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CHAPTER III

ROLE OF PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL

DEVELOPMENT BANKS IN AGRICULTURE DEVELOPMENT IN

KARNATAKA AND PROFILE OF STUDY AREA

INTRODUCTION

In the early years, rural development was considered synonymous with

the growth of agriculture, allied sectors and infrastructural facilities. Over the

years, rural development has emerged as a strategy design to improve the

economic and social life of the rural poor. It involves extending the benefits of

development to the rural areas. The term rural development involves a

process in which the rural society, at large, moves from one step of the

economic ladder to the next, thereby enhancing its social and economic

status. According to S. Gariayappa, rural development involves developing

the rural economy, so as to raise the standard of living of those rural people

who are poor and require upliftment. Lele defines rural development as

“Improving the living standards of the mass of low income population residing

in rural areas and making the process self sustaining”. However rural

development is a process concerned with the improvement of economic,

social and political conditions of mass rural population particularly those who

are below the poverty line. The villages in India have to grow well because of

three reasons: a) About 70% of the population in India and 69% in Karnataka

live in villages and over 40% of them are below the poverty line, b) The most

valuable resources for countries and state economic development are

concentrated in villages but not in a few cities, and c) Each and every village

in the country and the state is a market for goods manufactured either in

urban or semi urban areas as well as agricultural commodities grown in rural

regions.

The role of banks in the process of development is absolute, because

of the fact that they provide one of the most essential inputs, namely credit. In

the process of growth finance is a crucial element. It requires not only

effective mobilization of public savings but also proper deployment of

available scarce resources so as to create conditions for further generation

44

and mobilization of resources. It might be rather difficult in the absence of well

designed and integrated institutional apparatus. Thus development as Gurley

and Shaw assert involves finance as well as goods. Capital plays a significant

role in the theory of development. Capital plays a significant role in the theory

of development. Capital is regarded by Kindleberger not only as central to the

process of development but also as strategic. Economic development

requires and depends on inputs of capital. The process of development

involves savings to create a surplus for the capital investment. In the logistic

of growth mechanism, the role of banks was recognized long back as in an

under-developed economy. R.M. Saksena who recognized the importance of

bank finance for the economic development of a country, observes that the

banks are conceived as instrument for increasing the rate of growth of the

economy so fast that it surpasses the rate of growth of population, increase

per capita real income and help the economy leap forward into the phase of

self generating and self sustained growth. In the perspective of the history of

economic developed countries, banking was necessary for development of

developed countries, banking was necessary for development and not merely

a pre-requisite. Banking as a tool for development is a multipurpose tool and

depending upon the value system of the society, its uses are capable of vide

variations. In the modern economy bankers are to be considered not merely

as dealers in money but more realistically leaders in development. Similarly

banks are not just the store house of the country‟s wealth but are reservoirs of

resources necessary for economic development.

However in a developing country like India, scarcity of financial

resources is admittedly one of the constraints for accelerating the pace of

economic growth. Hence an efficient and responsive banking system is of

utmost importance. The contribution of banks to economic development is

remarkable in terms of mobilization of deposits, expansion of branches and

advancement of credit etc. in rural as well as urban areas.

In rural areas about 10% of the population has surplus savings, but

they are not prepared to save with banks as they do not have the knowledge

of banking and they are not convinced about the security of their deposits.

Thus the rural savings has to be collected tactfully and carefully. However, as

45

majority of the rural people are poor, it is not possible by them to save first a

certain amount of deposits and then undertake investment in land or allied

activities. Thus, it would be more appropriate first to help them with a loan and

invest in their familiar sector, so as to enable them to raise their productivity

and income. The bank then recover loan from the increased income. Any way

banks are to deploy credit mainly in productive fields so that income of

loaners will increase beyond subsistence level and contribute something more

to the savings. The additional income of households due to bank loan

investment may also improve the deposit potentially of the banks in rural

areas.

EVOLUTION OF AGRICULTURE AND RURAL DEVELOPMENT BANKS IN

INDIA

In India till the advent of 20th century there were no institutional agencies for

catering credit to agriculturist. Over 90% of farmers were mainly dependent on

private money lenders and other non–institutional agencies for capital for their

agricultural operations and social obligations. The non-institutional agencies

used to exploit the farmers in 3 ways namely – a) Charged exorbitant rate of

interest on loan amount, b) Forced the farmers to sell their produce at un

remunerative prices during harvest season for recovering loan and c) Forced

agriculturist to sell their land to them (money lenders) at lower prices for

recovering the loan. Then agriculture was not so profitable occupation to earn

and to liquidate old debts. The indebtedness of the farmers went on

increasing and reached an alarming level by the end of 19th century. The

establishment of regular law courts in the 19th century gave an easy handle to

creditors to pursue debtors to the bitterest end and exact the last pie. To help

the agriculturist under such circumstances several schemes for organizing

agricultural banks and similar institutions, the one by Sir William wedderburn

in 1882 were submitted to government. But none of them found acceptance at

the hand of the Government. Government, however, set up their own

machinery for advancing loans to agriculturist, and with that end in view the

Land Improvement Loans Act and the Agriculturists Loans Act were passed in

1883 and 1884 respectively. These were only enabling legislation and

empowered state Governments to advance loans from state funds and

46

invested them with powers to frame rules governing the issue of such loans.

Under the Land Improvement Loans Act, long-term loans for improvement

were granted, while under the Agriculturists Loans Act, short-term loans were

given for current agricultural needs. The actual working of the Acts shows that

loans under the Agriculturists Loans Act were advanced during times of

emergency only or on the occurrence of natural calamities like famine, flood,

etc., while the facilities offered under the Land Improvement Loans Act were

not availed by the agriculturists to any appreciable extent due to their

ignorance, dilatory way in which applications for loans were handled by the

Revenue Departments through which loans were administered and general

apathy of the farmers to deal with governmental agencies. Further, the loans

for redemption of prior debts for which long-term loans were largely required

by farmers were excluded from the purview of the Act in most of the states

under the rules framed by them.

With the introduction of the Co-operative Movement in 1904 it was felt

that it would be in a position to provide both the long-term and short-term

credit needs of the farmers. Credit societies were permitted to advance long

term loans along with short-term loans to the extent prescribed by the

Registrar for each society or class of societies. However, it was soon realized

that ordinary credit societies were entirely unsuited to undertake this type of

business. Primary societies depended for their working capital on central

banks, but these banks were able to attract short term deposits only. It was

not possible for societies to advance long- term loans with short term deposits

and whenever they did so, they courted only trouble and ruin. Moreover,

primary societies were not in a position to assess the values of real estate‟s

correctly or examine their titles and were not in a position to meet their outside

obligation when borrowers were unable to pay. Wholesale eviction of

borrowers from lands, forced sales, etc, brought only more troubles in their

train, as in a period of depression no buyers could be found for the properties

purchased by societies. Thoughtful co-operators and administrators,

therefore, came to the wise conclusion that separate institutions were

necessary for the dispensation of long- term credit.

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ALL INDIA RURAL CREDIT SURVEY REPORT (1954)

The All India Rural Credit Survey Committee (1954) appreciated the

role of land mortgage banks in the development of agriculture

The more important of the recommendations of the Committee in respect land

mortgage banks are summarized below:

(i) Each state should have a central mortgage bank. The state governments

should review their tenure and tenancy laws and take steps to eliminate such

features in them as, without being essential to policy, are hindrance to the

development of land mortgage banking. Where land reforms necessitate

restrictions on the mortgaging of title, the scope of such restrictions should be

the minimum necessary. Further, any special procedure for registration of

mortgages under the land reform acts (and the general procedure for

registration of mortgages of land) should be made simple, cheap and

expeditious. Similarly the provisions of the law should ensure that title passed

is as clear and as secure as possible.

(ii) Central land mortgage banks should issue debentures for varying periods

in conformity with the purpose of the loans. Further, to fit in with the

requirements of rural investment, central land mortgage banks should float

Rural Debentures. The Reserve Bank of India and the State Bank of India

should take positive steps for the creation of an effective market for the

debentures of the land mortgage banks. There should be provision for issue

of special development debentures which may be purchased in whole or part

by the Reserve Bank of India from out of its National Agricultural Credit (Long-

term Operations) Fund.

(iii) The government should contribute to the share capital of central land

mortgage banks at least up to 51 percent to enable them to borrow and to

lend adequately.

(iv) Land mortgage banks should orient their operations to production and

should give first priority to applications for loans for improvement, reclamation

and development of land, purchase of agricultural machinery and equipment

and other productive purposes. The banks should evolve a machinery for

achieving co-ordination of credit with planned agricultural development,

48

assessment of technical soundness of projects and verification of use of

credit. There should be proper arrangements for supervision of the utilization

of the loans granted by the banks.

(v) Apart from the different forms of state assistance already mentioned, there

should be:

(a) provision of staff for valuation of land, examination of schemes for land

improvement, assessing technical soundness, etc.,

(b) provision of overdraft facilities,

(c) exemption of stamp duty, registration fee, etc.,

(d) special legislation for facilitating working of land mortgage banks and

(e) special assistance to land mortgage banks in the underdeveloped areas

with reference to their administrative costs in order to enable them to function

on economic basis.

SECOND STAGE: LAND DEVELOPMENT BANKING

The second stage began when the All India Rural credit Survey

Committee in 1954 recommended that the Banks should concentrate on

providing long – term loans for productive purposes in the farm sector in the

context of planned development envisaged under the five year plan beginning

from 1951.

In pursuance of the recommendations of the All India Rural Credit

survey Committee (1954), Central Land Development Banks were organized

in all the major states of the country and also in some of the smaller states

and union territories. As on 30-06-1973, there were central Land Development

Banks in 18 states and 1 union territory out of the total of 21 states and 9

union territories. In addition there were separate land development banking

sections in the state co-operative banks of 2 union territories. The number of

central land development banks increased from 10 in 1953-54 to 19 in 1972-

73. During the same period membership of CLDB increased from 30,000 to

18,40,000, owned funds from `103.40 lakhs to `9774.47 lakhs, deposits and

other borrowings from `144.13 lakhs to `3830.30 lakhs, debentures

outstanding from `1145.04 lakhs to `101504.15 lakhs, working capital from

49

`1392.66 lakhs to `120207.30 lakhs, fresh advances from `192.40 lakhs to

`17143.06 lakhs, recoveries from `99.49 lakhs to `4901.62 lakhs, loan

outstanding from `1035.16 lakhs to `84920.53 lakhs and over dues from

`31.46 to `4071.47 lakhs.

The number of primary Land Development Banks increased from 304

in 1953-54 to 855 in 1972-73. In the same period the membership increased

from 2,65,000 to 21,83,000, owned funds from `96.25 lakhs to `4259.32

lakhs, deposits and other borrowings from `851.20 lakhs to `43,980.35 lakhs,

working capital `955.26 lakhs to `51,976.47 lakhs, fresh advances `140.50

lakhs to `10,162.97 lakhs, recoveries `60.59 lakhs, to `4473.25 lakhs, loan

outstanding `878 to `44,681.89 lakhs, and over dues from `16.06 lakhs, to

`1751.71 lakhs.

AGRICULTURAL REFINANCE CORPORATION AND LAND

DEVELOPMENT BANKS

All India Rural credit Survey Committee (1954), the committee on Co-

operative Credit (1960) and RBI‟s erstwhile standing Advisory Committee on

Agricultural Credit (1961) stressed the Central Government and RBI for the

establishment of an institution for stimulating long term investment in irrigated

belts and community development project area. They felt that the existing

institutions could not provide finance for schemes of land development under

the Command Areas of Major and Minor Irrigation projects and Schemes. As

a result of it the Government of India and RBI took initiative and a bill was

placed and passed in the Parliament to that effect and institution came into

existence on lst July 1963. This Corporation gave a fillip to the financing

operations of LDBS as it was the major beneficiary.

NABARD

National Bank for Agriculture and Rural Development (NABARD) is an

apex development bank in India having headquarters based in

Mumbai (Maharashtra) and other branches are all over the country. The

Committee to Review Arrangements for Institutional Credit for Agriculture and

Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI)

under the Chairmanship of Shri B. Sivaraman, conceived and recommended

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the establishment of the National Bank for Agriculture and Rural Development

(NABARD). It was established on 12 July 1982 by a special act by the

parliament and its main focus was to uplift rural India by increasing the credit

flow for elevation of agriculture & rural nonfarm sector and completed its 25

years on 12 July 2007. It has been accredited with "matters concerning

policy, planning and operations in the field of credit for agriculture and other

economic activities in rural areas in India". RBI sold its stake in NABARD to

the Government of India, which now holds 99% stake. NABARD is active in

developing financial inclusion policy and is a member of the Alliance for

Financial Inclusion.

HISTORY OF NABARD

NABARD was established on the recommendations of Shivaraman

Committee, by an act of Parliament on 12 July 1982 to implement the National

Bank for Agriculture and Rural Development Act 1981. It replaced the

Agricultural Credit Department (ACD) and Rural Planning and Credit Cell

(RPCC) of Reserve Bank of India, and Agricultural Refinance and

Development Corporation (ARDC). It is one of the premier agencies to

provide credit in rural areas. Nabard is India's specialised bank.

ROLE OF NABARD

NABARD is the apex institution in the country which looks after the

development of the cottage industry, small industry and village industry, and

other rural industries. NABARD also reaches out to allied economies and

supports and promotes integrated development. And to help NABARD

discharge its duty, it has been given certain roles as follows:

Serves as an apex financing agency for the institutions providing

investment and production credit for promoting the various

developmental activities in rural areas

Takes measures towards institution building for improving absorptive

capacity of the credit delivery system, including monitoring, formulation

of rehabilitation schemes, restructuring of credit institutions, training of

personnel, etc.

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Co-ordinates the rural financing activities of all institutions engaged in

developmental work at the field level and maintains liaison

with Government of India, State Governments, Reserve Bank of

India (RBI) and other national level institutions concerned with policy

formulation

Undertakes monitoring and evaluation of projects refinanced by it.

NABARD refinances the financial institutions which finances the rural

sector.

The institutions which help the rural economy, NABARD helps develop.

NABARD also keeps a check on its client institutes.

It regulates the institution which provides financial help to the rural

economy.

It provides training facilities to the institutions working the field of rural

upliftment.

It regulates the cooperative banks and the RRB‟s, and manages talent

acquisition through IBPS CWE.

NABARD's refinance is available to State Co-operative Agriculture and

Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs),

Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial

institutions approved by RBI. While the ultimate beneficiaries of investment

credit can be individuals, partnership concerns, companies, State-owned

corporations or co-operative societies, production credit is generally given to

individuals. NABARD has its head office at Mumbai, India.

NABARD operates throughout the country through its 28 Regional Offices

and one Sub-office, located in the capitals of all the states/union territories.

Each Regional Office [RO] has a Chief General Manager [CGMs] as its head,

and the Head office has several Top executives like the Executive

Directors[ED], Managing Directors[MD], and the Chairperson.It has 336

District Offices across the country, one Sub-office at Port Blair and one

special cell at Srinagar. It also has 6 training establishments.

NABARD is also known for its 'SHG Bank Linkage Programme' which

encourages India's banks to lend to self-help groups (SHGs). Because SHGs

are composed mainly of poor women, this has evolved into an important

52

Indian tool for microfinance. As of March 2006 22 lakh SHGs representing 3.3

crore members had to been linked to credit through this programme.

NABARD also has a portfolio of Natural Resource Management

Programmes involving diverse fields like Watershed Development, Tribal

Development and Farm Innovation through dedicated funds set up for the

purpose.

THE THIRD STAGE: AGRICULTURE AND RURAL DEVELOPMENT

BANKING (PCARD Banks)

The third stage Commenced when CRAFICARD recommended in1980

that Agriculture and Rural Development Banks should broad base their

operations and extend Investment Credit for rural development in all its

aspects including non-land based and non-agricultural activities and the

banks in the subsequent years diversified their activities including non-farm

sector financing. As on 31-3-1993 there were 20 Central Agricultural and

Rural Development Banks in the country. Table No.3.1 indicates the progress

made by primary co-operative agriculture and rural development banks in the

country

At the time of independence i.e. on 15th August 1947 there were two

Land Mortgage Banks in West Bengal, viz. Birbhum Land Mortgage Bank and

Burdwan Land Mortgage Bank. With these two Long Term Coop. Credit

Institutions West Bengal started its journey in the long term cooperative credit

sector. The West Bengal Land Mortgage Bank, which is presently called

„The West Bengal State Cooperative Agriculture & Rural Development Bank

Ltd.‟ (WBSCARDB Ltd.) is the Apex Long Term Coop Credit Institution. It

was registered on 07.01.1958 having the Registration No. 1 of 1958. The

Bank started its operation in the same year. The Bank was engaged in

providing long term and medium term credit under farm, non-farm and

housing sector. Gradually, 22 Land Mortgage Banks were established in

different districts / sub-divisions enhancing the total no. to 24. In two districts

viz. Darjeeling and Purulia no Land Mortgage Banks were set up and long

term cooperative credit was routed through the branches of the Apex Bank in

those two districts. The Land Mortgage Bank with the change of time and

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need mutated twice. The first mutation took place during mid-seventies and

Land Mortgage Banks were renamed as „Land Development Banks‟ and

thereafter, during mid-nineties they were again renamed as Cooperative

Agriculture & Rural Development Banks.

Table 3.1

NUMBER OF SOCIETIES AND MEMBERSHIP OF PCARD BANKS

Year Societies Membership (`000 no.)

2000 – 01 754 7269

2001 – 02 770 7254

2002 – 03 765 7443

2003 – 04 729 7334

2004 – 05 758 8377

Source: National Bank for Agriculture and Rural Development

ORGANISATION NETWORK

The organizational structure of the Agricultural and Rural Development

Banks is not uniform throughout the country. Out of the 19 ARDBS, 8 are

purely federal in nature with the state level bank at the apex and affiliated

primary agriculture and rural development banks at the lower level. A similar

number were functioning as unitary model. Of the remaining, three had

adopted a mixed pattern by directly financing their members through branches

in certain areas while in other areas loans were routed through ARDBS. In the

case of one state namely A.P. in pursuance of the Government‟s policy to

have an integrated rural co-operative credit structure, the SCARDBS loans

were issued through the short-term co-operative credit network following the

merger of PCARD Banks with it.

FINANCES OF PCARD BANKS

The major sources of funds for the PCARD Banks for lending are as follows:-

SPECIAL DEVELOPMENT DEBENTURES

These debentures are subscribed to by the NABARD to a major extent

and the central and state government to a lesser extent. These funds

54

raised from this source are used for financing schemes, projects in the

farm/non farm sector approved by the NABARD.

ORDINARY DEBENTURES

These debentures are subscribed to by commercial banks, financial

institutions as well as sister ARDBS. The funds raised are used for

financing projects/schemes in the farm sector.

SPECIAL RURAL HOUSING DEBENTURES

These debentures are subscribed to by the National Housing Bank

exclusively. These are used for advancing loans to farm-members for

construction of houses.

N.C.D.C. BORROWINGS

These funds raised in the form of loans from the National Co-operative

Development Corporation. Funds raised from this source are used for

financing construction of rural godowns, market yard etc.

In addition, the banks generate internal resources to a certain extent in

the form of share capital and reserves which help them to strengthen their

reserves base.

LOAN OPERATION OF PCARD BANKS

The main function of PCARD Banks is to grant loans on the security of

agricultural properties:

Since they grant loans which run for several years, strict rules are laid

down with regard to the security against which they can advance loans.

Generally, these banks restrict their loans to first mortgage of agriculture

property, though in a few cases they may advance loans against the

security of second mortgage as well.

They generally lend up to 50 percent of the value of the security. In order to

assess the value of land against which they lend employ experts who

assess the value of land and are conversant with local conditions. In

assessing the value of land such factors as the amount of land tax paid, the

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rental value of land, gross and net income from the land, sale value of the

land etc., are taken into account.

While granting loans the banks consider not only the value of the security

offered but also examine the repaying capacity of the applicants.

Finally, they are able to lend at fairly low rates of interest and enable the

needy famer to secure funds for long periods.

PCARD Banks provides credit for a variety of purposes such as redemption

of old debts, improvement of land, purchase if costly agriculture equipment,

construction of wells and erection of pumps and so on. At one time, the

redemption of old debts was the most important and, in a sense, the only

purpose for which the farmers approached the land development banks. In

recent years, however, farmers have borrowing from CARDBs mainly for the

purpose of land improvement and development including sinking of wells

(56percent) and purchase of agricultural machinery (30 percent)

IMPORTANCE OF PCARD BANKS

PCARD Banks, originally called Land Mortgage banks under the co-

operative field played a decisive role in the early sixties, seventies and

eighties in helping farmers to acquire capital or productive assets such as

tractors, tillers, pump sets, open wells, lift irrigation and in transforming the

cropping pattern from food to cash crops. Land development banks in the

villages were instrumental in converting agriculture into agri – business.

PCARD Banks have also given loans for non-land based activities subsidiary

to agriculture Viz., poultry, sheep – rearing, dairy, piggery, sericulture, cattle

shed etc.

Finance is one of the most important constraints in the growth of

agriculture. Credit is an essential and important input for development and

production. Agriculture like any other industry also needs capital investment

for development and for realizing higher production. Agriculture being the

most important occupation of the majority of our people, investment in it

assumes more importance in India where 40% of the national income is

derived from agriculture. A dynamic programme of agricultural credit is,

therefore essential for higher level production. For stimulating the tempo of

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agricultural production, it is imperative that farmers must be given all essential

requirements – the modern implements, fertilizers, improved seeds, irrigation

facilities, marketing facilities, etc. and all these things require adequate and

timely credit facilities. Timely availability of credit facilities to the cultivators is

of utmost significance for agricultural development especially in an economy

where majority of the cultivators belong to the category of small/marginal

farmers. In the words of prof. john D. Black of Harvard University, “If we are all

concerned about increasing total agricultural output in shorter term we must

provide credit first and foremost. It will enable them to buy more labour saving

equipment, more seeds and fertilizers.

In developing countries like India the need for credit is more pressing

where farmers are almost without liquid resources, credit on reasonable term

is needed to finance the preparation for their next crop, to enable them to

make a modest start in adopting improved methods of farming, and often to

enable them to avoid selling at a very low prices ruling immediately after the

harvest. One of the very important reasons as to why agricultural productivity

is low in developing countries like India, is that average farmers have hardly

any finance to effect improvement in land. Therefore, these farmers need

capital in right quantity, at right time and at reasonable rate of interest from

financial institutions for improving their agricultural production, income and

social status. However, the technological breakthrough (i.e. Green revolution)

which took place in Indian agriculture during 60s, demanded more credit for

agricultural inputs like fertilizers high yielding variety of seeds, pesticides,

irrigation and other modern implements. Drought in several blocks of the

country over the years has also created heavy demand for credit for the

development of minor irrigation. Since 1969, government has also realized the

significance of credit and began to provide adequate attention to the farmers

through its various credit agencies.

Farmers need short, medium and also long term credit for permanent

agricultural implements. The short and medium term requirements are met by

the commercial banks and other agencies like the co-operatives. In order to

meet the long term needs of the farmers, land development banks were

established all over the country. The LDBS provide long term loans to the

57

farmers on the basis of the security of land. Formerly the banks were meant to

provide long term loans for unproductive purposes like debt redemption but at

the seminar of the chief executive officers of the central Land Development

Banks held in 1969 it was decided that LDBS should advance 90% of the

loans for productive purposes, of which at least 70 percent should be for

easily identifiable productive purposes.

During pre – multiagency approach to rural credit land development

banks played a decisive role in providing long term loans for agricultural

development. Even during the post – multiagency period also the PCARD

Banks as exclusive rural investment banks have played a vital role in

advancing funds to agricultural and other rural economic activities. The long

term loan meant for acquiring or creating capital assets is to assure and

stabilize agricultural production and give the farmers a better sense of security

than he had before he made such investments. The creation of capital assets

either by installation of pump sets, sinking of bore wells or acquisition of

tractor/tiller is to raise the level of this agricultural practices resulting in better

production. Such farm investment further enables the cultivator to practice

extensive as well as intensive farming, example, if a pump set has been

installed he may bring additional area in the ambit of his cultivation.

Availability of water enables him to conduct more intensive farming and

produce two or three crops than he did before. Availability of water also

enables him to grow certain crops which need heavy water such as

sugarcane, paddy, areca, etc. The intensive farming and raising of two or

three crops in a year increases farm activities and ultimately increase more

employment for his family as well as wage - labour. It may also generate other

secondary activities.

PCARD BANKS IN KARNATAKA

The primary Co-Operative Agriculture and Rural development Banks

which are functioning in Karnataka are individual autonomous bodies and

members of the Karnataka State Co-Operative Agriculture and Rural

Development Bank. These banks borrow funds from KSCARD Bank and

lends directly to the agriculturist. The first PCARD Banks was come into

58

existence on 10th July 1930, at Bhimana Khone in shimoga District. At present

there are 177 PCARD Banks spread over all the 177 taluks in the state of

which two PCARD Banks are under liquidation. PCARD Banks provides

investment credit for activities such as minor irrigation, farm mechanization,

horticulture and plantation, land development, animal husbandry, fishery, farm

forestry and Non-Farm sector. The loans are provided for different periods

ranging between 3-16 Years according to types of investment, life of assets

and repaying capacity of the borrowers at administered interest rates

determined by the RBI/National Bank. The present interest rate is in the range

of 3 to 10 percent.

The PCARD Banks finance primarily farmers for development of

agriculture. However, these Banks have diversified their activities to non-farm

lending since 1986. This would mainly provide employment opportunities for

rural and others to earn an additional income. There are 177 PCARD Banks

functioning in Karnataka

CONSTITUTION AND MANAGEMENT

The membership of PCARD Banks is confined to farmers, agricultural

laborers, rural artisans and small rural entrepreneurs. As PCARD Banks are

voluntary form of associations, there is no compulsion on anybody to become

the member of the Bank. The PCARD Banks keep their doors open for the

admission of farmers, agricultural laborers, rural artisans and small rural

entrepreneurs.

Management of PCARD Banks consists of a) The General Body and b)

The Board of Directors.

THE GENERAL BODY

The ultimate authority of the administration of the PCARD Banks lies in

the General Body which comprises the members of PCARD Banks. The

meeting of the General Body is generally held once in a year, under the

direction of the Board, the manger of the bank convenes this meeting.

Generally in that meeting the progress of the bank, suitable solutions to the

existing problems, amendment of bye -laws and other issues are discussed

and take decisions.

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Each member of the General body has one vote. The General Body is

empowered to elect the Board members in accordance with rules. The elected

members of the Board, among themselves. elect the President and vice-

President

The main functions of the Board are appointing executive committee

and look after the management of the Bank. The executive committee has

power to admit members, sanction of loans, investments, borrowing, taking

steps in case of defaults, etc., The organizational structure of PCARD Banks

is depicted in the following chart:

Chart 3.1 ORGANIZATION CHART

Chart 3.2 OFFICE ADMINISTRATION CHART

Source: Branch Office of Jagalur, Davangere Dist.

General Body

Board of Directors

President

Vice-President

Vice-President

Manager

Accountant

Field Officers

Assistants

„D‟ Group Workers

60

SOURCE OF FINANCE

The resources of finance of PCARD Banks comprise the owned and

the borrowed funds. The components of the farmers are a) share capital b)

Reserve fund and other reserves and c) Membership and other fees. The

latter consists of a) Deposits b) Borrowings from the state Co-Operative

Agriculture and Rural Development Bank. C) State Government share

contribution d) Grants and subsidies and e) Cash credit.

Share capital

Reserve fund and other reserves

Membership and other fees

Deposits

Borrowings from the KSCARD bank

Grants and subsidies

Cash credit

Interest income

Credit deployment

A sound agricultural credit policy strengthen the farm economy. In other

words, the modern commercial farm enterprise is hinged on the sound credit

policy in the sense adequate wherewithal in right time for right purpose in

easy terms of repayment. The provision of agricultural credit should be aimed

at:

To improve the living standard of the farmers;

To augment the famers to adopt agricultural production and thereby

strengthening farm economy;

To encourage the farmers to adopt new agricultural techniques;

To develop the resourcefulness of farmers.

CREDIT POLICY

To fulfill the above said aim of the agricultural credit, an efficient credit

policy corresponds to the basic postulates of rural credit. In other words, the

credit policy should have facility and safety. Facility means the credit is ready

to provide against proper security, timely and adequately. Safety means the

61

credit should assist and not endanger the borrowers stability and productive

power. And this phenomena guides discipline and the borrower with which

minimize, if not possible to eliminate completely, the evasion of lone amount.

Thus, the cycle of lending and recovery enables the financing institutions in

reloaning program.

1. Viewing the postulates of credit the Reserve Bank of India in its circular

letters asked the cooperative banks financing agriculture to follow the

production-oriented system. The features of the production-oriented system

are:

Fixing of the scale of financing adequately to meet the cost of project for

different purposes

Proposed production of the project on which credits to be advanced

becomes security

Assessing the repayment capacity of borrowers based on the cropping

pattern of their farms

Determining the eligibility of loans with reference to repaying capacity.

Repaying capacity is calculated out of the incremental income

Fixing of the period of the loan with reference to the repaying capacity of

loanee but does not exceed the life of asset created out of the loan.

2. At the instant of the Reserve Bank of India the representatives of the

central cooperative agricultural development banks meeting held in

Bombay on 8th February, 1973 had agreed that from the year 1973-74

onwards, the loans to small farmers should not be less than 20.00 per cent

of total loans.To this effects the Reserve Bank of India issued a circular. In

1975 the National Cooperative Land Development Banks Federation

advised the central cooperative agricultural development banks that the

loans to small farmers should provide 50 per cent of total disbursements.

3. Post-sanction follow-up measures should be taken up to ensure that the

provided credit is:

Not misutilised ;

62

Fully utilized ; and

Recovered by persuasion.

4. Credit is made available to the farmers for agricultural purposes which are

classified into:

Identifiable productive purposes (loans to purposes which are directly

linked with increase in production) ;

Non-identifiable productive purposes (loans for purposes which are

productive but not directly connected with increase in production. Say,

land levelling, bunding, embankment, soil conservation, etc.) ;

Non-productive purposes (loans for repayment of old debts, purchase of

ownership rights etc.).

The non-identifiable productive purposes were to be allowed as identifiable

productive purposes were to be allowed as identifiable productive

purposes from 1st November, 1972 if loans for them provided under the

schematic basis and executed by the State Government or the technical

agency. As consequent the distribution of 90.00 per cent of loan should

go for productive purposes of which at least 70.00 per cent for

identifiable purposes. The loans are made available to following

purposes. They are:

Land improvement ;

Conversion of dry land into wet land ;

Digging and repairs of wells inclusive of tube wells ;

Purchase of oil engines, electric motors, pump sets ;

Purchase of tractors and their accessories ;

Purchase of power tillers, sprayers and other farm machinery ;

Purchase of milch cattle ;

Subsidiary occupations namely sheep and goat rearing, poultry, piggery,

pisciculture ;

Construction of farm houses, cattle shed ; and

63

Horticulture, sericulture, gobar gas plants.

5. To rectify the imbalances between the rich and the poor, it has been

decided that 60.00 per cent of total loans should be advanced to the small

and weaker section farmers of which 15.00 per cent and 6.00 per cent

should necessarily go to scheduled castes and scheduled tribes.

6. The financial discipline is being imposed on primary cooperative banks. If

the primary cooperative banks non-overdue-cover, which means dues by

primaries to the central cooperative banks does not exceed 25.00 per cent.

Then only the former is eligible to get cent per cent reimbursement from the

latter. Overdues arise due to natural calamities. The cooperative bank is to

be permitted to segregate overdues of five years and more into a separate

account called „blaked account‟ and excluded the same from demand. But,

to the extent of 20.00 per cent of this blacked account is to be treated as

demand for the year.

Rescheduling of loans is another method which may be adopted by the

cooperative bank as an alternative to the above. In calculation of

rescheduling of loans, over dues rose due to natural calamities other than

the farmers‟ over dues which mentioned below, are taken into account:

Those farmers who perennial source of irrigation ;

Those who pay income tax ; and

Those who borrowed loans for tractors.

7. Credit Dimensions

The measures which are related to the credit policy and which make it more

effective are discussed hereunder:

Security: Agricultural land is the main security for advances by the

primary cooperative agricultural development banks. The primary co-

operative agricultural development bank accepts the below mentioned

properties as advance loans. The property mortgaged in favour of the

primary cooperative agricultural development bank is assigned to the

apex bank

64

Lands having well irrigation;

Wet land with permanent irrigation;

Dry land;

Garden land.

Loan sanctioning power: The PCARD Banks do not have any

sanctioning power. KSCARD Bank and its district branchs are

empowered to sanction loan. up to `10 lakhs, the branchs sanction and

if, the loan amount is above 10.00 lakhs, the head office sanctions. All

the loan applications essentially pass through two levels. In the first

level, loan applications received by the PCARD Banks are verified,

scrutinized and appraised the PCARD Banks and in the second level

PCARD Banks with its recommendation refers to either apex bank or

district branches for sanction. To avoid delay at primary level, the power

of recommending loan is delegated to executive committee, consisted of

president, secretary, directors and manger of the PCARD Banks.

Down Payment: The concept of down payment was introduced by

PCARD Banks since 1971, for getting the borrower involved in the

project. At present down payment amount ranges between10% to 20%

of the project cost.

Loan disbursement: The sanctioned loan amount is disbursed either in

one lump sum or in installment depending upon the purposes for which

loans are sanction. In case of loans for the purchase of tractors, Power

tillers, Electric motors and Pump sets, Diesel engines and any other

agricultural equipments the disbursement is made directly to the dealer

in one lump sum against the invoice and delivery note.

In case of loans for development purpose the disbursement is

made in three installments representing 30%, 40% and 30% of the loan

amount. Subsequent installments are disbursed only after receiving

utilization certificate issued by authorized officers.

65

Documental Requirement: For getting loan, the applicant has to submit

legal and technical documents and certificates issued by competent

authorities.

LEGAL DOCUMENTS AND CERTIFICATES

Title deeds of land offered for security,

Records of rights and possession certificate for 3 years.

Genealogical tree certificate,

Twelve years encumbrance certificate,

Payment of land revenue receipts and

Latest mutation registers extract.

TECHNICAL DOCUMENTS

Spot selection letter for well and tube well,

Electricity boards sanction letter for supply of power,

Technical feasibility report,

Registration certificate issued by industrial center,

Map and estimation documents,

Bills, quotations, technical appraisal report and proposed map and

Soil and water testing reports

Loan Eligibility and Repaying capacity: In case of loan for development

purpose, fifty percent of the assessed value of land is granted as loan, and

in case of loan for purchase of tractors, power tillers, and other agricultural

equipments, the value of land and cost of equipments are taken together

for calculation of eligible amount of loan. However, the loan amount should

not exceed the value of land. In case of loan sanctioned under NABARD

assisted Schemes, the Government has agreed to guarantee the deficit in

security.

66

The repaying capacity of the borrower is determined at 90% of the net

incremental income. In respect of loans for the purchase of the tractors,

and other equipments the incremental income is determined at 30% of the

existing net income and in cases of loan for construction of farm house,

etc., The repaying capacity is fixed by calculating the surplus income

available after meeting family and other expenditure out of his total income.

Time Limit for Utilization of Loan: The KSCA&RD Bank Ltd. has

prescribed time limits for utilization of loans for different purpose. Loans for

the purposes of sinking of wells, installation of pump sets and for

reclamation of lands should be utilized within three months of the

disbursement of each installment. In the case of plantations, one year has

been fixed as time limit for the utilization of the loan installments from their

respective dates of disbursement.

Seasonality in Lending: In order to prevent the borrower from diverting

the loan amount for unproductive purposes, the PCARD Banks have been

strictly instructed by Karnataka State Co-operative Agriculture and Rural

Development Bank not to disburse the loan amount to a borrower when the

possibility of its utilization does not exist. In other words, the PCARD Banks

are required to observe the seasonality in lending in closed periods. The

Regional Joint Registers of Co-operative societies have fixed such closed

periods for different areas during which the banks are not permitted to

disburse loans.

Annual lending Programmes of PCARD Banks: The annual lending

Programmes of the PCARD Banks are fixed by the KSCA&RDB on the

basis of their actual lending performance and their Non-performing Assets

(NPAs) position at the close of preceding co-operative year. This means

that unless the PCARD Banks are successful in the recovery of loans

already granted their NPAs are within manageable limits, they cannot

embark upon any ambitious lending programme during any current year.

Therefore, the power of the PCARD Banks to entertain fresh applications

for loans is irrevocably linked to their NPAs position.

67

PURPOSE SHIFT-WISE FLOW OF CREDIT

The purposes for which loans issued by PCARD Banks are as given under:

I) Minor irrigation/Land Development

Sinking of new wells.

Construction of new tanks to conserve water for wet cultivation.

Boring and Deeping, reconstructions or repairs to old wells and Deeping,

reconstruction or repairs to tanks.

Purchase and installation of pump sets (Electrical, Diesel, Kerosene),

construction of pump houses.

Lying pipe line.

Installing sprinklers.

Drip irrigation.

Land leveling and fencing.

Banding and reclamation of lands.

Preparation of land for plantation etc.,

II) Sericulture Development

Karnataka, Sericulture Project.

Purchase of sericulture equipment.

Construction of Raring house.

III) Horticulture/Plantation

Coconut development scheme.

For growing mango.

For growing Areca nut.

For Saputo, pomegranate, Pineapple, Leman, grape, cashew, cardamom

cocoa, orange, oil palm, Rubber, Vanilla, coffee, currileaf, Jasmine, and

Rose etc.,

68

IV) Diversified Activities

For running poultry farm.

For Sheep rearing.

For Pig rearing.

For fish rearing.

Dairy development scheme.

Purchase of Bullock and Bullock cart.

V) Non-Farm Sector Activities

United Schemes-Handicrafts, Rural Industry, Leather Industry, Pottery

Paper Products, Printing Products, Glass Products, Rubber Products,

Wooden items, Chemical Products, Plastic Products, Simple carving,

Electrical and Mechanical carving, Sports Materials, etc.,

Integrated scheme-For running flour mill, T.V. cap Cable operation, T.V.

repair, Saw mill, Xerox etc.,

For minor transport vehicle.

VI) Rural Housing

For new house construction.

For house repairs/renovation.

II) General Schemes

For construction of cattle sheds, godowns, etc.,

For putting stone fencing.

For installing gober gas plant. Etc.,

The details of scale of finance, repayment period and minimum

development area are stated in the following table 3.2

69

Table 3.2

DETAILS OF PURPOSE-WISE SCALE OF FINANCE AND REPAYMENT

PERIOD OF PCARD BANKS

Sl No

Project/ Purpose Scale of Finance

Rs.

Minimum Development

area

Grace Period

Repayment Period

Small Farmers

Big Farmers

I Minor Irrigation

Open well 37000-

75000 2-3 acre 23 Months 15 Yrs 9 Yrs

Bore Well 36000 4 acre 11 Months 9 Yrs 9 Yrs

Water storage tank (3.5X3.5X2.5 meters)

29000 2 acre 11 Months 5 yrs 5 Yrs

Pump House (2.5X2.5X2.1 meters)

14000 2-4 acre 11 Months 9 Yrs 9 Yrs

Submergible Irrigation

1 H P 9400 1-2 acre 11 Months 9 Yrs 9 Yrs

2 H P 12000 1-2 acre 11 Months 9 Yrs 9 Yrs

3 H P 16300 1-2 acre 11 Months 9 Yrs 9 Yrs

5 H P 18800 1-2 acre 11 Months 9 Yrs 9 Yrs

7.5 H P 24200 1-2 acre 11 Months 9 Yrs 9 Yrs

Diesel Pump Set

3 H P 18300 1-2 acre 11 Months 9 Yrs 9 Yrs

5 H P 22500 1-2 acre 11 Months 9 Yrs 9 Yrs

Kerosene Pump set 11 Months 9 Yrs 9 Yrs

a) 1.9 H P 13900 1 acre 11 Months 9 Yrs 9 Yrs

b) 3 H P 18600 1 acre 11 Months 9 Yrs 9 Yrs

Pipe line (63 meters) 4400 1-10 acre 11 Months 9 Yrs 9 Yrs

Sprinkler

a) Field Crops 50000-

73900 2.5 acre 11 Months 9 Yrs 9 Yrs

b) Coffee Plantation 26000-

88300 2.5-10 acre 11 Months 9 Yrs 9 Yrs

c) Areca plantation 18000-

68000 1-4 acre 11 Months 9 Yrs 9 Yrs

Drip Irrigation 9900-

183400 1-10 acre 11 Months 14 Yrs 9 Yrs

II Land development scheme

CADA area 3760 1 acre 12 Months 12 Yrs 12 Yrs

Fencing

a) Dry land Rs. 75/-

per meter 2.5 acre 11 Months 9 Yrs 9 Yrs

b) Wet land Rs. 75/-

per meter 1 acre 11 Months 9 Yrs 9 Yrs

Electrical Fencing 18800-

35100 2.5-7.5 acre No 7 Yrs 7 Yrs

Rain Harvesting storage pond

a) 10x10x3 meter 30700 2.5 acre 23 Months 7 Yrs 7 Yrs

b) 8x8x3 meter 24800 2 acre 23 Months 7 Yrs 7 Yrs

Farm pond (Areca 31000- 10 acre No 4 Yrs 6 Yrs

70

plantation) 145000

III Horticulture per acre

Coconut 20750 1 acre 8 Yrs 12 Yrs 12 Yrs

Areca nut 20750 1 acre 8 Yrs 12 Yrs 12 Yrs

Coffee 25000 1 acre 7 Yrs 10 Yrs 10 Yrs

Oil palm 40000 1 acre 6 Yrs 9 Yrs 9 Yrs

Rubber 38800 1 acre 10 Yrs 14 Yrs 14 Yrs

cashew 10400 1 acre 7 Yrs 12 Yrs 12 Yrs

Cardamom 51000 1 acre 4 Yrs 9 Yrs 9 Yrs

Pepper 8500 1 acre 3 Yrs 9 Yrs 9 Yrs

Cocoa 18600 1 acre 6 Yrs 10 Yrs 10 Yrs

Grope 12000-

200000 1 acre 3 Yrs 8 Yrs 8 Yrs

Mango 14500 1 acre 6 Yrs 11 Yrs 11 Yrs

Pomegranate 30000 1 acre 4 Yrs 7 Yrs 7 Yrs

Vanilla 55000 1 acre 1 Yrs 6 Yrs 6 Yrs

Rose 145000 1 acre 1 Yrs 6 Yrs 6 Yrs

Jasmine 49100 1 acre 3 Yrs 10 Yrs 10 Yrs

IV Sericulture development

Karnataka sericulture Project

10200 1-2 acre 1 Yrs 4 Yrs 4 Yrs

Equipment 8000 1-2 acre 1 Yrs 3 Yrs 3 Yrs

Rearing house 49200-

67500 1 acre 1 Yrs 6 Yrs 5 Yrs

Shoot feeding 108000-

180000 2 acre 1 Yrs 8 Yrs 6 Yrs

V Diversified (Animal husbandry)

Dairy Cow 10000-

15000 1 acre dry/1/2 acre wet

6 Months 5 Yrs 5 Yrs

Sheep raring

a) 10+1 23600 1 acre dry/1/2

acre wet 1 Year 5 Yrs 5 Yrs

b) 20+1 44000 1 acre dry/1/2

acre wet 1 Year 5 Yrs 5 Yrs

Piggery 3+1 34800 Suff. Security 1 Year 5 Yrs 5 Yrs

Goat raring

a) 10+1 23100 1 acre dry/1/2

acre wet 1 Year 5 Yrs 5 Yrs

b) 20+1 44000 1 acre dry/1/2

acre wet 1 Year 5 Yrs 5 Yrs

Pair Bullock 22000 1 acre

irrigated No 4 Yrs 4 Yrs

Pair of the Buffalo 6000 1 acre

irrigated No 4 Yrs 4 Yrs

Bullock Cart (Wooden)

15000 1 acre irrigated

No 4 Yrs 4 Yrs

Tire Cart 18000 1 acre

irrigated No 4 Yrs 4 Yrs

VI Goober Gas plant 12500-

32650 No 4-7 Yrs 4-7 Yrs

71

VII Fishery

a) Fish pond 59000-

74200 1-2.5 acre 1 Yrs 4 Yrs 4 Yrs

b) Boat & Net

with engine 4000-60000

1 Yrs 4 Yrs 4 Yrs

VIII Agriculture mechanization

Tractor 95%

Estimated Cost

20 acre dry or 10 acre irrigated

9 Yrs 9 Yrs

Power tiller 90%

Estimated Cost

10 acre dry or 4 acre irrigated

7 Yrs 7 Yrs

Tractor repair 50000 5 Yrs 5 Yrs

Two wheeler 75%

Estimated Cost

5 Yrs 5 Yrs

IX Rural housing

House construction 10 Lac 1 Years 12 Yrs 12 Yrs

House repair/renovation

2.5 Lac 7 Yrs 7 Yrs

X General Schemes

United scheme 10 Lac 3-12 Months

10 Yrs 10 Yrs

Integrated scheme 50 Lac 3-12 Months

10 Yrs 10 Yrs

Small transport service.

10 Lac 6 Months 5 Yrs 5 Yrs

Source: KSCARD Bank Bangalore. Circular No, 5, Dated 17-6-2009. BPD/Unit cost/61/2009-10.PP:1-15.

72

Table 3.3

TRENDS IN SHARE CAPITAL OF PCARD BANKS IN KARNATAKA

(` IN LAKHS)

SHARE

CAPITAL

MEMBERS STATE TOTAL

2001-02 8234.63 676.97 8911.6

2002-03 8387.28 696.25 9083.53

2003-04 8406.29 703.38 9109.67

2004-05 8559.69 706.19 9265.88

2005-06 7991.56 719.83 8711.39

2006-07 8769.99 708.36 9478.35

2007-08 9389.15 706.03 10095.18

2008-09 10005.72 695.52 10701.24

2009-10 10661.67 697.23 11358.9

2010-11 10923.36 681.76 11605.12

CGR % 3.366877 0.00022571 3.367103

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

73

Table 3.4

TRENDS IN MEMBERSHIP OF PCARD BANKS IN KARNATAKA

MEMBERS BORROWERS NON-BORROWERS

TOTAL PERCENTAGE OF

BORROWERS TO TOTAL MEMBERS

2001-02 7,00,656 3,49,423 10,50,079 66.72

2002-03 7,01,237 3,48,737 10,49,974 66.79

2003-04 6,82,480 3,22,342 10,04,822 67.93

2004-05 6,89,418 3,45,095 10,34,513 66.64

2005-06 6,79,105 3,58,530 10,37,635 65.45

2006-07 6,61,326 3,89,431 10,50,757 62.94

2007-08 6,67,930 4,14,902 10,82,832 61.68

2008-09 6,86,703 4,13,671 11,00,374 62.41

2009-10 6,66,340 3,95,758 10,62,098 62.74

2010-11 6,56,409 4,23,430 10,79,839 64.51

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

74

Table 3.5

TRENDS IN LOAN ISSUES DURING THE YEAR OF PCARD BANKS IN

KARNATAKA

(` in Lakhs)

PURPOSE WISE AGRI NON-AGRI DEP. LOANS

TOTAL

2001-02 10301.01 1315.69 6633.80 18250.50

2002-03 10445.51 1676.69 5433.34 17555.54

2003-04 7493.50 982.53 4333.48 12809.51

2004-05 9865.07 1897.31 4240.37 16002.75

2005-06 15257.41 2502.67 4893.09 22653.17

2006-07 23118.12 1717.05 4531.31 29366.48

2007-08 20058.74 1151.79 4556.59 25767.12

2008-09 17362.22 370.71 4978.14 22711.07

2009-10 18447.74 307.45 6068.58 24823.77

2010-11 18996.14 396.89 7021.88 26414.91

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

75

Table 3.6

TRENDS IN DEMAND, COLLECTION AND BALANCE (TOTAL ONLY) OF

PCARD BANKS IN KARNATAKA

(` in Lakhs)

DEMAND COLLECTION BALANCE PERCENTAGE OF

COLLECTION TO DEMAND

2001-02 68,484.58 18,588.69 49,895.89 27.14

2002-03 73,551.05 17,977.18 55,573.8 24.44

2003-04 76,247.15 16,809.02 59,438.13 22.05

2004-05 81,248.04 11,750.91 69,497.13 14.46

2005-06 1,05,161.36 66,717.00 38,444.36 63.44

2006-07 64,185.55 30,215.42 33,970.13 47.08

2007-08 62,459.17 24,029.30 38,429.87 38.47

2008-09 68,819.82 29,934.19 38,885.63 43.50

2009-10 67,888.22 26,765.76 41,122.46 39.43

2010-11 72,858.23 38,248.45 34,609.78 52.50

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

76

Table 3.7

TRENDS IN OVERDUE (AGE-WISE) (TOTAL ONLY) OF PCARD BANKS IN KARNATAKA

(` IN LAKHS)

Sl No

AGE - WISE

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-

11

1 1 YEAR 8,862.96 9,377.63 7,944.76 7,637.21 7,876.40 8,992.24 10,709.58 9,564.35 6,775.29 4857.12

2 2 YEAR 6,858.08 7,658.61 7,021.60 7,830.93 4,252.57 3,883.58 8,294.45 9,210.93 8,683.66 4846.93

3 3 YEAR 6,393.47 7,079.22 6,705.40 7,415.81 3,410.51 2,772.72 3,071.99 4,847.79 7,618.70 9556.77

4 4 YEAR 6,084.23 6,610.52 5,607.55 6,519.38 3,096.92 2,676.49 1,846.46 2,076.74 4,646.00 5473.25

5 5 YEAR 6,915.70 7,407.68 6,147.94 7,254.89 3,315.00 3,123.94 2,053.82 1,800.97 2,034.67 3287.20

6 Above 5YEAR

14,781.44 17,440.21 26,010.88 32,838.91 16,492.96 12,521.16 12,453.57 11,384.85 11,364.14 10188.78

Total 49,895.88 55,573.87 59,438.13 69,497.13 38,444.36 33,970.13 38,429.87 38,885.63 41,122.46 34609.78

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

77

Table 3.8

TRENDS IN OVERDUE (SECTOR WISE) OF PCARD BANKS IN KARNATAKA

(` IN LAKHS)

Sl No

SECTOR WISE

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

1 MI 20,864.79 22,388.58 23,622.52 26,312.69 13,238.52 10,895.06 11,766.55 10,779.14 11,078.65 9053.91

2 FM 5,651.20 6,582.63 7,478.29 9,536.11 4,738.44 4,667.75 4,897.15 4,874.67 4,027.31 2972.08

3 SERI 2,440.84 2,897.79 3,028.24 3,306.12 1,340.89 1,328.13 1,472.80 1,575.79 1,612.00 1334.96

4 HORT 4,862.12 6,193.31 6,585.01 8,975.19 5,358.38 4,675.37 6,607.86 6,750.94 8,294.26 6514.19

5 DIV 5,262.05 5,685.02 5,772.82 6,249.24 3,642.10 2,988.12 3,372.29 3,209.34 3,653.62 3602.40

6 NFS 5,546.01 5,617.04 5,937.81 6,590.86 4,737.92 3,962.05 3,861.76 3,383.53 2,755.49 2011.57

7 RHS 1,464.08 1,696.08 2,159.59 2,444.26 2,436.32 2,872.55 2,879.16 4,038.68 4,486.26 4240.10

8 GS 3,277.92 3,531.02 3,889.68 4,656.79 2,055.07 1,421.00 1,549.49 1,904.31 1,730.43 1432.40

9 OTH 526.87 982.40 964.17 1,425.87 896.72 1,160.10 2,022.81 2,369.23 3,484.44 3448.17

Total 49,895.88 55,573.87 59,438.13 69,497.13 38,444.36 33,970.13 38,429.87 38,885.63 41,122.46 34609.78

Source: Statistical Report of KSCARD Bank Ltd., Bangalore. (MI-Minor irrigation, FM-Farm Mechanization, SERI-Sericulture, HORT- Horticulture, DIV-Diversified activities, NFS-Non Farm Sector, RHS-Rural Housing Scheme, GS-General Scheme, OTH-Others)

78

Table 3.9

TRENDS IN BAD ASSETS OF PCARD BANKS IN KARNATAKA

(` in Lakhs)

BAD ASSETS

2001-02 12455.71

2002-03 14170.90

2003-04 17081.73

2004-05 18099.74

2005-06 11441.98

2006-07 10162.92

2007-08 10391.59

2008-09 10764.90

2009-10 10644.71

2010-11 10685.91

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

79

Table 3.10

TRENDS IN WORKING RESULTS OF PCARD BANKS IN KARNATAKA

(` in Lakhs)

ACCUMULATED LOSS

2001-02 41161.48

2002-03 48670.21

2003-04 59187.91

2004-05 69731.70

2005-06 43774.03

2006-07 40295.55

2007-08 43450.04

2008-09 46699.45

2009-10 49521.90

2010-11 49865.12

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

80

Table 3.11

NUMBER OF PCARD BANKS IN KARNATAKA UNDER PROFIT OR LOSS

Year Profit Loss Total

2001-02 18 159 177

2002-03 21 156 177

2003-04 22 155 177

2004-05 6 171 177

2005-06 169 8 177

2006-07 104 73 177

2007-08 80 97 177

2008-09 79 98 177

2009-10 56 121 177

2010-11 95 82 177

Source: Statistical Report of KSCARD Bank Ltd., Bangalore.

81

A PROFILE OF DAVANGERE DISTRICT

Davangere distict is one of the 30 districts of Karnataka state. The

district came into existance on 15th august 1997.This has been carved out

from three districts namely: chitradurga (davangere, harihar and jagalur

blocks), shimoga (channagiri and honnali blocks) and bellary (harapanahalli

block) by the state government, when the creation of new districts was taken

up to facilitate rapid development and speedy administration by creating new

compact district units. Incidentally this has become one of the highly potential

districts with the combinations of six blocks of distinct geo-climatic features

endowed with significant natural infrastructure and inherent agra-industrial

potential yet to be exploited.

SITUATION AND EXTENT

Davangere district is almost centrally located in Karnataka. The

district is surrounded by bellary district in the north,chitradurga and shimoga

district in the south ,bellary and chitradurga districts in the east and haveri and

shimoga districts in the west.

Zilla panchayat is situated at the district head quarters. The six taluks

channagiri, Davanagere, Harapanahalli, Harihar,Honnali and jagalur are

divided into Two sub divisons for administrative pupose.The districts has

5924sq.km of geographical area consisting of 24 hoblies,93 vollages(810 are

Inhabited and 113 un Inhabited)distributed among 6 taluks and 230 village

panchayats.

TO POGRAPHY

Out of 59,7597 hectares of geographical area, 38,9771 hectares are

cultivable area,89918 hectares are under forest,25,394 hectares are fallow

land, 8525 hectares are cultivable waste land,4955 hectares are trees and

groves 19,538 hectares are permanent pasture land,38963 hectares are non-

agricultural land and 20,533 hectares are barren land.

CLIMATE

Out of 6 blocks, channagiri and honnalli blocks come under

malnad area have hot summer, pleasant vintner and a good Manson

82

davangere and harihar blocks also have hot summer pleasant winter

and considerable rait all harapanahalli and jagalur blocks have very

low raint all and a pleasant winter however the district receives on

an average 623mm of rain per annum , and normal rain day sare are

43.

DEMOGRAPHY

The degree of development of agricultural industrial or commercial

depends upon demographic features of particular region or a district. The total

population of the district is 17.90.952 (2001 cesus) (projeetes population on

2010 is 20.32.446) of this rural population is 12.47.954 and urban and semi-

urban population is 5.42998. out of the total population 9.177.5, population is

male and the 8.73.1247 population is female. The Weaker Section

Community consisting of the Scheduled castes and Schedled frones-

constitute 30.32% of the total population (scheduled caste-333227, and

schedtribes-209701) The densit of population is 302 per sg, km, which is

more than the state average 276 per sg km. 65.30% of the total working

Population is dependent on agricnlture. There ase 7.83781 workers,

2.41058 are cultivators, 30.233 are tlousehold industry workers, and 2.41.787

are other workers. Highest population is found in davangere blok and the

lowest in jagalur block .

EDUCATION AND LITERACY

The progress of a nation a state or a district is dependent to education

of inhabitants. Knowledge acquired through proper education enables people

to take up modern methods of cultivation, industries, business etc, for

improving their socio- economic conditions. In fact Knowledge is a permanent,

powerful and precious asset. In urban areas education facilities are good but

in rural areas they are inadequate and not upto the work in quality. The more

the literacy rate the higher will be the level of economic achievement because

the approach of the people will be rational and result- oriented. The state has

made good progress in this field. The average literacy rate in the district is

67.40% which is more than the state average i.e.66.60% and our country i.e.

83

65.38% The rate of of literacy is more among males i.e. 76.40% than female

i.e. 58% (as per 2001 census)

WATER RESOURCES

Water plays an important role in the development of agricnture and in

the generation of power, which in turn is used in industries, agriculture,

households, transport etc. Rivers, welk, ponds lokes and rain are the sources

of water in the district.

RIVERS

The Tungha Bhadra perennial river is the main river of the dietrict.

Tungha of the Bhadra river flows on the western boundary of the district, while

croseing the tlonnali block with full force adjacent to harihar block .Bhadra is

another river that provides irrigation facility to four blocks

namely:honnali,channagiri,harihar and davanagere in the district there is a big

natural lake shanthisagar which has also become a major source of irrigation

to the new district.

OCCUPATION

Agriculture

Plantation and horticulture:

Sericulture:

Animal husbandry:

Industries and tertiary sector:

LAND HOLDING PATTERN

The smalls and marginal farms constituting around 87% of holding

haring 59% are whereas the other farms constitating 13 % are holding 41 % of

the area. However 62321 hectare of land is in the holding of 120074

farmers with less than one hectare of land 113.072 hectare of land is in the

holding of 80428 farmers with less than two hectare and above one hectare

122825 hectare of land is in the holding of 45593 farmers with less than Four

hectare and above two hectare 94999 hectare of land is in the holding of

16931 farmers with less than ten hectare and above four hectare and 23048

hectare of land is in the holding of 1694 farmers with more than ten hectare

84

FACTORS AFFECTING DEVELOPMENT OF RURAL ECONOMY

The various factors affecting the district rural economy and

development of various sectors are presented in the form of SWOT analysis

STRENGTH

Blessed with fertile

Healthy mix of all types of banking financial institutions with a wide net work

Four blocks having irrigation facility and assured rainfall

Enthusiastic district administration and local self-governments

Sample scope for development of all the sectors

District head quarter is strategically located and potentially blessed growth

centre.

Good network of roads and railways

Good network of educational institutions.

WEAKNESS

Two blocks are dependent on rainfall

40% of the target group are under DPAP needing special attention

Depletion of water resources in 2 blocks which are about to turn grey jaglur

and davanagere

Poor recovery of bank loans especially under government sponsored

programmes which dampen banks involvement

Aversion to adopt modern technology and farm mechanization

Inadequate power supply /erratic

Lock of infrastructural facilities like roads marketing facilities et

Lock of drive will to take up risk/ face challenges in rural areas and

Lock of enter perneurship

85

OPPORTUNITIES

Ample scope for developing farm practice such as horticulture/ animal

husbandry/floriculture etc.

opportunities and scope for high- technology projects to develop in arid

climate blocks

Scope for innovative scheme like vermiculture plastic mulching medicinal

and aromatic herbs modern nurseries.

Davangere could be developed as a technology centre and fast growing

urban conglomerate in northern Karnataka

scope for formation of SHGS in which the district is yet to take initiative

Ample scope for development of agro-based industries.

THREATS

Large scale miss – utilization of bank loans / lack of repayment ethics.

Fast depletion of ground water sources.

STRATEGIES TO OVERCOME WEAKNESSES OR THREATS:

Encouraging farmers to adopt improved modern agricultural technology

Improving of irrigation facilities through construction of new tanks or

deepening existing tanks by removing silt and irrigation dams harnessing

lift irrigation potential digging new bore – wells where ground water

potential is rich

Discouraging miss utilization of loan and encouraging repayment of loan

on time through moral suasion and some times severe action

Providing adequate and timely loan to new customers or new members and

to prompt repayers of lone.

strengthening the loan recovery machinery

Providing sufficient power to agriculture industries either by improving the

power supply or by installing generators.

Improving rural roads and increasing the frequency of bus trips

Improving the quality of education heath and sanitation and telephone

facilities in rural areas

86

PROFILE OF PCARD BANKS OF DAVANAGERE DISTRICT

ORIGIN

PCARD Banks Originally called Land mortgage banks, because these

banks were advancing long term credit to farmers on the mortgage of land.

Subsequently the objectives of these banks widened to include agricultural

and total developmental activities of farmers and rural people. Therefore,

PLDBs have been rechristened as primary co-operative Agriculture and Rural

Development Banks.

ESTABLISHMENT AND AREA OF OPERATION

1. The PCARD Banks of Channagiri Taluk:

In the channagiri taluk the PCARD Banks was registered on 10th Sept

1941 under the Mysore state co-operative societies Act of 1918, No RCS

1562. This bank covers six revenue blocks (Hoblies) viz, Basavapatna-1,

Basavapatna-2, Channagiri, Santhebennuru-1, Santhebennuru-2 and

Ubrani.

The area of operation of this bank is 1209.76 square kilometers with

total population, of 2,92,507 (2001 census) and it has to provide loans to

209 villages.

2. The PCARD Banks of Davanagere Taluk:

The PCARD Banks in Davanagere taluk was established on 29th

June 1938, (No RCS 1533, under Mysore state co-operative societies Act

of 1918.) the area of operation of the banks spread over three revenue

blocks, viz., Anagodu, Davangere and Mayakonda and covers 153 villages.

The bank serves a population of 6,02,523 (2001 census) in 994.10 square

kilometers.

3. The PCARD Banks of Harapanahalli Taluk:

This PCARD Banks was registered under co-operative societies Act

of 1918 on 31st Oct 1956. No RCS 1622. This bank covers the area of

1430.24 square kilometers having four revenue blocks namely Arasikere,

Chitgateri, Harapanahalli and Telagi. These blocks have a population of

2,68,793 (2001 census ). This bank extand credit to 80 villages.

87

4. The PCARD Banks of Harihara Taluk:

The Harihara Bank was established on 27th May 1941. Under

Mysore state co-operative societies Act 1918 NO.R.C.S. 1559. 75 villages

of this taluks are spread over two revenue blocks namely Harihara and

Malebennuru with a population of 2,45,654 (2001 census) the operational

jurisdiction of this bank is 498.66 square kilometers.

5. The PCARD Banks of Honnali Taluk:

The Honnali taluk PCARD Banks was started on 20th Oct 1938. RCS

No.1534. This bank covers six revenue blocks viz, Belaguthi, Govina Kovi-

1, Govina Kovi-2, Hoannli, Saswehalli-1 and Saswehalli-2 with an area of

887.94 square kilometers. The operational area of this bank is spread over

153 villages with a population of 2,22,592 (2001 census).

6. The PCARD Banks of Jagalur:

This bank was established on 17th Sept 1941. RCS No. 1563. This

bank provides credit to 140 villages in three blocks namely, Bilachodu,

Jagalur and Sokke with a total area of 955.27 Square Kilometers. The

Population of the taluk is 1,58,883 (2001 census).

88

Table 3.12

MEMBERSHIP OF PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks

Channagiri 6130 6617 6471 6586 6766 6880 6963 7120 7182 7225

PCARD Banks

Davanagere 9282 9423 9537 9753 10249 10481 10581 10663 10753 10832

PCARD Banks Jagalur

6088 6185 6284 6402 6580 6802 7129 7129 5731 5828

PCARD Banks

Harihara 8051 9076 9238 9271 9309 9461 9542 9676 9750 9898

PCARD Banks

Harpanahalli 7628 7981 8009 8261 8729 9099 9272 9481 9681 9898

PCARD Banks

Honnali 9240 9546 10068 10297 10597 10781 10917 11197 11382 11505

Source: Audit report of concerned PCARD Banks

89

Table 3.13

TALUK AND YEAR WISE BORROWING MEMBERS OF DAVANAGERE DISTRICT PCARD Banks

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks Channagiri

3654 3758 3885 3990 3677 3932 4747 4564 4261 3867

PCARD Banks Davanagere

3722 3624 3934 4751 3144 3234 3138 3901 3518 3010

PCARD Banks Jagalur

4219 4316 4415 4533 4711 4933 5260 5260 3861 3958

PCARD Banks Harihara

5923 6009 6153 6179 6206 6351 6413 6547 6621 6780

PCARD Banks Harpanahalli

4502 4755 4883 5135 5603 5973 6146 6355 6555 6772

PCARD Banks Honnali

7034 7326 7523 7752 8052 8236 8372 8652 8837 8960

Source: Audit report of concerned PCARD Banks

90

Table 3.14

PAID UP SHARE CAPITAL OF PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks Channagiri

151.18 160.37 162.64 163.43 151.28 151.50 147.61 145.61 135.43 121.54

PCARD Banks Davanagere

129.31 132.56 134.81 138.64 126.24 126.51 123.80 121.55 113.04 101.27

PCARD Banks Jagalur

42.56 39.91 39.04 39.84 35.13 37.77 39.68 37.91 36.76 34.48

PCARD Banks Harihara

107.35 102.71 100.33 102.59 87.88 89.57 87.85 89.20 95.08 95.74

PCARD Banks Harpanahalli

44.58 42.09 39.55 42.22 37.13 45.52 48.33 54.73 59.78 64.76

PCARD Banks Honnali

122.06 135.43 138.88 146.33 143.32 142.80 135.12 133.50 122.31 111.70

Source: Audit report of concerned PCARD Banks

91

Table 3.15

RESERVE FUND OF PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks Channagiri

83.31 84.74 86.56 88.18 158.98 227.74 262.90 241.68 252.69 257.36

PCARD Banks Davanagere

13.06 13.24 13.75 14.47 15.17 15.75 15.79 16.05 16.11 16.11

PCARD Banks Jagalur

113.51 125.68 129.72 144.17 115.30 88.45 90.89 73.60 77.67 62.70

PCARD Banks Harihara

107.35 108.37 131.79 192.78 68.66 226.63 228.36 224.66 216.23 223.87

PCARD Banks Harpanahalli

91.67 103.75 148.90 152.90 57.22 58.16 48.33 62.52 64.64 29.45

PCARD Banks Honnali

85.60 67.19 110.61 187.59 250.56 207.34 206.75 186.19 207.37 200.15

Source: Audit report of concerned PCARD Banks

92

Table 3.16

DEPOSITS OF PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks Channagiri

25.25 25.59 20.42 13.90 4.19 0.26 0.74 0.11 0.10 0.10

PCARD Banks Davanagere

73.63 56.01 25.05 17.38 8.48 3.66 2.36 1.30 1.30 1.30

PCARD Banks Jagalur

3.54 3.44 2.50 1.60 1.49 1.48 1.48 1.28 0.10 0.10

PCARD Banks Harihara

48.32 53.87 45.79 47.91 39.48 40.20 25.68 18.09 8.44 3.36

PCARD Banks Harpanahalli

81.45 84.81 84.85 77.59 92.47 95.51 105.15 145.43 235.54 337.97

PCARD Banks Honnali

121.01 130.00 118.59 126.85 123.40 67.62 52.98 45.26 46.86 20.31

Source: Audit report of concerned PCARD Banks

93

Table 3.17

LOAN AVAILED BY PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks

Channagiri

From KSARDB 2173.19 2314.83 2397.82 2347.20 2029.75 1811.06 1956.49 1755.24 1568.10 1293.57

From SC/ST Board

18.94 19.92 19.92 19.92 19.33 14.07 19.33 14.07 14.07 11.60

Total 2192.13 2334.75 2417.74 2367.12 2049.08 1825.13 1975.82 1769.31 1582.17 1305.17

PCARD Banks

Davanagere

From KSARDB 1746.51 1846.88 1937.38 2091.92 1414.17 1381.90 1320.71 1222.32 1031.15 862.78

From SC/ST Board

8.84 5.54 5.54 6.45 5.56 5.06 5.06 5.06 5.06 3.70

Total 1755.35 1852.42 1942.92 2098.37 1419.73 1386.96 1325.77 1227.38 1036.21 866.48

PCARD Banks Jagalur

From KSARDB 776.06 796.97 810.86 844.88 695.00 718.40 650.69 636.38 316.56 586.62

From SC/ST Board

2.45 2.45 2.45 2.45 2.45 2.06 1.26 1.26 1.26 1.26

Total 778.51 799.42 813.31 847.33 697.45 720.46 651.95 637.64 317.82 587.88

94

PCARD Banks

Harihara

From KSARDB 1188.52 1102.93 1101.84 1215.14 828.62 853.14 838.85 851.54 983.27 1069.14

From SC/ST Board

2.49 2.49 2.05 2.05 1.10 1.10 0.70 0.70 0.70 0.70

Total 1191.01 1105.42 1103.89 1217.19 829.72 854.24 839.55 852.24 983.97 1069.84

PCARD Banks

Harpanahalli

From KSARDB 720.06 703.09 699.57 781.77 485.07 609.56 587.82 623.75 688.03 606.80

From SC/ST Board

4.52 5.64 6.06 5.80 5.64 5.64 5.64 5.64 5.54 5.54

Total 724.58 708.73 705.63 787.57 490.71 615.2 593.46 629.39 693.57 612.34

PCARD Banks

Honnali

From KSARDB 1489.17 1561.28 1663.45 1459.43 1657.61 1603.73 1445.82 1482.66 1286.71 1004.23

From SC/ST Board

7.87 9.16 9.75 9.39 8.32 8.15 7.76 7.76 7.76 5.63

Total 1497.04 1570.44 1673.2 1468.82 1665.93 1611.88 1453.58 1490.42 1294.47 1009.86

Source: Audit report of concerned PCARD Banks

95

Table 3.18

LOAN GRANTED TO BORROWING MEMBERS BY PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Taluk PCARD Banks Channagiri

PCARD Banks Davanagere

PCARD Banks Jagalur

PCARD Banks Harihara

PCARD Banks Harpanahalli

PCARD Banks Honnali

Year LOAN GRANTED

2001-02 425.62 304.33 17.04 113.89 14.82 325.94

2002-03 326.52 241.33 39.92 82.06 22.97 5657.79

2003-04 153.1 134.64 22.71 83.19 14.87 169.38

2004-05 170.89 192.63 37.66 169.24 4443.74 251.74

2005-06 313.83 209.86 44.5 246.52 101.66 307.06

2006-07 246.73 199.33 107.88 225.38 171.58 263.49

2007-08 145.32 51.56 54.94 172.99 89.74 121.23

2008-09 170.44 188.94 83.17 259.86 140.05 200.61

2009-10 152.39 126.04 36.3 346.49 102.28 154.67

2010-11 63.81 54.89 57.74 254.45 124.63 109.98

Source: Audit report of concerned PCARD Banks

96

Loan collected from borrowing members:

The collection of loan in time is a primary factor of the bank in planning the loaning system. If the loan instalments become

overdue, the entire loaning structure gets diluted and weak, and it will have a harmful effect on the growth, profitability and stability

of the bank. Loan granting and collection represents two sides of the same coin. Loan granting without collection bear no fruits,

collection without granting has no seeds. These two aspects are interlinked interdependent and inseparable. The following table

gives the details of loan collected from borrowing members of PCARD Banks of Davanagere District.

Table 3.19

LOAN DEMAND, COLLECTION AND PERCENTAGE OF COLLECTION TO DEMAND BY PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Taluk PCARD Banks Channagiri

PCARD Banks Davanagere

PCARD Banks Jagalur

PCARD Banks Harihara

PCARD Banks Harpanahalli

PCARD Banks Honnali

Year LOAN GRANTED

2001-02

DEMAND 708.67 917.88 439.62 790.16 415.31 602.13

COLLECTION 368.31 385.90 109.34 371.47 142.15 315.70

PERCENTAGE 51.97 42.04 24.87 47.01 34.23 52.43

2002-03

DEMAND 906.15 923.99 452.68 805.37 389.54 62.79

COLLECTION 373.60 281.53 100.60 291.36 109.17 27.01

PERCENTAGE 41.23 30.47 22.22 36.18 28.03 43.02

2003-04

DEMAND 972.07 1004.47 440.47 803.65 375.27 767.59

COLLECTION 303.29 214.15 75.40 209.97 74.60 254.88

PERCENTAGE 31.20 21.32 17.12 26.13 19.88 33.21

2004-05

DEMAND 1156.14 1139.97 453.92 909.58 425.16 905.77

COLLECTION 223.36 153.10 35.49 134.32 52.24 224.97

PERCENTAGE 19.32 13.43 7.82 14.77 12.29 24.84

97

2005-06

DEMAND 1656.61 1640.07 590.76 1169.13 592.82 1224.60

COLLECTION 1088.46 1128.34 356.56 878.01 483.26 693.18

PERCENTAGE 65.70 68.80 60.38 75.10 81.52 56.60

2006-07

DEMAND 1161.94 970.99 367.06 595.61 216.89 1044.75

COLLECTION 386.69 301.54 103.81 188.53 72.07 328.47

PERCENTAGE 33.28 31.05 28.28 31.65 33.23 31.44

2007-08

DEMAND 1350.70 1038.56 357.51 704.56 286.15 1184.86

COLLECTION 551.25 266.89 114.00 275.65 151.29 502.18

PERCENTAGE 40.81 25.70 31.89 39.12 52.87 42.38

2008-09

DEMAND 1323.93 1139.55 323.35 653.56 256.01 1121.77

COLLECTION 503.87 370.06 68.32 327.80 121.19 420.08

PERCENTAGE 38.06 32.47 21.13 50.16 47.34 37.45

2009-10

DEMAND 1320.91 1088.04 340.88 636.29 277.58 1167.53

COLLECTION 491.64 356.44 90.12 298.29 168.82 494.67

PERCENTAGE 37.22 32.76 26.44 46.88 60.82 42.37

2010-11

DEMAND 1282.16 1053.96 326.60 647.65 267.29 1041.71

COLLECTION 517.65 430.83 136.29 339.28 188.71 526.41

PERCENTAGE 40.37 40.88 41.73 52.39 70.60 50.53

Source: Audit report of concerned PCARD Banks

98

Table 3.20

LOAN DUE FROM MEMBERS OF PCARD BANKS DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

PCARD Banks

Channagiri 2213.18 2355.23 2376.91 2380.59 2097.57 2111.64 1967.52 1846.40 1700.91 1449.82

PCARD Banks

Davanagere 1756.81 1831.89 1871.57 1931.09 1589.92 1614.30 1524.82 1404.58 1230.81 1041.67

PCARD Banks Jagalur

578.84 546.45 524.40 540.24 416.02 459.16 443.32 421.00 401.73 369.43

PCARD Banks

Harihara 1292.33 1248.71 1194.80 1266.80 1020.29 1113.92 1103.89 1086.36 1187.66 1239.99

PCARD Banks

Harpanahalli 628.53 576.15 551.36 501.76 375.07 494.69 510.68 544.20 506.33 516.47

PCARD Banks

Honnali 1663.44 1714.60 1771.94 2037.31 1889.82 1781.85 1714.76 1645.74 1439.52 1416.02

Source: Audit report of concerned PCARD Banks

99

Table 3.21

LOSS INCURRED BY PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

PCARD Banks Channagiri

PCARD Banks Davanagere

PCARD Banks Jagalur

PCARD Banks Harihara

PCARD Banks Harpanahalli

PCARD Banks Honnali

ACCUMULATED LOSS

2001-02 -25.00 -262.65 -330.60 -20.12 -232.11 +0.54

2002-03 -203.48 -262.65 -388.06 -56.03 -282.22 -45.02

2003-04 -205.10 -344.70 -436.39 -124.91 -376.27 -126.29

2004-05 -340.26 -470.65 -514.94 -259.88 -426.93 -338.62

2005-06 +5.37 -660.96 -391.18 +180.34 -149.79 -48.84

2006-07 -267.88 -36.52 -384.34 +96.07 -176.89 -154.19

2007-08 -263.66 -177.97 -380.69 +151.71 -163.25 -87.68

2008-09 -219.48 -232.76 -381.12 +197.66 -155.45 -69.16

2009-10 -207-74 -197.72 -402.31 +225.16 -149.64 -51.01

2010-11 -163.14 -168.28 -380.20 +258.43 -111.37 +42.97

Source: Audit report of concerned PCARD Banks

100

Non-Performing Assets of PCARD Banks in Davanagere District:

The Non-performing assets one of the most important problem faced by Primary Co-operative Agriculture and Rural

Development Banks. There are so many factors which contribute for increasing NPA in PCARD Banks as, fault credit appraisal,

lack of effective supervision, improper selection of borrowers and Government sponsored schemes are also responsible for

increasing over dues in PCARD Banks.

Table 3.22 NON-PERFORMING ASSETS OF PCARD BANKS IN DAVANAGERE DISTRICT

(` in Lakhs)

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

PCARD Banks Channagiri

145.10 179.09 183.54 514.61 277.95 224.21 360.12 340.20 508.01 608.75

PCARD Banks Davanagere

270.20 314.48 317.80 719.61 217.11 225.08 241.77 380.88 349.34 448.96

PCARD Banks Harihara

192.80 215.52 247.54 335.40 78.05 123.44 83.96 124.64 132.65 193.80

PCARD Banks Harapanahalli

102.03 117.17 262.14 179.16 73.71 42.11 39.20 63.13 56.89 35.16

PCARD Banks Honnali

201.05 196.51 253.87 374.84 264.02 223.88 190.43 233.48 432.96 398.24

PCARD Banks Jagajur

230.28 287.24 273.44 221.59 203.80 250.12 107.68 131.97 135.87 108.62

Source: Audit report of concerned PCARD Banks

During the year 2005-06 state government has waived interest on loan and loan Principal amount up to `25000 hence in that

year percentage of collection is more than the other years and also it is caused for decreased in NPA amount.