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Chapter-III

History and Progress of District Central Cooperative Bank

in India

The third chapter deals with history and Progress of district central

Cooperative banks in India, the chapter highlights on Origin of District

Central Cooperative Banks In India, Trends of Capital, Reserves and

Borrowings of DCCB`s in India, Deposit, Credit and CD ratio of

DCCB`s in India, Place of Maharashtra District Central Cooperative

Banks on Indian Scene and Origin and Progress of district central

cooperative banks in Marathwada Region.

Introduction:

The cooperative movement was started in India largely with a

view for providing agriculturists funds for agricultural operations at a

low rates of interest and protect them from the clutches of

moneylenders. The average Indian Agriculturists is the delight tiller of

the soil, whose diet is sparse, whose wants are few and whose standard

of living is perhaps the lowest in the civilized world. He lives on the

margin of subsistence very often he borrows not because he can but

because he must. His chronic indebtedness is the result of his poverty.

Without removing the factors, which contribute to his chronic poverty,

indebtedness cannot be liquidated. The increasing dependence of the

population on agriculture, the decline of rural industries which once

furnished subsidiary occupation, the oppressive burden of land taxation,

the uneconomic system of land tenure, dependence on money lender-

cum-trader for the sale of his produce and as a source of credit, and

other indisputable economic factors have contributed largely to the ever

growing economic ability of the agriculturist and his proverbial poverty.

And as the royal commission on agriculture remarked, "The Indian

104

peasant is born in debt, dies in debt and bequeath death". It is this debt

which has been the root cause of the degeneration of the peasantry in

India. It is here that the cooperative movement can and must come

forward to improve the economic conditions of the masses and increase

their income and purchasing power1.

The process of rural development is of vital importance in a

developing

country like India, where according to census 2001, near about 72.2

percent population is living in the rural areas. For increasing agricultural

production and implementing advanced methods in the agriculture

sector, the farmers need adequate credit for stimulating the tempo of

agricultural production. It is imperative that the farmers must be

provided with essential pre-requisites like fertilizers, improved seeds,

irrigation facilities, modern implements, marketing facilities etc. It is

quite natural that without adequate and timely credit they would not be

able to make use of these essential inputs. The use of greater and better

quantity of inputs would mean greater demand for rural credit Mr. Hohn

D. Black, professor of Economics, Harvard university has very rightly

stated", If we are all concerned about increasing total agricultural output

in the shorter period, we must provide credit first and foremost2.

Thus the government of India, in 1901 appointed a committee

under the chairmanship of sir Edward Low to study the questions of

starting cooperative credit societies in India. This committee also

recommended the establishment of cooperative societies on the

Raiffeisen model. The famine committee of 1901 also recommended the

setting up of mutual credit associations. Accordingly the cooperative

credit societies Act was passed in 1904. This act provided for the

establishment of credit societies both in rural and urban areas, for

providing credit facilities at cheap rates to small men living in the same

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locality. Rural societies were to be organised on the Raiffeisen model

while the urban societies were to be established on the Schulze

Delitzsch pattern. Provision was also made in the Act for the

appointment of registrars in every province. The modern cooperative

movement in India, thus may be said to have started with the passing of

this Act3, for providing agricultural and non-agricultural credit to rural

areas.

The cooperative movement could not achieve much success

before independence. After the attainment of independence in 1947,

there was marked change in the conception of governmental functions

and the idea of the welfare state began to influence all activities of the

government. The national endeavour has been to promote repaid and

balanced economic development. The nation has accepted the concept of

planned economy and to work for a socialistic pattern of society to

achieve this objective the cooperative movement has to play an

increasingly important role4.

History of cooperative movement around world

The cooperative movement began in Europe in the 19th century,

primarily in Britain and France, although The Shore Porters Society

claims to be one of the world's first cooperatives, being established in

Aberdeen in 1498 (although it has since demutualized to become a

private partnership).[1] The industrial revolution and the increasing

mechanism of the economy transformed society and threatened the

livelihoods of many workers. The concurrent labour and social

movements and the issues they attempted to address describe the climate

at the time.

The first documented consumer cooperative was founded in 1769,[2] in a

barely furnished cottage in Fenwick, East Ayrshire, when local weavers

manhandled a sack of oatmeal into John Walker's whitewashed front

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room and began selling the contents at a discount, forming the Fenwick

Weavers' Society.

In the decades that followed, several cooperatives or cooperative

societies formed including Lennoxtown Friendly Victualling Society,

founded in 1812.[3]

By 1830, there were several hundred co-operatives.[4] Some were

initially successful, but most cooperatives founded in the early 19th

century had failed by 1840.[5] However, Lockhurst Lane Industrial Co-

operative Society (founded in 1832 and now Heart of England Co-

operative Society), and Galashiels and Hawick Co-operative Societies

(1839 or earlier, merged with The Co-operative Group) still trade

today.[6][7]

It was not until 1844 when the Rochdale Society of Equitable Pioneers

established the ‘Rochdale Principles’ on which they ran their

cooperative, that the basis for development and growth of the modern

cooperative movement was established.[8]

Financially, credit unions were invented in Germany in the mid-19th

century, first by Franz Hermann Schulze-Delitzsch (1852, urban), then

by Friedrich Wilhelm Raiffeisen (1864, rural). While Schulze-Delitzsch

is chronologically earlier, Raiffeisen has proven more influential over

time – see history of credit unions. In Britain, the friendly society,

building society, and mutual savings bank were earlier forms of similar

institutions.

The English CWS and Co-operative Group

The Co-operative Group formed gradually over 140 years from the

merger of many independent retail societies, and their wholesale

societies and federations. In 1863, twenty years after the Rochdale

Pioneers opened their co-operative, the North of England Co-operative

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Society was launched by 300 individual co-ops across Yorkshire and

Lancashire. By 1872, it had become known as the Co-operative

Wholesale Society (CWS). Through the 20th century, smaller societies

merged with CWS, such as the Scottish Co-operative Wholesale Society

(1973) and the South Suburban Co-operative Society (1984).

By the 1990s, CWS's share of the market had declined considerably and

many came to doubt the viability of co-operative model. CWS sold its

factories to Andrew Regan in 1994. Regan returned in 1997 with a £1.2

billion bid for CWS. There were allegations of "carpet-bagging" - new

members who joined simply to make money from the sale - and more

seriously fraud and commercial leaks. After a lengthy battle, Regan's bid

was seen off and two senior CWS executives were dismissed and

imprisoned for fraud. Regan was cleared of charges. The episode

recharged CWS and its membership base. Tony Blair's Co-operative

Commission, chaired by John Monks, made major recommendations for

the co-operative movement, including the organisation and marketing of

the retail societies. It was in this climate that, in 2000, CWS merged

with the UK's second largest society, Co-operative Retail Services.

Its headquarters complex is situated on the north side of Manchester city

centre adjacent to the Manchester Victoria railway station. The complex

is made up of many different buildings with two notable tower blocks of

New Century House and the solar panel-clad CIS tower.

Other independent societies are part owners of the Group.

Representatives of the societies that part own the Group are elected to

the Group's national board. The Group manages The Co-operative brand

and the Co-operative Retail Trading Group (CRTG), which sources and

promotes goods for food stores.[10] There is a similar purchasing group

(CTTG) for co-operative travel agents.

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Co-operative Women's Guild

Alice Acland, the editor of the "Women's Corner" in the "Co-operative

News" publication, and Mary Lawrenson, a teacher, recognized the need

for a separate women's organization within the Cooperative Movement

and began organizing a "Woman's League for the Spread of Co-

operation" in 1883. This League formally met for the first time during

the 1883 Co-operative Congress in Edinburgh in a group of 50 women

and established Acland as its organizing secretary. By 1884 it had six

different branches with 195 members, and the League was renamed the

Women's Cooperative Guild.[11]

The Guild organized around working women's issues and expanding the

Cooperative Movement. It continued to publish articles advocating for

women's involvement in the Cooperative Movement in the "Women's

Corner," and later through its own publications such as "The importance

of women for the cooperative movement." The Guild also opened the

Sunderland cooperative store in 1902, which catered to poor working

class women. It engaged in many political campaigns concerning

women's health, women's suffrage and pacifism.[12] The organization

still exists today as the Co-operative Women's Guild and participates in

social justice activism.[13]

History of Co-operative Movement in India

Pre-independence era:

The co-operative movement in the Indian context in the pre-

independence era can be classified into four phases. They are- (a)

initiation stage (1904-1911), (b) modification stage (1912-1918), (c)

expansion stage (1919-1929) and (d) restructuring stage (1930-1946).

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(a) Initiation stage (1904-1911):

In olden days non- institutional agencies in the shape of money-lenders

were charging exorbitant rates of interest from the helpless peasants.

The situation was such that the farmers were forced to sell their

belongings to repay the debts. In some parts of the country especially in

Poona and Ahmednagar the farmers spearheaded an agitation against the

moneylenders.

Ultimately the government understood the miserable plight of the

farmers and passed three Acts viz, the Deccan Agriculture Relief Act

(1879), the Land Improvement Loan Act (1883) and the Agriculturists

Loan Act (1884).

During 1892, the Madras Government appointed Frederick Nicholson to

study the village banks organized on co-operative lines in Germany. On

his return he submitted a report. The name of the report was “Find

Raiffeissen”. In the report he suggested to establish co-operative

societies for supplying rural credit.

The Famine Commission of 1901 strongly recommended that in order to

prevent famine, agriculturists should be granted loans to improve

agriculture. By 1904, the Co-operative Society Act was passed.

Salient features of 1904 Act:

1. Rural-urban classification of societies was made. Rural co- operative

societies were to be organised on the basis of Raiffeissen Model where

liability was unlimited and loans were granted to the members only for

productive purposes. Urban credit societies were organised on the basis

of Shulze-delitizsch Model where liability was limited and the societies

also carried out certain non-credit functions.

2. Registrar was supposed to organise and control the societies.

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3. Loans could be given to members on personal or real (immovable)

security.

4. One-man, one vote was specified in the Act.

The working of this Act showed several defects-

1. There was no provision for setting up of non credit cooperative

societies in rural areas.

2. There was no central agency to supervise and supply funds.

3. The classification of societies into rural and urban was extremely

unscientific.

4. There was the need for re-organisation for payment of credits.

(b) Modification stage (1912-1918):

The shortcomings of the Act of 1904 were rectified by enacting another

Co-operative Societies Act of 1912. The new Act provided legal

protection to all types of co-operatives including central financing

agencies and supervising unions. The distinction between rural and

urban societies was given a new focus.

The liability was limited in the case of primary societies and unlimited

for central societies. Since this Act provided for the registration of all

types of co-operative societies, it led to the emergence of rural co-

operatives both on credit front and non-credit front, but this growth was

uneven spatially.

In 1914 the Government appointed a committee under the chairmanship

of Sir Edward Mac Lagan to review the progress of co-operative

movement. The report of the committee came out in 1915.

The committee observed that illiteracy and ignorance of the masses,

misappropriation of funds, rampant nepotism, inordinate delay in

granting loans and viewing co-operative movement as a Government

movement were some of the glaring defects of the co-operative

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movement. These observations prompted Mac Lagan to offer the

following suggestions for the effective and smooth functioning of the

co-operative societies.

1. All members should be made aware of the co-operative principles.

2. Honesty should be the main criterion for taking loan.

3. Dealings should be strictly confined to the members only.

4. Applications should be carefully scrutinized before advancing loan

and there should be careful follow up for effective utilization of loan.

6. One member-one vote should be strictly followed.

7. Capital should be raised as far as possible from the savings of the

members only.

8. Punctual repayment should be insisted.

These recommendations could not be put into practice because of the 1st

World War.

(c) Expansion stage (1919-29):

Under the Montague- Chelmsford Act of 1919, co-operation became a

provincial subject which gave further impetus to the movement. Various

states passed their own Acts to make co-operative movement a

successful one. The membership of the co-operative societies increased

considerably during this period.

The same period also witnessed the birth of co-operative land mortgage

banks first in Punjab and subsequently land mortgage banks were

registered in Madras (1925) and Bomaby (1926). The year 1929

witnessed a worldwide economic depression.

The prices of the agricultural commodities fell down to a remarkable

extent. Unemployment along with other economic crises grew up. The

agriculturists could not pay back the loans of the societies. Over dues

increased unexpectedly and co-operative societies were ruined.

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(d) Restructuring stage (1930-1946):

Various enquiry committees, viz., Vijayaraghava Charya Committee in

Madras, Rehabilitation Enquiry Committees of Travancore and Mysore,

Kale Committee in Gwalior, Mehta and Bhansali Committee in Bombay

and Wace Committee in Punjab etc. were appointed for examining the

possibilities of restructuring the co-operative societies.

The Indian Central Banking Enquiry Committee (1931) highlighted the

glaring lacunae, particularly with reference to undue delays and

inadequacy of credit. Meanwhile the Madras Co-operative Societies Act

of 1932 and the Madras Co-operative Land Mortgage Banks Act of

1934 came into force with the former aiming at the growth of co-

operative movement, while the latter for developing the long term credit.

In 1937 the Congress Ministry came to power in many states and

revived interest in organising the cooperative movement. They

conducted enquiries about the failure of the cooperative societies and

made provisions for payment of overdues.

Then came the Second World War. The abnormal conditions created by

Second World War led to far-reaching developments in the co-operative

movement. Prices of agricultural commodities began to rise. The rural

farmer got extra economic gains. Non- credit societies like marketing,

production and consumer societies increased rapidly.

The working capital of co-operative societies also increased. The co-

operative societies gained in strength and vigour. The All India Co-

operative Planning Committee in 1945 also gave a Philip to the growth

of co-operative movement.

India since the country's independence from Britain in 1947 has seen a

huge growth in Cooperative societies serving mainly the farming sector.

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For example, most of the sugar production in India takes place at mills

owned by local cooperative societies. The members of the society

include all farmers, small and large, supplying sugarcane to the mill.[1]

Over the last fifty years, the local sugar mills have played a crucial part

in encouraging political participation and as a stepping stone for aspiring

politicians.[2]

This is particularly true in the state of Maharashtra where a large

number of politicians belonging to the Congress party or NCP had ties

to sugar cooperatives from their local area. Unfortunately, due to a

policy of "profits for the company but losses to be borne by the

government", has made a number of these operations inefficient.[3]

Cooperatives also play a great part in dairy marketing as well as

banking. Cooperative banks in India serve both the rural and urban

societies. Just like the Sugar companies, these institutions serve as the

power base for local politicians.

Verghese Kurien in his book "I too had a dream" details the problems,

solutions and experiences he had in setting up and developing the dairy

co-operative society now known as Amul.

Origin of District Central Cooperative Banks In Ind ia:

The Cooperative Societies Act was passed in 1904, there was no

provision for the formation of central bank. The sponsors of the

cooperative movement expected that the rural credit societies would be

able to attract substantial deposits from the members and well to do

sections of the village community and their savings would be available

to meet the needs of the needy in the villages. It was also contemplated

that any deficiency in the funds would be made good by loans from the

government. But these expectations of the promoters did not materialize.

The isolated and poorly managed societies failed, in the first instance, to

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tap funds from the more affluent, secondly they could not augment their

own capital base by encouraging thrift and self help among their

members5.

The movement gained popularity, the societies started increasing

in number by leaps and bounds. But the financial arrangements

envisaged did not yield enough money to meet their growing

requirements. The Cooperative Societies Act was, therefore, amended in

1912 with a view to permitting registration of central societies. It may

be of interest to note that even before the amendment, some central

banks had been established to cater to the financial needs of the primary

societies. The first central bank was registered in Uttar Pradesh in 1906

as a primary society. But the first perfect central bank in the modern

sense saw the light of the day in the farmer central provinces and Berar.

In Rajsthan, the first central cooperative bank was started in 1910 at

Ajmer6.

But there was no provision for formation of central cooperative

banks prior to 1912. It was in the year 1912 that an Act, relating to

cooperative societies provided for the formation of central cooperative

banks. The all India Rural Credit Survey Committee endorsed the views

expressed by this Reserve Banks standing advisory committee on

agricultural credit, that there should be only one central bank for each

district, but if, however, other conditions, justified, the formation of a

bank for a region smaller than a district, there should be no objection to

that. In view of the existence of more than one central bank in a district

which did not conform to the standard, the committee strongly

recommended that schemes of amalgamation must be introduced in all

states almost on a compulsory basis and the minimum standards in

regard to owned capital and working capital of the district central banks

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were also agreed to paid up share capital and reserves about Rs.3 lakhs

and working capital of Rs.20 to 25 lakhs7.

The central bank has passed through several phases of expansion,

stagnation and revival from their inception to the dawn of the planning

era. Their progresses made during the war period central cooperative

banks in many parts of the country were weak and needed

rationalization. The all India Rural Credit Survey Committee pointed out

that, "The central cooperative banks in most states are extremely

unsatisfactory institutions. It is therefore, important to draw up for each

state plans for the rationalization and strengthening of central

cooperative banks in several of their aspects including financial and the

administrative in several stages. However, the banks have made rapid

progress with active support of the government and the Reserve Bank of

India and state cooperative bank. Now, they have banker of central

cooperative banks and such acts as lender of last resort8.

History of Cooperative Banking In India:

The cooperative history in India may be traced back to year 1904,

in which Cooperative Societies Act was passed. There were no

provisions for the formation of central bank. The sponsors of the

cooperative movement expected that the rural credit societies would be

able to attract substantial deposits from the members and well to do

section of the village community and their savings would be available to

meet the needs of the needy in the village. It was also contemplated that

any deficiency in the funds would be made good by loans from the

government. But these expectations of the promoters did not materialize.

The isolated and poorly managed societies failed, for instance, to tap

fund from the more affluent, secondly they could not augment their own

capital base by encouraging thrift and self help among their members.

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As the movement gained in popularity, the societies started increasing in

number by leaps and bounds. But the financial arrangements envisaged

did not yield enough money to meet their growing requirements. The

Cooperative Societies Act was, therefore, amended in 1912 with a view

to permitting registration of central societies. It may be of interest to

note that even before the amendments, some central banks had been

established to cater to the financial needs of the primary societies. First

central cooperative bank was started in 1910 at Ajmer. But the revised

act stimulated the growth of the central financing agencies and within a

few year a large number of such bank were established, the period from

1906 to 1918 may be called the period of origin of the central banks in

various parts of the country. The decade from 1919 to 1929, which was

roughly to period between the end of the first war and the onset of the

world-depression, was marked by the expansion of cooperative banking

system. The number of central cooperative banks increased from 1919-

20 to 1929-30 while there members and working capital increased. The

war period provided a great fillip to cooperative banking in India. There

was a substantial increase in the owned funds and working capital of

these banks. The position of the central cooperative banks was a general

improvement in financial as a result of war9. Therefore the cooperative

credit societies in India are very important because they accepted three-

tire structure of cooperative credit societies.

Sources of Rural Credit In India:

There are two sources of rural credit in India10.

1. Non-Institutional Sources:

Before the planning in India, rural people were dependent for

their credit needs on non-institutional sources or private agencies. Non-

institutional sources or private sources, include money lenders,

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commission agents, traders, landlords, relatives. In rural areas, the

farmers largely depend upon the moneylenders for their credit

requirement. Among all the sources of rural credit, moneylender is the

most important and dominants source in the rural areas. According to

the all India Rural Credit Survey Committee 1954, the percentage of

rural credit provided by the moneylenders was 70 among all the sources

of rural credit. But there are many serious defects of non-institutional

sources of rural credit.

2. Institutional Sources:

Institutional sources consist of government, commercial banks,

cooperative banks and the regional rural banks. The needs for

institutions in rural credit areas are due to inadequacy of private

agencies to provide credit to agriculture. Moreover private rural credit is

exploitative and expensive. The rural credit co-operative has also played

an important role in providing credit to the agricultural sector.

Central Co-operative Banking And Banks Union:

The original scheme of cooperation provided for organisation of

primary agricultural credit societies at the village level with a view to

reduce the exploitation of poor peasants by the private money-lenders. It

did not contemplate the organisation of federal societies to function as

financing agencies for the village primaries, which in most cases could

not mobilize adequate financial resources through share capital from

members, and thus failed to meet the even increasing demand for

agricultural credit by farmers. However, this did not prove to be a

healthy and conductive arrangement for primary cooperative societies

which did not have any say in the management of such banks except

having the relationship of a borrower and lender primaries in surplus

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areas having excess thrift deposits could not find proper channel for

proper utilization of surplus resources to meet the demands of societies

in deficit areas. Hence, there was the need for a balancing centre.

Having failed to get proper financial support and guidance from

appropriate agency, they felt the necessity of having their own

arrangements with a right to participate in the shares and the

management of their financing agency etc. All problems, facing the

primaries the central government passed another cooperative Act of

1912. These act provided for the organisation of higher federal societies.

Taking advantage of the new enactment, primary cooperative credit

societies in compact areas federated themselves into banking unions and

formed central cooperative banks which in view of their financial

strength and management competence were expected to mobilize funds

from urban areas to village societies most of whom were starting for

want of funds. Thus the central cooperative banks as federal institutions

formed, composed and governed by primary societies them selves, came

to be organised all over the country11.

Central Banks:

The district central banks with mixed constitution organised on

the lines suggested by the Maclagan committee. These banks consist of

societies and individuals both, in which societies are not only assigned

certain proportion of the shares but also are given separate

representation on the board of directors. The committee further observed

that if majority was secured for the societies on the board, the dividends

were limited to a reasonable rate and the individuals shareholders were

prevented from enjoying an under advantage; that type of banks would

be well suited to the then conditions. But sometime, they recommended

for making provisions which should enable the banks by degrees to

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become more co-operative by diminishing the number of it's individual

shareholders either by lapse or by redeeming their shares or by

confining fresh issues to societies only a great majority of central bank

today conform to this pattern. The instance of the committee of direction

of the All India Rural Credit Survey the process of gradual elimination

of the individual shareholders has been introduced in most of the banks

in a bid to make them fully cooperative in character12.

Progress of District Central Cooperative Banks In India:

The progress of district central cooperative bank in India has been

divided into two period i.e. first period are 1950-51 to 1989-90, before

new economic policy and second period after new economic policy i.e.

1990-91 to 2004-05. These periods are discussed below.

Progress of district central cooperative banks in India before New

Economic Policy (1950-51 to 1989-90):

In this period, large changes in India i.e. the advent of

planning in

1951 after independence however the situation had changed our national

leaders were firmly in favour of a strong cooperative movement as

peoples movement to transform the rural economy. Cooperation was not

only visualized as a way of life for the people but also a foundation for

economic and political democracy. Table No. 3.1 indicates an overall

trends of the growth of district central cooperative banks in India. The

Table No. 3.1 depicts the following progress of district central

cooperative banks in India from 1950-51 to 1989-90.

On the eve of the first five year plan 1950-51, there were 505

district central cooperative banks in India, which decreased up to 349 in

1989-90. The number of district central cooperative banks in India was

120

decreased 69.11 times during the period 1950-51 to 1989-90. The

number of district central cooperative banks in India has increased in

1984-85. On an average annual increase of district central cooperative

bank was 387 in India an average percentage in growth in number of

district central cooperative bank shows negative trends (-4.87 percent)

during the period from 1950-51 to 1989-90.

The share capital of district central cooperative banks in India was

Rs.04 crores in first five-year plan. It was increased up to Rs.903 crores

in 1989-90. The share capital of district central cooperative banks, in

India shows the continuous increasing trends during the period from

1950-51 to 1989-90. With an average annual increase in Share capital

was Rs.249.63 crores and annual average growth rate in share capital of

these banks was 17.31 percent during the period from 1950-51 to 1989-

90.

The reserves of district central cooperative banks in India were

Rs.04 crores in the starting of first five-year plan, which increased up to

Rs.830 lakhs in the 1989-90. The reserves of these banks were

continuously raising

during the period from 1950-51 to 1989-90. On an annual average in

reserve of district central cooperative bank was Rs.209.38 crores with an

average increasing percentage of growth in reserve was 120.57 during

the period before new economic policy.

The owned funds of district central cooperative banks in India

were Rs.08 crores in 1950-51, which increased up to Rs.1734 crores in

1989-90. On an annual average in owned funds of these banks was

Rs.461.25 crores. With an annual average growth rate in owned funds

was 122.09 percent during the period from 1950-51 to 1989-90. The

owned funds of these banks has continuously raising trends during the

period.

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The deposits of district central cooperative banks in India were

Rs.38 crores in 1950-51, which increased up to Rs.9338 in 1989-90. The

deposits of these banks were continuously raising positive trends during

the period 1950-51 to 1989-90. On an average annual increasing in

deposits was Rs.2061.25 crores with an average growth in deposits of

district central cooperative banks in India was 124.27 percent during the

period 1950-51 to 1989-90. It means, district central cooperative banks

have created the faith of public in cooperative banking business.

The working capital of district central cooperative banks in India

was Rs.55crores in 1950-51, which was increased up to Rs.16542 crores

in 1989-90, with an average, annual growth in working capital was

136.25, percent during the study period. The growth in working capital

of these banks was continuous and positive raising during the period

1950-51 to 1989-90. The maximum growth was 159.35 percent in 1973-

74 and minimum was 69.9 percent in 1955-56 during the period from

1950-51 to 1989-90.

The borrowings of district central cooperative banks in India

were

Rs.10 crores in 1950-51, which increased up to Rs.5470 crores in 1989-

90. The borrowings of these banks were increased with an average

growth rate of 172.90 percent during this period. The growth in

borrowing was shown continuous and positive on an average borrowing

of this bank was Rs.1182.38 crores during the period from 1950-51 to

1989-90.

The loans and advances of these banks were Rs.34 crores in 1950-

51, which increased to Rs.10673 crores in 1989-90 on an average

growth in loans and advances was 134.75 percent during the study

period. The growth in loans and advances outstanding was continuously

122

increased during this period. The highest growth was 165.53 percent and

lowest was 70.59 percent during the period from 1950-51 to 1989-90.

The overdues of district central cooperative bank in India were

Rs.3 crores in 1950-51, which increased to Rs.3528 crores in 1989-90.

On an average overdues of these bank was Rs.790.88 crores. The

overdues of these banks were increased with an average growth rate of

185.29 percent. On an average percentage of overdues to outstanding

loans of these banks was only 0.94 percent, which, is good sign of

efficient management of district central cooperative banks.

The district central cooperative banks in India was found that a

positive growth in all parameters of their growth during 1950-51 to

1989-90. During the period, the share capital, reserve, borrowing, loans

& advances, deposits, owned funds and working capital has been shown

continuous positive trends during the study period from 1950-51 to

1989-90 and the recovery of district central cooperative banks in India

was found satisfactory during the period from 1950-51 to 1989-90.

Growth of District Central Cooperative Banks In India After New

Economic Policy (1990-91 to 2004-05):

In this period large changes in India took place. India has

accepted new economic policy in 1991 and the agreement established

the World Trade Organization (WTO) came into force on January

o1.1995, In many ways, the WTO is different from its predecessors, the

general agreement on trade and Tariff (GATT). WTO members have to

accept all obligations of GATT and other relevant agreements. In this

period an attempt is made here to study the trends in growth of district

central cooperative banks by taking quantitative and qualitative

123

indicators from 1990-91 to 2004-05. Table No.3.2 reveals the trends in

growth of district central cooperative banks in India from 1990-91 to

2004-05.

1. Number of Banks:

The number of banks has shown quantitative growth, can be

measured in number of district central cooperative banks in India from

the period of 1990-91 to 2004-05. The overall trends in number of banks

were increased during the study period except in 1991-92 and 2002-03.

In this year growth in number of banks shows negative trends. The

number of district central cooperative banks in India was 353 in 1990-

91, which increased, up to 368 in 2004-05. On an average increase was

0.30 percent per annum during the study period. The maximum numbers

of district central cooperative banks in India was 1.99 percent in 1993-

94 and remaining whole period numbers of district central cooperative

banks was found below 1.00 percent with an average 364 district central

cooperative banks in India were working during the period.

2. Share Capital:

The paid up share capital of district central cooperative banks in

India was Rs.985 crores in 1990-91, which increased to Rs.4115 crores

in 2004-05. The increase in share capital was 4.18 times in 15

years. On an average growth was 10.82 percent and growth in shares

capital showed continuously positive during the period from 1990-

91 to 2004-05. The

increase in share capital was due to increase in membership of district

central cooperative banks throughout the period. The maximum increase

in growth of this bank was 17.40 percent in 1988-99 and minimum was

5.50 percent in 1993-94 during the study period.

124

3. Reserve:

In 1990-91, the reserves were Rs.1096 crores, which increased to

Rs.12673 crores in 2004-05. On an average annual growth rate of

reserve was 23.55 percent. The increase in reserve of this bank was

11.56 times during the study period. The reserve showed continuous

rising trend during the study period except 1993-94 and 1997-98. The

maximum growth in reserve was (163.97 percent) due to the increase in

profit and minimum was (-18.47 percent) due to increase in loss during

the study period.

4. Owned Funds:

The owned funds of district central cooperative banks in India

were Rs.2081 crores in 1990-91, which increased to Rs.16788 crores in

2004-05. The increase in owned funds of this bank was 8.07 times

during the study period. On an average annual growth in owned funds

was 17.80 percent. The owned funds of these banks showed continuous

positive trend during study period except 1993-94 and 1997-98. The

maximum growth in owned funds of these banks was 95.13 percent in

1996-97 due to increase reserve and minimum was (-9.63 percent) due

to decrease reserves during the study period.

5. Deposits:

In 1990-91, the deposits of these banks were Rs.10357 crores,

which increased to Rs.80476 crores in 2004-05. The increase in deposits

was 7.77 times during the study period, with an annual average growth

rate in deposits was 16.00 percent. The increase in deposits showed

continuously positive trend during the study period due to faith of public

on working of district central cooperative banks in India. The maximum

125

growth rate in deposits of these banks was 31.98 percent in 1996-97 and

minimum was 4.79 percent in 2004-05 during the study period.

6. Working capital:

The working capital of district central cooperative banks in India

was Rs.17986 crores in 1990-91, which increased to Rs.122633 crores

in 2004-05. The working capital of these banks was increased 6.82

times during the study period. With an average annual growth in

working capital was 15.12 percent on an average working capital was

Rs.63927 crores. The working capital of these banks shows continuous

rising trend during the study period. The substantial increase in working

capital is an indication of growth in volume of business of district

central cooperative banks due to increase in membership, owned funds

and deposits during the study period.

7. Borrowings:

In 1990-91, borrowings of district central cooperative banks were

Rs.5548 crores which increased to Rs.21557 crores in 2004-05. The

borrowing of these banks show continuous rising trend during the study

period. On an average growth in borrowing was 10.34 percent during

the study period. The highest growth in borrowings of these banks was

Rs.24.61 percent in 1994-95 and lowest was Rs.0.48 percent in 1993-94.

The percentage of borrowing to working capital of district central

cooperative banks in India was 20.11 percent. It means these banks are

low dependent upon external source of funds.

8. Loans and Advances:

The loans and advances of district central cooperative banks in

India

126

were Rs.12070 crores in 1990-91, which increased to Rs.72090 crores in

2004-05. The loans and advances of these banks were increased 5.97

times during the study period. On an average annual growth in

borrowing was 10.34 percent during the study period. The loans and

advances of these banks were found continuously rising trends during

the study period. With an average loans and advances of this banks was

13.78 percent during the study period. The percentage of overdues to

loans and advances was 25.99 percent during the study period. It means

the district central cooperative banks in India could not recover the loans

and advance during the study period.

9. Overdues:

In end of the years 1990-91, the overdues of district central

cooperative banks in India were Rs.3155 crores, which raised to

Rs.18025 crores in 2004-05. The amount of overdues increased by 5.71

times. On an average annual growth in overdues of these banks was

13.66 percent during the study period. The growth in overdues shows

continuously rising trends except 1998-99 and 2004-05. The percentage

of overdues to loans and advances was found more. It was not healthy

sign progress of district central cooperative banks in India during the

study period from 1990-91 to 2004-05.

127

Table No:-3.1

Growth of DCCB`s in India

Year No of DCCBs No of offices Total Membership

2001-02 371 13068 1837433

2002-03 366 (-1.35) 12956(0.86) 2183731 (18.85)

2003-04 368 (-0.81) 12933 (-1.03) 2149071 (16.96)

2004-05 368 (-0.81) 12858 (-1.61) 2145876(16.78)

2005-06 370 (-0.27) 12991 (-0.59) 2267850 (23.42)

2006-07 371 (0.00) 12928 (-1.07) 3264849 (77.68)

2007-08 372 (0.27) 13151 (0.63) 3396881 (84.87)

2008-09 373 (0.54) 13233 (1.26) 3528802 (92.05)

2009-10 372 (0.27) 13181 (0.86) 3975660 (116.37)

2010-11 371 (0.00) 13327 (1.98) 3146070 (71.22)

Mean 370..2 13062.6 1837433

S.D 2.20 154.22 748736.78

CV 0.59 1.18 26.84

Source; NAFSCOB Reports, Base Year; 2011-12

The above table reveals that, the growth of DCCBs in terms of

number of banks, Offices and Membership. In terms of number of banks

they have negative growth from 2002 to 06 and there is a fluctuating

from 2007 to 2011. Similarly number of offices also have decreased

growthup to 2006-07, from 2008-09 there is a positive fluctuating

growth. In case of membership in DCCBs have been increased to

116.37% with the membership of 3146070 (thousands) in 2009-10 when

compare to 2001-02 with the membership of 1837433 (thousands).

There is a decrease in membership in 2010-11 with 3146070 (thousands)

with a percentage of 71.22.

128

Table No:- 3.2

Trends of Capital, Reserves and Borrowings of DCCBs̀ in India (RS. IN LAKHS)

Year Capital Reserves Borrowings

Amount Trend Amount Trend Amount Trend

2001-02 338800 100 792982 100 1827605 100

2002-03 357680 105.57 967591 122.02 1923847 105.27

2003-04 381003 112.46 1120824 141.34 2112810 115.6

2004-05 411547 121.47 1267286 159.81 2155710 117.95

2005-06 451147 133.16 1408294 177.59 2320213 128.36

2006-07 509813 150.47 1550512 195.52 2794060 152.88

2007-08 582923 172.05 1643573 207.26 3053334 167.07

2008-09 607141 179.2 1780801 224.57 2847764 155.82

2009-10 777653 229.53 2013296 253.88 3035483 166.09

2010-11 725768 214.22 2069202 260.94 3910116 213.95

Mean 514347.5 151.81 1461436.1 184.293 2598094.2 142.29

S.D 154584.3 45.63 430023.24 54.23 647849.13 35.38

CV 30.05 30.05 29.42 29.42 24.95 24.95

Source; NAFSCOB Reports, Base Year; 2011-12

129

Table No:-3.3

Deposit, Credit and CD ratio of DCCB`s in India

(RS.IN LAKHS)

Year Deposits Loans outstanding CD Ratio

2001-02 6679721 5050214 75.6

2002-03 7239443 (1.08) 5282006 (1.04) 72.96

2003-04 7688452 (1.15) 5485187 (1.08) 71.34

2004-05 8049350 (1.20) 6155483 (1.22) 76.47

2005-06 8665222(1.30) 6548656(1.30) 75.57

2006-07 9218136(1.38) 8545975 (1.69) 92.71

2007-08 10599372 (1.59) 9597423 (1.90) 90.55

2008-09 12372182 (1.85) 9720682 (1.92) 78.67

2009-10 14630314 (2.19) 10499715(2.08) 71.76

2010-11 16130882 (2.41) 12279548 (2.43) 76.12

Mean 10127307.4 7916488.9 78.17

S.D 3249582.96 2543523.72 7.46

C.V 32.08 32.13 9.54

Source; NAFSCOB Reports

130

Chart No:-3.1

Deposit and Loans outstanding Position in DCCB`s

The above table has been depicted that during the 2001-02 the

Deposits are registered Rs. 6679721 Lakhs it has been increased to

Rs.16130882 Lakhs in 2010-11. The mobilization of deposits have been

increased gradually during the study period, and the average deposits

mobilized by bank is 10127307.4. Whereas credit deployment of

DCCBs in India is just Rs. 5050214 Lakhs in 2001-02, it has been

increased to 2.43 times with an amount of 12279548 Lakhs in the year

2010-11. The average credit issued by the banks is Rs. 7916488.9 lakhs.

These banks are Service oriented institutions which supply Credits to

industry, trade and commerce, agriculture in the form of loans and

advances for their smooth functioning. While, the proportion of the

Credit deployed to the deposit mobilized, popularly known as C/D

Ration, is one of the Parameter to assess the performance of a bank. The

131

C/D Ratio of a bank in general, indicates the extent to which the

depositor’s money is invested in credit. The Credit Deposit Ratio of

DCCBs from 2002 to 2011 is shown a fluctuating trend. The highest

C/D Ratio of the banks estimated with 92.71% in 2006-07 and the

lowest C/D Ratio 71.76% is recorded in the year 2009-10. The average

C/D ratio during the study period 78.17%. with a variance of 9.54% .

The S.D is 7.46 which is very less it indicates high degree of uniformity

of observations as well as homogeneity of the series.

Table No:-3.4

Cost of Management Per Employee and Percentage of Cost of

Management to working

(RS. IN LAKHS)

Working Capital

Cost of Mat

No. of employees

.Cost of Mg per Employee

Cost of Mol To & orkmo Capital

10202039 2.89834 113088 156 184 10909239 323702 110078 194 196 11890531 334579 110058 3M 181 12263289 368012 109124 137 3 13124185 301304 105885 184 129 14608363 377984 91768 412 159 16813752 374876 90035 4.16 123 18403787 422724 89259 4.74 2.3 20691844 443737 87554 5.07 114 23543070 530745 87922 6.04 125 15245009.9 376749.7 99477.7 188 154 4475134.98 73208.75 10915.07 114 0.34 2935 19.43 10.97 29.32 1121 Source; NAFSCOB Reports

Cost of Management of District Central Co-operative Banks

includes salaries and other operating expenses. It is a parameter of the

132

bank to measure the efficiency, the cost of management per employee

decreases it is good sign, the bank is utilizing its resources effectively. If

it is increases we can say that the bank is not properly utilizing its

resources and the performance that bank not good. The Cost of

management of DCCBs is shown in above table it revealed that the cost

management per employee has been increasing constantly year by year

from Rs.2.56 lakhs (2001-02) to 6.04 lakhs (2010-11). The average cost

of management is Rs.376749.7 lakhs and the S.D is 73208.75 with a

variance of 19.43%. The low degree of variance is recorded due to

decrease in employees in the DCCBs in India. With regards to the

percentage of cost management to working capital, it has been

fluctuating from 2.14% to 3% during the study period. The lowest

percentage was recorded in the year 2009-10 with 2.14% and the highest

percentage was recorded in the year 2004-05 with 3%.

133

Table No:- 3.5

Growth of Investment By India DCCB`s

(RS.IN LAKHS)

Year Investment % of Growth

2001-02 2831959 100.00

2002-03 3113877 109.95

2003-04 3567729 125.98

2004 -05 3478322 122.82

2005-06 3712739 131.10

2006-07 4 079112 144.04

2007-08 4 824662 170.36

2008-09 6104’ 124 215.54

2009-10 75624’ 46 267.03

2010-11 75624’ 46 267.03

Mean 4683741.6 165.38

S.D 1779879.52 62.85

C.V 38.00 38.00

Source; NAFSCOB Reports

134

Chart No:-3.2

Growth of Investment By DCCB`s

The District Central Co-operative Banks have been investing it’s

funds in different investment avenues. The details of investment by

DCCBs are investment in Govt. Securities, Other trustee securities,

purchasing the Debentures of Land Development Banks, fixed deposits

and other investments. The table- 5 depicted growth pattern of

investment by DCCBs, the investment in 2001-02 is Rs.2831959 lakhs

and it has been increased gradually year by year and recorded

Rs.7562446 lakhs in the year 2010-11with a growth rate 167.035

(267.03-100.00). The average investment of the bank is 4683741.6 lakhs

during the study period. The Standard Deviation is 1779879.52lakhs and

the C.V is 38.0 which is higher it indicates low degree of homogeneity

as well as heterogeneity of the series.

135

Place of Maharashtra District Central Cooperative Banks on Indian

Scene:

Place of Maharashtra district central cooperative banks on India

scenario is shown in table 3.3. The Maharashtra state ranks first in India

in terms of almost all performance parameters such as number of

branches, number of members, sources of funds i.e. share capital,

reserves owned funds, deposits, working capital and uses of funds i.e.

cash and banks balance, borrowings and loans and advances.

1. Number of Branches:

The total number of branches of district central cooperative

banks in

India was 12,858 of these 3748 branches are in Maharashtra. It

compares favorably with National average of 643 the number of

branches in Maharashtra was 29.15 percent, 10.28 percent in Uttar

Pradesh, and 7.97 percent in Gujarat of total branches, these three states

have formed near about 50 percent branches. It means Maharashtra state

this regard ranks first, Uttar Pradesh is second and Gujarat was third in

the formed of number of branches in India.

2. Membership:

The membership of district central cooperative banks in

Maharashtra was 114612 in 2005, in absolute terms contributing 5.34

percent of the total membership of all district central cooperative banks

in India. The national average of membership was 107294 and

Maharashtra had 0.94 times more membership than the National average

Maharashtra has sixth rank in membership of district central cooperative

banks in India, Andhra Pradesh has first ranks Madhya Pradesh has

136

second rank, Jammu and Kashmir has third rank, Bihar has fourth ranks

and Punjab has fifth rank respectively.

3. Share capital:

Maharashtra ranks first with share capital of Rs.99330 lakhs in

absolute terms and contributes towards 24.14 percent of total share

capital against national average of Rs.20577 lakhs. Further, Andhra

Pradesh ranks second with Rs.61290 lakhs (14.89 percent) and Tamil

Nadu ranks third with Rs.43959 lakhs (10.68 percent) of paid up share

capital Maharashtra, Andhra Pradesh and Tamil Nadu had near about 50

percent paid up share capital of district central cooperative banks in

different states of India.

4. Reserves:

The reserves of district central cooperative banks in Maharashtra

were Rs.413201 lakhs in 2005, in absolute terms contributing 32.61

percent of total reserves of all district central cooperative banks in India.

The national average of reserves was Rs.63364 lakhs and Maharashtra

had 0.15 times more reserves than national average of reserves in 2005.

Maharashtra ranks first with Rs.413201 lakhs (32.61 percent), Tamil

Nadu ranks second with Rs.139090 lakhs (10.98 percent) Gujarat ranks

third with Rs.115445 lakhs (9.11 percent) and Madhya Pradesh ranks

fourth with RS.92207 lakhs (7.28 percent) of reserves. These four states

had 59.98 percent reserves due to regional imbalanced growth of district

central cooperative banks in India.

5. Owned capital:

The total owned capital of district central cooperative banks in

Maharashtra was Rs.512531 lakhs in 2005 and sharing 30.53 percent of

137

total owned capital of district central cooperative banks in India. The

national average of owned capital was Rs.83942 lakhs, Maharashtra

ranks first followed by Tamil Nadu in second place with Rs.180349

lakhs, Andhra Pradesh in Third place with Rs.149646 lakhs and Gujarat

in fourth place with Rs.144510 lakhs.

6. Deposits:

The total deposits of district central cooperative banks in India

were RS.8049350 lakhs out of which district central cooperative banks

in Maharashtra mobilized Rs.2464092 lakhs as against the national

average of Rs.402467.50 lakhs. The Maharashtra district central

cooperative banks have contributed 30.61 percent of total deposits of

district central cooperative banks in India. The Maharashtra ranks first

followed by Tamil Nadu with Rs.729769 (9.07 percent) lakhs and

Gujarat at third ranks with Rs.649082 lakhs (8.06 percent) These three

states have 47.74 percent deposits of total national deposits with district

central cooperative banks in India.

7. Borrowings:

The borrowings of district central cooperative banks in

Maharashtra were Rs.223748 lakhs as against the national average of

Rs.107785.50 lakhs. The Maharashtra district central cooperative banks

have contributed 10.38 percent of total borrowings of district central

cooperative banks in India. Here again, Andhra Pradesh ranks first

followed by Tamil Nadu at second and Maharashtra at third place. It

means district central cooperative banks in Maharashtra gave more

preference to the internal sources of funds i.e. shares capital reserves

and deposits.

138

8. Working Capital:

The borrowing capital of district central cooperative banks in

Maharashtra was Rs.3389132 lakhs, against the national average of

Rs.61364.45 lakhs. The district central cooperative banks in

Maharashtra shares were 27.64 percent of total working capital. The

Maharashtra state ranks first with Rs.3389132 lakhs, Tamil Nadu ranks

second with Rs.1167612 lakhs and Gujarat ranks third with Rs.993067

lakhs in working capital of district central cooperative banks in India.

9. Cash and Bank Balance:

The cash and bank balance on 31.3.2005 were Rs.1,31,306

lakhs of district central cooperative banks in Maharashtra region against

the national average of Rs.41,500 lakhs in absolute terms. It accounts for

15.82 percent of the cash and bank balance with district central

cooperative bank in India. The Maharashtra state ranks second

maintained cash and bank balance Rs.131306 lakhs, Haryana ranks

first with Rs.137428 lakhs and Kerala ranks third with Rs.123753 lakhs

in the maintained of liquidity position.

10. Investment:

The investment of district central cooperative banks in India

were

Rs.3478322 lakhs out of which district central cooperative banks in

Maharashtra was Rs.1199074 lakhs as against the national average of

Rs.173916.10 lakhs. The Maharashtra district central cooperative banks

have contributed 34.47 percent of total investment of district central

cooperative banks in India. Here again Maharashtra ranks second with

139

Rs.1199074 lakhs, Tamil Nadu ranks first with Rs.2791631 lakhs and

Gujarat ranks third with Rs.332243 lakhs.

11. Loans and Advances:

The loan and advances as on 31.3.2005 were Rs.1396754 lakhs by

district central cooperative banks of Maharashtra against the national

average of Rs.326778.90 lakhs in absolute terms. It accounts for 21.37

percent of the total loans and advances outstanding with district central

cooperative banks in India. The district central cooperative banks in

Maharashtra had 0.23 times more loans and advances than the national

average of loans and advances. The Maharashtra state ranks first by

lending Rs.1396754 lakhs, Tamil Nadu ranks second with Rs.887372

lakhs, Punjab ranks fourth Rs.542688 lakhs in lending loans and

advances outstanding of total national loans and advances with district

central cooperative banks in India. This indicates imbalanced growth in

lending loans and advances in India due to imbalanced growth of district

central cooperative bank in India.

The district central cooperative banks in Maharashtra ranks first

in India in respects of numbers of branches, paid up share capital,

reserve funds owned funds, working capital, deposits and loans and

advances except the uses of funds in this funds Maharashtra had shown

sixth rank in membership, cash and bank balance ranks second,

borrowings ranks third & investment ranks second in these respects

were not shown in first ranks of Maharashtra. It can be concluded that

the there is imbalanced growth of district central cooperative banks in

India only three states like Maharashtra, Tamil Nadu Gujarat had more

than 50 percent contribution in all respect of district central cooperative

banks. The imbalance of progress of district central cooperative banks in

140

India must be balanced by given some incentives for their development

in undeveloped areas such as expansion of branches and membership of

district central cooperative banks in India.

Cooperative movement in Maharashtra

The state of Maharashtra occupies the most prominent position in

the economic and banking map of India. It is the most economically

advanced state in India. It contributes the largest share to national

income. It is most urbanized and industrial state in the country. It is also

the birthplace of co-operative credit movement in the country and

continues to have strong co-operative credit institutions, both at urban

and rural centers. Maharashtra has been a pioneer in the development of

Co-operative banking and continues to hold the top ranking position in

the field of Co-operative Banking in post-independence period.

Maharashtra has proved two outstanding co-operators, Shri. Vaikunthbai

Mehata and Prof. D.R. Gadgil, who shaped the co-operative movement

of this country. They introduced in the field of co-operative credit

innovations Crop loan system, credit for creditworthy framer and state

partnerships, which were later on unhesitatingly adopted by commercial

banks after their nationalization. The Maharashtra State Co-operative

Bank provided institutional leadership to the co-op-erative credit

movement in the country. The contribution of central co-operative banks

and primary agricultural co-operative societies has been in the range of

15 to 22 percent of the total assistance provided by these types of

institutional in the country. There are 31 District Central Co-operative

Banks in Maharashtra whose primary object is to provide for the credit

requirements of the Primary Credit societies. The first such secondary

level cooperative was registered in Mumbai in 1911 under the

Government of India Act, 1904. Since then these Central Banks have

141

laid the firm financial infrastructure for the co-operative movement in

Maharashtra. The DCCB as the name suggests has an area of operation

covering a single district. In any district, the banking system would

comprise Commercial Banks, Regional Rural Banks, Cooperative Banks

and other agencies like SFC, MFIs, Non Formal Credit institutions and

Non Banking Credit agencies. With the available resources and the

unique strengths of the DCCB, a market needs to be developed which is

appropriate, adequate and profitable.

District wise progress in sources of funds of district central

cooperative banks in Maharashtra state.

Districtwise progress in sources of funds of district central

cooperative banks in Maharashtra state is shown in Table No.3.4

According to growth of district central cooperative banks in India,

Maharashtra state ranks first in the sources of funds. But the progress of

district central cooperative banks in Maharashtra was unbalanced. Most

of the banks and their branches are found in Western Maharashtra and

Kokan region.

1. Number of Offices:

The total number of branches of district central cooperative

banks in Maharashtra was 3748 in 2005. Marathwada region has 741

offices, which are 19.77 percent of total offices of Maharashtra state.

Ahmednagar district ranks first (290 offices), Jalgaon district ranks

second (261), Satara district ranks third (241) and Pune district ranks

fourth (238) with respect to number of branches of district central

cooperative banks in Maharashtra. Gondia district has lowest number of

offices of district central cooperative banks.

142

2. Membership:

In the case of membership of district central cooperative banks in

Maharashtra were 114612 in 31.3.2005, Marathwada region has 14229

Membership which are 12.41 percent of total membership of

Maharashtra state. Mumbai district ranks first (11.60 percent) Pune

district ranks second (10.17 percent), Kolhapur district ranks third (8.43

percent) and Nasik district ranks fourth (7.46 percent) These four

districts have 37.66 percent membership due to district balanced growth

of district central cooperative banks in Maharashtra. Gadchiroli district

ranks at bottom in case of membership of district central cooperative

banks.

3. Share Capital:

The total share capital of district central cooperative banks in

Maharashtra was Rs.99330 lakhs in 2005. Of which Marathwada region

has Rs.21763 lakhs which are 21.90 percent of total share capital of

Maharashtra state. Pune district ranks first with share capital of Rs.9914

lakhs, followed by Kolhapur district (Rs.7460 lakhs), Solapur district

ranks third (Rs.6713 lakhs) and Jalgaon district ranks fourth (Rs.6659

lakhs) with respect of share capital of D.C.C. banks. Gadchiroli district

is at lowest in the case of share capital.

143

Table No:-3.6

District wise Progress in Sources of funds of District Central

Cooperative banks in Maharashtra state as on 31.03.2012

(Rs. In lakhs)

Sr. No.

Name of the district central

cooperative banks in the state

No. of offices

including head office

Membership Share capital

Reserve

1 Ahmednagar 290 6741 5653 19390 2 Akola 106 2482 2200 9999 3 Amravati 89 2980 2234 12018 4 Aurangabad 146 1628 4429 12429 5 Beed 68 2429 2182 8375 6 Bhandara 33 1179 747 2071 7 Buldhana 118 2679 2340 17719 8 Chandrapur 72 1820 1671 5074 9 Dhulia 113 3715 2253 11325 10 Gadchiroli 28 558 417 3081 11 Gondia 25 803 646 1819 12 Jalna 65 1406 1268 8863 13 Jalgaon 261 6997 6659 28482 14 Kolhapur 207 9665 7460 10099 15 Latur 104 1664 3133 8897 16 Mumbai 40 13296 3994 47393 17 Nagpur 90 2678 2352 22252 18 Nanded 145 2404 2904 29960 19 Nasik 213 8553 6317 16625 20 Osmanabad 101 2253 3957 12062 21 Parbhani 112 2445 3890 17039 22 Pune 238 11656 9914 19650 23 Raigad 50 1626 885 7687 24 Ratnagiri 69 1718 1667 2854 25 Sangli 220 4062 4570 8619 26 Satara 241 2804 3168 12764 27 Sholapur 212 6505 6713 14724 28 Sindhudurg 78 950 711 3013 29 Tahne 76 4373 989 25054 30 Yavatmal 83 1736 3173 6751 31 Wardha 55 807 834 7113 Total 3748 114612 99330 413201 Mean 121 3697 3204 13329

144

Table 3.6 Contd.

Sr. No.

Name of the district central cooperative banks in the state

Owned Funds Deposits Borrowings Working Capital

1 Ahmednagar 25043 181291 4300 219813 2 Akola 12199 57741 811 71741 3 Amravati 14252 34782 510 53295 4 Aurangabad 16858 57752 20308 113610 5 Beed 10557 38313 9986 61449 6 Bhandara 2818 22087 77 30162 7 Buldhana 20059 57351 4622 83687 8 Chandrapur 6745 49807 1376 59459 9 Dhulia 13578 52070 5547 81077 10 Gadchiroli 3498 17879 80 23470 11 Gondia 2465 17322 878 23645 12 Jalna 10131 15648 6398 26110 13 Jalgaon 35141 121396 1387 173460 14 Kolhapur 17559 163010 6127 198032 15 Latur 12030 46895 9220 82304 16 Mumbai 51387 216714 2497 285591 17 Nagpur 24604 82219 409 101751 18 Nanded 32864 56706 18334 113037 19 Nasik 22942 136684 33963 197744 20 Osmanabad 16019 43590 19709 89061 21 Parbhani 20929 43474 3821 70038 22 Pune 29564 256243 24453 326403 23 Raigad 8572 56742 933 70056 24 Ratnagiri 4521 42417 512 51840 25 Sangli 13189 111637 15022 154539 26 Satara 15932 123793 1648 147697 27 Sholapur 21437 126349 27261 180412 28 Sindhudurg 3724 40144 647 46542 29 Tahne 26043 115248 33 146896 30 Yavatmal 9924 46970 2827 66603 31 Wardha 7947 31818 52 39608 Total 512531 2464092 223748 3389132 Mean 16533 79487 7218 109327

Source : Basic data on performance of district central cooperative

banks,

National federation of state cooperative banks Ltd;

Mumbai, 2011-12.

145

4. Reserves:

In the case of reserves, Mumbai district ranks first with Rs.47393

lakhs, Nanded district of Marathwada ranks second (Rs.29960 lakhs)

Jalgaon district ranks third (Rs.28482 lakhs) and Thane district ranks

fourth (Rs.25054 lakhs). Gondia has lowest position (Rs.1819 lakhs) in

the case of reserves of district central cooperative banks.

5. Owned Funds:

The total owned funds of district central cooperative banks in

Maharashtra were Rs.512531 lakhs. Of these Rs.119388 lakhs were in

Marathwada region. The Marathwada has contribute 23.29 percent in

total owned funds of Maharashtra. Mumbai district ranks first (Rs.51387

lakhs) in the total owned funds followed by Jalgaon district (Rs.35141

lakhs), Nanded district ranks third (Rs.32864 lakhs), Pune district ranks

fourth (Rs.29564 lakhs) and Thane district ranks fifth (Rs.26043 lakhs)

with respect to owned funds of D.C.C. banks. Osmanabad district ranks

14th in case of owned funds.

6. Deposits:

In the case of deposits of district central cooperative banks in

Maharashtra were Rs.2464092 lakhs in the year 2004-05; out of which

Pune district mobilized Rs.256243 lakhs and ranks first; Mumbai district

ranks second with Rs.216714 lakhs, Ahmednagar district ranks third

with Rs.181291 lakhs, Kolhapur district ranks fourth (Rs.163010 lakhs)

and Solapur district ranks fifth (Rs.126349 lakhs) with respect of deposit

mobilization of D.C.C. banks. Among the all district in Marathwada

region, Aurangabad district mobilized highest deposits i.e.Rs.57752

lakhs against the state average of Rs.79487 lakhs. It accounts for 2.34

percent of total deposits of Maharashtra state D.C.C. banks and for

remaining district of Marathwada share is negligible as compared to

Maharashtra state. Aurangabad district ranks 9th with respect to deposits

as on 31.3.2005.

146

7. Borrowings:

The borrowings of district central cooperative banks in

Maharashtra were Rs.223748 lakhs; out of Rs.87776 lakhs in

Marathwada region. The Nasik district ranks first with Rs.33963 lakhs,

followed by Solapur district Rs.27261 lakhs, Pune district ranks third

Rs.24453 lakhs and Aurangabad district in Marathwada ranks fourth

Rs.20308 lakhs.

8. Working capital:

In the case of total working capital, the district central cooperative

banks in Maharashtra has Rs.3389132 lakhs in 2004-05. On an average

working capital of these banks was Rs.109327 lakhs out of them the

working capital of Marathwada consist of Rs.555609 lakhs (16.39

percent) in 2004-05. Pune district ranks first Rs.326403 lakhs (9.63

percent) Mumbai district ranks second Rs.285591 lakhs (8.43 percent),

Ahmednagar district ranks third Rs.219813 lakhs, (6.49 percent),

Kolhapur district ranks fourth Rs.198032 lakhs (5.84 percent) and Nasik

district ranks fifth Rs.197744 lakhs (5.83 percent) with respect of

working capital of D.C.C. banks. Gadchiroli district has a lowest rank in

the case of working capital. Aurangabad district in Marathwada shows

eleventh rank in the case of working capital.

District wise progress in uses of funds of district central cooperative

banks in Maharashtra:

The Districtwise progress in uses of funds of D.C.C. banks in

Maharashtra is shown in the table No.3.5 it is discussed as under:

1. Cash and Bank Balance:

The total cash and bank balance of D.C.C. banks in Maharashtra

state

were Rs.131303 lakhs in 2004-05. On an average cash balance was

Rs.4236 lakhs out of them D.C.C. banks in Marathwada had

147

maintained cash Rs.15159 lakhs (11.55 percent) on 31.3.2005 Nasik

district ranks first with Rs.10641 lakhs (8.10 percent), Ahmednagar

district ranks second Rs.9952 lakhs (7.58 percent), Pune district ranks

third with Rs.9930 lakhs (7.56 percent), Solapur district has fourth rank

with Rs.8819 lakhs (6.72 percent), Satara district ranks fifth Rs.7021

lakhs (5.35 percent) and Jalgaon district ranks sixth Rs.7020 lakhs (5.35

percent) with respect of maintaining the cash and bank balances.

Nanded district in Marathwada region maintained very low cash and

bank balance which was Rs.827 lakhs as compared to all D.C.C. banks

in Maharashtra state.

2. Investment :

In the case of Investment in Maharashtra state had Rs.1199074

lakhs on 1.3.2005. The investment in Marathwada region was Rs.72022

lakhs (6.01 percent) out of total investment in Maharashtra state.

Mumbai district has first rank Rs.188318 lakhs (15.71 percent), Pune

district ranks second Rs.146585 lakhs (12.22 percent), Thane district

ranks Third Rs.112798 lakhs (9.41 percent), Ahmednagar district ranks

fourth Rs.94228 lakhs (7.86 percent), Satara district ranks fifth

Rs.81683 lakhs (6.81 percent), Kolhapur district ranks sixth Rs.65777

lakhs (5.49 percent) and Nasik district ranks seventh Rs.49862 lakhs

(4.16 percent) with respect of investment of D.C.C. Banks. Jalna district

in Marathwada has recorded lowest investment as compared to all

D.C.C. banks in Maharashtra state.

148

Table No.3.7 District wise progress of uses of funds of district central cooperative

Banks in Maharashtra State as on 31-03-2012 (Rs. In lakhs)

Sr. No.

Name of District Central cooperative banks in the state

Cash and Bank Balance

Investment Loans and advances

1 Ahmednagar 9952 94228 29889 2 Akola 3082 23244 20331 3 Amravati 2163 17271 3378 4 Aurangabad 2788 14434 79207 5 Beed 1700 10994 20963 6 Bhandara 1382 16578 5896 7 Buldhana 5854 13660 34809 8 Chandrapur 2309 25218 21903 9 Dhulia 4937 14431 15221 10 Gadchiroli 920 15555 2294 11 Gondia 1042 9884 7418 12 Jalna 936 3881 5413 13 Jalgaon 7020 36668 119190 14 Kolhapur 5871 65177 220127 15 Latur 2970 12861 38501 16 Mumbai 7002 188318 36896 17 Nagpur 3357 47209 23739 18 Nanded 827 11074 16768 19 Nasik 10641 49862 124823 20 Osmanabad 1877 11972 35077 21 Parbhani 4061 6806 7287 22 Pune 9930 146585 116100 23 Raigad 4706 18600 48131 24 Ratnagiri 4246 21171 19739 25 Sangli 4355 49555 90703 26 Satara 7021 81683 65387 27 Sholapur 8819 33429 78444 28 Sindhudurg 1731 20533 42424 29 Tahne 4379 112798 37803 30 Yavatmal 4069 13283 20599 31 Wardha 1356 12112 8294 Total 131303 1199074 1396754 Mean 4236 38680 45057

Source : Basic data on performance of district central cooperative banks,

National federation of state cooperative banks Ltd; Mumbai, 2004-05.

149

3. Loans and Advances:

The loans and advances of district central cooperative banks in

Maharashtra were Rs.1396754 lakhs out of them Rs.203216 (14.55

percent) lakhs loans disbursement by D.C.C. banks in Marathwada

region. On 31.3.2005 Kolhapur district ranks first with Rs.220127 lakhs

(15.76 percent) Nasik district ranks second Rs.124823 lakhs (8.94

percent), Jalgaon district ranks third Rs.119190 lakhs (8.53 percent),

Pune district ranks fourth Rs.116100 lakhs (8.31 percent), Sangli district

ranks fifth Rs.90703 lakhs (6.49 percent) and Aurangabad district in

Marathwada ranks sixth Rs.79207 lakhs (5.67 percent) during the year

31.3.2005 with respect of disbursement of loans.

From the above analysis, it can be concluded that the

Districtwise

growth in sources and uses of funds of district central cooperative banks

in Maharashtra with respect to different performance parameters is

unbalanced though Maharashtra state has first ranks in almost all

performance parameters at national level. The district of western

Maharashtra indicates high growth performance in almost all growth

performance parameters than other districts of Maharashtra. The district

central cooperative banks of Marathwada region have less growth than

state level average growth in almost all growth performance parameters

as on 31.3.2005.

In the case of total sources and uses of funds, the Aurangabad

district central cooperative banks in Marathwada region ranks fourth,

Ninth and eleventh with respect to borrowings, deposits and working

capital, Osmanabad district central cooperative banks ranks fourteenth

with respect of owned funds. Aurangabad, Jalna and Nanded district

central cooperative banks ranks were low with respect to uses of funds.

It means the growth performance in sources and uses of funds of district

150

central cooperative banks in Marathwada very low, as compared to the

state level performance of district central cooperative banks in

Maharashtra. Pune, Mumbai and Nasik district central cooperative banks

have shown good performance in sources and uses of funds.

Origin and Progress of district central cooperative banks in

Marathwada Region:

In India, the first Cooperative Societies Act, was passed in 1904

then after origin of cooperative credit movement in Marathwada region

can be traced. The Parbhani district central cooperative bank was

organized in 1917 in Marathwada region. It was the first district central

cooperative bank in Marathwada region. Till 1950, only two district

central cooperative banks were working in Marathwada region. In the

decade 1950-60, one new cooperative bank was formed in Marathwada

region, i.e. Beed district central cooperative bank. In the, 1960-70 and

1970-80, there was no new district central cooperative bank formed in

Marathwada region. In the year 1980-90, four new district central

cooperative banks were formed in Marathwada. Now, there are seven

district central cooperative banks working in Marathwada region

because new districts were not formed in Marathwada region.

Table No.3.6 reveals that the progress of district central

cooperative banks in Marathwada region from 1990-91 to 2004-05. The

parameters used to measure the growth were numbers of banks and their

branches. From the data shown in the table No.3.6 the following

inference can be drawn.

151

1. No. of Banks:

The total number of district central cooperative banks was seven

in 1990-91, which remained constant in 2004-05. So, from 1990-91,

there are seven district central cooperative banks working in

Marathwada, no new

Table No.3.8

Progress of District Central Cooperative banks in

Marathwada Region (1990-91 to 2012-13)

Sr.

No.

Year No. of Banks Index

Number

No. of

Branches

Index

Number

1 1990-91 07 100 719 100

2 1991-92 07 100 733 102

3 1992-93 07 100 760 106

4 1993-94 07 100 765 106

5 1994-95 07 100 781 109

6 1995-96 07 100 790 110

7 1996-97 07 100 794 110

8 1997-98 07 100 792 110

9 1998-99 07 100 780 108

10 1999-00 07 100 782 109

11 2000-01 07 100 797 111

12 2001-02 07 100 797 111

13 2002-03 07 100 786 109

14 2003-04 07 100 787 109

15 2012-13 07 100 670 93

Total 105 1500 11533 1603

Mean 07 100 769 107

Source: Compiled from annual reports of district central cooperative banks in Marathwada Region (1990-91 to 2004-05)

152

Chart No:-3.3

Index Number of Progress in Number of Branches and Banks of

D.C.C. banks in Marathwada (1990-91 to 2004-05)

This chart shows the number of branches and number of banks

during 1990-91 to 2004-05. The number of banks are constant since

1991 and the branches of these banks are decreased from 719 in 1991 to

670 in 2005.

Banks was formed from 1990-91 to 2004-05, because no new

district formed.

153

2. No. of Branches:

The No. of branches of district central banks in Marathwada

region was 719 in 1990-91, which is increase 787 in 2003-04, then

decreased to 670 in 2004-05. Due to liberalization of licensing policy of

the Reserve Bank of India now a days it is easy to establish branches but

still the quantative growth is high and qualitative growth is very low

because of cutthroat competition from commercial banks and urban

banks, regional rural banks and other financial institutions. In the case of

No. of branches there was decrease in 2004-05 because recovery

performance was very low of district central cooperative banks in

Marathwada region.

The progress of district central cooperative Banks in Marathwada

since 1990-91 to 2004-2005 shows in Chart No.3.1. The progress shows

with respect to number of banks and number of branches of district

central cooperative Banks in Marathwada region. The numbers of banks

of these banks were not increased during the study period because the

new districts were not formed in Marathwada region. The number of

branches of district central cooperative Banks in Marathwada region

was the phenomenal increase for the study period of 1990-91 to 2004-

05. The highest increase in number of branches of district central

cooperative Banks in Marathwada region was in 2000-01 and 2001-02

and decreasing in 2004-05 because the management of district central

cooperative Banks in Marathwada gave the trace on quality of branches

in Marathwada region.

154

Concluding Remark:

The Cooperative Societies Act, was passed in 1904. There was no

provisions for the formation of central bank. The sponsors of the

cooperative movement expected that the rural credit societies would be

able to attract substantial deposits from the members and well to do

sections of the village community and their savings would be available

to meet the need of the needy in the villages. It was also contemplated

that any deficiency in the funds would be made good by loans from the

government. But these expectations of the promoters did not materialize.

The isolated and poorly managed societies failed, in the first instance, to

tap funds from the more affluent, secondly they could not augment their

own capital base by encouraging thrift and self-help among their

members.

The movement gained in popularity, the societies started

increasing in number by leaps and bounds. But the financial

arrangement envisaged did not yield enough money to meet their

growing requirements. The Cooperative Societies Act was, therefore,

amended in 1912 with a view to permitting registration of central

societies. It may be of interest to note that even before the amendment,

some central banks had been established to cater to the financial needs

of the primary societies. The first central bank was registered in Uttar

Pradesh in 1906 as a primary society. But the first perfect central bank

in the modern sense saw the light of the day in the former central

provinces and Berar. In Rajasthan, the first central cooperative bank was

started in 1910 at Ajmer.

During 1950-51 to 1989-90, the district central cooperative banks

in India showed a continuous positive trend in major sources and uses of

funds growth performance during this period, on an average, growth rate

was between 17.31 percent to 136.25 percent in case of share capital,

155

reserves, owned funds, deposits, working capital and advances. It was

172.90 percent in case of borrowing and 185.29 percent in case of

overdues. It suggests that the district central cooperative banks in India

were unsuccessful in the recovering loans and advances in time and

merely depends up on borrowing during 1950-51 to 1989-90. The

growth of district central cooperative banks during the 15 years period

of 1990-91 to 2004-05 was satisfactory in sources and uses of funds

during this period, the growth rate in sources and uses of funds was on

an average between 10.82 percent to 23.55 percent. The annual average

in sources of borrowing was 10.34 percent and the growth rate of

overdues was 13.66 percent, both are less than the average growth rates

of previous period of 1950-51 to 1989-90. It means during 1990-91 to

2004-05, these banks were successful to recover loans and advances in

time than the previous year of the study. The overall growth

performance in sources and uses of funds of D.C.C. banks in India was

satisfactory but it was unbalanced. Maharashtra, Tamil Nadu and

Gujarat states have more than 50 percent contribution in all respects of

D.C.C. banks.

The district central cooperative banks in Maharashtra ranks first

in India in respect in sources & uses of funds parameters. In

Maharashtra, the growth of D.C.C. banks was also unbalanced. The

districts of western Maharashtra indicate high growth in all growth

performance in sources and uses of funds parameters than other districts

in Maharashtra. The D.C.C. banks in Marathwada show less growth than

the state level average growth in sources and uses of funds in growth

performance. District central cooperative bank of Pune ranks first in

case of sources of share capital. The external sources of deposits and

working capital of Pune district also ranks first. In the case of source of

funds in reserves and owned funds of Mumbai district ranks first. As a

156

sources of funds in borrowing Nasik district ranks first. The uses of fund

of D.C.C. banks in Maharashtra. In the case of cash and bank balance

Nasik district ranks first. Mumbai district ranks first in case of

Investment and, in case of loans and advances Kolhapur district has first

rank. In case of all sources and uses of funds of D.C.C. banks in

Marathwada region has shown low performance. Gadchiroli district

central cooperative bank has remained at the bottom in case of sources

and uses of funds as on 31.3.2005. Pune, Nasik and Mumbai district

central cooperative banks have good performance in sources and uses of

funds during 2004-05.

The Parbhani D.C.C. banks organized in 1917 in Marathwada

region was the first D.C.C. bank formed in Marathwada region. Till

1950, only two DCC banks were working in Marathwada in the decade

1950-60, one new D.C.C. bank was formed in Marathwada, i.e. Beed

D.C.C. bank. In the decade 1960-70 and 1970-80, there was no new

D.C.C. bank formed in Marathwada. In the year 1980-90, four new

D.C.C. banks were formed in Marathwada. At present seven district

central cooperative banks are working in Marathwada region.

157

REFERENCES:

1. Mamoria C.B., Rural Credit and Agricultural Cooperation in

India, Kitab Mahal Publication; Allahabad, First Edition, 1983.

2. Deshmukh P.G., Working of Cooperative Banks in India

Overview and Prospective, Kanishka Publishers& Distributors,

New Delhi, 2002.

3. Hajela T.N., Principles, Problems & Practice of Cooperation,

Shivalal Agrawala & Company Educational Publishers, Agra,

1979.

4. Hajela T.N., Op. Cit. 5. Mathur; Cooperation in India, Sahitya Bhawan Publication, Agra,

1977.

6. Ibid. 7. Choubey B.N., Principles and Practice of Cooperative Banking In

India, Assia Publishing House, London, 1968.

8. Patnik U.C., and Roy A.K., Cooperative and Cooperative

Management, Kalyani Publications, New Delhi, Ludhiana, 1988.

9. Patnik U.C., Op. Cit., 10. Solunke R.S., Primary Agricultural Credit Societies and Rural

Credit in India, Sanvendan Prakashan, Aurangabad, 2005.

11. Chouby B.N., Agricultural Banking in India, National Publishing

House, New Delhi, 1983.

12. Choubey B.N., Op. Cit.