188
PRIORITY SECTOR LENDING AND RECOVERY -AN
EYE OPENER
A c lear p ic tu re abou t the p r io r i ty sec to r l end ing and
recovery i s g iven in th i s chap te r .
“Though Ind ia has one of the o ldes t banking sec to rs
in the wor ld ye t the g rowth o f the sec to r has been very
lops ided .” 1
The main reason fo r such an imbalanced g rowth
was tha t the commerc ia l banks were in the hands o f the
p r iva te sec to r . As such , they p rov ided shor t - t e rm f inance to
t rade and indus t ry based on the secur i ty o f fe red by the
bor rowers . “Th is secur i ty -o r ien ted approach resu l ted in a
l a rge chunk o f bank c red i t be ing u t i l i sed on ly by b ig
indus t r ia l houses and t raders . Banks were unknown
ins t i tu t ions to smal l en t repreneurs , ag r icu l tu r i s t s , a r t i sans ,
t r anspor t opera to rs and a hos t o f peop le wi th smal l
means .”2
These v i ta l sec to rs , wh ich made the l a rges t
con t r ibu t ion to the Gross Nat iona l P roduc t [GNP] and
p rov ided the bu lk o f employment , were to ta l ly ignored by
the banking sec to r . Hence , a f te r independenc e , i t was fe l t
tha t in o rder to ach ieve ba lanced reg iona l g rowth in the
189
coun t ry , i t i s es sen t ia l to deve lop these neg lec ted sec to rs ,
fo r which i t i s essen t i a l to channe l i se the necessary
f inanc ia l resources .
For a t t a in ing the goa l o f se l f - su f f ic iency and fo r
ensur ing sus ta ined economic g rowth , the Al l Ind ia Rura l
Cred i t Survey Commit tee in 1954 , recommended fo r the
deve lopment o f a S ta te sponsored commerc ia l bank ing
sys tem. “ I t was in th i s background tha t the S ta te Bank o f
Ind ia was fo rmed , which se t up m ore than 400 b ranches in
ru ra l a reas . Th is was fo l lowed by na t iona l iza t ion o f 14
banks in 1969 and soc ia l con t ro l over banks was
in t roduced .”3
The main ob jec t ive o f na t iona l iza t ion o f commerc ia l
banks was to p rov ide f inance to the h i ther to neg lec ted
sec to r s o f the economy l ike ag r icu l tu re , smal l - sca le
indus t r ies , smal l en t repreneurs , a r t i sans , e tc . As these
sec to rs r ece ived p r io r i ty in ava i l ing f inanc ia l as s i s tance ,
they were known as p r io r i ty sec to rs .
“The concep t o f p r io r i ty sec to r l end ing was evo lved
to ensure tha t ass i s tance f rom the bank ing sys tem f lowed in
190
an increas ing measure to the v i ta l sec to rs o f the economy
and accord ing to na t iona l p r io r i t i es . The descr ip t ion o f the
p r io r i ty sec to rs was fo rmal ized in 1972 on the bas i s o f the
repor t submi t ted by the Info rmal S tudy Group on S ta t i s t i c s
re la t ing to advances to the p r io r i ty sec to r .”4 P r io r i ty
sec to rs inc lude agr icu l tu re [bo th d i rec t and ind i rec t ] , smal l
sca le indus t r ies , smal l road and wate r t ranspor t , smal l
bus iness , re ta i l t r ade , p ro fess iona l and s e l f -employed
persons , s ta te sponsored o rganisa t ions fo r schedu led
cas tes / schedu led t r ibes , educa t ion , hous ing [bo th d i rec t and
ind i rec t ] , consumpt ion loans , micro -c red i t , loans to so f t -
ware and food and agro -process ing sec to r .” 5
In i t i a l ly , the re were no ta rge t s f ixed on the p r io r i ty -
sec to r l end ing . I t was jus t emphas ized tha t commerc ia l
banks shou ld increase the i r invo lvement in the f inanc ing o f
p r io r i ty sec to rs . In November 1974 , pub l ic sec to r banks
were advised tha t the i r p r io r i ty sec to r l end ing shou ld reach
a l eve l o f no t l ess than one - th i rd o f the ou ts tand ing c red i t
by March 1979 . In November 1978 , the p r iva te sec to r banks
were a l so adv ised to l end a min imum of 33 1 /3 per cen t o f
the i r to ta l advances to the p r io r i ty sec to r by the end o f
191
March 1980 . Subsequen t ly , the t a rge t was enhanced to 40
per cen t o f aggrega te advances . In ach iev ing th i s overa l l
t a rge t , sec t ions were a l so s t ipu la ted fo r the banks . At
p resen t , r espec t ive ly , o f the i r Net Bank Cred i t [NBC] to
the ag r icu l tu ra l sec to r and weaker sec t ions o f the soc ie ty ,
respec t ive ly . Fore ign banks opera t ing in Ind ia were a l so
adv ised to p rogress ive ly increase the i r advances to the
p r io r i ty sec to r to reach a l eve l o f 15 per cen t o f the i r ne t
bank c red i t by the end o f March 1992 . In Apr i l 1993 , th i s
ra t io was fu r ther ra i sed to 32 per cen t o f NBC to be
ach ieved by March 1994 . Wi th in the enhanced ta rge t o f 32
per cen t , two sub - ta rge t s o f 10 per cen t in respec t o f Smal l
Sca le indus t r ies and 12 per cen t fo r expor ts were f ixed . On
the bas i s o f the rev i sed gu ide l in es on lend ing to the
p r io r i ty sec to r , the p r io r i ty sec to r l end ing ta rge t / sub -
ta rge t s have now been l inked to ad jus ted ne t bank c red i t
[ANBC] o r c red i t equ iva len t amount o f o f f -ba lance shee t
exposures , whichever i s h igher , wi th e f fec t f rom Apr i l 30 ,
2007 .
Dur ing the in i t i a l pe r iod , on ly ag r icu l tu re , smal l -
sca le indus t r ies , sma l l and marg ina l fa rmers and a r t i sans
192
and expor t s were inc luded in the pr io r i ty sec to r . La te r on ,
based on the recommendat ions o f the Naras imham
Commit tee Repor t , 1991 , hous ing , educa t ion , consumpt ion ,
p ro fess ion , I .T sec to r and food p rocess ing no t fa l l ing under
SSI were a l so inc luded under the ca tegory p r io r i ty sec to r .
In 1991 , the Naras imham Commit tee po in ted ou t many
p rob lems re la t ing to p r io r i ty sec to r l end ing , the mos t
impor tan t one be ing tha t a l a rge par t o f the non -per fo rming
asse t s come f rom pr io r i ty sec to r l end ing . Thus , the
commit tee recommended reduc t ion o f p r io r i ty sec to r t a rge t
to 10 per cen t and expans ion o f the coverage o f p r io r i ty
sec to r to inc lude more sec to rs . However , the t a rge t o f
p r io r i ty sec to r was no t reduced bu t the def in i t ion of
p r io r i ty was expanded to inc lude more sec to rs l ike
educa t ion , consumpt ion , p ro fess ion , I .T sec to r and food
p rocess ing no t fa l l ing under SSI . Also , a p rov is ion was
made such tha t , banks tha t cannot mee t the p r io r i ty sec to r
t a rge t s can depos i t funds in the f inanc ia l ins t i tu t ions l ike
Nat iona l Bank fo r Agr icu l tu re and Rura l Deve lopment
[NABARD] under Rura l In f ras t ruc tu re Deve lopment Fund
[RIDF] o r some banks can do so in the Smal l Indus t r ies
193
Bank o f Ind ia [SIDBI] fo r l esse r in te res t ra tes , wh ich in
tu rn wi l l be l en t ou t to the p r io r i ty sec to rs .
The b road ca tegor ies o f p r io r i ty sec to r fo r a l l
schedu led commerc ia l banks a re as under :
[ i ] Agr icu l ture (Direct and Indirect F inance)
Direc t f inance to ag r icu l tu re inc ludes shor t med ium
and long te rm loans g iven fo r ag r icu l tu re and a l l i ed
ac t iv i t i e s d i rec t ly to ind iv idua l fa rmer s , se l f -he lp g roups
(SHGs) o r jo in t l i ab i l i ty g roups ( JLGs) o f ind iv idua l
fa rmers wi thou t l imi t and to o thers ( such as co rpor a te
par tnersh ip f i rms and ins t i tu t ions) up to Rs . 20 lakh fo r
t ak ing up agr icu l tu re a l l i ed ac t iv i t i es . Ind i rec t f inance to
ag r icu l tu re inc ludes loans g iven fo r ag r icu l tu re and a l l i ed
ac t iv i t i e s .
[ i i ] Smal l - sca le industr ies (Direct and Indirect F inance)
Direc t f inance to smal l sca le indus t r ies (SSIs )
inc ludes a l l loans g iven to SSI un i t s which a re engaged in
manufac tu re , p rocess ing o r p reserva t ion o f goods and
whose inves tmen t a re in p lan t and mach inery (o r ig ina l
cos t ) exc lud ing land and bu i ld ing .
194
[a ] Smal l Sca le Industr ies
Smal l - sca le indus t r ies a re u n i t s engaged in the
manufac tu re , p rocess ing o r p reserva t ion o f goods and
whose inves tmen t in p lan t and mach inery (o r ig ina l cos t )
exc lud ing land and bu i ld ing does no t exceed Rs . 5 c ro re .
[b] Micro Enterpr ises
Smal l sca le un i t s whose inves tmen t in p lan t and
mach inery (o r ig ina l cos t ) exc lud ing land and bu i ld ing i s up
to Rs . 25 lakh , i r respec t ive o f the loca t ion o f the un i t , a re
t rea ted as Micro En te rp r i ses .
[ c ] KVI Sector
All advances g ran ted to un i t s in the KVI s ec to r ,
i r respec t ive o f the i r s ize o f opera t ions , loca t ion and
amount o f o r ig ina l inves tmen t in p lan t and mach inery come
under the ca tegory smal l - sca le sec to r . Such advances wi l l
be e l ig ib le fo r cons idera t ion under the sub - ta rge t (60 per
cen t ) o f the SSI se gment wi th in the p r io r i ty sec to r .
Indirect f inance
Ind i rec t f inance in the smal l - sca le indus t r ia l sec to r
wi l l inc lude c red i t to :
195
[a ] Persons invo lved in ass i s t ing the decent ra l i sed sec to r in
the supp ly o f inpu ts to and marke t ing o f ou tpu ts o f
a r t i sans , v i l l age and co t tage indus t r ies .
[b] Advances to coopera t ives o f p roducers in the
decen t ra l i sed sec to r v iz . a r t i sans v i l l age and co t tage
indus t r ies .
[c ] Subscr ip t ion to bonds i s sued by NABARD wi th the
ob jec t ive o f f inanc ing exc lus ive ly non- fa rm sec to r (no t
e l ig ib le fo r c las s i f i ca t ion under p r io r i ty sec to r l end ing
wi th e f fec t f rom Apr i l 1 , 2007) .
[d] Loans g ran ted by banks to NBFCs fo r on lend ing to SSI
sec to r .
[ i i i ] Smal l bus iness / serv ice enterpr ises
I t inc ludes smal l bus iness , re ta i l t r ade , p ro fess iona l
and se l f -employed persons , smal l road and wate r t r anspor t
opera to rs and o ther en te rp r i ses .
[a ] Smal l Bus iness
Smal l bus iness would inc lude ind iv idua ls and f i rms
manag ing a bus iness en te rp r i se es tab l i shed main ly for
p rov id ing any se rv ice o ther than p ro fess iona l se rv ices
196
whose or ig ina l cos t p r ice o f the equ ipment used fo r the
bus iness does no t exceed Rs .20 lakh .
[b ] Reta i l Trade
Advances g ran ted to re ta i l t r aders dea l ing in essen t ia l
commodi t ies ( fa i r p r ice shops) , consumer co -opera t ive
s to res and p r iva te re ta i l t r aders wi th cred i t l imi t s no t
exceed ing Rs .10 lakh .
[ c ] Profess iona l & Se l f -employed Persons
Loans to p ro fess iona l and se l f -employed persons
inc lude loans for the purpose o f purchas ing equ ipment ,
repa i r ing o r renova t ing ex i s t ing equ ipment and /o r
acqu i r ing and repa i r ing bus iness p remises o r fo r purchas ing
too ls and /o r fo r work ing cap i ta l requ i rements to med ica l
p rac t i t ioners inc lud ing den t i s t s , char te red accoun tan ts , cos t
accoun tan ts , p rac t ic ing company secre ta ry , l awyers o r
so l ic i to rs , eng ineers , a rch i tec t s , su rveyors , cons t ruc t ion
con t rac to rs o r management consu l tan t s come under the
ca tegory p r io r i ty sec to r loans .
197
[d] Smal l Road and Water Transport Operators
(SRWTO)
Advances to smal l road and wate r t ranspor t opera tors
owning a f l ee t o f veh ic les no t exceed ing ten veh ic les ,
inc lud ing the one p roposed to be f inanced cons t i tu tes
p r io r i ty sec to r loans . Loans advanced by commerc ia l banks
to NBFCs fo r the purpose o f p rov id ing f inance to t ruck
opera to rs and SRWTOs o ther than t ruck opera to rs
sa t i s fy ing the e l ig ib i l i ty c r i t e r ia i s a l so inc luded under the
ca tegory p r io r i ty sec to r loans .
[ iv ] Micro cred i t
Prov is ion o f c red i t and o ther f inanc ia l se rv ices and
p roduc ts o f very smal l amounts no t exceed ing Rs . 50 ,000
per bor rower to the poor in ru ra l , semi -u rban and u rb an
a reas , e i ther d i rec t ly o r th rough a g roup mechan ism, fo r
enab l ing them to improve the i r l iv ing s tandards , cons t i tu tes
micro c red i t .
[v ] Educat ion loans
Educa t ion loans inc lude loans and advances g ran ted
to ind iv idua ls fo r educa t iona l purpose , up to Rs . 10 lakh
198
fo r s tud ies in Ind ia and Rs . 20 lakh fo r s tud ies ab road and
th i s does no t inc lude those g ran ted schola rsh ip by the
ins t i tu t ions .
[v i ] Hous ing loans
Loans up to Rs . 15 lakh p rov ided fo r cons t ruc t ion o f
houses by ind iv idua ls , ( exc lud ing loans g ran ted by banks to
the i r own employees) and loans g iven for repa i r s to the
damaged houses o f ind iv idua ls up to Rs . 1 l akh in ru ra l and
semi -u rban a reas and up to Rs . 2 l akh in u rban a reas
cons t i tu te p r io r i ty sec to r loans .
[v i i ] Sta te sponsored organizat ion for scheduled
castes / scheduled tr ibes
Advances sanc t ioned to S ta te Sponsored
Organ isa t ions fo r Schedu led Cas tes /Scheduled Tr ibes fo r
the spec i f ic purpose o f purchase and supp ly o f inpu ts to
and /o r the marke t ing o f the ou tpu ts o f the benef ic ia r ies o f
these o rgan iza t ions cons t i tu te p r io r i ty sec to r loans .
[v i i i ] Consumpt ion Loans
Pure consumpt ion loans g ran ted to the weaker
sec t ions o f the communi ty under the Consumpt ion Cred i t
199
Scheme shou ld be inc luded in th i s i t em. These inc lude
loans f inanc ia l as s i s tance p rov ide d to NGOs and Sel f he lp
g roups .
[ ix ] Food and Agro -based Process ing Sector
Food and agro based process ing sec to r would be
e l ig ib le fo r c lass i f i ca t ion as p r io r i ty sec to r loans by banks
l ike f ru i t and vege tab le p rocess ing indus t ry , food g ra in
mi l l ing indus t ry , da i ry p roduc ts , p rocess ing o f pou l t ry and
eggs , mea t p roduc ts , f i sh p rocess ing , b read , o i l seeds , mea l s
(ed ib le ) , b reakfas t foods , b i scu i t s , confec t ionery ( inc lud ing
cocoa process ing and choco la te ) , mal t ex t rac t , p ro te in
i so la te , h igh p ro te in food , wean i ng food and ex t ruded /o ther
ready to ea t food p roducts , ae ra ted wate r / so f t d r inks and
o ther p rocessed foods , spec ia l Packag ing for food
p rocess ing indus t r ies and techn ica l ass i s t ance and adv ice to
food p rocess ing indus t ry . Wi th regard to the s ize o f the
un i t s wi th in th i s sec to r , i t i s c la r i f i ed tha t food and agro -
based p rocess ing un i t s o f smal l and medium s ize wi th
inves tmen t in p lan t and mach inery up to Rs .5 c ro re would
be inc luded under p r io r i ty sec to r l end ing .
200
[x ] Sof tware Industry
Loans to so f tware ind us t ry wi th c red i t l imi t up to
Rs .1 c rore f rom the bank ing indus t ry i s ca tegor i sed as
p r io r i ty sec to r loans .
[x i ] Venture Capi ta l
Inves tmen t in Ven tu re Cap i ta l wi l l be e l ig ib le fo r
inc lus ion in p r io r i ty sec to r , sub jec t to the cond i t ion tha t
the ven tu re cap i ta l funds / compan ies a re reg i s te red wi th
SEBI . However , f resh inves tmen ts tha t may be made by
banks on o r a f te r Ju ly 1 , 2005 sha l l no t be e l ig ib le fo r
c lass i f i ca t ion under p r io r i ty sec to r l end ing and the
inves tmen ts , wh ich have a l ready been made by banks up to
June 30 , 2005 sha l l no t be e l ig ib le fo r c lass i f i ca t ion under
p r io r i ty sec to r l end ing wi th e f fec t f rom Apr i l 1 , 2006 .
[x i i ] Leas ing and Hire purchase
Para -bank ing ac t iv i t i es such as l eas ing and h i re
purchase f inanc ing under taken depar tmen ta l ly by banks
wi l l be c lass i f i ed as p r io r i ty sec to r advances , p rov ided the
u l t imate benef ic ia ry sa t i s f i es the c r i t e r ia l a id down by RBI
fo r t rea t ing such advances as advances to p r io r i ty sec to r
201
[x i i i ] Loans to urban poor indebted to non inst i tut iona l
Lenders
Loans to d i s t ressed u rban poor to p repay the i r deb t to
l enders in the in fo rmal sec to r would be e l ig ib le fo r
c lass i f i ca t ion under p r io r i ty sec to r . Urban poor fo r th i s
purpose may inc lude those fami l i e s in the u rban a reas who
a re be low the pover ty l ine . Such loans t o u rban poor may
be c lass i f i ed under weaker sec t ions wi th in the p r io r i ty
sec to r .
[x iv ] Weaker Sect ions
In o rder to ensure tha t more under -p r iv i leged sec t ions
in the pr io r i ty sec to r a re g iven p roper a t t en t ion in the
mat te r o f a l loca t ion o f c red i t , i t shou ld be ensured tha t the
advances to weaker sec t ions reach a l eve l o f 25 per cen t o f
p r io r i ty sec to r advances o r 10 per cen t o f ne t bank c red i t .
The weaker sec t ions under p r io r i ty sec to r sha l l inc lude the
fo l lowing :
(a ) Smal l and marg ina l fa rmers wi th l and ho ld ing o f 5
ac res and less and land less l abours , t enan t fa rmers and
share c roppers
202
(b ) Ar t i sans , v i l l age and co t tage indus t r ies where
ind iv idua l c red i t l imi t s do no t exceed Rs .50 ,000 / - ,
( c ) Benef ic ia r ie s o f Swarn jayan th i Gram Swaro jgar Yojana
(SGSY) ,
(d ) Schedu led Cas tes and Schedu led Tr ibes ,
(e ) Benef ic ia r ie s o f Di f fe ren t ia l Ra te o f In te res t (DRI)
Scheme,
( f ) Benef ic ia r ie s under Swarna Jayan t i Shahar i Ro jgar
Yojana (SJSRY) ,
(g ) Benef ic ia r i e s under the Scheme for L ibera t ion and
Rehab i l i t a t ion o f Scavangers (S LRS) ,
(h ) Advances to Se l f Help Groups ,
( i ) Loans to d i s t ressed urban poor to p repay the i r deb t to
non- ins t i tu t iona l l enders aga ins t appropr ia te co l la te ra l o r
g roup secur i ty , sub jec t to the gu ide l ines to be approved by
the i r Boards o f Di rec to rs
( i ) Loans to d is t ressed u rban / ru ra l p oor to p repay the i r
deb t to non- ins t i tu t iona l l enders , aga ins t appropr ia te
co l la te ra l o r g roup secur i ty .
203
[xv] Export Credi t
This ca tegory wi l l fo rm par t o f p r io r i ty sec to r fo r
fo re ign banks on ly .
Commercia l banks a t ta in ing target s by invest ing in
spec ia l bonds
As per the recommendat ions o f the Naras imham
Commit tee repor t , the commerc ia l banks can fu l f i l the i r
t a rge t s by making inves tmen ts in spec ia l bonds i s sued by
spec i f ied ins t i tu t ions as a par t o f p r io r i ty sec to r advances
sub jec t to the fo l lowing cond i t ions :
[ i ] S ta te F inancia l Corporat ions (SFCs) /Sta te Industr ia l
Deve lopment Corporat ions (SIDCs)
The commerc ia l banks can s ubscr ibe to bonds
exc lus ive ly f loa ted by SFCs and SIDCs fo r f inanc ing SSI
un i t s and th i s wi l l be e l ig ib le to be inc luded under p r io r i ty
sec to r as ind i rec t f inance to SSI .
[ i i ] Rura l Electr i f i ca t ion Corporat ion (REC)
Subscr ip t ion to spec ia l bonds i s sued by REC
exc lus ive ly fo r f inanc ing pump -se t energ i sa t ion p rogramme
in ru ra l and semi -u rban areas and the Sys tem Improvement
P rogramme under i t s Spec ia l P ro jec t s Agr icu l tu re (SI -SPA)
204
wil l be e l ig ib le fo r inc lus ion under p r io r i ty sec to r l end ing
as ind i rec t f inance to ag r icu l tu re .
[ i i i ] NABARD
The banks can subscr ibe to bonds i s sued by NABARD
wi th the ob jec t ive o f f in anc ing exc lus ive ly
ag r icu l tu re /a l l i ed ac t iv i t i e s and the non - fa rm sec to r wi l l be
e l ig ib le fo r be ing inc luded under the p r io r i ty sec to r as
ind i rec t f inance to ag r icu l tu re / SSI , as the case may be .
[ iv ] Smal l Industr ies Deve lopment Bank of India
(SIDBI)
Commerc ia l banks can s ubscr ibe to bonds exc lus ive ly
f loa ted by SIDBI fo r f inanc ing of SSI un i t s and wi l l be
e l ig ib le to be inc luded under p r io r i ty sec to r as ind i rec t
f inance to SSIs .
[v ] The Nat iona l Smal l Industr ies Corporat ion Ltd .
(NSIC)
Subscr ip t ion to bo nds i s sued by NSIC exc lus ive ly fo r
f inanc ing o f SSI un i t s wi l l be e l ig ib le fo r inc lus ion under
p r io r i ty sec to r as ind i rec t f inance to SSIs .
205
[v i ] Nat iona l Hous ing Bank (NHB)
Subscr ip t ion to bonds i s sued by NHB exclus ive ly fo r
f inanc ing o f hous ing , i r respec t ive o f the loan s ize per
dwel l ing un i t , w i l l be e l ig ib le fo r inc lus ion under p r io r i ty
sec to r advances as ind i rec t hous ing f inance .
[v i i ] Hous ing and Urban Deve lopment Corporat ion
(HUDCO)
Subscr ip t ion to bonds i s sued by HUDCO exc lus ive ly
fo r f inanc ing o f ho us ing , i r respec t ive o f the loan s ize pe r
dwel l ing un i t , w i l l be e l ig ib le fo r inc lus ion under p r io r i ty
sec to r advances as ind i rec t hous ing f inance . Inves tmen t in
spec ia l bonds i s sued by HUDCO for p rov id ing f inance to
a r t i sans , hand loom weavers , e t c . under t iny sec tor wi l l be
c lass i f i ed as ind i rec t l end ing to SSI (T iny) sec to r .
Recovery o f Pr ior i ty sector loans by commercia l banks
The two p r imary func t ions o f commerc ia l banks a re to
accep t depos i t s f rom the pub l ic and lend money to the
bor rowers . The depos i t s a re to be repa id on the due da tes
o r on demand depending on the na tu re o f depos i t s .
L ikewise , the money len t shou ld be repa id on the due da tes
206
or on demand depend ing on the na tu re o f advances . In the
p re -na t iona l i sa t ion per iod , tha t too befo re 1969 , rec overy
o f loans was no t much a prob lem fo r the bankers . Th is was
because the t rad i t iona l bankers were conserva t ive in the i r
approach and they knew the i r cus tomers persona l ly .
However , recovery o f loans dur ing the pos t -na t iona l i sa t ion
per iod has no t been smo oth fo r the commerc ia l bankers
espec ia l ly due to p r io r i ty sec to r l end ing . Th is i s because
p r io r i ty sec to r loans a re g ran ted to bor rowers of smal l
means who a re no t usua l ly in a pos i t ion to o f fe r adequa te
secur i ty to the bankers .
“The success o f any Gover nment sponsored scheme
shou ld be measured no t by 100 per cen t d i sbursa l bu t by
100 per cen t recovery . The mot to o f 100 per cen t recovery
i s mean t fo r bankers , Government se rvan ts and the
bor rowers as wel l . In case o f p r io r i ty sec to r l end ing too ,
100 per cen t recovery i s a mus t . I t shou ld no t be
miscons t rued as a p ressu r iz ing ac t to demand 100 per cen t
recovery fo r even p r io r i ty sec to r advances . P r io r i ty i s fo r
g iv ing the loans and no t fo r exempt ing them f rom
recovery .”6 Th is chap te r th rows an ins igh t in to t he
207
var ious a l t e rna t ives ava i lab le to the banker fo r the
recovery o f loans advanced by h im. I t h igh l igh ts the
fo l lowing i s sues :
[ i ] impor tance o f recovery o f loans .
[ i i ] f ac to rs con t r ibu t ing to poor recovery .
[ i i i ] s t eps in recovery o f loans .
[ iv ] sugges t io ns fo r improv ing recovery o f loans .
Importance o f recovery of loans
The impor tance o f recovery o f loans need no t be over -
emphas i sed . There i s a genera l say ing tha t in a bank , any
person can g ran t advances bu t on ly a wise person can
recover the loans . Fo l lowing a re some o f the reasons for
the impor tance accorded to recovery o f loans :
[ i ] Non- recovery o f loans e rode p ro f i t ab i l i ty o f l end ing
banks .
[ i i ] The funds , which have been prov ided as loan , canno t
be recyc led and to tha t ex ten t , the more deserv ing
cus tomers wi l l be depr ived o f bank c red i t .
208
[ i i i ] A bank saddled wi th huge overdue loans por t fo l io wi l l
su f fe r in i t s image a nd may lose pub l ic conf idence .
[ iv ] A loan , which has been cons idered as bad , when
recovered increases the p ro f i t ab i l i ty o f the bank .
[v ] Overdue advances resu l t s in a lo t o f co r respondence
and paper work . A good recovery percen tage wi l l avo id th i s
was tage o f t ime and energy .
[v i ] A good recovery percen tage qua l i f i es the b ranch fo r a
be t te r inspec t ion ra t ing .
Factors contr ibut ing to poor recovery o f loans
Innumerab le fac to rs con t r ibu te to the poor recovery
o f loans by banks . [See Diagram No.3 . 1 ]
209
All these fac to rs can be b road ly c lass i f i ed as fo l lows:
[ i ] Borrower -or iented: The fo l lowing fac to r s resu l t in
non- recovery o f loans and these fac to rs a re bor rower
o r ien ted :
[a ] Poor generat ion o f revenue: The inab i l i ty o f the
bor rower to e f fec t payment o f dues due to poor cash
genera t ion and /o r fa i lu re o f the p ro jec t , be i t i ndus t ry ,
t r ade o r ag r icu l tu re , resu l t ing f rom in f luence o f ex te rna l o r
in te rna l fac to rs .
[b] Unwi l l ingness o f the borrower: The bor rower may no t
be wi l l ing to repay the loans because o f d ivers ion o f funds
bor rowed to o ther avenues o f inves tmen t .
[c ] Wi l fu l defaul t : The bor rower , fo r no va l id reason , may
no t be wi l l i ng to repay the loans in sp i te o f hav ing
su f f ic ien t funds a t h i s d i sposa l .
[d] Po l i t i ca l in f luence: The bor rower may be po l i t i ca l ly
in f luenced no t to repay the loans in the expec ta t ion o f
waiver o f loans , which o f ten takes p lace in case o f
ag r icu l tu ra l lo ans .
210
[e ] Misut i l i sa t ion o f funds borrowed: The bor rowers wi th
a fa l se op t imism of ea rn ing s izab le sum ou t o f an
in te rmedia te inves tmen t , may mis u t i l i se the bor rowed sum
and d iver t the loan p roceeds . When the loan bor rowed i s
no t u l t imate ly u t i l i sed fo r the concerned p ro jec t , the
bor rowers f ind i t d i f f i cu l t to repay , espec ia l ly when the i r
es t imat ion o f y ie ld f rom a l te rna te source fa i l s .
[ f ] Lack o f in teres t : The borrower may no t have any
persona l in te res t in the p ro jec t fo r which the loan i s
bor rowed .
[g ] Other personal reasons: The bor rowers may no t repay
the loan p roper ly because o f g ross neg l igence and def ian t
l ine o f the th ink ing , ques t ionab le charac te r o f bor rowers ,
l ack o f exper t i se and the burden o f main ta in ing the se l f and
the fami ly .
[ i i ] Banker -or iented: The bankers , on the i r par t should
d i scharge the i r ob l iga t ions p roper ly fa i l ing which i t r esu l t s
in non- recovery o f loans . The be low -ment ioned fac to rs
con t r ibu te to poor recovery o f loans :
211
[a ] Lack o f fo l low -up by banks: Af te r p rov id ing the loans ,
i t i s the du ty o f the bankers to fo l low -up a t per iod ica l
in te rva l s and a t t imes o f d i f f i cu l ty fo r the bor rowers , l end
a he lp ing hand to so lve the i r p rob lems .
[b] Inadequate project appra isa l by banks: The banks
a t t empt ha l f -hear ted ly in the mat t e r o f app ra i s ing a p ro jec t ,
be i t ag r icu l tu re o r indus t ry lead ing to sub -s tandard
lend ing . The p ro jec t becomes improper ly implemented and
insuf f ic ien t f inance ends in to ta l fa i lu re o f the p ro jec t .
Poor o r inadequate appra i sa l o f the p ro jec t regard ing the
f inanc ia l feas ib i l i ty , t echn ica l feas ib i l i ty and economic
v iab i l i ty resu l t s in non - recovery of loans .
[c ] Under- f inancing: The bankers have to p rov ide loans in
accordance wi th the f inanc ia l requ i rements o f the
bor rowers . I f the bankers reso r t to under - f inanc ing , th e
bor rowers may bor row the ba lance amount f rom ou ts ide
sources a t exorb i tan t ra te o f in te res t . Th is may be ano ther
reason fo r non - recovery o f loans .
[d] Unrea l i s t ic repayment schedules : The bankers , be fo re ,
dec id ing the repayment schedu les fo r the bor rowe rs shou ld
212
make an in dep th s tudy abou t the bor rowers ’ repayment
capac i ty . I f the repayment schedu les a re unrea l i s t i c ,
r ecovery o f loans becomes d i f f i cu l t fo r the bor rower s .
[e ] Delayed in i t ia t ion o f recovery measures: The banker
shou ld take immedia te reme dia l ac t ion once he no t ices any
warn ing s igna l s . I f the re i s any de lay in in i t i a t ing the
recovery measures , i t w i l l r esu l t in non - recovery o f loans .
[ f ] Other factors: Apar t f rom these fac to rs , f ac to rs l ike
hand l ing la rge number o f advances , poor s ta f f in vo lvement
and o ther cons t ra in t s and ind isc ree t l end ing under
Government schemes a l so con t r ibu te to poor recovery o f
loans .
[ i i i ] Project -or iented: Non- recovery o f loans may be
because o f the p ro jec t chosen by the bor rower . The
fo l lowing fac to rs con t r ibu te to poor recovery o f loans :
[a ] Project fa i lure: When a p ro jec t i s no t su i tab le to
Ind ian cond i t ions , the p ro jec t f a i l s . Fa i lu re o f p ro jec t
resu l t s in non - recovery of loans .
213
[b] Technica l ly unv iable : I f a p ro jec t i s no t t echn ica l ly
v iab le , i t w i l l be a to ta l fa i lu re . Th is cont r ibu tes to poor
recovery o f loans .
[c ] Lack o f exper ience in market ing: Many o f the
p roduc ts fa i l no t because o f sub -s tandard qua l i ty bu t
because o f inexper ience o f the manufac tu re r /bor rower in
marke t ing the p roduc ts . I f the bor rower i s ine f f ic ien t in
marke t ing the p roduc t he p roduces , he wi l l be unab le to
repay h i s dues .
[d] Severe compet i t ion: I f the bor rower i s unab le to face
severe compet i t ion , he wi l l no t be ab le to repay h i s loans .
[e ] Other factors: P rob lems l ike e ros ion o f i nven to r ies and
secur i t i e s , accumula ted losses , wrong se lec t ion of
p roduc ts , ex te rna l fac to rs beyond the con t ro l o f the
bor rowers and subs tandard p roduc ts a re o ther fac to rs
con t r ibu t ing to poor recovery .
[ iv ] Government -or iented: Government i s a l so respons ib le
fo r non -recovery o f loans . The under -ment ioned fac to rs
con t r ibu te to poor recovery o f loans :
214
[a ] Target approach: The Government f ixes ce r ta in t a rge t s
to be a t t a ined by the bankers which the bankers a t t a in
wi thou t mak ing p roper appra i sa l o f loans . Th i s resu l t s in
non- recovery o f loans .
[b] Waiver o f loans: The Government , in o rder to c rea te a
good image abou t i t s par ty , wa ives the loans bor rowed .
Th is resu l t s in non - recovery o f loans .
Steps in Recovery o f loans
“Recovery o f loans , tha t too a t the r i gh t t ime , p lays
a v i ta l ro le in c red i t management as i t s t reng thens the
resource pos i t ion th rough recyc l ing o f funds and exerc i ses
favourab le impac ts on the cos t o f funds and p ro f i t ab i l i ty .
Recovery o f the loans g ran ted has , the re fo re , to be
managed e f fec t ive ly so as to ensure con t inuous f low of
c red i t , w i thou t which banks l iqu id i ty would be in jeopardy
as a l so p roduc t ion cyc les , income genera t ion , employmen t
oppor tun i t i es e tc . wou ld be adverse ly a f fec ted .” 7
There a re th ree s teps , the bankers used to fo l low in
o rder to recover the loans advanced . These s teps a re
dep ic ted in Diagram No.3 .2 :
215
[ i ] Persuas ion: Persuas ion i s the f i r s t s t ep in the p rocess
o f recovery . The reca lc i t ran t borrowers a re persuaded by
the bankers to repay the loan amount . Th is i s done by
means o f send ing p r oper no t ices to the bor rowers . I f the
bor rowers ignore no t ices , reg i s te red no t ices a re sen t to the
bor rowers . S t i l l , i f the re i s no rep ly f rom the borrowers ,
the nex t s tep i s to con tac t the bor rowers persona l ly o r over
phone . Af te r th i s , the banker con tac t s the bor rowers
in fo rmal ly wi th the e l i t e o f the p lace o f the defau l t ing
bor rowers to c rea te psycho log ica l p ressu res . Nex t , the
banker t r i es to conv ince the bor rower to ob ta in a new loan
as aga ins t fu l l r epayment o f the ex i s t ing loan , which i s
overdue over a per iod o f t ime .
[ i i ] Negot ia t ion: “The lend ing banker adop ts the nex t s tep
i f pe rsuas ion fa i l s to evoke the des i red resu l t . Bo th the
l end ing banker and bor rower have to make cer ta in
sac r i f i ces in the i r mutua l in te res t . The banker may have to
accep t rev i s ion in the repayment schedu le , in te res t
concess ions and marg in reduc t ion and waivers . Al l these
can be nego t ia ted ac ross the t ab le .
216
[ i i i ] L i t igat ion: The las t reso r t fo r the l end ing banker to
e f fec t recovery i s to in i t i a te l ega l ac t ions by f i l ing c iv i l
su i t s in the cour t o f law. ” 8
“Such a s tep i s t aken
par t i cu la r ly wi th incor r ig ib le bor rowers wi th whom a l l the
o ther t echn iques o f recovery a re exhaus ted . When i t i s
conf i rmed tha t recovery i s imposs ib le , su i t may be f i l ed
af te r consu l t ing the bank’s appr opr ia te au thor i ty and the
l ega l adv ise r because each case needs a separa te t rea tmen t .
The p rocedure fo l lowed may d i f fe r f rom bank to bank
bu t genera l gu ide l ines a re g iven be low:
[a ] P repare the case h i s to ry .
[b ] Ex t rac t the ba lances f rom the ledgers and p repare a
s ta tement o f accoun t .
[ c ] See tha t a l l documents a re in o rder .
[d ] Dec ide upon the l imi ta t ion per iod , i . e . whe ther
documents a re no t t ime bar red .
[ e ] Consu l t the l ega l adv ise r a f te r hav ing ob ta ined
permiss ion f rom the appropr ia te au thor i ty o f the bank .
[ f ] Serve lega l no t ice on the bor rower .
217
[g ] F i le a su i t in the cour t th rough the l ega l adv ise r .
[h ] F i le c la im wi th the DI and CGCI . ”9
Legal measures adopted by commercia l banks
“ Ind ian banks su f fe r f rom la rge deb t a r rea rs , wh ich
adverse ly a f fec t the i r cu r ren t cash f low pos i t ion and reduce
p ro f i t s .”1 0
[ i ] Establ i shment o f Debt Recovery Tribunals [DRTs]
To recover bad deb ts , a new Act known as , the
‘Recovery o f Debts due to banks and f inanc ia l ins t i tu t ions
Act , 1993’ has been passed to se t up Deb t R ecovery
Tr ibuna ls . Such t r ibunals have been se t up a t ma jo r
cen t res .” 1 1
For recovery o f deb ts o f Rs .10 lakhs and above , banks
can approach DRTs under the Recovery o f Deb ts to Banks
and F inanc ia l Ins t i tu t ions Act , 1993 . For recovery o f
advances , 75 per cen t o f the deb t in d i spu te i s depos i ted .
Deb t Recovery Appel la te Tr ibuna l en te r ta ins no appea l
aga ins t DRT’s order .
218
[ i i ] The Secur i t i sa t ion and Reconstruct ion o f F inancia l
Assets and Enforcement o f Secur i ty Interes t
[SARFAESI]
Banks have adop ted mul t i -p ronged s t ra teg ies to b r ing
down the vo lume o f bad loans . These in te ra l ia inc lude
aggress ive p rovis ion ing , Corpora te Debt Res t ruc tu r ing
[CDR], wr i te -o f f s and recover ies . The SARFAESI Act ,
2002 enab led banks to qu icken recovery p rocess by d i rec t ly
a t t ach ing asse t s o f defau l te r s .
The Act empowers c red i to rs to i s sue no t ices to the
defau l t ing bor rowers /guaran to rs under Sec 13 [2 ] ca l l ing
upon them to d i scharge the i r l i ab i l i t i e s in fu l l on fa i lu re to
d i scharge the dues , the secured cred i to rs can take recourse
to one o r more o f the measures under Sec 13 [4 ] .
The Lok Sabha c lea red the en fo rcement o f Secur i ty
In te res t and Recovery o f Deb ts Laws [Amendment ] B i l l to
a rm banks to recover dues f rom defau l t ing bor rowers on
December 7 , 2004 .
219
[ i i i ] Set t ing up o f Asset R econstruct ion Companies
[ARCs]
“SARFAESI Act enab les to se t up ARCs under the
Companies Act , 1956 . Of the th ree p roposed ARCs, one
ARC of Ind ia L td [ACRIL] i s a l ready func t ion ing . NPAs o f
the banks can be t ransfe r red to ARCs a t a p r ice fo r fu r ther
recovery by them. I t i s expec ted tha t the p rocess o f p r ice
de te rmina t ion o f NPAS would be more t ransparen t . ”1 2
“The leg i s la t ion p rovides for se t t ing up Asse t
Recons t ruc t ion Companies , which wi l l t ake possess ion o f
secured asse t s o f the bor rowers . They wi l l have t he r igh t to
l ease ou t , se l l and rea l i se the secured asse t s o f the
bor rowers and take over the mana gement o f the
bor rower .”1 3
[ iv ] Set t ing up Nat iona l Company Laws Tribunal
[NCLT]
By amending the Companies Act , NCLT has been se t
up to look a f te r res t ruc tu r ing o f advances . NCLT wi l l
r ep lace Board o f Indus t r ia l and F inanc ia l Recons t ruc t ion
220
[BIFR] , which was look ing a f te r res t ruc tu r ing o f advances
fo r s ick compan ies under S ICA.
221
References
1. Jyotsna Sethi and Nishwan Bhatia, Elements of Banking and Insurance,
PHI Learning Private Limited, New Delhi-1, 2008, p.83.
2. Agarwal, H.C., Banking Law and Practice, Swan Publications, Agra-4,
2006, pp.369-370.
3. ibid, p.83.
4. Report on Trend and Progress of Banking in India, 2006-07, p.72.
5. Report on Trend and Progress of Banking in India, 2005-06.
6. Kallapiran, T.R., Slogan for the Decade:100 per cent recovery, Indian
Overseas Bank Monthly News Review, Vol.IV, No.8, August, 1990.
7. ibid, p.271.
8. ibid, p.274.
9. Ajit Singh, Rural Development and banking in India-Theory and practice,
Deep and Deep Publications, New Delhi-27, pp. 365-378.
10. Jhingan, M.L., Monetary Economics, Vrinda Publications [P] Ltd.,
Delhi-91, 2004, pp. 669-672.
11. ibid, 669-672.
12. Janardhan G.Naik, NPAs Management Challenges before banking
sector, The Management Accountant, Vol.41, No.5, May 2006, pp.355-360.
13. Rajendra Singh, Improving Recovery Climate of banks’ dues through
SARFAESI Act, 2002, Professional Banker, December 2005, The ICFAI,
pp.48-52.
D iagram No.3 .1
FACTORS CONTRIBUTING TO POOR RECOVERY
S o u r c e : P a r t h o P r a t i m R o y , M a n a g e m e n t o f U r b a n C o o p e r a t i v e
B a n k s , H i m a l a y a P u b l i s h i n g h o u s e , M u m b a i - 4 , 2 0 0 1 , p . 2 7 2 .
Borrower oriented
Project oriented
Banker oriented
D iagram No.3 .2
STEPS IN THE RECOVERY PROCESS
Source: Par tho Pra t im Roy , Management o f Urban
Coopera t ive Banks , Himalaya Pub l i sh ing house , Mumbai -4 ,
2001 , p .273 .
PERSUASION
BANKER BORROWER
NEGOTIATION
BANKER BORROWER
LITIGATION
BANKER BORROWER
67
References
1 . Gordon , E , and Nata ra jan , K . , ‘Bank ing Theory , Law and
Prac t ice ’ , Himalaya Pub l i sh ing House , Mumbai , 2005 , p .356 .
2 . Vasan t Desa i , Ind ian Bank ing -Natu re and Prob lems ,
Himalaya Pub l i sh ing House , Bombay -4 , 1991 , pg .344 -346 .
3 . ib id .
4 . Venugopa l , D , ‘ I t ’ s l ike b rea th ing in and ou t ’ , Ind ian
Overseas Bank Month ly News Rev iew, Vol . IV , No .8 , August
1990 , Edi to r ia l page .
5 . Sanyas iah , K . , and Ranganadhachar i , A .V. , ‘Money , Bank ing
and In terna t iona l t rade’ , Maru t i Book Depo t , Gun tu r -2 ,
pp .572-575 .
6 . Gordon , E . , and Nata ra jan , K . , opc i t , p .326 .
7 . ib id .
8 . Sanyas iah , K . , and Ranganadhachar i , A .V. , opc i t , pp .572 -
575 .
9 . Gordon , E . , and Nata ra jan , K . , opc i t , pp .326 -360 .
10 . Sundaram, K.P .M. , and Varshney , P .N. , ‘Bank ing Theory ,
Law and Prac t ice ’ , Su l tan Chand and Sons , New Delh i -2 .
11 . Gordon , E . , and Nata ra jan , K . , opc i t , pp .327 .
68
12 . Saravanave l , S . , ‘Bank ing law and Prac t ice in Ind ia ’ ,
Kedar Nath Ram Nath , Meeru t -01 , 1983 -84 , p .5 .
13 . Dharmara j , E . , ‘Bank ing Theory , Law and Prac t ice , Sc i tech
Publ ica t ions [ Ind ia ] P r iva te L imi ted , Ch enna i -17 , p .55 .
14 . Sr ivas tava , R .M. , ‘Management o f Ind ian F inanc ia l
Ins t i tu t ions’ , Himalaya Pub l i sh ing House , Mumbai -4 , p .73 .
15 . Dharmara j , E . , loc .c i t .
16 . Sen Gupta , N .C. , ‘Modern Bank ing in Ind ia ’ , Edi ted by
K.N.Subrahmanya , Deep and Deep Pub l ica t ions , New De lh i -
27 , p .17 .
17 . San thanam, B . , ‘Bank ing Theory , Law and Prac t ice ’ ,
Margham Pub l ica t ions , Chenna i -17 , 2006 , p .1 .3 .
18 . Garhwal , S . , ‘Commerc ia l Bank ing and Economic
Deve lopment ’ , Po in te r Pub l i shers , Ja ipur -3 , 1993 , p .15 .
19 . Reddy , Y .V. , ‘Economic Deve lopments in Ind ia ’ , Ed i ted by
Raj Kapi la and Uma Kap i la , Academic founda t ion , New
Delh i -92 , 2000 , pp .43 -64 .
20 . Garhwal , S . , loc .c i t .
21 . Leeladhar , V . , ‘The Evolu t ion o f Bank ing Regu la t ion in
Ind ia -A Ret rospec t on some aspec t s ’ , Rese rve Bank o f Ind ia
Bul le t in , December , 2 007 , Vol .LXI , No .12 , pp .2228 -2229 .
22 . Garhwal , S . , op .c i t , pp .15 -16 .
69
23 . Kapoor , G .P . , ‘Commerc ia l Bank ing’ , A.P .H. Pub l i sh ing
Corpora t ion , New Delh i ,2 , 2004 , pp .4 -21 .
24 . Sura j B . Gupta , ‘Moneta ry Economics Ins t i tu t ions , Theory
and Po l icy ’ , S .Chand & Company L td . , New De lh i , 1998 .
25 . Mai l Ram, ‘Cur rency and Bank ing’ , p .296 .
26 . Sundharam, K.P .M. , ‘Money , Bank ing , Trade and F inance’ ,
Sul tan Chand and Sons , Delh i -6 , 1968 , p .455 .
27 . Mithan i , D .M. , ‘The Anatomy of Ind ian Bank ing’ ,
Himalaya Pub l i sh ing House , 1989 , p .48 .
28 . Sura j B .Gupta , op .c i t .
29 . Raman and Pandey , ‘Commerc ia l Bank and Rura l
Deve lopment ’ , Deep and Deep Pub l ica t ions , New Delh i ,
1989 , pp .67 -70 .
30 . Sundharam, K.P .M. , and Varshney , P .N. , ‘Bank ing Theory ,
Law and Prac t ice ’ , Su l tan Chand and Sons , New Delh i -2 ,
2004 , pp .1 .72 -1 .73 .
31 . Raju la Dev i , A .K. , ‘Modern Bank ing in Ind ia ’ , Ed i ted by
Subrahmanya , K.N. , Deep and Deep Pub l ica t ions , New
Delh i -27 , p .23 .
32 . Sundharam, K.P .M. , op .c i t , p .459 .
33 . Rangaswami , B . , ‘Pub l ic Sec tor Bank ing in Ind ia ’ ,
Government o f Ind ia , New Delh i , 1985 , pp .8 -9 .
70
34 . Chandrasekher , K. , ‘Trends and Progress o f Bank ing in
Ind ia ’ , Deep and Deep Pub l ica t ions , New Delh i -27 , 1986 ,
p .13 .
35 . Garhwal , S . , op .c i t , p .16 .
36 . Sundharam, K.P .M. , op .c i t , p .459 .
37 . ib id .
38 . Sundharam and Varshney , op .c i t , p .1 .71 .
39 . Garhwal , S . , op .c i t , p .17 .
40 . Rakesh S inha , “Emerg ing Trends in Ind ian Bank ing” ,
Manorama Year Book , Malaya la Manorama Press , Kot tayam -
1 , 2006 , pp .547 -552 .
41 . Garhwal , S . , loc .c i t .
42 . Mahesh , H .P . and Meenaksh i Ra jeev , ‘P roduc t iv i ty o f
Ind ian Commerc ia l Banks in the p re and pos t l ibera l iza t ion
per iods’ , The Ic fa i Journa l o f Bank Management , Vol .VI ,
No.6 , November 2007 , pp .18 -19 .
43 . Garhwal , S . , opc i t , pp .17 -18 .
44 . ib id , pp .547 -552 .
45 . Radhakr ishnan , R . , ‘A Decade o f F inance Sec to r R efo rms
in Ind ia ’ , ‘ Ind ian Bank ing in the New Mi l lenn ium’ , ed i ted by
71
M.P.Shr ivas tava and S .R .S ingh , Anmol Pub l ica t ions Pr iva te
L imi ted , New Delh i -2 , p .98 .
46 . Pai , D .T . , ‘Overv iew of Bank ing Deve lopment 1947 -2007’ ,
D.T. Pa i , 16 -108 , Saraswath i Sadan , Anan th Na gar , Manipa l
4 , 2008 , pp .49 -50 .
47 . San jeev Chaddha, ‘ Ind ian Bank ing Chal lenges in the New
Mil lenn ium, Pro fess iona l Banker , Augus t 2006 , pp .39 -43 .
48 . Ja in , A .K. , ‘Chal lenges befo re the Bank ing and f inanc ia l
sec to rs in the con tex t o f g loba l iza t ion , The Ind ian Jo urna l o f
Economics , Ju ly 2003 , Vol .LXXXIV.
49 . Mahesh , H .P . and Meenaksh i Ra jeev , opc i t , pp .18 -19 .
50 . ib id .
51 . Raman , A . , ‘Reform of the Ind ian Bank ing Sys tem’ , Ed i ted
by S imha , S .L .N. , Or ien t Longman Limi ted , Madras , 1973 ,
p .139 .
52 . Punee t Verma and Ni t in Kumar , P. , ‘A s tudy o f Cred i t
Depos i t Ra t io in se lec ted S ta tes o f Wes te rn Ind ia ’ , The Ic fa i
Journa l o f Bank Management , Vol .VI , No .4 , November 2007 ,
p .32 .
53 . Sidda iah , T . , ‘A Diagnos t ic s tudy of overdues in
Commerc ia l Banks’ , Ind ian Banking towards 21s t
Cen tu ry ,
Deep & Deep Pub l ica t ions , New Delh i 110027 , 1988 , pp .122 -
128 .
54 . Kahlon , A .S . , and Karam S ingh , ‘Manag ing Agr icu l tu ra l
F inance : Theory and Prac t ice ’ , Al l i ed Pub l i shers P r iva te
Ltd . , New Delh i -64 , 1984 , pp .23 -24 .
72
55 . ib id .
56 . ib id .
57 . Punee t Verma and Ni t in Kumar , P . , ‘A s tudy o f Cred i t
Depos i t Ra t io in se lec ted S ta tes o f Wes te rn Ind ia ’ , The Ic fa i
Journa l o f Bank Management , Vol .VI , No .4 , November 2007 ,
p .32 .