International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

LENDING POLICIES OF DINDIGUL DISTRICT CENTRAL CO-OPERATIVE LIMITED IN TAMILNADU, - A VIEW N. Selvaraj Assistant Professor of Commerce, Saraswathi Narayanan College, Madurai, Tamilnadu, India

ABSTRACT Agriculture occupies a dominant position in the Indian economy. The well being of the people of India largely depends on the progress of agriculture. The co-operative has been recognised as the hope of the farmers to provide the basis of prosperity and the opportunity to meet the demand for funds. In the absence of adequate financial help, the farmers and agricultural labours are the ready victims of money lenders and indigenous bankers who charge exorbitant rates of interest. The Co-operative are institutions established with the objectives to facilitate rural credit and to promote thrift and self help among the economically weaker sections of the society. So it is suggested to utilize the resources in more effective manner and also have a continuous profit planning to increase its profitability. To reduce overdues a large number of field staff is to be engaged for collection of dues. Keyword: co-operative credit, overdue, Co-efficient of variation, Co-operative Banks and lending.

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

INTRODUCTION “Co-operative movement is one of the most fruitful ways of enlisting public co-operation on a mass scale in our planning and reconstruction activity” V.V. Giri The Co-operative credit structure in India is now a century old and happens to be the largest in the world. Efforts to build up the institutional financial system for agriculture commenced with the adoption of the Co-operative Societies Act in 1904. Several inquiries and studies such as Sri Malcolm Darlings Report (1935) and the preliminary and statutory reports of the Reserve (1936 and 1937) emphasized the need for and suggested various measures to nurture the co-operative movement, institutionalized efforts to relieve the farmers from traditional burden of debt, promote thrift and gradually assume a more positive role for defense against exploitation by money lenders. Till 1947, the general thinking was in favour of promoting multi-purpose primary societies in the rural areas. However, during the period from 1947-1956, Co-operatives were organized so as to make them instruments of economic development, as the co-operative system was considered more suitable for dispensation of farm credit. The co-operative credit structure in , is a three tier one. It consists of one Tamil Nadu State Apex Co-operative Bank (TNSC Bank) at the State level, 22 Central Co-operative Banks (CCBs) at the district level (excluding the Central Co-operative Bank which does not undertake agricultural finance) and 4589 agricultural service co-operative societies, renamed as Primary Agricultural Co-operative Banks (PACBs) at the village level. The CCBs are federations of PACBs and other co-operative societies in their respective areas, while TNSC Bank is the federation of CCBs. The central co-operative banks are formed at the district level by federating the primary agricultural co-operative banks located in the same area. They collect funds from the co-operative institutions, which have surplus funds and distribute them to the co-operative institutions with depleted or reduced funds. They also fulfill the need for funds of the primary agricultural co- operative banks by borrowing from their respective state co-operative banks. These central co-operative banks also mobilise local deposits and lend them to their member societies at reasonable rates of interest. The District Central Co-operative Banks since their inception, have

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org been playing a dominant role in mopping up small saving and providing credit facilities to farmers in the rural areas through the primary agricultural co-operative banks. Statement of the Problem The central co-operative banks by being at the middle order of three-tier structure have been playing a crucial role in promoting agricultural and allied activities by providing credit facilities through primary co-operative banks. They provide a strong linkage between rural based co- operative banks which do not have a close contact with money market and urban based apex co- operative banks which have a close connection with the money market. Thus the District Co- operative Banks act as a friend, philosopher and guide to the entire co-operative movement in the district, for they not only safeguard the interests of the primary credit societies but also the various other types of credit and non-credit societies in the respective districts. Hence, a consistent, firm and sound development of co-operative movement at the district levels warrants the existence of a strong and effective working of central co-operative banks. The sound working of the bank depends on good financial performance. The present study is an attempt to probe into the deposit mobilization, lending operations, repayment performance and utilization of funds of District Central Co-operative Bank. The findings of the study would pave the way for taking certain policy decisions for better financial performance of the Bank and hence the present study of,” Financial Performance of Dindigul Central Co-operative Bank Limited. Objectives of the present study The following are the objectives of the present study. 1. To analyse the lending and recovery performance of the study unit. 2. To offer suggestions to improve the performance of District Central Co-operative Banks on the basis of findings of the study. Scope of the Study The present study aims at studying the lending performance of the Dindigul District Central Co- operative Bank Limited. This study attempts to analyse its lending performance from the standpoint of the Central Co-operative Bank selected for the study. It does not include workers or members and other agencies that are either directly or indirectly connected with the study unit. This study becomes relevant as the co-operative sector in India, particularly in Dindigul District, has not been a total success, in spite of the Government efforts

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

REVIEW OF LITERATURE N. Narayanasamy and S. Ramachandran in their study of performance evolution of South Arcot district Central Co-operative Bank assessed the performance of the bank with reference to key indicators like membership, share capital, deposits, borrowings, advances operating expense, establishment expenses and profit for a period of ten years from 1974-75 to 1983-84. D. Gorwala, in his study, “All India, Rural Credit Survey Committee Report” found that a large part of the country had not been covered by the co-operatives and even in the areas where it had been covered, a large section of the agricultural population remained outside the membership. Even in the areas where membership was there, the bulk of credit requirement had been met from other sources other than co-operatives. The boards of management in most of the central co-operative banks were unwieldy in size and had a disproportionate representation of individuals as distinguished from societies. The author pointed out that the formula, “one society to one village and one village to one society” had failed in India. B. Venkatappiah, in his study, “Report of the All India Rural Credit Review Committee”, traced the state contribution to the share capital of co-operative banks. It was not adequate to increase the internal resources of the banks. The primary agricultural credit societies were not under strict statutory control of . Crop loan system was not effectively introduced in some parts of the country such as Bihar, Haryana and Assam. The loan policies and procedures in co-operative banks were too liberal to check overdues without taking any action against the defaulters. The societies were still undertaking action against defaulters, the societies were still undertaking financing of defaulters and due to the lack of proper verification and supervision by co-operative banks, credit was sanctioned on the basis of falsely reported acreage by the member- borrowers. Mehfoozur Rahman in his study, “Co-operative Credit and Agricultural Development”, – traced the development of agricultural co-operation in Jammu and Kashmir and analysed the working of the primary agricultural credit societies, central co-operative banks, state co-operative banks, land development banks and the role of nationalised banks in the provision of agricultural finance in Jammu and Kashmir. S.G.Saraiya, in his study, “Report of the Banking Commission” traced the organisational structure of banking institution in the rural sector which was not sound. The existence of paucity E-mail id:- [email protected] Page 4

International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org of funds in primary credit societies did not permit them to lend money adequately to agriculturist; the banking habit in the rural sector was not well developed due to the poor functioning of co-operative banks. The officials of central co-operative banks were not well- qualified and trained for effective implementation. The banking facilities in rural and semi- urban areas and the services rendered by the co-operative banks to rural people did not match with their needs. K.S. Krishnasamy in his study, “Role of Co-operative Credit in increasing Farm Production” pointed out that the credit made available by the co-operative societies to cultivators had increased rapidly under the five year plans and it was considered worthwhile finding out the impact of such credit on agricultural production as well as on the productive capacity of members of co-operative societies. C.L. Dadhich’s in his study, “Overdues in Farm Co-operative Credit”, assessed the structure and causes of overdues. He suggested measures for reducing overdues. The period of reference for the study was the co-operative year ending in June 1968. The All India Debt and Investment Survey 1971-72 made a “review of agricultural development and co-operative credit in Tamilnadu”. It is a general study on the entire co-operative movement, the short term and long term credit structure, the co-operative marketing, processing and industrial societies, small farmers’ development agencies, tribal development and the like. As pointed out in the survey 52 societies were selected from Tamilnadu of which only 45 societies could actually be surveyed, as data on the remaining societies were not available. A. Singh and J. B. Singh in their research study, entitled, “Agricultural Credit by Co-operatives,” analysed and inferred that the credit institutions were not functioning properly. Their credit position was far from satisfactory due to the indifferent approach of the co-operatives. They concluded that an unequal and untimely distribution of agricultural credit was a striking feature in Indian co-operatives. The study covered a span of 12 years from 1966 to 1977. C. R. Reddy in his article, “Overdue Appraisal and Management in Banking”, analysed the association between lending and recovery. He found that recovery was not satisfactory due to poor management and the poor effort on the part of the management in recovering loans which resulted in less lending. As a consequence the credit structure of co-operative banking stood diluted and the action taken against the defaulters was not timely and regressive. The main

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org contributing factor namely socio-economic characteristics of borrowers influencing overdue had not been considered. The period of study covered 10 years from 1971-72 to 1980-81. All India Rural Credit Survey Committee 1954 recommended many measures for the general performance of Central Co-operative banks. This committee maintained that there should be one CCB for each district and the states were asked to draw a detailed scheme for strengthening central co-operative banks located in the state. John Mylonakis on his article “Customer Relationship Management Functions: A Survey of Greak Bank Customer Satisfaction Perceptions” reiterated that the customers care was the key to maintain a competition advantages in today’s market. Banking institutions should be aware of who their customers are, which customer groups produce higher profit and what factors influence them loyalty and keep their happy. Customers affect a banks success and the winners will be those institution that succeed in manage their relationship with customer in an effective manner and in quick time. The establishment of a customer-centered attitude with the implementation of CRM applications and the recognition of customer strategic role in all banker activities constitute the best weapons of banking institution within a strongly competitive environment. Methodology The present study was mainly based on secondary data. The secondary data have been used to analyse the performance of the DDCC Bank with reference to its loan outstandings and overdues. Also, the data are used to evaluate the lending performance of the Bank during the study period. FRAMEWORK OF ANALYSIS The following statistical tools were used for analysing the data collected so as to fulfill the objectives of the study. After having collected the data, the research has computed the data. To have scientific data processed and arrived at meaningful result, the researcher has used the tools Annual growth, Percentage Analysis, Average, Co-efficient of variation, Annual compound growth rate and Trend co-efficient. The annual growth rate has been used to study the percentage of increase in loans and advances of the Bank. The annual growth rate refers to the percentage increase in loans and advances when compared to that of the previous year In order to estimate the trend and growth rate of advances the following Trend equation and the compound growth rate formula have been used. E-mail id:- [email protected] Page 6

International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

Log Y = a + bt where, Y = actual value advances t = time variable a and b are constants to be estimated. Above trend equation was estimated by the method of least squares. Compound growth rate (CGR) = (Antilog b-1) x 100. The co-efficient of variation (C.V) method has been used with the following formula in order to analyses the extent of variation in loans and advances. Standard deviation (σ) Co-efficient of variation = ------x 100 Arithmetic mean ( X)

Σ (x – x )2 σ = N-1

ΣX X = N where X = Loans and Advances N = Number of years If co-efficient of variation is less, it means greater stability, more consistency, uniformity and homogeneity of growth. Period of Coverage The study covers a period of 15 years from 1995-96 to 2009-10. Limitation of the study The present study is confined to 15 years of secondary data from 1995-96 to 2009-10. The study depends on secondary data collected from the records of the bank both published and unpublished. The study has also been based on the various lending, outstanding and over dues

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org of different categories of loan and advance and the component of working from the bank. LENDING PROCEDURES OF THE BANK The DDCC Bank fulfills the credit requirements of the PACBs, Co-operative Societies, Weavers Co-operative Societies, Co-operative Stores, Co-operative Spinning Mills and other affiliated Co- operative Societies located in Dindigul Revenue Districts. The credit requirements of the PACBs are assessed by the DDCC Bank taking into account the norms fixed by the Technical committee constituted for this purpose. The sanctioned loan amounts are disbursed to the PACBs through its nearby rural branches. This procedure is also applicable to all societies that come under the review of the bank. The scale of finance so fixed should get approved by the Registrar of Co-operative societies, Chennai every year. Out of the total short -term loans for agricultural operations 45 per cent is through the co-operative credit structure in the national level. The source of finance is fixed in terms of cash and kind components on the basis of the scale of finance laid down by the bank, the officials of the PACBs will prepare the annual credit limit loan statement for the society as a whole. This statement should be prepared separately for small, marginal and big farmers. The individual maximum limit is fixed by the Registrar of Co- operative Societies from time to time. The society will have to remit 10 per cent of its borrowing towards the share capital of the bank. The maximum that can be borrowed by a society and the PACBs is one fifth and one – tenth of their net assets respectively. The field supervisor of the DDCC Bank will sanction annual credit limit as per the applications prepared by the PACBs. The field supervisor will forward the application along with his recommendation to the branch of the bank, where the loan will be disbursed to the society. The annual credit limit application received from the branch will be processed at the head office with particular reference to the scale of finance. The society’s financial particulars, the resolution passed in the board meeting of the PACBs to this effect, seasonality for issue and recovery of loans are also taken in to account. After considering it, the bank sends the sanction order to the branch to disburse the amount, and the branch credit the cash portion of the loan amount in to the account of individual societies. In term, the society the amount to the account of individual borrowers. The society should acknowledge the receipt within seven days from the date of disbursement of loan. The verification of loan utilization is made three months after the E-mail id:- [email protected] Page 8

International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org date of loan disbursement by the field supervisors, field managers and executive officers of the bank. The kind portion of the loan is supplied only in the form of fertilized and pesticides by the PACBs. Now a days the PACBs have stopped supplying the seeds to the farmers. Fertilizers and pesticides are their only. The other loans include cash credit and over draft facilities to the affiliated societies such as the PACBs, Urban Co-operative Banks, Co-operative Printing Press and the like the other loans also include produce pledge loans, short – term, non – agricultural consumer loans and so on Types of Loans The lending policy of the Dindigul District Central Co-operative Bank has been broadly classified in the following ways I. Short-Term loans II. Medium -Term Loans III. Long-Term Loans Short Term Loans The Short – term loans are repayable within 12 to 15 months. Short-term loans are provided for agricultural and non – agricultural purposes. Short term credit limits are sanctioned to the affiliated primary co-operative banks for one year. The primary agricultural co-operative banks borrow from the Dindigul District Central Co-operative Bank up to the credit limit sanctioned for seasonal agricultural operations and marketing of agricultural produces. The annual credit limits are also sanctioned to the handloom weaves’ Co-operative societies for production and marketing activities in Dindigul District. According to the Rural Credit Survey Committee the following are the special features of the Short-term crop loan to farmers. Medium Term Loans Medium- term loans for agricultural and non – agricultural purposes are given for a period about 12 months and not exceeding five years. The bank provides medium -term loans for agricultural and non – agricultural purposes through the primary agricultural co-operative banks in the district. The NABARD provides medium–term credit limits to the state co-operative bank whose over dues do not exceed 60 percent of the demand for all loans at the end of the year. Long - Term Loan

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The Dindigul District Central Co-operative Bank mostly provides long- term credit to non – credit co-operative organizations like the Weavers Co-operative Societies, Marketing and Consumer Co-operative Societies, Co-operative Spinning Mills and the like. They also extend credit facilities for the non – farm sectors like industries, services and business. During the recent period, they have also started providing housing loans, vehicle loans, consumer loans and the like to individuals. The PACBs have to utilize the long- term loans for the construction of godown and the like. The DDCCBs get refinanced by the NABARD and the IDBI for financing small, tiny, cottage and village industries. An attempt has been made to analyze the performance of the bank in loans and advances provided by it. This paper analyses the total loans, type wise. The annual compound growth rates of the total and the other types of loans have been analysed. TABLE 1 COMPOSITION OF LOAN AND ADVANCES FROM 1995-96 TO 2009-10 (Rs.in Lakhs) Year Short Term Medium Term Long Term Total Amount Percentag Amount Percentag Amoun Percentag (Rs) e of Total (Rs) e of Total t e of Total (Rs) (Rs) 1995-96 20979.1 89.21 2455.79 10.44 80.44 0.34 23515.3 1996-97 7 86.68 2724.19 12.84 103.33 0.49 5 1997-98 18396.9 92.34 1715.67 7.48 42.21 0.18 21224.4 1998-99 7 89.09 2244.94 10.64 57.21 0.27 9 1999-00 21191.5 89.08 2887.53 10.80 32.07 0.12 22949.3 2000-01 0 87.57 3175.99 12.18 65.25 0.25 8 2001-02 18800.0 85.21 3606.49 14.62 42.90 0.17 21102.1 2002-03 4 87.26 3259.85 12.59 40.44 0.16 9 2003-04 23810.7 86.43 3402.94 12.63 252.09 0.94 26730.3 2004-05 6 72.89 9523.47 27.07 16.23 0.05 6 2005-06 22833.2 94.41 1622.94 5.57 5.96 0.02 26074.4

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2006-07 1 94.35 1645.98 5.65 0.03 0.00 5 2007-08 21025.1 91.36 3357.78 8.64 0.01 0.00 24674.5 2008-09 9 89.22 10394.0 17.77 8.93 0.02 8 2009-10 22598.6 91.21 7 8.79 8.79 0.00 25898.9 9 5697.97 8 23284.0 26939.0 1 4 25646.4 35186.1 7 7 27511.3 29140.2 3 3 27506.0 29152.0 6 7 35497.3 38855.1 1 0 48102.6 58505.6 1 1 59154.7 64853.8 7 6 Mean 27755.8 3847.71 49.88 31653.4 7 6 Standard 11504.3 2683.53 64.13 13152.1 Deviatio 0 6 n Source: Annual Audit Report of the DDCCB. It could be understood from Table 1 that the proportionate share of short- term loans in the total loans ranked first in the credit operations of the bank varying between 72.89 per cent and 94.41 per cent during 1995-96 to 2009-10, followed by short- term and medium -term loan. Medium term loans occupied the second place, the lowest was 5.57 per cent in 2005-06 and the

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org highest was 27.07 per cent in 2004-05. In long- term loans the lowest was zero per cent and the highest was 0.49 per cent in 1996-97. It could also be seen from Table 1 that the issue of short – term loan had increased from Rs.20979.17 lakhs in 1995-96 to Rs.59154.77 lakhs in 2009-10. In the case of medium -term loans there was a fluctuating trend ranging between Rs.1715.67 lakhs and Rs.10394.07 lakhs during the study period. Issue of long- term loan also showed a fluctuating trend ranging between Rs.0.01 lakhs and Rs.252.09 lakhs during the study period of 15 years. The average amount over a period from 1995-96 to 2009-10 was Rs.27755.87 lakhs for short- term, Rs.3847.71 lakhs for medium -term and Rs.49.88 lakhs for long- term loans. The total loan was Rs.31653.46 lakhs during the study period. TABLE 2 COMPOUND GROWTH RATE AND MAGNITUDE OF VARIABLITY IN LOAN AND ADVANCE FROM 1995-96 TO 2009-10 Particulars Trend co-efficient R2 CGR C.V A B (Percentage) (Percentage) Short- term 8812.175 2285.617* 0.659 7.401 41.45 loan (4.815) Medium- term 1227.597 319.945 0.236 6.510 69.74 loan (1.924) Long –term 96.244 -5.711 0.131 -37.730 128.56 loan (-1.346) Total loan 10136.017 2599.851* 0.654 7.422 41.56 (4.764) Source: Computed data Figures in parentheses indicate “t” values *Significant at 5 per cent level. Table 2 records that the total loans and advances achieved significant growth with the growth rate of 6.7 per cent during the study period. In the same way there was significant growth in respect of short term loans and advances, medium term loans and advances and long term loans

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org and advances with the growth rate of 6.6 per cent, 6.1 per cent and (-) 35.4 per cent respectively during the study period. It could be inferred from Table 2 that the growth rate of short term loans and medium term loans and advances is positive and significant. There was variation in the amount of short term loans, medium term loans and long term loans during the study period with the co-efficient variation of 41.45 per cent, 69.74 per cent and 128.56 per cent respectively. Outstanding Loans And Advances An outstanding loan is an amount which is likely to be repaid by the borrower. Loan outstanding arises when the borrower fails repay its loan amount promptly and he may be expected to repay it after some time. Higher outstanding leads to over dues and also drains the financial strength of the organisation so, the management should take necessary steps to recover the loan and should see that the loans outstanding was the grow rank. The working performance of the bank can be evaluated by analyzing the outstanding position of loans disbursed. Table 3 reveals the performance of the bank with regard to outstanding of loan and advances of DDCC bank. It could be understood from Table 3 that the outstanding of short- term loans to total varied between 54.78 per cent and 86.77 per cent during the period. In the case of outstanding of medium- term loan also there was a fluctuating trend, varying between 12.26 per cent and 44.04 per cent during the study period. Similarly outstanding of long -term loans to total also had a mixed growth and varied between 0.22 per cent and 1.45 per cent during the study period. It is found from Table 3 that the outstanding short- term loan was found higher at the average of Rs.19184.29 lakhs compared to outstanding other term loan during the period under study. It is also found that there was less fluctuation in outstanding medium -term loans than other term loans. The outstanding loan on an average of 15 years period was Rs.19184.29 lakhs in the case of short -term loans, Rs.6832.54 lakhs in the case of medium- term loans and Rs.246.66 lakhs in the case of long - term loans respectively. The average of total loans outstanding was Rs.26263.0 lakhs.

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TABLE 3 COMPOSITION OF LOAN OUT STANDING FROM 1995-96 TO 2009-10 (Rs. In Lakhs) Year Short term Medium term Long term Total Amount Percentage Amount Percentage Amount Percentage (Rs) of Total (Rs) of Total (Rs) of Total (Rs) 1995-96 10515.03 86.77 1485.12 12.26 117.48 0.97 12117.63 1996-97 10996.57 79.37 2660.07 19.20 198.83 1.44 13855.47 1997-98 12415.86 80.40 2816.36 18.24 210.65 1.36 15442.87 1998-99 12453.20 77.07 3470.68 21.48 233.84 1.45 16157.72 1999-00 13236.77 75.99 3952.94 22.69 230.52 1.32 17420.23 2000-01 15715.08 75.14 4953.12 23.68 246.01 1.18 20914.21 2001-02 17367.07 72.83 6217.41 26.07 260.42 1.09 23844.90 2002-03 19218.47 73.02 6842.77 26.00 257.84 0.98 26319.08 2003-04 24647.92 84.76 4116.13 14.15 315.97 1.09 29080.02 2004-05 17284.27 54.78 13895.01 44.04 374.10 1.19 31553.48 2005-06 21060.55 65.00 10990.23 33.92 351.03 1.08 32401.81 2006-07 20074.91 74.91 6427.69 23.99 294.33 1.10 26796.93 2007-08 24247.72 75.27 7714.09 23.95 252.55 0.78 32214.36 2008-09 31569.33 69.98 13302.62 29.49 243.01 0.54 45114.96 2009-10 36961.65 72.88 13643.82 26.90 113.29 0.22 50718.50 Mean 19184.29 6832.54 246.66 26263.50

Standard 7638.54 4220.52 72.24 11176.12 Deviation Source: Annual Audit Report of the DDCCB. TABLE 4 COMPOUND GROWTH RATE AND MAGNITUDE OF VARIABLITY IN LOANS OUT STANDING FROM 1995-96 TO 2009-10 Trend co-efficient CGR C.V Particulars R2 A B (Percentage) (Percentage) 1613.539* Short term loan 6088.444 0.804 8.384 39.82 (7.025) Medium term 411.819 800.315* 0.666 12.802 61.77

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org loan (4.893) 1.721 Long term loan 241.252 0.012 -0.059 29.29 (0.385) 2415.576* Total loan 6741.518 0.865 9.433 42.55 (8.776) Source: Computed data Figures in parentheses indicate “t” values *Significant at 5 per cent level Table 4 records that the total loans outstanding registered significant growth with the growth rate of 9.6 per cent during the study period. In the same way there was significant growth in respect of short term, medium term and long term outstanding loans with the growth rates of 8.3 per cent, 14.3 per cent and 1.8 per cent respectively during the study period. The co-efficient of variation in the outstanding of short term, medium term and long term loans during the study period were 39.82 per cent, 61.77 per cent and 29.29 per cent respectively. Overdues of Loans and Advances of the DDCC Bank The problem of overdues in the study unit prevails squarely on the PACBs themselves. Recovery and overdues are supposed to be significantly important, because timely recovery of loans not only keeps the business running but also benefits the borrowers by reducing the load of debt and making them eligible for getting loans in future. If the outstanding increases year after year, one day or other it becomes overdues. Such mounting overdues will have an adverse effect on transactions of the Bank. The funds will get locked up indefinitely resulting in the shortage of working funds for recycling. The overdues will become unremunerative ultimatley affecting the profitability of a bank. The co-operative credit structure can not be successful, if what it lends out is not recovered promptly. Hence an attempt has been made to analyse the overdue position of the Bank. The details of overdues in respect of short-term, medium-term and long-term loans and advances by the DDCC Bank and their respective share in the total overdues from 1995-96 to 2009-10 are shown in Table 5.

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TABLE 5 COMPOSITION OF OVERDUES OF LOANS AND ADVANCES FROM 1995-96 TO 2009-10 (Rs. In Lakhs) Year Short term Medium term Long term Total Amount Percentag Amount Percentage Amount Percentag (Rs) e of Total (Rs) of Total (Rs) e of Total (Rs) 1995-96 10515.03 86.77 1485.12 12.26 117.48 0.97 12117.63 1996-97 10996.57 79.37 2660.07 19.20 198.83 1.44 13855.47 1997-98 12414.86 80.40 2816.36 18.24 210.65 1.36 15441.87 1998-99 12453.20 77.07 3470.68 21.48 233.84 1.45 16157.72 1999-00 13236.77 75.99 3952.94 22.69 230.52 1.32 17420.23 2000-01 15715.08 75.14 4953.12 23.68 246.01 1.18 20914.21 2001-02 17363.70 72.83 6217.45 26.08 260.42 1.09 23841.57 2002-03 19218.47 73.02 6842.77 26.00 257.84 0.98 26319.08 2003-04 18441.95 63.42 10368.74 35.66 269.34 0.93 29080.03 2004-05 17284.27 54.78 13895.01 44.04 374.10 1.19 31553.38 2005-06 21060.55 65.00 10990.23 33.92 351.03 1.08 32401.81 2006-07 20074.10 62.31 6427.69 23.99 294.34 1.10 26796.13 2007-08 24247.72 75.27 7714.09 23.95 252.55 0.78 32214.36 2008-09 31569.33 69.8 13302.62 29.49 433.01 0.96 45114.96 2009-10 36961.65 72.86 13643.82 26.90 113.29 0.22 50718.76 Mean 18770.22 7249.38 256.22 20114.67 Standard 7488.18 4241.79 85.40 10457.44 Deviation Source: Annual Audit Report of the DDCCB. It is observed from Table 5 that the proportion of overdues of the short-term loans to total loans was higher and varied between 54.78 per cent in 2004-05 to 86.77 per cent in 1995-96. The percentage share of overdues of short term loans were higher that is 80.40 per cent and 86.77 per cent in 1997-98 and 1995-96 respectively. The reason for such an increase was the fact that

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org there was an increase in expenditure of the farming operations along with the non-commensurate price levels of the farm products during the same period. The proportion of overdues of the medium-term loans to the total overdues marked a fluctuating trend and it varied between 12.26 per cent and 44.04 per cent during this period. Similarly, the share of overdues of the long-term loans in the total varied between 0.22 per cent and 1.45 per cent. The total amount of overdues increased from Rs.72117 lakhs in 1995-96 to Rs. 50718.76 lakhs in 2004-2005 recorded with a 4.19 time increase. It is, therefore, established that the Bank should reduce the amount of overdues by undertaking effective measures. TABLE 6 COMPOUND GROWTH RATE AND MAGNITUDE OF VARIABLITY IN OVERDUES OF LOANS AND ADVANCES FROM 1995-96 TO 2009-10 Trend co-efficient CGR C.V Particulars R2 A B (Percentage) (Percentage) 1599.933* Short term 5760.438 0.818 8.316 39.89 (7.342) 814.057* Medium term 741.633 0.697 13.031 58.51 (5.254) 6.213 Long term 213.319 0.108 1.310 33.33 (1.204) 2420.203* Total 6715.390 0.865 9.444 42.62 (8.756) Source: Computed data Figures in parentheses indicate “t” values *Significant at 5 per cent level Table 6 shows that the total over dues of the study unit recorded steady increase and with the growth rate of 9.6 per cent which was found to be significant and positive during the study period. In the same way there was significant increase in respect of short term, medium term and long term over dues loans with the rate of increase of 0.82 per cent, 14.7 per cent and 3 per cent respectively during the study period.

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International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

The co-efficient of variation of over dues of short term, medium term, long term and total over dues were 39.83 per cent, 58.51 per cent, 33.33 per cent and 42.62 per cent respectively during the study period. CONCLUSION In this paper, the researcher has anlaysed the lending policy of the bank, overdue, outstanding of loan and advances. The study reveals that the short-term loan dominate the total loan issued at more than 72.89 per cent during the study period. The outstanding of short-term loans to total varied between 54.78 per cent and 86.77 per cent during the period. The recovery of loan and advances of short-term to the total recovery varied between 81 per cent and 94.03 per cent during the period. The proportion of overdues of the short-term loans to total loans was higher and varied between 54.78 per cent to 86.77 per cent. The total amount of overdues increased from Rs.72117 lakhs to Rs. 50718.76 lakhs recorded with a 4.19 time increase. SUGGESTIONS The following are the suggestions derived from the study for enhancing the performance of the DDCC Bank. 1. There should be only one strong and viable bank in each district. 2. The bank should take up work of supervisor of primary societies and should guide them so that they may work efficiently and become viable unit. 3. The bank must take greater step to open new branches especially in the semi-urban and rural areas. 4. The bank should follow the normal banking procedure such as issuing pass books, cheque books, pay - in - slips, balance confirmation advice, etc., to depositors. Besides, there should be a system of giving a receipt for every payment. 5. To reduce overdues a large number of field staff is to be engaged for collection of dues. 6. Advertisement should be given through mass media to repay the co-operative dues during the harvesting season. 7. Awareness programmes should be conducted by the Government to enable the farmers to diversil their farm activities so as to earn more income and to repay their loans. 8. The bank must be equipped with all facilities on a par with other banks. So the bank can attract more customers. E-mail id:- [email protected] Page 18

International Journal of Research in Management, Economics & Commerce (Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015) Website: www.indusedu.org

BIBLIOGRAPHY 1. Dossier, Co-Operatives State-Wise Status on the Co-Operative Credit Structure March 1997. NABARD, Mumbai p:11 2. Memoria, C.B. and Tripathi, B.B., Agicultural Problems in India, Kitab Mahal, Allahabad, p.458. 3. Sivasubramaniyan, The practice of co-operative banking, Arulselvi Publications, Trinelveli, 1986, p.164. 4. Ravindranathan, N., “Performance and Promises of Central Co-operative Banks in Kerala’, Indian Co-operative Review, Vol.XXIV, No.4, January 1989, pp.313-318. 5. Satyasai, K.J.S. and Patil, A.S., “Revitalising Rural Credit System”, Economic and Political Weekly, Vol.XXXVII, No.31, August 3, 2002, pp.3235-3238. 6. Mukhi, H.R., Co-operation in India and Abroad, R.B. Publications, New Delhi, 1991, pp.158-159. 7. Hajela, T.N., Co-operation, Principles, Problems and Practice, Konark Publishers Pvt. Ltd., New Delhi, 2000, pp.339-340. 8. Niranjan Raj Urs, B., “Some Analytical Tools for Effective Management of PACs”, Co- operative Perspective, Vol.32, No.4, January-March, 1998, pp.28-31. 9. Dash, D.K., “Financial Performance Evaluation Through Ratio Analysis: A Case Study of Nawnagar Co-operative Bank, Jamnagar (Gujarat)”, Co-operative Perspective, Vol.34, No.4, July-September, 1999, pp. 63-69. 10. Krishnamurthy, G. and Parameshwar, P., “Deposit Mobilisation by Central Co-operative Bank in Andhra Pradesh” – Indian Co-operative Review, Vol.XXII, No.3, January 1985, p.301-304. 11. Bedi, R.D., Theory, History and Practice of Co-operation, R.Lall Book Depot, Meerut, 1995-96. 12. Ramadass, B., “Financial Management Practice in co-operatives’, The Tamil Nadu Journal of Co-operation, Vol.77, December 1985, pp.305-312. 13. Reddy, C.R., “Overdue Appraisal and Management in Banking” India co-operative Review, Vol.XXIII, No.1, July 1985, pp.77-82.

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