A Study on Performance of Primary Land Development Banks (Pldbs) in Shivamogga District of Karnataka

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 A Study on Performance of Primary Land Development Banks (PLDBs) in Shivamogga district of Karnataka

Vidya K1, Ravindranath N Kadam2 1 Post Doctoral Fellow, Department of P.G. Studies and Research in Economics, Jnanasahyadri, Kuvempu University, Shankaraghatta, Karnataka, India. 2 Professor and Chairman, Department of P.G. Studies and Research in Economics, Jnanasahyadri, Kuvempu University, Shankaraghatta, Karnataka,India.

Abstract Co-operation is a form of organization where in persons voluntarily associate together based on equality for the promotion of their economic interest. Under this system, people with limited means are benefitted more. ‘One for all and all for one’ is the philosophy and principle of co-operation. Generally,Indian farmers need three types of credit, viz., short- term, medium-term and long-term. Their short-term and medium-term credit requirements are fulfilled by the co-operative banking institutions like PACs, CCBs and SCBs and long term loans are provided by Land development banks. The long-term finance required by the agriculturists for the purchase of agricultural machinery and for effecting permanent improvements on land. : The main objective of the land development bank is to promote the development of agriculture and increase the agricultural production. The CLDBs provide long-term finance to PLDBs affiliated to them or finance directly through their branches. Primary cooperative Agricultural and Rural development banks are playing an important role in meeting the credit requirements of the rural population. Present study makes an attempt to analyses the growth of these banks in Shivamogga Taluka over a period of nine years (2010 to 2019). The study revealed that although there is an increase in this paper deals with the Demand Collection and Balance Share capital ,Membership that particularly so overall in this various dimension on of working PCARDBs in Karnataka. In this paper, an attempt is made to evaluate the general performance of PLDBs of Shivamoggataluk, Shivamogga district of Karnataka state. The analysis is done on the basis of the statistical data for the period of 9years (2010-11 to 2018-19). Different aspects concerned to the PLDBs such as number, membership, paid up capital, working capital, deposits, loan disbursed and loan recovered have been considered in this study.

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 Keywords: Co-Operation, Deposit, Organization, Recover performance, Working capital.

1. INTROUDUCTION

Every agricultural holding is characterized by a system that is the way they are joined together, quantitatively and qualitatively, land, labor and capital. The optimal combination of these elements ensures maximum income. When the organizer of exploitation has no capital or earth or workforce that can develop within the optimum exploitation, he builds at lower proportions, adapted to the factor, which is the minimum. As other elements can be combined with that factor in various technical reports, the organizer is required to find that combination that guarantees maximum revenue.

The long-term finance required by the agriculturists for the purchase of agricultural machinery and for effecting permanent improvements on land. The necessity therefore has arisen for the establishment of the institutions with the object of providing long-term credit to agriculturists at moderate rates of interest and providing for the repayment of loans in easy annual or semiannual installments spread over a number of years. These institutions are the Land Development Banks. Farmers have to borrow also for the long-term (for a period of 5 years to 20 years) for buying equipment like pump sets, tractors, etc., and for other development purposes, such as reclamation of land, fencing, digging of new wells, construction of a tank or tube-well, or buying additional land. Under farm sector the purposes for which the long-term loans are advanced by the SCARDBs are as follows:

i. Minor Irrigation works i.e.,

(a) Digging/renovation of wells (b) Installation of pump sets (c) Construction of irrigation channels (d) Pipelines (e) Sprinkler/drip irrigation system (f ) Community wells (g) Lift irrigation system etc

ii. Farm Mechanization

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 (a) Tractor/power tillers with accessories (b) Combined harvesters (c) Trolleys (d) Power threshers etc.

iii. Land Development/Land Reclamation including water conservation

iv. Horticulture development (fruit crops, floriculture, mushrooms, vegetables etc)

v. Plantation crops (coconut, cashew, arecanut, rubber, coffee, cardamom, tea, bamboo etc.)

vi. Diversified activities (dairy, poultry, piggery, rabbit, fishery, sheep & goat rearing, gobar gas/bio-gas, farm house, sericulture, rural godowns, bullocks and bullock carts/camel carts, APMC, cold storages/storages etc.)

1.1. Land development banks in India:

Land Development Banks in India are of quasi-commercial type. Although they are all registered under the Co-operative Societies Act, they are associations of borrowers as well as non-borrowers organized on the principle of limited liability. The borrowing capacity of a member is generally determined according to the number of shares he holds in the bank, though each member has only one vote according to co-operative principle.

Thus, a need for a special kind of institution to provide long-term finance to the Indian agriculturists was earnestly felt. Consequently, land development banks came into existence. Initially, the land development banks were instituted in the form of co-operative land mortgage banks. The first co-operative land mortgage bank was established at Jhind, in Punjab in 1920. However, it did not function well. A real beginning was made by the establishment of the Central Land Mortgage Bank in Madras in 1929. Later on, the movement spread too many other states.

The land mortgage banks grant long-term loans to the farmers against the conveyance of land as security. Since, 1966-67, the land mortgage banks are renamed as land development banks. The Agriculture Credit Review Committee (ACRC) in 1989 emphasized the bigger role for

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 the LDBs and recommended to incorporate development of agriculture and its allied activities including wastelands and non-farm sector development. The banks in due course diversified their activities and at the instance of the NABARD in the year 1982 they started financing for agriculture and rural development activities including wastelands. However, late eighties and the beginning of nineties were the crucial period in which LDBs adopted financing long term loans for more significant rural development activities like, village and cottage industries, rural artisans etc. Besides financing for rural housing schemes under NHB refinance was introduced by the banks in selected states like Kerala, Karnataka, Uttar Pradesh, Maharashtra, West Bengal etc. In view of broader role of LDBs they are now known as State Co-operative Agriculture and Rural Development Banks (SCARDBs).

A remarkable progress has been made by the LDBs in providing long-term finance to the agriculturists. The total number of LDBs (central and primary) increased from 481 in 1960- 61 to 920 in 1984-85. In 1984-85 their number of membership had gone up to 10.6 lakhs. In 1984-85, their loans outstanding were to the tune of Rs. 3,643 crore and loan overdues amounted to Rs. 409 crores. Land Development Banks in India are of quasi-commercial type. Although they are all registered under the Co-operative Societies Act, they are associations of borrowers as well asnon-borrowers organized on the principle of limited liability. The working capitals of LDBs are raised from share capital, deposits and debentures, and borrowings from the State Bank of India, commercial banks and the State Co-operative Banks. However, a large part of their funds are raised through long-term debentures. The debentures can be issued only by the Central Land Development Banks and not by the Primary Land Development Banks.

Under its federal structure, the LDB consists of two-tier institutions: (i) the Central Land Development Bank at the State level, and (ii) the Primary Land Development Bank at the district or Taluka level.

1.1.1 State Land Development Bank.

All primary Land Development Banks are federated into Central Land Development Bank at the State Level. In some States, there is “ Unitary structure” wherein, there is only one State Land Development Bank at the state level operating through its branches and sub-branches at district and below levels.

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 1.1.2 Primary Land Development Bank at district level with branches at taluk level

These banks were originally organized to cover one or a few taluks in the district. At present they are eligible to cover one development block. . All land owners are eligible to become members and borrow funds bymortgaging their land. The principal borrower is enrolled as „A‟ class member and others who have interest in the mortgaged property are admitted as „B‟ class members.

Raising Funds: The main function of raising funds is carried out by the Central or State Land Development Bank which can really deal with the money market of the country effectively and advance loans to primary LDB‟s. The sources of funds of State LDB‟s are: Share capital. Issue of debentures Loans from NABARD, Reimbursements of subsidies from the Govt. Other funds.

Loan Procedure: The Branch offices receive applications from the prospective borrower. Then Agricultural Finance Officer or Inspector scrutinizes these applications, they visit places of the application and ascertain the purpose of borrowing, verify the genuineness of the proposal and it economic viability, repaying ability of the farmers, adequacy of security etc. After completing those formalities, the loan is granted by the appropriate authority at appropriate level depending upon the delegation of powers by the Banks.

1.1.3 Central Land Development Bank (CLDB)

These members of the CLDBs are the PLDBs and a few individual promoters. It grants long- term loans to agriculturists through the PLDBs and branches of CLDBs. It raises funds through floating debentures, which are guaranteed by the State Government. When PLDB obtains loan from the CLDB, it assigns the mortgage deeds obtained from the borrowers to the CLDB. The CLDB floats debentures and raises funds against the security of these properties. The NABARD and LIC subscribe for the debentures in large amounts and the former also extends refinance assistance e to LDBs.

1.2 PrimaryLand development bank in Karnataka:

The Karnataka State Co-operative Agricultural and Rural Development Bank. (KSCA & RD Bank) was established on 25th November 1929 and is located in Bangalore. This is an institution handling matters concerning policy, planning and operations in the field of credit

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 for agriculture and for other economic and developmental activities in rural areas. Essentially, it is a refinancing agency for financial institutions offering production credit and investment credit for promoting agriculture and developmental activities in rural areas.

TABLE 1. Primary Land development banks in Karnatakaduring 2014-2015.

Total number of Total Name of District Banks memberships

1. Bagalkote 6 34658

2. Bangalore 3 15879

3. Bagalore Rural 4 22464

4. Belgaum 10 50727

5. Bellary 6 22165

6. Bidar 5 39727

7. Bijapur 5 51053

8. Chamarajnagar 5 10304

9. Chikkaballapur 4 20851

10. Chikmagalur 8 38550

11. Chitradurga 6 67398

12. Dakshina.Kannada 5 57760

13. Davanagere 6 42489

14. Dharwad 5 65854

15. Gadag 5 21104

16. Gulbarga 7 54428

17. Hassan 8 52698

18. Haveri 7 34328

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389

19. Kodagu 3 15985

20. Kolar 5 32980

21. Koppal 4 27388

22. Mandaya 7 42876

23. Mysore 7 39775

24. Raichur 5 9000

25. Ramanagara 4 19975

26. Shivamogga 8 45375

27. Tumkur 10 68608

28. Udupi 3 30592

29. Uttara Kannada 11 70078

30. Yadagiri 3 21657

Total 175 1126726

Source: Department of Co-operation, Govt. of Karnataka

TheTable 1 shows that number of district‟s PLDBs in Karanataka State. Primary Land Development Banks of the taluk level numbering 175 centres. Highest number of PLDBs in Karnataka state are at Uttara Kannada,Tumkur,andBelgaum districts. Lowest numbers of centers are at Yadagiri, Udupi and Banglore. .In this table clearly shows that large number of members having in PLDBs are in Tumkur and Uttarkannada districts.

2. SIGNIFICANCE OF THE STUDY

The Primary land development Banks play an important role in the development of agriculture sector of Shivamogga district. The significance of study is mainly to understand

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 the role of PLDBs Bank in the development of agricultural sector of Shivamogga Taluk and to find the major problem related to functioning of PLD Bank.

3. OBJECTIVES

The study has been done with the following objectives,  To study the origin and growth of PLDBs in India.  The study intends to study the performance of the PLDBs in Shivamogga district in general.  To study financial performance of PLDBs of Shivamogga Taluk.  To make necessary suggestion for the improvement of the PLDBs in Shivamogga Taluk.

4. HYPOTHESES

The following are the hypotheses for the study.

1. Social factors affect the rate of repayment of loan in rural areas. 2. There are direct relationships between agriculture finance and income generation of farmers.

5. LIMITATION OF THE STUDY

The area covered by the study is confined to Shimoga Taluk Primary land development bank only and hence, the results shall relevant for area alone.

6. METHODOLOGY

The geographical area of the present study is restricted to Shivamogga Taluka in Karnataka state. The study is mainly based on secondary data. Secondary data was collected from, Karnataka State Co-operative Agriculture and Rural Development Bank (KSCARDB) Bangalore and, PLDBsin Shivamogga. The sources of secondary data are bank journals, annual reports, brochure and their online resources like web sites.

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 7. PERFORMANCE OFPLDBS IN SHIVAMOGGA DISTRICT

The Primary Land development Banks are play an imperative role in providing necessary financial assistance and some of the banking services to the farmers and agriculture development.The PLDBs provide long-term loans to the agriculturists for permanent improvements on land. PLDBs in Shivamogga was established in 1932 (vide registration no. 15/1511 06-01-1932) The main objectives of the Society is encouraging the saving, mobilizing the financial facility and increasing agricultural facility to farmer members. NABARD and Sate Bank with cooperation of centraland state government releasing the financial support for agricultural improvement to member‟s farmer in PLDBs. The following table with different kind of information gives clear picture of performance of the PLDB of Shivamogga Taluka.

TABLE 2. General Performance of PLDBs in ShivamoggaTaluk of Shivamogga district during 2010-2019

Total Women Total Audit Recovery Percentage Total Loan Net Years Member- Member- Loan classify Balance Deposit Recovered Loss ship ship disbursed cation

2010- 5860 865 17.92 146.10 B 252.60 193.06 215.61 53.95% 11

2011- 5915 875 32.15 82.15 B 236.68 192.17 70.27 77.11% 12

2012- 5957 891 773.92 201.66 B NA 179.34 NA NA 13

2013- 5994 917 510.20 201.85 B 319.29 NA 94.85 77.10% 14

2014- 6144 946 410.30 307.99 C 261.30 258.04 128.23 67.08% 15

2015- 6147 950 429.38 132.20 C 340.29 295.31 123.74 73.33% 16

2016- 6223 980 440.164 300.96 C 204.19 NA 294.99 40.91% 17

2017- 6247 1005 441.17 13.08 C 311.92 429.33 359.34 46.47%

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389

2018- 6262 1020 442.28 28.90 C 240.98 501.26 460.38 34.36% 19 Source: Annual reports of PLDBs Shivamogga.

The Table 2 gives clear information of performance of the Primary Land Development Banks in ShivamoggaTaluk.Total Membership, and women membership is increasing year by year. In 2010 to 2019 shows upper trend.Total Deposits in 2010-11-17.92 lakhs, in the year 2012- 13 it increasedto 773.92 lakhs, after 2017-18 it decreased to 442.28 lakhs. Performance of loan recovery was not satisfactory. Above Table 2 shows, that poor performance in recovery in the year 2011 and 2018. Net loss is also increased year-by-year due to increased overdues. Loans recovered over the years but they are suffering from high over dues dues and heavy accumulated losses.

8. FINDINGS  Total Membership of Shivamogga taluk PLDBs shown increasing trend that indicating healthy development.  The amount of loan was decreased year by year, due to increasedoverdues.  Overdues was found to be increased during the study period.  Net loss of the PLDBs in study area have shown increasing trend.  Loan Recovery has showndecreasing trend during study which shown the not satisfying recovery performance of the PLDB in the study area. This showed the need for the improvement in the PLDB in the ShivamoggaTaluk.  Total deposits are increased in past nine years.  Total loan disbursement are quite decreased past nine years.

9. CONCLUSION

Shivamogga district is positive in co-operative sector. PLDB in Shivamogga taluk playing imperative role in meeting long-termagricultural credit to farmers. Essentially, it is a refinancing agency for financial institutions offering production credit and investment credit for promoting agriculture and developmental activities in the study area. The long-term finance that required by the agriculturists for the purchase of agricultural machinery and for effecting permanent improvements on land, the co-operative credit sector is very successful

International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 2378 - 2389 in Shivamogga taluk. It may be stated that PLDB have made a commendable progress in quantitative terms. The mixed performance of PLDB was noticed.

10. SUGGESTIONS  To increase the membership in PLDBs for more steps to be taken.  Steps to be taken towards recovery of loans from farmers.  More and variety of deposits are to be attracted by increasing rate of interest on deposits.  The amount of loan disbursed should be increased.  The members are to be motivated to repay their loans in time to reduce the over dues and losses.  Sources of loan (finance) to PLDB should be increased  The amount of loan disbursed sanctioned should be increased  Needs big supports from government and policy makers to strengthen of PLDB financial losses.  Mounting overdues in most of the PLDBs have crippled the structure badly, overdues have caused innumerable financial problems. This problem to be addressed by government support and farmer‟s cooperation.  The financial discipline should be impose on the banks in the matter of eligibility to undertake fresh lendings based on recovery performance.

ACKNOWLEDGEMENT

The authors are grateful to Indian Council for Social Science Research (ICSSR), New Delhi, for the financial assistance in the form of Post-doctoral Fellowship and Kuvempu University for their institutional support.

REFERENCES

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