Journal of Xi'an University of Architecture & Technology Issn No : 1006-7930

TREND AND PROGRESS OF REGIONAL RURAL IN

Mrs. K. VIJAYA GOWRI1 Mrs HARIKA PUTTA2 and Dr. M. DORASWAMY NAIK3

1Assistant Professor of MBA, Department of Humanities& Science, Malla Reddy College of Engineering for Woman, Hyderabad, Telangana State. E 2.Research scholar, Deaprtment of MBA, Vignan University, Guntur, Andhra Pradesh, 3Assistant Professor, Department of Commerce, SBVR Degree & PG College, Badvel, Kadapa,(Dt.) AP.

ABSTRACT

The Regional Rural Banks (RRBs) predominant goal of imparting credit score amenities for crop manufacturing and allied functions to the rural terrible who had very limited get right of entry to to the formal savings device as it existed in early seventies. In response to the economic sector reforms, the Indian banking machine has moved away from the conditions and compulsions that were prevailing at the time of advent of the Regional Rural Banks in 1975. In this context, the business viability of Regional Rural Banks emerged as the most crucial thing in deciding about their preferred position in the rising economic scenario. This paper research on increase and growth of RRBs in the course of 2000-01 to 2017-18 in India. The learn about is based totally on secondary statistics amassed from annual reports of NABARD and RBI. An analytical lookup layout of “Key Performance Indicators Analysis” such as number of banks, branches and districts covered, deposits and deposit deployment is mentioned in the present paper. The find out about concludes that the development of deposits mobilization, savings creation and CD ratio of Regional Rural Banks is significant.

KEYWORDS: Regional Rural Banks, Key Performance Indicators, Mobilization of Deposits, Credits, CD Ratio, Growth Rate, NABARD.

INTRODUCTION

Regional Rural Banks had been set up in 1975 with the simple objective of offering credit services for crop production and allied purposes to the rural poor who had very limited get admission to to the formal credit score system as it existed in early seventies. The Regional Rural Banks were essential, in particular, to undertake the commercial enterprise of presenting credit services to the poorer sections of rural society, typically referred to as the ‘Target Group’. However, in response to the monetary region reforms, the Indian banking machine has moved for away from the stipulations and compulsions that have been prevailing at the time of creation of the Regional Rural Banks in 1975. In this context, the industrial viability of Regional Rural Banks emerged as the most indispensable factor in determining about their favored position in the emerging economic scenario. A committee beneath the chairmanship A.V. Sardesai (2005) revisited the trouble of restructuring to improve the operational viability of Regional Rural Banks:

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• Merger between Regional Rural Banks of the same sponsor in the state. • Merger of Regional Rural Banks subsidised by different banks in the state.

The committee was the view that ‘a change in sponsor banks may, in some cases help in improving the performance of Regional Rural Banks. A change in sponsorship may, improve the competitiveness, work culture, management and efficiency of the concerned Regional Rural Banks’.

Hence the present article is to examine the trend and progress of Regional Rural Banks during 2001 to 2018 in India. Bank branches are necessary for providing banking services to the public. Since Regional Rural Banks establishment, the various branch licensing policies had duly emphasized upon the opening of more and more branches in unbanked and neglected rural areas. During 2001-2002, the Regional Rural Banks were allowed to convert their loss making branches into satellite/ mobile offices provided such conversion would not impair the performance of service area obligations. As against the earlier policy of opening a large number of branches in far-flung rural areas, RRBs have now been permitted to merge/ close down their unviable branches and the branch licensing policy of Regional Rural Banks is almost at par with that of commercial banks.

REVIEW OF LITERATURE

According to NABARD (1986) posted “A study on RRBs viability”, which used to be conducted by way of Agriculture Finance Corporation in 1986 on behalf of NABARD. The learn about indicated the aid mobility and implementation in rural areas. In the yr 1989 for the first time, the conceptualization of the whole shape of Regional Rural Banks was challenged through the Agricultural Credit Review Committee.

Which argued that these banks have no justifiable cause for continuance and encouraged their mergers with sponsor banks? The Committee was once of the view that “the weaknesses of RRBs are widespread to the device and non-viability is built into it, and the solely option was to merge the Regional rural Banks with the sponsor banks. The Committee on Financial Systems, 1991 () pressured the terrible financial health of the RRBs to the exclusion of each different overall performance indicator. 172 of the 196 RRBs were recorded unprofitable with an combination loan recovery performance of 41.8 percent. Dr. B.K. Jha (2008) determined the fantastic banking services in rural areas can be capable to promote the rural entrepreneurship and enhance the picture of rural India.

Syed Ibrahim (2010) has given that the overall performance of rural banks in India has significantly improved after amalgamation procedure which has been initiated by the Government of India. Megha and Aparna Bhatia (2013) opined that the average position of Regional Rural Banks in India has improved throughout the publish amalgamation period, though the wide variety of Regional Rural Banks has decreased.

Jayaramaiah et.al (2013) tested that the universal boom of the economic system and poverty alleviation rely upon the gadget which is offering affordable credit via the monetary institutions that stimulates

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sustainable financial increase via the grant of credit in popular and to the rural sector in particular. Syed Mahammad Ghouse (2017) which analyzed the performance of Regional Rural Banks in India has improved at some point of the put up amalgamation period, although the wide variety of Regional Rural Banks has decreased.

OBJECTIVES OF THE STUDY

 To analyze the key performance warning signs of RRBs in India.  To consider Progress and Growth of the RRBs in India at some stage in 2001 to 2018.  To study the Credit – Deposit Ratio of RRBs in India.  To make vital recommendation to enhance the community of RRBs in India.

BRANCH EXPANSION The development of Regional Rural Bank branches is proven in the Table-1. The table shows that the financial institution branches have extended to 21,747 throughout 2017-18 from 14,468 throughout 2000- 01 i.e. an make bigger of 1.5 times. The variety of districts included also increased to 648 at some point of 2017-18 from 482 during 2000-01 i.e. an expand of 1.3 times. The compound growth charges of it account for 0.023 and 0.017 which indicates an insignificant boom of financial institution branches of Regional Rural Banks in India

Table-1: Branch Expansion of Regional Rural Banks in India S. No Year No. of No. of No. of Districts RRBs Branches Covered 1 2000-01 196 14468 482 2 2001-02 196 14486 511 3 2002-03 196 14462 516 4 2003-04 196 14484 518 5 2004-05 196 14433 523 6 2005-06 133 14372 525 7 2006-07 96 14422 534 8 2007-08 91 14558 594 9 2008-09 86 15010 616 10 2009-10 82 15303 618 11 2010-11 82 15658 620 12 2011-12 82 16909 620 13 2012-13 64 17861 635 14 2013-14 57 19082 642 15 2014-15 56 19964 642 16 2015-16 56 20342 648 17 2016-17 56 20924 648 18 2017-18 56 21747 648 Source: Reports of NABARD, Statistical Table on RRBs.

Deposit Mobilisation

Deposit mobilization is an vital banking variable determining the course of increase of the financial institution. It depends upon the savings capability and dependancy of the human beings of the place in

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which the bank is operating. It also relies upon upon the potential of the region involved and the commercial enterprise policy of the RBI. Another element determining the size of deposits is the charge of interest. If the fee of interest is high, the range of credit bills would be more. A greater charge of interest via way of yielding higher earning encourages giant extent of deposits. It is thru deposit mobilization that banks increase their resources. Deposits mobilized by means of the RRBs play a key function not only as an vital source of fund however additionally as an instrument for merchandising savings and banking habits amongst the rural people.

The growth of deposit mobilization of Regional Rural Banks in India at some stage in 2001 - 2018 is shown in Table-2. The table shows that the bank deposits have improved to Rs.4,00,459 crore all through 2017-18 from Rs.35,995crore in the course of 2000-01 i.e. an amplify of 11.13 times. The compound boom fees of it account for 0.143 which point out a giant increase of financial institution deposits of RRBs in India.

Table-2: Deposit Mobilization of Regional Rural Banks in India (Figures: Rs. in Crore) S. No Year Deposits S. No Year Deposits 1 2000-01 35995 10 2009-10 135814 2 2001-02 42494 11 2010-11 156702 3 2002-03 47644 12 2011-12 173393 4 2003-04 53390 13 2012-13 196422 5 2004-05 58286 14 2013-14 220624 6 2005-06 64195 15 2014-15 254226 7 2006-07 81620 16 2015-16 293754 8 2007-08 94412 17 2016-17 345573 9 2008-09 113828 18 2017-18 400459 Source: Reports of NABARD, Statistical Table on RRBs.

Credit Deployment Credit deployment is every other imperative factor of boom of any banking institution. This is more essential in those banking institutions which have been installed to meet the credit necessities of untapped sector in the country. It is, therefore, critical to learn about the increase pattern of deposit deployment through Regional Rural Banks. Regional Rural Banks furnish direct advances in the shape of crop loans, agricultural loans, loans for allied activities, loans for rural artisans, village and cottage industries, self- employed individuals and consumption loans. Regional Rural Banks additionally make oblique advances which are routed thru agencies such as Farmers’ Service Societies, Farmers’ Clubs, Primary Agricultural Societies, and Self-Help Groups etc.

The development of savings deployment of RRBs in India at some point of 2001-2018 is proven in Table- 3. The desk suggests that the financial institution credit score has also accelerated to Rs.2, 52,919 crore in the course of 2017- 18 from Rs.15, 211 crore at some stage in 2000-01 i.e. an enlarge of 16.63 times. The compound growth quotes of it account for 0.170 which indicate a widespread and greater boom of financial institution savings then the deposits, districts included and branch expansion of Re-gional Rural Banks in India.

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Table–3: Credit Deployment of Regional Rural Banks in India (Figures: Rs. in Crore) S. No Year Credits S. No Year Credits 1 2000-01 15211 10 2009-10 79016 2 2001-02 18033 11 2010-11 94545 3 2002-03 21359 12 2011-12 111082 4 2003-04 25057 13 2012-13 129936 5 2004-05 31651 14 2013-14 152051 6 2005-06 36050 15 2014-15 173972 7 2006-07 48420 16 2015-16 197111 8 2007-08 57417 17 2016-17 213247 9 2008-09 64011 18 2017-18 252919 Source: Reports of NABARD, Statistical Table on RRBs.

Credit-Deposit Ratio

To analyse the performance of Regional Rural Banks in India, the Credit-Deposit Ratio is shown in the Table-4.The table shows that the Credit-Deposit ratio of Regional Rural Banks has increased tremendously to 63.17 during 2017-18 from 42.26 during 2000-01 in India i.e. an increase of 1.50 times.

Table-4: Credit-Deposit Ratio of Regional Rural Banks in India (Figures: Rs. in Crore) S. No Year CD Ratio S. No Year CD Ratio 1 2000-01 42.26 10 2009-10 58.18 2 2001-02 42.44 11 2010-11 60.33 3 2002-03 44.83 12 2011-12 64.06 4 2003-04 46.93 13 2012-13 66.15 5 2004-05 54.30 14 2013-14 68.92 6 2005-06 56.16 15 2014-15 68.43 7 2006-07 59.32 16 2015-16 67.10 8 2007-08 60.82 17 2016-17 61.71 9 2008-09 56.23 18 2017-18 63.16 Source: Reports of NABARD, Statistical Table on RRBs.

Weakness of RRBs

Although RRBs had a fast expansion of department community and expand in volume of business, these establishments went via a very difficult evolutionary manner due to the following problems. 1. Very limited vicinity of operations. 2. High hazard due to publicity only to the target group. 3. Public appreciation that RRBs are terrible man's banks. 4. Chairman of RRBs underneath the route of Regional Managers appointed as Board of two two two two Directors with the aid of sponsor banks. 5. Burden of authorities subsidy schemes and inadequate know-how of clients main to low first-class assets.

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6. Unionized personnel with low commitment to earnings orientation and functional efficiency. 7. Inadequate skills in treasury administration for earnings orientation. 8. Inadequate exposure and capabilities to innovate merchandise limiting the lending portfolios. 9. Serious undermining of the Board by means of compulsions to appear up to sponsor banks, GOI, NABARD and RBI for most decisions.

SUGGESTIONS FOR IMROVEMENT OF RRBs

1. Government should motivate and help banks to take gorgeous steps in rural development. 2. Efforts need to be made to make sure that the non-interest price of credit to small debtors is saved as low as possible. 3. Policy be made via government for opening more branches in weaker and faraway areas of state. 4. Productivity can be increased by controlling the prices and growing the income. 5. Government have to take firm motion towards the defaulters and shouldn’t make popular bulletins like waiving of loans. 6. The RRBs have to make an essential trade in their selection making with regard to their investments. 7. The RRBs have to supply choice to the micro-credit scheme and encourage in the formation of self assist group. 8. A uniform pattern of pastime price structure need to be devised for the rural economic agencies. 9. The RRBs have to fortify superb credit score administration via way of credit score appraisal, monitoring the development of loans and their efficient recovery. 10. The credit score coverage of the RRBs need to be based on the crew strategy of financing rural activities.

CONCLUSION

The outcome of the study shows that out of 56 RRBs in India. During this study period the growth of bank branches is negligible as the compound growth rates are very low whereas the resource mobilization (Deposits) and credit deployment is significant as compound growth rates are high. In terms of total deposits and credits, there has been a substantial increase in volume of business of RRBs in India have been increased deposits from Rs. 35,995 crore in 2001 to Rs. 4,00,459 crore by 2018, registering a growth rate of more than 14.32% during the same period. From the beginning of their operations, the RRBs in the country concentrated on expanding credit services as reflected in the credit-deposit ratio, which has shows constantly an increasing trend from 42.26% in 2001 to 68.92% in 2014. After that it shows decreasing trend from 68.43% in 2015 to 63.16% in 2018. The correlation co-efficient between branches and deposits, deposits and credit and branches and credit account for 0.9 and is significant as calculated ‘t’ value accounts for 6.4636 which is higher than the tabular ‘t’ value both at 0.05 percent (1.796) and 0.01 percent (2.718) levels. Hence the resource mobilization especially in rural areas and credit allocation of Regional Rural Banks during 2000-01 to 2017-18 periods is significant.

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REFERENCE 1. Report of the Working Group on Rural Banks (1975), Ministry of Finance, Government of India, New Delhi. 2. Anil Kumar Soni and Abhay Kapre, Performance Evaluation of Regional Rural Banks in India, volume no.1, issue no.11. 3. R. K. Agarwal., “Evaluation of the Working of Regional Rural Banks”, Mittal Publications, New Delhi, 1991. 4. Hosamani, S.B., “Performance of Regional Rural Banks”, Anmol Publications Pvt. Ltd., New Delhi, 2002. 5. Pati, A. P., “Regional Rural Banks in Liberelised Environment”, Mittal Publications, New Delhi, 2005. 6. Report of the Internal Working Group on RRBs (2005), www.rbi.org.in. 7. Misra, Biswa Swarup, “Performance of Regional Rural Banks in India: Has Past Anything to Suggest for Future?” Reserve Occasional Papers, Vol.1 and 2, summer and Monsoon, 2006. 8. Navkiranjit Kaur Dhaliwal, “Growth and Performance of Regional Rural Banks”, Discovery Publishing House Pvt. Ltd., New Delhi, 2010. 9. Sudarshana Reddy, “Growth and Performance of Regional Rural Banks in India”, volume no.2 issue no. 11, November 2013. 10. Mudasir Ahmad (2014), “Performance of Regional Rural Banks: A comparative position of Regional Rural Banks in Jammu and Kashmir”, volume no.4, issue no.7. 11. Syed Mahammad Ghouse Narayana Reddy (2017), “Indian Regional Rural Banks Growth and Performance”, National Conference on Marketing and Sustainable development.

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