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Report of the Expert Committee (Chairman: Dr. Prakash Bakshi, Chairman, NABARD) on Streamlining of Short Term Co-operative Credit Structure (STCCS)
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....eport of the Expert Committee (Chairman: Dr. Prakash Bakshi, Chairman, NABARD) on Streamlining of Short Term Co-operative Credit Structure (STCCS) <br>FEMA & RBI<br>Dated:- 24-1-2013<br><BR>Report of the Expert Committee (Chairman: Dr. Prakash Bakshi, Chairman, NABARD) on Streamlining of Short Term Co-operative Credit Structure (STCCS) Date : 24 Jan 2013 The Reserve Bank of India released on its website today, the report of the Expert Committee (Chairman: Dr. Prakash Bakshi, Chairman, NABARD) constituted to review the existing Short Term Cooperative Credit Structure (STCCS) focusing on structural constraints in rural credit delivery system and explore various ways to strengthen the rural cooperative credit architecture with appropriate institutions and instruments of credit to fulfill credit needs. The Committee made an in-depth analysis of the STCCS and examined various alternatives with a view to reducing the cost of credit, including feasibility of setting up of a two-tier STCCS as against the existing three-tier structure. Major Recommendations of the Committee By adopting a wide and exhaustive consultation process, the Committee identified key issues facing diverse segment....
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....s and sections of cooperative credit structure; examined them thoroughly. Some of the important observations/ recommendations made by the committee include; i. For providing safety of deposits and efficient loan services to farmers, the Committee has recommended that PACS should work only as business correspondents (BCs) on behalf of banks and should not themselves act as financial intermediaries. In addition, PACS should provide a range of other fee based financial and non-financial products. The immediate consequence of such a change would be that all depositors and borrowers in villages would become direct member clients of the CCBs. ii. The Committee observed that 238 of the 370 CCBs in the country already have CRAR of 7% or above, and about two thirds of them would be able to internally generate enough capital to maintain a sustainable CRAR of at least 9% by 2016-17. About 209 of the 370 CCBs would require additional capital aggregating Rs 6,500 crore in four years to attain 9% CRAR by 2016-17. It is estimated that despite these measures, about 60 CCBs will not become sustainable and would need to be merged with other CCBs. The Committee has suggested a roadmap for such an e....
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....xercise. iii. Some of the CCBs do not have adequate capital to meet even the relaxed licensing norm of 4% CRAR. The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR, failing which RBI should take the necessary regulatory action. iv. The Committee has also estimated that about 58 CCBs would generally not be able to mobilise the required capital, or their business sizes are so small that they would not be sustainable in the long run and would have to be therefore consolidated with other CCB(s). v. Most of the CCBs and StCBs will also have to take concrete steps to improve their internal systems, human resources, and technology adoption. The Committee has also recommended various steps for improving the governance and management in StCBs and CCBs on the lines of recommendations of the Vaidyanathan Task Force. vi. RBI to modify banking licence of any CCB to include additional operational area from which a PACS could work as BC of a CCB. vii. 30 September 2013 to be set as deadline for all StCBs and CCBs to be fully operational on CBS and p....
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....roviding RTGS, NEFT, ATM and POS device based services. viii. StCBs and CCBs to be fully included in the financial inclusion and EBT drive. Deposits of governments and government agencies to be also made in StCBs and CCBs which have achieved 7% CRAR and are on CBS. ix. CCBs and StCBs to be covered by the banking Ombudsman or a similar mechanism that may be developed by RBI with NABARD. x. A working group to be set up to make recommendations on the human resources requirements following the transition of StCBs and CCBs on CBS and other ICT platforms. The recommendations of the Committee are expected to have significant impact in addressing issues related to cooperative credit structure. Ajit Prasad Assistant General Manager Press Release : 2012-2013/1253 ============= Document 1Report of the Expert Committee to examine Three Tier Short Term Cooperative Credit Structure (ST CCS) Chairman Prakash Bakshi Chairman, NABARD Reserve Bank of India Central Office Mumbai January 2013 37827&1 Chairman Dr D Subbarao Governor Reserve Bank of India Central Office Mumbai Letter of Transmittal Respected Sir Expert Committee to Examine Three-Tier Short Term Cooperative Credit Structure (ST ....
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....CCS) 15 January 2013 NABARD 30 YEARS NATION BUILDING The Reserve Bank of India had constituted the above Committee vide order D.O RPCD.CO.RCBD.593 / 07.06.000/2012-13 dated 23 July 2012. I am happy to place the report containing the analysis, conclusions and recommendations of the Committee for your kind perusal and consideration. Yours faithfully, diamanty Prakash. Prakash Bakshi Chairman of the Committee National Bank for Agriculture and Rural Development Head Office: BKC, Bandra (E), Mumbai - 400 051 Phone: +91 22 2653 0000 E-mail: [email protected] Website: www.nabard.org Taking Rural India >> Forward राषà¥à¤Ÿà¥à¤°à¥€à¤¯ कृषि और गà¥à¤°à¤¾à¤®à¥€à¤£ विकास बैंक पà¥à¤°à¤§à¤¾à¤¨ कारà¥à¤¯à¤¾à¤²à¤¯ : बीकेसी, बानà¥à¤¦à¥à¤°à¤¾ (पू), मà¥à¤®à¥à¤¬à¤ˆ - 400 051 फोन : +91 22 26530000 ई-मेल: [email protected] dais: www.nabard.org • गà¥à¤°à¤¾....
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....¤®à¥€à¤£ à¤à¤¾à¤°à¤¤ >> चलें साथ आगे eco friendly paper Chapter No. Contents Particulars Page No. Summary and Recommendations i-vi 1 Background and Introduction 1-5 2 Rural Cooperative Banking and Reforms. 6-9 3 Role of ST CCS in providing agricultural credit 10-16 4 Financial performance of STCCS - an Overview 17-32 5 Financial Sustainability of STCCS 33-43 6 Strategies for higher CRAR and Consolidation 44-56 7 Policy Measures and other Initiatives Required 57-62 Annexure No. 1.1 3.1 3.2 3.3 Annexures Particulars Constitution of the Expert Committee vide RBI letter DO.RPCD.CO.RCBD.593/07.06.000/2012-13 dated 23 July 2012 State-wise Details of Membership, and Loan Issued by PACS in Two tier & mixed tier structures- Average of 3 Years (2009-10 to 2011-12) State-wise Summary of Loans Issued by CCBs in Three tier & mixed tier Structures vis-à -vis All Agencies Average for the Years 2009-10 to 2011-12 Share of CCBs in Three tier & mixed tier Structures In Total Loans Issued and agri loan in its operational area (Based on average of years 2009-10 to 2011-12) Page No. i iii .> 3.4 Share of CCBs in Three tier ....
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....& mixed tier Structures in Total Loans Issued, Agri loans and Crop Loans based on 3 years average-Range vi 3.5 State-wise Summary of Loans Issued by StCBs under Two Tier Structure vis-Ã -vis All Agencies Average for the Years 2009-10 to 2011-12 vii 4.1 Business and Profitability parameters of StCBs Three & mixed Tier Structures as on 31 March 2012 viii 4.2 Business and Profitability parameters of CCBs in Three & mixed Tier Structures as on 31 March 2012 ix 4.3 Business and Profitability parameters of StCBs in Two tier Structure as on 31 March 2012 X 4.4 Deposits by Type and by Source of StCBs in Three tier and mixed tier Structures as on 31 March 2012 xi 4.5 Analysis of NPAs of Agri and Non Agri loans of Select StCBs Xii 4.6 Deposits by Type and by Source of CCBS in Three tier and mixed tier Structures as on 31 March 2012 Xiii 4.7 Analysis of NPAs of Agri and Non Agri loans of Select CCBs xiv 4.8 Deposits by Type and by Source of StCBs in Two tier Structure as on 31 March 2012 xvi 5.1 Statement showing likely additional capital required for CCBs on 'Trend Based' performance xvii Annexure No. 5.2 6.1 Particulars Modelwise assessment of likely additional capital requirement of sele....
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....ct CCBS Unlicensed CCBS - CCB- wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014- 15 and 2016-17 respectively Page No. Xix XX 6.2 Licensed Banks with less than 4% CRAR - CCB- wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively XXI 6.3 CCBs recommended for license - CCB- wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively XXII 6.4 Licensed Banks with CRAR ranging from 4% to 7%- CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively Xxiii 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively XXvi 6.6 Per PACS/Borrower likely additional capital mobilisation by 2016-17 XXXV 6.7 Illustrations of merger of banks with other banks in geographically contiguous area xliv 6.8 Illustrations of Consolidation of CCBs - Estimation of Recap assistance required by consolidated CCBs | Appendix No. Appendices Particulars Page No. 1 Details of Meetings of Committee | 2 List of Participants || 3 Views o....
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....f members IV Report of the Study conducted by Prof HS Shylendra, Committee Member XXXVI Report of the Expert Committee on Three tier ST CCS 1. Summary and Recommendations The Expert Committee was constituted by RBI to have a relook at the functioning of the short-term cooperative credit structure (ST CCS) from the point of view of the role played by ST CCS in providing agricultural credit, to identify central cooperative banks (CCBs) and state cooperative banks (StCBs) which may not remain sustainable, and to suggest appropriate mechanisms for consolidation or delayering of the ST CCS and make recommendations for action to be taken by various stakeholders. The analysis, conclusions drawn, and recommendations made by the Committee are indicated below. 2. The Committee noted that the share of ST CCS in providing agricultural credit has fallen to a mere 17% at the aggregate level although there are small pockets where its share is more than 50%. The Committee is of the opinion that ST CCS, which was primarily constituted for provision of agricultural credit must provide at least 15% of the agriculture credit requirements in its operational area, gradually increasing to at least 30%. (....
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....para: 3.14) 3. The Committee also noted that almost 40% of the loans provided by PACS and almost half the loans provided by CCBs are for non-agricultural purposes, although the share of many of these PACS and CCBs in agricultural credit was less than 30% in their operational area. The Committee noted with concern that these PACS and CCBs were not performing the role for which they were constituted. The Committee therefore recommends that CCB should strive to provide at least 70% of their loan portfolio for agriculture. The Committee also recommends that if a CCB or StCB consistently underperforms and provides less than 15% share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank. The Committee also noted that StCBs in the NER region as well as smaller states and union territories like Delhi, Goa, Chandigarh, etc. provide insignificant credit to agriculture and are catering to the requirements of only the urban population and may therefore be declared and treated as urban co- operative banks. Necessary amendments in the State Cooperative Societies i Report of the Expert Committee on Three tier ST CCS Acts, Rule....
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....s and byelaws of these banks may have to be carried out for this purpose. (paras: 3.14, 3.15 & 3.17) 4. As deposits made by members with PACS are not covered by DICGC, and not being part of the banking system PACS will not be in a position to issue kisan credit cards (KCC) transactable/working on ATMs and POS devices, it would be most appropriate for CCBs to provide these services directly by using PACS as their business correspondents (BCs). All the depositors and borrowers of PACS therefore would become normal shareholding members of the CCB with voting rights for all "active" members. Definition of active members with reference to deposits and loans may be provided by RBI or an agency authorised by it. Necessary amendments in the State Cooperative Societies Act, Rules and bye-laws will be necessary in each state. (paras: 6.39 & 5.26) 5. Almost two thirds of the deposits with StCBs are deposits made by CCBs in the form of term deposits for maintenance of their SLR and CRR requirements. However, StCBs lend far higher amounts to the same CCBs and also invest in loans which had generally resulted in higher NPAs, thus actually putting the SLR and CRR deposits made by CCBs to risk. Wh....
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....ile StCBs should definitely try to diversify their lending portfolio, ways to keep these investments safe need to be found. The Committee recommends that StCBs (and CCBs) may as a possible measure, be given a higher share in the food consortium credit. (para: 4.17) 6. To the extent StCBs are able to mobilise deposits from individuals, cooperatives other than CCBs and other entities, and also function as aggregators of refinance requirements on part of CCBs, they would continue to conduct the important function of providing liquidity support to affiliated CCBS, although technically each CCB can receive such liquidity support directly from any other bank or financial institution also. (para: 7.4) 7. Division of a state into two or more independent states should not be a compelling reason for the division of a well-functioning StCB and the possibility of converting such StCB into a multistate federal cooperative bank must be ii Report of the Expert Committee on Three tier ST CCS explored. Necessary amendments in the Multistate Cooperative Societies Act, BR Act, and NABARD Act would have to be carried out for this purpose. 8. (para: 7.7) About 238 CCBs already have a CRAR of 7% or more....
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...., and 2/3 of them would be able to meet additional capital requirements and sustain CRAR of at least 7% by 2014-15 and of 9% by 2016-17. However, a large number of CCBs and some StCBs do not have adequate capital to meet even the relaxed licensing norm of 4% CRAR. The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR failing which RBI should take the necessary regulatory action. (para: 6.11) 9. To assess the additional capital requirements, the Committee used four scenarios: Model 1 with fixed growth rates for different parameters, Model 2 with continued past trend, and Models 3 and 4 with accelerated growth for different parameters. (paras: 5.16,5.23 & 6.15) Bank-wise, these 10. The Committee estimated that 209 CCBs of the 370 CCBs will have to mobilise, as an aggregate, Rs. 4,024 crore by 2014-15 and 6,498 crore by 2016-17 to achieve CRAR of 7% and 9% respectively. amounts range from as low as 1.84 lakh to 282 crore. The Committee has estimated that about 151 CCBs should be able to mobilise the required capital from their members1 by askin....
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....g the members to contribute amounts ranging from 2 to 4000 over a period of 4 years. (paras: 5.16,5.23 & 6.15) 11. The Committee also recommends the following to help CCBs augment their capital. a. CCBs may be permitted by RBI to issue fixed interest bearing deposits of 10 years or more with a lock-in period of five years for its members and to treat such deposits as tier 1 capital. These deposits could be 1 All depositors and borrowers, presently of PACS, would become direct customers of CCBS once PACS started functioning as BCs and would have to become shareholding members of CCBs. Their loan-linked shares would also stand transferred to the CCBs. iii Report of the Expert Committee on Three tier ST CCS converted into regular shares after the CCB achieves the required CRAR. (para: 5.30) b. CCBs may be permitted to issue perpetual bonds or debt instruments to be contributed by states, individuals and other entities, and the same to be treated as tier 1 capital. (paras: 5.31 & 5.32) C. Share capital deposits with PACS created through releases of Gol and the state shares may be transferred to the concerned CCBs if not eroded due to the losses. (para 5.27) d. CCBs may increase the per....
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....centage of share linking for all the loans provided by them e. (para 5.28) RBI may permit tier 2 capital to be treated as tier 1 capital to an extent of 150% of tier 1 capital fund for a period of five years. (para 5.33) 12. The Committee has also estimated that about 58 CCBs would generally not be able to mobilise the required capital, or their business sizes are so small that they would not be sustainable in the long run and would have to be therefore consolidated with other CCB(s). The Committee has worked out illustrative examples of such possible consolidations and recommends that a working group may be constituted in each state for working out details of such possible consolidations in dialogue with the concerned stakeholders and preparing an action plan. The Committee recommends that broad parameters for attempting such consolidations should be a minimum business level Rs 200 crore for the consolidated CCB and achieving CRAR of 7% by 2014-15 and 9% by 2016-17 with a concrete action plan for contributing any additional capital that may be required. Contiguity of operational area may be given preference. (paras 6.21 to 6.37) 13. Most of the CCBs and StCBs will also have to tak....
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....e concrete steps to improve their internal systems, human resources, and technology adoption. The Committee has also recommended various steps for improving the iv Report of the Expert Committee on Three tier ST CCS governance and management in StCBs and CCBs on the lines of recommendations of the Vaidyanathan Task Force. (para 7.9) 14. An autonomous cooperative election authority may conduct elections for StCBs and CCBs and amendments may be made in the Cooperative Societies Act of each state ensuring that any director on the Board of these banks removed or superseded by RBI for any financial irregularity or if the bank incurs losses in any three years during their term of five years may be barred from contesting elections to any CCB or StCB for a period of five years. (para:7.9 i) 15. BR Act may be amended to give direct and overriding authority to RBI over any other law for superseding the Board or removing any director on the board of StCB or CCB and to prescribe the number of professionals, each from a different specialisation, to be elected, or co-opted within three months of the election, on the board of StCB or CCB. (para:7.9 ii & ii) 16. The panel of statutory auditors for....
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.... StCB or CCB, being a banking entity, to be prescribed by RBI or an agency authorised by RBI although the recent Constitutional amendment requires the state government to prescribe the (para:7.9 iv) same. 17. RBI to modify banking licence of any CCB to include additional operational area from which a PACS could work as BC of a CCB. (para: 7.9 v) 18. State Cooperative Societies Acts to be amended so as to provide the authority to StCBs and CCBs in taking business decisions such as percentage of share linkage, making investments, paying dividends etc within the directions and guidelines prescribed by RBI. (para: 7.9 vi) 19. 30 September 2013 to be set as deadline for all StCBs and CCBs to be fully operational on CBS and providing RTGS, NEFT, ATM and POS device based services. (para: 7.10) V Report of the Expert Committee on Three tier ST CCS 20. StCBs and CCBs to be fully included in the financial inclusion and EBT drive. Deposits of governments and government agencies to be also made in StCBs and CCBs which have achieved 7% CRAR and are on CBS. (para: 7.11) 21. CCBs and StCBs to be covered by the banking Ombudsman or a similar mechanism that may be developed by RBI with NABARD. (par....
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....a: 7.12) 22. A working group to be set up to make recommendations on the human resources requirements following the transition of StCBs and CCBs on CBS and other ICT platforms. (para: 7.13) 23. Gol may consider giving income tax exemption to StCBs and CCBs up to 2016-17 for incentivizing them to achieve 9% CRAR. (para: 7.14) 24. RBI may consider graded CRAR norms for CCBs and StCBs of different business sizes. (para: 7.15) 25. An independent organisation may be set up by CCBs and StCB in each state for providing support services. (Para 7.8) vi Report of the Expert Committee on Three tier ST CCS Chapter 1 Background and Introduction 1.1 The Committee on Financial Sector Assessment (CFSA) 1 had looked into the financial health of banks including the cooperative banks and made several recommendations for improving the financial health and systems for attaining and maintaining financial stability. The CFSA had reviewed the cooperative and rural banking sector as well and made the following recommendations, among others, relating to cooperative banks: a. b. C. The prevalence of the three-tiered structure leads to an increase in transaction cost that diminish profit margins. Also, there ....
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....is considerable interference by the elected board in the day-to-day management of these banks, which ordinarily should be the responsibility of the Chief Executive Officer (CEO). Further, officials from the state government deputed to these banks may have neither the professional skills nor the requisite experience to run the banks, though recent initiatives of incorporating fit-and-proper criteria for the CEO and directors in the MoU is expected to alleviate this problem. The suggestion by the Vaidyanathan Committee to introduce a risk weight- based capital requirement of 7 per cent should be implemented. Rural co-operative banks, which fail to obtain a licence by end-March 2012, should not be allowed to operate. 1.2 In the last two years, RBI and NABARD implemented a roadmap for issue of licences to unlicensed state co-operative banks (StCBs) and central co-operative banks (CCBs) in a non-disruptive manner, with an intention to complete the licensing agenda by end of March 2012. After considering NABARD's recommendations for issuance of licences based on inspection or quick scrutiny, 41 out of 370 CCBs were found to be unable to meet the licensing criteria by end-March 2012. RBI,....
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.... therefore, allowed time upto 30 September 2012 for concrete steps to be taken by these 41 banks and the respective state governments for meeting the licensing parameters. Based on the capital infusion and other support provided by the states, NABARD 1 Committee on Financial Sector Assessment set up by GOI under the Chairmanship of Dr Rakesh Mohan in September 2006 for suggesting measures to make the Indian Financial System stronger. Report of the Expert Committee on Three tier ST CCS recommended for issuance of licence to 15 banks and the balance 26 CCBs, however, did not meet the criteria by the set date, i.e., 30 September 2012. Further, 6 StCBs and 23 CCBs which had been granted licence by RBI earlier were found to be not able to maintain the 4% CRAR as on 31 March 2012. It is in such a background that RBI decided to have a relook at the working of the three tier rural cooperative banking structure, and constituted an Expert Committee (please see Annexure-1 for the RBI notification) under the Chairmanship of Dr. Prakash Bakshi, Chairman, NABARD and with representatives from Gol, RBI, State Govt., StCB and other experts as members with the following Terms of Reference (TOR): I. ....
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....II. To assess the role played by State & District Central Cooperative Banks in fulfilling the requirement of agriculture credit, the primary purpose for which they were set up. To identify Cooperative Banks that may not be sustainable in the long run even if some of them have met the diluted licensing criteria for the time being. III. To suggest appropriate mechanism for consolidation by way amalgamation, merger, takeover, liquidation and delayering. of IV. V. To suggest pro-active measures that need to be taken in this direction by the Cooperative Banks themselves, Gol, State Govts, RBI and NABARD. Any other issues and concerns relevant to the subject matter. The Committee comprised the following members: 1. Dr. Prakash Bakshi, Chairman, NABARD :Chairman 2. Shri V. Ramakrishna Rao, ED, NABARD :Member 3. Shri Umesh Kumar, Joint Secretary, DFS, Gol :Member 4. Dr. Mona Sharma, Principal Secretary, Cooperation, Govt. of Odisha 2 5. Shri Yadavalli Vijendra Reddy, President, APCOB 6. Dr. B. Yerram Raju, Director, Development & Research Services (P) Ltd (Expert in the field) 7. Dr. H. S. Shylendra, Professor, IRMA, Anand 8. Shri C.D. Srinivasan, CGM, RBI, RPCD, CO :Member² : Member :M....
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....ember :Member :Member Secretary Dr. Sharma attended one meeting. She was in the meantime posted as Chief Electoral Officer and did not participate later. 2 Report of the Expert Committee on Three tier ST CCS Approach 1.3 Basic premise of the Committee for analysing the business and financials, to arrive at conclusions and making recommendations was that ST CCS has been primarily set up for agricultural lending. In order to fulfil this obligation, a minimum of 15% market share in agricultural credit should be attained by the CCBs in their operational area and the percentage of agricultural lending should be at least 70% in their total loans outstanding. Attainment of CRAR at the designated level and maintaining the same and achieving higher CRAR within a time frame is of paramount importance and indicator of sustainable viability of the banks. Additional capital should be mobilised primarily through members' contribution and supplemented from other sources. Methodology 1.4 Chairman of the Committee had an initial discussion with Dr K C Chakrabarty, Deputy Governor, RBI, for setting the broad contours and framework for the working of the committee, given the short span of about three....
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.... months in which the Committee was required to submit its report. The Committee decided to obtain feedback from representatives of all the three tiers through formal and informal meetings, and held discussions with select representatives of cooperative banks and PACS, NAFSCOB members and officials, state govt. officials, eminent experts, and All India Cooperative Bank Employees Federation (AICBEF). Further, the TOR of the Committee was uploaded on the website of NABARD for soliciting comments and suggestions from interested persons and stakeholders. State governments and cooperative banks were also advised to give their views and suggestions on the TOR for consideration of the Committee. The Committee members also met several times in formal and informal meetings to discuss and finalise the analysis and contents of the report. (Details are furnished in Appendix 1,2 and 3). Dr Shylendra, member of the Committee took up a special study of the roles played by the StCB and CCBs in Gujarat (Appendix 4). 1.5 The Committee obtained available data on ground level credit flow to agriculture by CCBs and by all other agencies in the operational areas of CCBs alongwith the financial data and b....
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....alance sheets of StCBs and CCBs as on 31 March 2012. Data and other relevant information from PLPs, State Focus Paper, inspection reports of NABARD, agenda notes of SLBC, etc. alongwith data available from 3 Report of the Expert Committee on Three tier ST CCS NAFSCOB, RBI, NABARD, and reports of various Committees was used. Given the weak database and MIS of the cooperative credit structure, the Committee made all possible efforts to verify and sanitise the data as far as possible before its use. The report has captured changing scenario of rural banking (Chapter 2), the role of ST CCS in agricultural credit flow (Chapter 3), detailed analysis of financial performance of the entire ST CCS (Chapter 4), assessment of additional capital under different growth scenarios for achieving 7% CRAR by 2014-15 and 9% by 2016-17(Chapter 5), strategies for attaining higher CRAR and consolidation/ liquidation measures wherever necessary (Chapter 6) and various policy measures and initiatives required for strengthening the ST CCS (Chapter 7). 1.6 The Committee would like to place on record its appreciation for the inputs received from the Chairmen and Presidents, MDs and CEOs of all StCBs/ CCBs, o....
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....fficials of state governments, members and CEO of NAFSCOB, eminent experts, members of AICBEF and other interested people, who have provided valuable suggestions and comments. The entire analysis of the financials of ST CCS including conceptualisation of various growth scenarios and developing the analysis matrices on which the conclusions and recommendations of the Committee are based was carried out by Dr. U.S. Saha, General Manager, Shri A.V. Joshi, AGM and Smt. S. Vijayalakshmi, AGM who were ably supported by S/Shri A K Parhi, DGM, J Suresh, AGM, Smt Y Nagalatha Rani, AGM, S M Sule, Manager, Rajendar Perna, AM, Ramesh Kumbhare, AM and A P Chandrahasan, AM in compilation and cleansing of data as well as data analysis. Shri Manoj Raiwad, SDA, Shri Vaibhav Wadkar, DA and Smt Vedanti Khandalkar, DA-WP provided competent logistical support to this team. The Committee would like to record its appreciation for the in- depth analysis of such voluminous data by this team in such a short period. The valuable inputs and suggestions received from S/Shri K V Rao, CGM, P B Subramanian, AGM and other colleagues in departments of Supervision and Institutional Development in NABARD are also dul....
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....y acknowledged. The Committee also thanks all the Regional Offices of NABARD for providing information and organising various formal and informal meetings from time to time. Report of the Expert Committee on Three tier ST CCS 1.7 The Expert Committee is grateful to RBI for the opportunities given to the Committee and guidance provided. The Committee has made concerted efforts in analyzing the financials of cooperatives and made suggestions with the best of the knowledge of the Committee. drak Prakash Dr. Prakash Bakshi Chairman Каживо V. Ramakrishna Rao Member Joint Secretary DFS, Member,GOI Dr. Mona Sharma Member Y. Vijayender Reddy Member времена Dr.B. Yerram Raju Member Dr. H.S.Shylendra Member Sinivasan C.D.Srinivasan Member Secretary 5 Report of the Expert Committee on Three tier ST CCS 2.1 Chapter 2 Rural Cooperative Banking and Reforms Rural credit cooperatives were born more than 100 years ago, and developed into two distinct streams of agricultural credit, one basically meeting the crop loan requirements of farmers, and the other supporting farmer level capital investments in agriculture. The structure which primarily meets the crop....
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.... loan requirements is a three-tier structure in most of the states with primary agricultural credit cooperative societies (PACS) with farmers as their members at the base level, central cooperative banks (CCBs) as the intermediate federal structure with PACS as principal affiliated members, and the state cooperative bank (StCB) at the apex state level with CCBs and other cooperatives as its principal members. This three-tier cooperative credit structure is popularly known as the short-term cooperative credit structure (ST CCS). 2.2 The ST CCS functions as a three-tier structure in 16 states; while in 13 smaller states & union territories, PACS are directly affiliated to the StCB and the ST CCS functions as a two tier structure. In 3 states, a mixed structure, i.e., two tier in some districts, and three-tier in the other districts operates. 2.3 In principle, PACS was expected to mobilise deposits from its members, and use the same for providing crop loans to the needy members who need it. However, as deposits in PACS may not be enough to meet the loan requirements of all its farmer borrowing members, PACS draw support from the federal structure, viz., the CCB/StCB. The CCB was there....
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....fore constituted as a small bank working in small towns to mobilise deposits from public and provide the same for supporting the credit needs of PACS and its members. As part of the federal structure, the CCB was expected to also provide guidance and handholding support to PACS. StCB was set up in each state not only to mobilise deposits and thereby provide the required liquidity support to CCBs and PACS, but to also provide the required technical assistance, guidance and support to CCBs and PACS in fulfilling their 6 Report of the Expert Committee on Three tier ST CCS obligations towards their farmer members. Wherever required, the StCB was also expected to mobilise liquidity and refinance support from the higher financing institutions like NABARD for supporting the crop loan operations of CCBS and PACS affiliated to it. Over time, ST CCS has also been providing medium term loans for investments in agriculture and for the rural sector, often with refinance support of NABARD. 2.4 As on 31 March 2012, the ST CCS comprised about 93,000 PACS, 370 CCBs and 32 StCBs. 2.5 The ST CCS was the only institutional arrangement for providing agricultural credit until 1969. However, after nation....
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....alisation, commercial banks (CBs), and later, the regional rural banks (RRBs) which were established from 1975 onwards, also started catering to the needs of agriculture and rural development sectors. 2.6 The banking scenario is changing constantly and significantly due to rapid and radical reforms taking place in Indian banks since 1993. Application of prudential banking norms including norms for income recognition and asset classification (IRAC) and capital adequacy based on the risk (CRAR) to make them stronger and competitive was followed by capitalisation of public sector commercial banks and RRBs. Although IRAC norms were gradually applied to the StCBs and CCBs, the risk based capital norms were not applied to them for a variety of reasons. 2.7 In the meanwhile, the Committee on Financial Sector Assessment (CFSA), set up by Gol in September 2006 under the Chairmanship of Dr Rakesh Mohan looked into the financial health of all banks including the cooperative banks and made recommendations for improvement of financial health and systems for attaining/maintaining financial stability. A major recommendation of the Committee was to prohibit unlicensed banks from functioning beyond....
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.... March 2012. 7 Report of the Expert Committee on Three tier ST CCS Reforms in ST CCS 2.8 The poor financial health of the ST CCS had been a cause of concern during the past five decades, and several committees had, in the past, been constituted to look into the problems that plague the sector and make recommendations. The latest was the Task Force chaired by Prof. A Vaidyanathan (2004-05) which suggested wide-ranging reforms in the governance and management of ST CCS including crucial amendments to the respective State Cooperative Societies Acts which were to precede the recommended one-time capitalisation jointly by the Central government and the state governments (with certain contribution required to be coughed up by the ST CCS of the state itself). 2.9 Based on the recommendations of the Vaidyanathan Task Force, the Gol announced a package for revival of the ST CCS in 2006, which sought: ➤ legal and institutional restructuring to make PACS, CCBS and StCBs democratic, member driven, autonomous and self-reliant institutions, radical changes in the legal framework to empower the RBI to take action directly in matters deemed appropriate for prudent financial management of bank....
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....s, one-time financial assistance to wipe out accumulated losses and strengthen the capital base of each assisted institution to ensure CRAR of 7%, and qualitative improvement in personnel in all tiers and at all levels through capacity building and other interventions, leading to an increase in overall efficiency. Status of implementation 2.10 The status of implementation of the Revival Package, as on 31 December 2012 is as under: 8 Report of the Expert Committee on Three tier ST CCS ➤ Twenty-five state governments signed the MoU with Gol and NABARD to participate in and implement the package, and 21 States amended the respective State Cooperative Societies Acts. ➤ An amount of 9,002 crore was released by NABARD as Gol share, while the state govts. released 856 crore as their share for recapitalisation of 53,202 eligible PACS in 17 States. Recapitalisation assistance could not be released in many cases as the states did not complete all the necessary benchmark activities within the stipulated period. Impact of the Revival Package 2.11 Impact studies conducted in 13 States showed positive and visible impact of the implementation of the revival package in certain areas like....
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....: ➤ Institutional and legal reforms including amendments to Cooperative Societies Acts, Rules, and Byelaws, thus creating the basis for autonomy to the banks and PACS. Release of recap assistance leading to improve liquidity of PACS which enabled them to re-commence lending and restore cash flow and income streams. ➤ The assisted PACS could attain CRAR of 7% after recapitalisation and many of them were able to maintain the same. 2.12 Post implementation of the revival package, financial indicators have shown varying degrees of improvement in all the three tiers of CCS. Loans disbursed by PACS during the period 2006-07 to 2009-10 registered a growth of 73% in Uttar Pradesh, 53% in Madhya Pradesh and 23% in Odisha. The annual average growth rate during the period 2003-04 to 2009-10 ranged from 62% in Odisha to 38% in Haryana. Small and marginal farmer coverage was a priority with the CCS and continued to be around 70% during the period 2006-07 to 2009-10 in Madhya Pradesh & Uttar Pradesh. 9 Report of the Expert Committee on Three tier ST CCS Chapter 3 Role of ST CCS in providing agricultural credit Credit flow to Agriculture - Macro Analysis 3.1 The predominance of the coop....
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....eratives as the key credit provider of agricultural credit continued till mid-nineties when it was still meeting about 50% of agricultural credit provided by the entire banking system to farmers. But, with commercial banks stepping up their agricultural financing from 2001 onwards, and especially from 2003-04 onwards when the "doubling the agricultural credit" campaign started, commercial banks today provide almost three fourths of the total agricultural credit in the country with RRBs providing another 10% or so. The net result is that despite a modest growth of about 20% per year in its agricultural credit dispensation during the last five years, and having a rural penetration of over 93,000 PACS as compared to only about 50,000 rural and semi-urban branches of CBs and RRBs, the share of the cooperatives in agricultural credit has fallen to about 17% in 2011-12 (as shown in table below). Agricultural Loans Disbursed during the Year (in crore) Agency 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 42,480 Coops. (18) 48,258 (19) 46,192 (15) 63,497 (17) 78,121 (17) 87,963 (17) RRBs 20,435 (9) 25,312 (10) 26,765 (9) 35,217 (9) 44,293 (9) 54,450 (11) 1,66,485 1,81,088 CBs (73) (71) 2,....
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....28,951 (76) 2,85,800 (74) 3,45,877 (74) 3,68,616 Total 2,29,400 2,54,658 3,01,908 3,84,514 4,68,291 Figures in brackets indicate percentage share of different agencies to total agricultural credit 3.2 (72) 5,11,029 Although cooperatives are providing only 17% of agriculture credit, the share of cooperatives in total number of agricultural accounts held by the banking system is substantial. Cooperatives provided agricultural credit to 3.09 crore farmers during 2011-12 compared to only 2.55 crore farmers by commercial banks and 82 lakh by the RRBs. In fact, cooperatives financed 10 Report of the Expert Committee on Three tier ST CCS 67 lakh new farmers during 2011-12 compared to 21 lakh new farmers by commercial banks and only 9 lakh new farmers by RRBs (as shown in table below). Number of Loan Accounts Financed during the Year (in lakh) Agency 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Coops. 189 202 178 204 242 309 RRBs 62 62 76 73 73 82 CBs 172 175 202 205 234 255 Total 423 439 456 482 549 646 3.3 The success of cooperatives in reaching out to new farmers or those who had gone out of the active credit fold of the banking system is the real impact of the implementation of the ....
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....Vaidyanathan revival package and implementation of the agricultural debt waiver and debt relief scheme in its true spirit. 3.4 Such high penetration by the cooperatives despite having a low share in the total agricultural credit flow has the immediate implication of per account loan at 28,467 (2011-12) being provided by cooperatives as compared to 66,000 per account by RRBs and almost 1.5 lakh per account by commercial banks (as shown in table below). This trend has been prevailing in the past also. Agency Coops. RRBs CBs Agricultural Loan Disbursed per Borrowing Account (Amt. in ) 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 22,476 23,890 25,951 31,126 32,281 28,467 32,960 40,826 35,217 48,242 60,675 66,402 96,793 1,03,479 1,13,342 1,39,414 1,47,810 1,44,525 3.5 Given the increasing trend in fragmentation of holdings and growing preponderance of small and marginal farmers who would require much smaller quantities of loans as compared to medium and large farmers, an inference could perhaps be drawn that cooperatives are increasingly supporting the neglected or sidelined category of small and marginal farmers. Although this is a positive sign, the fact cannot be overlooked that a....
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....lmost 55% 11 Report of the Expert Committee on Three tier ST CCS of the agricultural loan accounts of commercial banks and almost 72% of the agricultural loan accounts of RRBs also pertain to small and marginal farmers (as shown in table below). Small and Marginal Farmer Accounts for Loans Disbursed during the Year (No. in lakh) 2010-11 2011-12 Agency 2006-07 2007-08 2008-09 2009-10 Coops. 101 118 97 128 159 205 (53) (58) (55) (63) (66) (66) RRBs 40 42 43 50 52 59 (65) (67) (57) (69) (71) (72) CBs 74 97 106 107 125 141 (43) (55) (52) (52) (53) (55) Total 215 257 246 285 336 405 Figures in brackets indicate percentage of small and marginal farmer accounts to total accounts 3.6 It is therefore, not that cooperatives alone finance small and marginal farmers, while other banks finance only large farmers, as is often made out. At the same time, as has been mentioned elsewhere, cooperatives are severely constrained in terms of resources for lending, due to which PACS in almost all the states have prescribed individual maximum borrowing power (IMBP) as an outer ceiling for any individual loan to their members. Although there is no documented evidence, given the fact that the proportion of....
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.... small and marginal farmers financed by RRBs is much higher than by cooperatives, and the per loan account amount provided by RRBs is almost 2½ times that provided by cooperatives, the possibility of fairly large number of borrowers from cooperatives being underfinanced and not getting adequate loan to meet their requirements and some members not getting any loans at all cannot be ruled out. The resources position as well as the other than agricultural³ credit business of the ST CCS therefore, needs to be looked in greater detail. 3 'Other than agriculture' credit term is used as 'non-agriculture' credit in other paras of the report. 12 Report of the Expert Committee on Three tier ST CCS Agricultural Credit by different Tiers of ST CCS4 Role of PACS 3.7 84,327 PACS affiliated to 366 CCBs 5 issued agricultural loans aggregating 67,531 crore, which constituted 92% of the total agricultural credit of 73,313 crore disbursed by CCBs (Annexure 3.1). In other words, only about 10% of the agricultural loans issued the PACS were supported through deposits mobilised by PACS and the rest 90% had to be provided by CCBs either through their own resources or through borrowings. 3.8 Agricul....
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....tural loans issued by PACS constituted 59% of the total loans issued by PACS at 1.14 lakh crore. In other words, almost 41% of loans provided by PACS, either through internal resources or through borrowings from CCBs, were for non-agricultural purposes. The aggregated data at all India level however, gets distorted due to the high proportion of non- agricultural loans issued by PACS in four states like Kerala, Tamil Nadu, Karnataka & Uttar Pradesh where this proportion was as high as 76% of total non-agriculture loans. The PACS in these 4 States disbursed 42,611 crore, which constituted 91% of the total non-agriculture loans. 27,405 per account 3.9 The average loan size of PACS worked out to and varied hugely between less than 1,000 in Jammu and Kashmir (J&K) to over 60,500 in Punjab. The average agricultural loan per account also varied similarly from less than 1,000 to almost 80,000 in the same states. The average agricultural loan per account was however lower than the average loan per account. The detailed analysis showed that the size of agri loans was much higher than the size of non-agriculture loans in states like Punjab, Haryana, Uttarakhand etc. while the reverse is true ....
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....in states like Kerala. 3.10 An area of concern however is the fact that only a little more than 4 crore members availed loans from PACS out of the total membership of over 9 crores signifying that the majority of the members do not avail of loan services 4 In order to remove biases in drawing conclusions, the analysis is based on average of last three years. 5 Data for all PACS and CCBs was not available; the analysis is based on available data which covers more than 90% of PACS and CCBs and is therefore fairly representative and conclusive 13 Report of the Expert Committee on Three tier ST CCS from their cooperative; there are reasons to believe that most of such members did not become members for availing of the services of the PACS. Such a large proportion of inactive members also has its negative impact on the governance of the PACS. Role of CCBs 3.11 As per the available data, 366 CCBs had disbursed agricultural loans aggregating 73,313 crore (average of last three years), while the year-wise agricultural loans had actually increased from Rs. 58,772 crore to * 88,517 crore during the period. The three year average of crop loans issued by the CCBS stood at 67,406 crore constitu....
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....ting 92% of the total agricultural loans issued by CCBs (Annexure 3.2). In other words, the CCBs were found to be performing the principal task of supporting PACS for providing crop loans so far as their agricultural loan portfolio is concerned. Share of agricultural loans 3.12 The share of agricultural loans to total loans issued by the CCBs, as an aggregate, was only 57%, although the actual shares range from as low as 12% in Jharkhand to 100% in Bihar. CCBs in 13 states had more than 50% share of agricultural loans to their total loans (Annexures 3.3 & 3.4). 3.13 As seen earlier, the aggregate share of agricultural loans by CCBs was about 22% in their operational area; state-wise it ranged from as low as 1% in Jharkhand to almost 50% in the states like Maharashtra and Odisha. The share of CCBS in crop loans disbursed by all agencies ranged from a low of 1% in Jharkhand to 63% in Chhattisgarh. 3.14 The role played by 366 CCBs in their operational areas in providing agricultural credit is presented in the table below. It would be seen that more than one third of CCBs supported less than 15% the total agriculture credit flow in the operational area. In fact, only one third of the C....
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....CBs supported more than 30% of the agricultural credit in their operational areas, and two thirds of the CCBs were failing to provide even 30% support to the agricultural 6 This data pertains only to CCBs and not for entire ST CCS 14 Report of the Expert Committee on Three tier ST CCS credit flow in their operational area, the principal purpose for which the CCBs and the entire set up of ST CCS was created. The Committee is of the opinion that ST CCS, which was primarily constituted for provision of agricultural credit must provide at least 15% of the agriculture credit requirements in its operational area, gradually increasing it to at least 30%. The Committee also recommends that if a CCB or StCB consistently underperforms and provides less than 15% share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank. Share of CCBs in Agriculture Lending in their Operational Area > 50% > 30% to 50% > 15% to 30% = =12 Total 49 51 85 102 370 5.11 In other words, 23 CCBs, which had already received licence now, do not comply with even the diluted CRAR norm of 4%. In fact, seven of these CCBs do not comply even with the min....
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....imum net worth norm of Rs. 1 lakh. 5.12 The above analysis means that at least 130 CCBs, or about one third of the total number, need to take serious action for attaining at least 7% CRAR in the next two years, and then to move on to at least 9% CRAR within the next five years. CRAR of CCBs and their Market Share in Agricultural Credit 5.13 The Working Group on agricultural credit for the 12th Plan had estimated, about three years ago, the total agricultural credit requirement from all the agencies to be in the range of 40 - 42 lakh crore during the Plan period 2012-17, with the share of cooperatives estimated at around Rs. 9 lakh crore during the Plan period. Year-wise, the share of cooperatives was expected to increase from about 68,000 crore in 2012-13 to about 1 lakh crore in 2016-17. However, as has been seen earlier, agricultural credit from cooperatives has picked up substantially during the past two years, and with increasing refinance support from NABARD has already touched about 87,000 crore in 2011-12, an estimate they were expected to reach only by 2015-16. Given this trend, the cooperatives should be able to continue their growth path. 5.14 However, as CCBs are expecte....
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....d to primarily focus on agricultural credit, the effect that such an expansion will have on their CRAR needs to be 36 Report of the Expert Committee on Three tier ST CCS analysed. The table below presents CRAR and the share of CCBs in agricultural credit in the operational areas for 366 CCBs for which detailed data was available. It is seen that 82 CCBs (71%) out of 115 CCBs, which had 30% or more share in agricultural credit, had CRAR of 7% or above. This goes on to suggest that increasing agricultural lending does not necessarily translate into riskier portfolio so as to have negative impact on CRAR. In fact, it is seen that the non-agricultural portfolio is riskier than the agricultural portfolio. Of the 49 CCBs with CRAR of less than 4%, 38 have less than 30% share in agricultural credit. Low CRAR therefore seems to be a manifestation of poor governance and management rather than the nature of portfolio. CRAR Level No. of No. of CCBs based on its share of Agri-lending CCBs 30% to 50% >50% Total 7 to 9% 51 17 17 12 5 51 >9to 12% 85 27 26 22 10 85 >12% 101 35 33 22 11 101 Total 366 131 120 77 38 366 ** Of the total 370, 366 have been taken up 5.15 It is imperative that even if th....
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....e RBI had diluted the criteria for licensing to 4% CRAR, CCBs and StCBs cannot continue to operate in the banking environment with such a low capital base. These banks would need to take concerted steps to reach the general banking norms in the foreseeable future and a five-year time-frame, i.e., by March 2017 for achieving at least 9% CRAR with an intermediate target of achieving 7% CRAR by March 2015 seems logical. Not only do we need to estimate the additional capital that may be required by these banks, but also how it can be contributed. The unlicensed banks, which do not achieve the CRAR of at least 4% by March 2013, may be debarred from undertaking any banking operations and their agri lending portfolio may be taken over by the neighbouring CCB or the StCB. For assessing the likely capital requirement, the Committee has used 4 different models as described hereunder: 37 Report of the Expert Committee on Three tier ST CCS Model 1 all CCBs 16 shows infusion of a little least 7%, and an 5.16 A simple analysis presuming a flat growth rate in that 209 CCBs 17 spread over 15 states would require an over 4,000 crore by March 2015 to attain CRAR of at additional 2,500 crore by March....
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.... 2017 to achieve CRAR of at least 9%. Although this estimate gives a fair idea of the capital infusion that would be required, the analysis suffers from the fact that a flat growth is assumed for all CCBs irrespective of their past performance and growth capacities. Model 2 5.17 Another attempt was therefore made to see the capital requirements for achieving these CRAR levels if the present trend of business in the CCBS continues. Due to paucity of data and time, however, this analysis was restricted to a random sample of CCBs. An analysis of 20 CCBs spread over 5 states which presently have a CRAR of less than 4% and most of which are unlicensed, showed that they would require infusion of about 2,112 crore for achieving CRAR of at least 9% by March 2017 if they continue to grow at the same pace as at present. The comparable estimate for these 20 CCBs under Model 1 would be Rs.1,453 crore ( as given in Annexure 5.1). 5.18 For a sample of 10 CCBs in 5 states (including two unlicensed CCBs recommended for granting license), which have a CRAR between 4% and 7%, capital infusion Rs. 126 crore would be required if they continue with the present business trends, and would require 225 cro....
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....re under Model 1. As some of the CCBs may have business trends upwards of 15%, restricting their business growth to 15% in fact would put more pressure on them as they would receive lower amounts of loan linked share capital. 5.19 A similar analysis of 5 CCBs across 5 states which already have a CRAR of 7% or above reveals that capital infusion of about 29 crore would 16 A constant 15% growth in loan issued and consequently 7.5% growth in loan outstanding and risk weighted assets, 5% growth in profit with 30% of surplus profit to be ploughed back to reserve and 5% growth on incremental loan outstanding as loan linked share capital accretion is presumed in this analysis. 17 Other CCBs would not require any infusion as they would generate the required capital on their own 38 Report of the Expert Committee on Three tier ST CCS be required under Model 1 while no additional capital would be required if they continue their business on the same trends as of now. Model 3 5.20 It is obvious from the above analysis that continuation of the present trend of business is not adequate enough, especially for CCBs with CRAR of less than 7%. It was also seen that many CCBs had less than 15% share i....
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....n agricultural credit. It could be normally expected that such a situation will prevail in case of CCBs whose own agriculture portfolio was less than 50% of their total loan portfolio. However, surprisingly, this included even CCBs whose agricultural lending constituted more than 50% of their total loan business, and even 100%, as in absolute terms their total business was itself very small. Another attempt was therefore made to estimate the capital requirement if the agricultural credit portfolio was to expand to cover at least 15% of the agricultural credit disbursement in their operational area. An analysis of 16 such randomly selected CCBs spread over 8 states showed that CCBs which already had CRAR of more than 7%, would not require additional capital infusion even if their agricultural credit portfolio is expanded to cover at least 15% of the agricultural credit flow in the operational areas. However, CCBs with lower CRAR would need additional capital ranging from about 1 crore to 12 crore in addition to the capital required by them under Model 2 for achieving 9% CRAR by March 2017. Model 4 5.21 Model 4 assumes a high growth trajectory covering both agricultural and non-agric....
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....ultural credit business for the CCBs. It was obvious that cooperatives need to have, especially in view of their long history of agricultural financing, a meaningful share in the agricultural credit flow in their operational areas, which, in the long run should not be less than 30% if they have to remain an agricultural credit disbursing entity which can influence the credit flow in the region. However, as the national average itself is a paltry 17% at the moment, and almost one third of the CCBs have a less than 15% share in agriculture credit disbursement in their operational areas, the first target needs to be achieving a minimum of 15% share in agricultural credit 39 Report of the Expert Committee on Three tier ST CCS within the next two years, and then accelerate agricultural credit disbursements to reach at least 30% share in about five years. It would also be necessary to increase loan linked share contribution to atleast 5% in those CCBs where it is lower than 5% and to a maximum of 10% for all kinds of loans and members depending on additional capital requirement of a particular CCB. The aggregate repayment rate of agricultural loans of cooperatives is about 76%, which nee....
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....ds to be stepped up to atleast 90% within five years through better credit appraisal and intensive monitoring. It has been seen that for some of the CCBs almost the entire credit portfolio is agricultural credit. Even this is not conducive to their growth. Such CCBs would have to build up capacities for providing non-agricultural loans and gradually have a share of 20% to 30% of their credit portfolio as non- agricultural loans. These efforts would lead to higher incomes making contributions to reserves possible. 5.22 Model 4 takes into account the above aspects, and the analysis needs to be bank specific based on potential and financials for bringing in such change in the CCBs in the next five years. Due to time constraints, this analysis was limited to a random sample of 16 CCBs. Ten of the 16 CCBS would need about 671 crore as additional capital for attaining CRAR of at least 9% by 2017. This means, an additional amount of around 224 crore over and above the additional capital needed under Model 3 (Annexure 5.2). 5.23 Based on the exercise carried out under the 4 models, 209 CCBs would require additional capital ranging from around 2 lakh to 282 crore under model 1. However, the....
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.... number of CCBs and additional capital requirement would vary when the financial and business parameters are moderated under other models. CCBs with less than 4% CRAR and less than 15% of market share in agricultural credit would need substantial additional capital while CCBs already having 7% or more CRAR but with less than 15% agricultural credit share would generally not require additional capital for sustaining CRAR at 9%. While banks with CRAR of 4-9% and less than 15% agricultural credit share would need additional capital (model 3), most banks with 7-9% CRAR may not need any additional capital. As mentioned earlier, 40 40 Report of the Expert Committee on Three tier ST CCS bank specific exercise would be required under models 3 and 4 to assess capital requirements for higher CRAR and higher agricultural credit share. Strategies and Sources of Capital Mobilisation 5.24 StCBs and CCBs, being cooperative banks, can mobilise their capital only from their members who are also their owners. The same is true for PACS. Capital can be contributed by members in the form of direct share purchase or through share linked loans as has been the practice. The latter however effectively make....
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....s the loan costlier to the member and is technically a detrimental step. However, if the cooperative is run well and makes profits, it can disburse dividend against such shares and bring the effective cost of loan down. In fact, this needs to be the strategy that the cooperatives should adopt. 5.25 Certain strategies and measures are suggested below for enabling StCBs and CCBs to raise capital to attain the required higher CRAR. Share Capital from Members 5.26 As PACS become BCs of CCBs, the entire client base of PACS will become direct clients of CCBs. It would be necessary for CCBs, therefore, to ensure that a depositor or borrower who transacts business at the PACS now operating as BC is a shareholding member of the CCB. The present 4.2 crore borrowing members at the level of PACS, as also depositors, will therefore have to take shares of CCBs while they continue to be members of PACS for availing other services. In tune with this requirement, all the depositors and borrowers of CCBs therefore would become normal shareholding members of the CCB with voting rights for “active membersâ€18. This transition would allow mobilisation of additional share capital of CCBs by a....
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....bout 500 crore on an assumption that atleast one crore new members and converting non- borrowing members to borrower members will subscribe at the rate of 500 per member. All the active members who are obtaining other services from the CCBs, viz., benefit of higher interest rate on deposits, fertilizer and other 18 Definition of active members with reference to deposits and loans may be provided by RBI or an agency authorised by it. 41 Report of the Expert Committee on Three tier ST CCS services etc may also be required to contribute additional share capital. Presently, they are nominal members. This measure would help improve the capital and help attain the sustainable CRAR faster. Transfer of Share Capital Deposit of Vaidyanathan Package 5.27 53,202 PACS were provided 8,521 crore by the Gol and 825 crore by the concerned state governments as share capital deposits under the Vaidyanathan package for revival of ST CCS. Of this, an amount of about 102 crore has been released for attaining of CRAR of 7% as on 31 March 2004 for the PACS concerned. As all agricultural loans including existing loans outstanding at the level of PACS would have to be transferred onto the books of the CCBs....
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...., it would be logical that the share capital deposit made with the PACS against agricultural credit losses and improving CRAR be transferred to the respective CCBs unless the same have been eroded. Enhancing Share Linkage Percentage 5.28 The share linkage (in terms of a percentage to incremental loan outstanding) is observed to be varying from state to state from 1% to 10% depending on the type of loan and the type of borrower. In some cases, a monetary ceiling is prescribed. The share linkage has to be at a higher percentage, since this is 'the most important source of capital augmentation in terms of volumes and percentage. The cooperatives would need to mobilise additional 2% to 5% through share linking (with a maximum of 10% so that it does not become counterproductive) to help generate additional core capital (Tier I). A quick analysis indicates that the CCBs as a lot would be able to mobilise about 6,500 crore through this method. The concerned cooperatives may have to amend their bye-laws for taking this step. 5.29 The following steps are suggested for consideration of RBI as these will help the StCBs and CCBs significantly in augmenting their capital base. Introduction of I....
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....nterest bearing Capital Deposits 5.30 A new instrument in the form of Share Capital Deposit from members could be approved by RBI to be treated as Tier-1 Capital. This instrument may 42 Report of the Expert Committee on Three tier ST CCS have options to give a special dividend in the form of a fixed interest being paid. The individual banks could stipulate such capital deposits with a lock-in period of atleast 5 years and maturity period of 10 years or more. After attaining sustainable CRAR level, banks could convert these deposits into regular shares eligible for payment of dividend. Introduction of Perpetual Long-Term Bonds 5.31 RBI may allow StCBs and CCBs to float such Bonds on the line of perpetual long-term bonds 19. These may be permitted as Tier-1 Capital for CRAR calculation for atleast 10 years or till attaining the sustainable CRAR level. Both Central and state governments may consider contributing to such bonds. Long term debt 5.32 State government may keep deposits with StCBs/CCBs as long term debt for a period of 10-20 years without any interest or with nominal interest. Such debt may be kept with cooperative banks as share capital deposit for helping banks to attain ....
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....higher CRAR 20 and the same may be reckoned as Tier I capital till the bank sustains CRAR of 9% (say at least 5-7 years). Such debts will have moratorium period of at least 5 years. Reckoning of Tier II Capital 5.33 In a few banks, it is observed that Tier II Capital is more than Tier I. As per the existing stipulations of RBI, the Tier II capital can be counted upto a maximum extent of Tier I. RBI may consider giving a relaxation for 5 years to treat Tier II capital up to at least 150 % of Tier I towards CRAR compliance. 19 RBI has permitted Urban Cooperative Banks to mobilize capital through perpetual bonds. 20 Some state governments such as Rajathan & Maharashtra have expressed willingness for this. 43 Report of the Expert Committee on Three tier ST CCS 6.1 Chapter 6 Strategies for higher CRAR and Consolidation As per ToR 2, sustainability of banks was assessed for higher CRAR and additional capital requirement of banks was estimated wherever needed under different models. The findings of analysis and a few strategies for capital mobilisation were discussed in Chapter 5. As observed, 209 CCBs would need additional capital under various models for CRAR of 7% by 2014- 15 and 9% by....
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.... 2016-17. 6.2 In this chapter, an attempt is made for assessing feasibility of mobilising additional capital for 209 banks for attaining CRAR of 7% by 2014- 15 and 9% by 2016-17 and sustaining the same. As per the assessment indicated earlier, total additional capital requirement was estimated at about 4,000 crore to Rs. 6,500 crore under different models. Bank wise requirement would vary widely depending on each bank's financials and business. Further, it was attempted to identify the banks, which will not be able to mobilise required capital by using either one or all the strategies and may have to eventually go for consolidation or closure. The results of consolidation and future 5 years' financial position was also assessed for a few sets of banks to examine their sustainability. 6.3 As mentioned earlier, the additional capital requirement would undergo change if higher growth in business and in agri credit were applied (Model 4). 6.4 It was observed that 58 CCBs with CRAR of less than 7% were very sensitive and would not be able to attain 7% CRAR by 2014-15 without external fund support. Further, these banks may not sustain CRAR of 7% and 9%, even with increased growth in busi....
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....ness and agri-credit and a higher market share. These include 26 CCBs which are unlicensed, 21 CCBs licensed but not having CRAR of 4% and a set of 11 other CCBs including CCBs which have received capital infusion for achieving CRAR of 4%. 6.5 Various possible measures for different categories of CCBs were applied to examine the sustainability of CCBs and to find out suitable 44 Report of the Expert Committee on Three tier ST CCS measures specifically for certain categories of banks. This approach was needed, as a uniform prescription of actions would not help all types of banks. Measures for different categories of CCBs 6.6 As per Model 1 assessment, the likely total additional capital requirement for CCBs worked out to 4,024 crore for 7% CRAR and Rs.6,498 crore for 9% CRAR to be mobilised by 209 banks during the next five years. The likely additional capital requirement varied widely from 1.84 lakh (Jabalpur CCB) to Rs. 282 crore (Solapur CCB). The feasibility of mobilising additional capital is discussed hereunder for different groups of banks. 6.7 Out of 41 unlicensed CCBs as on 31 March 2012, 26 remained unlicensed and 15 could attain CRAR of atleast 4%. Another 23 CCBs were l....
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....icensed but had CRAR of less than 4%. These banks are discussed separately in the following paragraphs. Unlicensed CCBs 6.8 A decision on the continuation of these 26 unlicensed banks is under consideration of RBI since some State Governments (such as Maharashtra) are in the process of firming up their decision on infusion of capital. The fund requirements of the 26 unlicensed CCBs is likely to be around 2,114 crore for 4% CRAR (relaxed norm for license) at the first stage. Further, the likely additional capital requirement of these would be around CRAR by 2014-15 and 2,391 crore for 9% CRAR by 2016-17 (Annexure 6.1). Licensed Banks with CRAR of less than 4% 6.9 2,263 crore for 7% Under this category, 21 of 23 CCBs having CRAR of less than 4% are likely to require additional fund of about 912 crore for 7% CRAR by 2014-15 and about 1,373 crore for 9% CRAR by 2016-17. The capital requirement varied from 7 crore (Nawadha CCB) to 275 crore (Kolhapur CCB). Bank- wise requirement is given in Annexure 6.2. The balance two banks, viz., Sangli CCB and Kottayam CCB will not need any additional capital and would sustain on their own for 9% CRAR by 2017. 45 Report of the Expert Committee on Th....
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....ree tier ST CCS Unlicensed Banks recommended for licence in 2012-13 6.10 15 CCBs may get licence from RBI in 2012-13 which had attained 4% CRAR on receipt of government funds of about 286 crore (by 14 CCBs) and 1 CCB (Aurangabad in Bihar) on its own and NABARD has recommended to RBI for issuance of licence to these CCBs. However, 5 of these banks would be required to mobilise additional capital of 6.77 crore for a 7% CRAR by 2014-15 and 7 banks would require additional capital of 29.3 crore for 9% CRAR by 2016-17 (Annexure 6.3). 6.11 The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR failing which RBI should take the necessary regulatory action. CCBs with 4% to 7% CRAR 6.12 Under this category, there are 77 banks, of which 66 banks require additional capital. 16 banks would not require any additional capital for 7% CRAR by 2014-15 while the remaining 61 banks would require capital to the extent of 805 crore. For attaining 9% CRAR by 2016-17, 66 banks would require an additional amount of 1,923 crore (please see table below). The banks are....
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.... spread across states and the requirements varied from bank to bank, as given in Annexure 6.4. Additional Capital Requirement for CCBs having CRAR of 4% to 10000 Total 1 Upto 1 cr 9 9 2 1 to 5 cr 31 8 5 1 47 3 5 to 10 cr 9 10 4 3 1 30 4 10 to 50 cr 7 19 20 9 3 58 5 Above 50 cr 1 7 6 Total 49 25 28 25 15 9 151 Category B: Average Per PACS-25 lakh to 1 crore 1 5 to 10 cr 1 2 210 to 50 cr 5 7 4 2 18 3 Above 50 cr 1 Total 2 2 3 4 2 3 9 21 9 9 7 11 41 Category C: Average Per PACS - Rs.1 crore to Rs.2 crore 11 to 5 cr Total 1 51 28 38 34 22 20 193 Categories B and C 6.19 Out of the 42 CCBs required to mobilise more than 25 lakh per PACS, 24 CCBs would need to mobilise from PACS' borrowing members amounts upto Rs.4,000/- which seems quite feasible although the absolute amounts per CCB are large. In all, therefore, a total of 151 CCBs (127+24) should be able to mobilise required additional capital if members contribute upto 4,000 per member (Annexure 6.6). In this process of additional capital mobilisation, per borrowing member contribution would be upto Rs. 500 (51 CCBs), 500 to 1,000 (28 CCBs), 1,000 to 2,000 (38 CCBs) and 2,000 to 4,000 (34 CCBs). The remaining 42 CCBs of 193 may not be....
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.... in a position to mobilise adequate capital from borrowing members of the PACS. 6.20 Efforts therefore need to be initiated by CCBs to convert more non- borrowing members as borrowing members and also enrol additional members. CCBs can strive to mobilise capital additionally from other non- borrowing members and other members availing services as well. In this 49 49 Report of the Expert Committee on Three tier ST CCS process, they may mobilise required funds to the extent of about 500 crore (@500 for additional 1 crore such members, as mentioned in chapter 5) 6.21 It may therefore be concluded that 151 CCBs should be able to mobilise the required additional capital. These CCBs should prepare the Sustainable Business Plans (SBPs) after assessing exact requirement of additional capital based on performance as on March 2013 for attaining CRAR of 9% by 2016-17 under Models 2 to 4 from the borrowing members or in combination of other efforts. NABARD and RBI would need to monitor the implementation of SBPS on a regular basis. 6.22 Remaining 58 CCBs would not be able to easily attain CRAR of 9% for sustainability since per borrowing member contribution would be beyond *4,000 and above 10....
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....,000 in some cases, which is considered to be very high for a farmer to contribute over a period of 4 years. However, individual banks would have to strive to mobilise the required amounts for survival. 6.23 In case any CCB fails to mobilise the additional capital either from members or from any other source, there would be no alternative but to adopt the following two options: i. ii. Consolidation of banks wherever feasible, and If consolidation fails, closure or liquidation. Consolidation 6.24 The primary objective of consolidation is to make the CCBs sustainable by combining 2 to 4 CCBs so that the combined unit can sustain the CRAR level of at least 9% with a small amount by way of additional capital, which is possible to be generated by the bank from its own operations and additional member contributions. 6.25 There are also small banks with limited business and functional areas as their branch network is limited, or they are functioning in smaller and remote areas. CCBs also became smaller as a consequence of division of districts in various states. Right-sizing of operations of such CCBs is also 50 50 Report of the Expert Committee on Three tier ST CCS required 23. Many CCBs....
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.... are having CRAR of above 9% at present 24 but have less than 200 crore business (deposits+loan outstanding). Such small CCBs would not be able to sustain in the long run, even though some of them presently have 9% CRAR. Hence, consolidation is necessary (Annexure 6.7). Methodology 6.26 An exercise of consolidation is attempted taking into account both financial and non financial parameters: a) Consolidation in contiguous geographical areas, where 2 to 4 banks can consolidate with each other with the primary objective of having bigger operational areas, economy of scale, profitability and sustainability. b) Minimum business level should be at least 200 crore. c) Consolidation would primarily be with CCBs and in case it is not feasible to get desired results, then consolidation with StCBs can be attempted. d) Where consolidation is not feasible (banks being in isolated areas etc), the weaker banks will have to go for liquidation. Expected results 6.27 The following results are expected as outcome of consolidation: • • • Have at least 70% of loan business for agriculture and allied activities including both short term and medium term loans. Enhance business level an....
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....d attain at least 15% market share of agri- credit and further increase this share to about 30%. Adopt technology with appropriate software for MIS generation and also issue AADHAR enabled KCC, and provide ATMs, remittance services, etc. through technological upgradation. Increase the level of branch and staff productivity and profitability. 23 Number of branches varied from 5 (Vaishali CCB in Bihar) to 137(Aurangabad, Maharashtra). The total business varied from 32 crore (Vaishali CCB) to Rs. 4,200 crore (Thiruvanathapuram CCB). 24 Vaishali, Khagaria, National Bettiah, Magadh, Rohilka and other CCBs 51 Report of the Expert Committee on Three tier ST CCS Process and issues 6.28 The general bodies of the CCBs, which may be consolidated, will have to take appropriate decisions as required in the Cooperative Societies Act of the State. 6.29 HR issues such as, seniority, posting, transfer etc., would also arise and may be resolved as has been done in the case of amalgamation of RRBs. In some cases, voluntarily retirement plan may also have to be designed in the interest of the bank and the employees. Legal framework 6.30 The Cooperative Societies Act has provisions for amalgamation of ....
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....a CCB with two or more such CCBs and assets and liabilities can be transferred from the existing unit to the amalgamated bank. Provisions in the Societies Act in UP are not explicitly clear of this option and in a few other States (AP, Gujarat, Karnataka) have limited power for amalgamation. Hence, necessary amendments may be required in the respective Cooperative Societies Acts. Requirements for Implementation 6.31 A Working Group may be constituted in each state where such an exercise is required to look into various aspects such as : a. Study the legal framework of the state and suggest required amendments. b. Assess the need for consolidation of CCBs which would be unable to mobilize additional capital and identify the neighbouring CCBs for consolidation after having detailed discussions with all stakeholders; c. Prepare a projected business and financial plan (as per Models 2 and 4) for ascertaining the attainment of CRAR level of 9% by 2017 and also its sustainability. d. Assess the need for additional capital and mobilization ability for attaining and ensuring sustainability of 9% CRAR. e. Assess the feasibility of mobilizing such capital from members and other stakeholders ....
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....including state government. 52 2 Report of the Expert Committee on Three tier ST CCS f. Address any other matters related to the amalgamation. Analysis of consolidation 6.32 To assess the feasibility of proposed consolidation, an exercise was carried out, wherein latest financial position of such CCBs identified for consolidation, likely status of the CCBs on consolidation and projected financials including likely CRAR of the consolidated CCBs over next five years was worked out. For projecting the financial position of the consolidated CCB, assumptions / methodology for Model 1 discussed in Chapter 5 were adopted as an initial assessment to examine the possibility of attaining CRAR of 9% by 2017. Illustrations 6.33 Based on the latest financial position, 37 combinations (5 in West Bengal, 1 in Kerala, 5 in Punjab, 10 in Rajasthan, 9 in Bihar, 4 in Maharashtra and 3 in Odisha) involving 90 CCBs, having contiguous geographical locations were identified for an illustrative exercise and should not be quoted as a prescription of the Committee. These CCBs in Punjab had CRAR ranging from 0.56% to 42.35%, CCBs in Rajasthan with CRAR from 0.12% to 19.91%; CCBs in Bihar with CRAR from -11.1....
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....4% to 55.10% and so on (as given in Annexure 6.7). Business level of the CCBs in Punjab, Rajasthan and Bihar was ranging from 215 crore to 1,056 crore, from 164 crore to 788 crore and from 33 crore to about 250 crore respectively. Combination of Thiruvananthapuram CCB with the highest amount of business of 4206 crore with Kollam CCB was also taken up. It was observed from the combinations that uniformly consolidating the financials (balance sheet as on 31 March 2012) of 2 banks 25 would not help in all the cases to arrive at CRAR of 4%. Hence, 3 or more banks may have to be taken depending on the financial conditions of weak and strong banks. Results of a few samples 6.34 Some possible combinations have been made in 5 states by combining 2 to 4 banks and tested for sustainable CRAR. A few of these combinations 25 e.g Nawadha and Nalanda CCBs merged CCB's CRAR at negative 2.08%; Kollam and Thiruvanathapuram CCBS – merged CCB's CRAR at 3.9%) - 53 Report of the Expert Committee on Three tier ST CCS These 12 are given in table below. It may be seen that the consolidated bank will have sustainable CRAR with some capital infusion in some cases. consolidated banks were taken for fu....
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....rther testing as per Models 1 and 2 for assessing sustainability (as given in Annexure 6.8). It is observed that combined banks still need additional capital (4 out of 5 combinations) under Model 1. Consolidation of CCBs: Few examples (in crore) State Name of CCB CRAR (latest) Total assistance required to achieve 9% by 2016-17 after consolidation - Model I 4 As per Model II recapitalisation required to achieve 7% and 9% 2014-15 5 2016-17 6 1 2 3 Maha Beed 11.03 rashtra Jalna -10.01 Osmanabad -3.92 Aurangabad 4.07 Consolidated Bank 4.48 82.91 0 Nanded 6.01 Parbhani 14.14 Latur 4.25 Consolidated Bank 9.17 0 0 Odisha Balasore-Bhadrak 7.67 Banki 8.25 Cuttack 5.55 Consolidated Bank 6.63 81.63 0 Bolangir 5.18 Bhawanipatna 5.7 Consolidated Bank 5.31 33.52 2 0 Rajasth Alwar 13.1 an Bharatpur 0.12 Dausa 8.45 Consolidated Bank 7.54 21.23 8.50 6.35 Further testing under Model 2 showed that 3 combinations (as shown in table above) would not require any additional capital, whereas 2 combinations, i.e., 1 in Odisha - Bolangir and Bhawanipatna need * 2 crore in 2014-15 for 7% CRAR while the other combination in Rajasthan, i.e., Alwar, Bharatpur and Dausa CCBs may need Rs. 8.5 crore in 2016-17 for....
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.... 9% CRAR. 6.36 The illustrative examples mentioned above clearly indicate that there is a need for assessing additional capital requirement for each of the banks as also for the consolidated banks for actually working out the CRAR level of 9% 54 4 Report of the Expert Committee on Three tier ST CCS by 2016-17 on the basis of the Model 2 to 4 (since uniform growth rate in business and profitability as assumed in Model 1 will not work for all the banks). 6.37 It is observed that for CCBs which required huge sums of additional capital for 9% CRAR, such as Solapur (282 crore), Kolhapur (* 275 crore), Deoria Kasia DCB (174 crore), Jammu CCB (Rs. 201 crore) and Nagpur CCB (151 crore), it would not be feasible to take them up for consolidation without any external capital infusion either from the members or from any external source. Many of such banks have actually incurred huge losses not due to their agricultural lending portfolio but because of other business and investments. It would therefore be logical that such banks are taken up for closure/liquidation after taking out their agricultural credit portfolio and consolidating only that part with other CCBs. PACS as Business Correspond....
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....ents (BC) 6.38 The need for PACS to function as BCs of CCBs has been articulated in para 5.8 of Chapter 5. 6.39 Functionally, while working as BCs, the loaning operations as also deposits collection will be carried out by PACS on behalf of CCBs and will be on the books of the CCBs, hence imbalances between the PACS and CCBs I would not arise. While PACS will carry out their traditional operations on behalf of CCBs 26 and earn agency fees without any risk, a proper mechanism needs to be developed in this regard. This will also enable PACS to increasingly provide other agricultural and non-agricultural services to the members who would now be members of both the PACS as well as of CCB. 6.40 NABARD has taken a lead for creating a common CBS system in over 200 CCBs and StCBs across the country. It is also creating the required ICT support infrastructure in the form of POS terminals and ATM card, as well as arranging required capacity building in CCBs. This will help CCBs to provide doorstep banking facilities using the services of PACS as BCs. This will also enable the member clients of CCBs and PACS to connect to the national payment system and avail all types of financial services. 2....
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....6 RBI already permits PACS to act as BCs of Commercial Banks and RRBs. This can be 55 Report of the Expert Committee on Three tier ST CCS implemented in any CCB or StCB having stabilized CBS branches. The Committee also proposes that a deadline of 30 September 2013 may be prescribed by RBI for all CCBs and StCBs to be fully operational on CBS and also to be part of the payment gateway through RTGS and NEFT and connectivity to the ATM or switch either directly or through a sponsor bank. 56 99 Report of the Expert Committee on Three tier ST CCS 7.1 Chapter 7 Policy Measures and other Initiatives Required The Committee observed that while mobilisation of the required capital by the concerned CCBs may help meet the CRAR requirements, the CCBs and StCBs will have to take many other steps in improving internal systems, adoption of technology, and improvement of human resources if they have to survive and function as an efficient banking institutions. PACS will also have to undergo a structural transformation while working as BCs and aim at providing multiple financial and non-financial services to member farmers and other rural population. These would require various policy measures and ....
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....initiatives to be undertaken not only by the ST CCS, but also by the concerned state governments, RBI, Central Government and others. These measures and initiatives are indicated in the paragraphs below. Membership of CCBs 7.2 At present, the CCB is a federal structure with PACS and other cooperatives being the principal members and having voting rights for the purpose of electing the Board of Directors of the CCB. However, as indicated earlier, when the CCBs start providing deposit and loan products to the rural population with PACS acting only as business correspondents, these depositors and borrowers will become direct clients of CCBs. In order to ensure good governance, it would be necessary that these depositors and borrowers become voting members of the CCB, subject to their being defined as "active members" as per the recent Constitutional amendment for cooperatives. It would be necessary to define "active member†in terms of amount of deposit and period for which the deposit is kept so far as depositors are concerned, and similarly in terms of amount of loan taken and the status of such a loan in terms of default, in the case of borrowers. That authority to prescribe ....
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....parameters of deposits and loans for defining active members shall vest with RBI or an agency authorised by RBI. 7.3 These initiatives would require suitable amendments in the respective State Cooperative Societies Act with necessary changes in Rules and 57 Report of the Expert Committee on Three tier ST CCS Byelaws. PACS will have to enter into a suitable agreement with the CCB for which it acts as business correspondent for payment of service fees. The members of PACS will then be farmers and others who avail of services directly provided by the PACS which would include services like sale of farm inputs, leasing out of equipments, provision of warehousing space to member farmers, provision of services like payment of electricity bills, insurance premium etc. as well as many other non-financial services like sale of household goods etc. If the PACS is in a position to also work as an extension centre for member farmers in collaboration with an appropriate technology service provider, such services would also be included and farmers availing of such services would need to become members of PACS. However, PACS not being any longer borrowing entities of CCBs, would not be having voti....
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....ng rights for elections to the Board of Directors of the CCB. Necessary amendments to the respective State Cooperative Societies Act with necessary changes in Rules and Byelaws would have to be carried out. Role, Status and Functions of StCBs 7.4 To the extent the StCBs are able to mobilise deposits from individuals, cooperatives other than CCBs and governmental institutions and agencies, they would continue to provide a useful service to CCBs in terms of supplementing the liquidity of CCBs which need it. StCBs could also continue to act as aggregators of refinance requirements on behalf of member CCBs and take necessary action for borrowing and disbursing the same to the CCBS although, technically, CCBs being independent banks can avail of such refinance directly from higher financing institutions, and there needs to be an enabling provision to this effect irrespective of their federal relationship with the StCB. 7.5 It has been mentioned in earlier chapters that the StCBs and CCBs need to move towards providing about 70% of their loans for agriculture inclusive of crop loans and term loans for making capital investment in farms, and about 30% of their loan portfolio should be div....
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....ersified as a risk mitigating measure. To facilitate such diversification in a safe manner, the Committee recommends a higher allocation to StCBs (and CCBs led by the concerned 58 Report of the Expert Committee on Three tier ST CCS StCB) in the food consortium advances by the banking system for a period of at least 10 years. 7.6 It has been mentioned earlier that CCBs place their SLR and CRR deposits with StCBs and a regulatory issue arises when the same StCB disburses loans to the concerned CCBs or to others, thus placing the SLR and CRR deposits of CCBs to risk. Opportunities, direction and guidance for making safe investments of such deposits therefore need to be provided to StCBs by the RBI. 7.7 At present, there is a single StCB in each state although there are enabling provisions for more than one StCB in a single state 27. The Committee has noted that states have been divided in the past due to a variety of reasons. Following such divisions, division of StCBs has also been done in many cases. The Committee feels that division of a business entity only due to division of administrative boundaries may not necessarily result in efficient and profitable divided entities. The Com....
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....mittee therefore recommends that if a state is divided the possibility of the existing StCB functioning as a multistate cooperative bank should not be overlooked. Necessary amendments in the Multistate Cooperative Societies Act, BR Act, and NABARD Act would therefore be required to enable the functioning of a Multi- state apex cooperative bank which is federal in character. 7.8 At present, the StCB is not only a banking entity for the affiliated CCBs, it is also expected to provide guidance, technical support, support in human resource development through training and other such initiatives, and handholding support for many other activities. The Committee notes that quite often business and banking decisions of the StCBs which are bottom line oriented could be in conflict with development initiatives which the StCBs are expected to take as these are in the nature of expenditure. The Committee therefore recommends that CCBs and other cooperatives should 27 NABARD act provides for this. The present provision however authorises the state government to declare a federal cooperative of some CCBs as an StCB. However, as StCB is a banking entity in a cooperative system, such a decision ne....
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....eds to be taken on the basis of business parameters and the authority to permit the same needs to be RBI irrespective of the recommendation or opinion of the state government. 59 59 Report of the Expert Committee on Three tier ST CCS either avail the services through other professional entities or financially support the formation and operations of a separate federal cooperative for providing only non-financial services to the member CCBs 28. Governance and Management of StCBs and CCBs 7.9 The Vaidyanathan Task Force had recommended various measures for improving governance and management in StCBs and CCBs. The present Committee endorses the same and makes following recommendations to further improve the governance and management in StCBs and CCBs. i. ii. iii. An autonomous cooperative election authority to be set up in each state as per the requirements of the Constitutional amendments would conduct elections for StCBs and CCBs also. On lines of the conditions of the Vaidyanathan Task Force for election to PACS, the Committee recommends an amendment in the respective State Cooperative Societies Act to provide that any director on the board of CCB or StCB removed or superseded by R....
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....BI for any financial irregularity or if the bank incurred losses in any three years during their term of five years may be barred from contesting elections in that CCB or StCB or any other CCB for a period of five years. Being banking institutions, the authority to remove the boards of StCBs and CCBs needs to be solely vested with RBI. Necessary amendments in the BR Act and the State Cooperative Societies Act would have to be carried out to ensure overriding powers of RBI vis-Ã - vis any other law. The Fit and Proper criteria presently prescribed by RBI for election of professionals to the boards of CCBs and StCBs stipulates three professionals to be either elected or to be co-opted with voting rights in case such number does not get elected. The recent Constitutional amendment puts the number of such professionals in cooperatives at two. Suitable amendment in the BR Act giving RBI overriding powers 28 Such a service-oriented federal cooperative would be in the nature of DGRV in the German cooperative banking system. 60 60 Report of the Expert Committee on Three tier ST CCS iv. V. vi. to prescribe the number of professionals generally for StCBs and CCBs, as well as specifically f....
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....or a particular StCB or CCB as part of regulatory action, needs to be made. A modification in the present RBI order on Fit and Proper criteria for Board of Directors is also required to specify that each such professional should be of a separate specialisation. Such professional directors, if required to be co-opted, also should be co-opted within three months of the constitution of the board of the CCB or StCB failing which RBI should be free to take any necessary regulatory action. The Constitutional amendment prescribes that the panel of statutory auditors would be recommended by the state. However, CCBs and StCBs being banking institutions, the authority for appointing statutory auditors needs to be vested with the RBI or an agency authorised by RBI. In order to provide better and more efficient financial services to the farmers and other rural population, if any PACS wishes to function as the BC of a CCB registered in a district other than in which the PACS is located and the CCB is in agreement to provide financial services in the operational area of that PACS by taking up that PACS as its BC, it should be free to do so. In such an event, the RBI would be required to modify t....
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....he banking licence provided to the CCB for expanding its operational area to that district where such a PACS is located. At present, some of the State Cooperative Societies Acts 29 contain provisions which restrict the flexibility of StCBs and CCBs in taking business decisions like prescribing the percentage of share linkage on loans, making investments, payment of dividend, etc. Necessary amendments in the State Cooperatives Societies Acts would be required which give complete freedom to the CCBs and StCBs to take such business decisions within the directions and guidelines prescribed by RBI. 29 for example, in Kerala 61 Report of the Expert Committee on Three tier ST CCS Other recommendations 7.10 The Committee recommends that 30 September 2013 may be set as the deadline for all the StCBs and CCBs to be not only fully operational on CBS but also be part of the payment system through RTGS and NEFT, and also provide transactions through any ATM and POS devices which may be placed with PACS, input suppliers etc. 7.11 State and Central governments may take required steps to involve StCBs and CCBs in the financial inclusion drive and electronic benefit transfers (EBTs). The government....
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....s may also consider placing deposits of governmental agencies and entities with StCBs and CCBs which have achieved 7% sustainable CRAR and are already on core banking platform. 7.12 The depositors and borrowers of CCBs and StCBs also need to be part of a grievance redressal mechanism in the nature of Ombudsman instituted by RBI and the Committee recommends that all licensed CCBs and StCBs may be covered by the Ombudsman or a similar mechanism that may be developed by RBI with NABARD. 7.13 With the CCBs and StCBs moving onto the CBS and other ICT platforms, their human resource requirements would no longer be governed by the Mitra Committee recommendations made as a follow-up of the implementation of the Vaidyanathan package. RBI may like to constitute a working group to look into these issues and make suitable recommendations. 7.14 As a large number of CCBs and StCBs are required to augment their capital, the Committee recommends that the Government of India may consider providing income tax exemption to CCBs and StCBs up to 2016-17 for incentivizing them to achieve CRAR of 9%. 7.15 RBI may consider graded CRAR norms for CCBs and StCBs of different businesses sizes. G2 62 ANNEXURES....
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.... AND APPENDICES मà¥à¤–à¥à¤¯ महापà¥à¤°à¤¬à¤‚धक Annexure 1.1 à¤à¤¾à¤°à¤¤à¥€à¤¯ ERVE रिजरà¥à¤µ बैंक BANK OF à¤à¤¾à¤°à¤¤à¥€à¤¯ रिज़रà¥à¤µ बैंक RESERVE BANK OF INDIA www.rbi.org.in 3136 chi/Inward No.- 3178 Chairman's सचिवालय Secretanal 26 JUL 2012 राषà¥à¤Ÿà¥à¤°à¥€à¤¯ कृषि और गà¥à¤°à¤¾à¤®à¥€à¤£ विकास बैंक, मà¥à¤‚बई NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT, MUMBAI पà¥à¤° का मà¥à¤‚बई HO Membal July 23, 2012 Chief General Manager DO. RPCD.CO.RCBD. 593 /07.06.000/2012-13 Dear Dr Prakash Bakshi Expert Committee to examine Three-Tier- Short Term Cooperative Credit Structure (STCCS) As per the recommendations of the Committee on Financial Sector Assessment (CFSA) (Chairman: Dr. Rakesh Mohan), no unlicensed cooperative bank may be allowed....
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.... to operate in cooperative space beyond 31 March 2012. However, this has to be attained in a non-disruptive manner. After recapitalization of the three tier Short-Term Co-operative Credit Structure (STCCS) 43 Central Cooperative Banks (CCBs) continue to have high level of financial impairment and as on 31 March 2012 they were unable to meet the licensing criteria. These financially weak/unviable entities need to be strengthened/weeded out of the financial system. The structural constraints in rural credit delivery system would need to be addressed so as to ensure a sustainable rural financial system. In order to examine all such issues and explore various ways to strengthen the rural cooperative credit architecture with appropriate institutions and instruments of credit to fulfill credit needs, it was proposed in the Annual Policy Statement for the year 2012-13, to constitute a Working Group to review the Short Term Cooperative Credit Structure (STCCS). The Committee will make an in-depth analysis of the STCCS and examine various alternatives with a view to reducing the cost of credit, including feasibility of setting up of a two-tier STCCS as against the existing three-tier struct....
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....ure. Consequently, Reserve Bank has constituted an 'Expert Committee' under the Chairmanship of Shri Prakash Bakshi, Chairman, NABARD with the following terms of reference: गà¥à¤°à¤¾à¤®à¥€à¤£ आयोजना और ऋण विà¤à¤¾à¤—, केनà¥à¤¦à¥à¤°à¥€à¤¯ कारà¥à¤¯à¤¾à¤²à¤¯, 10वीं मंजिल, केनà¥à¤¦à¥à¤°à¥€à¤¯ कारà¥à¤¯à¤¾à¤²à¤¯ à¤à¤µà¤¨, शहीद à¤à¤—तसिंह मारà¥à¤—, मà¥à¤‚बई - 400001. à¤à¤¾à¤°à¤¤ फोन: 022-22610261 फैकà¥à¤¸ : 022-22610943 ई-मेल: [email protected] Rural Planning & Credit Department, Central Office, 10th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai - 400 001. INDIA Tel: 022-2261 0261 Fax: 022-2261 0943 E-mail: [email protected] हिंदी आसान है, à....
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....‡à¤¸à¤•à¤¾ पà¥à¤°à¤¯à¥‹à¤— बढ़ाइठi -2- Continuation Sheet i) To assess role played by State & District Central Cooperative Banks in fulfilling the requirement of agriculture credit, the primary purpose for which they were set up ii) To identify Cooperative Banks that may not be sustainable in the long run even if some of them have met the diluted licensing criteria for the time being iii) To suggest appropriate mechanism for consolidation by way of amalgamation, merger, takeover, liquidation and delayering iv) To suggest pro-active measures that need to be taken in this direction by the cooperative banks themselves, GOI, State Governments, RBI and NABARD v) Any other issues and concerns relevant to the subject matter. 2. It gives me great pleasure to inform that you have been nominated Chairman of the Expert Committee, which is as under; (i) Dr. Prakash Bakshi, Chairman, NABARD : Chairman (ii) Shri V. Ramakrishna Rao, ED, NABARD 3. (iii) The Joint Secretary, DFS, MOF, GOI (iv) Dr. Mona Sharma, Principal Secretary, Govt. of Odisha (v) Shri Yadavalli Vijendra Reddy A.P. State Coop. Bank (vi) Dr. B. Yerram Raju, an E....
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....xpert in the field : Member Member : Member : Member : Member : Member (vii) Dr. H. Shylendra, Institute of Rural Management, Anand (viii) Shri C. D. Srinivasan, Chief General Manager, Reserve Bank of India, Rural Planning and Credit Department will be the Member Secretary. The Committee is required to submit its report within three months of the date of its first meeting. Yours sincerely, with best regards, (C. D. Srinivasan) Dr Prakash Bakshi Chairman National Bank for Agriculture & Rural Development Plot No. C-24, G-Block Bandra-Kurla Complex PB No.8121, Bandra (East) Mumbai - 400051 !! Annexure 3.1 State-wise Details of Membership, and Loan Issued by PACS in Two tier & mixed tier structures- Average of 3 Years (2009-10 to 2011-12) SI. State No. No. of PACS Membership of PACS (No.) Total Borrowing membership (No.) Loans issued by PACS Amt of loan issued members (crore) Avera Avg ge borr. Memb memb % Avg Borro loan Avg. Agri. wing per Loan per (No.) Agri Non- Total Agri Non- Total er per er er per memb memb borrower PACS PACS Agri Agri ership er in in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 Andhra Pradesh 2 Bihar 7299 3126 10368739 988687 2711409 251135 2962544 5845 332 6177 3317 9....
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....48 28.6 20852 21557 146388 0 146388 414 0 414 136 21 14.8 28301 28301 3 Chattisgarh 1104 1931587 1287296 4460 1291756 1186 40 1226 1750 1171 66.9 9493 9215 4 Gujarat 8052 2551887 1091709 8818 1100527 4762 125 4887 317 137 43.1 44407 43621 5 Haryana 6 Karnataka 7 Kerala 8 MP 9 Maharashtra 10 Orissa 11 Punjab 12 Rajasthan 13 Tamil Nadu 4534 643 2754823 1189932 431882 4821 4991824 1634771 480830 1554 15346101 2993982 5069067 4526 6210642 3913546 0 20653 8219599 3279577 128868 2699 4884332 1976808 70495 3636 1573630 1063007 436583 5396 4485269 2564286 9249536 3652657 1621814 5087 134 5222 4285 2523 58.9 32197 42754 2115601 4709 2047 6756 1036 439 42.4 31935 28803 8063049 3913546 5747 3959 25474 29433 9876 5189 52.5 36503 13222 0 5747 1373 865 63.0 14685 14685 3408445 10145 1027 11172 398 166 41.5 32778 30934 2047303 3633 162 3795 1810 759 41.9 18536 18379 1499590 8496 579 9075 433 413 95.3 60519 79925 0 2564286 5488 1379 6867 832 476 57.2 26780 21401 0 3652657 2842 12018 14860 2041 806 39.5 40682 7781 14 UP 7253 12594640 3926263 0 3926263 3217 3071 6289 1737 542 31.2 16017 8194 15 Jharkhand 498 16 Uttarakhand 756 17 West Bengal 5106 1251910 1129000 187253 93901 2969736 1504601 122910 1....
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....251910 188 0 188 2514 2514 100.0 1501 1664 62468 165647 156369 160 0 161 248 207 83.5 10276 17068 1670248 1378 336 1714 582 328 56.2 10260 9156 18 HP 2104 1078481 124271 0 124271 258 33 291 513 60 11.5 23420 20764 19 J&K 567 884151 188452 0 188452 16 1 17 1560 333 21.3 915 870 Total 84327 92522827 34471856 7233163 41705019 67531 46760 114291 1098 495 45.1 27405 19590 iii Annexure 3.2 State-wise Summary of Loans Issued by CCBs in Three tier & mixed tier Structures vis-Ã -vis All Agencies Average for the Years 2009-10 to 2011-12 ( crore) SI. Name of the State GLC of all agencies GLC of CCBs No. Total Of which Agriculture Sector Total Of which Agriculture Loans Loans Sector Issued Short Term Total Issued Short Term Total term Loan Term loan 1 Andhra Pradesh 70575 30508 17435 47943 8540 5975 569 6544 2 Bihar 21625 6462 3445 9907 397 397 0 397 3 Chhattisgarh 6529 1678 1735 3413 1203 1061 92 1153 4 Gujarat 33771 13689 6165 19854 6947 4469 563 5032 5 Haryana 50355 17150 9472 26622 6388 4829 151 4980 6 Karnataka 39319 14229 4833 19063 8168 3640 239 3880 7 Kerala 89067 24503 4686 29188 34401 6358 567 6926 8 Madhya Pradesh 25497 15482 3733 19214 6464 5979 168 6146 9 Maharashtra 42092 13144....
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.... 5289 18434 13343 7863 1216 9079 10 Odisha 16169 5535 1674 7209 3890 3410 134 3545 11 Punjab 49015 25661 5124 30785 11944 8421 388 8809 12 Rajasthan 33496 17911 5227 23138 7038 5659 171 5830 13 Tamil Nadu 54113 28197 4042 32240 5535 3249 334 3583 14 Uttar Pradesh 55787 23981 8458 32439 8963 4272 937 5208 15 Jharkhand 13012 950 504 1454 78 9 0 9 16 Uttarakhand 5804 1570 993 2563 1032 485 127 612 17 West Bengal 17551 4460 2607 7067 2942 1201 158 1359 18 Himachal Pradesh 3623 580 516 1096 906 111 85 197 19 Jammu & Kashmir 3483 182 425 608 128 17 8 25 Total 630883 245873 86364 332238 128309 67406 5907 73313 iv Annexure 3.3 Share of CCBs in Three tier & mixed tier Structures In Total Loans Issued and agri loan in its operational area (Based on average of years 2009-10 to 2011-12) SI State Share of CCBS in Total LI (%) Share of CCBs in Agri LI (%) (share in %) Share of CCBs in crop loan (%) Share of Agri LI of CCB in its Total LI (%) 1 Andhra Pradesh 12 14 20 77 2 Bihar 2 4 6 100 3 Chhattisgarh 18 34 63 96 4 Gujarat 21 25 33 72 5 Haryana 13 19 28 78 6 Karnataka 21 20 26 47 7 Kerala 39 24 26 20 8 Madhya Pradesh 25 32 39 95 9 Maharashtra 32 49 60 68 10 Odisha 24 49 62 91 11 Punjab 24 29 33....
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.... 74 12 Rajasthan 21 25 32 83 13 Tamil Nadu 10 11 12 65 14 Uttar Pradesh 16 16 18 58 15 Jharkhand 1 1 1 12 16 Uttarakhand 17 West Bengal 18 Himachal Pradesh 872 18 24 31 59 17 19 27 46 25 18 19 22 19 Jammu & Kashmir 4 4 9 19 Average 20 22 27 57 Annexure 3.4 Share of CCBs in Three tier & mixed tier Structures in Total Loans Issued, Agri loans and Crop Loans based on 3 years average- Range SI State Share of CCBs in Total LI (%) Share of CCBs in Agri LI (%) Share of CCBs in Crop Loan (%) CRAR (%) Minimum Maximum Minimum Maximum | Minimum | Maximum Minimum Maximum 1 Andhra Pradesh 8.0 25.5 10.3 24.4 10.7 41.4 4.9 26.3 2 Bihar 0.3 10.8 0.6 17.3 0.8 26.7 -1.3 55.1 3 Chhattisgarh 11.4 38.6 18.7 71.2 6.1 79.8 8.9 25.2 4 Gujarat 4.7 43.7 5.1 59.7 6.9 78.2 4.2 16.8 5 Haryana 8.9 32.3 16.4 45.2 17.9 59.3 3.8 13.5 6 Karnataka 3.1 68.5 4.3 51.5 4.8 59.1 7.1 25.3 7 Kerala 18.7 67.4 9.4 50.5 12.4 51.8 -2.1 11.4 8 Madhya Pradesh 6.3 68.3 9.3 77.1 13.7 78.9 4.3 25.2 9 Maharashtra 8.6 69.1 12.1 71.6 18.5 84.9 -18.4 26.8 10 Orissa 13.5 55.0 21.4 71.7 33.9 79.8 4.5 11.1 11 Punjab 10.8 49.4 8.5 46.9 10.1 48.2 0.6 26.1 12 Rajasthan 6.1 45.6 9.6 51.7 13.4 66.7 0.1 13.1 13 Tamil Nadu 2.3 30.7 3.4 27.5 3.0 ....
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....28.9 4.91 13.2 14 Uttar Pradesh 0.3 57.5 0.4 49.7 0.4 49.5 -1700.7 24.7 15 Jharkhand 0.3 1.6 0.0 2.7 0.1 4.6 5.7 61.8 16 Uttaranchal 13.3 37.3 15.9 57.4 22.7 61.5 9.9 23.2 17 West Bengal 1.0 36.2 2.5 38.8 3.8 66.0 -19.7 12.8 18 HP 10.7 30.6 17.6 19.2 16.0 37.1 10.1 23.2 19 J&K 1.7 6.1 2.5 4.9 5.0 15.7 -140.1 -7.2 All India 0.3 69.1 0.0 77.1 0.1 84.9 -1700.7 61.8 vi Annexure 3.5 State-wise Summary of Loans Issued (LI) by StCBs under Two Tier Structure vis-Ã -vis All Agencies Average for the Years 2009-10 to 2011-12 SI. Name of the GLC of all agencies GLC of StCBs (GLC in crore, share in %) Share of StCBs in No. State Total Agriculture Sector Total Agriculture Sector Short Term Total Sho Term Total Total Agri crop Agri LI Crop term loan loan LI LI loan in its Ll in term Total its LI Agri LI 1 Assam 3329 605 626 1231 2 Andaman & 268 6 32 38 38 48 44.3 63 5 2 21 22 22 26 32 2 23 18 59 33 300 1 33 540 50 16 47 9 Nicobar 3 Arunachal 159 22 38 88 60 Pradesh 4 Chandigarh 6804 0 4792 4792 50 113 60 0 2 2 3 3 0 33 3 0 0 0 0 0 0 5 Delhi 474 30 36 66 12 1 3 3 3 6 Goa 2448 79 148 227 589 10 7 Manipur 382 20 35 55 12 11 15 25 0 4 4 8 Meghalaya 519 90 66 156 34 4 5 10 9 Mizoram 456 36 41 77 85 ....
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....1 8 10 19 4379 24 11 13 23 LO 28 19 4 41 7 10 Nagaland 201 0 0 95 21 0 0 14 10 11 Puducherry 1561 281 62 343 405 10 0 10 26 12 Sikkim 504 12 13 25 23 4 1 5 5 13 Tripura 1254 278 0 278 146 28 ☠Total 18359 1458 5890 7443 1457 66 85 164 8 2 5 11 40 28 12 053 624322 32 28 46 11 12 262 66 0 4 3 97 36 10 19 225 85 100 vii Annexure 4.1 Business and Profitability parameters of StCBs Three & mixed Tier Structures as on 31 March 2012 Sr StCB Capit Reser Total Total Total Total Interest earned on Interest paid on No al ves & Deposit Surplu S S Borro Invest Loans wings ments Outsta nding Profit (+) / Loss (-) in crore) Accumulated Loss, if any Invest ments Advance Deposits Borrowings S 1 Andhra 247 1354 3912 5086 1543 7078 279 419 275 220 123 0 Pradesh 2 Bihar 20 172 1866 846 1046 1710 96 105 116 16 46 0 3 Chhattisgarh 77 80 1484 702 428 1156 27 71 107 24 10 0 4 Gujarat 21 311 4862 2504 3632 3624 324 235 380 136 19 0 5 Haryana 102 330 2131 3404 1358 4515 113 197 140 118 19 0 678 Karnataka 113 420 5263 2834 2908 5382 179 364 361 115 29 0 7 Kerala 389 393 5904 1384 4436 3077 200 113 474 26 -101 390 8 Madhya 212 312 3879 3347 3081 4529 260 283 258 122 68 0 Pradesh 9 Maharashtra 445 656 1586....
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....2 3966 12040 10285 886 809 1285 145 175 77 10 Orissa 171 122 3954 3403 4136 3793 263 238 320 134 11 Punjab 68 244 2593 4823 1488 6296 126 327 167 185 12 Rajasthan 84 398 3580 3611 3491 4036 248 212 253 151 13 Tamil Nadu 996 579 6523 2328 2139 7538 182 548 476 114 14 UP 144 573 4631 1804 2484 4979 253 233 358 70 15 Uttaranchal 34 25 1231 511 1080 643 93 33 95 18 122223 11 0 27 0 20 0 52 0 30 0 0 16 HP 8 326 5242 749 3931 2362 313 230 357 39 41 0 17 J&K 2 7 538 1 427 103 36 11 33 0 4 0 18 West Bengal 40 104 4814 1649 3189 2873 248 420 492 45 -31 27 Total 3170 6408 78270 42953 52837 73978 4126 4849 5946 1679 544 494 viii Annexure 4.2 Business and Profitability parameters of CCBs in Three & mixed Tier Structures as on 31 March 2012 crore) Sr State Capit Reserv No al ts Total Total Total Total es & Deposi Borro Invest Surplus Interest earned Interest paid on Loans on No. of Amou CCBs nt of wings ments Outsta Invest Adva Depo Borro in Profit No. of CCBs in Loss Amoun Accum t of ulated Loss Losses nding ments nces sits wings Profit 1 Andhra 1045 1014 4702 6412 3246 9725 219 707 343 318 21 50 1 -2 180 Pradesh 2 Bihar 175 134 1807 422 932 849 66 103 90 12 18 34 3 Chhattisgarh 190 174 3404 7....
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....03 2693 1308 234 166 143 32 6 4 Gujarat 390 978 14075 3411 10277 8309 694 869 819 162 15 365 30 2 -2 5 60 0 0 0 87 3 -13 0 LO 5 Haryana 332 355 5365 4144 2364 7562 165 477 305 171 14 8 5 -28 0 6 Jharkhand 73 76 901 81 626 305 72 30 61 2 8 11 0 0 0 7 Karnataka 505 683 9222 3952 4331 9669 345 780 542 193 21 99 0 0 16 8 Kerala 206 899 22414 2404 7113 17463 598 1923 1681 243 11 41 3 -20 0 9 Maharashtra 1911 3212 49231 5110 23083 35298 1780 3238 2447 291 30 428 1 -7 0 10 MP 685 1005 9536 3918 5870 8651 376 901 504 229 38 181 0 0 0 11 Odisha 587 137 4731 3006 3160 5360 257 416 335 124 15 32 2 -52 26 12 Punjab 162 696 9035 5665 1743 9864 411 724 508 265 13 Rajasthan 320 352 7063 3830 4514 6213 298 531 434 171 28 78 17 34 3 -11 29 44 1 -9 10 14 Tamil Nadu 1639 1206 15418 5399 4332 20590 357 1918 1214 369 23 189 0 0 3 15 UP 441 1149 11646 3503 8347 6763 744 433 534 161 32 98 18 -153 25 16 Uttarakhand 45 310 4249 671 3350 1738 287 148 238 27 10 52 0 0 12 17 West Bengal 165 346 7576 877 4457 4104 403 361 493 52 16 31 1 -2 0 18 HP 5 588 5663 340 3551 2654 296 237 378 10 2 36 0 0 24 19 J&K 5 68 1616 15 780 604 59 59 21 2 0 0 3 -35 1 Total 8881 13381 187653 53863 94768 157028 7659 14019 11090 28....
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....35 325 1511 43 -334 331 ix Annexure 4.3 Business and Profitability parameters of StCBs in Two tier Structure as on 31 March 2012 in crore) Sr. StCB No. Capital Reser Total ves & Deposits Surpl us Total Total Total Gross Interest Interest Borrow Investm Loans NPA earned ings ents Outstan Amount on ding Investm on Interest paid on advanc deposits Interes Profit Accum t paid (+)/ ulated on Loss Loss, es Borrow (-) (if any) ents ings 1 Assam 2 Andaman & 03 9 16 1559 7 1020 505 104 79 46 61 0 26 16 41 456 46 316 223 43 26 22 24 4 3 0 Nicobar 3 Arunachal 192 6 95 149 20 109 92 24 2 3 14 0 129 Pradesh 4 Chandigarh 1 11 254 0 217 62 9 16 7 12 0 3 0 5 Delhi 3 144 794 21 634 362 27 111 0 44 0 30 0 6 Goa 21 90 1160 0 527 624 94 46 70 85 7 Manipur 15 31 95 121 103 153 133 9 5 3 8 Meghalaya 6 53 1184 44 888 422 56 67 42 54 013 1 0 0 21 3 11 0 9 Mizoram 6 4 372 30 106 237 40 12 21 17 10 Nagaland 35 27 367 10 236 132 34 19 11 16 11 Pondicherry 15 46 533 19 171 387 50 10 42 34 12 Sikkim 11 11 136 21 43 93 5 7 10 8 21 12 2 3 0 1 43 -7 11 2 3 0 13 Tripura 17 21 1156 3 761 356 27 53 31 64 0 14 0 Total 334 500 8160 472 5043 3666 714 479 308 424 28 87 220 X Sr. StCB No. Deposits by Type Current Total D....
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....eposits Deposits Of which, Share of Total CASA CASA Deposits Annexure 4.4 Deposits by Type and by Source of StCBs in Three tier and mixed tier Structures as on 31 March 2012 Fixed/ Savings Term Bank Deposits Deposits Deposits by Source Deposits ( crore) Deposits Deposits Total by CCBs by Other by Govt. / Deposits Societies Govt. Deposits by Individuals Deposits to Total bodies (%) 1 Andhra Pradesh 3478 176 258 3912 434 11 545 2941 153 273 3912 2 Bihar 1011 412 444 1866 855 46 611 802 453 0 1866 3 Chhattisgarh 1344 96 43 1484 139 9 124 1318 42 0 1484 4 Gujarat 4633 5 223 4862 229 5 38 3737 1087 0 4862 5 Haryana 1838 232 60 2131 292 14 411 1535 47 138 2131 6 Karnataka 4596 297 371 5263 668 13 836 3987 0 440 5263 7 Kerala 5518 91 295 5904 386 7 300 5473 131 0 5904 8 Madhya Pradesh 3364 209 305 3879 514 13 426 3051 402 0 3879 9 Maharashtra 14635 624 603 15862 1228 8 861 11330 3671 0 15862 10 Orissa 3739 118 98 3954 216 5 739 2922 114 179 3954 11 Punjab 2259 215 120 2593 335 13 579 1924 91 0 2593 12 Rajasthan 3225 74 281 3580 355 10 293 3287 0 0 3580 13 Tamil Nadu 5764 611 149 6523 759 12 2178 3479 866 0 6523 14 Uttar Pradesh 4149 335 147 4631 482 10 700 3437 493 0 4631 15 Uttaranchal 1....
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....198 10 23 1231 33 3 14 1205 12 0 1231 16 Himachal Pradesh 3517 1628 97 5242 1726 33 5073 0 156 13 5242 17 Jammu & Kashmir 351 126 61 538 187 35 288 249 0 0 538 18 West Bengal 4052 448 314 4814 762 16 1055 2737 1020 3 4814 Grand Total 68670 5707 3893 78270 9600 12 15072 53414 8738 1046 78270 xi Annexure 4.5 Analysis of NPAs of Agri and Non Agri loans of Select StCBs in crore) Sl. Name of Position Total Agri. Non- Gross Agri. Non- % of Non Prov Prov. Net Accu Gross Agri Non- No. the StCB as on loan Loan Agri NPAs Loan Agri Agri for For Loss/ mula NPAs NPA Agri. (31 o/s o/s loan o/s NPAs loan Loans to Agr. non- Profit ted % % NPA March) NPAs Total agri loss % Loans 1 Punjab 2011 5325 4187 1138 55 26 29 21.4 99 19 26 0 1.0 0.6 2.6 StCB 2 West Bengal 2011 3303 2396 907 424 385 39 27.5 28 39 39 10 0 12.8 16.1 4.3 StCB 3 UP StCB 2011 3999 3979 1999 313 116 197 50.0 269 159 21 0 7.8 2.9 9.8 Ltd. 4 Andhra 2011 5660 4835 825 155 44 111 14.6 4 22 112 0 2.7 0.9 13.5 Pradesh StCB 5 Madhya 2011 3271 2661 610 105 0 105 18.7 0 75 40 0 3.2 0.0 17.2 Pradesh StCB 6 Maharastra 2012 10285 3725 6560 2210 0 2210 63.8 0 2039 175 77 21.5 00 0.0 33.7 StCB xii Sr State No Fixed/ Savings Term Bank Deposits De....
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....posits Deposits by Type Current Total Deposits Deposits Of Share of Annexure 4.6 Deposits by Type and by Source of CCBs in Three tier and mixed tier Structures as on 31 March 2012 Deposits by Source Deposits Deposits ( crore) Deposits Depo which, CASA by sits by Other by Govt. Total Deposits Total Deposits Individuals by Societies / Govt. CASA in Total PACS bodies Deposits (%) 1 Andhra Pradesh 3793 745 165 4702 909 19 2958 1092 533 120 4702 2 Bihar 492 1132 183 1807 1315 73 1432 23 267 85 1807 3 Chhattisgarh 1126 2112 166 3404 2278 67 2798 445 25 136 3404 4 Gujarat 7540 5429 1107 14075 6535 46 9729 488 3560 299 14075 5 Haryana 2625 2631 109 5365 2740 51 3896 179 436 853 5365 6 Jharkhand 370 479 52 901 531 59 670 11 204 16 901 7 Karnataka 6332 2126 763 9222 2890 31 5225 2069 1483 444 9222 8 Kerala 18171 3342 901 22414 4243 19 10019 9571 2369 455 22414 9 Maharashtra 22887 17312 9032 49231 26344 54 29071 5731 7244 7185 49231 10 MP 5162 3789 585 9536 4374 46 6041 801 1994 699 9536 11 Odisha 3246 1342 143 4731 1485 31 3041 1551 73 65 4731 12 Punjab 4433 4324 278 9035 4602 51 7373 1354 54 254 9035 13 Rajasthan 4428 2382 252 7063 2635 37 4613 991 933 526 7063 14 Tamil Nadu 11997 2451 971 ....
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....15418 3422 22 10680 3214 866 658 15418 15 Uttar Pradesh 4377 6734 535 11646 7269 62 10624 317 546 159 11646 16 Uttarakhand 1833 2267 150 4249 2416 57 2976 795 115 363 4249 17 West Bengal 4889 2498 189 7576 2686 35 4701 2122 691 62 7576 18 HP 4120 1521 21 5663 1542 27 4121 11 1173 358 5663 19 J&K 827 681 108 1616 789 49 1543 11 1 62 1616 Total 108647 63297 15709 187653 79005 42 121510 30776 22567 12800 187653 xiii Annexure 4.7 Analysis of NPAs of Agri and Non Agri loans of Select CCBs (in crore) Sl.No Name of the CCB Position Total Agri. Non- Gross Agri. Non- % of Non Prov Prov. Net Loss Accumu Gross Agri Non- as on loan Loan Agri NPAs Loan Agri o/s o/s loan NPAs loan Agri Loans to for For (-)/ Profit lated NPAs NPA Agri. Agr. non- (+) loss % % NPA o/s NPAs Total agri % Loans 1 Jalandhar 31-Mar-12 608 346 262 17 17 0.4 43.1 0.2 9.0 2.5 0 2.9 4.9 0.1 2 Karimnagar 31-Mar-12 467 180 287 11 1.4 10 61.4 0.2 6.4 3.5 15 2.4 0.8 3.4 3 Nasik 31-Mar-10 1532 651 881 113 61 52 57.5 12 180 11 0 7.4 9.4 5.9 4 Nagpur 31-Mar-12 730 375 355 74 47 27 48.6 8.2 24 41 199 10.2 12.6 7.6 5 Mugberia 31-Mar-12 215 69 147 15 1.1 14 68.1 0.1 4.6 0.8 0 7.0 1.6 9.6 00 6 Khammam 31-Mar-12 334 246 88 15 6.6 8.8 2....
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....6.4 0.7 6.9 1.2 0 4.6 2.7 10.0 7 Nalgonda 31-Mar-12 424 297 126 30 8 Gorakhpur 31-Mar-12 181 90 91 76 66 16 14 29.8 2.2 6.0 1.0 0 7.0 5.4 10.8 66 10 50.4 54 0 -11 117 42.3 74.0 11.2 9 Jammu 31-Mar-12 381 58 323 57 19 38 84.9 22 0 -32 148 15.0 33.8 11.7 10 Purnea 31-Mar-12 69 46 23 20 17 2.8 33.1 7.0 2.8 -1.6 25 28.7 36.8 12.3 11 Murshidabad 31-Mar-12 207 90 117 26 10 16 56.6 3.2 8.8 0.2 5.5 12.4 11.2 13.3 12 Kakinada 31-Mar-12 796 564 232 51 19 32 29.1 5.1 20 1.1 0 6.4 3.4 13.6 13 Ghazipur 31-Mar-12 76 55 21 17 13 3.2 27.6 10.6 0 -2.4 39 21.8 24.3 15.4 14 Solapur 31-Mar-11 2935 623 2312 407 22 385 78.8 5.7 145 15 0 13.9 3.5 16.6 1251 327 15 Thiruvanathapuram 31-Mar-11 1848 597 16 Jalna 31-Mar-12 202 140 63 37 21 16 31.0 17 16 11 5 18.5 15.2 10 317 67.7 1.7 100 2.7 0 17.7 1.7 25.3 25.9 xiv AM Annexure 4.7 Analysis of NPAs of Agri and Non Agri loans of Select CCBs (in crore) Sl.No Name of the CCB Position Total Agri. Non- Gross Agri. Non- % of Non Prov Prov. Net Loss Accumu Gross Agri Non- as on loan Loan Agri NPAs Loan Agri Agri for For (-) / Profit lated NPAs NPA Agri. o/s o/s loan NPAs loan Loans to Agr. non- (+) loss % % NPA o/s NPAs Total agri % Loans 17 Mau 31-Mar-12 31 17 14 1....
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....4 10 3.7 45.9 12 0 -1.7 27 44.8 60.5 26.2 18 Muzzafurpur 31-Mar-12 35 14 21 15 10 6 58.8 7.2 5.6 2.7 29 44.3 68.8 27.2 19 Burdwan 31-Mar-12 605 327 278 88 12 76 45.9 8.0 52 2.0 0 14.5 3.5 27.5 20 Amritsar 31-Mar-12 473 354 119 45 11 33 25.1 6.0 15 1.5 12 9.5 3.2 28.2 21 Jalgaon 31-Mar-12 1147 567 581 209 27 182 50.6 3.9 180 17 94 18.2 4.7 31.4 2222222 Buldhana 31-Mar-12 577 166 410 134 3.7 130 71.1 123 0 2.0 170 23.2 2.2 31.7 23 Azamgarh 31-Mar-12 61 41 20 22 22 15 7.0 33.4 15 0 -2.7 81 35.3 36.0 34.0 24 Dhule & Nandurbar 31-Mar-12 510 183 327 169 19 150 64.2 12 70 0.9 117 33.1 10.2 45.9 25 Etah 31-Mar-12 93 79 14 27 20 7.7 15.3 13 4.9 0 0 29.5 25.1 54.0 26 Nanded 31-Mar-12 547 224 323 208 16 192 59.0 10 192 2.8 144 38.1 7.2 59.6 27 Birbhum 31-Mar-12 197 104 92 61 2.0 59 47.0 0.9 25 -1.8 46 30.8 1.9 63.4 28 Kolhapur 31-Mar-11 1356 542 814 563 21 542 60.0 14 293 7.3 197 41.5 3.9 66.6 XV Annexure 4.8 Deposits by Type and by Source of StCBs in Two tier Structure as on 31 March 2012 ( crore) Sr. StCB Deposits by Type No. Fixed/ Term Deposits Deposits Savings Bank Current Total Of Share of Deposits Deposits Deposits Deposits which, CASA by by PACS Total Deposits Individuals Deposits by ....
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....Source Deposits by Other Societies Deposits by Govt. /Govt. Total Deposits CASA in Total bodies Deposits (%) 1 Assam 496 929 135 1559 1064 68 1494 0 66 0 1559 2 Andaman & 197 244 15 456 259 57 448 0 8 0 456 Nicobar 3 Arunachal 30 47 18 95 65 69 62 0 33 0 95 4 Chandigarh 88 161 6 254 167 66 185 0 28 41 254 5 Delhi 333 401 59 794 460 58 619 7 168 0 794 6 Goa 628 426 106 1160 532 46 743 0 354 63 1160 7 Manipur 30 45 20 95 65 69 81 0 14 0 95 8 Meghalaya 431 645 108 1184 752 64 981 0 26 177 1184 9 Mizoram 140 218 14 372 233 62 366 4 2 0 372 10 Nagaland 139 203 25 367 228 62 361 0 6 0 367 11 Pondicherry 357 140 36 533 176 33 389 0 63 80 533 12 Sikkim 76 51 8 136 60 44 110 0 23 2 136 13 Tripura 583 434 139 1156 573 50 911 0 38 206 1156 Total 3526 3945 689 8160 4634 57 6751 11 829 569 8160 xvi Sr. No State Status of CCB - Licenced / Present CRAR (as Unlicenced per DoS) Name of the CCB Annexure - 5.1 Statement showing likely additional capital required for CCBs on 'Trend Based' performance Likely additional capital requirements estimated for (*crore) Likely additional capital requirements estimated for achieving CRAR of 7% by 2014-15 & 9% by 2016-17 Share of Agri. Loans issued in Area of O....
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....peration achieving 9% CRAR (Model-1) (Model - 2) Group [CRAR upto 4%] 1 Jaunpur Uttar Pradesh Unlicenced -1700.68 0.92 125 162 2 Siddharthnagar Uttar Pradesh Unlicenced -1511.17 5.96 47 61 3 Sultanpur Uttar Pradesh Unlicenced -717.81 0.81 71 89 4 Bahraich Uttar Pradesh Unlicenced -620.32 1.93 69 101 5 Deoria Uttar Pradesh Unlicenced -487.78 0.36 174 229 6 Ballia Uttar Pradesh Unlicenced -439.84 5.89 99 183 7 Sitapur Uttar Pradesh Unlicenced -113.88 3.72 97 179 8 Azamgarh Uttar Pradesh Unlicenced -91.87 8.44 66 86 9 Basti Uttar Pradesh Unlicenced -73.94 18.06 59 89 10 Hardoi Uttar Pradesh Unlicenced -71.55 2.9 73 110 11 Fatehpur Uttar Pradesh Unlicenced -57.26 12.49 106 273 12 Gorakhpur Uttar Pradesh Unlicenced -55.39 5.21 109 152 13 Varanasi Uttar Pradesh Unlicenced -47.59 10.24 59 51 14 Ghazipur Uttar Pradesh Unlicenced -28.39 12.75 41 52 15 Allahabad Uttar Pradesh Unlicenced -27.39 17.86 98 121 16 Faizabad Uttar Pradesh Unlicenced -19.85 8.21 33 37 17 Bharatpur Rajasthan Licenced 0.1 10.52 21 14 18 Birbhum West Bengal Unlicenced -19.66 29.57 71 88 19 Jind 20 Haryana Licenced 3.78 19.52 25 37 Sitamarhi Bihar Licenced 3.71 3.48 10 0 Total 1453 2112 Group-II [CRAR above 4% upto 7%] ....
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....1 Murshidabad West Bengal Licenced 4.02 10.38 19 4 2 Hissar Haryana Licenced 4.01 25.74 47 16 xvii Sr. Name of the CCB No State Status of CCB - Licenced / Present CRAR (as Share of Agri. Loans issued Unlicenced per DoS) in Area of Operation Annexure - 5.1 Statement showing likely additional capital required for CCBs on 'Trend Based' performance (crore) Likely additional capital requirements estimated for achieving CRAR of 7% by 2014-15 & 9% by 2016-17 (Model - 2) Likely additional capital requirements estimated for achieving 9% CRAR (Model-1) 3 Kurukshtra Haryana Licenced 4.83 14.54 27 17 4 Sirsa Haryana Licenced 4.21 16.97 24 29 5 Palakkad Kerala Licenced 4.1 50.5 66 45 6 Kanpur * Uttar Pradesh Unlicenced $ 4.2 13.37 0 4 7 Kanyakumari Tamil Nadu Licenced 5.21 3.83 26 0 8 Sivaganga Tamil Nadu Licenced 5.63 5.79 12 0 9 Mau# Uttar Pradesh Unlicenced $ 5.5 2.48 0 13 West Bengal Licenced Group-III [CRAR above 7% upto 9%] Karnataka - Dharwad Karnataka Licenced Tamil Nadu Licenced 10 Purulia Total 1 2 Salem Total Group-IV [CRAR above 9% upto 12%] 1 Vidyasagar 2 Keonjhar West Bengal Odisha Licenced Licenced 9.25 9.73 14.02 57.14 22 0 0 Total 4 0 1 Aurangabad Bihar Licenced Group-V [CRAR a....
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....bove 12%] 17.6 10.35 0 0 Total 0 0 * 4.73 8.91 4 0 225 126 7.2 7.9 9.86 0 0 22.43 25 0 25 0 #$ Besides 30.00 Crore received during 2012-13. Besides 19.05 Crore received during 2012-13. Recommended for grant of licence as the banks has attained licencing criteria. xviii Annexure - 5.2 Model wise assessment of likely additional capital requirement of select CCBs Sr Name of the CCB No CRAR as per DoS Model- 1 (Uniform growth rate Model - 2 (Trend) Model - 3 (Higher Agri Loan O/S) ( crore) Model - 4 @ 15%) Recap needed to achieve 9% Recap needed to Recap needed to CRAR by achieve 9% CRAR achieve 9% CRAR by compared to 2017 by 2017 2017 Model 2. Additional capital Need for Model 3 (Higher growth in important business parameters) Likely additional capital need in growth model Likely additional capital Need for Model 4 compared to (Model-4) Model 3. 1 Kanpur 4.2 0 3.5* 5.2* 1.7 14.0* 8.8* 2 Kurushetra 4.83 27.0 17.2 18.4 1.2 36.0 17.6 3 Pallakad 4.1 66.1 45.0 57.0 12.0 205 148 4 Salem 7.9 25.0 0 0 0 0 0 5 Murshidabad 4.02 19.0 3.5 4.5 1.0 9.2 4.7 6 Vidyasagar 9.25 1.9 0 0 0 2.0 2.0 7 Birbhum -19.66 71.1 87.5 91.0 3.5 82.5 0 8 Jind 3.78 25.0 36.5 36.5 0 46.5 10 9 Allahabad -27.39 98.0 120.....
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....7 116.0 0 132.5 16.5 10 Basti -73.94 59.0 88.8 89.5 0.7 97.3 7.8 11 Sitamarhi 3.71 10.0 0 0 0 0 0 12 Hissar 4.01 47.0 15.5 15.5 0 18.0 2.5 13 Sirsa 4.21 24.0 29.0 29.0 0 22.5 0 14 Karnataka Dharwad 7.2 0 0 0 0 0 0 15 16 56 Keonjhar 9.73 2.0 0 0 0 6.0 6.0 Aurangabad (Bihar) 17.6 0 0 0 0 0 0 Total 475.1 447.2 462.6 20.1 671.5 223.9 * besides 30 crore given during 2012-13. ㄨ xix Annexure - 6.1 Unlicensed CCBS - CCB- wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference date No. of Inspection CRAR (%) (Base Likely additional capital required for achieving 4% CRAR 7% CRAR 9% CRAR Position) by 2012-13 by 2014-15 by 2016-17 1 Deoria Kasia 31.03.2012 -487.78 173 173 174 2 Jammu 31.03.2012 -33.85 168 185 201 3 Buldana 31.03.2012 -15.55 151 179 206 4 Nagpur 31.03.2012 -15.77 149 153 151 5 Jaunpur 31.03.2012 -1700.68 125 125 125 6 Dhule & Nandurbar 31.03.2012 -10.49 107 135 161 7 Gorakhpur 31.03.2012 -55.39 97 103 109 8 Ballia 31.03.2012 -439.84 97 98 99 9 Fatehpur 31.03.2012 -57.26 96 101 106 10 Sitapur 31.03.2012 -113.88 92 95 97 11 Allahabad 31.03.2012 -27.39 78 88 98 12 Anantnag 31.03.2012 ....
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....-140.11 78 80 82 13 Wardha 31.03.2012 -18.36 76 81 85 14 Sultanpur 31.03.2012 -717.81 70 71 71 15 Baharaich 31.03.2012 -620.32 68 68 69 16 Hardoi 31.03.2012 -71.55 66 70 73 17 Azamgarh 31.03.2012 -91.87 61 64 66 18 Birbhum 31.03.2012 -19.66 54 63 71 19 Basti 31.03.2012 -73.94 54 57 59 20 Varanasi 31.03.2012 -47.59 52 56 59 21 Siddhartha Nagar 31.03.2012 -1511.17 47 47 47 22 Osmanabad 31.03.2012 -3.92 38 37 32 23 Jalna 31.03.2012 -10.01 38 41 44 24 Ghazipur 31.03.2012 -28.39 33 37 41 25 Faizabad 31.03.2012 -19.85 25 29 26 Baramulla 31.03.2012 -7.24 20 27 33 33 33 Total 2114 2263 2391 XX Annexure - 6.2 Licensed Banks with less than 4% CRAR CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. No. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving date of (Base Position) Inspection 4% CRAR by 2012-13 7% CRAR 9% CRAR by 2014-15 by 2016-17 1 Kolhapur 31.03.2011 -11.49 190.11 234.77 275.06 2 Sangli 31.03.2011 -14.30 95.76 0.00 0.00 3 Alappuzha 31.03.2011 -2.05 57.16 95.13 130.36 4 Sambalpur 31.03.2012 -1.50 41.42 67.95 92.13 5 Nasik 31.03.2010 2.40 32.70 114.77 191.33 6 Pathanamthitta....
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.... 31.03.2010 1.16 13.45 33.42 52.02 7 Balageria 31.03.2011 -1.88 13.20 22.37 30.96 8 Kasargod 31.03.2010 1.85 10.69 32.02 51.79 9 Mansa 31.03.2010 0.56 10.66 23.39 35.42 10 Kollam 31.03.2011 2.94 8.89 48.58 84.90 11 Malappuram 31.03.2011 3.33 8.13 54.55 97.69 12 Faridkot 31.03.2011 1.48 6.97 18.04 28.30 13 Bharatpur 31.03.2011 0.12 6.89 14.02 20.63 14 Idukki 31.03.2010 3.34 5.21 39.57 71.41 15 Nagaur 31.03.2010 1.84 4.90 14.38 23.20 16 Thrissur 31.03.2010 3.59 3.20 55.70 104.07 17 Nawadah 31.03.2011 -1.31 2.84 5.04 7.12 18 Jalpaiguri 31.03.2011 2.80 1.59 7.01 12.02 19 Wyanad 31.03.2011 3.53 0.97 11.78 21.71 20 Jind 31.03.2010 3.78 0.74 13.58 25.49 21 Sitamarhi 31.03.2011 3.71 0.29 5.49 10.33 22 Kottayam 31.03.2011 -0.40 0.23 0.00 0.00 23 Jalgaon 31.03.2012 3.29 0.00 0.00 7.21 Total 516.01 911.57 1373.17 xxi Annexure - 6.3 CCBs recommended for license - CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. No. Name of the CCB Reference Net date of Worth Inspection Capital Risk CRAR Funds Weighted Assets Likely additional capital required for achieving (%) 4% CRAR by 2012-13 7% CRAR by 2014-15 9% CRAR by 2016-17 F....
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....inancial Support received from State Govt. in 2012-13 State - BIHAR 1 Katihar 31.03.2012 3.1 5.25 40.56 12.95 0.00 0.00 0.00 5.65 2 Purnea 3 31.03.2012 Muzaffarpur 31.03.2012 11.23 12.43 4.09 4.09 72.43 5.64 0.00 0.32 1.92 9.78 48.48 25.63 0.00 0.00 0.00 21.33 4 Munger-Jamui 31.03.2012 4.3 6.07 62.19 9.76 0.00 0.00 0.00 27.30 5 Aurangabad 31.03.2012 17.60 0.00 0.00 0.00 0.00 Sub total 0.00 0.32 1.92 64.06 - State RAJASTHAN 6 Tonk 31.03.2012 10.14 10.45 163.43 6.40 0.00 2.25 7.95 30.00 Sub total 0.00 2.25 7.95 30.00 State - UP 7 Pratapgarh 31.03.2012 11.58 6.8 117.54 5.78 0.00 0.58 3.34 8.49 8 Raibareili 31.03.2012 8.65 8.13 115.65 7.03 0.00 0.00 2.45 11.69 9 Farukkhabad 31.03.2012 10.92 10.92 145.24 7.52 0.00 0.00 4.31 15.68 10 Mau 31.03.2012 1.4 9.34 30.73 30.38 0.00 0.00 0.00 19.05 11 Barabanki 31.03.2012 9.67 8.26 77.72 10.62 0.00 0.00 0.00 21.64 12 Aligarh 31.03.2012 5.92 5.14 85.13 6.04 0.00 1.25 4.05 24.45 13 Lucknow 31.03.2012 4.09 4.02 82.17 4.90 0.00 2.37 5.24 28.50 14 Kanpur 31.03.2012 6.54 3.43 81.76 4.20 0.00 0.00 0.00 30.00 15 Unnao 31.03.2012 4.67 13.59 55.08 24.67 0.00 0.00 0.00 32.40 Sub total 0.00 4.20 19.39 191.90 GRANT TOTAL 0.00 6.77 29.26 285.96 xxii Annexure -....
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.... 6.4 Licensed Banks with CRAR ranging from 4% to 7%- CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference date CRAR (%) Likely additional capital required for achieving No. of Inspection (Base 4% CRAR 7% CRAR 9% CRAR Position) by 2012-13 by 2014-15 by 2016-17 1 Hisar 31.03.2012 4.01 0.06 24.31 46.85 2 Murshidabad 31.03.2012 4.02 0.15 9.89 19.02 3 Sasaram-Babhua 31.03.2011 4.06 0.00 2.84 5.77 4 Palakkad 31.03.2010 4.07 0.00 33.91 66.10 5 Aurangabad 31.03.2011 4.07 0.00 31.88 62.72 6 Sangrur 31.03.2011 4.16 0.00 31.87 63.65 7 Mugberia 31.03.2010 4.19 0.03 10.17 19.66 8 Sirsa 31.03.2011 4.21 0.00 11.95 23.57 9 Kutch 31.03.2012 4.22 0.00 2.55 5.06 10 Parbhani 31.03.2011 4.25 0.00 0.00 0.00 11 Chhindwara 31.03.2010 4.33 0.00 5.07 11.13 12 Thiruvananthapuram 31.03.2011 4.42 0.00 68.55 140.50 13 Mehsana 31.03.2010 4.45 0.00 9.96 20.54 14 United Puri Nimpara 31.03.2011 4.48 0.00 2.26 5.30 15 Solapur 31.03.2011 4.49 0.00 144.07 282.18 16 Ferozepur 31.03.2012 4.51 0.00 14.74 30.44 17 Fatehabad 31.03.2011 4.55 0.00 11.62 24.14 18 Amritsar 31.03.2012 4.64 0.00 16.19 34.18 19 Junagarh 31.03.2012 4....
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.....65 0.00 0.00 0.00 20 Purulia 31.03.2011 4.73 0.00 1.96 4.30 21 22 Hoshangabad 31.03.2011 4.79 0.00 6.74 17.77 Surendranagar 31.03.2012 4.80 0.00 0.00 0.64 23 Kurukshetra 31.03.2011 4.83 0.00 12.53 27.02 24 Prakasam 31.03.2011 4.89 0.00 14.68 32.35 25 Virudhunagar 31.03.2011 4.91 0.00 2.51 12.24 26 Pali 31.03.2011 4.93 0.00 7.16 17.78 xxiii Annexure - 6.4 Licensed Banks with CRAR ranging from 4% to 7%- CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference date CRAR (%) Likely additional capital required for achieving No. of Inspection (Base 4% CRAR 7% CRAR 9% CRAR Position) by 2012-13 by 2014-15 by 2016-17 27 Seoni 31.03.2011 4.97 0.00 0.00 0.00 28 Gurdaspur 31.03.2012 4.97 0.00 16.54 37.20 29 Taran Taran 31.03.2011 5.02 0.00 9.23 21.96 30 Fatehgarh Sahib 31.03.2011 5.06 0.00 10.46 24.98 31 Boudh 31.03.2010 5.07 0.00 0.17 2.95 32 Tirunelveli 31.03.2011 5.14 0.00 12.31 28.05 33 Guna 31.03.2011 5.15 0.00 0.00 0.00 34 Panchkula 31.03.2011 5.15 0.00 4.30 10.41 35 Bolangir 31.03.2012 5.18 0.00 10.34 24.03 36 Tamluk Ghatal 31.03.2011 5.18 0.00 8.83 19.62 37 Kanyakumari 31.03.2011 5.21 0.00 1....
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....0.60 25.98 38 Raisen 31.03.2010 5.26 0.00 6.57 15.37 39 Kurnool 31.03.2010 5.27 0.00 6.56 14.88 40 Patiala 31.03.2011 5.27 0.00 21.96 53.33 41 Bhatinda 31.03.2011 5.29 0.00 13.62 32.50 42 Datia 31.03.2010 5.34 0.00 1.59 4.25 43 Rewari 31.03.2010 5.38 0.00 7.32 17.18 44 Thanjavur 31.03.2011 5.43 0.00 4.32 18.67 45 Nadia 31.03.2012 5.55 0.00 6.26 16.23 46 Cuttack 31.03.2012 5.55 0.00 20.06 49.84 47 Motihari 31.03.2011 5.59 0.00 3.03 7.78 48 Sivagangai 31.03.2011 5.63 0.00 2.82 12.47 49 Deogarh-Jamtara 31.03.2012 5.70 0.00 0.00 0.00 50 Bhawanipatna 31.03.2010 5.70 0.00 3.97 9.49 51 Ajmer 31.03.2010 5.71 0.00 1.24 5.33 52 Baroda 31.03.2012 5.74 0.00 0.00 0.00 53 Fazilka 31.03.2011 5.75 0.00 8.09 21.76 xxiv Annexure - 6.4 Licensed Banks with CRAR ranging from 4% to 7%- CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference date CRAR (%) Likely additional capital required for achieving No. of Inspection (Base 4% CRAR 7% CRAR 9% CRAR Position) by 2012-13 by 2014-15 by 2016-17 54 Vellore 31.03.2011 5.78 0.00 13.37 38.50 55 Dindigul 31.03.2011 5.81 0.00 12.15 33.11 56 Kozhikode 31.03.2012 5.85 0....
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.....00 28.35 83.85 57 Kannur 31.03.2010 5.93 0.00 22.68 66.52 58 Thoothukudi 31.03.2011 6.00 0.00 0.00 5.28 59 Bhilwara 31.03.2010 6.04 0.00 4.61 11.86 60 Nanded 31.03.2011 6.10 0.00 6.61 23.62 61 Jabalpur 31.03.2011 6.15 0.00 0.00 0.02 62 Dewas 31.03.2010 6.18 0.00 0.00 0.00 63 Moga 31.03.2010 6.27 0.00 6.99 20.29 64 Mirzapur DCCB 31.03.2011 6.28 0.00 1.89 6.34 65 Cuddalore 31.03.2010 6.30 0.00 9.24 33.32 66 Bhiwani 31.03.2010 6.38 0.00 8.86 27.70 67 Ratnagiri 31.03.2011 6.48 0.00 2.70 21.23 68 Kheda 31.03.2011 6.58 0.00 0.00 0.00 69 Shahdol 31.03.2011 6.60 0.00 0.00 0.00 70 Dakshin Dinajpur 31.03.2011 6.61 0.00 0.00 0.05 71 Koraput 31.03.2011 6.65 0.00 8.55 27.23 72 Bhopal 31.03.2010 6.70 0.00 4.47 20.94 73 Tiruchirapalli 31.03.2010 6.70 0.00 2.78 36.16 74 Yamunanagar 31.03.2010 6.71 0.00 0.00 0.00 75 Hazaribagh 31.03.2011 6.82 0.00 0.00 0.00 76 Warangal 31.03.2010 6.88 0.00 0.00 2.85 77 Sundergarh 31.03.2011 6.88 0.00 4.29 16.85 0.23 805.13 1922.92 XXV Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capit....
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....al required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 1 Tumkur 31.03.2010 7.07 0.00 1.11 10.70 2 Mayurbhanj 31.03.2010 7.13 0.00 1.98 7.42 3 Shivpuri 31.03.2011 7.14 0.00 0.00 3.19 4 Pudukottai 31.03.2010 7.18 0.00 1.86 12.10 5 Karnataka (Dharwad) 31.03.2011 7.18 0.00 0.00 0.00 6 Bundi 31.03.2010 7.20 0.00 0.36 4.07 7 Ramanathapuram 31.03.2011 7.20 0.00 0.00 9.29 8 Sindhudurg 31.03.2011 7.22 0.00 0.37 21.08 9 Aska 31.03.2012 7.23 0.00 0.00 2.74 10 Kanchipuram 31.03.2011 7.27 0.00 0.87 34.72 11 South Canara 31.03.2011 7.28 0.00 0.00 28.11 12 Chandrapur 31.03.2010 7.29 0.00 2.48 29.06 13 Sabarkantha 31.03.2010 7.44 0.00 2.29 18.79 14 Mumbai 31.03.2010 7.44 0.00 16.57 81.55 15 Agra 31.03.2011 7.54 0.00 0.00 3.13 16 Hoshiarpur 31.03.2011 7.61 0.00 1.70 27.17 17 Madurai 31.03.2011 7.61 0.00 0.00 19.97 18 Balasore Bhadrak 31.03.2010 7.64 0.00 2.76 27.98 19 Jhunjhunu 31.03.2010 7.67 0.00 0.57 5.86 20 Anantapur 31.03.2010 7.68 0.00 0.00 15.07 21 Tiruvannamalai 31.03.2010 7.69 0.00 0.00 14.23 22 Banda 31.03.2011 7.74 0.00 0.05 3.68 23 Karnal 31.03.2011 7.81 0.00 0.91 24.06 24 Hooghly 31.03.2011 7.88 0.00 0.41 16.05 225 Sale....
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....m 31.03.2011 7.90 0.00 0.00 25.02 26 Morena 31.03.2011 7.91 0.00 0.00 6.01 xxvi Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 27 Nalanda 31.03.2010 7.92 0.00 0.00 1.30 28 Khurda 31.03.2011 7.97 0.00 0.18 9.00 29 Chitradurga 31.03.2011 8.00 0.00 0.00 4.06 30 Nilgiris 31.03.2011 8.05 0.00 0.00 0.00 31 Damoh 31.03.2011 8.06 0.00 0.00 0.00 32 Gurgaon 31.03.2011 8.07 0.00 0.62 17.44 33 Banki 31.03.2012 8.25 0.00 0.00 3.81 34 Bangalore 31.03.2011 8.32 0.00 0.00 0.00 35 Kodinar 31.03.2010 8.32 0.00 0.00 0.00 36 Jhalawar 31.03.2011 8.43 0.00 0.00 9.30 37 Ambala 31.03.2011 8.44 0.00 0.00 9.87 38 Dausa 31.03.2010 8.45 0.00 0.00 3.09 39 Muktsar 31.03.2010 8.48 0.00 2.13 15.59 40 Jaisalmer 31.03.2011 8.50 0.00 0.00 1.58 41 Kaithal 31.03.2011 8.54 0.00 0.00 13.27 42 Villupuram 31.03.2010 8.60 0.00 0.00 9.83 43 Udaipur 31.03.2011 8.74 0.00 0.00 5.37 44 Tikamgarh 31.03.2011 8.77 0.00 0.00 0.0....
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....0 45 Dharmapuri 31.03.2010 8.79 0.00 0.00 6.40 46 Jalore 31.03.2011 8.89 0.00 0.00 0.00 47 Bilaspur 31.03.2010 8.90 0.00 0.00 0.00 48 Chittoor 31.03.2010 8.92 0.00 0.00 2.97 49 SAS Nagar 31.03.2011 8.97 0.00 0.00 5.86 Sub total-CRAR 7% to 9% 0.00 37.24 569.81 50 Churu 31.03.2011 9.03 0.00 0.00 2.83 51 Kota 31.03.2010 9.13 0.00 0.00 0.00 52 Mandya 31.03.2011 9.14 0.00 0.00 4.97 Xxvii Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 53 ||}|||3| Jagdalpur 31.03.2010 9.16 0.00 0.00 0.00 54 Jaipur 31.03.2011 9.16 0.00 0.00 5.55 55 Raigarh 31.03.2010 9.18 0.00 0.00 10.73 56 Visakhapatnam 31.03.2011 9.21 0.00 0.00 5.96 57 Vidyasagar 31.03.2011 9.25 0.00 0.00 1.92 58 Rewa 31.03.2012 9.27 0.00 0.00 0.00 59 Ahmednagar 31.03.2010 9.27 0.00 0.00 38.66 60 Firozabad 31.03.2011 9.28 0.00 0.00 2.45 61 Faridabad 31.03.2011 9.30 0.00 0.00 14.37 62 Kumbakonam 31.03.2010 9.31 0.00 0.00 0.00 63 Jhansi....
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.... 31.03.2011 9.34 0.00 0.00 1.90 64 Vaishali 31.03.2011 9.34 0.00 0.00 1.13 65 Banaskantha 31.03.2011 9.35 0.00 0.00 11.48 66 Kolar 31.03.2012 9.38 0.00 0.00 0.00 67 Chittorgarh 31.03.2010 9.41 0.00 0.00 6.38 68 Gwalior 31.03.2012 9.52 0.00 0.00 0.00 69 Karimnagar 31.03.2010 9.55 0.00 0.00 1.32 70 Gopalganj 31.03.2011 9.59 0.00 0.00 2.04 71 Panchmahals 31.03.2011 9.61 0.00 0.00 0.00 72 Raiganj 31.03.2010 9.62 0.00 0.00 1.73 73 Lalitpur 31.03.2010 9.62 0.00 0.00 0.00 74 Jhajjar 31.03.2011 9.63 0.00 0.00 7.26 75 Rohika 31.03.2010 9.65 0.00 0.00 0.00 76 Kadapa 31.03.2011 9.67 0.00 0.00 2.58 77 Bulandshahar 31.03.2010 9.71 0.00 0.00 2.94 78 Keonjhar 31.03.2011 9.73 0.00 0.00 2.03 79 Sriganganagar 31.03.2011 9.74 0.00 0.00 6.69 xxviii Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 80 Shimoga 31.03.2010 9.75 0.00 0.00 1.15 81 Yeotmal 31.03.2011 9.81 0.00 0.00 0.00 82 Bijapur 31.03.2011....
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.... 9.83 0.00 0.00 11.00 83 Rohtak 31.03.2010 9.84 0.00 0.00 6.25 84 Dehradun 31.03.2011 9.85 0.00 0.00 0.00 85 Siddhi 31.03.2011 9.88 0.00 0.00 0.00 86 Raichur 31.03.2011 9.88 0.00 0.00 0.00 87 Belgaum 31.03.2010 9.92 0.00 0.00 2.52 88 Burdwan 31.03.2010 9.97 0.00 0.00 1.93 89 Bidar 31.03.2010 10.01 0.00 0.00 5.56 90 Bhavnagar 31.03.2011 10.02 0.00 0.00 0.00 91 North Kanara 31.03.2010 10.02 0.00 0.00 5.29 92 Ambikapur 31.03.2011 10.04 0.00 0.00 0.00 93 Jogindra 31.03.2011 10.05 0.00 0.00 0.00 94 Davangere 31.03.2010 10.11 0.00 0.00 3.41 95 Mahendragarh 31.03.2010 10.11 0.00 0.00 4.19 96 Malda 31.03.2011 10.19 0.00 0.00 0.00 97 Banswara 31.03.2011 10.35 0.00 0.00 0.00 98 Ahmedabad 31.03.2010 10.37 0.00 0.00 0.00 99 Baran 31.03.2010 10.39 0.00 0.00 2.18 100 Berhampur 31.03.2011 10.63 0.00 0.00 2.57 101 Sonepat 31.03.2010 10.67 0.00 0.00 4.83 102 Chhattarpur 31.03.2011 10.68 0.00 0.00 0.39 103 Amravati 31.03.2011 10.70 0.00 0.00 0.00 104 Etah DCB 31.03.2012 10.73 0.00 0.00 0.07 105 Angul United 31.03.2011 10.77 0.00 0.00 2.49 106 Ludhiana 31.03.2011 10.81 0.00 0.00 2.15 XXIX Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% an....
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....d 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 107 Hassan 31.03.2011 10.84 0.00 0.00 0.00 108 Satna 31.03.2011 10.86 0.00 0.00 0.00 109 Garwal (Kotdwar) 31.03.2011 10.88 0.00 0.00 0.00 110 Bagalkot 31.03.2010 10.91 0.00 0.00 0.00 111 Dungarpur 31.03.2010 10.93 0.00 0.00 1.03 112 Amreli 31.03.2010 11.02 0.00 0.00 0.80 113 Beed 31.03.2011 11.03 0.00 0.00 0.00 114 Akola 31.03.2011 11.05 0.00 0.00 4.81 115 Ujjain 31.03.2010 11.06 0.00 0.00 2.68 116 Mathura 31.03.2011 11.06 0.00 0.00 0.00 117 Nayagarh 31.03.2010 11.08 0.00 0.00 0.00 118 Jalaun 31.03.2010 11.10 0.00 0.00 0.00 119 Jalandhar 31.03.2010 11.14 0.00 0.00 5.42 120 Bhind 31.03.2010 11.15 0.00 0.00 1.21 121 Barmer 31.03.2010 11.21 0.00 0.00 0.00 122 Ernakulam 31.03.2010 11.36 0.00 0.00 0.00 123 Adilabad 31.03.2010 11.39 0.00 0.00 0.00 124 Kakinada 31.03.2010 11.45 0.00 0.00 2.71 125 Pune 31.03.2011 11.52 0.00 0.00 0.00 126 Darjeeling 31.03.2011 11.53 0.00 0.00 0.00 127 Sawai Madhopur 31.03.2011 11.57 0.00 0.00 0.00 128 Begusarai 31.03.2....
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....011 11.63 0.00 0.00 0.37 129 Mainpuri 31.03.2011 11.70 0.00 0.00 0.00 130 Kapurthala 31.03.2011 11.83 0.00 0.00 0.00 131 Coimbatore 31.03.2010 11.84 0.00 0.00 0.00 132 Howrah 31.03.2011 11.96 0.00 0.00 0.00 Sub total - CRAR 9 to 12% 0.00 0.00 209.90 XXX Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 133 Rajgarh 31.03.2011 12.08 0.00 0.00 0.00 134 Narsinghpur 31.03.2011 12.08 0.00 0.00 0.00 135 Sehore 31.03.2011 12.09 0.00 0.00 0.00 136 Badaun 31.03.2011 12.10 0.00 0.00 0.00 137 Hanumangarh 31.03.2010 12.11 0.00 0.00 0.18 138 Valsad 31.03.2010 12.11 0.00 0.00 0.00 139 Indore 31.03.2010 12.18 0.00 0.00 0.00 140 Mandsaur 31.03.2010 12.19 0.00 0.00 0.00 141 Patliputra 31.03.2010 12.25 0.00 0.00 1.04 142 Bellary 31.03.2011 12.27 0.00 0.00 0.00 143 Panna 31.03.2011 12.28 0.00 0.00 0.00 144 Sirohi 31.03.2010 12.33 0.00 0.00 0.00 145 Bareilly 31.03.2010 12.50 0.00 0.00 0.00 146 Bikaner ....
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....31.03.2010 12.56 0.00 0.00 0.00 147 Jodhpur 31.03.2011 12.56 0.00 0.00 0.00 148 Sikar 31.03.2010 12.61 0.00 0.00 0.00 149 Thane 31.03.2011 12.61 0.00 0.00 0.00 150 Gondia 31.03.2011 12.62 0.00 0.00 0.00 151 Khammam 31.03.2010 12.63 0.00 0.00 0.00 152 Kodagu 31.03.2011 12.74 0.00 0.00 0.00 153 Ropar 31.03.2011 12.79 0.00 0.00 0.00 154 Bankura 31.03.2010 12.81 0.00 0.00 0.00 155 Lakhimpur Kheri 31.03.2011 12.88 0.00 0.00 0.00 156 Surat 31.03.2011 12.92 0.00 0.00 0.00 157 Bhandara 31.03.2011 13.05 0.00 0.00 0.00 158 Alwar 31.03.2010 13.10 0.00 0.00 0.00 159 Uttarkashi 31.03.2011 13.13 0.00 0.00 0.00 XXXÄ° Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 160 Bharuch 31.03.2011 13.16 0.00 0.00 0.00 161 Erode 31.03.2011 13.23 0.00 0.00 0.00 162 Gumla-Simdega 31.03.2010 13.27 0.00 0.00 0.15 163 Shahjahanpur 31.03.2011 13.28 0.00 0.00 0.00 164 Khagaria 31.03.2011 13.46 0.00 0.00 0.00 1....
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....65 Panipat 31.03.2010 13.47 0.00 0.00 0.00 166 Khandwa 31.03.2011 13.56 0.00 0.00 0.00 167 Singhbhum 31.03.2012 13.61 0.00 0.00 0.00 168 Khargone 31.03.2010 13.89 0.00 0.00 0.00 169 Chikmagalur 31.03.2011 13.99 0.00 0.00 0.00 170 Rajkot 31.03.2011 14.02 0.00 0.00 0.00 171 Nizamabad 31.03.2010 14.04 0.00 0.00 0.00 172 Latur 31.03.2011 14.14 0.00 0.00 0.00 173 Satara 31.03.2011 14.23 0.00 0.00 0.00 174 Ghaziabad 31.03.2011 14.35 0.00 0.00 0.00 175 Hyderabad 31.03.2010 14.53 0.00 0.00 0.00 176 Dhar 31.03.2010 14.53 0.00 0.00 0.00 177 Tehri Garhwal 31.03.2010 14.82 0.00 0.00 0.00 178 Guntur 31.03.2010 14.91 0.00 0.00 0.00 179 Shajapur 31.03.2011 14.97 0.00 0.00 0.00 180 Saharanpur 31.03.2010 15.44 0.00 0.00 0.00 181 Balaghat 31.03.2010 15.48 0.00 0.00 0.00 182 Vidisha 31.03.2011 15.96 0.00 0.00 0.00 183 Eluru 31.03.2010 15.98 0.00 0.00 0.00 184 Almora 31.03.2011 16.00 0.00 0.00 0.00 185 Krishna 31.03.2010 16.01 0.00 0.00 0.00 186 Mysore 31.03.2011 16.04 0.00 0.00 0.00 Xxxii Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (crore) Sr. Name of the CCB Reference CRAR (%) Likel....
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....y additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 Chamrajnagar 187 Ara 31.03.2010 16.07 0.00 0.00 0.00 188 Betul 31.03.2010 16.09 0.00 0.00 0.00 189 Rampur 31.03.2010 16.21 0.00 0.00 0.00 190 Bijnore 31.03.2011 16.29 0.00 0.00 0.00 191 Moradabad 31.03.2011 16.41 0.00 0.00 0.00 192 Jamnagar 31.03.2010 16.81 0.00 0.00 0.00 193 Nalgonda 31.03.2010 17.00 0.00 0.00 0.00 194 Rajnandgaon 31.03.2010 17.29 0.00 0.00 0.00 195 Roorkee (Haridwar) 31.03.2010 17.48 0.00 0.00 0.00 196 Samastipur 31.03.2011 17.50 0.00 0.00 0.00 197 Durg 31.03.2011 17.82 0.00 0.00 0.00 198 Mahabubnagar 31.03.2010 18.01 0.00 0.00 0.00 199 Ratlam 31.03.2010 18.41 0.00 0.00 0.00 200 Nainital 31.03.2010 18.46 0.00 0.00 0.00 201 Sagar 31.03.2010 18.67 0.00 0.00 0.00 202 Pithoragarh 31.03.2010 19.10 0.00 0.00 0.00 203 Etawah 31.03.2011 19.53 0.00 0.00 0.00 204 Nellore 31.03.2011 19.67 0.00 0.00 0.00 205 Pilibhit 31.03.2010 20.27 0.00 0.00 0.00 206 Muzaffar Nagar 31.03.2011 21.21 0.00 0.00 0.00 207 Chamoli 31.03.2010 21.23 0.00 0.00 0.00 208 Srikakulam 31.03.2011 21.84 0.00 0.00 0.00 209 Kangra 31.03.2011 23.15 0.00 0.00 0.00 210 Udh....
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....amsinghnagar 31.03.2010 23.24 0.00 0.00 0.00 211 Hamirpur 31.03.2010 23.29 0.00 0.00 0.00 212 Siwan 31.03.2010 23.54 0.00 0.00 0.00 XXXiii Annexure - 6.5 Licensed Banks with CRAR above 7% CCB-wise likely additional capital required to achieve 4%, 7% and 9% by 2012-13, 2014-15 and 2016-17 respectively (*crore) Sr. Name of the CCB Reference CRAR (%) Likely additional capital required for achieving No. date of (Base 4% CRAR 7% CRAR 9% CRAR Inspection Position) by 2012-13 by 2014-15 by 2016-17 213 Vizianagaram 31.03.2011 23.60 0.00 0.00 0.00 214 Mandla 31.03.2012 24.39 0.00 0.00 0.00 215 Meerut 31.03.2011 24.66 0.00 0.00 0.00 216 Dhanbad 31.03.2010 24.74 0.00 0.00 0.00 217 Raipur 31.03.2011 25.19 0.00 0.00 0.00 218 Jhabua 219 Gulbarga 31.03.2010 25.21 0.00 0.00 0.00 31.03.2011 25.32 0.00 0.00 0.00 220 Chennai 31.03.2011 26.12 0.00 0.00 0.00 221 Nawanshahr 31.03.2011 26.12 0.00 0.00 0.00 222 Medak 31.03.2010 26.32 0.00 0.00 0.00 223 Gadchiroli 31.03.2010 26.75 0.00 0.00 0.00 224 National Bettiah 31.03.2011 26.75 0.00 0.00 0.00 225 Giridih 31.03.2012 30.70 0.00 0.00 0.00 226 Ranch-Khunti 31.03.2012 39.72 0.00 0.00 0.00 227 Magadh 31.03.2011 50.35 0.00 0.00 0.00 228 Bhagalpur 31.03.2011 5....
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....5.10 0.00 0.00 0.00 229 Dumka 31.03.2010 61.84 0.00 0.00 0.00 Sub total - CRAR above 12% 0.00 0.00 1.36 TOTAL 0.00 37.24 781.07 XXXIV Annexure - 6.6 Per PACS/Borrower likely additional capital mobilization by 2016-17 கத௠Sr. No. Name of the Reference date of Inspection CRAR Likely additional capital mobilization to achieve 9% CRAR by No. of PACS 2016-17 as per Model-l Crore) Borrowing members of PACS (No.) Likely additional capital mobilization Per Per Borrowing PACS Klakh) member of PACS (Rs.) Likely assistance required – CCB upto Rs. 1 crore, per PACS 95%) to one sector - Agriculture: Concentration Risk • Excessive dependence on external borrowings-CD Ratio normally > 100%. • Resistance to change. • Inability to raise low cost funds locally – in the rural areas. • Excessive Staff leading to high cost of Management without corresponding increase in business volume. • Delay in introduction of computerization. XXIV • Large geographical areas to cater to. • Average age of Staff > 50 years. • NABARD standardized staffing norms and these have been adopted by the entire RCCS, which in turn led to frictions. T....
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....hese are in the process of resolution. Opportunities: • • • Steady growth in rural economy in the recent past with agriculture sector growing at more than 6%. Increase in banking needs in the rural areas. The Banking Sector in AP grew from 76,000 crores in March 2000 to `525,000 crores in March 2010. Vast Scope for low cost deposit mobilization and consequential reduction in Cost of Funds • Scope for rural / cottage industry financing. • Scope for selling insurance / Micro Finance products etc. · • • Scope for financing Procurement, Storage and Marketing of Agricultural Produce. Scope for undertaking more fertilizer distribution (More than 60%) and other agri-inputs Scope to raise revenue through participation in Service Sector Ex: Payment of utility bills, collection of pensions, remittance of funds etc. Threats: • RBI's Permission to appoint Business Correspondents by Banks. • • • This Threat can turn out into opportunity if the PACS itself becomes a business correspondent. Govt. of India's focus on villages with more than 2000 population through Financial Inclusion project. Rapid updation/leveraging of technolo....
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....gy by new generation banking institutions. • Migration of GOOD Farmers to competing banking institutions. • Offer of wide range of products by competing banking institutions. • In-adequacy of policy support by Government. • Influence of external factors on loan recovery. • Inadequate and ill-equipped staff and large scale retirements in the immediate future. XXV However, in a sea of largesse in the public sector and government during the last five years, it is difficult for oasis of neglect to continue. But the ability of PACS to address the issue, with only a few exceptions, does not just exist. There is as much need for recognition of the PACS as business enterprises with a degree of social commitment, as the need to recognize and correct the imbalance in pay structures. While taking on further commitments by the stakeholders, the Managements of PACS have to enter into an irrevocable undertaking regarding their responsibility for business development, following the staff recruitment norms and cleaning up the balance sheets of the PACS as directed by the NABARD, and taking prompt action on the frauds and misappropriations within agreed time schedules.....
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.... Subject to these, the State Government as a one-time measure, under the supervision of a committee to be set up for the purpose at the District Level, can crystallize a grant assistance with some participation from the APCOB and NABARD. Since these staff would be the staff of the PACS and not of the Government, it must be made clear that the grant is flowing more out of compassion than out of eligibility and these are not normative. The norms would be as per the NABARD directive. a. b. C. Structural changes should start with the basic premise that the PACS are autonomous entities within the bounds of regulatory norms imposed by the NABARD/RBI and therefore, the recruitment norms, working conditions, pay scales etc., are out of bounds for the State Government to interfere unless the latter decide to bear the costs of such interventions either in full or to a large extent within the bounds of 25 percent equity contribution. If it were to inject capital for this purpose, it has to lay down such norms and working conditions as required by the NABARD/RBI. Even after such intervention, it must make clear that the staff of PACS are basically employees of PACS only and not of the Cooperat....
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....ive Department and their rights can be asserted only to the managements of the PACS. The locked up share capital of PACS in DCCBs at the time of merger of DCCBs with the StCB should be also released for the business development of PACS with adequate insurance mechanisms in favour of the shareholders. Unlike many rural enterprises, many PACS have their fixed assets, which, if revalued, can lead to developing revaluation reserves to act as collateral for loans to be obtained by them for restructuring. XXVI d. e. f. g. There should be MOU between the PACS-APCOB and the State Government on certain performance commitment and other conditions relating to recruitment of staff and regulatory compliance. Technology development: Training, Development for technology infusion should be the responsibility of the technology provider under strict monitoring of deliverables at PACS level. Accountability for implementation should be fixed at different administrative levels. Handholding of PACS should be the key responsibility area of the staff of cooperative department at the District level. Audit of PACS should be done by staff trained and tested for the purpose. It is suggested that out of the de....
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....partmental auditors, if they be the compulsive choice for certain tactical reasons, a pool should be created who should be trained in the new accounting, audit and risk audit procedures after they qualify in a test for such purpose that should be conducted by the Institute of Chartered Accountants of India or another accrediting agency. h. Change Management Training should be at Mandal level once in a month and should be taken up by certain qualified trainers at the week-ends at the staff and directors' levels in two laps - one separately for both cadres and the other by integrating both. i. j. k. Several DCCBs have fixed assets of huge value in the Districts where they are operating in own premises and so are PACS in good numbers. The valuation of assets at the time of merger should be done professionally so that they get into the Balance sheet of merged APCOB. This large asset value base should help raise resources for restructuring the PACS and APCOB. At the District level, an administrative office of APCOB for monitoring the restructured package should be set up in the existing Head office of DCCB under the surveillance of NABARD. The staff of DCCB would be merged with the cadr....
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....es of APCOB and this should not pose a problem as the cadre management of DCCB right now is as per APCOB cadre management. The recent recruitment to the DCCBS would be inducting new blood into the branch level and this would help invigorating the structure of APCOB. I. Capacity Building of the poor to manage the cooperatives. XXVII - There is no gainsaying the fact that any exercise of reforms has huge costs and somebody has to bear the burden of the costs. There are two proven ways: One, where at the end of reforms, since the entities involved in reforms would have realised the gains, would be asked to pay up the costs incurred. Second, the society takes the cost: meaning thereby that the Government – Centre and State can come forward for certain sharing arrangement and bear the initial costs for three years; this would bring to fore the moral suasion. There are huge assets in the Balance Sheet of the merged entity that could be collateralised for a soft loan from either the World Bank or ADB or another donor. It is important, however, that this reform agenda should not be left for the State Government to implement. It is desirable that a team of experts is formed as a moni....
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....toring body over the Reform Agent like Robo Bank, ICA or another donor organisation for a well-thought out period for the reform agenda to become culturally acceptable agenda among all the stakeholders. When the public sector banks, post-reform 1991, are still being recapitalised, I do not see any reason why the cooperatives with a more formidable inclusive agenda should not be provided such support at least for a decade. XXVIII Aspects to be noted while formulating the final set of Recommendations discussed yesterday and duly incorporated in the document where applicable. By Dr. Yerram Raju Legal Reforms to Cooperatives on the anvil: The Constitution (97thAmendment) Act 2012 enacted by the Parliament envisaged that 'the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies' (43B of the Act) Amendment proposed to Article 19(1) states that co-operatives and any restriction on them has to be within the framework of Article 19(4) and also to have a definition of co-operatives in the Constitution that will indicate that they are promoted, owned, controlled and managed by their member-users.....
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.... (This would mean that all the controls other than those by the Members would abrogate the Constitution itself.) In consonance with these provisions, the Committee provided only for democratic control and professional management. under Part IXB 243Z Complimentary to this Amendment, Central Government enjoined upon the States to formulate a New Cooperative Act in line with the governance and other provisions incorporated of the 97th Amendment. These amendments would enable States to move to a Cooperative System that would turn the Cooperative Societies of various hues as economic entities devoid of State control and State partnership significantly. State Governments have to formulate New Cooperative Act before January 11, 2013 and wherever two Acts are in force, it is desirable to move to a single unified Act keeping separate mechanism to tackle any legacy issues of the old legislation. 243ZR provided for application of the Act to the multi-State Cooperative Societies in Toto. When the Committee considered democratic control, the reference is to the elected boards to govern the affairs and professional CEOs as per the prescribed fit and proper criteria to constitute professional man....
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....agement. XXIX Democratic Control: Article 243ZK provides for regular conduct of elections to the cooperatives and their respective Boards once in five years regularly, in a manner that the elected Board assumes charge immediately after the term of the existing Board concludes and that too, by a separate Authority or body to be specified by the State Government in their State Acts. The procedure and guidelines for the conduct of elections should be also specified by the Legislature as part of that Law. Our Committee is in consonance with the provision felt that a State Election Authority to conduct elections to cooperatives shall be set up by the States. Article 243ZN deals with the conduct of General Body meetings. It requires that the annual general body meeting of every cooperative society shall be convened within a period of six months of close of the financial year to transact the business as may be provided in such law. 243ZJ specifies the number and term of members of board and its office bearers, according to which, the number of directors shall not exceed 21 (Twenty one) and five years respectively and should provide reservation for one seat for scheduled castes or schedule....
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....d tribes and two seats for women. The tenure shall be five years. The State Law should provide for cooption of two members of the Board in addition to twenty one and these two professional members shall have "experience in the field of banking, management, finance or specialization in any other field relating to the objects of the Societyâ€. These professional directors do not have any voting rights. It also provides for functional directors as members of the Board and such members shall be excluded for purpose of counting the total number of directors specified in the Act. Supersession: The committee in accordance with the Article 243ZL suggested supersession of the Boards or kept under suspension for a period not exceeding six months in case:- "(1) persistent default; or (2) of negligence in the performance of its duties; or (3) the board has committed any act prejudicial to the interests of the cooperative society or its members; or (4) there is stalemate in the constitution or functions of the Board; or XXX (5) the authority or body as provided by the Legislature of a State, by law under clause (2) of article 243ZK, has failed to conduct elections in accordance with the pr....
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....ovisions of the State Act Provided also that in case of a cooperative society carrying on the business of banking, the provisions of the Banking Regulation Act 1949 shall also apply: Provided further that the board of any such cooperative society shall not be superseded or kept under suspension where there is no government shareholding or loan or financial assistance or any guarantee by the government: Provided also that in case of a cooperative society, other than Multi-State Cooperative Society, carrying on business of banking, the provisions of this clause shall have the effect as if for the words "six months" the words "one year" had been substituted. No Voting Rights for Inactive Members: The Committee took into consideration while making this recommendation provisions of the Article 243ZO(2) dealing with Right of a Member to get Information that requires the State Legislature to make provisions to ensure the participation of members in the management of the cooperative society providing minimum requirement of attending meetings by the members and utilizing the minimum level of services as may be provided in such Act. Audit: Article 243ZM deals with the Audit of Accounts of Co....
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....operative Societies: The Legislature of a State may, by Law, make provisions with respect to maintenance of accounts by the cooperative societies and the auditing of such accounts at least once in each financial year. Section deals with the minimum qualifications and experience of auditors for eligibility to enroll as qualified auditors in the panel to be prepared by the State Government. The Accounts shall be audited within six months of the closure of the financial year to which such accounts relate. The Audit Report of Apex Society is required to be placed before the State Legislature. (This provision would require that the State Cooperative Banks should place their Audit Reports before their respective Legislatures. It is necessary that the Banking Regulation Act 1949 should be amended to prevent XXXI unnecessary delays on flimsy grounds for the legislature to pass their accounts. (The Committee's recommendations should necessarily take care of this aspect) Article 243Z (a) to (e) defines Offences and Penalties and these cover the internal systems that the Committee prescribes. In addition to the above, as mentioned during the discussions yesterday (12th Jan 2013) that some asp....
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....ects relating to PACS should find a place in the Report in addition to reiterating the recommendations of Rakesh Mohan Committee Report dealt with reproduced below. The Committee on Financial Sector Assessment (Rakesh Mohan) recognized the "potential conflict of interest between the supervisory and development functions of NABARD. The Sardesai Committee also felt that by virtue of their 'scheduled status', it would be more appropriate for these entities to be supervised by the Reserve Bank."1 CFSA called for segregation of the role of NABARD as a development financial institution (DFI) and as a regulator/supervisor of rural financial institutions appropriately. It has also suggested the formation of a Board of Supervision with members drawn from the NABARD Board as also with regulatory/supervisory experience. Such a Board has since been set up by the NABARD. PACS VIABILITY: The Co-operative Societies extend various services that include finance to its members and member organizations. When the Primary Agricultural Cooperative Societies (PACS) were originally contemplated, it was expected that they would be set up for every four villages with a membership of 3000. With the elapse of....
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.... time, threatened with viability of the Society, the reach became constricted and the number of PACS shrunk. Introducing technology in PACS cannot afford delay any longer and it shall be done on war footing so that their connectivity to the rest of the lending system would enable effacing information asymmetry and becoming part of the overall payment and settlement systems. This would in turn rebuild trust in the system at the grassroots. PACs' ability to mobilize deposits and raise members' share capital can be significantly improves if the deposits secured by PACS could be insured by the 1 Committee on Financial Sector Assessment (CFSA): RBI (2008), p153 XXXII Deposit insurance and Credit Guarantee Corporation of India on the same lines as for the commercial bank deposits with usual caveats like the PACS following KYC norms and additional leverage of PACS as a consequence in lending for non-farm activities allowed. Once the PACS become BCs as recommended by the Committee, the deposits become the Liabilities of the licensed DCCB branches/StCB branches. They automatically get the insurance cover which, in turn leads to trust in the cooperative societies simultaneous with the implem....
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....entation of the other recommendations of the Committee and the legal strength in governance and management that the Societies secure in the days to come. PACS, unlike the branch of a commercial bank or Gramin bank, have the advantage of doing non-banking business and could also be one-stop shop for the farmer, where inputs, credit, storage and marketing of produce could all be accessed, of course, by paying reasonable costs appropriate for such non-credit services. PACS in turn carry the advantage of cross-holding of risks more efficiently and effectively. They, therefore, have the potential for being the most effective instruments of Financial Inclusion, the most important agenda of the present Government and the RBI if they can be brought back to health as economic entities with the respective Boards of PACS enabled to take advantage of the present autonomy (of course within the guidelines of the RBI) and gradual professionalization. Recommendations should fall under a log frame: Nature of Recommendation: Action points: Legal; Regulatory; Supervisory; Procedural; Timelines; Action Agents. XXXIII Comments/ views of Prof H S Shylendra, Member of Committee 1) Though there are five o....
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....bjectives but the essential task of the committee apparently seems to be clear. It has to go into the issue of the viability of cooperative banks and explore ways of addressing the same. I feel the historically determined structural constraints (multi tier nature being one them) of cooperatives would need considerable attention of the committee. The focus of the cooperatives in terms purpose and tenure of loans (agri and short- term), inadequate focus on savings, competition from CBs/RRBs are some of other structural aspects having bearing on their working. We may have to look at how far these structural constraints may be eased or tweaked to enable the coops to thrive. 2) We would need some good evidence/data about how the Vaidyanathan committee package has worked for these cooperatives. This can help in terms of arriving at alternative future strategies for reviving the cooperatives. 3) Cooperatives are still in the strong grip of the state governments. We need to have a clear feel of how the state governments would like to approach this specific problem. The emerging experience of the self-reliant or MACS acts could be a useful input to explore anything new on the legal front. T....
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....he states have to be taken board in a more proactive and participatory way in resolving the challenge. 4) Another stakeholders at primary level whom we have to hear are the PACS/FSS. Many of the committees in the past have not adequately taken the views or interests of these primary institutions' into account while restructuring the coops. For ex. when many states attempted reorganising PACS through merger of smaller units, the local feel/factor was ignored. 5) We can think of organising regional level workshop/seminars involving major stakeholders so that we can get a clear feel of the prevailing views and challenges. XXXIV Comments from Prof. H.S.Shylendra | Study: 1) We need to clearly understand what should be our focus given our TOR: is it viability/prudential aspects/licence problem, or margin or layer/structural problem or governance problem, or all which requiring measures as per the ToR 3. Some clarity on this would help us approach the things in better way. Some of the readings given on first day provided some good insights. 2) We may have to also look at some of the legal changes made by states recently esp after VC package and scope available or given to autonomy / rest....
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....ructuring of Co- ops. 3) What factors are enabling those which are satisfying CRAR (>9%) 4) Functions/services of 3-tiers and effects of delayering or mergers on the functions. Alternatives for taking care of those functions/services 5) Clear analysis of the margins existing today and ramifications of delayering/ mergers for margins. Alternatives for reducing margins. Some of earlier reports/ studies on the issue of delayering/ mergers need to looked at. 6) What alternatives /options are there in current scenario to attain the goals even without resorting to merger or delayering (especially ICT, BC, alternatives sources etc). Useful know the views of the coops themselves. We can possibly carry our some case studies of selected states and also take the help of DDMs to seek coops views on some of the above issues. With out some clear insights it would be challenging to address the ToR 3. XXXV Study Conducted by Prof. H S Shylendra The STCCS in Gujarat: Working of Gujarat State Cooperative Bank (GSCB) and DCCBs (A Note prepared for the Expert Committee Based on the Quick Assessment of the Working of STCCS in Gujarat) The study was carried out keeping the ToR of the RBI Expert Committe....
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....e on STCCS in view. The aim was to understand relevant issues based on the working of GSCB and a selected DCCB. The study relied mainly on interactions with the top management of the GSCB, and the DCCB and perusal of documents like annul reports and the note of NABARD (circulated for members of the Expert Committee) Gujarat State Cooperative Bank (GSCB) GSCB is the apex bank of the STCC structure in Gujarat. The governance and management of GSCB is vested in Board of Directors comprising 27 members that include the Chairman and Vice-Chairman (16 members representing DCCBs, 2 members each from Urban Cooperative Banks, Industrial and other cooperative banks, nominated members, one each from GSCARDB, State Marketing Federation, State Government nominees, CGM, NABARD, RCS, professional directors and the Managing Director). The Board of GSCB has representatives from diverse stakeholders. The representatives from the co-operative banks have been elected uncontested. The Board is trying to be both autonomous and professional in its working. The Board gives considerable attention to the concerns of PACS and farmers. It tries to take non-partisan attitude across DCCBs so as to protect the i....
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....nterest of the co-operatives. The Bank has two professionals on the board as per the 'fit & proper' criteria prescribed by the RBI. The Board is assisted by various committees and some of the important committees are: Audit Committee, Investment Committee, and Executive Committee. All the committees meet regularly as per the periodicity prescribed and the decisions made thereof were ratified by the Board. As per the top management, the process of decision making and the process of its implementation are very transparent and inclusive. GSCB has been trying to provide leadership to the short- term cooperative structure in the state by way of capacity building, supervision, meeting credit needs, technology development, and clearing house operations. Besides, there is thrust being given to compliance with licensing norms by weak DCCBs and GSCB has an exclusive mechanism in place for improving the CRAR on XXXVI a sustainable basis. A special officer has been appointed for the purpose which is noteworthy. As per GSCB's top management, farmers' interest is of paramount importance for the Board and it adopts a not-discriminatory approach while extending financial support/grant to any of th....
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....e unlicensed banks for compliance. Board also does not interfere in day-to-day management. Deposit Mobilization: GSCB is mobilizing deposits from DCCBs, UCBs and individuals. The deposits from individuals are mainly from the HO branch. Majority of GSCB's deposits are institutional in nature but the share of institutions is declining in recent years. Though there is some SLR linked obligations or component in the deposits of DCCB, there is no compulsion for DCCBs to deposit their funds. In fact, GSCB is giving higher rate of interest which is even better than what is offered by banks like SBI. The step is to support DCCBs in terms of their returns on investment. In the recent years there is a spurt in the deposits of GSCB though in the lost year there was decline. GSCB does not have branches except the HO branch. It does not want to pose any competition to the lower tires, particularly DCCBs. As DCCBs are keen to enhance lending due to increase in demand at grassroots level, larger would be the stress on deposits of GSCB. Bulk of the deposits are of long term nature (97 % percent) resulting in high cost of funds for the bank. Absence of branches has affected mobilization of low cost....
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.... deposits. GSCB has so far not extended its branch network though emerging situation demands a new approach. The GSCB has plans to open more branches to tap into cheaper deposits to remain competitive and viable and step up selectively retail banking operations. The branch banking may remain confined to Ahmedabad city only. The branches may help mobilize low cost deposits which may be used to support demands of the three cost structure reducing the reliance on borrowings. This will help GSCB to improve its margins further. Investment: The deposits are reinvested and also deployed for lending. Bulk of the deposits (nearly 80 percent) gets deployed as investment largely with government securities and nationalized banks. GSCB has both a clear policy and committee in place. The committee is a fully professional body. With banks it is able negotiate and get better returns. As such there is no restriction on the type of investment. GSCB also does not face difficulty in fund management (asset-liability management) due to its SAO operations which require short-term funds. GSCB has a Investment Committee and a department for managing funds flow. The investment committee is purely a professi....
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....onal body. XXXVII Despite mobilizing considerable deposits the GSCB is unable to deploy them towards meeting the needs of its primary clients (DCCBS/PACS) resulting in a sort of disintermediation. Refinance and Lending: Bank's refinance product has been in tune with NABARD norms. The refinance was availed on behalf of DCCBs as per NABARD guidelines ( 207511 lakh sanctioned to eligible DCCBs during 2011-12,). Audit rating and NPA are the key criteria for availing refinance. It was indicated that the GSCB was drawing NABARD refinance to the maximum and the GSCBs share of ground level credit (GLC) was 40%. Not all the DCCBs were availing refinance to the full. Uptake for NABARD refinance has increased of late, primarily due to increase in ground level demand, increase in input cost, fresh finance as a result of implementation of ADWDR etc. This has improved the overall C-D ratio for the GSCB. Some targets fixed for refinance availment by DCCBs. Targets are fixed to ensure credit flow especially with those having lower C-D ratio. Four DCCBs are self-reliant and do not avail refinance. GCCB did propose to NABARD to relax its norms for a couple of DCCBs. GSCB is giving loans to instituti....
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....ons and individuals (though its branch). Loans to major units are sanctioned through DCCBs. GSCB has devised new loaning products keeping the farmers/stakeholders interest in view. Besides, it shares with member DCCBs remunerative loaning products launched by it, through consortium arrangement. It is felt, that normally DCCBs/ PACS are happy and comfortable with refinance procedure. GSCB has a general agreement with NABARD for immediate release of refinance. For DCCB/PACS it is a kind of reimbursement of the advances. Hence, there is as such no delay in refinancing. However, some procedural delay may occur at PACS level. Issues of Viability: While GSCB's bottom line has always been healthy, except once during 2008-09, when the profitability was affected (reported loss of .5266 lakh) on account of additional provisioning for loans given to Panchmahal DCCB which had slipped to higher brackets of classification as per IRAC. The interest dues amounting to 4900/- lakhs were yet to be recovered from Panchmahal DCCB. The bank was also working on a very thin margin that is equal to provision required under standard asset. The Bank had a CRAR of 7.4% as of 2011. Scope for delayering: Whethe....
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....r the 3-tier system adds to the cost in dispensing credit? Is there a case for eliminating at least one tier? According to the GSCB, this XXXVIII may not be true as the primary level structure has to be as proximate as possible to its members and therefore there are different levels of jurisdictions. There are restrictions on resource mobilization at the lower tier and hence the lower units have to be federated at the middle level and further up at apex level. GSCB in fact is making efforts for improving the margins of lower tires. The interest subvention scheme of Gol has improved the margins. Besides, GSCB has played an important role in getting the 2% additional interest subvention from Government of Gujarat. Refinance being concessional no subvention is allowed, however, the subvention is substantial where the owned funds of the cooperatives are involved. This has also helped in improved recovery position. GSCB had been providing variety of services to DCCBs. Besides lending, GSCB is involved in providing managerial and capacity building support to DDCBs. In the context of expected role of a higher tier in terms of effective support to all the tires, at GSCB level the view is t....
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....hat the 3-tire structure must continue in Gujarat. The old structure has worked well insofar as providing the expected leadership to the lower tiers with no extra cost burden on any one tier. On recovery scenario, both NABARD and GSCB were better placed because of assured recovery from lower tiers. PACS/DCCBs play a useful role in loan recovery as they have good local contact and relations. Any attempt to delayer might impact adversely as the apex level tier was not having required proximity and outreach with the communities. The lower tires catered well the farmers at the grassroots level. GSCB hold the view that apparently the old structure has been beneficial to PACS in Gujarat. One may need to examine the implications of changing the existing structure as it may adversely affect the working. Moreover, the three-tier / federal structure is not unique to credit co- operatives. Even other services have such structure. Coming to the question of giving choice to the farmers/PACS in terms of newer/alternative mechanisms, the view is that the Service Area Approach should have been implemented effectively. There is need to improve the conditions and capability of farmers before they ca....
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....n make any choice. Co-operatives are the better solution in this regard. The GSCB officials' view that they must make efforts for capacity building of farmers, identification of weak links among the structure and make efforts to strengthen them. About the possibility of PACS working as branches of DCCBs, to GSCB this may complicate the issues as the structures are regulated by different agencies. Moreover, different areas have different needs, any uniform strategy of changing the structure may not work. Either elimination of PACS or converting them as branch of DCCB may go against the autonomy of PACS. It may XXXIX harm the interest of the farmers. The commercial banks cannot reach the farmers easily unlike co-operatives. Unlike commercial banks, PACS or DCCBs did not resort to VRS. Any reform has to look at the interest of the co-operatives and their members. Co-operatives must be allowed to survive and not die. The risk of eliminating them is high. But the co-operatives have to develop flexibility and reliability in increasing their outreach and providing better services. The GSCB itself is working towards strengthening the structure. There is a Cell for upgradation of weak bank....
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....s. GSCB has been developing CBS with DCCBs. 14 DCCBs are currently under CBS development. Further, GSCB is keen to support the efforts of DCCBs for developing the PACS. GSCB has strategy to strengthen PACS on several lines: Make them professional; Improve margins; Diversification of activities; Focus on savings; and Training staff of PACS / DCCBs. GSCB is organizing Education Workshops and specialized trainings including on computerization/MIS. There are ToTs for DCCBS which in turn train PACS. Impact of Vaidyanathan Committee(VC) | Package: GSCB views that after VC-1 PACS have their improved viability and financial discipline. The reforms package seems to have helped by and large as the PACS have become good business centers. Besides, the HRD component has been helped in terms of improved awareness among staff and members of PACS. CAS has improved book keeping and accounting besides help attain uniformity among PACS across the state. However, there is still scope for training of secretaries and improving professionalism in Board. Besides, inclusion of all segments (SF/ MF) of farming community has resulted in financial inclusion. Farmers who had deserted PACS have started returnin....
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....g. GSCB feels that RBI may consider relaxing the requirement of CRAR and the stringent NPA norms at least in case of loans of small and marginal farmers. Efforts be made for continuance of capacity building efforts by higher tires. The VC package conditions are being met by the state through change in laws. The constitutional amendment related rules are being framed to ensure autonomy for co- operatives. The State Government has been given the time limit up to February 2013 for the purpose. The Working of DCCBs: The Case of The Kheda District Central Cooperative Bank (KDCCB), Nadiad. There are 18 DCCBS in Gujarat with a network of 1185 braches. All the DCCBs are now licensed having met the minimum norms. The state government helped in the case of four DCCBs which had difficulty in meeting the norms. Others have made XL efforts on their own in meeting the norms. The DCCBs mobilize deposits from the public besides from the PACS. The branch network and deposits have been helpful for the DCCBS in diversifying their business though lending to PACS remains as a major activity. The DCCBS also park their deposits with GSCB and in government securities by way SLR investments. The KDCCB was ....
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....established in 1949 and currently works with 448 PACS ( as against the total of 710 PACS) which are affiliated to it. It has 75 branches of its own in Kheda and Nadia districts. As of March 2012, the KDCCB had total deposits of Rs. 679.50 crores and total advances of 342.47 crores with a CD ratio of 50.4 percent. The investment of the DCCB stood at 433.89 crore in SLR and non-SLR instruments. The DCCB has gone through licensing problem recently and could come out of it by way of sustained efforts including reducing its NPA levels to below 5 per cent. The bank reported a profit of 293.31 lakh during 2011-12. The bank has been able to wipe out its accumulated losses out of its own profits. A main reason for the problem was loans going bad in the case of sugar factory and chicory units. The failure of urban cooperative bank also created its own negative effect. Even the loans of PACS had gone bad and sticky. The DCCB came up with its own strategy. It had to revive loaning to PACS and bring down its NPA. The loan waiver scheme (ADWDR) and VC 1 package also came to the rescue. The DCCB released about 36 crores under VC 1. The present goal is to further enhance its lending and viability ....
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....and reach a CD ratio of 60 per cent. Loans: The DCCB fixes limits for the PACS taking into scale of finance and member level demand for credit. Generally, at the member level, the demand fixed is 25 per cent above the scale of finance. However, given the subvention scheme, a maximum limit of 3 lakh is being given for an individual farmer. The PACS can sanction more than 3 lakh loan out of own funds (a very few PACS have fixed such higher limits of above 3 lakh). The DCCB sanctions loans for SAO and allied purposes. The PACS have to mobilize own funds of certain level in the case of SAO/allied loans. Through its own branches, DCCB sanctions several types of non-farm loans. These include loans for trading, gold loans, vehicle loans, project loans and staff housing loans. The DCCB issue total loans of 398.32 crores during 2011-12 of which agricultural loans (ST/MT) accounted for about 39.4 %. The outstanding loan was of the order of 342.47 crores as of March 2012 of showing an increase of nearly 27% over the previous year. XLI Refinance Issues: The NABARD refinance accounts for only small share of the DCCB's lending. The share however varies across years in the range of 25-30 per cent....
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.... of the total loans issues. The Borrowings accounted for about Given that there is subvention from both central and state governments, the NABARD refinance available at 5.5% is not found to be affordable/attractive. For DCCB, the own funds cost about 6 per cent. The DCCB itself is giving an incentive of 0.5 per cent for better recovery by PACS. The ultimate borrower gets loan at 4 per cent. Deposits: The DCCB accepts deposits from co-operatives-PACS and DCS, and individuals. There are no conditions now imposed for co-operatives to keep their money with DCCB. The DCCB has been able to significantly increase its deposit base. This is attributed by DCCB to the confidence and trust that it was able to generate among the general public. The local relations and effort of staff have helped in this regard significantly. The DCCB did face certain difficulties during the phase of bad loans. The DCCB now conducts campaigns for deposit mobilization besides fixing certain targets. It offers deposit rates comparable to that of commercial banks. It is accepting all major types of deposits in its branches. It has secured RBI's permission for accepting NRI deposits. The CBS under implementation and....
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.... facilities like RTGS help in providing better deposit services. Outreach: There is a big gap in the number of total PACS(710) and number affiliated to DCCB(448). At the PACS level also the actual coverage of farmers in the district is low as compared to total membership/farmers, despite some increase seen in the recent years. The DCCB attributes this to various reasons. The belt has considerable NRI population. The better-off are not that keen to come to the co- operatives. At the same time, the initial problem faced in getting subvention for the co-operatives forced many farmers (10-15%) to migrate to commercial banks. The weak deposit base of co-operatives constrained in expanding the coverage. DCCBs have to also maintain prudential norms making them more conservative. The DCCB is keen to take up microfinance to increase its coverage of the poor. Prospects of three-tier Co-operative Structure: About the possibility of converting PACS as BCs/branches the concern at the DCCB level is that such a step has the potential to convert PACS as mere agents. The autonomy and independence of PACS may get affected. In a sense, the PACS act as `BC' of DCCB. The VC1 package has apparently help....
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....ed the co-operatives. The number of viable cooperatives have increased recently. The PACS are autonomous and have their own operations. PACS provide variety of other services besides helping in recovery. As such DCCB has no control over PACS. There is an imbalance/deficit in the current XLII fund flow in the three-tier system which is actually absorbed by DCCB. DCCBs may need more control over PACS as SCB does not look at such deficits. Ideally, the merger of loan business of PACS with that of DCCB may help resolve the imbalance. At a broader level, co-operatives are subject to excessive control by RCS / Apex bank. They need more autonomy. Ideally, having only one regulator would help the co-operatives greatly. Major Insights/Implications The following insights emerge for the study: The three tiers historically have been playing certain assigned role and have developed their own specialization and strengths. The different layers at the same time complement each other so as to enhance the effectiveness of the structure. The view within the system is that any structural level change is likely to affect these role and the strengths to the disadvantage of the farming community. The app....
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....arent reason/ perception is that the ground level institutions have a key role in the ultimate goal of financial institution. Delayering as being suggested might affect the cooperative autonomy and independence. Hence there is a strong view (even resistance) apparently for changing the existing structure. This would need careful analysis and approach before one can clearly arrive at a conclusion. There are also certain changes visible in the working of the structure with growing trend towards self-reliance of funds especially through deposit mobilization. The relative importance of NABARD refinance has reduced especially at SCB/DCCB level. The local deposits have also increased the local stakes. But the infusion of deposits funds, given the composition (FD dominance) has resulted in high cost of operations, the inability to mobilize CASA deposits by the coops being key major reason. The problem has been to an extent been mitigated by subvention scheme. In the light of low off-take of loan funds from lower tier, the higher tier institutions are looking towards investment route for fund deployment resulting in some sort of disintermediation. The VC package seems to have contributed i....
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....n enhancing the viability at the lower tier. There are efforts to capitalize on the increased viability. However, the gap in ground level outreach of cooperatives still remains large. The challenge is to bridge this gap by innovative ways and diversification. There is appreciation of this challenge within the structure but would need much more concrete action. --0-- XLIII<BR> News - Press release - PIB....