Post on 21-Jul-2020
C H A P T E R 3Y
CENTRAL CO-OPERATIVE BANKS AND SUPPLY OF CREDIT.
1 . Jammu Central Co-operative Bank Ltd.
2. The Anantnag Central Co-operative Bank Ltd.
3 , The Baramulla Central Co-operative Bank Ltd.
Having discussed tae State level
Cooperative iiau&,. next ©omes tne plaoe of
central Cooperative xsanits waieh are financed
by and subordinate to trie State Cooperative
uau&. In the following adapter the constitution,
woridua and financial position of eaen such banK.
will be discussed.
Ihe Central Cooperative Panics virtually
are the Federations of all types of Cooperative
Societies, operating tnrougnout the country.
Varied as their objectives are, the ban cs not
only regulate the flow of credit requirements ox
affiliated societies but also supervise the wor*
of such societies. Ihe Central Cooperative jianitB
implement tae crop loan system and special assistance
is made availaule 1d them in tae form of Btate
contribution towards their share capital as well as
loans from reserve Bamc of India. Due to tne
absence of planning in earlier stages of development
of cooperative movement, growth of Centzsal Coopera
tive Panic's was rather a&paazard. It was unfortunate
that no proper attention was paid as to wnat snould
be tne area of operation of a Central Cooperative
Ban*. General criteria* was that a Central Cooperative
Bauic must cover an area whicn will provide adequate
business in order to function efficiently aud with
profitability. It is only tne i\ural Credit Survey
Committee wnicn recommended * o&e Centra! Cooperative
Baxoc in one d i s t r ic t s o taat it could toe strong
enough as an economic unit1. However , despite
tae recommendation toy tne iteserve Bank of India
the pattern of Ceu.tral Cooperative Bank is not
■uniform in most of tne Etatee. For instance tnere
are more Central Cooperative Banks than one in
11 districts m Bihar, p districts in Punjab, in
4 districts in West Bengal and in 3 districts each
2in Orissa and Andhra Pradesh.
J)he situation in Jammu and Kasnmir does
not confirm to any pattern, fnere were seven
Central Cooperative banks in 1955* 5 i*± Jammu3
province and 2 in Kasnmir . As most of tnese
1. iieport of All lndia Kural Cr edit Survey Committee, 1954(Abridged), p .227.
2. ii.B .Bedi, Iheory,History and Practice of Cooperation" Loyal Book Depot". P . 267.
3. Office reoords of the .Registrar Cooperative Societies,JcoC Govt. Srinagar.
oaaJts in Jammu Division were nonviable units,
taey had to oe amalgamated and marked witn
Jammu Central Cooperative iiamt in 1956. ks a
consequence tuereot' i>ne eutxre Jammu Province
was left , wl to one Oeutral Cooperative Banit
to serve all tae districts.
fae State ae a vmole has tnree Central
Cooperative Banits eacn covering more than one
district. These bantcs are t -
I . Jammu Central Cooperative Ban*; Ltd.I I . Anantnag Cooperative Ban*c Ltd.; and
I I I . Baramulla Central Cooperative &&xi& Ltd.
The Apex State Cooperative Bans also aots ae
Central Cooperative Ban c lor Srinagar, Badgam, Leh
and K argil die trie te ( already diecuesed ).
The Maclagan Committee classified tae
Central Cooperative Baznts aooording to tneir
constitution under three aeads ; -
a ." HPXL&B for wnioh member eh ip is confined to individuals;
b. Ban&e of which membership is a onioned, to societies, and
c . Batucs union include bo tn individuals and societies as tneir membersH4
The Central Cooperative banks of Jammu
arid Kashmir State fall in the last category. It
follows therefore, that its members are both
societies ae well ae individual8 posseseing
necessary q.ualif ications. The main objects of
triese banks are i
1. "t o finance tne Cooperative Societiesin tneir jurisdiction and carry on banking business;
2. to control affiliated societies by regular and careful supervision and
5. to act as balancing centree for the affiliated primary societies'^
It is a matter of satisfaction fehat by
and large the by el awe of Ua ese banks conform to
the general national pattern. However, they differ
in matters of detail only. Low we proceed to bank-
wise discussion starting vi th the Jammu Central
Cooperative Bank Ltd.,
4. Maolagan Committee iieport on Cooperation in India, 1911.
5 • Byelaws of the Central Cooperatives B«mks of tne Jammu and Kasnmir State.
The Jammu 0entral Cooperative si Baa Ltd., Jammu :
Ihe bank was registered originally
in 1914 as district Central Cooperative Bankc
for Jammu District. Following partition of the
country, Cooperative bauics of Hajouri, Poonch ,
uowshera and Kathua were badly affected by Iribal
War. Ihe Central Cooperative Banks operating in
Bhaderwah, Kimtwar and Udaampur districts grew
financially weaker. Consequent upon tais all these
banks were liquidated and. their assets, if any
credited to the Central Cooperative Bnnk, Janmru
which was structurally sound and economically a
viaole oank in vtiole of tae province of Jammu. lae
B-mk today has 37 branches tarouga which it launches
its operations* Ihe urancaes are situated at : Jan mu,
bazar Jammu, Gandhi toagar, K. S. Pur a, Jain Bazar,
lalab liloo, Aicanoor, Dan sal, tChour, Bishna , Bari
Brenimna, Vijs^y Pur, Samba, Ambgharota, xiiranagar,
Bilawar, Kathua, isasohli, Udaampur, Keasi, Arnas,
Jhinani, Gool. GuLabgarh, Baniaal Do da, Ki eat war
Batote, , ;,Kamban,iia3o'uri, fcowshera, Sunderbani,
iCalakote, Tnaua Mandi, Poonch Mandi, M anda er, £uranicota.^
Office records of the Jammu Central Cooperative bank.7. Ibid.
Share Capital t
The records oi the oaxu. depict compoei-
tioxi. oi the share capital ae imder : -
a. Capital paid by Cooperative Societies;
b. Capital paid by individuals and
c . Capital paid by the State Government
Ihe yearwiee breai up of eaare capital
for the last five year© ie indicated in the following
table «-
I A B I jS 1
YiJAH-WiSS SHARIS CAPITAL OPths bai k
(xie. in latche)
Paid up snare capital Year Societies Individual 8 " 'tfoverxaaent Total
1975-76 50.06 0.65 16.00 48.711976-77 30.54 0.66 23.00 54.221977-78 30.94 0.70 23.00 54.641976-79 31.21 0.97 23.00 55.181979-80 32.47 1.21 23.00 56.66
Source * - By courtesy of Central Cooperative Bank Jammu.
ladle 1 snows tuat Government share
capital has remained constant for the last four
years whereas snare oontrioution from societies
and individuals has 2>een rising constantly. As
per by el awe the autnorised snare capital of the
f tjuazus. ie K e , 20 la Khs f While the paid -up capital
has gone up to its. 56 *68 la iithe in 1979-80. The
authorised limit needs to du regularised and placed
a bit nigher taan the paid-up limit.
Heserves
The ii-nic has created tne following funds:
i . Statutory He serve fund;
i i . Stabilisation fund ;
i i i . Bad Debt .Reserves and others
The year wise position of reserves
is depicted by the fb 11 owing tacOLe.
T A B L E 2
YEAR WISE POSITION OF KBSifliVBSI Cits, in lasha)
Tear Funds
Reserve sation fund bad debt1975-76 " 5.72 '■r 0.61 -rTT “ ''u?T5 ~~ y ;v r1976-77 3.72 0.61 11 .54 0.75 3.v»1977-78 3.72 0.81 11.M 0.75 ^.401978-73 3.72 0.81 11.^4 0.75 4.831979-60 3.72 0.81 11.54 0.75 4.83
Source: - By courtesy of Jammu Central Coop .Bank Ltd.
BT Sy e-laws'of the bank. Bye law 7( 3a ).
2aDie 2 shows tnat appropriations to funde
out of profits has not progressed because profits
if aay, have not been distributed for all tnese
years.
Membership
Section 4 of the by el awe deals with
membership. It entitles the State Government,
Cooperative Societies and individuals to be the
members of the bank. The composition of the bank's
member ehip ( year wise) is revealed ty the following
table s -
T A B L E 3
rEAH-WISE MEMBERSHIP OF IHE BAM
fear Societies Individuals
GrOVt. Nominalmembers
Total
W 6- 77 1367 149 1 81 1618
1977-76 1366 H5 1 102 1634
1976-79 1391 142 1 328 1862
1979-60 1402 139 1 381 1923
Source * - By courtesy of Jammu Central Cooperative Bank.
Ihe table saows that umber of societies
has oeeu fluctuating and bmber of nominal members
snows a marked increase from 61 in 1976-77 to
381 in 1979-80. -Che number of individual member e
has Bhovm a falling trend of 139 in 1979-80 against
149 in 1976-77. Admission of nominal members is
new phenomina and such members have no right of 'vote.
Iney are oiily entitled to get the facility of loan.
Ihe bank finds it difficult to retain its member
ship because majority of members are marginal and
landless labourers who are entitled to raise loaae
at the rate of 4 percent from commercial banks under
Si.il scheme, at wnich low rate the bank cannot provide
them finance out of its om fiinde.
Management :
For managing the affairs of the bank tae
General Body elects from among themselves the Board
of Directors to look into the daily affaire of the
bank. Ihe present Board of Directors has been
appointed by tae Government under tae cooperative *
societies Act by superceding the elected Board in
* J co Ki Cooperative Societies Act, 1960 amended 1978, Pub. foazdoor Cooperative Press Srinagar.
1975 • Ihe G atioral Body meeting hae not been
since 1975 vdaioh requires to oe held once in a
year under ejection 29 of the eaid Act. It follows
therefore, taat tae present hoard is holding office
illegally because in no case a nominated hoard or
administrator can he in office for a period exceeding
one year and six mont&s. Ihe superoession of the
elected Board is thus ultra voir£ in absence of
written requisition in this beaalf by the Keestfve
Ban* of India as per requirements of Section 29('A)
of the Cooperative Societies Act.
Staff Development:-
It is gratifying to note that tne bank
is reasonably staffed. Most of its members of the
staff are cooperative trained. However* some of tern
do not possess adequate qualification in banking. Ihe
present trend is that recruitment is made from graduates
only who are put under basic cooperative training
and in turn arrangements are made for their deputation
to bankers training in a phased manner. Ihis depicts
9. Personal <3i souse ion with tne General Manager of the bank.
a healthy trend and must therefore be maintained
and improved upon*
Ihe General Manager of the bank ie an
old graduate, trained in banking with 16 years
of eervice in the field. However, at the junior
level the bank aas failed to attract suitably trained
men because of low wage etruoture compared with
10tnat of commercial banks, Ihis flaw needs immedia
te rectification to enable the bank to attract good
talent.
Supervision : -
For conducting supervision of tne affilia
ted societies the Cooperative Department has since
transferred power of super vie ion to the bank. Ihe
supervisory staff ie adequate in number, but tae
population coverage for the province as a whole
is only 42 percent as against 60 percent in Kashmir11
Province. Joint effort lay the department, the bank
and the State Cooperative Union is required to
organise cooperatives throughout the province.
10. Personal discussion with the General Manager of tne Bank.
11. Ibid.
S9
Coverage in certain irrigated pockets like
it. S. Pora, Bishneh, Kathua touches even 90
percent of total households. The sub-Hiaalayan
lerrain epread over Kajouri, Poonch, iteasi, Udhampur,
Do da and Kaehtiwar is very tn inly covered by
cooperative organisation, although there is
sufficient scope for organisation of allied
agricultural activities like Dairying, Poultry and
saeep breeding and as ngrumer cooperatives in these
undei-developed areas.
Xhe bank has adopted a liberal branch
exp bai £ ion policy. A.s a resuLt thereof the number
of branches has increated to 37 in June 1980. I he
bank has proposal of opening 2 more branches at
1 ?strategic points to mobilize rural deposits. However,
the fact remains that most of the breaches are running
on lose. In 1960 out of 37 branches , only 12 branches
earned profit whereas tne remaining 25 incurred losses.
.Che banit is finding it difficult to maintain its
deficit branches situated in hilly districts which
are backward and National Ooooerative Development
T2. Office 'records of tne Jammu Central Cooperative xsaok, Jammu.
100
Corporation and Agricultural ftefinanoe .Development
Corporation should toe called upon to pool tneir
assistance under various developmental schemes%
to boost up the primitive eoonon of tnese hilly
districts. The br;ju.ca«ise preparation oi' profit and
lose accounts would go a long way to improve the
overall position bye exposing inefficient personnel.
A scheme of giving awards and incentives for d>ood
performance among brauch managers will give dividends
if introduced.
Business operation t
a. Loans and Advances
The bans has been meeting the financial
requirements of tae affiliated cooperative societies
operating in the Jaam/u province. Ihe year*-wise
loaning operation of the ban& in sphere of agricul
ture is given below*
T A J3 1> £ 4*AWAfcCB KiSCoraY 'OTfSMDIMJ AND OVERDUE
POEm o * OP IHE BAwKs.in lakhs)
fear Advances "b. ecovery Outis- Overdue Loan #age itanding overdue
i m ^ 7 6 ' 1278.12 1249.99 375 .’27 £2.21976-77 893.34 842.32 361.88 124.43 58.31977-76 2018.84 1956.08 448.72 137.94 61.71976-79 1846.44 1860.66 416.54 146.12 61.51979-60 2310.74 2k17.00 2^0.18 126.02 54.6
Source* By courtesy of JOG Bank, JammuT
101
Table 4 shows that advances have almost
doubled from ±te. 1278.12 lakhs in 1975-76 to its.
2310.74 in 1979-80. Kecovery position is apparent!y
eatiefactozy but percentage has fallen from 97.50
percent to 96 percent. Ihe advances were mainly for
cash credit ae depioted at item 4 below where-in
the position of the purpose-wise break up of advancee,
recovery, outstanding and overdue of loan£ disbursed
is shoWiA »-
Advanoes
ly-pe of loan im = ik 1976-77 1977-78 1976-79 -a Ms 1 00 o
Orop loan 109 00 81.46 84.16 91.73 134.22M.T.Agri 2.80 4.47 3.85 0.80 1.68M.T.Conversion 7*49 1.14 0.03Caen credit 1158.66 806.27 1930.80 175 3.91 2174.74L . I .Agri. 0.17 - - - 0.10Total 1278.12 895.34 2018.84 1846.44 2310.74
Recovery
Orop loan 109.20 83.59 81.44 63.76 117.80M.I.Agri 5.24 7.51 7.86 2.55 0.52M .I. Confer sion 0.58 0.74 0.45 0.37 0.65Cash Credit 1131.61 747.76 1863.81 1771.57 2093.53l.T.Agri 5.56 3.12 2.52 2.81 4.50Total 1249.99 842.32 1956.06 1860.86 2217.00
Outstanding
Crop loan 151.52 129.39 132.11 140.09 156.51M.I.Agri 26.88 28.06 4.96 6.02M.T .0 onvei’ sion 16.35 17.20 16.78 16.40 15.75Caeh Credit 108.51 167.02 234.02 220.56 301.77L.I.Agri 39.91 39.39 37.75 34.53 30.13Total 316.27 361.86 448.72 416.54 240.18
<• . .Contd. • •
Overdue 1975-76 1976-77 1977-78 1978-79 1979-80
Crop loan 11 .95 67.00 68.54 69.80 82.38M.T.Agri. 17.61 16.64 12.31 20.68 3.69M.T. Conversion 4.35 7.72 11.45 15.74 15 .61Caen Credit 2.79 4.04 6.19 4.09 6.65L.i.Agri 9.50 9.03 12.45 15 .81 17.69Total 150.20 124.63 137.94 146.12 126.02
Source i - By courtesy/Jammu C. 0 . Bank, Jajnmu./of
Notes M. T. Agri «&edium term loan;M.T.Conversion * hedium Tgrm conversion L .1 . * Long Term loan
During tne period of five years the hand's
advances mow a lluctuating trend. Advances made during
the period 1976-77 are Re. 893.34- lakhB as against
its. 1276.12 lakhs diring 1975-76. Again in 1976-79
advances fell from ke. 2016.64 in 1977-78 to Re.
1846*44 lakhs. In a Orowth oriented eaonowy the
advances s h o u l d have shown a constantly toward trend.
Un discussion with tne Management of the hankttwas
explained tnat during this period State Government
started issuing fertilizers even 1d the defaulters of
the credit societies. Secondly intensification of
activities of Commercial Ban&e and Hegional Kural
Bank Jan mu in potential districts of Jammu and Kathua
also account for thie trend. This also explaine
increase in the over dues position of the baxuc.
Overdues t
The average land holdiug iu Jammu division
ie 2 to 3 acree of dry land wnxch is hardly suffi
cient for the subsistence of tne farmer and nis
family, leaving very little marketable surplus
to enable him to repay tne bank dues. This ie also
a big cause for increasing over dues with the ban*.
The yearwise classification of overduee is given
as under s -
T A B L E 5
CLASSIFICATION OF OVERDUES OF THE BAfliK
(He. in lakhe )
Tea r Up to 1-2 2-3 Above 3 T o ta l_________ 1 ye a r y e a rs y e a rs y e a rs __________________1976-77 20.24 17.13 36.47 55*51 124.43
1977-76 22.55 17.04 15.29 66.22 143.10
1976-79 20.56 17.62 15.63 96.06 149.06
1979 -70 10.68 16.00 12.70 118.02 157.60
Source* - Compiled by' the S cho la r from the o f f i c e re c o rd s o f tn e Ban&.
The above table ie self explanatory .
Gverdues above 3 years time have mounted to He.
116.02 latche in 1979-60 as against Kb. 55 ,51 lakhs
in 1976-77. So far ae overduee of the duration of
2-3 yearBa** concerned the position ie a hit satis
factory, ae the amount has fallen from Rs. 36.47
laithe in 1975-77 to xis, 12 lakhs in 1979-80, But
the total overduee of the bank have increased
oauEtautly. During the course of discussion the
management accepted the ambarracing overdue position.
However, they seemed hopeful to improve upon the
position by effecting recovery of loans,, referred
to arbiration , As a matter of fact the position
of over dues as laid above calls for assessment
of each society aud eacn individual borrower as to
their repaying capacity. In such oases where rep^y ing
capacity xs nil, provision has to be made for wrxting
off such amount. But wnere the repaying capacity
exists, coercive action requires to be taken to
salvage tae bank's position. Sue a a step w>uLd thus
justify the exnortation of the State Chief Minister
which he made in the State Assembly while discussing
14the demand for writing off bad debts.
T7T Proceedings of State Assembly S@scion, March, 1981
fc.ff.D.A, Schemes and the Bank
The ban* has inveeted a sum of He.44.24
laiche from ite inception in various schemee to help
small farmers and for retaining cooperative member
ship with it and to eave itself from elimination
from agricultural field, because other Commercial
Banks and Jammu Hegional Hural Bank had resorted
to direct lending. The basic requirements of ensuring
timely and regular supply of feed, birds, milch cattle,
timely provision of animal health care, organised
marie tin0 facilities were not provided by the State
Government. Band's outstanding stood at He. 26.29
lakhs against txie borrowing of Hs. 3.78 lakhs from
He serve Bank of India. Out of outstanding an amount
of Hs. 14.89 lakhs is overdue^ Inis is a distressing
situation and calls attention of baas, authorities.
d . Loan Procedure
As regards loaning procedure the system
in vogue is in conformity with the crop loan pattern
wnere under for eacn crop scales of finance are fixed.
15. Office records of the J.C.G. Bank, Jammu.
Since tne area of operation of tne bank comprises
ox drought-prone areas ae well ae areas naving
ailly terrain, scales of finance are fixed not
oiily cropwise but aleo ar eawj.ee. 2he preeent per
acre eoalee of finance for 1980-61 by field wor&ers
group constituted for tne purpose and adopted by the
ban& ie given in pa^e next.
Financial Assistance
I n case o f eno rtage o f fm d e , to meettne financial requirements of afiiliatea societies
tne bank ^ete accomodation from ueeerve Bank of India
16under Section 17 of tne Jtteeerve Bant of India Act.
The Dank aleo receives loans from tne Apex Bank, and
from tne State Government in addition to tne snare
capital contribution ae and when needed. Aesistauce
ie aleo given to the bank by way of subsidy by Govern
ment. Dhe Dank hae availed of RBI aesistance of Re,
20 lakhe He. lakhs and Re. 30 lakhs respectively
for 1977-76* 1976-79 and 1979-80 against sanctioned
17limit of Rs. 60 lakhs each year, in addition, the bank
To'I R .jj .1 . Provision of R .B .I . Act., 1934 Relating to Rural Credit.
17. Office of R .B .I . Regional Office, Jammu.
107
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has received subsidy of He. 0.37* He. 0.56 and He.
2.72 lakhs from State Government during 1977-78,
1978-79 and 1979-80 respectively. Imo assistance
has Deen availed from A.R.D.C.
Deposits
The bank hae fairly succeeded in creating
confidence in the public to a greater extent which
ie evident from the following comparative figures for
the last five years »-
T A B L E 7
DEPOSIT POSITION OP JHE BAM
Cite, in lakhs )
Years Individuals Societies Others i’otal
1975-76 105*13 60.43 266.561976-77 226.22 97.66 — 338.881977-78 345.87 86.17 • 432.041978-79 450.87 133*80 • 584.671979-80 659.39 180.27 — 848.66
Source : - By courtesy of the J.G.C, Bank Ltd. Jaiumu.
The above data clearly reveals an increasing
trend of deposit mobilization. Deposits have constantly
increased from He. 266*36 la&hs to Re. 646.66 lakhe
oetween June 1976 to June 1980. The major aiare of
total deposits ie from individuals. About 77*6 percent
of tne deposits as tapped ending June 1960 were from
individuals. The bank is transacting all types of
banking Queinesfc and is providing safe deposit lookers
facility to its clientale at taree of its city brancaes.
The ban£ issues drafts on banks in important towns
in the country ihrougn agancy arrangements with tne
Central Bank of India at comperative rates and under
All India Mutual Drawing Scheme. The bank has also
opened two evening branches in the ol ty for the benefit
of salaried class and business ®o mu-unity. Inis is a very
good experiment vhich otner banks should follow. However,
it is unfortunate to note that bank has not been
recognised by the State Government for accepting the
deposits from Government , semi Government organization
Municipalities, Panchayats etc. Such a step would 4- ve
a boost t> the cooperative movement besides strenglh ening
deposit position of the bank.
Financial Position*
The financial position of the Jammu Central
Cooperative Bank as revealed by the latest available
iialauce Sheet C June, 1980 ) presents a dismal
picture. lae paid up mare cg> ital ie He. 56.68 lakhs
of wiion He. 22.00 la&hs are contributed by the State
Government. On matching base State’ s share should be
raised to He. 33 la&hs. Heearve and other fiinde are
He. 21.65 la*chs. The financial statement of affaire
of the Banx ae on 30th June, 1980 ie reproduced below*
SIATEMi^I OF Ai'FAXitS
(Pig, in Laiche)
Liaoilitiee Amount
Share capital 56.68.ae serve fund & other reserve® 21.65State Partnership fund 51.81
Deposits
Fixed 367.05Saving 376.46Current 80.04Call 23. 09 848.64
Borrowings 56.68
Bills forcollection 12.47
Branch Adjustment 19.73Overdue Interest reserve 52.90Interest payable 8.72Otner liabilities 37.24Undistributedprofit 5.28
lotal 1171.80
Sources Balance sneet of the
Assets
Cash
Deposits
State Partnership fund Investments Advances
S .I. M.T.IL «I •
551.5474.1330.52
Interestreceivable
Amount
95 .51
226.79
51.8149.40
656.19
7.63
Bills forcollection 12.47Premises and furniture 5.92Other assets 'Sundry reoove- rable 10.41Jeep A/C 0.27Books in Lib 0.5 Stationery 2.06 12.79lotal 1118.51Deficit gap 53.29
J .C .C .Bank ending June, 1960,
Prom the above statement following points
deserve sp eoial attention.
I . Sundry recoverable Rs. 10.41 la&hs are
subject to Micro analysis ox' each item whereby the
net deficit gap may increaee and be higher than
ite. ^3.29 la&hs.
I I . The owned Funds of tne bank ( share
capital its. 36.68 lakhs plus Keeerve Fund andother
reserves us. 21.65 lakhs )* amounting to its. 78.33
lashs has obviously been affected to the extent of
tne deficit gap on the asset Bide viz Re. 53.29 lakhs.
I I I . Interest receivable also include an amount
of Rs. 53.90 lashe which has been treated as reserves
for bad and doubtful recovery.
I his overall factual position is rather
distressing and should catch attention of authorities.
The deficit gap can however, be filled up if actual
market value of the premises is accounted for in the
last resort. The present mariet value of land and
buildings of the bank is many fold of waat has been
shown in the books of the bank. The market value of
its concrete buildin0s is appreciating instead of so
called depreciation theoiy as applicable in the
accounting codes.
11. The Anantnag Central ^operative Bank LTa.
The ban* has been registered on 21 et
December, 1923 and its area of operation: was Anan-
17tnag die trio t only . After the recorganieation of
District Administration Pulwama has been carved
out ae a separate district from the Anantnag district
recently. For cooperative Banking it does not mean
any structural, , change in tne near future. The bank
functions torou^h 14 branches, spread in 16 blocks
of Anantnag and Pulwama Districts. These branches
are conveniently situated at, Anantnag, Bijbehara,
Waziguud, Kulgam, laripora, Achabal, Damhal-rianj ip or a,
Seer KaiQjgund, Wanpoh, Sri0ufwara, Pulwama, Tral,i£
Sriopian, Katcapora, Littershieter.
Share Capital
The paid up share capital of the bank has
increased from us. 24*94 lacs in 19(3$-33 to iis.26.56
19lace in Hay 1961 . This is a happy trend and needs to
be maintained in future as well. The yaarwieo break-up of share capital is given ae under : .17. Office records of Anantnag Central Cooperative
Bank Ltd.18. Ibid.19. Ibid.
1 1 3
T A B L ' E
YEAH WISE SHAHE CAPITAL Of THE BAM£
I ear Societiee
( Hs. in laKhs )
Individual 8 Govt. Total
1976-77
1977-78
1978-79
1979-80
May 1981
7.87
8,14
8.30
8.54
9.13
0.07
0.07
0.09
0.47
0.45
17.00
17.0017.00
17.0017.00
24.94
25.21
25.39
26.01
26.58
Source : ay aourteey of Central Cooperative Banfc An&ntnag.
Whereas chare capital of Govarnment hae
remained constant at He. 17 laithe, that of societies
aud individual & ehowe some progress and yeTjt tneir
total ie far below the State's snare. The State
snare capital ie almost double that of the societies
and individuals*with the view of overcoming this
deficiency it ie suggested tnat the authorities
snouLd make concerted efforts to bring societies
enare contribution at par with the Government contri
bution eo that the ratio on matching basis is maintained,
Member skip :
Section 4 of the Byelaws of the Bank
lays down tnat each cooperative society as weil
as any person who is of 16 years of age,and competent
20 „to contract, can become member ox the ban* . The
21present membersaip of -he bans is 1219 . The year-
wise break-up of membership is given below.
T A B L E 9
fEAHWISE MEMBERSHIP Qi' THE BAim
fear______Societies Individuals Grovt. Total
1376-77 375 1 25 1 501
1377-76 375 142 1 516
1376-73 375 170 1 546
1373-80 39 3 736 1 1132
1960-81 416 602 1 1213
Sources- Compiled by tae scholar from the Office records of tne bank.
20. By e-laws of the Central Cooperative Ban&, Anantnag By e-law 4.
21• Office records of the Anantnag, Central Cooperative Bank.
Contrary to th~ directives of Reserve Bans
of India tne table pffittrays that the membership of
individuale ie increasing unabatedly by inducting
nominal members within its fold.
Management t -
Ihe composition of the Board of Directore
constituted on accordance with the provisions of the
byelaws represents the interest of the following: -
Government nominees . . 3
R e p r e s e n t a t i v e s o fPrimaries •• 15
R e p r e s e n t a t i v e s o findividual s • • 1
Representatives of Marketing and Service Society •• 3
Representatives of Consumer- Societies . . 1
Representatives of transport societies •. 1
Total . . 14
While the composition of tne Board of Direc
tors fulfills the statutory requirements yet it is
distressing to find tnat the General Body, the source
£2. Annual Audit Report of tne Anantnag Central Cooperative B a n f c , 1980.
of supreme power, nae not met since 1978 bo far.
Thie contravenes section 26 of Cooperative societies
Aot wuioh exxvisagee holding of such meetings at least
once in a year to dib o u b b and adopt the Annual Activity
Report, the Annual Audit Report, Annual Budget and the
Inspection no tee of the department and the R .B .l.
23officers. Ae a consequence thereof annual profits
have not been distributed and appropriations to reserve
fund. Bad debt Reserve etc. have not been made and
tae members in general have developed a sense of exclu
sion £rom their institution. This i& a gross violation
of byelaws and cooperative societies Act , and nence
needs to be rectified at tae earliest.
Staff Development t
Reviewing the stafi development position it
was distressing to find tnat the bank has not adopted
any staff development policy* The bank is adequately
staffed, but out of total of 133 staff members only
seven employees have received basio cooperative training.
23* The J & i£ Cooperative Societies Act, 1960, Section 26, p. 20.
24. Personal discussion with tae General Manager, Anantnag Central Cooperative Bank.
The Cnief Ixecutive of tae ban& having 14 years service
has acquired requisite training in hanking and coopera
tion. in order to aim at staff development it is
imperative on the part of the management to depute
hank employees C field officere, Branch Managers
and Supervisors ) for training in various institutions
In&phased manner to qualify for tae job assigned.
Further Back should give a fresh look to tne present
structure of its employees. This is essential in order
to set right the disparity which exists presently
between similar institutions operating at Jammu, Srinagar
and Anantnag.
Supervision
The department of cooperation has trans
ferred power of supervision over societies to the Bank
in Eatisfaction of bank's demand over the years. For this
purpose the bank has sufficient numerical strength in
the form of 26 supervisors and 16 Inspectors and one
field officer. Out of 16 inspectors only two are trained
in basic cooperative training school and out of 26
supervisors none has received training either in
recooperative or bauking. Therefore, the intrinsic value
of tak staff ie negligible unless they are suitably
trained and professionalized in the job. The appoint
ments of most of the staff have "beau made during tae
past two to three years on party basis without tailing
into consideration their suitability, as raw hands to
the movement, which ie highly technical. Transfer of
supervision has thus proved counter-productive so far
as tae job is concerned.
Out of uotal number of 14 branches only
three namely Damhal, Seer Kanligund and Waupoh are
wonting at lose . Adequate steps for making them healthy
units are needed. Maintenance of separate profit and
loss accounts of each branch should be maintained and
rules framed for working tae branches on sound lines.
Special incentives for good recovery work should be
provided.
Business operations t-
a. Loans and Advances 2
The primary credit societies affiliated to
S . Office reoords of the Central Cooperative Bank,Anantnag.
26. Ibid.
the bank are 199 out of wnich only 141 are eligible
27for fresn finance7 The loaning operations of the
bank in tne agricultural sphere for the last few
years is ae under t -
T A B L E 10
ALVAftOE KBGGVBUr, OUTETAbiDlMr,OVERDUE POSiTXQlM Off THE BAMiC
C lit, xu laahe )
Year Advances Recovery Out- Overdue standing
Lfiage of overdue t< demand
1976-77 146.76 122.82 189.25 67.97 42.6
1977-76 149.03 115.24 141.41 62.28 41.0
1976-79 145.13 140.76 174.03 67.05 44.0
1979-80 196.67 155.87 214.75 81.72 48.0
1980-61 95.00 upto March
67.92 h.A. 99.20 N.A.
Source t By courtesy of Anantnag 0 .0 . Ban* Ltd.
The aoove table snows unsatisfactory pefform . ce
of the bank. Advances have fluctuated between 146 to H5
27. Ibid.
from 1976-77 to 1978-79. Gut standings have exceeded
reooveriee every year and over dues have increased
to the extent of Kb . 99.20 lakh upto Max oh, 1981.
The percentage of o veer due 8 has increased from 41 per
cent to 48 percent from 1977-78 to 1979-80. The loans
ar^mainly for Skofck Term ( jCPo/Lio&ta. ) and Cashf
Credit. This ie enown by the purpose-wise break up of
business operations of the ban*.
THE PURPOSE WISE BREAK-UP OP ADVANCE, RECOVERY, OUTSTANDING AND OVERDUE
OP THE BAM
( Re. in lakhe)
Type of loan 1976-77 1977-78 1978-79 1979-80 1980-81
Advances
Crop loan 46.14 62.61 62.11 97.71 77.00Medium Term 7.48 12.60 20.14 18.04 18.08Medium Term conversion 50.00 11.27 8.14 1.69 N.A.Long Term • 6.07 4.26 1.97 —Cash Credit 43.16 56.26 50.48 77.31Total 146.78 149.03 145.13 196.67 92.08
Recovery
Crop loan 71.43 62.69 39.47 63.37 57.81Medium Term 4.16 6.30 8.43 11.59 5.38Medium Term conversion 7.97 29.74 20.63 9.11 2.35Long Term 0.53 8.26 6.15 3.02 2.38Gash credit 41.73 56.25 46.08 69.76 N.ATotal 122.62 115.24 140.76 155.87 67.92
«i ,C ontd».
Outstandings
Crop loan 65 .92 66 *04 68.67 103.01 H.AMedium Term 15.46 19.75 31.46 37.91 H.AMedi-Coa Termconversions 63.23 44.76 32.27 24.85 N.ALong X0rm 36.53 34.35 32.45 31.40 fi.ACash Credit 6.11 6.51 9.18 17.58 K.kTotal 169.25 141.41 174.03 214.75 ft .A
Overdues
Crop loan 29.69 30.90 28.01 31.16 44.11Medium Term 13.77 4.34 5.07 5.08 7,43Medium Termconversion 11.65 12.56 16.68 24.29 23.50Long Termv 12.86 14.48 17.29 21.19 24,16Cash Credit till fill Nil Nil Hi!Total 67.97 62.26 67.05 81.72 99.20
Source i - By courtesy of Anantnag Central Cooperative Bank.
The above figures indicate taat except
for 1978-79 advances made the bank show an increa
sing trend. Major portion of loans go as cShorttftcnu
loans. Reooveiy for crop loan have fallen from Re.71.43
lakhs in 1976- 77 to Re. 57.81 lakhs in 1979-80. the
outstanding and overdoes have considerably increased
from it s. 65.02 to £&• 103.01 lakhs between June, 1977 to
June, 1980 and Rs. 29.69 lakhs to He. 44.11 lakhs between
June 1977 to June 1980 respectively • Out of the societies
affiliated there are 56 whioh are ineligible for
refijaanoa and 3 sooietiee are defunct. Furtaer,
at least 50 percent members of otherwise eligible
societies are not eligible for fresh loans for non-
28payment of over due s. The Rural credit Survey Review
Committee has desired that non defaulters and new
members mould uot suffer and the Central Cooperative
Banks should finance non*defaulters and new members
of basio societies directly till the conoerned society
29is activieed. Besides short term and medium term loans,
the bank has made cash credit facilities available to
primary agricultural societies which procedure is
greater in consonance with the latest recommendations
of Reserve Bank of India. It, however, requires to be
confirmed if the cash credit facility is passed on
to tne basio members of the beneficiary society whose
repayments are prompt. This is of course a new strategy
in Agricultural financing to minimise tne time-lag and
make cooperative credit easy of approach. This facility
has to be introduced in societies which afte classified
as A and B in Audit and even to the basio members whose
repayment record is satisfactory with their society.
261 b .B .I . District Credit flan, Anantnag, 1980-82,p 86. 29. R .B .I . Report of Rural Credit Review Committee,
1969 ,p . §78.
Overdues : -
The above statement aleo eJiowe mounting
overduee which increased from its. 67.97 lace in
1976-77 to Re. 81.72 lace ending June 1961. The ratio
of inereaee ie eo high that juet in ten months period
overduee nave inoreaeed to Re* 99 . 20 lace ending April
1981 from Re. 81.72 ending June 1960. Out of total
overduee the following amounte are overdue by above
5 years and the amount over^due by 6 years oannot be
recovered under general law on the eubjeot.0
(Re.in latche)Tear Amount overdue
____________ b,/ 5 years
1^76.77 15.961977-76 15.92
1976-79 15-.861979-80 16.44
In order to eet the overdue position right
the banic has filed arbitration oasee against the wilful
defaultere. Ihe caeee filed for arbitration upto Deoember,
1960 were 3273 in number involving an amount of Re. 19.07
31lace. She Aseietant Registrar at bloc it level ie inveeted
with the powere of Registrar under section 63 of the
3(5. R.ji.I. Inspection Report of Anantnag Central Coop., Banic, 1960.
31. Offioe reoorde of the bank.
Cooperative Societies Aot, Taay require to toe activised
to finalize arbitration cases toy summary disposal and
not toy protraoted methods of civil courts.
to. Loan Procedure
The procedure adopted for advancing crop
loans ie uniform for all Central Cooperative banks.
This has already been discussed under the Jammu Central
Cooperative Bank, But there ie marked difference in the
eoales of finance of Jammu Central Cooperative Bank and
the ban&s in the valley because of difference in climate
and terrain. The pae sent so ales of finance per acre
for Knarif and liatoi crops prescribed for the bank to/
the expert group are as under s
SCALES OP HbAbCS
Crop Irrigated UnirrigatedCash Kind Cash Kind
Khar if Below 5500 ' 500 280 150 140Above 55CO' 200 180 100 100
RabiO il "seeds 100 150 _Wheat 100 215 75 125
Source s - Statistical cell, Registrar,Cooperative______Societies, J & K,
52” J & K Coop. Societives Act, 1966, p .42.
The moet important Kind component represents
cost of fertilizer which is dependent upon fluctuations
in the oil market. It may not he out of place to make
a digression and refer to Jammu Central Cooperative
B an k Circular regarding enhanced scales of finance
fixed for advanoing kind component of crop loan for
Eabi 1960-81, waerein it has been notified that tne
already sanctioned maximum credit limit shall he
treated as enhanced ty 33 percent for kind component
only. in the wake of still furtner doze of price hi&e
in early July 1961, fertilizer cost has esclated and
the limits already fixed require a still upward
revision not only for Anantnag Central Cooperative Bank
but for all Cooperative banks of the State.
Financial Assistance »-
With the view of over-coming the financial
inadequacies the bank can. borrow from Reserve Bank of
India, Apex Cooperative Bank and from other institutions
like A.ii.B.0 • , H.C.D.C. The bank can also get financial
assistance from the State Government. The bank has not
received any assistance by way of loans/ subsidy from
State £o vernmentt Agricultural Refinance Development
Corporation and others. The bank has received only
-tts. 40 lakhe from H .B .l . again.et the sanctioned limit
of its. 60 laiche,fi»». 1976* He. 60 lakhe for 197933
and Ke* 30 lakhe for 1960.
Deposits
The banx. has succeeded in mobilization of
savinge of people to an extent. The rate of interest
offered on deposits is generally half a percent above
the ruling bank rate. The response from the public is
encouraging as is evident from the following table .
T A B L S 11
DEPOSIT POSITION OP THE BAW&
(lie* in lakhs)
fear Current h k r m Fixed Total
1976-77 18.06 14.47 7.34 39.871977-78 24.62 20.48 6.97 54.071978-79 36.76 32.79 13.86 82.411979-80 61.49 37.49 20.90 119.881980-81* 35.5 54.35 27.77 117.65
Source By courtesy of Anantnag Central Cooperative Ba^k.
_____________ *______Figure ending May# 1981557 ii.B.I. Regional Office* Jammu.
Deposit mobilization shows an upward trend
during the last few years. Deposits have increased
to Kg . 119.86 la&hs in 1979-80 against Kb . 39.87 lakhs
in 1976-77. The major share of deposits is from indivi
duals C Hs. 90.95 laichs) constituting 77.5 percent of
54th e t o t a l d e p o s its . The bank does n o t p ro v id e modern ban k in g f a c i l i t i e s l i k e sa fe d e p o s it v a u lts , re m it ta n c e f a c i l i t i e s o v e rd ra f t o r " Double y o u r Money" d e p o s it scheme to i t s c l i e n t s . The bank shou ld in tro d u c e modern bank ing f a c i l i t i e s and f a l l in l i n e w ith advanoed c o o p e ra t iv e banks as has been done by Jammu C e n tra l C oope ra tiv e Bank. A ga in th e bank has n o t been re cog n ise d by th e S ta te Government f o r acceptance o f d e p o s its from Government and Semi Government O rg a n is a t io n s as i s a ls o th e case w ith o th e r C e n tra l C oope ra tive Banks i n the S ta te . T h is makes a sad comm e n try o f fa c te as d e s p ite th e re pea te d a d v ice from th e Reserve Bank o f I n d ia , th e S ta te Government has tu rn e d a dea f ear to t h i s is s u e .
F in a n c ia l p o s i t io nThe f in a n c ia l p o s i t io n o f th e bank as
re v e a le d by th e la t e s t a v a i la b le Ba lance Sheet as on 34 . O f f ic e re c o rd s o f th e Bank.
ending June 1980 cannot be said a oomiuendable one.
The paidu.p share capital is of the order of its* 26.01
lakhs* of wnich Ke. 17 lakhs are contributed lay the
State Government. Share capital from societies and
individuals put together makes only He. 9.58 lakhs.
Reserve and other funds account for Re. 16.63 lakhs.
The owned funds including share capital also and stands
at Rs. 42.65 lakhs. The factual statement of affairs
of the hank ending June 1980 is given as under s -
STATEMENT OP AFFAIRS OF THE ALAfcTNAS CENTRAL COOPERATIVE
BAftg
Liabilities Assets
Particulars Amount Particulars Amount
Share capital 26.01 Cash 20.41Reserve & otherfunds 16.63 Deposits 45.01State Partnership State partner shipfund 22.26 fund 22.26Deposits Investments 12.72
AdvancesFixed 20.90 T . 77 121.92Saving 50.88 M. T. 105.55Current 42.63 L. T. 34.67 262.14Call 5.26 119.87 Investment receiBorrowings 147.22 vable after deducOverdue interest ting Bad & doutfulreserve 8.70 debts. 0.69Interest payable 6.78 Premises 3.91Other liabilities 35.73 Furniture 1.10Undistributed Other assets 1.27profits 0.41Total 365.81 Total 309.51
Deficit gap ---------------75730'
.....Sources Published Balance Sheet of the Bank* June,1980.
The deficit gap indicates that total
Eaare capital Re. 26. 01 laKhs , Reserves and
other funds i t s . 16*63 lakhs and overdue interest
Reserve Re. 8*70 lashs total Re. 51*34 lakhe have
been consumed and still a gap of Rs. 24*76 laiche
exists * This gap can he filled only when the
liquidator lays hand on the hulldings of the hank
which have market value of about Rs, 10 lakhs •
Organisation of an Agricultural State Bank with
branchee in all districts in place of such week
0®atral Banks appears to he the only solution*
The other solution lies in coaling down of had
debts after proper screening of each defaulters
case and subsidisation by U overrun ant to the extent
of loans to he written off. The Government should
seriously think about it.
I l l . The Baramulla Central (Topper ativeltenk Lid.
Amonget the Central Cooperative
Banks in the State, the Baramulla J3an& ie the weakest
of all, beth financially and operationally. Registered
in 1920 the hank serves the financial requirements of
cooperative societies in the erestwhile district of
Baramulli^ The district enjoys a strategic position
as its borderb are close to China, Russia and Pakistan.
The north western blocks of the district namely JCarnah,
Sogam, Gurez, Raj war and Uri aad been ravaged in Indo-
Pak Conflicts of 1947, 1965 and 1971. Ae a result thereof
working of tne bank and its affiliated primaries were
adversely affected. The ban& operates through eleven
branches located at Baramulla, Sopore, Handwara, Kupwara,
S-umbal, Bandipora, Tangdar, Eajan, iCarlgund, Uri and
Sonawari•
Share Capital
The bank has an authorised share
capital of Rs. 50 lakhs comprising of :
dffice records of tae Baramulla Central Cooperative Bank.
a. 1100 eaares of 'A* class of the value of Rs. 100
each meant for subscription lqy the State Government,
the State Cooperative baas, and other Cooperative
institutions.
b. 5800 shares of *B* class of the value of Rs.50 each
for subscription by individual s living in the area of
36operation of tae Bank.
The year wise breakup of the paid up oapital
of tae bank is given as under i -
1 A B L ii 1*
PAID UP SHARE CAPITAL Off ME BAEK
( Rs. in lakhs )
Year Societies Individuals Govt. Total
1975-76 6.95 0.06 8.00 17.03
1976-77 9.15 0.09 11.00 20.23
1977-78 9.36 0.09 11.00 20.45
1978-79 9.5 7 0.10 11.00 20.69
1979-80 10.05 0.18 11.00 21.23
Source* By oourte^ of Baramulla Central Cooperative Bank Ltd.
The above table '*showe that the paid up
eaare capital of Government remained constant from
1977 to 1980 at iis. 11 laahs, and taat contributed
by societies and individuals combined snowed a steady
increase.
Membership
The membership of tae bamt ie of composite
type wita Primary Cooperatives, individuals and State
Government as its constituents. The position over
tae past five years is given below.
T A B L E 13
y ear
I S A M SE MEMBERSdIP OP 'THE
T o ta lS o c ie t ie s
SAM
I n d iv id u a ls G o v t.1975-76 207 62 - 369
1976-77 307 70 1 378
1977-78 311 75 1 387
1976-79 211 91 1 403
1979-80 216 99 1 416
Source « - By courtesy of Central Cooperative Baiiic, Baramulla.
Over a period of five years membership
of the bank has inoreaeed numerically though at a
slow pace, ae ie revealed lay the table given above.
The number of societies in June 1976 was 307 which
increased to 316 in June 1960. Inspite of repeated dir
ectives from iteserve Bank of India to reduce number
of individual members, their number has constantly
increased from 62 to 99.
Management
Section 15 of the bylaws of the Bank
provides for an elected managing Committee of 15
members for a period of 3 years. Ihe constitution
of the said committee stands superceded from 1975
and replaced by Board styled as authorities. It com
prises of 9 members drawn mainly from the ruling party
37as -under :
1. Shri S.D.Shariqt ChairmanCKP )2. Shri M.M.Mir Member3. Shri A el am Gojri Member4. Majahid M.Abdullah Member 5• Shri Abdul Ahad Bhat Member6 . Shri Habibullah Bhat Member7. Sn.J$$|iU&§i& Bhat Member6. By ►degistrarCSuper
vision), Bar amulla Member9. Project Officer SFDA Member
" 5 7 ! Personal discussion in with the General Manager , 0 • 0 . Bank Baramulla.
From toe composition of this Authority it
would be observed tnat no representation nae been
given to tne societies of the district. The Board
was superceded at a time when elections were held
in Cooperatives after a decade or so. Election to
the Board i& much overdue ae is also the case with
Jammu Central Cooperative Bank.
Supervision t
iThe Cooperative Department has since
transferred supervision to tne BaAk as a policy of
decentralization of power. Keying in view tae moun-
taneous terrain and far-flung areas to supervise, tne
bank needs additional staff to supervise and diversify
its activities in the area of its operation whioh now
consists of two districts of Kupwara and Baramulla. The
management has up-graded the Executive Offioer to the
post of General Manager and reduced the rank of General30
Manager to tne position of the Executive Offioer.
Including the General Manager the staff
at head office as well as in the branches is of the
lowest calibre. The Annual Audit Report. 1976-79 has
w . — x m r .—
clearly pointed out tnis deficiency on the part
of the bank, personnel vis-a-vis M wording of the
bank hae reduoeditw teffioiency and propriety consi-
derably both on account of adherence to banking39
princip&ee and accounting procedures . Due to bad
performance the bank oontinuee to fall in category
"C” of Audit classification under norms prescribed
by Reserve Bank of India. Transfer of supervision
to bank as an experiment has failed -under this bank
also* The department must intervene to salvage the
Banit.
.Business. Operations : -
'The bank advances mainly for agricultural
purposes through affiliated primary societies. But
in recent years the bank also provides individual
loans to subsidiary occupations The loaning operation
of the bank in the field of agriculture is depicted
from the table below * - No. 14.
Tne figures in the table reveal that
Snort Term loans advanced have suddenly jumped
to iis. 50.01 laths in June 1379 as against Rs. 16.92 lakhs
59. Annual Audit Report of the Bank, 1979
j.3 0
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in June 1977. But for June 1980 they have fallen
to Rs. 33.79 latche inepite of the fact that demand
for the year aae inoreaeed to the time of Re. 37.95
latche. The recovery position is again disappointing.
U * ^ They have fallen from Re. 21.32 lakhe in June 1977
to xie. 19.60 lakhe in June 1976 to Rs. 10.10 lakhe
in June 1979 and to Re* 12.21 lathe in June 1980.Though
the overduee have fallen from Re. 29.69 lakhe to
Re. 25*74 lakhe between 1976-77 to 1979-60, the percen
tage of overdue to demand hae increased to 60 percent
ae against 50 percent in 1976-77* Ihe short fall in
demand and unsatisfactory recovery position ie attributed
to the fact tnat supply of fertilizers hae not been
smooth which ie bound to reflect on production.
So far as the Medium Term loans are concerned
they have eteadly inoreaeed from Re. 4.05 laiche in
1977-78 to Rs. 20.6 lsuche in 1978-79 to Re. 23.04 lakhe
in 1979-80 which depicts a healthy trend.But keeping
the demand for credit in view Rs. 18.13 lakhe in 1977-78,
and Re. 34.10 lakhe in 1979-60 the performance ie neglible.
Recovery poeition indicate that they have risen from
Re. 1.64 lakhe in June 1977 to Re. 2.48 lakhe in June, 1978
to K b . 2.^0 laahe ia. 1976-79 and to Hs. 6.44 lakhs
in 1979-60. Overdues have almost doubled during the
period of one year ( increased from Re. 12.69 laiche in
June 1979 to He. 27.66 lashe in June 1980 ). The
percentage of over dues hae generally shown a rising
trend over the past few years. Over due e on principal
account alone has gone upto 5 2 percent in June, 1976
and hae further deteriorated in June, 1979 when it
touched to 60 percent.
Ihe overdue position of interest ie indicated
ae under t -
T A B L E 15
rsAHWISE OVEHDUE POSITION ( INTEREST )
000( H s . in lafchs )
Tear Amount Period by iftich overdue
1974-75 231003 Over 4 years
1975-76 266728 Over 2 years
1976-77 414517 Over 2 yeare
1977-78 464217 Over 1 year
1976-79 324621 Less than one year
Source t - iSy oourtesy of Central Cooperative Ban* Baramulla Ltd.
For tackling tae problem of overduee
tae ban* hae created an overdue reserve to tae tune
40of Rs. 50697 in 1976-79 • This augers veil for reaping
tae baii&B liquidity position sound. It is reoo mm ended
that subscription to this fund should become a regular
annual feature.
S.g.D, Scheme and tae Bgnk
The entire district is covered under SFDA
Scheme and the bank is the main finaneer of such
schemes right from tae start of tae agency. Quite a
good amount of medium term loans have been advanced
tarouga this agency. The bank has advanced in such
schemes to tae tune of He# 10,50 lakhs out of wnich
it s. 4,06 lakhs were advanced for poultry development
schemed? Since tae poultry scheme has entirely failed
because of non-availability of feed and inadequate
medical care, the band's total investment has turned
as stagnated in the soaeme.
40. Office records of the 0 . 0 . Bank Baramulla.
41, Typed note jis on the vtoricing of C, 0 , Bank, Baramulla.
Deposite
As said earlier an important indicator
of the success and efficiency of any credit agency
ie the extent to which it is able to mobilize savings
of the community. A strong deposit position reduces
to an extent the dependence of the cooperative agencies
on the borrowings from Apex bank, or from any other
agency authorised in this behalf. Ihe position of toe
bank, regarding deposits is as under :
T A B L E 16
DBPOSIT POSITION OP THE BANK
C Hs. In lakhs )
Tear Depositor Fixed Saving Current Call
1977-76 Individuals 4.04 0.17 4.70 3.39Societies 2.7 6 5.94 7.62 0.25Total 6.60 6.11 12.52 3.64
1976-79 Indivi dual 7.61 2.02 7.40 4.47Sooieties 3.26 9.60 9.56 0.27Total 10.99 34.62 16.96 4.74
Source t Compiled by the soholar from office records of the bank.
Table 16 snows taat there has been, a consi
derable increase in deposit mobilization by the bank
during the last two years. Rising trend of deposits
-under individuals is mainly due to shift in the pattern
of economy from deficit agriculture to surplus orohardi-
«n. The bank hat introduced only ** double your moneNj"
ecneme which is yet in its infancy. The bank has raised
its own building situated on th£ road side close to the
49main market at the cost of Rs. 6 lakhe last year.
This should enable the management to build up its image
by providing other facilities of safe-deposit vault.
Remittance facilities, discounting of bills, as also
other lucrative deposits schemes like depoeite Pension
Annuity, and cash certificate schemes to tne publio
in General. The introduction of these schemes has
beoome imparative in view of the growing demand on the
part of the orcaardists — a class which emerged
in recent years and hae proved responsible in changing
tae face of rural eaonomy in the banks area of operation.
The fruit industry is expanding rapidly through
State assistance in several ways. There is sufficient
scope for development of production, processing, grading 4-2. 2exsonal discussion with the General Manager,
C. 0. Banx, Baramulla.
and marketing and preservation of fruit for better
marketing practices through cooperative agency for
years to come, as greater areae are brought under
Horticulture in preference to growing of crops and
cereals. Ihe Directorate of Horticulture ( Planning
and Mar ice ting ) who exercise powers of Cooperative
Department for fruit cooperatives, have appointed
marketing officers in big trading centres of the
countries* yet the formation of pools by the Private
Traders at tne time of bidding has been defeating all
devices to fetch the farmer a better prioe. Even under
euch adverse conditions it hae been estimated that
sale proceeds exceeding its. 30 crores enter this dis-4.®
trict annually . The investible surplus available with
fruit producers and some private orchardiets provide
better field for deposit mobilization. As a fellow up
measure the bams should appoint expert personnel
with force of persuation and motivation. This is the
/heed of the hour in view of the fact that Commercial
Banks''performance in this behalf ie quite encouraging.
43. Ibid.
Rehabilitation of tne Ban*
Ae stated earlier the district of Baramulla
suffered severe economic devastation in the three
Indo-Pak conflicts since independence. 3>uring the war
of 1965 huge amounts recoverable from primaries went
44in default . The Reserve Bank of India hae identified
this bank under the scheme of Rehabilitation of weak
Central Cooperative Banks and the loans due by socie
ties to the bank have been written off. The bank has
got re-imbureement of principal Re . 30.67 lakhs only
and the interest recoverable thereon amounting to Re.
7*31 lakhs has not been subsidized which is a direct
45loss to the bank. The State Government should reimburse
the amount to the bank. The field stufy revealed that
the bank has not revived transactions with most of the
primaries which suffered due to conflicts and the bank
has not cleared tneir liabilities in the books of the
bank. This shows that the bank is hesitant to grant
fresh loans to the societies near tne boarders.
44. Personal discussion with the General Manager,0 . C, Bank, Baramulla.
45. Office reoordsC Annual Audit Report of the0. C. Bank Baramulla, 1979.
ftew Trends mad Its Impact on Lending
The flow of money ae eale proceeds of
soft fruit, boar dear roade construction and construc
tion of Hydel Projects has raised wages of unskilled
labour up to ixs. 20,00 a day and all this has brought in
a high degree of affluence in rural areas of the district.
That explains the short fall in advances by the bank.
Also the bank is fising targets at a crore of rupees
every year as short term loaning which hardly touched
50 per cent of achievement in 1976-79. Again under the
Area Approach Scheme the target set as commitment of
Rb , 266.56 lakhs for cooperation the achievement from
461974-79 was only k e . 72.54 lakhs. On the other hand
advances under Medium term have shown a constant
upwafcd trend as is evident under the head * others " in
balance sheet, waich are in fact loans granted individuals
has been on a liberal scale. Loans to individuals has
been objected to ty' the He serve BaAk of India and should
be stopped if three-tier system of Cooperative financing
is to continue. Effort needs to be made to route all loans
46. S .B .I. District Credit Plan for Baramulla, 1960-82
through primaries lay reducing tneir overduee position
to tne minimum.
Financial Position
The financial position of the bank as
revealed by the latest available balance sheet ending
June 1960 ie non too happy. The paid up share oapitalof
is ite. 21*23 lakh which Rs. 1$ lakhs are contributed
by the State Government* Share capital from societies
and individuals comes to Rs* 10*23 lakhs * Reserves
and other funds accounts for jxs* 9*67 lakhs. The factual
statement of affaire of the bank ending June, 1980 is
as under f -
S IA lflM M J OF AFFAIRS( Rs. in lakhs)
—— — Assets
Amount Particulars Amount
Liabilities
Particular e
Share oapital 21.23ne serve & other funds 9 *87State Partnership fund 10.73Deposits 91*34Borrowings 62*04Overdue Int*Resv. 10*60Int .P sqt abl e 9 .66Other Liabilities 15*39Profit for the year 0.05
CashCash at baak
10*1034*07
Investments 4.42Partnershipfund 10.73AdvancesBhort term 60*84 Less bad debt 15 * 24 65*60 Medium Term 57*78 Less Bad debt 9*75 47*99Long term 19*89 Less bad debt 1*50 16*39Premises 3*53Furniture etc. 0.56Other assets 0.65Total 196.56Deficit gap__________ 54 .BET
Total 250.91________________________________ DefiQit gap__________ 54.85
Source* Published Balance sheet of C.C.Bank Baramulla, 1980
The statement reveals that total share
capital lie. 21.25 lakhs, reserve and other funds Rs.
9.87 lakhs, reserve for overdue/Re. 10.60 C totatyinterest
Re. 41.70 lakhs ) have all been consumed. The defioit
still remains to the extent of Rs. 13.15 laiche whioh
oan he filled up if the hank ie immediately liquidated
and its newly building ( last year construction cefet
Rs. 6.14 lakhs ) might fill up the gap. The State Coopera
tive Bank should have its own branch in Baramulla to
take over the responsibility of feeding the societies
in the area of operation of the bank.
Suggestions *-
As CekfeiQ&Kmovement has been accepted as the
only suitable veniole for bringing about a socio-eao nomic
change under the new set of developmental planning, the
following points deserve careful consideration.
1. Tae Central Cooperative Banks should
prepare yearwise profit and loss accounts of their branch
offices instead of consolidated annual accounts. This
will bring to light the branch -wise performance as
well as chronic defaulter pockets. As a remedial measure
the ban its enould give prizes or awards, for od performance
to the branch Managers. Managerial subsidy be granted to
tae banks for deficit branohes for a period of
three to five years till they become viable.
2. In order to increase fludity of Central
Cooperative Banke* State Government should contribute
outright grants of Es. ten lakhs each to Anantnag and
Baramulla Central Cooperative Banks and Eb . 20 lakhs
to Central Cooperative Bank* Jammu to enable them to
maintain weak branches. State Government should also
pay an amount of Es. 10 lakhs to Jammu Central Cooperative
Bank as share capital contribution to bring it at par
with the banks own share capital of Es. 33.66 lakhs.
3. In order to tackle the overdue problem of
these banks, multipronged action should be taken as per
the suggested lines t-
a. Special sqwSude enould be appointed for flnaalisation
of arbitration oases.and The Registrar is empowered to
refer the oases for arbitration. Such cases should be
referred to Panohayats as a trial measure, where moral
persuation will play an effective role.
b. Eligible members of the defaulting societies eaould
be financed directly by the concerned Central Cooperative
Banks through their nearest branch till such time amounts
in default are made good and the societies are made viable,
o. Rewards, Shields or epeoial incentives l$r way of
advance increments should be given to field staff for
beet reoovery work. Bad performance ehould invoke dis
ciplinary and penal action.
4. Speoial attention ehould be paid to get
staff, both at head office and at branohee trained
suitably. The Cooperative Member Education Scheme should
be advised to educate members about the benefit of timely
repayment of loans. Also conditions should be made for
favourable and prompt payments.
5 . A scheme of Agricultural holding pase books
should be introduced to facilitate borrowing and also
to change the existing procedure vtoioh is time consuming
and also open to mal-praotfoes at lower levels.
6* Ihe Central Cooperative Banks fibould be
recognised by the State Government for accepting deposits
from Government and Semi-G overrun ant organizations. This
will increase the deposit position of these banks.
Anantnag, Srinagar and Baramulla Central Cooperative
Banks should provide safe deposit vaults, remittance and
other modern banking facilities to the publio.
7. Enrolment of individual members to the
Central Cooperative Banka riiould be stopped. Attempt
to admit individual8 as nominal members be given up.
6 . ixulee for common cadre of Seoretaiy/
Manager a t primary level have since been framed and
issued in 1976* but with the exhausion of subsidy for
this purpose the servioes of the inoumbents are generally
terminated by employer societies, because sufficient
momentum has not been gained ty them so as to maintain
the cadre accountant on their establishments. This needs
reconsideration lay the authorities. Creation of a cadre
of Managers for Central Cooperative Banks was envisaged
as back as in 1973-74 but has not been implemented so far .
This also requires top p r i o r i s o that professionaliza
tion is introduced in the cooperative banking sector.
9 . Elections should be held immediately where
they are overdue and nominated boards should be replaced
by eleoted ones, dominated Boards are no remedy for
elected Boards nor a substitution. If the Managing Committee
is to be disolved there is no bar for immediate reeleotioxi
To complete investigation of the three-tier
credit structure, an attempt has been made to look into
the performance of primary cooperative Agricultural Socie
ties in the next ohapter.