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.

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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

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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.