COMPOSITION OF ADVANCES IN THE DISTRICT CENTRAL COOPERATIVE BANKS IN PUNJAB

The Banking scene in India has undergone a tremendous change due to the Narsimham Committee recommendations since 1992 i.e. with the advent of the new economic policy. It emphasized shift from centralized planning to indicative planning. Thus the committee shifted its onus from ownership to efficiency and competitiveness while ensuring the integrity and operational autonomy of the banks. Financial sector reforms, based on Narsimham committee recommendations, aim at fostering financially strong banking cooperative in a competitive world.


INTRODUCTION
Cooperative banks, basically, were established as a tool of government policy, to provide institutional credit to farmers at lower rates and easy terms. Cooperative Agricultural Development Banks were providing long term credit to farmers for capital formation i.e. purchase of tractors, agricultural implements or land reclamation, tube well pumping etc. Similarly District Cooperative Banks were providing short-term credit facilities to farmers for purchase of agriculture inputs. These banks were even known as 'Society Banks' or Kissan Banks'. As a result of financial sector reforms, cooperative banks had to face a stiff competition, banking technology explosion, new prudential banking norms, customer central banking operations and a deregulated and market oriented banking system. And in response, these banks had to redefine and refine their working culture and working strategy. Cooperative banks responded to above banking challenges with full vigour and strength. Sound banking practices replaced the age-old credit agency system approach. They adopted professional approach to control the costs and enhance the yield. Being committed to economic upliftment of rural masses, they have to provide timely and adequate credit at cheaper rates to farming community. To meet this social obligation, they have to earn from somewhere. To supplement the low yield assets, these banks had only one choice i.e. diversification in high yield areas. Once allowed to go in prohibited areas, these banks have created a niche for themselves in non-farm sector operations.
Since 1992, these banks have diversified business operations in financing non-farm sector activities and during the last few years, the cooperative banks have witnessed a phenomenal change in terms of variety in its business products. Now, these banks are not only confined to agricultural credit business. The thrust of loan portfolio of these banks has shifted from agriculture credit to general advancement, which covers non-agriculture and other high yield advances also.

RESEARCH DESIGN
The sample of the study was based on multi-stage stratified random sampling technique. Three agro-climatic zones became the 1 st stage of sampling design. Two District Central Cooperative Banks (DCCBs) were randomly selected from each zone.

A) Trend Analysis
In order to assess the existing trends and to estimate the future trends in different parameters under study, trend analysis was performed in two forms. The compound growth rates were tested to determine their statistical significance with the help of t-test.

1.1: CROP LOAN
Crop loan is a short-term loan advanced to farmers for the purpose of enabling them to buy seeds, fertilizer and pesticides. It is distributed to farmers through Primary Agriculture Cooperative Societies (PACSS). Maximum loan, which a farmer can get under this scheme, depends upon his land holding, and scale of finance for each crop which is fixed by an expert committee constituted by the government.

1.2: REVOLVING CASH CREDIT LIMIT TO FARMERS (RCCL (F)
Money in this scheme is advanced to meet the socio-economic needs of the farmers, , on the basis of their land holding, A withdrawal limit is fixed for the farmer, upto a maximum of Rs. 300,000, which has been enhanced to Rs. 600,000 since 1 st July, 2007. He can withdraw and deposit money any number of times, depending upon his requirement. Limit is sanctioned initially for a period of one year, renewable subject to satisfactory operation in the account.

1.3: NON FARM SECTOR (NFS)
In 1996-97, NABARD encouraged the cooperative banks to diversify their activities and started providing refinance for lending to the non farm sector (NFS). From 1996-97, DCCBs are advancing loans for various purposes under non farm sector, which includes Integrated Loan Scheme, Composite Scheme and Small Road and Water Transport Operators loan (SRWTO) Scheme. Under Integrated Loan Scheme, the loan is advanced to any individual, partnership firms, corporate bodies, companies, small entrepreneurs etc. to establish or extend any manufacturing service and processing unit as approved by KVIC/ NABARD, up to a maximum of 75percent of the project cost minus cost of land. Under the Composite Loan Scheme, the loan is advanced to individuals and small entrepreneurs to establish or extend any manufacturing service and processing unit as approved by KVIC/NABARD, upto a maximum of Rs. 10 lakhs or 75percent of the project cost minus cost of land, whichever is less. Under SRTO Scheme, the loan is advanced for the purchase of a new vehicle to be used for commercial purposes i.e., trucks, mini trucks, bus, auto rickshaw, water transport units etc upto a maximum amount of Rs. 10,00,000.

1.4: CONSUMER DURABLE LOAN
In this scheme, loan is advanced to individuals whether in service or self employed for purchase of consumer durables. Maximum limit per loanee under this scheme is Rs.50, 000.

1.5: VEHICLE LOAN
This loan is advanced to provide financial assistance for purchasing a new vehicle for business or personal use to any individual, group of individuals or a partnership firm. Amount of loan, which can be advanced under this scheme is Rs. 600,000 or 80percent of the value of the vehicle, whichever is less.

1.6: CASH CREDIT LIMIT (TRADERS)
Cash credit limit is a short term financing scheme. Only traders, government/quasi government contractors, registered units run by the self employed persons and professionals like doctors, engineers lawyers etc. are allowed finance under this scheme for a period of one year to meet their working capital requirements. Depending upon the turnover of the trader, an overdraft limit is fixed, upto which the trader can withdraw or deposit money any number of times in the account. At the end of one year, the trader will be required to get his limit renewed. Maximum loan advanced under this scheme per person is Rs. 15 lacs.

1.7: OTHER LOANS
This Category includes Personal loans, Housing Loans (Rural and Urban), Education Loans and other loans advanced for consumption purposes.

1.7.1: PERSONAL LOANS
Under this scheme, loan is advanced by the bank to meet socio-economic needs of employees such as child's education, furnishing house, buying a computer, son's/daughter's marriage, holiday tour etc i.e. it is not a productive loan. Only salaried employees of Punjab Government, Cooperative Department, and Punjab State Cooperative Bank are eligible for loan in this scheme as per the bank norms. Amount of loan, which can be advanced under this scheme to one individual, is Rs. 200,000 or 10 months gross salary, which ever is less. M a y 0 2 , 2 0 1 3 .

1.7.2: HOUSING LOANS
Housing loan is one of the most saleable bank products. Main reasons for this are great desire of the people to own houses and income tax incentives on housing loans. Cooperative banks, in the year 2003-04, launched two different housing loan schemes for urban and rural clients. Maximum credit, which can be availed by a loanee from urban area is Rs. 10 lacs, whereas a rural area client can avail a maximum of Rs. 5 lacs under this scheme.

1.7.3: EDUCATION LOAN
This loan is advanced to provide financial assistance to students with at least 50percent marks in +2, for pursuing higher studies in India or Abroad i.e. Engineering, Medical, Dental, Law, Computer, Agriculture ICWA, CA etc or any other course run by a recognized university. The maximum amount of loan is Rs. 500,000 for studies in India and Rs. 10, 00,000 for studies abroad for a maximum period of 5 years.
It is felt that a serious attempt is required to assess the quantum of loans outstanding in different banks. The quantum of loans outstanding depends upon two things: If the loans outstanding increase due to new advances, it is a healthy sign for the banks but if the loans outstanding show a rising trend due to improper recoveries, then the financial position of the banks is not sound. By and large, the efficiency of the DCCBs can be assessed taking into account their performance in mobilizing adequate internal resources and meeting credit needs of the area (CRAFICARD, 1978).

COMPOSITION OF ADVANCES IN THE DISTRICT CENTRAL COOPERATIVE BANKS IN PUNJAB
The trends in advances outstanding, future projections and trends in proportionate share of different types of advances outstanding in the selected DCCBs, have been discussed

THE NAWANSHAHR CENTRAL COOPERATIVE BANK LTD, NAWANSHAHR
The trends and future projections for different types of loans outstanding in DCC B, Nawanshehar are presented in Table 5.1. It is first time encouraging to note that the total loans outstanding in DCCB, Nawanshehar i ncreased at an insignificant rate. This indicated that the outstanding in the bank neither increased nor decreased, rather these were stagnant over 2000-2010. Similarly, the insignificant growth in CCL(T) and other loans outstanding were found to be in correspondence with the trends in total loans outstanding The highest significant positive growth could be seen in case of vehicle loan outstanding i.e, 18.93 percent per annum, followed by 11.16 percent in case of crop loan, 6.86 percent in case of consumer durable loans and 6.63 percent for RCCL (F) while the lowest growth rate to the tune of 2.59 percent was found to be in case of non-farm sector loans outstanding.
Though, total loans outstanding would increase in future but insignificantly. Similar would be the trend in case of CCL (T) and other loans outstanding. However, there would be an increase of 47.16 percent in crop loan outstanding in 2016 over 2010. Similarly the outstanding in RCCL (F), non -farm sector loans, consumer durable loan and vehicle lo an would also increase in future. Therefore, there is a large scope of improvement in DCCB, Nawanshehar.
Trends in Proportionate Share of Different Types of Advances Outstanding:     The analysis given in Table 5.5 showed that total loans outstanding in DCCB, Amritsar increased from Rs. According to the quantum and significant level of growth rates, it may be estimated that in future, growth of outstanding in consumer durable loans and vehicle loans would be slower than that in other types of loans. Therefore, the bank should take appropriate steps to curb the increasing trend in advances outstanding. A view of Table 5.6 showed that on an average, the proportionate share of crop loan outstanding in the total loans outstanding was highest of the order of 43.45 percent, followed by other loans (20.34 percent), RCCL (F) (15.51 percent) and consumer durable loans (9.45 percent) while the lowest proportion to the tune only of 1.83 percent was secured by CCL (T) outstanding, followed by 3.74 percent by vehicle loans and 5.67 percent by non-farm sector loans outstanding. The growth r ate of proportionate share of outstanding crop loan was significantly positive while that of RCC -F, CD loans, vehicle loans and other loans were significantly negative. However, the non -significant growth rates in case of non -farm sector loans and CCL-T outstanding indicated stagnation in these loans. The analysis revealed that there is a scope of significant shift of outstanding advances from RCC-F, consumer durable loans, vehicle loans and other loans towards crop loan. According to the projections, the o utstanding crop loans share in total outstanding loans would go as high as 53.85 percent in 2016 and further to 55.63 percent in 2021. Therefore, there is a dire need to check strictly the fastest increase in crop loan outstanding in DCCB, Amritsar. According to the analysis shown in Table 5.7, the total loans outstanding increased from Rs. 19179.04 lacs in 2000 to Rs. 445320.81 lacs in 2010, registering a compound growth rate of 8.68 per cent per annum in DCCB, Ludhiana. The outstanding in crop loan, vehicle loan and other loans increased at significantly positive growth rate i.e. 12.36 percent, 43.98 percent and 22.25 percent respectively while the outstanding in non-farm sector loan and cash credit limit to traders declined significantly at the rate of -3.15 percent and -23.49 percent respectively, compounded annually. However, there wa s statistically no significant change in outstanding in RCCL (F) and consumer durable loans.

THE LUDHIANA CENTRAL COOPERATIVE BANK LTD, LUDHIANA
The existing trend showed that the total loans outstanding would increase to the level of Rs. 60449.75 lacs in 2016 i.e. 36.39 percent higher than 2010 and furthe r to Rs. 73206.75 lacs in 2021 i.e. 65.17 percent higher than 2010. This future increase in total loans outstanding might be attributed to the highly significant increase in crop loan liabilities and other loans outstanding while the outstanding in RCC -F, NFS and CCL (T) would fall drastically in the near future.

ZONE-III
THE MANSA CENTRAL COOPERATIVE BANK LTD, MANSA  Table 5.10 showed that the crop loan outstanding secured the major share in total loans outstanding. It was on the average, 60.30 percent, which, accordi ng to the existing trend, would not decline significantly in future. There is a scope for proportionate share of crop loans outstanding to remain stagnant. Similar was the pattern observed in case of RCC -F, non-farm sector outstanding, CD loans and other l oans.
On the other hand, the increase in the proportionate share of vehicle loans (17.18 percent) and CCL -T loans (19.63 percent) outstanding came to be significant and would further increase in future. The serious concern area remains the recovery of crop loan, RCCL (F) and other loan outstanding in DCCB, Mansa. The analysis shown in the Table 5.12 indicated that, on an average, the highest share i.e. 62.56 percent of total loans outstanding was secured by crop loans only. This was followed by 15.41 percent in case of other loans and 14.13 percent in case RCC-F. All other types of loans outstanding i.e. non -farm sector, consumer durable loans, vehicle loans and CCL(T) , together accounted for only 7.90 percent of the total loans outstanding. The share of outstanding in RCC -F, NFS loans, vehicle loans and CCL-T decreased significantly through 2000-2010 which would further decline in future while the share of crop loans, CD loans and other loans remained stagnant. Thus, DCCB, Bathinda should focus on the recovery these types of loans, and particularly keeping in view the highest quantum of crop loans outstanding, the bank sh ould make stringent efforts for the recovery of these loans.