Structure

As at the end of 2000-01, the long term co-operative credit structure consisted of State Cooperative Agriculture and Rural Development Banks (SCARDBs) in 20 States /Union Territories with 732 Primary Cooperative Agriculture and Rural Development Banks (PCARDBs)/ branches of SCARDBs. Of the 20 SCARDBs, nine have unitary structure with branches, twelve have federal/mixed structure with PCARDBs and their branches. Four PCARDBs in Orissa State were liquidated during 2000-01 and twenty one PCARDBs were merged in Assam SCARDB during the year. In the states not served by the LT structure, separate sections of the State Cooperative Banks look after long term credit needs. In the North Eastern Region, only three states (Assam, Manipur & Tripura) are served by the LT Structure. Chhattisgarh SCARDB has been formed out of MPSCARDB and has started functioning from 01 November 2000 following the formation of new state of Chattisgarh.

The total membership (Ground level) of the LT structure aggregated 140.74 lakh of which, borrowing members at 98.50 lakh constituted around 69.9%.

In the LT structure, the average government contribution to the share capital of SCARDBs formed only 13.2% of the total as on 31 March 2001 as against 51% recommended by the ACRC. However, government contribution was higher than all India average in respect of SCARDBs of Tripura (86%), Assam (77.4%), Tamil Nadu (40.5%), Pondicherry(61.8%), Bihar (45.9%), Orissa (43.7%), Himachal Pradesh (26.5%), J&K (29.6%) and West Bengal (29.9%). The government share capital to the total share capital of SCARDBs ranged from Rs.0.03 crore (Manipur) to Rs. 15.95 crore (Bihar) and that in respect of PCARDBs from Rs. 0.33 crore (Punjab) to Rs. 24.04 crore (Haryana) as on 31 March 2001. During 2000-01, the PCARDBs in Karnataka, Kerala, Rajasthan , Orissa and West Bengal received substantial contribution of Rs.0.68 crore, Rs.1.45 crore, Rs.1.20 crore, Rs.1.60 crore and Rs.1 crore respectively as share capital.

The LT structure continued to be dependent on external financial agencies for augmenting its resources. About 79.1% and 81.9% of the total resources of the SCARDBs and PCARDBs, respectively were in the form of borrowings. The outstanding borrowings of the LT structure as on 31 March 2001 were of the order of Rs.13431 crore (SCARDBs) and Rs.8412 crore (PCARDBs) registering an increase of 8.3% and 10.0%, respectively over the previous year. Paid up capital of SCARDBs and PCARDBs as on 31 March 2001 was 21.9% and 44.2% of the Owned Funds, respectively. State Government holding in the capital base of SCARDBs and PCARDBs constituted 13.2% and 17.2%, respectively. The deposits of the SCARDBs stood at Rs.535 crore and those by the PCARDBs at Rs.235crore as on 31 March 2001. During 2000-01 SCARDBs achieved a growth rate of 9.6% in mobilisation of resources while PCARDBs could achieve growth rate of 11.2% as compared to previous year growth rate of 13.7% and 14.0% respectively.

As regards the Long-term Structure, six States viz. Uttar Pradesh (25.6%), Punjab (12.2%), Rajasthan (8.8%), Tamil Nadu (9.0%), Kerala (12.9%) and Haryana (10.8%) accounted for nearly 79.3% of the total term credit disbursements by SCARDBs. There was a steep decline in the amount of loans issued by Bihar (-66.6%), Pondicherry (-39.9%), Tripura (-34.6%) and Jammu & Kashmir SCARDBs (-33.3%) during 2000-01 as compared to 1999-2000.While Maharashtra SCARDB which had registered a steep decline in the amount of loans issued during 1999-2000 registered a substantial increase during 2000-01 from Rs. 609 crore to Rs.948 crore (55.7%), Orissa, Manipur and Assam SCARDBs could not disburse any amount during 2000-01 as in the earlier years due to their deteriorating financial position and continued default to NABARD. The loans outstanding as on 31 March 2001 stood at Rs.12596 crore (SCARDBs) and Rs.8352 crore (PCARDBs) registering a growth of 8.9% and 9.7% respectively over the previous year. The loans issued by SCARDBs as also by PCARDBs during 2000-01 increased by 2.1% and 2.5% respectively.

The aggregate recovery of SCARDBs declined from 62% in 1999-2000 to 58% during 2000-01. At the PCARDBs level, the recovery level has progressively declined from 60% in 1998-99 to 58% in 1999-2000 and further declined to 53% during 2000-01. Further, 13 SCARDBs and 464 PCARDBs had recovery level of less than 60% as on 30.6.2001. Overdues in absolute terms registered an increasing trend in both SCARDBs and PCARDBs. The overdues as on 31 March 2001 increased by Rs.533 crore (SCARDBs) and Rs.319 crore (PCARDBs) as compared to the position as on 30 June 2000. It is a matter of serious concern that at the PCARDBs level, 41.4% of the total overdues were overdue for more than 3 years. In the case of SCARDBs the same stood at 39.7%. Overdues constituted 16.5% and 20% of the total loans and advances outstanding at the SCARDB and PCARDB levels respectively during 1999-2000.

In regard to the overdues in the long-term structure, the Capoor Committee has suggested that the SCARDBs/PCARDBs be allowed the right of foreclosure of mortgages in the case of willful defaulters. This, the committee feels should substantially improve recovery position of such institutions and pave the way for securitisation of mortgage loans to raise resources from the market at reasonable rates. The committee is also of the opinion that there is a need to evolve compromise/ settlement procedure for closing of long pending overdue loans.

Keeping in view the scheme for OTS announced for Public Sector Banks by RBI, detailed guidelines for OTS were finalized by the National Bank during 2001-02 in consultation with RBI for the co-operative banks both in the ST and LT structures. Accordingly all the banks were advised of the detailed guidelines in this regard. Most of the banks have adopted the scheme, with the approval of their competent authorities. The salient features of the scheme are as under:

• The cut off date for NPAs has been fixed as 31 March 1998 and cut-off level amount is Rs. 5 lakhs

• NPAs under all loans and advances will be covered and the scheme will be operative up to 31 March 2002 (which was subsequently extended upto 30.09.2002).

• The guidelines should be uniformly followed by the banks without discrimination.

• Wherever the state governments have formulated One-Time Settlement Scheme it would be necessary to issue instructions / orders modifying their scheme to conform to the above scheme.

• The amount recovered under the scheme should be passed on in repayments to the higher financing institutions immediately.

• No financial support from the Government, RBI or the National Bank would be available for implementation of the scheme.

During the years 1998-99 and 1999-2000, 9 of the 19 SCARDBs earned profits. During the year 2000-2001, 10 SCARDBs reported profit and 7 SCARDBs were in loss. Further, only 284 of the 732 PCARDBs earned profits during 2000-2001 as against 284 PCARDBs (reporting banks - 733) in 1999-2000.

The NPAs as on 31 March 2001 constituted 20.39% (SCARDBs) and 24.1% (PCARDBs) of their total loans and advances outstanding as on that date. The SCARDBs in Punjab and Haryana reported 'NIL' NPAs. The aggregate NPAs as on 31 March 2001 were estimated at Rs.2568.01 crore (SCARDBs) and Rs.2004.77 crore (PCARDBs).

The accumulated losses as on 31 March 2000 stood at Rs.776 crore (12 SCARDBs) and at Rs.784 crore (PCARDBs in 9 States). As on 31 March 2001 the accumulated losses of SCARDBs (11 States) stood at Rs.891 crore and those of PCARDBs at Rs.1061 crore (10 States). As on 31 October 2001, 4 SCARDBs had defaulted to NABARD to the tune of Rs.319.36 crore. It is apprehended that due to the steadily eroding financial health, some more SCARDBs may default to NABARD in the near future.

[Source: Website of NABARD]