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Banking industry plays a vital role in the rapid and all round development of the economy. They act as an engine for economic growth by providing multifarious services. In the global world the relationship between banks and economic activities are very close. Majority of the economic transactions are carried out with the help of banking world.
In a country like India, rural sector plays a significant role in the economy. It affects directly or indirectly, almost all the economic activities of the country. Rural sector can be rightly considered as the backbone of the economy. So the rural development cannot be neglected in the developing era. The government of India is trying its level best to help the rural sector through public sector commercial banks. The government is trying hard to encourage the farmers providing finance for seeds, irrigation, electricity, tools, pesticides etc. The commercial banks are playing an important role in the rural development. Now a day's both priority sector as well as non-priority sector are testing the fruits of banking industry. In recent years, rural development has emerged as a distinctive field of policy and practice and of research.
Statement of the Problem:
The rural sector has a tremendous potential of employment generation. Moreover it gives a high contribution to the national income. The Reserve Bank of India introduced different lending policies of commercial banks for the priority sectors. Not only these it also gives direction of opening more and more branches in rural areas especially in the backward rural areas with the objectives of achieving lending targets. Hence it is important to review the performance of the PSBs for rural development and to trace the growth of lending through different schemes introduced by PSBs.
To find out the most backward areas in Bharuch district, the researchers evaluated the district's eight talukas i.e. Amod, Ankleshwar, Bharuch, Hansot, Jambusar, Jhagadia, Vagra and Valia with one another considering 24 parameters. The parameters are (1) Number of cultivators, (2) Number of agricultural laborers, (3) Number of Cottage and House-hold industries, (4) Number of other occupations, (5) Employment, (6) Population / Square kilometer, (7) Literacy Level, (8) Backward Population, (9) Number of SSI units, (10) Capital / Unit in the SSI, (11) Number of Medium and Large Scale units, (12) Capital / Unit in Number of Medium and Large Scale units, (13) Roads, (14) Irrigation, (15) Number of Villages without Electricity, (16) Number of Agricultural Co-operative Societies, (17) Number of Post Offices, (18) Number of Public Libraries, (19) Desolated Villages,(20) Number of Cities,(21) Villages without Primary Schools, (22) Total Railway Tracks,(23) Number of Railway Stations,(24) Number of Banks.
It is found that Valia taluka is the most backward taluka, with 13 parameters of backwardness and Jhagadia taluka is the second most backward taluka with 11 parameters of backwardness. Government has also declared these two talukas as the most backward talukas in the district. Hence, these two talukas have been chosen for the study purpose.
Scope of the Study:
The study is restricted to the public sector commercial banks of two talukas namely Valia and Jhagadia talukas of Bharuch district only. There are total 14 branches of three public sector commercial banks in the selected talukas. BOB has 8 branches, SBI has 4 branches and BOI has only 2 branches in Valia and Jhagadia talukas of Bharuch district. Twelve years data, i.e. from 1998-99 to 2009-10, has been analyzed for the study purpose.
Objectives of the Study:
The main objectives of the study are as below:
To highlight the performance of commercial banks of Valia and Jhagadia talukas of Bharuch district during the study period.
To evaluate the pre and post socio-economical condition and impact of the loan taken by them from the banks.
The study is based on primary data as well as secondary data. Secondary data are collected from the branches of BOB, SBI and BOI from Valia and Jhagadia talukas of Bharuch district. Twelve years data, from 1998-99 to 2009-10 have been analyzed for the study purpose.
Primary data is collected with the help of questionnaires. For the primary data analyses total 1350 samples (beneficiaries) from different branches have been randomly selected to evaluate the pre and post socio-economical condition and impact of the loan taken by them from the banks. The analysis and findings are based on these data.
For the analyses growth rate and Credit-Deposit ratio are used.
For the total incensement of 12 years period, i.e. from 1998-99 to 2009-10, following formula has been applied:
Growth Index = ( Loan disbursement of 2009-10 X 100) - 100
Loan disbursement of 1998-99
Secondary Data Analyses:
The secondary data is collected from the public sector banks' branches of Valia and Jhagadia talukas of Bharuch district (Gujarat). Data analysis highlights the following findings:
Table-1: Branch wise Total Deposits (Rs. in Lakh)
Sources: BOB, SBI, BOI Branches
Graph-1: Branch wise Total Deposits
Above table-1 indicates total branch wise deposits containing current deposits, saving deposits and fixed deposits. The table clearly shows that the total deposits of each bank increase year after year during the study period. In 2009-10, BOB has Rs. 14033.45 lakh total deposits compared to Rs. 3516.99 lakh total deposits in 1998-99. It is a good sign for the healthy banking development that about 300 per cent increasment has been noted during the period in the total deposits of BOB. In the same way SBI has increased its deposits from Rs. 1182.52 lakh to Rs. 8203.53 lakh during the study period. SBI has made about 594 per cent improvement during the study period. BOI possessed Rs. 2019.74 lakh total deposits in 2009-10 against Rs. 803.44 lakh in 2004-05. If it is considered the whole scenario of the deposits of PSBs of Valia and Jhagadia talukas, the total deposits increased from Rs. 4699.51 lakh to Rs. 24256.72 lakh, increasing by 416 percent during the twelve years. The table clearly points out that the increment in deposit was faster during 2004-05 to 2009-10 than 1998-99 to 2003-04.
Table-2: Branch wise Deposit Mobilization (Rs. in Lakh)
Sources: BOB, SBI, BOI Branches
Graph-2: Branch wise Deposit Mobilization
It is very clear from the above table that the total deposits have been increased year after year during the study period and mobilization of deposits was about Rs. 300 lakh to Rs 400 lakh during 1998-99 to 2009-10. From 2004-05 the banks have started the use of ICT in the rural branches of the Bharuch district and so that banks' deposits were mobilized Rs. 1500 lakh to Rs. 4000 lakh during 2004-05 to 2009-10. Particularly BOB has performed marvelously in deposit mobilization.
Table-3: Branch wise Total Advances (Rs. in Lakh)
Sources: BOB, SBI, BOI Branches
Graph-3: Branch wise Total Advances
Table -3 focuses on the branch wise total advances in Valia and Jhagadia talukas of the Bharuch district from 1998-99 to 2009-10. BOB has increased its advances from Rs. 1635.48 lakh to Rs. 12571.38 lakh, increasing by 669 per cent, during the study period. SBI increased its advances from Rs. 358.25 lakh to Rs. 5813.45 lakh, increasing by 1523 per cent and BOI's advances increased from Rs. 633.52 lakh to Rs. 911.44 lakh during 2004-05 to 2009-10. The total advances were Rs. 19296.27 lakh in 2009-10 compared to Rs. 1993.73 lakh in 1998-99. Advances were increased Rs. 292.65 lakh, Rs, 160.07 lakh, Rs. 155.38 lakh, Rs. 300.84 lakh and Rs. 43.84 lakh during 1999-2000 to 2003-04 respectively, but from 2004-05, the advances were increased Rs. 1903.53 lakh, Rs. 1520.34 lakh, Rs. 2519.36 lakh, Rs. 3457.07 lakh, Rs. 3545.98 lakh and Rs.3403.48 lakh during 2004-05 to 2009-10 respectively.
Table-4: Branch wise Credit-Deposit Ratio (Per cent)
Graph-4: Branch wise Credit-Deposit Ratio
Table - 4 clearly indicates that the Credit - Deposit ratio of PSBs of Valia and Jhagadia talukas has been increasing year after year during the study period. It is very clear that CD ratio has increased about 42 per cent per year during 1998-99 to 2003-04, but there after from 2004-05 to 2009 -10 the CD ratio has increased by 52 per cent to 80 per cent per year. BOB has increased its CD ratio more effectively than any other banks during the study period. The data also reveals that the CD ratio of BOI has declined continuously during the study period.
Primary Data Analyses:
Sample of 100 customers had been taken from each branch and questions related to banking services were asked. The analyses of these primary data show findings as below:
1. Majority of the people get employed through agriculture.
2. Majority of the beneficiaries (52.30 %) are not highly educated.
3. Amongst the total beneficiaries, 72.44 % respondents believe that their level of consumption has increased after the proper utilization of the loan.
4. 85% beneficiaries prefer to borrow money from banks than others, like relatives; money lenders etc. if the expenditure exceeds income.
5. Most of the people prefer to borrow money from banks because of less interest rate, taken easy and their co-operation with the people.
6. 77.82 % farmers possess less than or equal to 10 acres of land.
7. 74.71 % farmers have the irrigation facility.
8. 44.74 % respondents do not have sufficient tools. They get tools on hire or from relatives or try to do their work without tools or do their work with traditional methods of cultivation.
9. 97.19% beneficiaries are not burdened with inherited debt.
10. 87.80 % loan has been given to priority sector in the selected talukas.
11. 80.96% beneficiaries get sufficient credit from bank.
12. Among the total beneficiaries 99.19% utilized loan for the same purpose for what they had taken.
13. 61.63% respondents are at the opinion that agriculture production or productivity has been increased due to finance.
14. 66.44% respondents' living standard has raised.
15. 55.86% respondents' socio-economic condition has changed positively.
16. 96.59% beneficiaries repaid the loan within stipulated time period.
17. 71.51 % of loan takers repaid loan from their income.
The study concludes that the commercial banks working in Valia and Jhagadia talukas have been playing an active role for the rural development, especially during 2004-05 to 2009-10. Various schemes are introduced by banks to improve saving habits and to fill the gape of credit need especially in rural and remote areas. It is very clear from the study that from 2004-05, there has been noticeable improvement in the bank wise total deposits, bank wise deposit mobilization, bank wise total advances and bank wise credit- deposits ratio.
From the primary data analyses it is also concluded that majority of the people who have taken loans from the banks are truly benefited. Their income, employment, level of consumption, production or productivity, socio-economic condition also changed very positively due to bank finance. Banks have truly proved themselves the pillar of economic development, especially in the backward rural areas.
Considering the following recommendations, banks can surely perform well and can even perform better.
1. The data reveals that there are large number of small and marginal farmers so the banks should provide sufficient finance to small and marginal farmers at the concessional rate of interest.
2. The data indicates that there are large numbers of illiterate or low educated people so, the banks should make people aware, especially to illiterate and low educated farmers and rural artisans about the different schemes and should be provided proper financial assistance.
3. The banks should give attention towards the need of equipment and try to provide sufficient finance for getting tools.
SCOPE FOR FURTHER RESEARCH:
1. The same study can be done for the whole district.
2. The same study can be done for the whole state as well as for the national level.
3. One can conduct the study for the further time period.
ATM : Automated Teller Machine
BOB : Bank of Baroda
BOI : Bank of India
CD Ratio : Credit-Deposit Ratio
ICT : Information Communication Technology
PSBs : Public Sector Commercial Banks
SBI : State Bank of India