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CHAPTER VIII

SUMMARY OF FINDINGS AND RECOMMENDATIONS

Pages

224-239

Contents

8.1 Introduction 225

8.2 Findings 227

8.2.1 Scheduled Commercial Banks at the National Level 227

8.2.2 Scheduled Commercial Banks in Kerala 229

8.2.3 Attitudes of Bank Managers 230

8.3 Conclusion 233

8.4 Recommendations 235

8.5 Further Areas of Research 239

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CHAPTER VIII

SUMMARY OF FINDINGS AND RECOMMENDATIONS

8.1 Introduction

Rural development has always remained the focal point of economic development of the

country since the beginning of the planning era. In the Indian context, it is a societal

problem rather than an economic problem. The objective of rural development is to

promote economic activities by ensuring effective utilization of rural resources, and

ensuring adequate human welfare in the rural life. Bank finance is an inevitable factor

determining and facilitating the utilization of rural resources and economic activities. The

concept of social banking was introduced by the Central Government in 1960s and

major banks were nationalized and clear instructions were given for opening branches in

rural unbanked areas with the clear understanding that banks should act as a good friend

of rural people.

But it is distressing to note that the BSRs introduced in India changed the attitudes of

banks and they now provide top priority for profitability and wealth accumulation. Their

participation in rural areas in the form of number of branches, growth of deposits and

credits, and CD ratios declined during the post reform period. The thrust on agriculture

credit also declined. The flow of rural deposits to urban areas created problem of shortage

of funds in rural activities. So the low CD ratio is a hot issue in the state for the last few

years. At the same time, profitability of SCBs improved considerably in the post reform

period. In this context, the impact of BSRs on the performance of SCBs in rural credit is

analysed.

The objectives of the study are to evaluate the impact of banking sector reforms on

deposits, advances, priority sector advances and agriculture credit of SCBs in India and

Kerala, to identify the problems felt by bank managers relating to priority sector advances

and government schemes lending, to examine the attitude of bank mangers towards

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priority sector advance, government schemes lending and banking sector reforms and to

assess the level of support of bank managers towards banking sector reforms and to

formulate recommendations.

Keeping in view the above objectives, following hypotheses were formulated and tested in

the study.

1. There is no significant difference in the rate of growth in demand, time and total

deposits, total advances, priority sector advance, agricultural lending and SSI

advances of scheduled commercial banks in pre and post reform periods at

national level.

2. There is no significant difference in the rate of growth of deposits and advances of

scheduled commercial banks in Kerala in pre and post reform periods.

3. There is no significant difference in the rate of growth of deposits and advances,

priority sector advance and agricultural lending of scheduled commercial banks

between Kerala and India.

4. The bank managers have a neutral attitude towards priority sector advance and

government schemes lending.

5. The attitude of bank managers towards banking sector reforms is not significantly

different.

6. There is no significant difference in the level of support of bank managers

towards banking sector reforms.

The study was both empirical and analytical. Data were collected from both primary and

secondary sources. For a primary survey at the branch level of scheduled commercial

banks, a sample of 90 branch offices (out of 361) from Ernakulam and Idukki districts

were selected. Sixty-five branch offices were selected from Ernakulam District (40 PSBs

and 25 Private Sector banks) from 15 blocks and 25 branch offices (16 PSBs and 9

Private sector banks) from 8 blocks in Idukki District. The sample of 90 units constitutes

25 percent of the total units in the source list.

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Secondary data were collected from published and unpublished records of Government

Departments, RBI publications, Lead bank offices, SLBC offices, branches and regional

offices of scheduled commercial banks, NABARD offices and periodicals like Yojana,

kurushetra, prajanan, Economic and Political Weekly etc.

The Tools of analysis applied were Ratios, Percentages, Averages, Compound growth

rates, Gutman split-half technique, Multi Dimensional Scaling, F test, Students t test,

Likert analysis, Analysis of variance and Chow test.

8.2 Findings

The major observations of the study are summarized into three heads.

8.2.1 Scheduled Commercial Banks at the National Level

It was found that there was a decline in the rate of growth of scheduled commercial bank

branchesfrom 69 percent in the pre-reform period to 11 percent in the post reform period.

The number of rural branches increased from 17656 to 35206, nearly 100 percent, in the

pre-reform period whereas it declined to 32200 in the post reform period. Further, the

proportion of rural to total branches increased from 49.4 percent to 58.5 percent in prereform period whereas it declined to 48 percent in the post reform period

The analysis made in respect of deposits revealed that there was a significant decline in

the rate of growth of time, demand and total deposits of CBs in the post reform period.

The share of PSBs in total deposits declined from 90.8 percent to 87.6 percent in the pre-

reform period and further to 75.1 percent at the end of 31st

march 2002. But the share of

private sector banks increased from 4.4 percent to 15.3 percent in the post reform period.

The participation of RRBs was found to be insignificant and the participation of foreign

banks declined in the post reform period.

It was found that there was a significant increase in the rate of growth in total loans and

advances given by SCBs from 15 percent in the pre reform period to 15.6 percent in the

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post reform period. The analysis also revealed that the share of rural credit in total loans

and advances increased from 11.9 percent to 14.2 percent in the pre reform period;

however, it steadily declined in the post reform period.

The CD ratio of SCBs showed a declining trend both in pre and post reform periods. It

was noticed that the rural CD ratio which was hovering around 60 percent in the pre

reform period sharply declined to 41.8 percent towards the end of the post reform period.

However, though metropolitan CD ratio showed a declining trend during the pre reform

period, it sharply increased in post reform period.

In the pre reform period, priority sector credit hovered around 40 percent, whereas it

declined to 34.5 percent by the end of the post reform period under study. It was also

found that in none of the years in the post reform period, the minimum PSA rate of 40

percent was achieved. The exponential growth rate of PSA found to have declined from

17.6 percent in the pre reform period to 14.1 percent in the post reform period. The

decrease in the rate of growth was found to be significant.

Agriculture advance was around 17 percent of net bank credit in the pre reform period

and it declined to 11.9 percent in the post reform period. Here also, the prescribed

minimum rate of 18 percent was not achieved in any of the years during the post reform

period. Further, the compound rate of growth declined from 17 percent in the pre reform

period to 12.7 percent in the post reform period. It was found that the decrease in the rate

of growth in the post reform period was statistically significant.

SSI advance was around 16 percent of net bank credit in the pre reform period, which

declined to 8.6 percent in the post reform period. The compound growth rate declined

from 17.6 percent in the pre reform period to 11.2 percent in the post reform period and

this decline was found to be significant.

The analysis of advances to different category of farmers revealed that the compound

growth rates in advances to marginal, small and large farmers declined from 18.4 percent,

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20.2 percent and 16.1 percent respectively in the pre reform period to 9.5 percent, 10.9

percent and 10.2 percent respectively in the post reform period. It was found that the

decline in the rates of growth was significant in all categories of farmers.

8.2.2 Scheduled Commercial Banks in Kerala

The analysis of deposits showed that the share of domestic deposit in total deposit

declined from 75.4 percent to 70.7 percent in the pre reform period and further to 54.4

percent in the post reform period. In contrast to the trend at the national level, it was

found that the compound growth rate in deposits increased from 12.9 percent in the pre

reform period to 15.7 percent in the post reform period and this increase was found to be

statistically significant. There was significant increase in growth rates in both domestic

and NRE deposits also.

Similar to the trend in the growth rate of deposits, there was significant increase in the

growth rate in advances also. Still it is below the growth rate at the national level. It was

also found that there was significant difference between the growth rates at the national

level and at the state level in respect of both deposits and advances.

The average CD Ratio of SCBs in the state declined from 60.8 percent in the pre reform

period to 45 percent in the post reform period. The All India CD Ratio of SCBs also

declined from 62.8 percent to 58 percent during the same period. It was also found that

the deposits and advances of total PSBs, state bank group, nationalized banks and private

sector banks increased at higher compound rates in the post reform period and this

increase was significant.

During the post reform period priority sector advances in the state increased from 42.2

percent to 49.35 percent of the total bank credit, whereas at the national level the rate

declined from 36.17 percent to 31.38 percent. In none of the years during the post reform

period, the rate was not below the prescribed minimum of 40 percent in the state. It was

higher than that at the national level in the post reform period.

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Although a 5.5 fold increase was noticed in agriculture advance during the post reform

period, the percentage of agriculture declined from 16.1 percent to 14.1 percent. The

target of 18 percent was not achieved in any of the years during the post reform period.

But the rate of agriculture advance in the state was higher than that of at the national

level.

The state level compound rates of growth in priority sector advance, agriculture advance

and SSI advance were 15.8 percent, 13.5 percent and 12.4 percent respectively. These

rates were found to be significantly higher than the corresponding rates at the national

level.

8.2.3 Attitudes of Bank Managers

To know the attitude of bank managers towards priority sector advances and banking

sector reforms and to realize the problems in priority sector advances and government

schemes lending, primary data were collected with help of a structured questionnaire. Ten

statements were used to evaluate the attitude of bank managers towards priority sector

advances and ten problem statements were used to evaluate the intensity of PSA

problems felt in the respondent bank branches. In evaluating the problems felt in

government schemes lending, eleven problem statements were used. To know the attitude

of bank managers towards the banking sector reforms, eight statements were used and for

evaluating the level of support of bank managers towards banking sector reforms thirteen

statements were used.

It was found that more than 70 percent of the respondent branches provided priority

sector advance of more than 40 percent of the net bank credit. With regard to agriculture

advances, it was found that more than 60 percent of the respondent branches provided

agriculture advances at the rates higher than 20 percent of their total advances. The share

of private sector banks was comparatively low compared to that of SB group and NBs.

The SSI advances of respondent branches are found satisfactory, as the share of the

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majority of them was around 20 percent. In advances to small business, it was noted that

26 percent of the respondents provided between 20 percent and 30 percent, and 19

percent provided between 30 percent and 40 percent of the total advance. It was also

found that 41 percent of the managers provided only less than 10 percent and 35 percent

provided between 10 percent and 20 percent of the total advance as self-employment

loans. In education loan, it was found that more than 60 percent of respondent branches

provided only less than 10 percent of total loans as education loans.

It was noticed that default in loans was not at all a problem in respondent branches as the

rate of default was only 10 percent for agriculture, SSI, small business and self

employment loans for around 50 percent of respondent branches. The same trend is found

in different bank groups also.

It was also realized that 60 percent of respondent branches have only less than 10 percent

default in education loans and 23 percent of branch managers provided no option as it is a

new segment of lending in their branches.

It was found that more than 90 percent of managers responded positively for retaining

PSA and the same pattern of agreement is found in all bank groups. It was also found that

majority of managers were satisfied in priority sector advance. Among different bank

groups, the managers of PSBs were found more satisfied whereas some dissatisfaction

was in existence in private sector banks. Majority of managers were satisfied with

government scheme lending also and much difference was not found in different bank

groups in satisfaction levels.

It was realized from the analysis that the bank managers have a positive attitude towards

PSA.It was also noticed that there is significant difference in the attitudes of bank

managers in Ernakulam and Idukki districts. Although the managers in two districts have

positive attitudes towards PSA, the managers having more favourable attitudes are found

in Ernakulam district. It is also realized that even though positive attitudinal managers are

found in Idukki district, the responses of negative attitudinal managers are found

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stronger. The bank category wise analysis reveals that there is no significant difference in

the attitudes of bank managers in different category of banks towards PSA.

Multi dimensional scaling was used to analyze the problems felt by bank managers in

priority sector advances and government schemes lending and found the intensity of

problems in the following order.

The main problems of SCBs in priority sector advances are deliberate default, lack of

adequate commitment from the part of borrowers, poor recovery of loans, misutilisation

of loans and lack of sufficient security to offer by the borrowers.

The district wise analysis showed that the main problems in PSA of SCBs in Ernakulam

district are poor recovery of loans, lack of adequate security and deliberate default from

borrowers. But the main problems in Idukki district are identification of beneficiaries and

non co-operation of bank staff.

The banks group wise analysis showed that main problems of PSA in SB group are

identification of beneficiaries and non co-operation bank staff. But the main problems in

nationalized banks are misutilisation of loans, identification of beneficiaries and lack of

commitment from borrowers. The main problems in private sector banks are lack of

adequate security, frequent changes in government policy, poor recovery of loans and

misutilisation of loans.

The main problems felt by SCBs in government schemes lending are identification of

beneficiaries, ignorance of beneficiaries, lack of monitoring and lack of training.

From the district wise analysis, it was found that main problems in government schemes

lending of SCBs in Ernakulam district are identification of beneficiaries and ignorance of

beneficiaries. But the main problems in Idukki district are lack of monitoring, lack of

training in jobs and ignorance of beneficiaries.

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The bank group wise analysis revealed that the main problems in government schemes

lending in SB group are lack of monitoring, lack of training, ignorance of beneficiaries

and identification of beneficiaries. In nationalized banks the main problems in

government scheme lending are lack of monitoring, ignorance of beneficiaries,

identification of beneficiaries and political interference. The main problems of private

sector banks in government scheme lending are political interference, taking of loans for

availing subsidies and lack of training.

With regard to the attitudes of bank managers towards Banking Sector Reforms it was

realized from the analysis that bank managers have a neutral attitude towards BSRs. It

was further realized that the attitudes of bank managers towards BSRs in Ernakulam and

Idukki districts are not significantly different. The bank category wise analysis also

shows that there is no significant difference in the attitudes of bank managers towards

BSRs in different bank groups.

The analysis on the level of support of bank managers towards Banking Sector Reforms

revealed that the bank mangers are not neutral towards banking sector reforms; they are

marginally supporting the reform measures. The district wise analysis revealed that there

is no significant difference in the level of support of bank managers towards BSRs in

Ernakulam and Idukki districts. From the bank group wise analysis it was found that

there is no significant difference in the level of support of bank managers towards BSRs

in different bank groups.

8.3 Conclusion

Policy decisions may not be cent percent fruitful. Here also the effects of BSRs are not

entirely painless. There are both achievements and pitfalls as a result of banking sector

reforms. On the one side, the reform measures made certain positive changes. The

profitability and financial health of SCBs considerably improved, capital base widened,

assets quality enhanced, operating expenses and NPA level considerably declined. On the

other side, there are certain pitfalls. The functional performance of SCBs worsened at the

national level in the post reform period. The growth rate of deposits and advances and the

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share of rural deposits and advances to total declined in the post reform period. However,

the share of metropolitan deposit and advances to total increased. The all India rural CD

ratio also declined, but the metropolitan CD ratio sharply increased.

The compound rate of growth in the amount of priority sector advance, agriculture and

SSI advance also declined significantly at the national level in the post reform period.

The compound rate of growth in the amount of advances to marginal, small and large

farmers also declined. These show that a paradigm shift has taken place in bank

advances, particularly in priority sector advance. Banks want to play safe and so their

priorities in lending are directed towards new vistas like housing, vehicles, consumer

durables, construction etc. So the emerging needs of agriculture and industry are getting

back seats.

In contrast to the national level results, the deposits and advances increased at higher

compound rate in Kerala in the post reform period. Although the CD ratio showed a

declining trend, some positive signs are found at the end of the post reform period. But it

is distressing to note that the CD ratio of the Kerala based private sector banks is lower

than that of PSBs, though they have a good capital base. The compound rate of growth in

the amount of priority sector advances increased, but the share of agriculture and SSI

advance declined in the post reform period. However, the state level rates are higher than

the national level rates.

In a developing economy like India, social goals should go side by side with economic

goals to alleviate poverty by providing credit facilities to priority sector, particularly to

the weaker sections of the society. So the functional performance of SCBs needs to be

revitalized and strengthened. The saving led SHG-bank linkage programme initiated by

NABARD in 1992 as a pilot project for linking 500 SHGs to banks, has now been

recognized as the largest and fastest growing micro finance programme in the world and

as on 31 st march 2004, bank credit has been extended to 10,79,091 SHGs (Yadav

2005).The mission of NABARD is to link one million SHGs with the overall banking

system by the year 2008, of course, a welcome approach. Further, as part of its thrust on

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agriculture, Union Bank of India also started to open village knowledge centers and rural

training centers in all districts in the country for the benefit of farmers.

More over the need of PSA was greatly accepted by the respondent managers of banks as

more than 90 percent of them agreed to retain PSA and were found satisfied in their

priority sector advance. But their support to BSRs was found only marginal. They did not

support the reform measures like reduced importance to directed lending, reduction of

subsidies in PSA, entry of foreign banks, reduction of government control and

disinvestment of PSBs. They want to continue the PSA as such. So even in this

globalised banking scenario, PSA and agriculture credit would continue to play a crucial

role in the growth and development of our economy. The imbalance in credit needs to be

immediately corrected and the excessive importance provided to profit and market by

SCBs should be reduced. At the same time, it is true that an organization cannot sustain

without profit and financial stability. So the need of the hour is a good balance between

economic and social performance of SCBs. There fore, at present, the challenge of policy

makers is to identify the future risks and reduce the negative impact of reform measures

on the society by strengthening the banking sector with uptodate technology driven

measures.

8.4 Recommendations

The researcher likes to propose the following recommendations in order to solve the

problems deeply felt in the banking sector.

1. Rural development projects tend to suffer if the banking policy makers do not

adopt a bolder approach to rural credit. The number of rural branches should be increased

so as to give more credit to farmers. The SCBs should act as best friends of rural people.

2. The vast potentials of mobilizing deposits in rural areas should be effectively

utilized by designing suitable action plans.

3. The choice between formal and informal credits is mainly determined by their

accessibility in rural areas. The informal sector is characterized by simplicity and

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flexibility. So the formal institutions of SCBs must be made freely accessible to farmers

and poorer sections of the society.

4. There is a tendency for formal credit institutions to flow more easily to

agriculturally developed regions and to relatively larger farmers, leaving the backward

regions and small farmers to the informal moneylenders. This should be corrected and

steps should be taken to enhance credit facilities to small and marginal farmers.

5. Steps should be taken to ensure successful management of credit by providing

right type and right amount of loans to right type of clients. This helps to enhance

productivity and quality of lending, so that credit deployed ensures the expected level of

production, employment and income, which will guarantee timely repayment of loans

and recycling of loanable funds.

6. Production, processing and marketing should be integrated with credit so that

there is value addition and ready market for farm products.

7. The pre credit and post credit appraisals should be strengthened.

8. The CD ratio of SCBs should be improved. Since the CD ratios of Kerala based

private sector banks are below the national average and state average, they should

immediately change their attitude and start to fulfill their social obligations towards the

state.

9. The directives from the top to reduce NPAs and improve profitability by adopting

newer prudential norms actually forced SCBs to cut short their risky lending. So they

neglected the priority sector. The government should provide adequate directives to

banks for giving due weightage to priority sector advance.

10. Along with economic goals of profitability, importance should be given to social

goals also for alleviating poverty and ensuring sustainable development in the society.

11. Agriculture credit should be improved.

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12. The allied segments of agriculture like pig farming, cattle farming, poultry

farming, floriculture, aquaculture etc. should be promoted in rural areas by giving timely

credit so that the economic conditions of rural people can be improved.

13. The reverse transmission of funds from rural to urban and metropolitan areas

should be arrested and steps should be taken to deploy the rural deposits in the rural area

itself.

14. Towards fulfilling the social objectives, SCBs should provide adequate financial

support to government sponsored programmes like SGSY, PMRY etc. and ensure their

constant monitoring for effective utilization of funds.

15. As most bank managers argued that the low CD ratio and rejection of loans weredue to the non-viability of projects, the banks should assist small entrepreneurs in rural

areas in preparing feasible project reports.

16. More credit should be provided to rural industrialization as it helps the effective

utilization of rural resources, generate employment and improve the economic conditions

of people.

17. Rural women entrepreneurship should be promoted by providing financial

assistance to their activities as women empowerment helps to establish a better social

order in the area.

18. SCBs should extend co-operation to Panchayath Raj Institutions for the integrated

development of rural areas.

19. As Self Help Groups (SHGs) like Kudumbasree units are found successful in rural

areas, the programme of SHGs linkage of SCBs should be widened.

20. Bank customers meet should be convened periodically to discuss bank matters,

problems of customers, schemes of loans etc. for providing adequate information to

customers that helps to establish cordial relationship and result timely repayment of

loans.

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21. The functions of State Level Banker Committee (SLBC), District Level Bankers

Committee (DLBC) and Block Level Bankers Committee (BLBC) should be regenerated

and strengthened so that timely information can be provided to banking authorities for

decision making and also for supporting researchers relating to banking activities.

22. Lack of security is a problem felt in banks, particularly in government schemes

lending. The poor people cannot have adequate security to offer. So the government

should guarantee such loans.

23. Misutilization of loans is common in government sponsored schemes and it can

be arrested through a proper system of monitoring.

24. The problem of identification of beneficiaries can be tackled through a propersystem of preliminary evaluation.

25. Default in loans is a major problem of banks, especially in government sponsored

schemes. Proper awareness should be created for prompt repayment and incentives or

interest subsidy should be provided for prompt repayment of loan amounts. At present

revenue recovery proceedings are taken in default cases of less than Rs. 10 lakhs and

cases of above Rs. 10 lakh referred to Debt Recovery Tribunals (DRTs). So the

government should simplify and speed up the revenue recovery proceedings and

strengthen the work of DRTs for ensuring confidence among the people in the working of

banks.

26. The concept of write offs should be removed from the minds of people and the

government should be bold enough to declare that no more write off in bank loans is

possible.

27. The political interference in sanctioning loans should be avoided.

28. Deliberate default is usually made by influential borrowers. So the managers

should be careful in ensuring sufficient realizable security from them at the time of

granting loans.

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29. Most of the government scheme loans were taken for availing subsidies. This can

be prevented by close monitoring of loans and subsidy should be provided only to the

viable and living units.

The above suggestions, it is expected, would provide adequate background to the policy

makers for correcting the adverse trends found in the banking sector and helps to ensure

sufficient funds for rural development.

8.5 Further Areas of Research

To study the impact of Banking and Financial Sector Reforms on rural credit, only SCBs

were taken into account in this study. There are RRBs, Co-operative banks and informal

agencies in the rural area for providing loans and advances to rural people. So the study

can be extended to these agencies and, thus, the topics for further study can be framed as

under:

1. Role of Regional Rural Banks in rural credit.

2. Role of Co-operative banks in rural credit.

3. Role of Informal institutions in rural credit of Kerala.

4. A study on the financial performance of Scheduled Commercial Banks in India.

5. Service marketing of Scheduled Commercial Banks in Kerala.

6. Rural customer satisfaction in bank finance- A study with special focus on Kerala.

7. Agriculture credit in Kerala- A comparative study of commercial banks and co-

operative banks.

8. Role of commercial banks in rural industrialization of Kerala.

9. Role of commercial banks in women entrepreneurship development in Kerala.

10. Performance of Regional Rural Banks in Kerala.

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WEBSITES

www.rbi.com

www.censusindia.org

www.keralaind.com

http:// www.kudumbashree.org

http:// www.sjsry-kudumbashree.org

www.ssi.nic.in

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Appendix

QUESTIONNAIRE

This questionnaire is part of the study on Banking Sector Reforms and Rural Credit

Delivery System. May I request you to kindly fill in the questionnaire? I assure you that

the information collected through this questionnaire will be used only for research

purpose and the identity of the officials involved in this questionnaire will not be

disclosed.

Muvattupuzha. Mohanan M.K M.Com. M.Phil,

02/05/2002 Lecturer Selection Grade,

Department of Commerce,

Nirmala College,

Muvattupuzha.

Phone: Off: 0485 2833497,

Res: 2830063.

Profile of the Respondent

Name : Designation:

Age : Below 30 30 to 35 35 to 40 40 to 45

45 to 50 Above 50

Monthly income : Less than Rs. 20000 20000 to 25000

25000 to 30000 Above 30000

Educational Qualifications : Graduate Post Graduate

Professional(Specify) Technical (Specify)

Name of the bank :

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1. Please indicate the participation of your branch in priority sector advance as percentage

to total advance (Please tick in appropriate columns).

Less than 10% 10% - 20% 20% - 30% 30% - 40% Above 40%

2. Out of the total priority sector advances, what is the percentage of disbursement ineach of the following categories?

Statements Less than

10%

10%- 20 % 20%-30% 30%-40% 40%-60% Above

60%

Agriculture and allied

activities

Small Scale Industries

Small business and

retail trade

Professional and Self

employment

Education

3. Roughly, what is the level of default in your branch in respect of the advances in

each of the following categories?Statements Less than

10%

10%-20 % 20%-30% 30%-40% 40%-60% Above

60%

Agriculture and allied

activities

Small Scale Industries

Small business and

retail trade

Professional and Self

employment

Education

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4. Please indicate your level of agreement or disagreement to the following

statements. (Please tick in appropriate columns).Statements Strongly

agree

Agree Neutral Disagree Strongly

disagree

a) Credit to priority sector should continue

to be given special attention

b) The rural economy has come of age and

hence special consideration is unnecessary

today

c) There is huge demand supply gap in rural

credit delivery system

d) Priority sector advance leads to increased

Non Performing Assets and therefore, it

should be discontinued.

e) The people in rural areas are still

exploited by money lenders and thus, there

is a need to save them from the clutches of

money lenders

f) Priority sector advance affects the health

of the entire banking system and hence thelevel of credit for priority sector should be

scaled down.

g) For fast agricultural and rural

development, the multi-agency rural credit

delivery system needs to be strengthened

h) Banks find it difficult to recover the loans

granted to priority sector

i) In priority sector advance, security

position of beneficiaries doesnt create

much problem.

j) Ethics of repayment in the loanees of

priority sector advance is low.

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5. Do you agree with the statement that in the present economic set up, priority sector

advance or directed lending should be retained?

Strongly agree Agree Neutral Disagree Strongly disagree

6. Is the priority sector advance in your bank satisfactory?

Highly satisfactory Satisfactory Satisfactory to some extent

Not satisfactory Not at all satisfactory

7. Do you face the following problems in priority sector advance?

Problems Very much

(more than

75%)

Much

(30% -

75%)

To some

extent

(10% - 30%)

Little

(Less than

10%)

Not at

all

a) Identification of

beneficiaries

b) Lack of commitment

from borrowers

c) Misutilisation of loans

d) Rigid norms of banks

e) Non co-operation of

bank staff

f) Lack of sufficient

security

g) Frequent changes in

government policy

h) Deliberate default from

the part of borrowers

i) Poor recovery of loans

j) Crop failure and natural

calamities

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8. Is the performance of your branch in the government schemes lending like IRDP,

JRY, PMRY etc. satisfactory?

Very much Much To some extent Little Not at all

9. Do you face the following problems in the government schemes lending?

Problems Very much

(more than

75%)

Much

(30% - 75%)

To some

extent

(10% - 30%)

Little

(Less than

10%)

Not at all

a) Identification of

beneficiaries

b) Ignorance of

beneficiaries

c) Lack of training in

jobs

d) Lack of

monitoring

e) Misutilisation of

loans

f) Political

interference

g) Lack of security

h) Poor recovery

i) Lack of initiative of

loanees to repay the

loan

j) Increased Non-

Performing Assets

k) Taking loans by

beneficiaries for the

sole purpose of

availing subsidies

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10. Please indicate your agreement or disagreement with the following statements.

Statements Strongly

agree

Agree Neutral Disagree Strongly

disagree

a) Banking sector improved the

capability of the banking system to

mobilise resources and effectiveness

of its lending.

b) The Government of India showed

too much hastiness in implementing

reforms in the banking sector

c) Banking sector reforms ensure

adequate funds to the real sector of the

economy.

d) Banking sector reforms have

created unnecessary competition in the

banking sector

e) Banking sector reforms

strengthened the organizational

structure of banks.

f) Frequent changes in interest rates on

deposits and loans have created

problems in accounting and

dissatisfaction among customers

g) Banking sector reforms have

greatly benefited customers of banks

h) Banking sector reforms have forced

the bankers to give undue importance

to profitability

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11. Please indicate your level of support for the following measures adopted by the

government since 1990.

Problems Very high high Neutral Low Very low

a) Deregulation of interest rates

b) Reduction of SLR and CRR

c) Reduced importance to

directed lending

d) Increased competition

e) Increased financial

supervision by RBI

f) Reduction of subsidies in

priority advance

g) Disinvestments of PSBs

h) Increased participation in

financial markets

i) Entry of foreign banks

j) Voluntary retirement scheme

k) Increased automation

including internet

l) Emphasise on corporate

lending, consumer credit and

capital market

m) Reduction of governmentcontrol

12. If you have any suggestions or comments relating to rural credit, please specify.

.

....