CHAPTER-VII

FINDINGS, SUGGESTIONS
AND CONCLUSION
 CHAPTER-VII

FINDINGS, SUGGESTIONS AND CONCLUSION

7.1 Findings:

In this chapter, an attempt is made by the scholar to summarise the

findings o f this research study. These findings are based on chapterwise

discussion on the topic.

(i) In the first chapter, it is found that the economy o f Assam is

predominantly agrarian. About 99 percent area o f total land mass of the

state is rural and almost 50 percent of the total land is used for cultivation.

The growth rate o f 6.04 percent in Gross state domestic product

(GSDP) has been expected mainly due to the considerable growth of (over

5.0 percent) in sectors like-construction, Electricity, Transport, Communi­

cation, Trade, Business, Insurance and Banking Services etc.

In the pre merger stage the state of Assam had 5 (five) RRBs. These

RRBs were rendering yeoman’s service for terms of mobilization o f Sav­

ings and dispensation of credit.

At present, the state has two RRBs i.e., Assam Gramin Vikash Bank and

Langpi Dehangi Rural Bank. Majority of the bank branches are located in

rural areas. Therefore special focuss and emphasis must be given to provide

credit to the agricultural and allied activities for development o f economy

o f the state and the country as a whole.

[223]
 RRBs had thus proved their mettle as meaningful institutions for trans­

forming the rural economic credit scenario and could be able to inculcate

banking habit among the rural masses.

However, the structure and organizational arrangements of these RRBs

were changed w.e.f. 12* January 2006 for strengthening the Rural Banking

Structure and upliftment o f rural economy. Those RRBs were amalgamated

into a composite unit Known as Assam Gramin Vikash Bank.

(ii) The institution of Regional Rural Banks (RRBs) was created to meet

the excess demand for institutional credit in the rural areas, particularly

among the economically and socially marginalised sections. Rural banks are

quite helpful in the implementation of national objectives such as removal

of poverty and unemployment by providing credit under various schemes

specially designed by the central Government for rural areas like IRDP,

TRYSEM etc. Thus the banks play a very momentous role in economic

v development o f rural areas.

(iii) The study reveals that the various committees suggested different

recommendations regarding the structural changes o f RRBs in various

sectors.

(iv) It is also found that a large number o f research studies have been

carried out by the research scholars on Regional Rural Banks. Thus, this

study is entirely based on structural Re-organization o f Rural Banking

system in Assam.

(v) With the objectives in view, the Regional Rural Bank has been playing

active role in development o f credit for the weaker section of the society.

Emphasis has been given on micro finance through SHG Linkage Programme.

[224]
 (vi) It is also observed that both Assam Gramin Vikash Bank, Spon­

sored by United Bank o f India and Langpi Dehangi Rural Bank in Assam

sponsored by State Bank o f India have been continuously giving a special

thrust on the formation of SHG and for their credit linkage by the bank in

order to evolve supplementary credit strategy for benefiting rural poor and

to inculcate banking habits both thrift as well as credit.

(vii) It is found that under the Financial inclusion scheme, all the

branches of Assam Gramin vikash Bank have actively participated in open­

ing o f ‘No Frill’ Accounts to low income groups and to those who are so

far deprived of formal banking facilities.

(viii) Financial inclusion is a great step to alleviate poverty in India. A

pilot project has been sanctioned under Financial inclusion during 2008-09,

for installing four ATMs, one in each district of Tripura by the Tripura

Gramin Bank for technology upgradation to reach out to the excluded

population.

(ix) It is found that Assam Gramin Vikash Bank, the only amalgamated

Regional Rural Bank o f the N.E. Region has emerged as the largest bank

in the State o f Assam in terms of branch network. Further, interms of

numbers o f districts covered, Assam Gramin Vikash Bank tops the list of

RRBs in the entire country.

(x) Assam Gramin Vikash Bank gives maximum emphasis on develop­

ing the rural economy by providing credit for agriculture, trade, industry and

other productive activities, particularly to the small and marginal farmers,

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agricultural labourers, artisans and small entrepreneurs, SHGs, etc. and also

to transacts business as defined in section 18 (2) of the RRB Act, 1976 and

section 6 (I) of the Banking Regulation Act, 1949.

(xi) It is observed that various committees were appointed by different

authorities from time to time to examine the working of the RRBs and

suggest recommendation for their Re-structuring.

(xii) One of the most important features observed during the year 2008-

09 is that six branches of Assam Gramin Vikash Bank namely Nalbari.

Silchar, Mangaldoi, Dhemaji, Guwahati and Barpeta have crossed Rs. 50.00

crore mark in terms of total business.

Bhakatpara Mahila Sangha, a Farmers Club Promoted by Bhakatpara

branch of Assam Gramin Vikash Bank has been selected for National

Award’ during 2008-09.

(xiii) From this study it is seen that the priority sector advances have

increased from Rs. 877.78 on 31-3-2008 crore, to Rs. 1031.57 crore on 1 1-

3-2009 and advances to agriculture have also increased from Rs. 276.10

crore on 31-3-2008 to Rs. 322.78 crore on 31-3-2009 (22.55% and 23 .07 %

of total advances respectively).

(xiv) The study reveals that banks total business has achieved the

turnover of Rs.5080.57 crore as on 31-03-2010. With this, Assam Gramin

Vikash Bank could make its place in the category (IV) RRBs, as per ! lit

policy approved by the Govt. India, in terms of both volume of business

as well as no. of branches.

[226 ]
 (xv) It is also found that Micro-Finance institutions (MFI) have worked

as a bridge between the banking sector and the rural poor. The programme

has covered more than 7 crore poor households, making it the largest MF

Programme in the world.

(xvi) The major initiatives were taken by Assam Gramin Vikash Bank

during the year 2008-09 to reduce NPAs through compromise settlement

policy.

(xvii) After the announcement o f restructuring o f RRBs by the GOI,

Sponsor banks have taken positive steps regarding various policy initiatives

for efficient and effective functioning o f the Regional Rural Bank (RRBs)

as vibrant rural financing institutions.

(xviii) The ALM system was introduced in 12 RRBs from 1 April, 2007.

NABARD is monitoring the progress in implementation of ALM system for

all banks.

(xix) There has been a revolution in technology dissemination in every

walk of life and the banking sector is no exception. It is foreseen that by

2012 almost every one will have broadband connection and cellphone.

(xx) Assam Gramin Vikash Bank was able to wipeout their accumulated

loss of Rs. 8.76 crore up to 31-3-2008 in the year end 31-3-2009. Because

the AGVB earned net profit in the year 1st April, 2008 to 31-3-2009 Rs. 25.50

crore and in the year 01-4-2009 to 31-3-2010, bank also earned a net profit

of Rs. 37.45 crore. So, it was of great help for the bank to improve its

network progressively within the state.

[227]
 ( x x i ) B I R D a n d R T C o f N A B A R D c a n d r a w u p m a s s i v e t r a i n i n g

p r o g r a m m e s i n v a r i o u s f i e l d s o f o p e r a t i o n s o f R R B s i n c o m p u t e r i s e d

e n v ir o n m e n t .

( x x i i ) I t i s f o u n d t h a t a s o n 3 1 M a r c h , 2 0 0 9 t h e t o t a l n u m b e r o f R R B

s t o o d a t 8 6 ( 4 5 a m a l g a m a t e d a n d 4 1 s t a n d a l o n e , i n c l u d i n g t h e n e w R R B

s e t u p i n p u d u c h e r r y d u r i n g 2 0 0 7 - 0 8 ) .

( x x i i i ) D u r i n g 2 0 0 8 - 0 9 , 8 1 R R B i m p r o v e d t h e i r p e r f o r m a n c e a n d r e ­

p o r t e d g r o s s p r o f i t o f R s . 1 7 4 5 .8 4 c r o r e , a n i n c r e a s e o f 2 6 p e r c e n t o v e r

2 0 0 7 - 0 8 . T h e r e m a i n i n g 5 R R B d e s p i t e c o n t i n u i n g a s l o s s - m a k i n g e n t i t i e s

r e d u c e d t h e i r l o s s e s b y 3 9 p e r c e n t t o R s . 3 3 .8 5 c r o r e .

( x x i v ) I t i s o b s e r v e d t h a t t h e r e c o v e r y p e r f o r m a n c e o f R R B s i n t h e

n o r t h e r n ( 8 5 % ) a n d s o u t h e r n ( 8 0 % ) r e g i o n s m a i n t a i n e d t h e i r r e c o v e r y

p e r f o r m a n c e a b o v e n a t i o n a l a v e r a g e a s o n 3 0 th J u n e 2 0 0 8 . R R B i n T a m il

N a d u R e g i s t e r e d t h e h i g h e s t r e c o v e r y ( 9 4 % ) , f o l l o w e d b y P u n j a b ( 9 1 % ) ,

M i z o r a m ( 8 7 % ) a n d K e r a l a ( 8 3 % ) .

( x x v ) I t is a l s o f o u n d t h a t t h e a g g r e g a t e g r o s s N P A o f a ll R R B i m p r o v e d

f r o m 6 .5 5 p e r c e n t , a s a t e n d M a r c h , 2 0 0 7 t o 6 .0 5 p e r c e n t a s a t e n d M a r c h ,

2 0 0 8 a n d f u r t h e r t o 5 .5 8 p e r c e n t o n 3 1 M a r c h , 2 0 0 9 . D u r i n g 2 0 0 8 - 0 9 , 5 6

R R B r e c o r d e d t h e g r o s s N P A l e v e l b e l o w t h e n a t i o n a l a v e r a g e .

( x x v i ) T h e R e g i o n a l R u r a l B a n k s a l s o c a m e u n d e r t h e f r e e i n t e r e s t r a t e

p u r v i e w , a n d t h e y a r e a l s o i n s t r u c t e d b y t h e R e s e r v e B a n k o f I n d i a t o f i x

u p t h e i n t e r e s t r a t e o n d e p o s i t a n d a d v a n c e o f t h e i r o w n o n ly .

[
2 2 8 ]
 (xxvii) The study reveals that where the business performance of RRBs

has not been raised or where the NPA ratios have not been reduced the

banks have not been able to improve the operational performance, as a

result accumulated loss have increased.

(xxviii) From this survey it is found that the repayment of instalment

by the borrower is fairly regular.

(xxix) It is found in the study that the recovery position of RRBs in

comparison to other states o f India except Tamilnadu, Punjab, Mizoram and

Kerala.

(xxx) The structural consolidation o f RRBs has resulted in formation of

new RRBs, which are financially stronger and bigger in size in terms of

business volume and outreach. They will thus be able to take advantage of

the economies o f scale and reduce their operational cost. With the advan­

tages o f local feel and familiarity acquired by the RRBs, they would now

be in a better position to achieve the objectives of rural development and

financial inclusion.

(XXXI) Measures have also been taken to address the manpower

challenges in the RRBs. A committee under the chairmanship of Dr. Y.S.P.

Thorat, the then chairman, NABARD was setup to examine and lay down

parameters for staffing norms in RRBs and suggest norms and procedures

for new recruitments. The report of the committee is under examination of

Government. It is hoped that many o f the manpower related issues would

be taken care o f after the recommendations o f the committee are

implemented.

[229]
7,2 Suggestions :

(i) For increasing the productivity of the staff and the branches it is

necessary that the top management, middle management and staff at lower

level should all be sincere, hardworking and committed to their job require­

ments. When they will work with dedication, naturally the productivity of

the RRBs will increase sharply as there is a great potentiality for it. More­

over, it is necessary to maintain regular interaction with the different level

o f employees from desk of senior management. Imparting training should

be regular feature to enhance the capability of employees according to the

requirement of the Job and also to service in competition.

(ii) For increasing the loan recovery the bank authorities should encour­

age the managers to work hard with sincerity and honesty. To have good

recovery of loans it is necessary that loans are sanctioned only in genuine

cases after carefully analysing the viability of the projects.

After the sanction of loans to the agricultural labourers/small farmers/

marginal farmers/artisans and small businessmen, the bank officials should

properly monitor the project o f the borrowers at regular intervals and

wherever it is found that the project of any borrower is going in wrong

direction, the proper needed guidance should be provided, So that the

borrowers’ project may not incur any loss. This will save the borrower from

becoming defaulter o f the bank and his income will also increase. Hence

the bank would be quite successful in playing its role in eradication of

poverty from rural areas.

[230]
 (iii) Effective supervision and monitoring over borrowers are necessary

for achieving the objective of projects for which loans are granted and also

for timely recovery o f loans. For this purpose monthly visit to the borrow­

ers should meticulously be conducted regularly. It will enhance the loan

quality and thereby improve collection of loan due for payment. It is also

necessary to discuss the problems faced by the borrowers regarding the

business o f the project and the economic impact o f the project financed

by the bank. If the farmer/borrower is not in a position to generate addi­

tional income, he may be guided by the expert staff of the bank. In

appropriate cases they can take help from the respective department of the

Govt, who are always ready to provide logistic support to the farmers.

(iv) For smooth functioning of the branch the bank’s higher officers

should extend full cooperation to the branch managers and they should be

encouraged for increasing the business of the branch honestly.

(v) The Assam Gramin Vikash Bank has recently introduced a scheme

o f life insurance to obtain the insurance risk policy from the insurance

company against the life o f the loanee those who avails the house building

loan (HBL). If any misfortune happens to the loanee it will reduce the risk

factor of the survivor and bank as well. But at the time of field survey it

is observed that the same is not introduced for other type of borrowers.

So, it is felt that the scheme should be introduced for all type of borrowers.

(vi) Since Assam Gramin Vikash Bank had large clientele in their port­

folio they should provide ATM facility for the benefit of them. During the

course of study the researcher came across many customers of the bank

[231]
d e s i r i n g i m m e d i a t e A T M s e r v i c e f r o m t h e b a n k i n c l u d i n g c o r e b a n k i n g

s o l u t i o n ( C B S ) .

( v i i ) D u r i n g m y s t u d y i t i s r e v e a l e d t h a t R R B e m p l o y e e s , i r r e s p e c t i v e o f

t h e i r d e s i g n a t i o n , a r e l e s s e x p o s e d t o t h e d a y t o d a y b a n k i n g k n o w l e d g e in

c o m p a r i s o n t o t h e i r c o u n t e r p a r t i.e . n a t i o n a l i z e d b a n k . T h e r e a s o n b e i n g

t h e y a r e l e s s e x p o s e d t o t r a i n i n g a n d i n t e r a c t i v e s e s s i o n d u e t o d e a r t h o f

t r a i n i n g i n s t i t u t i o n s p e c i a l l y t o d e v e l o p t h e e m p l o y e e s o f G r a m i n b a n k . I t

i s f e l t t h a t a t l e a s t o n e t r a i n i n g i n s t i t u t i o n m u s t b e e s t a b l i s h e d i n n o r t h e a s t e r n

r e g i o n w i t h i t s p r e s e n c e i n G u w a h a t i .

( v i i i ) T h e e s t a b l i s h m e n t o f G r a m i n b a n k w a s f o r t h e b e n e f i t o f t h e

p e o p l e l i v i n g b e l o w p o v e r t y l i n e a n d t o a m e l i o r a t e t h e p o v e r t y o f t h e

p o o r e s t o f t h e p o o r . F u r t h e r t o d e v e l o p b a n k i n g h a b i t a m o n g t h e r u r a l

p e o p l e w h o w e r e n o t a q u a i n t a t e d w i t h t h e b a n k i n g s e r v i c e s .

( i x ) H o w e v e r , d u r i n g m y s t u d y i t is f o u n d t h a t t h e r e i s a d e p a r t u r e f r o m

t h e b a s i c o b j e c t i v e s o f t h e G r a m i n B a n k . I n s t e a d o f p r o v i d i n g c r e d i t t o t h e

p o o r e s t o f t h e p o o r t h e G o v e r n m e n t o f I n d i a c h a n g e d t h e p o l i c y a n d

a l l o w e d t h e G r a m i n B a n k t o f i n a n c e 6 0 % t o t h e i r t a r g e t g r o u p a n d 4 0 % to

n o n t a r g e t g r o u p . T h i s d e p a r t u r e , o f c o u r s e w a s r e q u i r e d f o r t h e e c o n o m i c

v i a b i l i t y f o r t h e G r a m i n B a n k .

( x ) W h i l e u n d e r t a k i n g t h i s s t u d y i t i s f o u n d t h a t t h e r e is s t r u c t u r a l

c h a n g e s o f R e g i o n a l R u r a l B a n k s . T h e o r i g i n a l i d e a w a s t o e s t a b l i s h o n e

G r a m i n b a n k i n e a c h d i s t r i c t o f a s t a t e . W h e r e p o p u l a t i o n i s l e s s i n a s t a t e

t h e G r a m i n b a n k w a s t o b e e s t a b l i s h e d c o m p r i s i n g m o r e t h a n o n e d i s t r i c t s .

W h e r e t h e s t a t e i s t h i n l y p o p u l a t e d , s p e c i a l l y t h e h i l l s t a t e , t h e o n e G r a m i n

[ 232 ]
b a n k w a s s u g g e s t e d f o r c o v e r i n g t h e e n t i r e s t a t e . T h e i d e a w a s t o c o v e r

a l l c r e d i t s t a r v e d p e o p l e a n d t o s a v e t h e m f r o m t h e g r e e d y m o n e y l e n d e r .

N o w G o v e r n m e n t h a s s u g g e s t e d o n e R R B i n e a c h s t a t e t o m a k e t h e m v i a b l e .

O w i n g t o t h i s s t e p i t i s f o u n d t h a t t h e n u m b e r o f R R B s w a s r e d u c e d f r o m

1 9 6 t o 8 1 . T h i s i s t h e s t r u c t u r a l c h a n g e s o f R R B s c o n s i d e r t o m a k e t h e m

v i a b l e . S i n c e R R B s a r e l o o k i n g a f t e r t h e c r e d i t n e e d o f t h e r u r a l p e o p l e

s p e c i a l l y v i a b i l i t y m u s t b e l o o k e d i n t o . H e r e i t c a n b e s t a t e d t h a t t h e

G o v e r n m e n t i s m o v i n g i n r i g h t d i r e c t i o n .

( x i ) I t i s a l s o s e e n t h a t t h e s t r u c t u r a l r e - o r g a n i z a t i o n i s n e c e s s a r y t o

i m p r o v e t h e w o r k i n g f u n d o f t h e G r a m i n b a n k . T h e G o v e r n m e n t a l s o

i m p r o v e t h e c a p i t a l b a s e o f t h e G r a m i n b a n k w i t h s h a r e c o n t r i b u t i o n b y t h e

p r o m o t e r s i n t h e i r r e s p e c t i v e s h a r i n g b a s i s ( C e n t r a l G o v t . 5 0 % , r e s p e c t i v e

s t a t e G o v t . 1 5 % a n d s p o n s o r b a n k 3 5 % ) . H e r e m y s t u d y a l s o r e v e a l s t h a t

a f t e r t a k i n g s t e p s a s m e n t i o n e d h e r e i n a b o v e m o s t o f t h e G r a m i n b a n k s h a v e

a t t a i n e d v i a b i l i t y . A s s a m G r a m i n V i k a s h B a n k i s o n e o f t h e b a n k s w i t h e a r n

n e t p r o f i t o f 3 7 .4 5 c r o r e a f t e r w i p i n g t h e i r a c c u m u l a t e d l o s s . M y s u g g e s t i o n

i s t h a t t h e G o v e r n m e n t i n c o n s u l t a t i o n w i t h R e s e r v e B a n k o f I n d i a a n d

N A B A R D i n j e c t m o r e c a p i t a l t o G r a m i n b a n k a n d a l s o t o m a k e a v a i l a b l e

a d e q u a t e f u n d t o w i p e o u t t h e a c c u m u l a t e d l o s s e s o f G r a m i n b a n k . I t w i l l

h e l p t o m a d e G r a m i n b a n k m o r e h e a l t h y a n d c a n b e a b l e t o p r o v i d e

a d e q u a t e s e r v i c e t o t h e p e o p l e o f t h e s o c i e t y .

I f t h e a b o v e s u g g e s t i o n s a r e c a r r i e d o u t i n t h e i r t r u e s p i r i t , t h e A s s a m

G r a m i n V i k a s h B a n k i n P a r t i c u l a r a n d R R B s i n g e n e r a l w i l l v e r y s o o n

a c h i e v e t h e e c o n o m i c v i a b i l it y .

[ 233 ]
7.3 Conclusion :

RRBs which were setup with the intention o f extending credit to the

rural poor have succeeded in the objective of taking banking services to the

villages, but have however, failed to make a clear dent on credit to the rural

poor during the past 30 years of their existence. This has to be viewed in

the context o f the policy framework for rural development adopted in India

with focus on income and employment generation and poverty alleviation.

The renewed emphasis on agricultural and rural development by the

Government o f India would lead to a growing demand for different types

o f financial services in the rural areas, as financial needs of the rural

economy becomes diversified. The present structure of rural credit may not

be able to cater to the same. RRBs would be called upon to play a greater

role in providing such services due to their rural character and feel. RRBs

have to take over a larger share of credit disbursements calling for much

larger resource mobilization, as also greater efforts for their institutional

strengthening.

After nearly three decades of existence, the RRBs are facing many

constraints warranting an overhaul and serious consideration on the part of

the policy makers for their strengthening. This can be achieved not only

through recapitalisation, but by simultaneously establishing a revamped

legal, regulatory and supervisory framework with emphasis on high quality

o f governance and management that recognises the real challenges

[234]
confronting the RRBs. Only then can RRBs be expected to meet the

expectations o f becoming vibrant rural financial institutions capable of

meeting the growing requirements o f rural India.

With the advantage of having largest network of branches in the rural

Assam, it is the duty and obligation of Assam Gramin Vikash Bank to serve

the rural masses, who have been the deprived o f and denied all banking

facilities for augmentation o f agricultural production, uplift of the downtrod­

den employment o f rural youth, with commitment to the sacred task of all

out development of the rural Assam. The bank’s initiatives have strength­

ened our culture and aim to be the Top Class Rural Bank of the country.

It is also the obligation of the Assam Gramin Bank to financially include

as well as to spread banking literacy to each household and initiative

appropriate intervention for economic uplift of the people of Assam through

agriculture, micro, small and medium enterprises, to accomplish the man­

date set out for the RRBs and thus emerging as a strong, vibrant and socially

committed ‘Mass-class Bank’.

After an in-depth examination of the prevailing scenario in rural banking

operations, expected role of RRBs, amalgamation of RRBs at state level,

level o f computerization in various RRBs, financial health of RRBs and also

future challenges before RRBs as a one-stop entire banking service provider,

the Task Force recommended the following:

• All RRBs need to take up computerization of major areas of

operations.

[235]
 • RRBs should recruit IT professionals and

• Undertake immediate assessment of training needs o f all trainable

employees/officers and also arrangements for regular/crash training

programme.

In conclusion we can say that there is an imperative need for Indian

banks to address the issues relating to the establishment of ALM system in

right earnest and make it an effective tool for total Balance Sheet Manage­

ment. Therefore, Asset Liability Management is essential to both domestic

and international banking.

The success o f the RRB experiment o f our state could set a unique

example o f successful rural financial institutions with its set objectives.

[236]