Chandragouda Marigoudar

PERFORMANCE OF PRIMARY AGRICULTURAL CO-
OPERATIVE CREDIT SOCIETIES IN DHARWAD

DISTRICT OF KARNATAKA
CHANDRAGOUDA MARIGOUDAR
DEPARTMENT OF AGRICULTURAL ECONOMICS

COLLEGE OF AGRICULTURE, DHARWAD
UNIVERSITY OF AGRICULTURAL SCIENCES,
DHARWAD – 580 005
JUNE, 2011
PERFORMANCE OF PRIMARY AGRICULTURAL
CO-OPERATIVE CREDIT SOCIETIES IN DHARWAD
DISTRICT OF KARNATAKA
Thesis submitted to the

University of Agricultural Sciences, Dharwad
in partial fulfillment of the requirements for the
Degree of
MASTER OF SCIENCE (AGRICULTURE)

In
AGRICULTURAL ECONOMICS
By
CHANDRAGOUDA MARIGOUDAR

UNIVERSITY OF AGRICULTURAL SCIENCES,
DHARWAD – 580 005
JUNE, 2011
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD
CERTIFICATE
This is to certify that the thesis entitled "PERFORMANCE OF PRIMARY

AGRICULTURAL CO-OPERATIVE CREDIT SOCIETIES IN DHARWAD
DISTRICT OF KARNATAKA " submitted by Mr. CHANDRAGOUDA
MARIGOUDAR, for the degree of MASTER OF SCIENCE (AGRICULTURE) in
AGRICULTURAL ECONOMICS, to the University of Agricultural Sciences, Dharwad
is a record of research work done by him during the period of his study in this university
under my guidance and supervision and the thesis has not previously formed the basis
for the award of any degree, diploma, associateship, fellowship or other similar titles.
DHARWAD
JUNE, 2011 (S. S. GULEDGUDDA)

CHAIRMAN
Approved by :
Chairman :
(S. S. GULEDGUDDA)
Members : 1.
(L. B. KUNNAL)
2.
(H. BASAVARAJA)
3.
(BASAVARAJ BANAKAR)
4.
(K. V. NATIKAR)
Acknowledgement
“Gratitude takes three forms, A feeling from the heart, an expression in words and a
giving in return……..”
At last the moment has come to look in to deeper layer of my heart which is
filled with the feeling of togetherness and loveliness; consolation and satisfaction. Some
are permanent and some are momentary but both involve a member of the persons to
whom I acknowledge my worm regards.
I have no words to express my heartfelt love and affection for persistent

encouragement and blessing of my parents Shri. Ninganagouda, smt. Neelavva and my
dear brothers Bharamagouda, and Basanagouda and my lovely Vidya and Vinay for
their never ending support, affection, love and sacrifice that forms the soul for this body
and responsible for what I am Today. I am eternally grateful to them for all that they
have done for me.
It is always immense and immeasurable pleasure to applaud the auspicious

personally who has the character of kind benevolence, consummate and care taking
affaire in other welfare. Here I am in hunt for express my pleasurable feelings and
thankfulness to my well wisher cum chairman of advisory committee,
Dr. S. S. GULEDGUDDA, Associate Professor, Department of Agricultural
Economics for his thought provoking , inspiring and valuable guidance in planning and
execution of my research work.
My diction is too poor to translate my gratitude to Dr. L. B. KUNNAL,

Professor and University Head of Agricultural Economics, Dr. H. BASAVARAJA,
Professor, Department of Agricultural Economics, and Dr. BASAVARAJ BANKAR
Professor and Head, Department of Agri-business Management and
Dr. K. V. NATIKAR, Associate Professor, Department of Agricultural Extension
Education, Agriculture College, Dharwad who served as Members of my Advisory
committee for their sagacious suggestion and constructive criticisms during the period
of study and in improving the manuscript
I am highly indebted to Dr. S. M. Mundinamani, Professor and

Head Department of Agricultural Economics, Dr. B. L. Patil, Dr. G. N. Kulkarni,
Dr. (Smt.) Jayashri A. Handigol Smt. R. l. Bilagi, Department of Agricultural
Economics, and Dr. P. A. Kataraki, Professor, Dr. A. R. S. Bhat, Professor and Head,
Department of Agricultural Statistics, College of Agriculture, Dharwad, for their help
and encouragement during the study and research work.
I am immensely grateful to Shri. Ashok. Sobanad and Shri Pujar staff of KCCB,
Dharwad, Smt. Shridevi Kulkarni, staff of Assistant Director of Co-operative Dharwad,
And very special thanks to Dr. B. S. Nadagoudar Ex. DE of UAS Dharwad. for their
kind help and strong encouragement during the study.
This thesis has come to reality because of the wonderful friends of my life thanks
from the core of my heart, to all of them and would like to register for their wonderful
guidance, extreme patience, sound and faithful advice, constant encouragement, care,
love and kindness and for all the trouble they took for my sake.
As said “dearest is the friends love” who’s volunteered help at time of need for
achieving my cherished goal and pave me to offer my loveable and debted thanks to
Shrikant, Kirankumar, Dinesh, Manjunath, Samay, Satyaranjan, Lingaraj, Anand,
Avinash, Mahesh, Sangmesh, Kumar, Pavankumar, Shivayogi, Salini, Kusuma, Resmi,
Prajna and Saraswati and who have been with me in my endeavor, for their constant
help during work helped me to pursue my research work with precision
I am very glad to mention sincerely support from my senior friends Aravind

Kammar, Vinod, Savitha, Netrayani, Pavitra, Vijay, Sachin and Ramachandra,
Manjunath, S. S., Teju Singh, Sudarshan, Subhash, and my dear junior friends and all
my UG friends who encouraged me during my post graduation
I extend my special thanks to the members of SNEHA TANDA Vitobha, Mallu,

Shantveer, Vijayalaxmi, Veeresha, Chandru, Basu, Anand, Nagayya, Sateesh, Yallappa,
Rajugouda, Guru, Roopa B., Neelakka, Archana, Shwetha, Ashwini, Manjula,
Abhilasha, Channappagouda, Renuka, S. K., Asha A., Shruti, Girija, Soumya, Sneha,
Neha, Pooja, Varuni, Shilpa, Jayalaxmi, Kavyashree,
I convey my whole hearted thanks to Mr. Arjun, Mr. Kalmesh (M/s Arjun Computers)
and Kumbar binders for his meticulous typing of the manuscript neatly, timely and more vitally
his co-operation and affection towards
………….omission of any names doesn’t the lack of gratitude. Ending inevitable for all
good work it is time to end the acknowledgement.
DHARWAD
JUNE, 2011 (CHANDRAGOUDA MARIGOUDAR)
Affectionately Dedicated to
My Beloved Parents,
Late Grandma Shantamma & Grandpa
Teachers and
Linganagouda Patil,
Friends
CONTENTS
Sl. Chapter Particulars

No.
CERTIFICATE
ACKNOWLEDGEMENT
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDIX
1. INTRODUCTION
2. REVIEW OF LITERATURE
2.1 Performance Evaluation through Growth Rate Analysis.
2.2 Performance Evaluation through Principal Component
Analysis
2.3 Performance Evaluation through Financial ratios
2.4 Recovery and Overdue Analysis.
3. METHODOLOGY
3.1 Description of the study area
3.2 Sampling procedure
3.3 Nature and sources of data
3.4 Analytical techniques employed
3.5 Concepts used in the study
4. RESULTS
4.1 Performance of PACS’s
4.2 Lending norms and pattern of credit flow of PACS’s
4.3 Recovery performance of the PACS’s
4.4 Assessment of the working of PACS’s
5. DISCUSSION
5.1 Performance of the PACS’s
5.3 Recovery of PACS’s
5.4 Assessment of the working of the PACS’s
6. SUMMARY AND POLICY IMPLICATIONS
REFERENCES
LIST OF TABLES
Table
Title
No.
3.1 Salient features of the study area
3.2 Land utilization pattern in the study area and sample taluks
(2008-09)
3.3 Cropping pattern in the study area
3.4 Area Irrigated by Different Sources (2008-09)
3.5 Financial Institutions as on March 2008-09
3.6 Variables Influencing the Performance of Selected PACSs
4.1 Physical Performance Indicators of Selected PACS’s in

Dharwad district
4.2 Financial Performance Indicators of Selected PACS’s in

Dharwad District (1999-00 to 2009-10)
4.3 Compound Growth Rate of Physical Indicators of Selected
PACS’s in Dharwad District
4.4 Compound Growth Rate of Financial Indicators of Selected
PACS’s in Dharwad District
4.5 Liquidity Ratios of Selected PACS’s in Dharwad district
4.6 Tests of Solvency of Selected PACS’s in Dharwad district
4.7 Tests of Strength of Selected PACS’s in Dharwad district
4.8 Test of Profitability of Selected PACS’s in Dharwad district
4.9 Tests of Efficiency of Selected PACS’s in Dharwad district
4.10 Principal Components and Factor Loadings of Physical and

Financial Indicators Influencing the Performance of Selected
PACS’s in Dharwad taluk

Financial Indic ators Influencing the Performance of Selected
PACS’s in Kalaghatagi taluk
Contd…..
Table
Title
No.

PACS’s in Navalgund taluk

PACS’s in Hubli taluk

PACS’s in Kundgol taluk
4.15 Category-wise and purpose-wise Loan Disbursement in

Selected PACS’s in Dharwad district
4.16 Recovery performance of Selected PACS’s in Dharwad

District
4.17 Non-interest Cost Incurred by Borrowers
4.18 Aggregate Clusters of Variables on the Performance of

PACS’s According to Policy Makers
4.19 Aggregation of Clusters of Variables on the Performance of

PACS’s According to officials
4.20 Opinion of borrowers about the performance of PACS’s in

Dharwad district
LIST OF FIGURES
Figure
Title
No.
3.1 Map showing the study area

LIST OF APPENDIX
Appendix
Title
No.
I. Physical and financial indicators of PACS's in Dharwad taluk
II. Physical and financial indicators of PACS's in Kalaghatagi

taluk
III. Physical and financial indicators of PACS's in Navalgund taluk
IV. Physical and financial indicators of PACS's in Hubli taluk
V. Physical and financial indicators of PACS's in Kundagol taluk
VI. Questionnaire for policy makers of the PACS
VII. Questionnaire for officials of the PACS
VIII. Interview schedule for farmer-borrower

1. INTRODUCTION
The concept of cooperation is as old as human society, and it has been practiced
in various forms since ancient times in India. The history of modern civilization is the
history of cooperation, without it social and economic progress would have been
impossible. The spirit of village communities of rural India was almost entirely
cooperative. The cooperative element in community life in India was represented by the
joint family system. In this system, the lands were commonly owned, cultivated and
benefits were shared by the member equitably. Another form of cooperation particularly
in credit activities was the chit fund which was based on mutual confidence and honest
dealings. Yet another form, particularly in South India was “Nidhis” which were based
on the idea of mutual credit association.
The modern concept of cooperation began in India in 1904 with the enactment
of Cooperative Credit Societies Act. This act made the provision for the establishment
of the cooperative credit societies only. In order to widen the sphere of activity through
organization of all types of cooperative societies, the Cooperative Societies Act was
modified in the year 1912. This act made the provision for the present two-tier and
three-tier structures of cooperative credit societies apart from the provision for non-
credit societies in India.
In India, farm incomes still constitute a large proportion of national income.

However, farm income does not meet even the basic requirement of the agriculturist.
This has resulted in the under-utilization of resources on the one hand and chronic
indebtedness of the farmers on the other. The volume of investment in the farm business
mainly depends upon the internal savings generated by the business. Since the savings
generated in Indian agriculture are very less, the adequate, timely and cheap finance
becomes a necessary function of the farm business.
Agriculture in India is changing rapidly due to availability of modern

technology. The adoption of modern technology calls for increased capital needs.
Further, a majority of the farmers have very low capital base and as such it would be
difficult for them to adopt the new technology without adequate external finance.
The availability of credit enables farmers to switch over to a superior production
function. Hence, production oriented lending system on the basis of the techno-
economic feasibility rather than security based particularly for the farmers who have
low income-savings base is imperative.
The All India Rural Credit Survey Committee (1951-54), reviewed credit
situation in the country and recommended new initiation and financial support for
cooperatives from Government of India. The establishment of large sized primary
cooperative credit societies, financial and technical strengthening of cooperative credit
structure in the rural areas were some of the effort of the government.
The evolution of the cooperative credit policy in India indicates that a definite
policy of integrated cooperative credit emerged by the end of the first five year plan.
Although the same general approach to cooperative credit is still being pursued, a shift
in policy towards multiagency approach to agricultural finance was seen during 1970’s
with the commercial banks and regional rural banks taking active participation. In spite
of the entry of several other institutions, cooperatives are the most important agencies
which supply the largest amount of institutio nal finance to agriculture.
Doubts are raised about the efficient functioning of the cooperatives in India.
Apart from the social view point, proper management of the cooperatives is a subject to
criticism. For instance, the All India Rural Credit Review Committee of the Reserve
Bank of India has pointed out that the business principles are scarcely followed in the
village cooperatives. The performance of the Cooperatives is thus far from satisfactory
as evidence from the increasing percentage of overdues in the total loans outstanding
against members. Despite of this, cooperative sector has been recommended by the
banking commission to provide not only credit, but also the other services required to
village.
The flow of cooperative rural credit in India is not uniform. Many studies have
indicated that inter and intra-state as well inter-district inequalities exist in the flow of
cooperative rural credit in India. The Indian cooperative movement can be divided into
two broader groups, viz., credit and non-credit societies and each one of them may
further be divided into agricultural and non-agricultural societies. The movement in
general based on three- tier system but for a few types like long-term credit societies
which are based on two-tier system.
The Primary Agricultural Co-operative Societies (PACS) form the basic
foundation on which the entire short and medium term Cooperative credit system is
built. The member agriculturists are having direct contact with PACS at village level,
the Central Co-operative Bank at district level and the Apex Bank at the state level.
These societies are generally organized, managed and benefited by the member farmers.
of the Cooperative movement consisting of different types of Cooperative societies,
it is these societies that form the bulk. The success of the Cooperatives in general and
credit structure in particular, depends to a very large extent on the success of
these primaries. Hence, the study of performance analysis of these societies will be of
much use.
According to statistics of the National Federation of State Cooperative Banks

(NAFSCOB, 2009) the three tier structure consist of nearly 95,633 Primary Agricultural
Credit Societies, 373 District Central Cooperative Banks (DCCB) with 12,858 branches
and 31 State Cooperative Banks (SCB) with 953 branches or a total of 122,590 service
outlets during March 2009. On an average, there is one PACS for every 6 villages; these
societies have a total membership of more than 120 million rural people making it one
of the largest rural financial systems in the world. As per the data available with
NAFSCOB, small and marginal farmers constitute nearly 70 per cent of total
membership of PACS at the national level, while SCs / STs constitute 34 per cent.
The Primary Agricultural Co-operative Credit Societies at all India level the
total membership consist of 1.32 lakhs with an owned fund Rs.11.8 lakhs, deposit
(Rs.26.24 lakhs). borrowing (Rs.48.93 lakhs), loan advance was Rs.58.78 lakhs, loan
outstanding was Rs.64.04 lakhs, number of employees engaged in PACS 2.21 lakhs,
number of borrowers was 0.46 lakhs during 2009.
Karnataka has been fortunate from the beginning to have a good rural credit
system compared to many other states. Though there are a number of studies on rural
credit supply and use at a national level and the studies at the disaggregated level are
only few. The exercise at the national level in any case is expected to give us some
broad perspective into the trend in credit flow and the nature as well as the extent of the
impact of various factors on credit use. This has to be supplemented by district level
studies because districts may differ in respect of soil, climatic condition, irrigation,
adoption of HYVs, fertilizer consumption, etc. All these differences are concealed in the
national level estimates and make them inappropriate for use in district specific
situations. Though the quantum of credit advanced to agriculture has increased over the
years, the flow is not uniform over the district.
The effectiveness of the service rendered by Primary Agricultural Credit

Cooperative Societies varies from district to district. Though the number of these
primary societies decreased over the years, they have been able to cover all the villages,
though increase in their jurisdiction. The status of the local communities is also related
to the performance of the cooperatives. It has indicated that in communities, with more
flexible socio-economic structure as well as with a more homogeneous membership,
there would be a greater effectiveness in bringing changes and to effect improvements.
The planned and positive approach adopted by district of Dharwad somehow

has not been shared by all the rural masses. It is, therefore, more necessary on the part
of cooperatives to help the needy farmers in large numbers rather than the affluent.
The large coverage of the small farmers is one of the indicators of achieving the desired
objectives by the cooperative societies. These cooperative societies have failed due to
the varied nature of performance. However, all the studies, beginning from the All India
Rural Credit Survey, have indicated that these primary institutions which have localized
characteristics, close contact with the member farmers, with better understanding as
compared to any other organization, are considered as essential features for bringing
about desired improvement in the local farming communities.
Importance of the present study
Cooperative credit society is the main agency for providing credit both for crop
production and investment in agriculture. In the present economic environment
characterized by deregulation and global competition, the crucial role of cooperative
banks in meeting the socio-economic necessities of the farming community has been
duly recognized. As such, strengthening and promoting the cooperative banks assumes
greater significance.
PACS’s have been assigned a vital role in agricultural development of our

country. It is through the branches of these societies that vario us programs of the
government are being implemented in the agriculture sector. The basic task of these
societies is to develop agriculture sector, which is the main occupation of the majority
of people in our country and a major contributor to national income.
Hence, managing the PACS’s more efficiently, so as to serve at best, the

farming community needs a comprehensive study on these societies to identify strengths
and weakness in their working. An effective research every now and then in the
evaluation of performance of PACS’s can alone provide an answer in this regard.
Keeping this in view, an attempt was made to evaluate the performance of PACS’s in
Dharwad district of Karnataka state with the following objectives.
Specific objectives of the study
• To examine the growth in physical performance indicators of PACSs.
• To examine the growth in financial performance indicators of PACSs.
• To study the purpose-wise and category-wise loan disbursement and recovery.
• To analyze the opinions of the policy makers, officials and beneficiaries

(Borrowers) about the performance of PACSs.
Hypotheses
• Physical performance of PACS’s is satisfactory.
• Financial performance of PACS’s is satisfactory.
• Credit flow to agriculture from PACS’s has been increasing over the years and
recovery performance of PACS’s is satisfactory.
Scope of the study
PACS’s play a vital role in short-term credit structure. Even though there are
many agencies, which provide short-term credit to the farming activity, the PACS’s are
continued to be the most preferred agency of the farming community. But the PACS’s
are encountered with many problems like mounting over dues, inadequate capital base,
and lack of trained staff. So far, the studies conducted on performance of PACS’s are
very limited and have not thrown light on multi facets of the problem. Hence, present
study is an attempt to evaluate performance of PACS’s in a holistic approach
encompassing both quantitative as well as qualitative variables relating to the societies.
Presentation of the study
The entire study has been presented in six chapters. Chapter-I deals with the
significance of the problem, the issues involved and the specific objective of the study.
Chapter-II that includes the review of earlier studies connected with the present
investigation, chapter-III is devoted to the description of the study area, the nature and
sources of data, the tool and techniques of analysis adopted for evaluating the
objectives. The next chapter summarizes the results under appropriate heads consistent
with the objectives of the study, while Chapter-V provides explanation for the casual
relationships between certain variables and outcome, which they produced. It also tries
to provide a frame of reference for drawing policy measures. The last chapter
summarizes the investigations to improve the performance of PACS’s.
2. REVIEW OF LITERATURE
To devise the ways to evaluate the objectives of the study, it is necessary to have
an idea of the methodology followed by the earlier related studies along with their
findings. A review of literature connected with the working and performance of
financial institutions in India and abroad was done, and is presented under the following
heads.
2.1 Performance Evaluation through Growth Rate Analysis.
2.2 Performance Evaluation through Principal Component Analysis
2.3 Performance Evaluation through Financial ratios
2.4 Recovery and Overdue Analysis.
2.1 Performance Evaluation through Growth Rate Analysis
Reddy et al. (1994) assessed the working of Malkanoor Cooperative Rural Bank
in AP considering the variables like share capital, reserve fund, deposits and borrowings
for the period 1978-79 to 1992-93. The compound growth rates were calculated by
fitting an exponential growth function. The study revealed that the growth rates were
relatively higher for deposits, reserves and investments.
Palleri (1998) employed compound growth rate to evaluate the management of

the credit distribution to agricultural sector by KCC Bank, Dharwad. The important
indicators considered were amount of credit disbursed, amount of agricultural credit and
non-agricultural credit, total deposits, number of beneficiaries, recovery performance
and overdues.
Javir et al. (1998) examined the advances extended by Thane Grameena Bank,
Maharashtra for the period 1987 to 1995. The required data were collected from the
annual reports of the bank for the above period. It was found that the outstanding
advances had increased from Rs. 0.82 lakhs to Rs. 178.38 lakhs during the period of
1987 to1995 and the recovery position of the loan was found to be increasing. It was
concluded that the bank had disbursed the credit to various sectors, various government
schemes and social programme activities effectively.
Dayanandan and Shashikumar (1999) under took comparative analysis of DCBs
in Kerala with the national level performance and revealed that the state level
performance was behind the national level performance as regard to membership,
owned funds, borrowing loans, advanced etc., where as deposits were slightly higher
than the national level performance. But as long as there was no considerable decrease
in rate of total loans overdue and profitability of the bank cannot be improved. Various
researchers opined that, the major variables which have impact on performance of any
credit institutions were deposits, membership, recovery, profit/loss etc. It was found
from the most of the studies that there was a positive impact of credit on income and
employment of borrowers.
Ramesh and Patil (1999) while explaining different analytical tools and
techniques for measuring performance of co-operatives opined that co-operatives
registered an excellent growth in all the selected variables. However, unstable profits,
higher liquid assets, upward trend in over dues, decelerating trend in owned funds and
regional imbalance in their distribution and growth were some of the major problems
affecting badly the overall performance of co-operatives. Further, it was revealed the
important variables that determine the performance of the banks were share capital,
loans, over dues, profit and loss. There was a high growth in the aforesaid variables and
mounting over dues was a common feature.
Saveeta and Satish (1999) studied the factors determining the profitability of
public sector banks in India, by applying multiple regression analysis. The study is
confined to public sector banks comprising of state Bank of India (SBI) and its seven
subsidiaries considering time series data from 1971-1995. For improving the
profitability of banks, it was recommended that the priority sector advances need to be
curtailed and the cost of funds should he reduced by mobilizing more of current and
saving deposits. In short it was suggested to reduce costs at all levels which would
improving the profitability of banks.
Devaraja (2000) examined the performance of the Horticultural Producers

Cooperative Marketing and Processing Society Limited in Karnataka, India, during the
period 1958-59 to 1995-96. Physical and financial indicators of performance such as
membership, retail outlets, share capital, owned funds, total assets, long-term
investments, fixed assets, working capital, total liabilities and sales were analysed.
Results showed that there were substantial increases both in physical and financial
indicators over the study period.
Sarkar et al. (2001) examined the growth and functioning of Primary

Agricultural Credit Societies in India during the period 1981-82 to 1995-96.
The analysis revealed that the entire growth period could be broadly divided into 2
distinct phases with the period of truncation being 1989-90. The study revealed that
although profits increased, the number of profit making societies had declined, mainly
due to low borrowing membership, low business turnover and high level of overdues.
Sriramalu et al.(2001) in assessing the performance of 58 Farmers Service

Co-operative Societies in Andhra Pradesh. Concluded that out of the total valume of
non credit service, input supply constitute 91.33 per cent, consumer goods accounts for
5.18 per cent and customer service 0.04 per cent. This indicated that non-credit service
mainly confined to supply of agriculture inputs and the making of agriculture produce
was completely neglected by all the Farmers Service Co-operative Societies.
Aynew et al. (2002) analysed the loan delinquency, transaction/ administrative

cost and recovery performance of Primary Land Development Banks (PLDBs) in
Haryana and analyzed the factors affecting the overdues in PLDBs in Haryana, India.
They revealed that the amount of loan recovered by these banks in the State recorded a
steady increase from Rs. 71.89 crores in 1988-89 to Rs.188.13 crores in 1997-98.
The problem of chronic overdues found to be a serious case in these banks.
The percentage of recovery to demand was the main significant factor influencing the
overdues of long- term credit in the PLDBs over the study period.
Vivek et al. (2003) analysed the growth performance of all Primary Agricultural
Credit Societies (PACS) in Haryana, India, based on secondary data for the years
1988/89-2000/01. Results revealed that the number of PACS increased from 2249 in
1998-99 to 2396 in 2000-01, registered an annual growth rate of 0.52 per cent. The total
membership and the borrowing membership also increased over the study period.
Shekhar et al. (2003) used compound growth rates for selected physical and
financial indicators of KDCCB for the period 1985-86 to1994-95. Among the physical
indicators, the growth rates of number of branches and number of employees were
statistically significant, while those of beneficiaries covered and total number of
employees were not significant. Among the financial indicators, the growth rates of
total share capital, paid- up share capital, borrowings, deposits mobilized, investments,
total liabilities, current assets, current liabilities, income, expenditure and outstanding
advances were statistically significant, but growth rates of authorized share capital,
credit disbursed and recovery percentage were not significant.
Anonymous (2004) analysed the achievements in credit provision during

2003-04 by India's National Bank for Agriculture and Rural Development (NABARD).
The year 2003-04 witnessed a 3.11per cent growth over the previous year with the
aggregate financial support provided to various banks and state governments amounting
to Rs. 23, 402.66 crore compared to Rs. 22, 696.01 crore in 2002-03.
Reddy (2006)examined total factor productivity and technical and scale

efficiency changes in Regional Rural Banks by using data from 192 banks for the period
1996 to 2002. Rural banks showed significant economies of scale in terms of assets and
number of branches under each bank. Total factor productivity growth of rural banks
was highest in profitability than in service provision during liberalization period.
Overall, there was a convergence of efficiency of rural banks during the study period.
Parent public sector banks have no influence on the efficiency and productivity growth
of rural banks. There was a justification for opening new banks in low banking density
regions as efficiency and productivity growth of rural banks in these areas were high.
There was also a case for mergers and enlargement of the asset base and the number of
branches under each bank.
Namashivayam (2006) examined the working performance of the Madurai

District Central Co-operative Bank Ltd. The performance had been quite impressive in
terms of deposit mobilization and credit disbursement. He concluded that the success of
the cooperative bank depends on effective manpower, planning and management.
Lakshmanan and Dharmendran (2007) examined the impact of NPAs on

selected performance variables viz., net profit, investments and legal expenses.
The regression model was used to analyze its impact on performance variables.
The results showed that impact of NPAs on all the above performance variables of the
bank was negative and insignificant at 5 per cent level in all the equation. He concluded
that efforts are required at RBI, NABARD and Bank level to control the management of
NPAs and performance.
Pujari et al. (2009) conducted a study on an evaluation of performance of

Primary Agricultural Co-operative Credit Societies in Karnataka state. State was
purposively elicited over a period of ten years (1996-97 to 2005-06) from Published
sources of cooperative financial institutions. Data were analysed using averages,
percentages and compound growth rate analysis. The findings of the study revealed that
about 98.93 per cent of villages and more than 82.75 per cent of families were covered
in the state by PACS’s due to significant increase in number of societies.
Ravi and Rajendra (2009) conducted a micro level study on the performance
evaluation of Primary Agricultural Co-operative Societies in Puttur Mandal of Chittur
district of Andhra Pradesh. Taduka primary Agricultural Co-operative Societies was
purposively selected for study based on fact that it is predominantly an agriculture
bastion. Data were collected for the period of five financial years (2003-04 to 2007-08)
from records of PACS. Study concluded that number of members, population covered
and families covered have increased during the study period.
Vijaysingh and Chahal (2010) studied the performance of Primary Agricultural

Co-operative Societies in India. On the basis of some selected indicators for ten years
secondary data from 1998-09 to 2007-08 were collected from different sources. Data
were analysed by using averages, percentages, ratios index numbers, standard deviation
and average compound growth rate. Findings of study revealed that there is no
significant growth in the expansion of the societies during study period. But, the
membership as well as the number of borrowers was increased over a period with the
ACGR of 3.92 per cent and 4.4 per cent respectively.
2.2 Performance evaluation through principal component analysis
Murthy (1986) studied the performance of Karnataka State Cooperative

Marketing Federation and its impact on the farm market. He used factor analysis with
principal component solution in analysing the performance indicators of the federation
over a period of 25 years. The factor analysis revealed that the existence of two main
underlying dimension in the performance of the federation namely "Growth in physical
and financial indicators" and "Growth in assets and liabilities ".
Reddy et al. (1994) analysed the performance of PCARDB's in the districts of

Karnataka and ranked them by applying Principal component analysis on selected
performance indicators. Eight districts were ranked as higher performance and six
districts as lower performance. Further, using discriminant analysis the factors
contributing to the disparity between the district where the PCARDB's were performing
well from those were not, was quantified. The discriminant function revealed that
growth in working capital (49.7 per cent), deposits (32.85 per cent) and overdues
(26.5 per cent) distinguished high performing banks from low performing banks.
Hosmani (1995) while studying the performance and impact of Malaprabha

Grameena Bank Dharwad, employed functional analysis technique with Principal
component solution with a view to aggregate the performance indicators into a few
groups of factors. The factor analysis revealed that income, deposits and total business
were important variables influencing the performance of the bank.
Patil (2000) while studying performance of PCARDBs in Dharwad employed

Principal component solution wit h a view to aggregate the performance indicators into a
few groups of factors. The factor analysis revealed that income, deposits and total
business were important variables influencing the performance of the bank. Findings of
study revealed that, the growth in physical and financial indicators, except recovery per
cent of selected PCARDBs were positive and significant.
2.3 Performance evaluation through financial ratios
Ramesh and Patil (1999) while explaining different analytical tools and
techniques for measuring performance of co-operatives opined that, ratio analysis was
one of the most significant internationally used techniques for evaluating the
performance of an enterprise. He also said that in most of the studies on co-operatives,
the ratios were found not satisfactory and below standards.
Siddhanti (1999) used various financial ratios to analyze financial performance

of Indian Farmers Fertilizer Co-operative Ltd. He opined that the current ratio of the
institution between 1987-88 and 1997-98 was ranging from 2.62 to 2.52 as against
standard norm of 2:1. The debt-equity ratio during the period was between 1.05 and
1.07 as against standard norm 1:1.
Amuthan (2010) analyzed the performance of the Cuddalore District Central

Cooperative Bank in Tamilnadu. Secondary data were collected from the annual reports,
audited reports and records of bank for a period of ten years i.e., 1997-98 to
2007-08.Data were subjected to rigorous financial ratio analysis and solvency ratio.
Indicate the bank’s inability to meet its medium and long-term obligations.
Deepakraj et al. (2010) conducted a study on performance of PCARDB in

Bangalore rural district. Study was based on secondary data collected from 2003-04 to
2007-08. Four PCARDBs in the district with 25,057 members were considered for the
study. Study revealed that despite several shortcomings, the PCARDBs have been
performing better, while advancing loan priorities were identified sector- wise.
Kannapiran. (2010) conducted study on the financial performance of Nilgiris

District Central Co-operative Bank Ltd. Secondary data were collected from the annual
reports for a period of eight years from 2001-02 to 2008-09. Ratio analysis was
employed for analyzed the data. Findings of the study concluded that the financial
performance of the NDCC is satisfactory because it maintains the standard liquidity and
current ratio.
2.4 Recovery and overdue analysis
Gumaste et al. (1998) worked out cost of credit while studying the extent
of borrowing, repayment and overdues of agricultural loans of farm facilities in Thane
district of Maharastra state. The overall total cost of credit per borrower was Rs
3053.76. The overall traveling expenses per borrower was Rs 13.98, expenditure
incurred on certificate was Rs 11.19, loading and boarding expenses Rs. (50.00) and
average interest paid by borrower was Rs. 297.69.The lending norms for some of the
sector were not mandatory. However, in the process of providing credit in the major
components of cost were interest cost and non-interest cost.
Kulwantsingh and Singh (1998) studied the performance of the Himachal
Pradesh Cooperative Banks. On the basis of certain indicators such as branch
expansion, share capital,working capital, deposits mobilization, loan advancement and
recovery. They concluded that the performance of the bank in terms of membership,
share capital, deposit mobilization and working capital had improved over a period of
five years. However, recovery performance was unsatisfactory and overdues had
increased steadily. This was due to the after effects of loan waiver scheme.
The per member and per branch performance of the bank revealed that there was a
significant growth in share capital, deposits, borrowings, advances and profits.
Singhal (1998) considered two types of overdues – willful default and those
beyond the control of borrower. The study suggested mechanisms for recovering
overdues resulting from willful default. The study mentioned a need on the part of
cooperatives to coordinate refinancing for borrowers with overdues beyond their
control.
Shiyani and Sima (1999) while comparing performance of credit institutions in

promoting agricultural development in Gujarat opined that the total overdue of
agricultural and allied activities in Gujarat was as high as Rs. 421.52 crores.
The situation of agricultural overdues in co-operative banks was warranted and needed
immediate action as its proportion in the total overdue of all banks of Gujarat was more
than 65 per cent Contrary to this, the share of co-operative banks in total credit flow to
the agricultural sector by all banks was only 36 per cent.
Dinabandhu (2002) studied the Pune District Central Cooperative Bank Ltd.
(PDCC) in Maharashtra, India. He has examined the impact of development action
plans (DAPs) as a suitable mechanism through which the viability of rural financial
institutions could be analysed and planned. The PDCCs resources, loan recovery
performance, profitability, and productivity were examined. It was concluded that the
bank's DAP has created some awareness in the bank. However, the increase in the
bank's performance in all areas could not be totally attributed to the DAP.
Aynew et al. (2003) in his study opined that the soundness and success of the
whole Cooperative credit structure to a large extent dependent on the immediate and
timely recovery of loans. He studied the loan delinquency, transaction/administrative
cost and recovery performance of Primary Land Development Banks (PLDBs) and
analysed the factors affecting the overdues in PLDBs in Haryana, India. He revealed
that the amount of loans recovered by these banks in the state recorded a steady increase
from Rs. 71.89 crores in 1988-89 to Rs. 188.13 crores in 1997-98. The problem of
chronic overdues found to be a serious case in these banks. The percentage of recovery
to demand was the main significant factor influencing the overdues of long-term credit
in the PLDBs over the study period.
Vivek et al. (2003) studied overdue loans in Primary Agricultural Credit

Societies (PACS) in Punjab, India, during the period 1998-99 to 2000-01 based on
secondary data. An increasing trend in the recovery of overdues was observed along
with an increasing trend in the amount of overdues.
Kulandaiswamy and Murugesan (2004) analysed the performance of Primary

Agricultural Cooperative Credit Societies (PACS) in India based on eight variables,
namely, membership, share capital, working capital, loan disbursement, deposits,
borrowings, demand and overdues. Of the 30 PACS studied, those showing good
performance were only 7 (23.3%), while 12 units (40%) revealed moderate performance
and as much as 11 (36.7%) were found to be poor. The empirical evidence calls for
appropriate policy interventions to correct the deficiency by such measures as
recapitalization, amalgamation, bringing down the overdues, and improving the overall
efficiency.
Prasad (2006) conducted a study on recovery performance and overdues of

selected Primary Agricultural Co-operative Societies in West Godavari district of
Andhra Pradesh. Nine PACS’s working in this district was selected for study. Data were
analysed using simple averages, percentage and tabular presentation. The findings of
study revealed that average recovery performance of selected PACS’s varies between
53 and 81 per cent and overdues of short-term loan constituted a considerable
proportion.
3. METHODOLOGY
This chapter deals with the description of the study area, salient features of the
selected Primary Agricultural Cooperative Credit Societies (PACS), the sampling
procedure employed, the nature and sources of data and the various tools and techniques
employed to quantify and evaluate the objectives. At the end of the chapter a few
concepts are defined and explained to facilitate a clear understanding of the issues with
which the present study is concerned.
The methodology is presented under the following major heads.
3.5 Concepts used in the study
Dharwad district is situated in the Western sector of Northern part of Karnataka

State (Figure 3.1). It lies between 150 15’ to 150 35’North latitude and between 750 to 750
20’ East longitudes. Belgaum and Gadag districts surrounding it in the North, Haveri
district in the South and Uttar Kannada district in the West. The district is divided into
three belts geographically viz., Malanad, Transition and Dry regions. Dharwad taluk
surrounded by Navalgund in the East and Hubli taluk in the South- East and Belgaum
district in North. Navalgund taluk falls in the Northern part of Dharwad district. It is
surrounded by Nargund taluk in the North, Gadag taluk in the East, Dharwad taluk in
the West and part of Kundgol taluk in the South. Kalaghatagi taluk falls in the Southern
part of the Dharwad district. It is surrounded by Hubli and Dharwad taluks in the North,
Kundgol and part of Hubli taluk in the East and Uttar Kannada and Haveri districts in
the South. Hubli taluk falls in centre part of the Dharwad district. It is surrounded by
Dharwad and Navalgund in North, Kundgol in the South and Kalaghatagi in the West.
Kundgol taluk falls in the South part of the Dharwad district. It is surrounded by Hubli
in the North, Kalaghatagi in the West, Siggaom and Savanur in the South, Shirahatti in
the East.
3.1.1 Geographic and demographic features
Dharwad district has an area of 4,263 sq. kms. Dharwad taluk has an area of
1,032 sq. kms. Navalgund, Kalaghatagi, Hubli and Kundgol taluks have an area of
1,080 sq. Kms, 682 sq. kms, 631 sq. kms, And 648 sq. kms, respectively. As per 2001
census, the total population of Dharwad district was 16, 04,253. The total population of
Dharwad taluk was 2,18,961 and that of Navalgund, Kalaghatagi, Hubli and Kundgol
taluks was 1,76,648, 1,37,016, 1,28,380 and 1,57,053, respectively. The density of
population in Dharwad district was 377 per sq. km. The density of population in
Dharwad, Navalgund, Kalaghatagi, Hubli and Kundgol taluks was 219 per sq. Km,
163 per sq. K, 201 per sq. Km, 207 per. sq km and 242 per sq. Km., respectively
(Table 3.1).
3.1.2 Soils
Soils in Dharwad district comprises of red, medium black and deep black soils.
Similar types of soils were found in Dharwad taluk. Kalaghatagi taluk mostly comprised
of red and medium black soils, in Navalgund, Hubli and Kundgol taluks, major part of
soils comprised of deep black cotton soil.
3.1.3 Rainfall
The South-West monsoon is most crucial for Dharwad district. Average annual
rainfall of the district was 769 mm, Kalaghatagi taluk has an average annual rainfall of
833 mm, where as Dharwad, Navalagund, Hubli and Kundgol taluk receive an average
annual rainfall of 860 mm,771mm, 755 mm and 627 mm, respectively.
3.1.4 Land utilization pattern
The land utilization pattern of Dharwad, Hubli, Kalaghatagi, Navalgund and

Kundgol taluks is presented in the Table 3.2. The net sown area of Dharwad taluk was
1,11,148 ha, and that of Navalgund, Kalaghatagi, Hubli and Kundgol taluks were
1,67,601 ha, 50,213 ha, 90,839 ha and 1,08,720 ha, respectively. The area under forest
was 13,676 ha in Dharwad taluk, 19,526 ha in Kalaghatagi and 2,033 ha in Hubli taluk.
No forest cover was seen in Navalgund and Kundgol taluk. The fallow land accounted
for 10,596 ha in Dharwad taluk, 1,770 ha in Kalaghatagi taluk, 19,257 ha in Navalgund
taluk, 7,595 ha in Hubli taluk and 2,232 ha in Kundgol. About 25,732 ha of land were
found to be not available for cultivation in Dharwad district as whole. The land not
available for cultivation in Dharwad, Hubli, Kalaghatagi, Kundgol and Navalgund
taluks was 9,188 ha, 6300 ha, 4634 ha, 2213 ha and 3397 ha, respectively.
3.1.5 Cropping pattern
The cropping pattern of Dharwad district and selected taluks are presented in the
Table 3.3. The major crops of Dharwad district were jowar, maize, paddy and wheat
among cereals, bengal gram and red gram among pulses, cotton and groundnut among
commercial crops. Similar cropping pattern was observed in Dharwad and Kalaghatagi
taluk.
3.1.6 Area Irrigated by different sources
The area irrigated by different sources in Dharwad district and selected taluks
are presented in table 3.4. The major sources of irrigation in Dharwad districts are
canals, tanks and well. However, the canal irrigation was not found in Dharwad and
Kalaghatagi taluk. In Kalaghatagi, Dharwad and Hubli taluks, major sources of
irrigation are Bore wells and wells. The total area irrigated in the Dharwad district was
39,485 ha. The area irrigated in Dharwad, Kalaghatagi, Navalgund, Hubli and Kundgol
was 8,951 ha, 2,689 ha, 23,654 ha, 3,586 ha and 605 ha have respectively.
Multi-stage sampling technique was employed for the study. The theme of the
study was evaluating the performance of PACS’s in Dharwad district. Dharwad district
was purposively selected for the study, because co-operative movement was first started
(1905) in India from undivided Dharwad district i.e. village called by Kadaginahala in
Gadag taluk. In Dharwad district, there are five taluks, these taluks representing
different agro-climatic zones viz. Navalgund, Hubli and Kundgol (zone 8), Dharwad
(zone 3) and Kalaghatagi (zone 9) and from each taluk, three PACS’s were selected
randomly. Thus, a total of 15 PACS’s were selected for the present study..
3.2.1 Selection of borrowers
PACS’s advance loan for different purposes namely, agricultural (include crop
loan, livestock loan purchase of seed and fertilizers etc) and non- farm sector loan
(consumption loan, pigmy, two-wheeler loan etc) .Accordingly the list of borrowers for
the above said purposes were obtained from respective PACSs. Then from each PACS
three borrowers were selected randomly. In all, the total number of borrowers selected
for the study was 45.
3.2.2 Selection of policy makers and officials
Directors and officials of the selected PACSs were considered for eliciting the
opinion on the performance of the societies. For the study 3 policy makers and one
official from each sample PACSs were considered. At total of 45 policy makers and
15 officials were considered for the present study.
For evaluating the objectives of the study, primary data relating to borrowings,
cost of borrowing, repayments, interest and non- interest costs, opinion, etc were
collected from the selected borrowers with the help of a pre-tested and well-structured
schedule. The borrowers were personally interviewed to ensure accuracy and
comprehension.
For eliciting the opinion of the sample respondents on the performance and
working of the societies, three different types of questionnaires related to one each for
policy makers, officials and borrowers were used. The variables which have close
relevance to performance were identified and included in the schedule based on the
discussion with the Advisory Committee Members, besides bank officials themselves.
Each selected variable was bifurcated into sub-variable and a three point continuum
scale was adopted to measure the scores. These questionnaires were personally
canvassed and opinions were sought from sample respondents.
The secondary data on both physical and financial aspects were also collected
from respective PACS reports from Assistant Registrar of Co-operatives, Karnataka
Central Cooperative Bank (KCCB) Reports, the annual reports, monthly progress
reports, audit reports and other records of the banks. The period of the study covered
11 years time series data from 1999-2000 to 2009-10. Physical and financial variables
were considered to measure the performance of the PACS and identify the variables that
had the major influence on working and performance of the PACS.
3.3.1 Performance indicators
About 15 variables were identified as performance indicators having close

association with the performance of the societies. Out of these, three were considered as
physical indicators viz., membership, employees and number of loan accounts and
remaining twelve were share capital, borrowing, deposits, cash in hand, cash at bank,
reserves, investment, advances, overdues, recovery, profit and loss as financial
indicators.
3.3.2 Indicators influencing the working of the societies
To get the opinion of the policy makers and officials with respect to working of
the societies, 18 variables and 12 variables were identified, respectively and same are
listed in the Table 3.6.
The data collected from the primary and the secondary sources were analysed
through the following statistical techniques.
1. Tabular analysis
2. Growth rate analysis
3. Principal component analysis
4. Cluster analysis
5. Ratio analysis
3.4.1 Tabular Analysis
The technique of tabular analysis was used for computing average of the
variables relating to the physical and financial performance of the societies. Percentages
were also worked out to arrive at meaningful results for the purpose of comparison.
3.4.2 Growth Rate Analysis
Growth rate analysis was undertaken with a view to studying changes in selected
physical and financial variables related to the PACS. The following conventional
compound growth rate model was used for estimating the compound growth rate.
Yt = A Bt e u ………………. (1)
Where, Yt = Physical/ Financial variables in time period‘t’
A = Y in the base year
t = Time period
u = Error term
B = 1+ g
Where, g = growth rate
By taking the logarithm, equation (1) was reduced to the following form.
Log Yt = log A + (log B) t + u…………..(2)
Where, log A and log B are the parameters of the function obtained by Ordinary Least
Square (OLS) method
Defining, Qt = log Y
Xt = t
A = log A
B = log B
Equation (2) could be rewritten as follows:
Qt = A + BXt + u................... (3)
Once the above equation is estimated, g can be computed as:
Log B = b
B = Antilog b
b = 1+ g
g=b–1
3.4.3 Principal component analysis
The selected physical and financial variables measured in many facets of the
performance of selected PACSs. Principal component analysis was employed, with a
view to aggregate the performance indicators into a few groups of factors.
This technique was used by many researchers for grouping the factors and is the oldest
and the best-known technique of multivariate analysis.
The main purpose of adopting principal component analysis was to economise

the number of variables. To achieve this objective, linear transformation of variables of
the following type is done.
Zi = ai1 X1 + ai2 X2 +………………+aip Xp
Where, Zi= standardized variables
X1 , X2 ……….Xp are the P variates considered for the study and
i= 1, 2 ….........p are the components.
The coefficient ai1 , ai2 ………aip are chosen that the new variates Z1 has as
large a variances as possible, the second Z2 was chosen to be uncorrelated with the first
and to have as large a variance as possible, etc. The technique of principal component
analysis was adopted in order to identify the most important physical and financial
indicators, which had greater influence on the performance of PACSs.
Once a set of variables are transformed by successfully extracting the largest
common elements then the principal component with Eigen value less than one would
be eliminated as for Kaisers rule(Kaiser 1960). Each component measures a dimension
of performance and it is possible to correlate a component a group of variables.
3.4.4 Cluster analysis
Cluster analysis, a formal multivariate technique that has been an important

technique to classify the characteristics into meaningful sets, known as clusters. It is a
simple form of correlation analysis, which provides a measure of similarity among
different independent variables. The analysis commences with the data set of
independent variables of the sample, later on which leads to the formation of
homogeneous groups.
The technique of cluster analysis i.e. Hierarchical agglomerative method was

adopted to analyze the opinion of the policy makers and officials of the selected PACSs
about the performance of the societies. Clusters were formed, by following minimum
distance method also known as single linkage method. To begin with each variable was
considered as a separate cluster. This process of grouping was continued until a single
cluster was formed containing all the variables. The absolute values of correlation
coefficient were used as measure of similarity and the coefficients were converted in to
the scale of 0 to 100. It was presumed that higher the similarity values of the cluster,
greater were the degree of association of that cluster with the working of the selected
PACSs.
In order to have better understanding and interpretation of the cluster analysis

results, the cluster were further aggregated based on the degree of similarity.
The variables having similarity values greater than mean + 0.425 standard deviation
were classified as high aggregate clusters. In case of variables having similarity values
between mean +0.425 standard deviation and mean -0.425 standard deviation were
considered as medium aggregate cluster and the variables having similarity values less
than, mean -0.425 standard deviation were considered as low aggregate cluster, after
classification of cluster into different groups, the variables having higher similarity
values were retained in respective cluster.
3.4.5 Ratio Analysis
Ratios are important tools to analyze the performance of any business

organizations. Relevant financial ratios were worked out for the PACS, viz., liquidity,
solvency, profitability and efficiency ratios, etc.
3.4.5.1 Liquidity ratios
Liquidity ratios are used to measure the ability of the bank to possess adequate
cash to meet immediate obligations.
3.4.5.1.1 Current Ratios
This ratio measures the degree of short-term liquidity of the bank. It indicates
whether the current assets are sufficient to meet the current liabilities.
Current assets
Current ratio = -----------------------
Current liabilities
The current assets included in this study were cash at hand, balance with other
banks (current account), money at call and short notice, short-term advances and bills
receivables. The current liabilities included borrowings and bills payables.
It is generally believed that a good current ratio should be between 1.5:1 and
2:1. Generally, higher the value of this ratio, greater will be the margin and financial
solvency of the bank.
3.4.5.1.2 Liquid Assets to Total Assets Ratio
The degree of liquidity performance adopted by the bank is depicted by this

ratio. It was computed as follows.
Liquid Assets
Liquid Assets to Total Assets Ratio = ---------------------
Total Assets
The liquid assets include cash in hand and cash at bank. Total assets include
cash and bank balances, balance with bank investment, advances, fixed assets and other
assets.
3.4.5.1.3 Acid- Test Ratio
This ratio is called quick ratio or near money ratio. This represents the ratio
between quick assets and current liabilities and computed as follows
Quick Assets
Acid – Test Ratio = ----------------------
Total Liabilities
The quick assets include cash in hand, cash at bank and short term deposits.
The current liabilities include bills payable, interest accrued, other provisions and
interest paid.
3.4.5.2 Solvency Ratio
These ratios indicate banks involvement in the total resources and provide basis
for measuring leverage ratio. The various ratios employed were as follows:
3.4.5.2.1Debt- Equity Ratio
This ratio is called ‘leverage ratio’. This compares the banks stake in the
business with outside term liabilities. Lower value of the ratio indicates that the
leverage effect will be restricted to the minor role of debt and major capital being
equity, the bank is supposed to be trading on thick equity.
Long-Term Liabilities
Debt- Equity Ratio = ----------------------------------
Net worth
In the above ratio, debt represents only long-term liabilities and not current
liabilities, while equity refers to net worth after deducting intangible assets. Net worth
includes statutory reserves, capital reserves, revenue and other reserves and share
capital.
3.4.5.2.2 Indebtedness Ratio
The ratio indicates the amount owed by the bank to creditors. The ratio reflects
the solvency position of the bank in a better way.
Total Liabilities
Indebtedness Ratio = ------------------------
Net Worth
The lower the ratio, the better is the solvency position. The total liabilities
include statutory reserves, capital reserves, revenue reserves, borrowings, contingent
liabilities, other liabilities and share capital.
3.4.5.3 Tests of Strength
3.4.5.3.1 Net Worth
It indicates what the bank owes to the owners of the business. It measures the
excess of assets over liabilities, which indicates the soundness of the bank.
Net Worth = Total Assets – Total liabilities
3.4.5.3.2 Net Capital Ratio
The ratio indicates the degree of liquidity of the bank in the long-run.
It measures the degree of availability of assets to pay off the long-term liabilities.
Total Assets
Net Capital Ratio = -----------------------
Total liabilities
This ratio would throw light on the real financial strength of the bank.
3.4.5.4 Profitability Ratio
The following ratios were used to compare the return to the investment.
3.4.5.4.1Net profit to Total Assets Ratio
This is ratio of net profit to total assets of the bank and their employme nt.
Net Profit
Net profit to Total Assets Ratio = --------------------
Total assets
An increasing trend over the years indicates the overall efficiency of the bank.
3.4.5.4.2 Net Profit to Net worth Ratio
The ratio of net profit to net worth shows whether profitability is being
maintained or not.
Net Profit
Net Profit to Net Worth Ratio = -------------------
Net Worth
3.4.5.4.3Net Profit to Fixed Assets Ratio
The ratio indicates whether the fixed assets are being us ed profitability.
A decline in the ratio shows that either the assets are being kept idle or the business
conditions are bad.
Net Profit
Net Profit to Fixed Assets Ratio = -----------------
Fixed Assets
3.4.5.5Efficiency Ratios
Two ratios were adopted to assess the efficiency of the bank, viz., gross ratio
and operating ratio.
3.4.5.5.1Gross Ratio
This ratio helps to ascertain how efficiently the gross income of the bank was
earned. The ratio was computed as follows.
Total Expenses
Gross Ratio = ----------------------- × 100
Gross Income
3.4.5.5.2Operating Ratio
This ratio indicates the proportion of gross income being used for meeting the
operating expenses.
Operating Expenses
Operating Ratio = --------------------------- × 100
Gross Income
An increase in the ratio indicates a decline in the efficiency of the bank
3.5 Concepts Used in the Study
Credit: A contractual agreement, in which a borrower receives something of value now, with
the agreement to repay the lender at some date in the future.
Interest: The charge for the privilege of borrowing money, typically expressed as an annual
percentage rate.
Advances : The amount of loan advanced by an institution, during a particular period,

year or season.
Agricultural Credit : Credit provide for the purpose of agricultural operation.
Co-operative Credit : Credit provide by co-operative institution like, PACS, DCCB

etc.
Current Assets : The assets that could be quickly converted into cash within a short
time, usually a year. e.g., cash in hand, cash at bank.
Current Liabilities : The debt that must be paid in the very near future, e.g., bills
payable, borrowings.
Overdues : The amount which was due to be paid on a particular date, but has not been
repaid by the borrowers.
Recovery : The amount of loan which was recovered up to a point of time by the
financial institutions.
Seasonal Agricultural Operation (S.A.O) Loan : These loans are intended to increase
the production of the crops. These are also called as short term loans or crop loans.
These loans are repayable within period ranging from 6 months to 18 months in lump
sum.
Medium-term Loans : The amount of credit made available for the purchase of pump
set, bullocks, land improvement, spray pumps, carts etc, and to undertake irrigation
activities. The period of repayment range from 18 months to 5 years.
Marginal farmers: A farmer whose landholding is up to 1 hectare.
Small farmers: A farmer whose land holding were ranging 1-2 hectares.
Medium farmers: A farmers whose land holding were ranging between 2 to 4 hectares.
Large farmers : A farmer is having more than 4 hectares of land holding.

Table 3.1: Salient features of the study area
Total Rural Urban

Geographic No. of Normal Actual
Sl. population population population Male Female Population
Taluk al area habited rainfall rainfall
No (2001 (2001 (2001 population population density
(sq. kms) villages (mm) (mm)
census) census) census)
1 Dharwad 1032 118 218961 202671 16290 112239 106722 219 865 860
(24.20) (31.13) (13.64) (28.05) (1.84) (13.63) (13.66) (58.09) (109.91) (111.83)
2 Hubli 631 58 128380 128380 - 66000 62380 207 732 755
(14.80) (15.30) (8.00) (17.77) - (8.01) (7.98) (54.90) (93.01) (98.17)
3 Kalaghatagi 682 87 137016 122336 14680 70780 66236 201 980 833
(15.99) (22.95) (8.54) (16.93) (1.66) (8.59) (8.48) (53.31) (124.52) (108.32)
4 Navalgund 1080 58 176648 128736 47912 90360 86288 163 643 771
(25.33) (15.30) (11.01) (17.82) (5.43) (10.97) (11.04) (43.23) (81.700 (100.26)
5 Kundgol 648 58 157053 140213 16840 80740 76313 242 716 627
(15.20) (15.30) (9.78) (19.41) (1.90) (9.80) (9.77) (64.19) (90.97) (81.53)
Dharwad district 4263 379 1604253 722336 881917 823204 781049 377 787 769
6
(100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)
Note: figures in the parentheses indicate percentage to Dharwad district

Source: Dharwad District at a Glance, 2009
Table 3.2: Land utilization pattern in the study area and sample taluks (2008-09)
(area in ha)
Sl. Dharwad
Particulars Sample taluks
No district
Dharwad Hubli Kalaghatagi Navalgund Kundgol
I Area under forest 35235 13676 2033 19526 0 0
II Land not available for cultivation
i) Non-agricultural uses 21747 8508 5263 3678 2750 1548
ii) Barren land 3985 680 1037 956 647 665
Total 25732 9188 6300 4634 3397 2213
III Other uncultivated land
i) Cultivable waste 2669 1531 106 798 61 173
ii) Permanent pastures 3571 1959 607 688 5 312
iii) Trees and Grove 178 0 63 6 3 106
Total 6418 3490 776 1492 69 591
IV Fallow land
i) Current fallow 34631 8706 4260 1415 19257 993
ii) Other fallow 6819 1890 3335 355 0 1239
Total 41450 10596 7595 1770 19257 2232
V Net sown area 528521 111148 90839 50213 167601 108720
VI Geographical area 427329 111788 73707 68757 108218 64859
Source: Dharwad District at a Glance, 2009

Table 3.3: Cropping pattern in the study area
(area in ha)
Dharwad Dharwad Kalaghatagi Navalgund Kundgol
Particular Hubli Taluk
district Taluk Taluk Taluk Taluk
I. Cereals
Paddy 25952 1230 481 1304 27 272
Ragi 108 0 14 1 0 93
Jowar 51139 11640 9358 5682 1487 9586
Wheat 41041 6933 2613 60 22339 9096
Maize 41377 8233 6379 3234 22289 1242
Other cereals 2830 970 1188 384 9 279
Total 162447 39906 20033 22403 59537 20568
II. Pulses
Bengal gram 47573 18150 2165 553 24519 2186
Red gram 2944 1098 854 222 102 668
Other pulses 52176 1726 7447 3174 18970 5325
Total 102693 36508 10466 3949 4359 8179
III. Commercial crops
Oil seeds 75965 14883 15353 13715 11003 21011
Cotton 72612 2216 20636 5730 17216 26814
Total Non Food crops 150495 17402 36366 20555 28225 47947
IV Total food crops 378026 93746 54473 29658 139376 60773
Source: District Statistical Office, Dharwad, 2009
Table 3.4: Area Irrigated by Different Sources (2008-09)
(area in ha)
Sl. No. Particular Dharwad district Dharwad Taluk Hubli Taluk Kalaghatagi Taluk Navalgund Taluk Kundgol Taluk
1 Canals 24957 0 1303 0 23654 0
2 Tanks 60 39 0 21 0 0
3 Wells 579 400 0 0 170 0
4 Bore well 14185 8894 2024 2662 0 605
5 Other sources 283 18 259 6 0 0
Total 39485 8951 3586 2689 23654 605

Table 3.5: Financial Institutions as on March 2008-09
Dharwad Dharwad Hubli Kalaghatagi Navalgund Kundgol

Sl. No. Bank district Taluk Taluk Taluk Taluk Taluk
1 Commercial Banks 186 58 100 8 11 9
2 Grameena Banks 55 19 15 7 8 6
3 Urban Co-operative Banks 14 1 8 1 1 0
4 PCARD Banks 5 1 1 1 1 1
5 Other Co-operative Banks 166 31 32 30 44 29
Total 426 110 156 47 65 45

Table 3.6: Variables Influencing the Performance of Selected PACSs
Sl.
Variables for Policy Makers Variables for Officials
No
1 Education and Experience of Education and Experience

policy makers
2 Awareness about Government Involvement

policies
3 Decision at the district branches Managerial capacity
4 Adequacy of the staff Leading and supervision
5 Education level of the employee Communication between the societies
6 Training to employee Functioning of the board
7 Effectiveness of training Bank management
8 Bank management Performance indicators
9 Service provided to farmers Impact indicators
10 Impact of credit General problems
11 Bank supervision Financial problems
12 Communication and Coordination Miscellaneous problems

within the societies
13 Communication and Coordination

among the societies
14 Performance indicators
15 Impact indicators
16 General problems
17 Financial problems
18 Miscellaneous problems
KARNATAKA STATE
DHARWAD DISTRICT
Navalgund
Dharwad
Hubli
Kundagol
Kalaghatgi
Fig. 3.1: Map showing the study area

4. RESULTS
Pertinent with the objectives of the study, the data collected from primary and
secondary sources were analysed and interpreted. The findings of the study are
presented in this chapter under the following heads.
4.3 Recovery performance of the PACS’s
4.1.1 Performance indicators of PACS’s
For better insight into the working of the organization, growth and development
the study of the basic features becomes a prerequisite step. The performance indicators
of selected PACS’s are broadly categorized into physical and financial indicators based
on the nature of variables.
4.1.1.1 Physical performance indicators of selected PACS’s
The physical performance indicators of selected PACS’s are presented in the

Table 4.1.The taluk-wise and society- wise performance has been presented as below.
Dharwad taluk
The average membership was 1138, 535 and 600 in Hebballi, Marewada and
Vanahalli PACS, respectively. Average numbers of employees were 4, 4 and 2 in
Hebballi, Marewada and Vanahalli societies respectively. Average loan accounts were
863, 263 and 265 in Hebballi, Marewada and Vanahalli societies, respectively.
Kalaghatagi taluk
The average membership was 465, 318 and 514 in Malakankoppa, G. Hulikatti
and Thabakadhonnihalli societies respectively. Average employees were 2 in all the
respective societies. Average loan accounts were 276, 115 and 330 in Malakankoppa,
G. Hulikatti and Thabakadhonnihalli societies, respectively.
Navalgund taluk
The average membership was 386, 682 and 1297 in Javoor, Shirkola and Morab
societies, respectively. Average employees were 3 in Shirkola and Morab and 2 in
Javoor PACS. Average Loan accounts were 209, 348 and 923 in Javoor, Shirkola and
Morab societies, respectively.
Hubli taluk
The average membership was 310, 378 and 180 in Chabbi, B. Aralikatti and
Varur societies, respectively. Average employees were 2, 3 and 2 in Chabbi,
B. Aralikatti and Varur societies, respectively. Average loan accounts were 242, 240
and 115 in Chabbi, B. Aralikatti and Varur societies, respectively.
Kundgol taluk
The average membership was 1453, 494 and 1684 in Yaliwala, Kubihal and
Kundgol societies, respectively. Average employees were 4, 2 and 4 in Yaliwala,
Kubihal and Kundgol societies, respectively. Average loan accounts were 270, 264 and
841 in Yaliwala, Kubihal and Kundgol societies, respectively.
4.1.1.2 Financial pe rformance indicators of PACS’s
The performance of the financial resources could be judged by examining the

trend of various financial indicators such as share capital, borrowings, advances, cash in
hand, cash at bank, profit, loss, overdues, recovery, etc. The financial performance
indicators of selected PACS’s are presented in the Table 4.2. The taluk-wise and
societies- wise description has been explained as follows.
Dharwad taluk
The average share capital was Rs. 6.87, 9.17 and 4.47 lakhs in Hebballi,
Marewada and Vanahalli PACS’s, respectively. The average borrowings was
Rs.37.72, 29.98 and 20.51 lakhs in Hebballi, Marewada and Vanahalli PACS’s,
respectively. The average deposit was Rs. 8.83, 47.68, and 5.37 lakhs in Hebballi,
Marewada and Vanahalli PACS’s, respectively. The average cash in hand was Rs. 0.45,
0.14 and 0.01 lakhs in Hebballi, Marewada and Vanahalli PACS’s, respectively.
Average cash at bank was Rs. 0.45, 17.99 and 0.12 lakhs in Hebballi, Marewada and
Vanahalli PACS, respectively. The average reserve was Rs. 1.71, 14.86 and 22.21 lakhs
in Hebballi, Marewada and Vanahalli PACS’s, respectively. Average investment was
Rs. 1.84, 1.75 and 0.88 in Hebballi, Marewada and Vanahalli PACS’s, respectively.
Average advance was Rs. 39.57, 28.39 and 30.89 lakhs in Hebballi, Marewada and
Vanahalli PACS’s, respectively. Average Overdues was Rs. 5.95, 19.64 and 47.86 lakhs
in Hebballi, Marewada and Vanahalli PACS’s, respectively.
Average recovery was Rs. 0.72, 37.33 and 1.04 lakhs in Hebballi, Marewada
and Vanahalli PACS’s, respectively. The average loss was Rs. 7.83, 0.016 and
9.61 lakhs in Hebballi, Marewada and Vanahalli PACS’s, respectively. The average
profit was Rs.0.34 and 1.64 lakhs in Hebballi and Marewada PACS, respectively.
No profit was recorded in Vanahalli PACS.
Kalaghatagi taluk
The average share capital was Rs. 1.00, 1.04 and 1.92 lakhs in Malakankoppa,
G. Hulikatti and Thabakadhonnihalli PACS’s, respectively. The average borrowings
was Rs. 3.04, 24.16 and 17.91 lakhs in Malakankoppa, G. Hulikatti and
Thabakadhonnihalli PACS’s, respectively. The average deposit was Rs. 2.88, 0.66 and
5.78 lakhs in Malakankoppa, G. Hulikatti and Thabakadhonnihalli PACS’s,
respectively. The average cash in hand was Rs. 0.001, 0.02 and 0.01 lakhs in
Malakankoppa, G. Hulikatti and Thabakadhonnihalli PACS’s, respectively. Average
cash at bank was Rs. 0.02, 0.03 and 0.009 lakhs in Malakankoppa, G. Hulikatti and
Thabakadhonnihalli PACS’s, respectively. The average reserve was Rs. 0.24, 0.12 and
0.16 lakhs in Malakankoppa, G. Hulikatti and Thabakadhonnihalli PACS’s respectively.
Average investment was Rs. 0.20, 0.65 and 0.84 lakhs in Malakankoppa, G. Hulikatti
and Thabakadhonnihalli PACS’s respectively. Average advance was Rs. 1.64, 4.05 and
17.74 lakhs in Malakankoppa, G. Hulikatti and Thabakadhonnihalli PACS’s,
respectively. Average overdues was Rs. 1.64, 4.05 and 17.74 lakhs in Malakankoppa,
G. Hulikatti and Thabakadhonnihalli PACS’s, respectively. Average recovery was
Rs. 0.23, 2.01 and 6.57 lakhs in Malakankoppa, G. Hulikatti and Thabakadhonnihalli
PACS’s, respectively. The average loss was Rs. 0.26, 1.03 and 4.55 lakhs in
Malakankoppa, G. Hulikatti and Thabakadhonnihalli PACS’s, respectively. The average
profit was Rs. 0.53 and 0.16 in Malakankoppa and Thabakadhonnihalli PACS’s,
respectively.
Navalgund taluk
The average share capital was Rs. 7.74, 10.46 and 11.03 lakhs in Javoor,
Shirkola and Moraba PACS’s, respectively. The average borrowings was Rs. 66.80,
21.38 and 91.52 lakhs in Javoor, Shirkola and Moraba PACS’s, respectively. The
average deposit was Rs. 1.44, 8.86 and 8.18 lakhs in Javoor, Shirkola and Moraba
PACS’s, respectively. The average cash in hand was Rs. 0.03, 0.42 and 0.17 lakhs in
Javoor, Shirkola and Moraba PACS’s, respectively. Average cash at bank was Rs. 0.07,
1.16 and 3.09 lakhs in Javoor, Shirkola and Moraba PACS’s, respectively. The average
reserve was Rs. 0.46, 1.16 and 3.09 lakhs in Javoor, Shirkola and Moraba PACS’s,
respectively. Average investment was Rs. 3.89, 9.60 and 7.49 lakhs in Javoor, Shirkola
and Moraba PACS’s, respectively. Average advance was Rs. 59.41, 17.85 and 77.11
lakhs in Javoor, Shirkola and Moraba PACS’s, respectively. Average Overdues was Rs.
54.83, 67.59 and 78.44 lakhs in Javoor, Shirkola and Moraba PACS’s, respectively.
Average recovery was Rs. 2.10, 0.79 and 50.34 lakhs in Javoor, Shirkola and Moraba
PACS’s, respectively. The average loss was Rs. 7.15, 14.55 and 15.30 lakhs in Javoor,
Shirkola and Moraba PACS’s, respectively. The average profit was Rs. 4.11, 84.58 and
50.93 lakhs in Javoor, Shirkola and Moraba PACS’s, respectively.
Hubli Taluk
The average share capital was Rs. 3.03, 4.27 and 5.34 lakhs in Chabbi,
B.Aralikatti and Varur PACS’s, respectively. The average borrowings was Rs. 6.90,
16.16 and 23.49 lakhs in Chabbi, B.Aralikatti and Varur PACS’s, respectively. The
average deposit was Rs. 14.57, 5.96 and 1.58 lakhs in Chabbi, B.Aralikatti and Varur
PACS’s, respectively. The average cash in hand was Rs. 0.40, 0.16 and 0.44 lakhs in
Chabbi, B.Aralikatti and Varur PACS’s, respectively. Average cash at bank was
Rs. 6.60, 0.16 and 0.44 lakhs in Chabbi, B.Aralikatti and Varur PACS’s, respectively.
The average reserve was Rs. 1.12, 1.02 and 0.37 in Chabbi, B.Aralikatti and Varur
PACS’s, respectively. Average investment was Rs. 1.09, 1.59 and 0.95 lakhs in Chabbi,
B.Aralikatti and Varur PACS’s, respectively. Average advance was Rs. 18.07, 19.46
and 14.67 lakhs in Chabbi, B.Aralikatti and Varur PACS’s, respectively. Average
overdues were Rs. 10.39, 18.69 and 14.36 lakhs in Chabbi, B.Aralikatti and Varur
PACS’s, respectively. Average recovery was Rs. 11.56, 16.93 and 7.47 lakhs in Chabbi,
B.Aralikatti and Varur PACS’s, respectively. The average loss was Rs. 0.67, 3.80 and
1.45 lakhs in Chabbi, B.Aralikatti and Varur PACS’s, respectively. The average profit
was Rs. 1.69, 0.02 and 0.07 lakhs in Chabbi, B.Aralikatti and Varur PACS’s,
respectively.
Kundgol taluk
The average share capital was Rs. 23.91, 12.58 and 46.64 lakhs in Yaliwala,
Kubihal and Kundgol PACS’s, respectively. The average borrowings was Rs. 14.33,
16.82 and 229.26 lakhs in Yaliwala, Kubihal and Kundgol PACS’s, respectively.
The average deposit was Rs. 7.23, 4.65 and 38.14 lakhs in Yaliwala, Kubihal and
Kundgol PACS’s, respectively. The average cash in hand was Rs. 0.48, 4.65 and 38.14
lakhs in Yaliwala, Kubihal and Kundgol PACS’s, respectively. Average cash at bank
was Rs. 9.64, 4.42 and 6.14 lakhs in Yaliwala, Kubihal and Kundgol PACS’s,
respectively. The average reserve was Rs. 27.33, 2.86 and 24.77 lakhs in Yaliwala,
Kubihal and Kundgol PACS’s, respectively. Average investment was Rs. 6.33, 3.80 and
279.17 lakhs in Yaliwala, Kubihal and Kundgol PACS’s, respectively. Average advance
was Rs. 56.70, 12.31 and 144.98 lakhs in Yaliwala, Kubihal and Kundgol PACS’s,
respectively. An average overdue was Rs. 80.40, 42.59 and 18.58 lakhs in Yaliwala,
Kubihal and Kundgol PACS’s, respectively. Average recovery was Rs. 54.44, 53.97 and
17.76 in Yaliwala, Kubihal and Kundgol PACS’s, respectively. The average loss was
Rs. 7.20, 0.90 and 16.06 lakhs in Yaliwala, Kubihal and Kundgol PACS’s, respectively.
The average profit was Rs. 3.31, 1.33 and 15.58 lakhs in Yaliwala, Kubihal and
Kundgol PACS’s, respectively.
4.1.2 Growth pattern of PACS’s
In order to assess the performance of PACS’s in all 15 variables comprising of

both physical and financial were subjected to compound growth rate analysis for the
study period covering 1999-00 to 2009-10.
4.1.2.1 Growth in physical indicators
The growth pattern of the selected physical indicators of selected PACS’s are
presented in the Table 4.3.
Dharwad taluk
The growth in membership was positive and significant in the case of Hebballi,
Marewada and Vanahalli PACS’s accounted for 0.07, 1.25 and 1.11 per cent per annum,
respectively. Whereas growth in number of employees showed a positive and
significant in case of Hebballi (1.8%) and Marewada (1.8%) but there was no growth in
case of Vanahalli PACS. The growth in number of loan account was also positive and
significant in Hebballi (0.57%), Marewada (2.41%) and Vanahalli (1.29%) PACS’s
respectively.
Kalaghatagi taluk
The growth rate in membership was positive and significant in Malakankoppa

(1.18%) and Thabakadhonnihalli (1.32%) PACS’s respectively but there was no growth
in case of G. Hulikatti PACS. Whereas growth in number of employees registered a
positive and significant in case of Malakankoppa (5.68%) and G. Hulikatti (4.52%) but
there was no growth in case of Thabakadhonnihalli PACS. The growth rate in number
of loan account was found to be positive and significant in Malakankoppa (0.94%),
G. Hulikatti (4.93%) and Thabakadhonnihalli (3.68%) PACS’s, respectively.
Navalgund taluk
The growth rate in membership was found to be positive and significant in

Javoor (0.77%), Shirkola (0.02%) and Moraba (3.53%) PACS’s respectively.
The growth rate in number of employees was observed to be found to be

positive and significant in Javoor (4.52%), Shirkola (3.18%) and Moraba (6.28%)
PACS’s, respectively. The growth in number of loan account was also positive and
significant in Javoor (1.1%), Shirkola (0.99%) and Moraba (2.97%) PACS’s,
respectively.
Hubli taluk
The growth rate in membership was found to be positive and high significant in
case of B. Aralikatti PACS (8.38%) but there was a significant and negative growth in
case of Chabbi (-2, 53%) and Varur PACS (-9.17%). Whereas growth in number of
employees showed a positive and significant in case of Chabbi PACS (3.37%) but there
was no growth found in case of B. Aralikatti and Varur PACS’s. The growth rate in
number of loan account registered positive and significant in Chabbi (0.36%) and
B. Aralikatti (6.86%) PACS’s, respectively but it was a significant and negative growth
in case of Varur (-0.36%) PACS.
Kundgol taluk
The growth in membership was observed to be positive and was highly

significant in Yaliwala (0.97%), Kubihal (0.1%) and Kundgol (2.15%) PACS’s,
respectively. The growth in number of employees has showed positive and significant in
Yaliwala (2.46%), Kubihal (5.68%) and Kundgol (4.47%) PACS’s, respectively.
The growth in number of loan account was found positive and significant in Kubihal
(2.8%) and Kundgol (8.6%) PACS’s, respectively but it was a significant and negative
growth in case of Yaliwala (-0.11%) PACS.
4.1.2.2 Growth in financial indicators
The growth pattern in financial indicators of selected PACS’s in Dharwad,

Kalaghatagi, Navalgund, Kundgol and Hubli taluks are presented in the Table 4.4.
Dharwad taluk
The growth in share capital was found to be positive and was highly significant
in Hebballi (2.21%), Marewada (2.77%) and Vanahalli (0.16%) PACS’s, respectively.
Growth in borrowings was found positive and significant in case of Hebballi (7.03%)
and Vanahalli (20.51%) PACS’s but it was negative and significant growth in case of
Marewada (-34.06%) PACS. The growth in deposits had showed negative and
significant in all three PACS’s. The growth in cash in hand was negative and significant
in all three PACS’s.
The growth in cash at bank was positive and significant in case of Hebballi
(4.71%) and Marewada (27.64%) PACS’s but growth was seen negative in case of
Vanahalli (-0.29%) PACS. The growth in reserves was observed positive and significant
in case of Marewada (9.38%) and Vanahalli (0.11%) PACS’s but negative and
significant in case of Hebballi (-21.15%) PACS. Growth in investment was positive and
significant in all three PACS’s. Growth in advances was positive and significant growth
in case of Vanahalli (18.26%) PACS but negative and significant in case of Hebballi
(-30.46%) and Marewada (-4.32%) PACS’s. The growth rate in recovery was positive
and significant in Hebballi (16.46%) PACS but negative and significant in Marewada
(-0.01%) and Vanahalli (-7.99%) PACS’s. Growth in loss was positive significant in
Marewada (24.66%) PACS but negative and significant in Hebballi (-2.43%) and
Vanahalli (-23.18%) PACS’s. The growth in profit was also positive and significant in
Hebballi (47.61%) and Marewada (3.48%) but there was no growth was found in
Vanahalli PACS.
Kalaghatagi taluk
The share capital was registered a positive and significant growth in

Thabakadhonnihalli (2.42%) PACS but there was no growth in Malakankoppa and
G. Hulikatti PACS’s. The growth in borrowings was also positive and significant
growth in G.Hulikatti (23.87%) and Thabakadhonnihalli (1.33%) PACS’s, but negative
and significant in Malakankoppa (-9.28%) PACS. The growth in deposits registered
positive and significant in all the three PACS’s. Growth in cash in hand was positive
and significant in Malakankoppa (1.9%) and Thabakadhonnihalli (69.99%) PACS’s but
negative growth in G. Hulikatti (-6.83%) PACS. Growth in cash at bank was positive
and significant in Malakankoppa (0.14%) and Thabakadhonnihalli (9.35%) PACS’s but
negative growth in G. Hulikatti (- 5.65%) PACS. The growth in reserves was found
positive and significant in all the three PACS’s. Growth in investment was also positive
and significant in G.Hulikatti (0.76%) and Thabakadhonnihalli (8.36%) PACS’s but
negative growth growth in Malakankoppa (-0.01%) PACS. Growth in advances was
registered positive and significant in Malakankoppa (55.87%) and Thabakadhonnihalli
(0.39%) PACS’s but negative growth in G. Hulikatti (-5.47%) PACS. Growth in
overdues was also found positive and significant in Thabakadhonnihalli (8.67%) PACS
but it was negative in Malakankoppa (-28.76%) and G. Hulikatti (-15.91%) PACS’s.
The growth in recovery showed nega tive and significant in all the three PACS’s.
Growth in loss was positive and significant in all the PACS’s. The growth in profit
registered positive in Malakankoppa (21.89%) but was negative growth in
Thabakadhonnihalli (-35.61%) but there was no growth found in G. Hulikatti PACS.
Navalgund taluk
The growth rate in share capital was found to be positive and significant in
Javoor (3.69%), Shirkola (44.15%) and Moraba (3.1%) PACS’s. Borrowings registered
negative and significant growth in all three PACS’s. Growth in deposits was also found
positive and significant in all the three PACS’s. Growth in cash in hand was seen
negative and significant in all the three PACS’s. Growth in cash at bank was found
positive and significant in Shirkola (29.31%) and Moraba (26.98%) PACS’s but it was
negative growth in Javoor (-9.37%) PACS. The growth in reserves has shown positive
and significant in all the three PACS’s. Growth in investment was found positive and
significant in Shirkola (1.61%) and Moraba (1.96%) PACS’s but negative in Javoor
(-11.92%) PACS. Growth in advances was positive and significant in Moraba (0.23%)
PACS but negative in Javoor (- 1.48%) and Shirkola (- 4.28%) PACS’s. Growth in
overdues was found negative and significant in case of Javoor (- 19.01%), Shirkola
(-50.22%) and Moraba (-24.87%) PACS’s. The growth in recovery registered negative
and significant in Javoor (-14.21%) Moraba (-30.07%) PACS’s, but positive in Shirkola
(5.47%) PACS. Growth in loss was found positive and significant in Javoor (2.25%)
PACS, but it was negative and significant growth in Shirkola (-79.23%) and Moraba
(-19.66%) PACS’s. The growth rate in profit has shown positive in all the PACS’s.
Hubli taluk
The growth rate in share capital was positive and significant in Chabbi (0.49%)
and B.Aralikatti (0.79%) PACS’s, but negative growth in Varur (-2.27%) PACS.
Growth in borrowings was registered positive and significant in Varur (0.23%) but
negative growth in Chabbi (-10.75%) and B. Aralikatti (-13.19%) PACS’s. Growth in
deposits was found positive and significant in Chabbi (35.99%) and B. Aralikatti
(1.58%) PACS’s but negative growth in Varur (-1.81%) PACS. Growth in cash in hand
was negative and significant in all the three PACS’s. Growth in cash at bank was found
positive and significant in Chabbi (27.91%) and Varur (0.59%) PACS’s but negative in
B. Aralikatti (-3.1%) PACS. The growth in reserves was observed to be positive and
significant in all the three PACS’s. Growth in investment was also positive and
significant in Chabbi (4.22%), B. Aralikatti (8.14%) and Varur (0.67%) PACS’s.
Growth in advances was found negative and significant in all three PACS’s. Growth in
overdues was positive and significant in Chabbi (56.91%), but negative in B. Aralikatti
(-5.01%) and Varur (-0.76%) PACS’s. The growth in recovery showed negative and
significant in Chabbi (- 10.6%), B. Aralikatti (- 2.27%) and Varur (-3.6%) PACS’s.
Growth in loss recorded positive and significant in B. Aralikatti (138.78%) PACS, but it
was negative and significant growth in Chabbi (-28.72%) and Varur (-15.31%) PACS’s.
The growth in profit was found positive in Chabbi (23.88%) and Varur (17.59%) but
negative in B. Aralikatti (-46.68%) PACS.
Kundgol taluk
The share capital registered a positive and significant growth in Yaliwala

(0.20%), and Kundgol (2.62%) PACS’s but it was growth negative in Kubihal (-1.78%)
PACS. Growth in borrowings was found to be positive and significant in Yaliwala
(2.34%) and Kubihal (10.14%) but negative in Kundgo l (-42.77%) PACS’s. Growth in
deposits was found to be positive and significant in Yaliwala (11.38%) and Kubihal
(2.6%) PACS’s but there was negative growth in Kundgol (-9.67%) PACS. Growth in
cash in hand was positive and significant in Yaliwala (9.92%) but negative in Kubihal
(-4.76%) and Kundgol (-64.82%) PACS’s. Growth in cash at bank was positive and
significant in Yaliwala (16.86%) and Kundgol (37.42%) PACS’s but negative in
Kubihal (-0.5%) PACS. The growth in reserves was positive and significant in Yaliwala
(19.72%) and Kundgol (0.74%) PACS’s but negative in Kubihal (-0.003%). Growth in
investment was positive and significant in Yaliwala (2.92%), Kubihal (1.74%) and
Kundgol (4.62%) PACS’s. Growth in advances observed to be positive and significant
in Kundgol (0.5%) PACS but negative in Yaliwala (-4.54%) and Kubihal (-7.49%)
PACS’s. Growth in overdues was positive and significant in Kundgol (1.2%) but
negative in Yaliwala (-12.17%) and Kubihal (-0.97%) PACS’s. The growth in recovery
showed positive and significant in Yaliwala (12.03%) but was negative growth in
Kubihal (-4.62%) and Kundgol (-30.83%) PACS’s. Growth in loss was negative growth
and significant in Yaliwala (-70.56%), Kubihal (-70.37%) and Kundgol (- 82.79%)
PACS’s. The growth in profit has shown positive in all three PACS’s.
4.1.3 Analysis of the PACS’s performance through financial ratios
Ratio analysis is one of the most significant internationally used technique for
evaluating the financial performance of PACS’s. Ratios are nothing but relative figures
expressing the relationship between the variables. Balance sheet and profit and loss
account (Income statement) are the basic financial statement of every enterprise.
These statements furnish a summarized view of the financial as well as operating status
of an enterprise. However, absolute figures alone in the financial statements convey no
meaning unless those figures are studied in relation to other figures. Hence, a careful
examination of the financial statement is felt intrinsic to know about the performance.
The financial ratios relevant to PACS’s are grouped under different categories namely,
liquidity ratios, solvency ratios, test of strength, profitability ratios and efficiency ratios.
These ratio s were computed to measure the ability of the bank to meet its
liability obligations in the short-run. The possession of assets is expressed as their
liquidity, which may at any time required to meet the liability obligation of the society.
Three liquidity ratios were computed as detailed below and are presented in the
Table 4.5.
a. Current ratio
b. Liquid assets to total assets ratio
c. Acid-test ratio
a) Current ratio
The ability to pay-off debt can be measured by establishing a relationship

between current assets to current liabilities. In the given context current implies readily
available with reference to its assets and immediate or urgent in case of liabilities, both
components spread at the most for one year. The average current ratio was higher for
Hebballi PACS (41.48) followed by Marewada (1.57) and Vanahalli (0.12) PACS of
Dharwad taluk, respectively. Whereas in Kalaghatagi taluk, Thabakadhonnihalli had
higher ratio (8.08) followed by Malakankoppa (0.08) and G. Hulikatti (0.01). In case of
Navalgund taluk, ratio was higher in Javoor PACS (2.28) followed by Shirkola (0.01)
and Moraba (0.01) PACS’s. In case of Hubli taluk, Chabbi, B. Aralikatti and Varur
PACS’s were having same (0.01) current ratio. In case of Kundgol taluk, current ratio
was highest in Kundgol PACS (15.31) than Yaliwala (0.01) and Kubihal (0.01).
b) Liquid assets to Total assets ratio
This ratio was highest in Hebballi PACS (0.54) followed by Marewada (0.37)
and Vanahalli (0.14) in Dharwad Taluk. In case of Kalaghatagi taluk,
Thabakadhonnihalli PACS(6.53) had higher ratio followed Malakankoppa and
G. Hulikatti, respectively. In Navalgund taluk, Javoor PACS (19.63) was highest ratio
followed by Shirkola (1.12) and Moraba (0.01). In Hubli taluk, Chabbi (0.63) had
higher ratio followed by B. Aralikatti (0.01) and Varur (0.01). In case of Kundgol taluk,
Kundgol PACS (0.39) had higher ratio followed by Yaliwala and Kubihal.
c) Acid-test ratio
This ratio is refined measure of liquidity and assesses how liquid the society
would be if business operations come to an abrupt halt. In case of Dharwad taluk,
Marewada PACS (6.35) showed highest ratio followed by Vanahalli (0.12) and Hebballi
(0.05) PACS’s. In case of Kalaghatagi taluk, Thabakadhonnihalli PACS (82.72) showed
very higher ratio and lowest in G.Hulikatti (0.01). In Navalgund taluk, Javoor (32.81)
showed high ratio followed by Shirkola (3.16) and Moraba (2.09). In Hubli taluk, ratio
was found to be less than unity in Chabbi PACS (0.20) B. Aralikatti and Varur PACS.
In case of Kundgol taluk, ratio was remains same in Yaliwala (0.01) and Kubihal (0.01)
and no ratio was found to be in Kundgol PACS.
4.1.3.2 Test of solvency
Two types of ratios were computed to ascertain the solvency position of the
society in order to measure the share of each society against the funds provided by its
creditors and the ratios are presented in the Table 4.6.
a. Debt-equity ratio
b. Indebtedness ratio
a) Debt-equity ratio
The ratio was found to be positive for all selected fifteen PACS’s. In Dharwad
taluk, ratio was found to be higher in Marewada PACS (3.60) followed by Vanahalli
(1.11) and Hebballi (0.26). In case of Kalaghatagi taluk, Thabakadhonnihalli (32.66)
had high ratio followed by Malakankoppa (1.60) and G. Hulikatti (0.01). In Navalgund
taluk, Shirkola (9.72) showed high ratio followed by Javoor (1.29) and Moraba PACS
(0.01). In Hubli taluk, all three PACS’s showed (0.01) same ratio. Similarly, all three
PACS’s in Kundgol taluk showed (0.01) same ratios.
b) Indebtedness ratio
This ratio was highest in Marewada (3.99%) followed by Vanahalli (2.74%) and
Hebballi PACS (0.19%) in Dharwad taluk. In case of Kalaghatagi taluk,
Thabakadhonnihalli PACS (3.55%) had showed high ratio followed by Malakankoppa
(3.03%) and G. Hulikatti (0.60%). In Navalgund taluk, Shirkola PACS (9.97%)
exhibited high ratio followed by Javoor (0.83%) and Moraba (0.74%). In Hubli taluk,
ratio was found to be less than unity in B. Aralikatti (0.29%), Varur (0.12%) and Chabbi
(0.10%). In Kundgol taluk, Yaliwala (2.12%) showed higher ratio followed by Kundgol
(0.25%) and ratio has no value in Kubihal PACS.
4.1.3.3 Tests of strength
Net worth and net capital ratio were used to assess the real strength of society
and results are presented in the Table 4.7.
a. Net worth
b. Net capital ratio
a) Net worth
The average net worth of Hebballi (Rs. 4.61 lakhs) and Marewada PACS (Rs.
29.52 lakhs) was positive, where as negative net worth in case Vanahalli (Rs. -27.64
lakhs) of Dharwad taluk. In case of Kalaghatagi, Navalgund and Hubli taluk selected
PACS’s showed a negative net worth. In case of Kundgol taluk, all three societies
showed a positive net worth, namely Yaliwala (Rs. 74.45 lakhs), Kubihal (Rs. 26.89
lakhs) and Kundgol PACS (Rs. 100.67 lakhs).
b) Net capital ratio
The highest ratio was found in case of Marewada PACS (25.18) followed by
Vanahalli (16.43) and Hebballi (0.16) of Dharwad taluk. In case of Kalaghatagi taluk,
G. Hulikatti (54.54) had highest ratio followed by Thabakadhonnihalli (50.09) and
negative ratio was found in case of Malakankoppa (-3.92) PACS. In Navalgund Taluk,
Moraba PACS (71.46) showed highest ratio followed by Javoor (1.17) and Shirkola
(1.03) PACS. In Hubli taluk, Chabbi (2.92) has shown a highest ratio followed by Varur
(2.63) and B. Aralikatti (1.48) PACS. This ratio was found to be greater than unity in
Kubihal (6.10), Yaliwala (5.17) and Kundgol (2.73) PACS’s of Kundgol taluk.
4. 1.3.4 Profitability ratio
Following profitability ratios were used to analyze the financial health of the
selected PACS’s namely,
a. Net profits to Total assets
b. Net profit to Net worth
c. Net profit to Fixed assets
These ratios are depicted in the Table 4.8
a) Net profits to Total assets
This ratio was found to be highest in Hebballi PACS (14) followed by

Marewada PACS (1.29) and the ratio were found to be zero in Vanahalli PACS’s of
Dharwad taluk. Where as in Kalaghatagi, Navalgund and Hubli taluks, all three selected
societies showed zero values with respect to this ratio. In case of Kundgol taluk,
Kubihal PACS (9.94) showed a higher ratio followed by Yaliwala (4.06) and Kundgol
(1.71) PACS’s.
b) Net profit to Net worth
This ratio was found to be highest in Marewada (6.40) followed by Hebballi

(0.85) and the ratio was zero in Vanahalli PACS’s of Dharwad taluk. Whereas in
Kalaghatagi, Navalgund and Hubli taluks three selected societies showed zero values
with respect to this ratio. In case of Kundgol taluk, Kubihal PACS (20.47) showed a
higher ratio followed by Yaliwala (0.08) and Kundgol (0.07) PACS’s.
c) Net profit to Fixed assets
This ratio was found to be higher in Hebballi PACS (25.98) followed by

Marewada (0.28) and the ratio was observed to be zero in Vanahalli PACS’s of
Dharwad taluk. Where as in Kalaghatagi, Navalgund and Hubli taluks, all three selected
societies were found to be zero values with respect to this ratio. In case of Kundgol
taluk, Kubihal PACS (2.80) showed higher ratio followed by Yaliwala (1.57) and
Kundgol (0.54) PACS’s.
4.1.3.5 Efficiency ratio
The results of the efficiency ratios employed in the study are presented in the
Table 4.9
a) Gross ratio
The average value of the ratio was found to be highest in Vanahalli PACS
(1080.75%) followed by Marewada (88.03%) and Hebballi (68.26%) PACS’s of
Dharwad taluk. In Kalaghatagi taluk, it was higher in Malakankoppa PACS (745.59%)
followed by Thabakadhonnihalli (175.24%) and G. Hulikatti (100.0%) PACS’s. In case
of Navalgund taluk, Javoor PACS (247.75%) had higher ratio followed by Shirkola
(157.41%) and Moraba (149.32%) PACS’s. In Hubli taluk, B. Aralikatti PACS
(418.22%) had higher ratio followed by Varur (129.40) and Chabbi (127.40) PACS’s.
In Kundgol taluk, Kundgol PACS (83.96%) were found to be higher ratio followed by
compared to Yaliwala (63.92%) and Kubihal (47.26%) PACS’s.
b) Operating ratio
The operating ratio was found to be lowest in Hebballi PACS (0.0068%)

compared to Marewada (75.79%) and Vanahalli (158.57%) PACS’s. In case of
Kalaghatagi, the ratio in G. Hulikatti PACS (100.0%) was found lowest ratio compared
Thabakadhonnihalli (125.40%) and Malakankoppa (745.59%) PACS. In case of
Navalgund taluk, Moraba PACS (87.97%) showed a lowest ratio compared to Javoor
(111.24%) and Shirkola (157.41%) PACS’s. In Hubli taluk, Chabbi PACS (66.98%) has
shown a lower ratio as compared to Varur (68.18%) and B. Aralikatti (196.45%)
PACS’s. In Kundgol taluk, Kubihal PACS (28.11%) exhibited lowest ratio compared to
Yaliwala (63.92%) and Kundgol (83.96%) PACS’s.
4.1.4 Relative performance of the PACS’s
The technique of principal component analysis was applied to study the

influence of physical and financial indicators on the performance of PACS’s. Results
are presented below.
Dharwad taluk
The first three components explained 81 per cent of the variation in Hebballi
PACS of Dharwad taluk. The details of the co-efficient of the component along with the
associated eigen values and the percentage variation are depicted in Table 4.10. Table
revealed that, 15 variables were closely associated with the performance of the society,
in the first component. Out of which, three variables were physical indicators and
remaining were financial indicators. The variables appeared in the first component
were, membership, employees, loan account, share capital, borrowings, deposits, cash in
hand, cash at bank, reserve, investment, advance, overdues, recovery, loss and profit.
The scores were ranged from -0.923 to 0.946 and this component accounted for 81.15
per cent variation.
In Marewada PACS, all the selected variables were grouped into three
components and they accounted for about 70 per cent variation. The results presented in
the Table 4.10. Revealed that,15 variables were closely associated with the performance
of the society, in the first component. Out of which, three variables were physical
indicators and remaining twelve were financial indicators. The variables appeared in the
first component were, membership, employees, loan account, share capital, borrowings,
deposits, cash in hand, cash at bank, reserve, investment, advance, overdues, recovery,
loss and profit. Table also revealed that all the selected variables were closely associated
with performance of the society and the scores were ranged from -0.735 to 0.891, and
accounted for 37.61 per cent variation variation.
In case of Vanahalli PACS the first three components explained 69.02 per cent
of variation. Table revealed that, out of 15 variables 13 variables were closely
associated with the performance of the society, in the first component. Out of which,
two variables were physical indicators and remaining 11 were financial indicators.
The variables appeared in the first component were, membership, employees, loan
account, share capital, borrowings, deposits, cash in hand, cash at bank, reserve,
investment, advance, overdues, recovery, loss and profit. Table also revealed that all the
selected variables were closely associated with performance of society except profit and
employees and scores were ranged from -0.831 to 0.879 and accounted for 37.07 per
cent
Kalaghatagi taluk
The first three components were explained 67 per cent of the variation in
Malakankoppa PACS of Kalaghatagi taluk. The details of the co-efficient of the
component along with the associated eigen values and the percentage variation were
shown in the Table 4.11. Table revealed that, out of 13 variables, 8 variables were
closely associated with the performance of the society, in the first component. Out of
which, three variables were physical indicators and remaining five were financial
indicators. The variables appeared in the first component were, membership, employees,
loan account, share capital, borrowings, deposits, cash in hand, cash at bank, reserve,
investment, advance, overdues, recovery, loss and profit. Table revealed that the
selected variable was closely associated with performance of the society except loss
with the scores was ranged from -0.908 to 0.903.
In case of G. Hulikatti PACS first three components explained 82 per cent of the
variation. Table also revealed that the selected variable was closely associated with
performance of society except borrowings, with the scores were ranged from -0.921 to
0.967. In case of Thabakadhonnihalli PACS, first three components explained 71 per
cent of the variation. Table revealed that the selected variable was closely associated
with performance of society except recovery, with the scores were ranged from -0.578
to 0.939.
Navalgund taluk
The first three components explained 83.82 per cent variation in Javoor PACS.
The details of the coefficients of the components along with associated eigen values and
the percentage variation were shown in the Table 4.12, revealed that, out of 15
variables, eight variables were associated with the performance of the society in the first
component. Out of which, three variables were physical indicators and remaining were
financial indicators. The scores were ranged from -0.812 to 0.870 and the third
component explained 18.97 per cent variation in the society performance
In Shirkola PACS the first three components explained 81.57 per cent variation.
The details of the coefficients of the components along with associated eigen values and
the percentage variation were shown in the Table 4.12. Table revealed that, out of 15
variables ten variables were associated with the performance of the society in the first
component. Out of which, three variables were physical indicators and remaining were
financial indicators. The score were ranged from-0.888 to 0.957 and the third
component explained 11.23 per cent variation.
68.88 per cent of the variation was explained by the first three components in
Moraba PACS. The details of the coefficients of the components along with associated
eigen values and the percentage variation were shown in the Table 4.12, revealed that,
out of 15 variables ten variables were associated with the performance of the society in
the first component. Out of which, three variables were physical indicators and
remaining were financial indicators. The score were ranged from -0.912 to 0.953 and
the third component accounted for 14.13 per cent variation.
Hubli taluk
The first three components were explained 77.92 per cent of the variation in
Chabbi PACS of Hubli taluk. The details of the co-efficient of the component along
with the associated Eigen values and percentage variation were shown in the Table 4.13.
revealed that, 14 variables were closely associated with the performance of the society,
in the first component. Out of which, two variables were physical indicators and
remaining were financial indicators. The variables appeared in the first component
were, membership, loan account, share capital, borrowings, deposits, cash in hand, cash
at bank, reserve, investment, advance, overdues, recovery, loss and profit. The scores
were ranged from -0.808 to 0.994 and this compone nt accounted for 40.21 per cent
variation.
In B. Aralikatti PACS the first three components explained 80.85 per cent
variation. The details of the coefficients of the components along with associated eigen
values and percentage variation were shown in the Table 4.13, revealed that, out of 14
variables, seven variables were associated with the performance of the society in the
first component. Out of which, two variables were physical indicators and remaining
were financial indicators. The scores were ranged from-0.852 to 0.783. The third
component explained 19.22 per cent variation in the society performance.
In Varur PACS the first three components explained 81.98 per cent variation.
Table revealed that, out of 14 variables ten variables were associated with the
performance of the society in the first component. Out of which, two variables were
physical indicators and remaining were financial indicators. The scores were ranged
from -0.945 to 0.886 and this component explained 13.19 per cent variation.
Kundgol taluk
The first three components were explained 72.34 per cent of the variation in
Yaliwala PACS of Kundgol taluk. The details of the co-efficient of the component
along with the associated eigen values and the percentage variation were shown in the
Table 4.14, revealed that, out of 15 variables, 11 variables were closely associated with
the performance of the society in the first component. Out of which, three variables
were physical indicators and remaining were financial indicators. The variables
appeared in the first component were membership, employees, loan account, share
capital, borrowings, deposits, cash in hand, cash at bank, reserve, investment, advance,
overdues, recovery, loss and profit. The scores were ranged from -0.646 to 0.954 and
this component accounted for 37.83 per cent variation.
In Kubihal PACS the first three components explained 69.39 per cent variation.
Table revealed that, out of 15 variables ten variables were associated with the
performance of the society in the first component. Out of which, three variables were
physical indicators and remaining were financial indicators. The score were ranged
from-0.593 to 0.892. The third component explained 17.50 per cent variation in the
society performance.
In Kundgol PACS, the first three components explained 85.15 per cent variation.
Table also revealed that, out of 15 variables ten variables were associated with the
performance of the society in the first component. Out of which, three variables were
physical indicators and remaining were financial indicators. The score were ranged
from-0.712 to 0.982 and this component accounted for 13.19 per cent variation in the
society performance.
4.2 Lending norms and credit flow of PACS’s
The loaning norms followed by the PACS’s and the extent of credit flow have
been discussed as under.
4.2.1 Loaning procedure
The organizational structure of three tier cooperative credit system State

Co-operative Bank (SCB) is an Apex Bank with the head office at Bangalore, District
Central Co-operative Bank (DCCB) at district level and Primary Agricultural
Co-operative Credit Societies at village level. DCCB acts as intermediate between the
SCB and PACS. The PACS’s do not have any loan sanctioning power. DCCB
empowered to sanctioning of loan to PACS. Hence, all the loan applications essentially
pass through two levels at the first level, loan applications received by the PACS’s are
verified, scrutinized and appraised by the PACS’s. These, applications with the
recommendations of the PACS’s are referred to either, branch office or head office
depending on the quantum of loans for the further appraisal and sanctioning. The DCCB
office verifies all the documents, conducts legal scrutiny and collects additional
information, if required from the PACS’s. Sanctioned loan applications along with
cheques are sent back to PACS’s for their disbursal.
4.2.1.1 Documents required
For getting loan, the applicant has to submit various legal and technical
documents and certificates from competent authorities.
1. Title deeds of land offered for security
2. Records of rights and possession certificates for last three years.
3. Twelve year encumbrance certificate.
4. Payment of land revenue receipt.
5. Latest mutation registers extract.
It can be seen tha t, the borrower of the PACS has to obtain 3 to 5 documents.
Usually all the documents or certificates are to be submitted along with application
form. The purpose for which loans are advanced by PACS is mainly for crop loan.
4.2.2 Purpose-wise and category-wise flow of credit
With commercialization of agriculture, the cash requirement of farmers

increased to diversify their activities in order to stabilise their income. For this purpose
farmers were not able to meet the requirement due to limited owned funds. Hence
farmers need to be advanced adequate credit for diversified purposes.
Dharwad Taluk
The purpose- wise and category-wise flow of credit from PACS’s in Dharwad
taluk is given in Table 4.15. It could seen from the table that, the Hebballi PACS
advances on an average Rs. 28.51 lakhs loan to the all categories of farmers for different
purpose of which Rs. 17.11 lakhs of loan was given to the small farmers for which they
used Rs. 10.69 lakhs for agricultural purpose and Rs. 6.42 lakhs for non-agricultural
purpose. Rs. 4.99 lakhs of loan was given to medium farmers for which they used Rs.
1.43 lakhs for agricultural purpose and Rs. 3.56 lakhs for non-agricultural purpose. Rs.
6.42 lakhs of amount was given to large farmers of which they used Rs. 4.28 lakhs for
agricultural purpose and Rs. 2.14 lakhs was given for non-agricultural purpose.
It could be seen from the table that, the Marewada PACS advances on an
average Rs. 21.89 lakhs loan to the all categories of farmers for different purpose of
which Rs. 13.13 lakhs of loan was given to the small farmers for which they used
Rs. 8.21 lakhs for agricultural purpose and Rs. 4.93 lakhs for non-agricultural purpose.
Rs. 3.83 lakhs of loan was given to medium farmers for which they used Rs. 1.09 lakhs
for agricultural purpose and Rs. 2.74 lakhs for non-agricultural purpose. Rs. 4.93 lakhs
of amount was given to large farmers of which they used Rs. 3.28 lakhs for agricultural
and Rs. 1.64 lakhs was given for non-agricultural purposes.
It is seen from the table that, the Vanahalli PACS advances on an average
Rs. 8.71 lakhs loan to the all categories of farmers for different purpose of which
Rs. 7.10 lakhs of loan was given to the small farmers for which they used Rs. 5.30 lakhs
for agricultural purpose and Rs. 1.80 lakhs for non-agricultural purpose. Rs. 0.63 lakhs
of loan was given to medium farmers for which they used Rs. 0.10 lakhs for agricultural
purpose and Rs. 0.53 lakhs for non-agricultural purpose. Rs. 0.98 lakhs of amount was
given to large farmers of which they used Rs. 0.20 lakhs for agricultural purpose and
Rs. 0.78 lakhs was given for non-agricultural purpose.
Kalaghatagi taluk
The purpose wise flow of credit from PACS’s in Kalaghatagi taluk is given in
table 4.15. . It could seen from the table that, the Malakankoppa PACS advances on an
average Rs. 1.99 Lakhs loan to the all categories of farmers for different purpose of
which Rs. 1.99 lakhs of loan was given to the small farmers for which they used Rs.
0.35 lakhs of loan was given to medium farmers for which they used Rs. 0.10 lakhs for
agricultural purpose and Rs.0.25 lakhs for non-agricultural purpose. Rs. 0.45 lakhs of
amount was given to large farmers of which they used Rs. 0.30 lakhs for agricultural
purpose and Rs. 0.15 lakhs was given for non-agricultural purpose.
It could be seen from the table that, the G. Hulikatti PACS advances on an
average Rs. 3.36 Lakhs loan to the all categories of farmers for different purpose of
agricultural purpose and Rs. 0.42 lakhs for non-agricultural purpose. Rs. 0.76 lakhs of
amount was given to large farmers of which they used Rs. 0.50 lakhs for agricultural
It can be seen from the table that, the Thabakadhonnihalli PACS advances on an
Rs. 0.74 lakhs of loan was advanced to medium farmers for which they used Rs. 0.21
lakhs for agricultural purpose and Rs. 0.53 lakhs for non-agricultural purpose. Rs. 0.95
lakhs of amount was given to large farmers of which they used Rs. 0.63 lakhs for
agricultural purpose and Rs. 0.32 lakhs was given for non-agricultural purpose
Navalgund taluk
The purpose wise flow of credit from PACS’s in Navalgund taluk is given in
table 4.15. It could be seen from the table that, the Javoor PACS advances on an
Rs. 28.76 lakhs for agricultural purpose and Rs. 17.26 lakhs for non-agricultural
purpose. Rs. 13.42 lakhs of loan was given to medium farmers for which they used
Rs. 17.26 lakhs of amount was given to large farmers of which they used Rs. 11.50
lakhs for agricultural purpose and Rs. 5.75 lakhs was given for non-agricultural
purpose
It could be seen from the table that, the Shirkola PACS advances on an average
Rs. 58.57 lakhs loan to the all categories of farmers for different purposes of which Rs.
35.14 lakhs of loan was advanced to the small farmers for which they used Rs. 21.96
lakhs for agricultural purpose and Rs.13.18 lakhs for non-agricultural purpose. Rs.
agricultural purpose and Rs. 7.32 lakhs for non-agricultural purpose. Rs. 13.18 lakhs of
amount was given to large farmers of which they used Rs.8.78 lakhs for agricultural
purpose and Rs. 4.39 lakhs was advance for non-agricultural purpose.
The Morab PACS advances on an average Rs. 97.60 Lakhs loan to the all
categories of farmers for different purpose of which Rs. 58.56 lakhs of loan was given
to the small farmers for which they used Rs. 36.60 lakhs for agricultural purpose and
Rs.21.96 lakhs for non-agricultural purpose. Rs.17.08 lakhs of loan was given to
medium farmers for which they used Rs.4.88 lakhs for agricultural purpose and
Rs.12.20 lakhs for non-agricultural purpose. Rs. 21.96 lakhs of amount was given to
large farmers of which they used Rs.14.64 lakhs for agricultural purpose and Rs.7.50
lakhs was given for non-agricultural purpose
Hubli taluk
The purpose-wise flow of credit from PACS’s in Hubli taluk is given in

Table 4.15. It could be seen from the table that, the Chabbi PACS advances on an
average Rs. 6.80 Lakhs loan to the all categories of farmers for different purposes of
2.55 lakhs for agricultural purpose and Rs.1.53 lakhs for non-agricultural purpose.
Rs.1.19 lakhs of loan was given to medium farmers for which they used Rs.0.43 lakhs
for agricultural purpose and Rs.0.85 lakhs for non-agricultural purpose. Rs. 1.53 lakhs
of amount was given to large farmers of which they used Rs.1.02 lakhs for agricultural
The B. Aralikatti PACS advances on an average Rs. 5.78 lakhs loan to the all
categories of farmers for different purposes of which Rs. 4.66 lakhs of loan was given to
the small farmers for which they used Rs.4.11 lakhs for agricultural purpose and Rs.
0.54 lakhs for non-agricultural purpose. Rs. 0.44 lakhs of loan was given to medium
farmers for which they used Rs. 0.23 lakhs for agricultural purpose and Rs. 0.21 lakhs
for non-agricultural purpose. Rs. 0.68 lakhs of amount was advanced to large farmers of
which they used Rs. 0.23 lakhs for agricultural purpose and Rs. 0.45 lakhs was given
for non-agricultural purpose.
The Varur PACS advances on an average Rs. 14.24 lakhs loan to the all
categories of farmers for different purposes of which Rs. 8.54 lakhs of loan was given
to the small farmers for which they used Rs.5.34 lakhs for agricultural purpose and
Rs.3.20 lakhs for non-agricultural purpose. Rs.2.49 lakhs of loan was advanced to
medium farmers for which they used Rs.0.71 lakhs for agricultural purpose and Rs.1.78
lakhs for non-agricultural purpose. Rs. 3.20 lakhs of amount was advanced to large
farmers of which they used Rs.2.14 lakhs for agricultural purpose and Rs. 1.07 lakhs
was given for non-agricultural purpose.
Kundgol taluk
The purpose-wise flow of credit from PACS’s in Kundgol taluk is given in table
4.15. It could be seen from the table that, the Yaliwala PACS advances on an average
Rs. 71.96 Lakhs loan to the all categories of farmers for different purposes of which
Rs. 43.18 lakhs of loan was given to the small farmers for which they used Rs. 26.99
lakhs for agricultural purpose and Rs.16.19 lakhs for non-agricultural purpose. Rs.12.59
lakhs of loan was given to medium farmers for which they used Rs.3.60 lakhs for
agricultural purpose and Rs.9 lakhs for non-agricultural purpose. Rs. 16.19 lakhs of
purpose and Rs. 5.40 lakhs was advanced for non-agricultural purpose
The Kubihal PACS advances on an average Rs. 14.63 lakhs loan to the all
categories of farmers for different purposes of which Rs. 8.78 lakhs of loan was given to
the small farmers for which they used Rs. 5.48 lakhs for agricultural purpose and
Rs.3.29 lakhs for non-agricultural purpose. Rs. 2.56 lakhs of loan was given to medium
farmers for which they used Rs.0.73 lakhs for agricultural purpose and Rs.1.83 lakhs for
non-agricultural purpose. Rs.3.29 lakhs of amount was given to large farmers of which
they used Rs.2.19 lakhs for agricultural purpose and Rs. 1.10 lakhs was advanced for
non-agricultural purpose
It could be seen from the table that, the Kundgol PACS advances on an average
Rs. 207.61 lakhs loan to the all categories of farmers for different purposes of which Rs.
124.57 lakhs of loan was given to the small farmers for which they used Rs.77.85 lakhs
for agricultural purpose and Rs.46.71 lakhs for non-agricultural purpose. Rs.36.33 lakhs
of loan was given to medium farmers for which they used Rs.10.38 lakhs for
agricultural purpose and Rs.25.95 lakhs for non-agricultural purpose. Rs.46.71 lakhs of
purpose and Rs.15.57 lakhs was advanced for non-agricultural purpose.
4.3 Recovery performance of PACS’s
The poor recovery of loan in agricultural sector, for obvious reasons, is an area
of anxiety and serious concern for the co-operative societies. It is an important factor for
success or revival of cooperative societies that the loan should be repaid at time.
Hence, an attempt was made to analyse recovery in various perspectives during the
study period.
4.3.1 Demand, recovery and balance position of selected PACS’s
The societies wise demand, collection and balance position of selected PACS’s
are presented in Table 4.16. The demand, collection and balance of Kundgol PACS’s
were higher compared to Navalgund, Dharwad, Hubli and Kalaghatagi taluks PACS’s.
The demand for all the PACS’s was found to be more. There was a fluctuating trend
with respect to recovery and balance position of all the PACS’s.
Dharwad taluk
The demand, recovery and balance are increasing over the years. The recovery
per cent was highest in Marewada (84%) followed by Hebballi (76%) and Vanahalli
(16%) PACS’s. The average overdues was highest in Hebballi (Rs.8.91 lakhs) followed
by Vanahalli (Rs.6.99 lakhs) and Marewada (Rs.6.52 lakhs) PACS’s.
Kalaghatagi taluk
The demand, recovery and balance have been increasing marginally during the
years. The recovery per cent was highest in G.Hulikatti (88%) followed by
Thabakadhonnihalli (70%) and Malakankoppa (24%) PACS’s. The average overdues
was higher in Thabakadhonnihalli (Rs. 1.1 lakhs) followed by Malakankoppa (Rs. 0.16
lakhs) and G. Hulikatti (Rs. 0.04 lakhs) PACS’s.
Navalgund taluk
The demand, recovery and balance have more for the present years.
The recovery per cent was highest in Moraba (97%) followed by Javoor (95%) and
Shirkola (68%) PACS’s. The average overdues was highest in Shirkola (Rs. 34.31
lakhs) followed by Javoor (Rs. 4.38 lakhs) and Morab (Rs. 2.21 lakhs) PACS’s.
Hubli taluk
The recovery per cent of Chabbi PACS was very highest (100%) when
compared to Varur (86%) and B. Aralikatti (12%) PACS’s in Hubli taluk. The average
overdues was highest in Varur (Rs. 2.69 lakhs) followed by B. Aralikatti (Rs. 1.75
lakhs).
Kundgol taluk
The demand, recovery and balance were increasing for present years.
The recovery per cent was higher in Yaliwala (90%) followed by Kubihal (89%) and
Kundgol (82%) PACS’s in Kundgol taluk. The average overdues was highstr in
Kundgol (Rs. 35.4 lakhs) followed by Yaliwala (Rs. 7.04 lakhs) and Kubihal (Rs. 2.66
lakhs) PACS’s.
4.3.2 Non-interest cost of borrowings
Non-interest cost of borrowings forms an important item of cost of borrowings

though it seems to be minor item of cost as the borrower himself has to spend before he
getting loan.
Hence, an attempt has been made to compute the non- interest cost of
borrowings. The items of non- interest cost include application fee, document cost and
travelling cost. The results are presented in the Table 4.17. It is apparent from the
Table that, travelling cost (12.82%), membership fee (9.61%) and share fee (67.30%)
together constituted 89.73 per cent of non- interest cost. The other items of non- interest
cost namely encumbrance fee (2.56%), postage (1.28%) and document cost (6.41%)
constituted remaining portion of the cost. Thus the total non- interest cost amounted to
be Rs. 780.
4.4 Assessment of Working of PACS
The assessment of working of the PACS has been analyzed based on the opinion
of policy makers, officials and borrowers and presented as fallows.
4.4.1 The working of PACS’s in the opinion of its policy makers.
Opinion of policy makers about Working of PACS’s was analyzed with the help
of technique of cluster analysis considering 18 variables grouped into different clusters
are presented in Table 4.18. revealed that out of 18 variables were grouped under high
aggregate cluster namely, impact of credit, services of farmers, communication and
coordination within the organization, bank supervision or effectiveness of training,
communication and coordination among the organization , performance indicators and
adequacy of stock. The degree of similarity values of high aggregate cluster ranges from
66.37 to 100. There were two variables with similarity value of 100 at the top of the
high aggregate cluster. At the bottom, the variables such as performance indicators and
adequacy staff among the organizations 78.44 were found.
The similarity value of medium aggregate cluster ranged between 62.55 to 63.19
and the variables were education level of employees and government policy, education
and training of directors at the bottom. In the low aggregate clusters the similarity
values ranged from 49 to 51.123 with the variables were miscellaneous problems and
training to employees (51.23) at the top followed by bank management (49) at the
bottom.
4.4.2 The working of the PACS’s in the opinion of its officials
The opinion of officials expressed on the working of PACS’s was analyzed with
a help of cluster analysis technique and the results are presented in Table 4.19. Out of
12 variables, 10 variables were found in high aggregate cluster and another two
variables were grouped in medium and low aggregate clusters.
The similarity values of high aggregate cluster ranged from 63.58 to 100 with
the variables namely involvement and communication between banks, bank
management, general problems at the top (100) followed by miscellaneous problems,
functioning of board of management, impact indicators, performance indicator, financial
problems and managerial capacity at the bottom. The other two variables namely
leading and supervision (41.72) and education and experience (14.70) were grouped in
the medium and low aggregate clusters, respectively.
4.4.3 Opinion of farmer – borrowers about availing the PACS’s loan
The opinion survey of the farmers were carried out with regard to accessibility,
procedure involved, adequacy, timeliness, rate of interest, technical guidance provided,
loans provision, staff treatment . The same are presented in Table 4.20.
It is clear from the table that about 70 per cent of the small farmers were opined
that, the society officials were hardly accessible for availing the credit services whereas
60 and 55 per cent of medium and large farmers respectively groups were opined that
the society officials were easily accessible.
In respect of procedure of advances involved in availing the loans majority of
medium and large farmers to the extent of 55 and 70 per cent were considered as
simple. In contrast 70 per cent of small farmers felt that procedures involved were
cumbersome. In case of adequacy of the loan amount sanctioned for different purposes
were considered as adequate by 60 per cent of small farmer groups whereas 85 and 55
per cent of the medium and large farmers respectively opined that loan was inadequate
for different purposes.
In case of timeliness in advancing the credits to farmers by societies, 55, 75 and

40 per cent respondents from small, medium large farmer groups considered that
societies were timely in nature.70, 55 and 60 per cent respondents from small, medium
and large farmer groups, felt that rate of interest was low.
The security norms for advancement of loans were found to be rigid for 70, 70
and 55 per cent of respondents from small, medium and large farmers respectively. In
respect to technical guidance 80, 75 and 70 per cent of small, medium and large farmers
opined that, they were not provided with any technical guidance. In case of repayment
terms, 55 per cent and 55 per cent of the small and large farmer groups respectively felt
that repayment terms were difficult to adhere to, where as about 55 per cent of medium
farmers opined that repayment term was easy.
In case of loan supervision by staff of respective societies only by 20, 10 and

10 per cent of respondents of small, medium and large farmers respectively felt that
loan supervision was frequent. Majority of the respondents, in all two farmer groups felt
that the staff treatments were good.
5. DISCUSSION
The results of the study presented in the previous chapter are discussed in the
present chapter under the following heads.
5.3 Recovery of PACS’s
5.4 Assessment of the working of the PACS’s
5.1.1 Performance indicators of the PACS’s
The study of past growth and development of basic parameter relating to an

organization is quite essential for performance evaluation. The physical and financial
variables influencing the performance of the PACS’s are discussed as under.
5.1.1.1 Physical performance indicators of PACS’s
The effective functioning of any institution will definitely be influenced by the

attitude of the employees (Table 4.1). The staff would play an important role in
effecting proper co-ordination among different development agencies as well as in
discharging the legitimate duties assigned to them besides managing and supporting the
policy wing of the PACS’s. In view of the above facts, the number of employees of
PACS’s of Dharwad, Kalaghatagi, Navalgund, Hubli and Kundgol societies showed an
increasing trend during the study period. However, among the selected societies slight
variation was observed in number of employees may be due to variation in lending
operation of the societies (Appendix No-I to V).
In respect of membership showed an increasing trend in all the selected societies

except Chabbi and Varur societies of Hubli taluk. This may be due to overdues of the
respective societies. In Dharwad taluk Hebballi and Marewada societies, the numbers of
employees were higher which may attributed to extension of lending activities along
with increased coverage areas. In Kalaghatagi taluk, all three societies showing constant
trend. In case of Navalgund taluk, Shirkola and Morab societies showed an increasing
trend may be due to the other non-credit business. In Hubli taluk, all three societies
showed constant trend in their staff position. In case of Kundgol, Yaliwala and Kubihal
societies showed an increasing trend due to increased non-credit business like pigmy
collection.
The number of loan accounts showed an increasing trend in all the selected
societies except Varur and Yaliwala societies of Hubli and Kundgol taluk, respectively.
This might be due to the poor recovery performance of the societies during the study
period.
5.1.1.2 Financial performance indicators of PACS’s.
The performance of various financial indicators of selected PACS like reserves,

overdues, recovery, profit, loss etc during the study period has been shown in Table 4.2
and Appendix-I to V. The success or failure of any credit institutions could be judged
by the extent of credit deployment to the target group. The PACS’s did make a laudable
progress in this direction.
The average share capital and investment exhibited an increasing trend

continuously with little variation in all the societies, but the enhancement in share
capital may be due to lending for various diversified activities and also increased in
membership of the societies. The Borrowings showed an increasing trend may be due to
increase in demand from member-borrowers during the study period. Whereas deposits
showed a mixed performance, it may due to mounting overdues and poor recovery
performance of selected PACS.
The average cash in hand and cash at bank and reserves indicated a mixed
performance in almost all PACS’s may be due to employee’s poor performance.
The average reserves, investment and advances of some PACS have been increasing
over the study period except few societies because these societies did not focus on
diversified activities. The average overdues and loss has been increasing due to
announcement of loan waiver scheme by the government for this reason borrowers not
repaid the loan. The average profit has shown decreasing trend due to mounting
overdues, poor recovery performance and increase in man power expenses. The study
conducted by Deveraja (2000) on Horticultural Producer Co-operative Marketing and
Processing Society Limited in Karnataka also revealed similar results.
5.1.2 Growth pattern of PACS’s
To assess the growth pattern of PACS’s, 15 important variables (physical and

financial) were subjected to growth rate analysis and the results are presented in both
Tables 4.3 and 4.4.
5.1.2.1 Growth in Physical indicators
The growth in membership of PACS’s was found to be positive and significant

in Dharwad, Kalaghatagi, Navalgund and Kundgol taluks, but it was negative growth in
Chabbi and Varur PACS’s of Hubli taluk. Hence, the highest growth in membership
was quite obvious to expand their business during the study period.
The growth in employees was observed to be positive and significant in all the
PACS’s except Vanahalli in Dharwad taluk, Thabakadhonnihalli in Kalaghatagi taluk
and B. Aralikatti and Varur PACS’s in Hubli taluk. These respective societies showed
constant growth rate because over the years number of employees were same.
The growth in number of loan accounts was found to be positive and significant
during the study period except Varur PACS in Hubli taluk and Yaliwala PACS in
Kundgol taluk, this was because of mounting overdues and hence the PACS’s have
curtailed the lending activities. These results were on for with the results of Vivek et al
(2003) analysed the growth performance of PACS’s in Haryana.
5.1.2.2 Growth in financial indicators
The results are presented in the Table 4.4. The growth in share capital was
positive and significant in Dharwad taluk PACS’s. In case of Kalaghatagi taluk, growth
was stagnant in PACS’s except Thabakadhonnihalli PACS. Whereas in Navalgund
taluk, all three societies showed a positive and significant growth. In Hubli taluk, all
three societies showed a positive and significant growth except Varur PACS (-2.27%).
Similar trend was observed in societies of Kundgol taluk also showed positive growth
except Kubihal (-1.78 %). This could be attributed to the lower growth of membership
in selected PACS’s. The results on far with Patil and Ramesh (1997) who linked the
growth in share capital with membership of Urban Co-operative Bank in Goa.
The growth in Borrowings showed an increasing trend for Dharwad taluk and
Kundgol taluk PACS’s as these taluks societies relatively performed better with respect
to recovery and these were able to got higher refinance facilities from KCCB. While for
Kalaghatagi, Navalgund and Hubli taluk PACS’s showed a declining trend due to lower
recovery performance of the societies. Growth in deposits exhibited a mixed trend
during the study period. The growth in deposits was found to be positive in Kalaghatagi,
Navalgund, Hubli and Kundgol taluk PACS’s while it was negative growth in case of
Dharwad taluk PACS’s. This might be due to poor recovery performance and high
mounting overdues. The growth in cash in hand and cash at bank showed mixed results.
Some of the societies showed a positive and significant growth, this implied that these
societies did not have liquidity to solve short-term obligations. While most of the PACS
have showed negative growth this indicates these societies incurring losses, this has
affected the growth in overall development of PACS.
The growth in reserves was observed to be positive and significant in case of

Kalaghatagi, Navalgund and Hubli taluk PACS’s, hence these societies have possessed
both movable and immovable properties to run the societies. While growth was found to
be negative in case of Hebballi PACS (-21.15%) in Dharwad taluk and Kubihal PACS
(-0.03%), because that these societies incurring losses. The growth in investment was
positive and significant in Dharwad and Kundgol taluk PACS’s, this indicate that these
societies diversified their activities through investment. While it was negative growth in
Malakankoppa PACS (-0.01%) in Kalaghatagi taluk and Javoor PACS (-11.92%) PACS
in Navalgund taluk. This might be due to poor in their investment activities. The growth
in advance was positive and significant in some of the selected PACS’s due to loan
advanced for diversified activities. Whereas most of the societies showed a negative
growth in investment due to that these societies restricted to few purposes coupled with
poor recovery performance and mounting overdues.
The growth in overdues exhibited a positive and significant in Vanahalli,
Thabakadhonnihalli, Shirkola, Chabbi, Yaliwala and Kundgol PACS’s. This implied
that over the year’s overdues was increasing trend(Appendix-I to V) due to declaration
of loan waiver scheme by the Government during 2008. The growth in recovery was
found to be negative in some of the PACS’s. This was due to the primarily negative
attitude of the farmers to repay the loan promptly in anticipation of loan waiver scheme
during the study period. The growth in loss was found to be positive and significant in
almost all the PACS’s, due to mounting overdues coupled with poor recovery
performance of selected PACS’s. Growth in profit was found to be marginal changes in
some of the PACS’s, because most of the PACS were incurring losses.
5.1.3 Analysis of the PACS’s Performance through Financial Ratios
Financial ratios explain in detail the ultimate financial position of the society.
For this purpose, some relevant ratios were worked out and presented in the Table 4.5 to
4.9 and are discussed as under.
Liquidity ratios were worked out to study the financial soundness of the society.
The concept of liquidity has more relevance for a financial institution, which indicates
the ability of the PACS’s to cover their short-term obligation out of their own short-
term resources.
a) Current Ratio
The current ratio has been regarded as an important barometer of the liquidity
position of the institution. It indicates the ability of an institution to meet its short-term
commitments as and when they fall due. It could be seen from the Table 4.5 that during
the study period, the current ratio of Hebballi PACS (41.48) ranked first followed by
Marewada and Vanahalli PACS’s. Thus it could be concluded that for all the PACS’s
the current assets were sufficient to meet the current obligations. In Kalaghatagi taluk,
Thabakadhonnihalli (8.04) ranks first followed by lowest in other two PACS’s. The
current ratio was found to be highest in Javoor (2.28) in Navalgund taluk, Kubihal
PACS (15.31) in Kundgol taluk having enough current assets to meet current
obligations and have sound liquidity position. But other societies were found to be
lowest current ratio to meet current obligations. These results are on far with
Kannapiran (2010) findings of the study on financial performance of NDCC.
b) Liquid assets to total assets ratio
The results (Table 4.5) revealed that, the ratio was found to be little higher in
Thabakadhonnihalli (6.53) PACS of Kalaghatagi taluk, Javoor (19.63) and Shirkola
(1.12) PACS’s of Navalgund taluk. This was mainly due to the consideration of the
society for current working funds during the study period. Remaining PACS’s showed a
lower ratio due to increase in current liabilities on one hand and the other hand these
PACS have not maintained large proportion of current working funds
c) Acid-test ratio
This ratio has regarded as a refined measure of liquidity and able to assesses
how liquid the society would be if the business operation come to an abrupt halt.
This ratio was observed to be less than unit in most of the PACS’s (Table 4.5) in the
study period. The ratio was relatively higher in Marewada (6.35), Thabakadhonnihalli
(82.78), Javoor (32.81), Shirkola (3.16) and Morab (2.09) PACS’s. The PACS’s have
not maintained large proportion of current assets during the study period in which the
liquid assets were part of it was responsible for this lower ratio.
5.1.3.2 Solvency Ratios
In order to find out the extent of contribution of the PACS’s towards the funds
provided by their creditors, the solvency ratios were worked out and are presented in the
Table 4.6 and discussed as under.
a) Debt-equity Ratio
It represents the ratio of borrowed funds to owner’s capital. This ratio indicated
the PACS’s stake in the business with outside term liabilities. Higher the ratio lowers
the stake and vice-versa. The optimum contribution of debt to equity varies from
organization to organization. Where as in banking organization as in case of PACS
these ratios may be as high as 10:1.
It was observed from the Table 4.6 that the ratio was found to be positive.
The main reason for positive debt-equity ratio for all the PACS’s was due to their higher
capital base and diversified lending activities, as the PACS’s are entirely depends on
KCCB for their Borrowings activities. These results were supported by findings of
Siddanti (1999) on the debt-equity ratio during the study period was between 1.05 and
1.07 as against standard norm 1:1.
b) Indebtedness Ratio
The indebtedness ratio indicates the extent of debt per rupee of owned funds.
The prescribed norm has been 3:1 which indicates, three times external funds could be
used in relation to owned funds. From the Table 4.6 it was apparent that the all the
societies exhibited a positive values of ratio. PACS’s are entirely depends on external
funds for the society business and Borrowings from KCCB has becomes inevitable in
order to meet the long term credit requirements of the farmers.
5.1.3.3 Test of Strength
The net worth and net capital ratio indicates long-term liquidity position of the
business or real worth of the PACS.
a) Net Worth
This indicated the difference between assets and liabilities of the PACS’s.
A positive and higher magnitude of net worth indicates a favourable situation for the
society. It could be seen from the Table 4.7 that the net worth of Hebballi PACS
(Rs.4.16 lakhs) Marewada (Rs. 29.52lacks) PACS’s in Dharwad taluk was found to be
positive and similar trend was also observed in Kundgol taluk Yaliwala (71.45 lakhs)
followed by Kubihal (Rs.26.89 lakhs) and Kundgol PACS (Rs.1 lakhs). Net worth was
found to be negative for most of the PACS’s due to increase in their liabilities compared
to assets. The increase in liabilities of PACS’s was mainly due to increased borrowings
coupled with low recovery and negative profits of the societies.
b) Net Capital Ratio
The net capital ratio indicates the degree of liquidity of the PACS’s in the long-
run. The value was less than unity during the study period (Table 4.7). The ratio of more
than unity for the PACS’s indicated that their assets were sufficient enough to cover the
total liabilities. Due to the recent trend in increased overdues the ratio was found to be
lower in some of the societies, thereby increased the liabilities. Thus, it is clear that, the
PACS’s were not having the sound liquidity position for long-run sustainability.
5.1.3.4 Profitability Ratios
These ratios can be used to access the financial health of the institution
(Table 4.8). Though profitability is a secondary motive but they would provide credit
service to weaker section of the society yet it is a measure of success of the PACS
business.
a) Net Profit to Total Assets Ratio
The ratio of net profit to total assets was found to be negative for Kalaghatagi,
Navalgund and Hubli taluk societies, while for Dharwad and Kundgol taluk societies,
the ratio was found positive during the study period. Since these societies have incurred
losses in the years due to higher expenditure compared to income. Thus, there is a need
to put in lot more efforts by all the PACS have to increase profit by reducing the cost
and increasing the income. So as to achieve acceptable norms of these ratios.
b) Net Profit to Net Wo rth
This ratio shows the extent of profitability with reference to the investment of
the PACS. In Dharwad and Kundgol taluk PACS’s, the ratio was found positive during
the study period. The low level of profitability could be attributed as a proof of
providing variety of loans to various beneficiaries for different purposes rather than
being interested in making profits. The societies seemed to have adhered more to the
service motto of an ideal co-operative but by altogether sacrificing sound business
principle, essential for the overall progress and prosperity of a cooperative bank.
Enugandula et al. (1998) considered only as a supplementary measure in the case of
service oriented co-operative because of their stress on social objectives.
c) Net Profit to Fixed Assets
This ratio is designed to test the utility and the importance of the fixed assets in
the business. The ratio captures the earning from the investment on the permanent assets
like building, reserves and fixed deposits in other institutions. The ratio was found to be
positive in case of Dharwad and Kundgol taluk PACS’s which are stabilized its business
at least to earn some profits. However in Kalaghatagi, Navalgund and Hubli taluk
PACS’s, the ratio was found to be zero, as these societies have incurred losses during
the study period.
5.1.3.5 Efficiency Ratios
Gross and operating ratios were computed to know the extent of utilization of
gross income of the PACS’s and are depicted in the Table 4.9.
a) Gross Ratio
This ratio measures the expenses for every Rs.100 income of the society
business. It was evident from the table that the ratio was more than cent per cent for
Kalaghatagi, Navalgund and Hubli taluks PACS’s. This was mainly due to higher level
of expenses over the gross income. This also supported by higher growth of expenses
compared to income during the study period. For Dharwad and Kundgol taluk, the ratio
was observed to be less than cent per cent. This raising trend of expenditure during
recent years and earlier years increased the gross ratio in study period. From the point of
view, sustainability perhaps necessitated a higher margin of profit by reducing the total
expenses of the societies on one hand and increasing the gross income of the society on
the other.
b) Operating Ratio
This ratio indicates the operating efficiency of the PACS’s in judging their
operations and the results were presented in the Table 4.9. From the table it was
observed that the operating ratio was highest in Kalaghatagi, Navalgund, Hubli taluk
PACS’s. This was mainly due to less number of employees and lower pay scale to the
PACS staff compared to other banking institutions.
5.1.4 Relative performance of PACS’s
The technique of principal component analysis was adopted to identify the most
important factors having a bearing on the performance of the PACS’s. In the present
study, an attempt was made to pool both physical and financial indicators to know
which of them exert more influence on the performance of the PACS’s and are
discussed as bellow.
Dharwad taluk
In Hebballi PACS’s, it was observed from the Table 4.10 that all the three
physical and financial variables were grouped in the first component. This component
was able to explain 42.44 per cent variation. All the physical variables and majority of
financial variables were extracted by this component and the variables were
membership, employees, loan account, share capital, borrowings, cash at bank,
investment, recovery, profit etc. All the variables had positive sign except deposits, cash
at bank, reserve, advance, overdues, loss which implied that there is need to improve the
recovery performance. In first component accommodate all physical variables that’s
why this component is called “management component”.
In Marewada PACS’s, the three physical variables were grouped in the first
component. The selected variables explain 70 per cent variation of the society
performance. Some of the selected variables such as borrowings, deposits, cash in hand,
advances, over dues and recovery exhibited a negative sign. This implied that there is
need to reduce the transaction cost, interest expenditure and administrative expenses and
also lead to improve recovery performance. First component having investment and
share capital this component is called “business component”.
In Vanahalli PACS’s, the results presented in the Table 4.10 revealed that two
physical indicators and eleven financial variables found the place in first component.
These components were able to explain 69 per cent of variation. Some exhibited a
positive sign and high factor loading except deposits, cash in hand, cash at bank,
recovery and loss. This PACS has incurred losses since its inception and also had low
recovery performance. This implied that this society has to intensify its recovery
performance which ultimately increases the profit by reducing transaction costs. In first
component accommodate all physical variables that’s why this component is called
“management component”
Kalaghatagi taluk
It was observed from the Table 4.10 that all the three physical and financial
variable were grouped in the first component. The selected variables explained 67 per
cent of variation in the Malakankoppa PACS performance. Some of the selected
variables exhibited a positive and high factor loading except borrowings, over dues,
cash in hand, cash at bank and recovery. This implied that this society needs to reduce
all the expenses. First component having investment and share capital this component is
called “business and profitability component”
It was observed from the Table 4.10 that all the three physical variables were
grouped in the first component. The selected variables explained 82 per cent of variation
in the G.Hulikatti PACS performance. Some of the selected variables exhibited a
negative sign except advances, over dues, cash in hand and cash at bank. This implied
that this society needs to reduce all the costs by maximizing the profit. This component
is called “profitability component”.
In Thabakadhonnihalli PACS, all the selected variables explained 71 per cent of

variation in the society performance. All the variables exhibited a positive and high
factor loading except advance, recovery and profit. This indicates PACS has incurred
losses since low recovery performance. First component is called per branch component
because it includes deposits.
Navalgund taluk
The results presented in the Table 4.10 revealed that three physical and all
financial variables found the place in first components in Javoor PACS. This component
was able to explain 83 per cent variation. Among the variables, which were grouped in
the first components, some variables exhibited a positive sign and high factor loadings
except borrowings cash in hand, cash at bank, advances, overdues, recovery and
investment which implied that there is need to improve the recovery performance and
reduce its costs. This component is called “per branch component”.
It also revealed that three physical and all financial variables found the place in
first components in Shirkola PACS. This compone nt was able to explain 81 per cent
variation. Among the variables, which were grouped in the first components, some
exhibited a positive sign and high factor loadings except borrowings, cash in hand,
advances, overdues and loss which implied that there is need to improve the recovery
performance. This component is called “profitability component”.
In Morab PACS, the selected variables were explained about 68 per cent of the
variation. borrowings, cash in hand, advances and profit exhibited a negative sign
implied that PACS has incurred losses since its low recovery performance.
This component called “business component”
Hubli taluk
It was seen from the Table 4.10 that all the three physical variable were grouped
in the first component. The selected variables explained 77 per cent of the variation in
the Chabbi PACS performance. Some of the selected variables exhibited a positive and
high factor loading except borrowings, advance, over dues, recovery, membership and
share capital. This implied that this society needs to reduce all the expenses. It may be
due to poor recovery performance. This component is called “profitability and business
component”.
The first component captured all three physical variables. The selected variables
explained 80 per cent of variation in the B. Aralikatti PACS performance. Some of the
selected variables exhibited a negative sign except borrowings, cash in hand, cash at
bank, advances, over dues, recovery and profit. This implied that this society needs to
reduce all the costs, and need to focus on recovery performance. This component is
called “business component”.
Similarity in case of Varur PACS, all the selected the variables explained 81 per
cent of variation in the society performance. All the variables except borrowings,
reserves, investment and loss showed a positive and a high factor loading. This implied
that PACS has incurred losses due to mounting overdues. This component is called
“Business and management component”.
Kundgol taluk
In Yaliwala PACS, also three physical and all financial variables found the place
in first component. This component was able to explain 72 per cent of the variation.
Among the variables, which were grouped in the first components, some exhibited a
positive sign and high factor loading except loan account, borrowings, overdues, and
loss which implied that there is need to improve the recovery performance and reducing
its costs. This component is called “Efficiency component”.
In Kubihal PACS, three physical and all financial variables could find the place
in first component. This component was able to explain 69 per cent variation. Among
the variables, which were grouped in the first components, some exhibited positive sign
and high factor loading except cash in hand, advances, overdues, recovery and loss
which implied there is need to improve the recovery performance. This component is
called “Management component”.
The variation explained by the first component was 85 per cent in Kundgol
PACS. Borrowings, cash in hand, deposits, recovery and profit showed a negative sign
implied that this PACS has also incurred losses since its low recovery performance.
This component is called “Business and management component”.
5.2.1 Lending norms of PACS’s
There is a lengthy procedure in getting loan from PACS’s and borrower has to
submit three to five documents/certificates from different authorities. Hence, the
borrower has to spend a lot of time and energy in getting these documents before
submission of application form. Even after getting these documents or certificates
applicant has to wait for a long time to get loan, because application has to be
scrutinized by DCCB as PACS, has no power to sanction loan amount directly.
5.2.2 Purpose-wise and category -wise credit flow of PACS’s
Dharwad taluk
It could be seen from the Table 4.15 that agricultural loan (Rs. 10.69 lakhs)
dominated among the loan amount for different purposes followed by non-agricultural
loan for sma ll farmers. In all the three societies shows same trend, whereas for medium
farmers, non-agricultural loan (Rs. 3.56 lakhs) dominated followed by agricultural loan
in all three societies. In case of large farmers, agricultural loan (Rs. 4.25 lakhs)
dominated followed by non-agricultural. Some slight variations were found in these
societies. This may be due to constant encouragement given by the societies for these
purposes and also variation in the allocation of funds by the societies after meeting the
credit requirement of agriculture and allied sector.
Kalaghatagi taluk
The results presented in the Table 4.15 revealed that in terms of loan amount
advanced, agricultural loan (Rs. 0.75) accounted for the majority share in all the
categories of farmers which indicates the constant encouragement given by the societies
for agricultural development. These purposes followed by agricultural and non-
agriculture for medium farmers and large farmers. The reason is obvious that these
purposes found the greater attentio n after meeting the credit requirements for agriculture
and allied activities.
Navalgund taluk
From the table it was evident that again agriculture loan dominated followed by
non-agricultural loan in all categories of farmers. This may be attributed to higher scale
of finance compared to any other type of advances. This implied that there was an
agreement over the years and thus no change in the pattern of credit flow.
Hubli taluk
Table also revealed that, these societies were focused more on agriculture loan
for small farmers rather than non-agriculture loan. In case of medium farmers, these
societies gave more focus for non-agricultural loan. Same trend was also observed for
large famers. There was no uniformity in loan disbursement by these societies; this may
be due to low recovery performance.
Kundgol taluk
The results presented in the Table 4.15 revealed that the PACS advances to
agricultural purposes (Rs. 26.99 lakhs) accounted for the major share in all the
categories of farmers which indicates the constant encouragement given by the societies
for agricultural development. These purposes were followed by agricultural and
non-agriculture for medium and large farmers. The reason is obvious that these
purposes would find the attention after meeting the credit requirements of agriculture
and allied activities.
Moreover, all the categories of farmers diverted a small share of loan advanced
towards non-production purposes including consumption, pigmy loan, FD loan, repair
of house, repayment of old loan purposes etc. There is an urgent need to educate the
farmers for proper use of adequate amount of loan being advanced by these societies.
5.3 Recovery performance of PACS’s
The recovery of the loan is very important from the point of view of recycling of
funds safeguarding the trust and confidence of depositors and also for drawing refinance
from KCCB. Overdues come in the way of viability and sustainability of the society.
Health of the cooperative credit institution which is an important factor in sustaining the
projected levels of credit supply and the level of loan recovery matters very.
5.3.1 Demand, balance and recovery position of PACS’s
Dharwad taluk
The demand, collection and balance of the societies was found to be more (Table
4.16). On an average the loan recovery was high in Marewada (84 per cent) followed by
Hebballi (76 per cent) and was lowest in Vanahalli PACS (16 per cent).
Kalaghatagi taluk
The demand, collection and balance of the societies have been an increasing
trend during study period (Table 4.16). On an average the loan recovery was found
highest in G. Hulikatti PACS (88 per cent) followed by Thabakadhonnihalli
(70 per cent) and it was lowest in Malakankoppa (24 per cent). The results also revealed
that over the study period demand showed an increasing trend, while balance exhibited
a fluctuating trend.
Navalgund taluk
The demand, collection and balance of the societies showed an increasing trend.
The recovery was highest in Morab PACS (97 per cent) followed by Javoor
(95 per cent) and was lowest in Shirkola PACS (68 per cent).
Hubli taluk
The demand, collection and balance indicated the mixed trend over the years
during the study period. On an average the loan recovery was found to be highest in
Chabbi PACS (100 per cent) followed by Varur (86 per cent) and was lowest in
B. Aralikatti (12 per cent).
Kundgol taluk
Over the years demand, collection and balance of the societies showed an
increasing trend (Table 4.16). On an average the loan recovery was higher (90 per cent)
in Yaliwala PACS followed by Kubihal (89 per cent) and Kundgol (82 per cent).
The loan recovery is found to be satisfactory in some PACS and is found to be very low
in other societies. Loan recovery camps have helped the PACS to achieve high recovery
performance. The low recovery rates might be because of expectation of loan waiver
schemes by the borrowers from the Government.
5.3.1 Non-interest cost of borrowings
Among the cost of borrowings, interest and non- interest costs are two items of
which the later has to be paid by the borrower at the time of getting loan. In many of the
studies only interest cost was accounted and least importance was given to non- interest
cost. This non- interest cost need to be paid before the benefits are accrued from
Borrowings and hence it affect borrowers especially small and marginal farmers to
whom it becomes difficult to arrange to pay this part of cost. The items included in non-
interest costs are membership fee, share fee, postage, travelling cost and document cost.
Among these items, share fee constitutes a lion share (67.30 per cent) of the cost.
The total non-interest cost amounted to Rs.780, by avoiding delay in sanction and
tedious procedure one can minimize the total non- interest cost (Table 4.17).
The opinions sought from the policy makers, officials and borrowers were
analyzed separately and the outcomes had been discussed as under.
5.4.1 The working of PACS’s in opinion of its policy makers
The opinions sought from the policy makers were subjected to cluster analysis in
which an inter correlation matrix 0f 18x18 was designed to accommodate 18 variables
identified pertaining to the performance of the PACS’s. The similarity measures or
degree of association between all possible variables was computed for the purpose of
comparison.
It could be seen from the Table 4.18 that a decreasing trend was observed in the
similarity measure from the first cluster to last cluster, which implied relatively lower
degree of agreement among the variables. The similarity values ranged from 100 to 49,
when the clusters were formed. A cluster with lower similarity value implied the lower
important of that cluster in working of the society and vice-versa.
The selected 18 variables were accommodated in three different clusters based

on their similarity measures in which as many as 12 variables were in first cluster,
another three in the second cluster and remaining three variables in third cluster.
The first cluster which was designated as high aggregate cluster whose similarity values
ranged between 100 to 66.37 reflected that impact of credit and services to farmers were
the important variables in determining the performance of PACS’s. It also exhibited
that, impact indicators, financial problems and general problems were of high degree.
The first cluster also highlighted a very opinion of policy makers about
communication among the societies as well as communication within the PACS such as
DCCBs, SCB and other banks in the area of operation. The second cluster, which was
designated as medium cluster, had similarity values ranging from 63.19 to 62.55
highlighted the importance of education and training of directors.
The third cluster which was termed as the low aggregate cluster had the
similarity value ranging from 51.23 to 49 and included three variables namely
miscellaneous problems, training to employees and PACS management. This cluster
indicated the need for bringing about improvement in the variables for better working of
the PACS’s, since they had comparatively lower similarity values compared to other
variables found in other clusters
5.4.2 The working of PACS’s in the opinion of its officials
Based on the similarity values of opinion obtained from the officials relating to
the performance were grouped into different clusters and the results were presented in
the Table 4.19. It was observed from Table that the variables in high aggregate cluster
reflected the high degree of involvement of officials in decisions-making and sense of
worthwhile accomplishments. There was greater degree of relation of officials in society
management relating to mobilization of funds, allocation of funds, monitoring,
evaluation and personnel. It also highlighted the miscellaneous problems like
performance of the head of the organization, maintenance of accounts, efficiency of
executive, control on subordinates, employees relations and customer relations.
Functioning of the board of management with respect to regularity of meetings, timing
of decisions, executing the decisions and participation and commitment of directors
which results into a high degree of impact and performance of the society. Further, it
also highlighted the close association of financial problems like funds management,
overdues and refinance and management co-operation of the officials. The similarity
values of this cluster ranged from 100 to 63.58.
The medium aggregate cluster included the variable namely leading and
supervision of subordinates. The execution of plans and policies, harmony among
higher and lower officials, clarity in determination of responsibility, scope for
subordinates to express their views etc. need attention for improve ment of the PACS’s.
The similarity values were 41.72. In the low aggregate cluster the similarity value was
just 14.70. The variables included in this cluster were education and experience.
Education, experience, training and cadre level of the officials influence directly the
affairs of the society as manpower aspect is important for successful functioning of any
of the organization. Hence, this variable was considered as the area of immediate
concern and deserves the attention of policy makers as well as officials of the society
for improvement.
5.4.3 Opinions of borrowers about the PACS’s.
The borrower of small farmers experienced difficulty in availing the loans in

terms of accessibility of officials, cumbersome procedure, inadequacy of loans, rigid
norms in providing the security and poor loan supervision. Major proportion of medium
farmers experienced gains while obtaining the loan in terms of accessibility, procedure
of advance was simple, timeliness in advancing the loans, low rate of interest and good
treatment of the staffs while procuring the loans from the society. In case of large
farmers, major proportion of the respondent experienced gains in obtaining loans in
terms of accessibility of officials for societies procedures and they were with their
reach, procedure of advance was simple, well adequacy of loans, timeliness while
sanctioning the loans, low rate of interest and also good treatment of the staff while
acquiring the loans from the societies (Table 4.20).
6. SUMMARY AND POLICY IMPLICATIONS
Agriculture remains to be the mainstay of the Indian economy providing

livelihood to about 60 per cent of the people and contributing about 15 per cent to the
gross domestic product (GDP). In the last five decades there was a tremendous inc rease
in agricultural production which was evident from the increase in food grain production
from just 50 million tons during 1990-51 to 235.88 million tons in 2010-11. However in
the last decades, signs of stagnation and even some degree of declaration in few crops
have become visible and calls for immediate attention. Further, growth in agriculture
requires larger investment enabling better use of all resources. But, the fact is that, the
rate of investment in agriculture has declined in the recent years.
With the advent of green revolution, the Indian agricultural scenario changed
from subsistence to commercial, which led to more demand for capital to purchase
various inputs. Though co-operatives were pioneering institutional agencies in the
sphere of agricultural credit, subsequently various institutional agencies made their
entry in the field of agricultural finance. In spite of it co-operative movement has given
much impetus to the development of agriculture in India. It also created new hopes and
inspirations in the minds of rural farming community.
Institutionalization of agricultural credit in India began with the passing of the

Cooperative Credit Societies Act, 1904. Co-operatives are the vital organizations not
only in ensuring smooth flow of agricultural credit, but also in the development of rural
economy. They help in mobilizing human resource and political power for achieving
their goals and identifying and developing local leaders through democratic process.
Co-operatives help in horizontal and vertical integration of production, procurement,
processing and marketing functions and achieving an equitable distribution of
developmental benefits.
The three tiered co-operative credit structure consists of Primary Agricultural

Credit Societies at village level, the Central Co-operative Banks (CCBs) at district level
and the State Co-operatives Apex Banks (SCBs) at the state level. The DCCBs ensure
the strict implementation of developmental schemes in the co-operative sector and also
avoid misuse of funds by PACS or the affluent sections of the rural society.
Hence, managing the PACS’s more efficiently, so as to serve at best, the
farming community needs a comprehensive study on these societies to identify strengths
and weakness in their smooth working. An effective research every now and then in the
evaluation of performance of PACS’s can alone provide an answer in this regard.
Keeping this in view, an attempt was made to evaluate the performance of PACS’s in
Dharwad district of Karnataka state with the following specific objectives.
1. To examine the growth in physical performance indicators of PACSs
2. To examine the growth in financial performance indicators of PACSs
3. To study the purpose-wise and category-wise loan disbursement and recovery
4. To analyze the opinions of the policy makers, officials and beneficiaries

(borrowers) about the performance of PACSs.
Special features of the study
1. The present study encompasses about 12 financial indicators and 3 physical

variables, which were having influence on the performance of the societies and
were identified in consultation with the subject matter specialist and officials of
the PACS’s.
2. The performance of the societies was assessed from various angles by collecting
the opinion of Policy makers, Officials and Farmer-borrowers.
3. Special technique like compound growth rate analysis, principal component

analysis and cluster analysis were employed for analysis of the data.
4. Non-interest cost of borrowing was worked out as it forms an important cost of

borrowing.
Methodology
A multi-stage sampling was adopted for the present study. Five taluks of
Dharwad district representing different agro-climatic zones. The three PACS’s working
in each taluk was selected for in depth analysis. PACS advances loan for different
purposes namely, agricultural and non- farm sector. Accordingly the list of farmer-
borrowers for the above said purposes were obtained from respective PACSs.
Then from each PACS three borrowers were selected randomly. In all, the total number
of borrowers selected for the study was 45.
Policy makers and officials of the selected PACSs were considered for
elicitating the opinion on the performance of the societies. For the study 3 policy
makers and one official from each sample PACSs were considered. Total of 45 policy
makers and 15 officials were considered for the present study.
The primary data were gathered on the opinions of policy makers and officials
through questionnaire and from the farmer-borrower in (beneficiaries’) through
personnel interview method about the working of the PACS. The time series data
relating to physical and financial aspects of PACS’s were collected from annual reports
and audit reports, for a period of 11 years from 1999-00 to 2009-10.
Analytical tools employed
The statistical tools employed were simple averages, ratios, percentages and
compound growth rates. Principal component analysis was used to analyse the
performance of the societies by identifying the underlying and importance of the
variable in explaining the total variation. The cluster analysis of variables was adapted
to analyse the scores obtained from the two groups of respondents on the working of the
societies.
Findings of the study
1. a) Analysis of physical and financial indicators
There was a substant ial increase in physical indicators of all the PACS’s except
membership in G. Hulikatti PACS and employees in Thabakadhonnihalli PACS in
Kalaghatagi taluk, B. Aralikatti and Varur PACS of Hubli taluk. Among the financial
indicators all the variables showed a marginal increasing trend.
b) Growth Rate Analysis
The compound growth rates in respect of physical and financial indicators were
worked out. The growth in membership and employee was found to be positive and
significant for Dharwad, Kalaghatagi, Nava lgund and Kundgol taluk PACS’s.
The growth in loan accounts of Dharwad, Kalaghatagi and Navalgund taluk PACS’s
were positive during the study period, while it was negative growth in some of the
PACS’s of Hubli and Kundgol taluk societies.
The growth in all the financial variables except deposits, cash in hand, advances
overdues, recovery and loss showed a positive and significant in all PACS’s Dharwad
taluk. Growth in financial variables like overdues, recovery and profit showed positive
for most of the societies. This implied that most of the societies incurring losses.
2 Financial ratio analysis
a. The current ratio was less than unity for most of the selected PACS’s, indicate
that, the societies do not have maintained a reasonable level of liquidity. On the
contrary, Acid-test ratio was found to be less than unity for all the societies
during the study period.
b. Debt equity ratio was found to be positive for all the selected PACS’s.
Indebtedness ratio was observed to be positive for all the PACS’s during the
study period.
c. The average net-worth was positive only for Dharwad and Kundgol taluk
PACS’s. While it was negative for all other taluk societies. The net capital ratio
was found to be more than unity in all the PACS’s except Malakankoppa PACS
of Kalaghatagi taluk.
d. The ratio of net profits to total assets was found to be negative for Kalaghatagi,
Navalgund and Hubli taluk PACS’s due to losses incurred by them during the
study period. Net profit to net worth was positive for Dharwad and Kundgol
taluk PACS’s during the study period which indicated the service motto of the
societies in which profitability aspect was relegated to second position.
Net profit to fixed assets ratio was negative for Kalaghatagi, Navalgund and
Hubli taluk PACS’s due to higher losses incurred by them.
e. The average value of gross ratio was found to be highest for all the selected
PACS’s. The value of operating ratio was found to be more than 30 per cent for
all the selected PACS’s
3) Relative performance of the PACS’s (principal component analysis)
The principal component analysis revealed that almost all variables were closely
associated with performance of the societies in first component. The variations
explained by these variables were ranged from 67 per cent to 85 per cent in all selected
societies during the study period.
4) a) Lending norms and flow of credit from PACS’s
There is a lengthy procedure in getting loan from PACS’s and borrower has to
submit three to five documents/certificates from different authorities. Hence, the
borrower has to spend a lot of time and energy in getting these documents before
submission of application form. Even after getting these documents or certificates
applicant has to wait for a long time to get loan, because application has to be
scrutinized by DCCB as PACS, has no power to sanction loan amount directly.
b) Purpose-wise and category -wise flow of credit from PACS’s
Agricultural loan dominated among the loan amount advanced for different
purposes followed by non-agric ultural loan for small farmers. In all the societies shows
same trend. Whereas for medium farmers non-agricultural loan dominated followed by
agricultural loan in all societies. In case of large farmers agricultural loan dominated
followed by non-agricultural loan. But some slight variations were found in these
societies. This may be due to constant encouragement given by the societies to these
purposes and also variation in the allocation of funds by the societies after meeting the
credit requirements for agriculture and allied sector.
6) Recovery performance of PACS’s
Over the study period the demand, collection and balance of the societies
showed an increasing trend except Vanahalli PACS (16%) of Dharwad taluk,
Malakankoppa PACS (24%) of Kalaghatagi taluk and B. Aralikatti PACS (12%) of
Hubli taluk.
7) Assessment of the working of PACS
The opinion of policy makers, officials and borrowers were analysed separately.
Opinion of policy makers was analysed using the technique of cluster analysis
considering 18 variables. Out of 18 variables, 12 were grouped under high aggregate
cluster, 3 variables each in medium and low aggregate cluster.
The opinion of officials revealed that out of 12 variables, ten variables were
found in high aggregate cluster and another two variables were grouped in medium and
low aggregate clusters.
The borrower of small farmers experienced difficulty in availing the loans in

terms of accessibility of officials, cumbersome procedure, inadequacy of loans, rigid
norms in providing the secur ity and poor loan supervision. Major proportion of medium
farmers experienced gains while obtaining the loan in terms of accessibility, procedure
of advance was simple, timeliness in advancing the loans, low rate of interest and good
treatment of the staffs while procuring the loans from the society. In case of large
farmers, major proportion of the respondent experienced gains in obtaining loans in
terms of accessibility of officials for societies procedures and they were with their
reach, procedure of advance was simple, well adequacy of loans, timeliness while
sanctioning the loans, low rate of interest and also good treatment of the staff while
procuring the loans from the societies.
Policy implications
1. It was evident from the analysis that, the profit margin of PACS was poor.
The financial resource base is poor in the societies. In future, the PACS’s can
improve their financial resource base by venturing into the scheduled banking
activities. For this purpose, necessary amendments are the need of the hour.
2. In the recent years, the decline in recovery(less than 50 per cent) of loans was
partly due to announcement of loan waiver scheme and implementation of other
subsidy schemes. Therefore, there is a need to recognize prompt borrowers and
provide incentives for repayment of the loans at time. Instead of Debt Waiver
and Debt Relief Scheme, government should think of providing incentives in
terms of interest subsidy to regular repayers, and reduction of interest rates on
agricultural loans.
3. There is a need to delegate power to PACS’s for sanctioning of loans to avoid

delay in sanctioning of loans by KCCB.
4. To avail the loan from PACS’s the borrower needs to submit various (3 to
5 documents) documents, which is tedious process and consumes lot of time.
In order to avoid this difficulty computer networking of revenue department,
land records office and financial institutions operating in the study area may be
selected on the pilot basis to access the required information.
5. Credit cards may be issued to borrowers based on their past transaction records
to enable them to get the loan timely.
6. Results revealed that there was an increased inequality in flow of credit for
different purpose. Hence, efforts may be made at the society’s level to diversify
the lending of funds for different purposes.
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Table 4.1: Physical Performance Indicators of Selected PACS’s in Dharwad district
(in Numbers)
Sl. No Name the taluk/indicators Name of the PACS’s
I Dharwad Taluk Hebballi Marewada Vanahalli
1 Membership 1138 535 600
2 Employees 4 4 2
3 Loan Account 863 263 265
II Kalaghatagi Taluk Malakankoppa G Hulikatti Thabakadhonnihalli
2 Employees 2 2 2
III Navalgund Taluk Javoor Shirkola Morab
2 Employees 2 3 3
IV Hubli Taluk Chabbi B.Aralikatti Varur
2 Employees 2 3 2
V Kundgol Taluk Yaliwala Kubihal Kundgol
1 Membership 1453 494 1684
2 Employees 4 2 4
Source: Audit Reports of Societies

Table 4.2: Financial Performance Indicators of Selected PACS’s in Dharwad District (1999-00 to 2009-10)
(Rs.in lakhs)
Dharwad Taluk Kalaghatagi Taluk Navalgund Taluk Hubli Taluk Kundgol Taluk
Sl.
Indicators
No
Hebballi Marewada Vanahalli Malakankoppa G Hulikatti Thabakadhonnihalli Javoor Shirkola Moraba Chabbi B.Aralikatti Varur Yaliwala Kubihal Kundgol
1 Share Capital 6.87 9.17 4.47 1.00 1.04 1.92 7.74 10.46 11.03 3.03 4.27 5.34 23.91 12.58 46.64
2 Borrowings 37.72 29.98 20.51 3.04 24.16 17.91 66.80 213.85 91.52 6.903 16.16 23.49 142.33 16.82 229.26
3 Deposits 8.83 47.68 5.37 2.88 0.66 5.78 1.44 8.86 8.18 14.574 5.96 1.58 7.23 4.65 38.14
4 Cash in Hand 0.45 0.14 0.015 0.001 0.024 0.01 0.03 0.42 0.17 4.04 0.16 0.44 0.48 0.22 277.14
5 Cash at bank 0.45 17.99 0.12 0.023 0.03 0.009 0.07 1.16 3.09 6.60 o.27 1.00 9.64 4.42 6.14
6 Reserves 1.71 14.86 22.21 0.24 0.12 0.16 0.46 1.69 2.43 1.12 1.02 o.37 27.33 2.86 24.77
7 Investment 1.84 1.75 0.88 0.20 0.65 0.84 3.89 9.60 7.49 1.09 1.59 0.95 6.33 3.80 279.17
8 Advances 39.57 28.39 30.89 1.64 4.05 17.74 59.41 178.56 77.11 18.07 19.46 14.67 56.70 12.31 144.98
9 Overdues 5.95 19.64 47.86 2.66 6.18 16.30 54.83 67.59 78.44 10.39 18.69 14.36 80.40 42.59 18.58
10 recovery 0.72 37.33 1.04 0.23 2.01 6.57 2.10 0.79 50.34 11.56 16.93 7.47 54.44 53.97 17.76
11 Loss 7.83 0.016 9.61 0.26 1.03 4.55 7.15 14.55 15.30 0.67 3.80 1.45 7.20 o.90 16.06
12 Profit 0.34 1.64 0.00 0.53 0.00 0.16 4.11 84.58 50.93 1.69 0.02 0.07 3.31 1.33 15.58
Source: Audit Reports of Societies

Table 4.3: Compound Growth Rate of Physical Indicators of Selected PACS’s in
Dharwad District
Sl. No Name of the taluk/ indicators PACS’s/Compound Growth Rate (per cent)
I Dharwad Taluk Hebballi Marewada Vanahalli
1 Membership 0.07** 1.25** 1.11**
2 Employees 1.84** 1.84** 0
3 Loan account 0.57** 2.41** 1.29**
II Kalaghatagi taluk Malakankoppa G Hulikatti Thabakadhonnihalli
1 Membership 1.18** 0 1.32**
2 Employees 5.68** 4.52** 0
3 Loan account 0.94** 4.93** 3.68**
III Navalgund taluk Javoor Shirkola Moraba
1 Membership 0.77** 0.02** 3.53**
2 Employees 4.52** 3.18** 6.28**
3 Loan account 1.1** 0.99** 2.97**
IV Hubli Taluk Chabbi B Aralikatti Varur
1 Membership -2.53** 8.38** -9.17**
2 Employees 3.37** 0 0
3 Loan account 0.36* 6.86** -0.36*
V Kundgol Yaliwala Kubihal Kundgol
1 Membership 0.97** 0.1** 2.15**
2 Employees 2.46** 5.68** 4.47**
3 Loan account -0.11* 2.8** 8.6**
** Significance at1 per cent level
* Significance 5 per cent level

Table 4.4: Compound Growth Rate of Financial Indicators of Selected PACS’s in Dharwad District
(Per cent)
Particulars \Talu
Dharwad Taluk Kalaghatagi Taluk Navalgund Taluk Hubli Taluk Kundgol Taluk
ks
Sl No
Indicators \PAC Mare Malakan G Thabaka B
S’s Hebballi wada Vanahalli koppa Hulikatti dhonnihal Javoor Shirkola Moraba Chabbi Aralikatti Varur Yaliwala Kubihal Kundgol
li
1 Share capital 2.21** 2.77** 0.16** 0 0 2.42* 3.69** 44.15** 3.1* 0.49* 0.79** -2.27** 0.20* -1.78* 2.62**
2 Borrowings 7.03** -34.06** 20.51** -9.28** 23.87** 1.33** -0.15* -3.055** -6.06** -10.75** -13.19** 0.23* 2.34* 10.14** -42.77**
3 Deposit s -20.86** -4.92** -1.67** 77.91** 20.34** 21.99** 50.87** 13.16** 0.94* 35.99** 1.58* -1.81* 11.38** 2.6** -9.67**
4 Cash in Hand -8.17 -10.03** -0.19* 1.9* -6.83** 69.12** -8.06** -30.51** -16.28* -7.67** -5.41* -5.58* 9.92** -4.76** -64.82**
5 Cash at bank 4.71* 27.64** -0.29** 0.14* -5.65** 9.35* -9.37** 29.31** 26..98** 27.91** -3.1* 0.59* 16.86** -0.5* 37.42**
6 Reserves -21.15** 9.38** 0.11** 9.95** 3.03** 6.21** 14.22** 25.07** 1.82** 5.5** 8.65** 2.51* 19.72** -0.003* 0.74**
7 Investment 2.3** 8.22** 0.019* -0.011** 0.76** 8.36** -11.92** 1.61** 1.96** 4.22** 8.14** 0.67** 2.92** 1.74** 4.62**
8 Advances -30.46** -4.32** 18.26** 55.87** -3.47** 0.39* -1.48** -4.28** 0.23* -12.29** -5.12** -6.66* -4.54* -7.49** 0.5*
9 Overdues -10.16* -3.16** 0.00099* -28.76** -15.91** 8.67** -19.01* -50.22** -24.87* 56.91** -5.01** -0.76* -12.17** -0.97** 1.2**
10 Recovery 16.46** -0.014* -7.99** -12.63** -29.44** -22.24** -14.21* 5.47** -30.07* -10.6** -2.27* -3.6* 12.03** -4.62* -30.83**
11 Loss -2.43** 124.66** -23.18** 4.44* 23.63** 34** 2.25* -79.23** -19.66* -28.72** 138.78** -15.31* -70.56** -70.37** -82.79**
12 Profit 47.61** 3.48* 0 21.89* 0 -35.61* 30.47* 527.23* 0.049** 23.88** -46.68** 17.59* 247.11** 209.66** 457.3**
** Significance at1 per cent level
* Significance 5 per cent level

Table 4.5: Liquidity Ratios of Selected PACS’s in Dharwad district
Liquid Asset
Acid Test
Sl. No Name of PACS’s Current Ratio to Total Asset
Ratio
Ratio
I Dharwad Taluk
1 Hebballi 41.48 0.54 0.05
2 Marewada 1.57 0.37 6.35
3 Vanahalli 0.12 0.14 0.12
II Kalaghatagi Taluk
4 Malakankoppa 0.08 0.01 0.00
5 G Hulikatti 0.01 0.01 0.01
6 Thabakadhonnihalli 8.04 6.53 82.72
III Navalgund Taluk
7 Javoor 2.28 19.63 32.81
8 Shirkola 0.01 1.12 3.16
9 Moraba 0.01 0.01 2.09
IV Hubli Taluk
10 Chabbi 0.01 0.63 0.20
11 B Aralikatti 0.01 0.01 0.01
12 Varur 0.01 0.01 0.01
V Kundgol Taluk
13 Yaliwala 0.01 0.01 0.01
14 Kubihal 0.01 0.01 0.01
15 Kundgol 15.31 0.39 0.00

Table 4.6: Tests of Solvency of Selected PACS’s in Dharwad district
Sl. No Name of PACS’s Debt-equity Ratio Indebtedness Ratio
I Dharwad Taluk
1 Hebballi 0.26 0.19
2 Marewada 3.60 3.99
3 Vanahalli 1.11 2.74
4 Malakankoppa 1.60 3.03
5 G Hulikatti 0.01 0.60
6 Thabakadhonnihalli 32.66 3.55
III Navalgund Taluk
7 Javoor 1.29 0.83
8 Shirkola 9.72 9.95
9 Moraba 0.01 0.74
IV Hubli Taluk
10 Chabbi 0.01 0.10
11 B Aralikatti 0.01 0.29
12 Varur 0.01 0.12
V Kundgol Taluk
13 Yaliwala 0.01 2.12
14 Kubihal 0.01 0.00
15 Kundgol 0.01 0.25

Table 4.7: Tests of Strength of Selected PACS’s in Dharwad district
Net worth
Sl. No Name of PACS’s Net capital ratio
(Rs. in lakhs)
I Dharwad Taluk
1 Hebballi 4.61 0.16
2 Marewada 29.52 25.18
3 Vanahalli (-) 27.64 16.43
4 Malakankoppa (-) 0.29 (-) 13.92
5 G Hulikatti (-) 11.92 54.54
6 Thabakadhonnihalli (-) 10.55 50.09
III Navalgund Taluk
7 Javoor (-) 1.43 1.17
8 Shirkola (-) 21.59 1.03
9 Moraba (-) 8.75 71.46
IV Hubli Taluk
10 Chabbi (-) 0.88 2.92
11 B Aralikatti (-) 11.78 1.48
12 Varur (-) 0.85 2.63
V Kundgol Taluk
13 Yaliwala 71.45 5.17
14 Kubihal 26.89 6.10
15 Kundgol 100.67 2.73

Table 4.8: Test of Profitability of Selected PACS’s in Dharwad district
Net Profit to Net Profit to Net Profit to

Sl. No Name of PACS’s
Total Assets Net worth Fixed Assets
I Dharwad Taluk
1 Hebballi 14.00 0.85 25.98
2 Marewada 1.29 6.40 .28
3 Vanahalli 0.00 0.00 0.00
4 Malakankoppa 0.00 0.00 0.00
5 G Hulikatti 0.00 0.00 0.00
6 Thabakadhonnihalli 0.00 0.00 0.00
III Navalgund Taluk
7 Javoor 0.00 0.00 0.00
8 Shirkola 0.00 0.00 0.00
9 Moraba 0.00 0.00 0.00
IV Hubli Taluk
10 Chabbi 0.00 0.00 0.00
11 B Aralikatti 0.00 0.00 0.00
12 Varur 0.00 0.00 0.00
V Kundgol Taluk
13 Yaliwala 4.06 0.08 1.57
14 Kubihal 9.94 20.47 2.80
15 Kundgol 1.71 0.07 0.54
Note: The ratio value is zero in Kalaghatagi, Navalgund and Hubli taluks PACS’s since Profit was zero
Table 4.9: Tests of Efficiency of Selected PACS’s in Dharwad district
(Values in Per cent)
Sl. No Name of PACS’s Gross Ratio Operating Ratio
I Dharwad Taluk
1 Hebballi 68.26 0.0068
2 Marewada 88.03 75.79
3 Vanahalli 1080.75 158.67
4 Malakankoppa 745.59 745.59
5 G Hulikatti 100.0 100.0
6 Thabakadhonnihalli 172.24 125.40
III Navalgund Taluk
7 Javoor 247.75 111.24
8 Shirkola 157.41 157.41
9 Moraba 149.32 87.97
IV Hubli Taluk
10 Chabbi 127.40 66.98
11 B Aralikatti 418.22 196.45
12 Varur 129.40 68.18
V Kundgol Taluk
13 Yaliwala 63.92 63.92
14 Kubihal 47.26 28.11
15 Kundgol 83.96 83.96

Table 4.10: Principal Components and Factor Loadings of Physical and Financial Indicators Influencing the Performance of Selected PACS’s in
Dharwad taluk
Hebballi PACS Marewada PACS Vanahalli PACS

Sl. Principal Component Ranking Principal Component Ranking Principal Component Ranking
Variables/Indicators based on based on based on
No
PC 1 PC 2 PC 3 High Factor PC 1 PC 2 PC 3 High Factor PC 1 PC 2 PC 3 High Factor
Loadings Loadings Loadings
1 Membership 0.811 0.545 -0.103 4 0.789 0.004 0.230 4 0.879 -0.113 -0.382 1
2 Employees 0.813 -0.030 -0.537 3 0.622 0.249 0.222 6 - - - -
3 Loan Account 0.944 0.064 -0.195 2 0.835 0.440 0.126 3 0.814 0.028 -0.089 3
4 Share capital 0.946 0.087 0.190 1 0.693 0.262 0.018 5 0.529 0.519 -0.453 5
5 Borrowings 0.069 -0.925 0.330 9 -0.399 0.146 0.810 11 0.246 0.735 -0.389 8
6 Deposits -0.560 0.610 -0.336 13 -0.431 0.584 -0.415 12 -0.726 0.434 0.360 12
7 Cash in Hand -0.530 -0.717 0.206 12 -0.433 -0.058 0.450 13 -0.137 0.550 0.329 9
8 Cash at bank 0.359 0.442 0.808 8 0.574 0.538 0.457 7 -0.689 -0.440 -0.203 11
9 Reserve -0.477 0.371 0.558 14 0.886 -0.342 -0.031 2 0.825 -0.178 0.260 2
10 Investment 0.760 -0.361 0.024 6 0.891 0.231 -0.116 1 0.382 0.299 0.596 7
11 Advance -0.923 0.120 0.259 15 -0.447 0.831 -0.068 14 0.661 0.182 0.437 4
12 Overdues -0.293 0.576 -0.112 11 -0.735 0.473 0.301 15 0.444 -0.525 0.523 6
13 Recovery 0.766 0.038 0.259 5 -0.057 0.657 -0.621 10 -0.361 -0.162 -0.375 10
14 Loss -0.263 0.510 -0.311 10 0.515 0.270 -0.051 8 -0.831 0.246 0.228 13
15 Profit 0.368 0.388 0.831 7 0.070 -0.209 -0.672 9 - - -
Eigen Values (Latent roots) 6.367 3.272 2.536 5.641 2.613 2.306 5.080 2.026 1.868
Variation explained 42.444 21.810 16.905 37.606 17.418 15.372 39.076 15.584 14.366
Cumulative variation
42.444 64.254 81.159 37.606 55.024 70.396 39.076 54.659 69.026
explained
Note: PC1, PC 2 and PC 3-Principal Component 1, 2 and 3, respectively

Kalaghatagi taluk
Malakankoppa PACS G. Hulikatti PACS Thabakadhonnihalli PACS

Principal Component Ranking Principal Component Ranking Principal Component Ranking
Sl. No Variables/Indicators based on based on based on
1 Membership 0.683 0.052 -0.509 4 - - - - .932 0.214 -0.017 2
2 Loan Account 0.881 0.004 0.101 2 0.917 0.097 0.337 3 0.939 0.011 0.133 1
3 Borrowings -0.831 0.143 0.126 12 0.486 0.082 0.523 6 0.077 0.909 0.020 11
4 Deposits 0.482 0.345 0.172 5 0.159 -0.917 0.267 7 0.733 0.053 -0.094 5
5 Cash in Hand -0.033 0.834 0.114 9 -0.496 0.743 0.206 8 0.758 0.046 -0.124 4
6 Cash at bank -0.190 0.754 -0.230 10 -0.598 0.756 0.073 9 0.207 -0.395 0.285 8
7 Reserve 0.269 0.164 -0.197 7 0.967 0.076 -0.101 1 0.816 0.401 0.023 3
8 Advance 0.838 0.292 0.279 3 -0.827 -0.080 0.435 11 -0.201 0.933 0.249 12
9 Overdues -0.908 -0.016 0.248 13 -0.809 -0.368 0.255 10 0.176 0.913 0.116 10
10 Recovery -0.768 0.475 0.169 11 -0.921 -0.073 0.341 12 -0.578 0.301 0.695 14
11 Loss 0.380 -0.098 0.851 6 0.478 0.220 0.214 5 0.690 -0.109 0.303 6
12 Employees 0.903 0.166 0.214 1 0.800 0.146 0.500 4 - - - -
13 Profit 0.259 0.128 -0.399 8 - - - - -0.435 0.411 -0.584 13
14 Investment - - - - 0.924 0.121 0.019 2 0.310 -0.391 0.555 9
15 Share Capital - - - - - - - - 0.363 -0.064 -0.633 7
41.673 55.507 67.172 54.582 73.083 82.946 34.821 58.589 71.621
explained

Navalgund taluk
Javoor PACS Ranking Shirkola PACS Ranking Moraba PACS Ranking

Principal Component Principal Component Principal Component
High Factor High Factor High Factor
PC 1 PC 2 PC 3 Loadings PC 1 PC 2 PC 3 Loadings PC 1 PC 2 PC 3 Loadings
1 Membership 0.734 0.280 0.492 4 0.727 -0.227 0.499 6 0.903 .278 0.129 2
2 Loan Account 0.852 0.070 0.285 2 0.812 -0.041 0.494 5 0.953 0.132 0.094 1
3 Borrowings -0.247 -0.638 0.145 9 -0.883 0.354 0.268 14 -0.912 -0.320 0.032 15
4 Deposits 0.870 0.088 -0.323 1 0.957 0.215 -0.027 1 0.609 -0.064 -0.387 5
5 Cash in Hand -0.743 0.635 0.130 13 -0.346 -0.688 -0.063 11 -0.320 0.303 -0.134 13
6 Cash at bank -0.776 0.561 0.088 14 0.559 -0.678 -0.339 7 0.634 -0.302 0.187 4
7 Reserve 0.707 0.182 0.292 6 0.860 0.406 0.086 3 0.535 -0.609 -0.045 7
8 Advance -0.683 -0.346 -0.183 12 -0.888 0.325 0.274 15 -0.404 0.307 0.393 14
9 Overdues -0.421 -0.332 0.828 10 -0.704 -0.022 -0.012 12 0.098 0.707 0.028 10
10 Recovery -0.587 0.583 0.494 11 0.324 0.820 -0.088 10 -0.075 0.236 0.913 11
11 Loss 0.384 -0.480 0.713 8 -0.794 0.039 0.471 13 0.179 0.860 -0.193 9
12 Employees 0.721 0.513 0.241 5 0.561 -0.054 0.556 8 0.795 -0.015 0.377 3
13 Profit 0.413 0.296 -0.835 7 0.840 0.366 -0.040 4 -0.187 -0.420 0.819 12
14 Investment -0.812 0.540 0.104 15 0.938 0.024 -0.269 2 0.580 -0.695 -0.113 6
15 Share Capital 0.745 0.505 .223 3 .364 -0.448 0.553 9 0.515 0.462 0.192 8
Cumulative variation 45.201 64.849 83.824 54.062 70.333 81.572 34.644 54.750 68.882
explained
Note: PC1, PC 2 and 3-Principal Component 1, 2 and 3, respectively

Hubli taluk
Chabbi PACS Ranking B. Aralikatti PACS Ranking Varur PACS Ranking

Principal Component Principal Component Principal Component
High Factor High Factor High Factor
PC 1 PC 2 PC 3 Loadings PC 1 PC 2 PC 3 Loadings PC 1 PC 2 PC 3 Loadings
1 Membership -0.772 0.213 0.565 11 0.731 0.421 0.466 3 0.599 -0.118 -0.207 5
2 Loan Account 0.003 0.584 -0.133 8 0.783 0.395 0.402 1 0.886 0.049 -0.199 1
3 Borrowings -0.767 -0.455 -0.184 12 -0.852 -0.181 -0.022 14 -0.536 0.400 -0.694 11
4 Deposits 0.994 -0.039 0.031 1 0.471 -0.744 -0.222 6 0.701 0.582 -0.255 4
5 Cash in Hand 0.074 -0.485 0.462 6 -0.190 0.115 -0.670 8 0.056 0.922 0.347 10
6 Cash at bank 0.807 -0.545 0.123 2 -0.293 0.898 -0.238 10 0.099 -0.819 -0.072 9
7 Reserve 0.722 0.672 0.002 4 0.743 0.294 -0.490 2 -0.705 -.0342 0.596 12
8 Advance -0.113 0.828 -0.442 9 -0.615 -0.291 0.505 11 0.530 0.530 0.443 8
9 Overdues -0.778 -0.194 0.093 13 -0.697 0.118 0.566 12 0.539 -0.792 -0.239 7
10 Recovery -0.808 0.041 0.292 14 -0.237 0.882 0.065 9 0.724 -0.425 0.408 3
11 Loss 0.071 0.721 0.641 7 0.701 0.056 -0.199 4 -0.945 0.215 0.127 14
12 Employees - - - - - - - - - - - -
13 Profit 0.602 0.074 0.771 5 -0.822 0.535 0.094 13 0.557 0.045 0.395 6
14 Investment 0.749 -0.343 0.085 3 0.231 -0.347 0.799 7 -0.880 -0.256 0.262 13
15 Share Capital -.284 0.071 0.652 10 0.700 0.344 0.499 5 0.878 0.032 0.277 2
Cumulative variation 40.215 61.300 77.923 38.564 61.638 80.858 44.811 68.791 81.981
explained

Kundgol taluk
Yaliwala PACS Kubihal PACS Kundgol PACS
Principal Component Ranking Principal Component Ranking Principal Component Ranking

1 Membership 0.612 -0.514 0.436 7 0.774 0.397 -0.152 4 0.982 -0.061 -9.463E-5 1
2 Loan Account -0.052 0.701 0.550 12 0.876 -0.007 .065 2 0.949 -0.078 -.0142 3
3 Borrowings -0.301 0.517 -0.369 13 0.813 -0.358 .028 3 -0.425 0.762 0.216 14
4 Deposits 0.810 -0.102 0.335 3 0.743 0.105 .631 5 -0.408 0.635 0.606 13
5 Cash in Hand 0.486 -0.022 0.768 9 -0.271 0.742 .097 14 -0.712 0.084 0.454 15
6 Cash at bank 0.954 -0.077 -0.126 1 0.257 0.925 .162 7 0.736 0.162 0.525 7
7 Reserve 0.766 -0.313 0.113 5 0.085 -0.472 .297 9 0.822 0.105 0.329 6
8 Advance 0.128 0.558 -0.391 10 -0.593 -0.100 -.250 15 0.365 0.862 0.077 9
9 Overdues -0.527 -0.459 0.295 14 -0.049 0.709 .639 12 0.509 0.806 0-.010 8
10 Recovery 0.703 -0.306 -0.502 6 -0.022 0.557 -.217 11 -0.049 -0.595 0.599 11
11 Loss -0.646 -0.501 0.256 15 -0.212 0.488 .285 13 0.129 -0.213 0.958 10
12 Employees 0.837 0.417 0.193 2 0.892 0.106 -.356 1 0.907 0.200 0.012 4
13 Profit 0.502 -0.231 -0.459 8 0.208 -0.720 .066 8 -0.383 0.718 0-.319 12
14 Investment 0.805 0.241 -0.267 4 0.345 0.211 -.745 6 0.856 0.054 -0.024 5
15 Share Capital 0.098 0.644 0.485 11 0.031 -0.371 .889 10 0.950 -0.115 -0.094 2
37.832 55.863 72.347 27.232 51.891 69.391 46.346 69.026 85.152
explained
4.15: Category-wise and purpose-wise Loan Disbursement in Selected PACS’s in Dharwad district (2009-10)
(Rs. in lakhs)
Sl. No Society Name Small farmars Medium farmars Large farmers Grand
I Dharwad Taluk AL NAL Total AL NAL Total AL NAL Total Total
10.69 6.42 17.11 1.43 3.56 4.99 4.28 2.14 6.42 28.52
1 Hebballi
(37.48) (22.51) (59.99) (5.01) (12.48) (17.49) (15.0) (7.5) (22.5) (100)
8.21 4.93 13.13 1.09 2.74 3.83 3.28 1.64 4.93 21.89
2 M arewada
(37.50) (22.52) (59.98) (4.97) (12.51) (17.48) (14.98) (7.49) (22.47) (100)
5.30 1.80 7.10 0.10 0.53 0.63 0.20 0.78 0.98 8.71
3 Vanahalli
(60.84) (20.66) (81.50) (1.14) (6.08) (7.22) (2.29) (8.95) (11.24) (100)
0.75 0.45 1.19 0.10 0.25 0.35 0.30 0.15 0.45 1.99
4 Malakankoppa
(37.68) (22.52) (59.78) (5.02) (12.56) (17.58) (15.07) (7.53) (22.61) (100)
1.26 0.76 2.02 0.17 0.42 0.59 0.50 0.25 0.76 3.36
5 G. Hulikatti
(37.50) (22.63) (60.11) (5.05) (12.5) (17.55) (14.88) (7.44) (22.59) (100)
1.58 0.95 2.54 0.21 0.53 0.74 0.63 0.32 0.95 4.23
6 Thabakadhonnihalli
(37.35) (22.45) (60.04) (4.96) (12.45) (17.49) (14.89) (7.56) (22.45) (100)
III Navalgund Taluk
28.76 17.26 46.02 3.83 9.59 13.42 11.50 5.75 17.26 76.70
7 Javoor
(37.49) (22.5) (60) (4.99) (12.50) (17.49) (15.0) (7.49) (22.5) (100)
21.96 13.18 35.14 2.93 7.32 10.25 8.78 4.39 13.18 58.57
8 Shirkola
(37.45) (22.45) (59.98) (5) (12.49) (17.5) (14.99) (7.48) (22.5) (100)
36.60 21.96 58.56 4.88 12.20 17.08 14.64 7.32 21.96 97.60
9 Morab
(37.51) (22.49) (60) (5) (12.4) (17.48) (15.02) (7.5) (22.52) (100)
IV Hubli Taluk
2.55 1.53 4.08 0.34 0.85 1.19 1.02 0.51 1.53 6.80
10 Chabbi
(37.50) (22.6) (60) (5) (12.5) (17.5) (15.0) (7.51) (22.49) (100)
0.75 0.54 4.66 0.23 0.21 0.44 0.23 0.45 0.68 5.78
11 B. Aralikatti
(71.10) (9.34) (80.62) (3.97) (3.63) (7.61) (3.97) (7.78) (11.76) (100)
5.34 3.20 8.54 0.71 1.78 2.49 2.14 1.07 3.20 14.24
12 Varur
(37.50) (22.47) (59.97) (4.98) (12.53) (17.48) (15.02) (7.51) (22.53) (100)
V Kundgol Taluk
26.99 16.19 43.18 3.60 9.00 12.59 10.79 5.40 16.19 71.96
13 Yaliwala
(37.5) (22.49) (60) (5) (12.5) (1749) (14.99) (7.5) (22.49) (100)
5.48 3.29 8.78 0.73 1.83 2.56 2.19 1.10 3.29 14.63
14 Kubihal
(37.45) (22.48) (60.01) (4.89) (12.57) (17.46) (14.96) (7.51) (22.48) (100)
77.85 46.71 124.57 10.38 25.95 36.33 31.14 15.57 46.71 207.61
15 Kundgol
(38) (21.38) (60) (4.97) (12.48) (16.85) (15) (7.5) (22.50) (100)
Note: AL-Agricultural loan, NAL-Non-agricultural loan; Figures in parenthesis indicates percentage share to grand total
Table 4.16: Recovery performance of Selected PACS’s in Dharwad District (2009-10)
(Rs. in lakhs)
Sl. No Society Name Demand Collection Balance Recovery

I Dharwad Taluk STL MTL Total STL MTL Total STL MTL Total per cent
1 Hebballi 27.75 9.25 37 21.06 7.02 28.09 6.68 2.22 8.91 76
2 Marewada 30.75 10.25 41.01 25.86 8.62 34.49 4.89 1.63 6.52 84
3 Vanahalli 6.26 2.08 8.35 1.02 0.34 1.36 5.24 1.74 6.99 16
4 Malakankoppa 0.15 0.05 0.21 0.03 0.01 0.05 0.12 0.04 0.16 24
5 G. Hulikatti 0.26 0.08 0.35 0.23 0.07 0.31 0.03 0.01 0.04 88
6 Thabakadhonnihalli 2.77 0.92 3.7 1.95 0.65 2.6 0.82 0.27 1.1 70
III Navalgund Taluk
7 Javoor 71.64 23.88 95.52 68.01 22.67 90.69 3.28 1.09 4.38 95
8 Shirkola 79.38 26.46 105.84 53.64 17.88 71.53 25.73 8.57 34.31 68
9 Moraba 53.11 17.70 70.82 51.45 17.15 68.61 1.65 0.55 2.21 97
IV Hubli Taluk
10 Chabbi 4.42 1.47 5.9 4.42 1.47 5.9 0 0 0 100
11 B. Aralikatti 1.49 0.49 1.99 0.18 0.06 0.24 1.31 0.43 1.75 12
12 Varur 14.51 4.83 19.35 12.51 4.17 16.68 2.01 0.67 2.69 86
V Kundgol Taluk
13 Yaliwala 55.12 18.37 73.5 49.84 16.61 66.46 5.28 1.76 7.04 90
14 Kubihal 18.42 6.14 24.57 16.43 5.47 21.91 1.99 0.66 2.66 89
15 Kundgol 150.96 50.32 201.28 124.41 41.47 165.88 26.55 8.85 35.4 82
Note: STL- Short-Term Loan and MTL- Medium-Term Loan

123
Table 4.17: Non-interest Cost Incurred by Borrowers
(Per borrower)
Sl. No Particulars Cost (Rs.) Per cent to Total
1 Membership fee 75 9.61
2 Share fee 525 67.30
3 Encumbrance fee 20 2.56
4 Postage fee 10 1.28
5 Documents cost 50 6.41
6 Travelling cost 100 12.82
Total 780 100

124
Table 4.18: Aggregate Clusters of Variables on the Performance of PACS’s According to

Policy Makers
Aggregation of Variable code Name of the variable Degree of

clusters Number similarity
High 10 and 9 Impact of credit and services to farmers 100.0
15 and 17 Impact indicators and financial problems 87.87
16 and 12 General problems and communication 81.11

and coordination within the organization
11 and 7 Bank supervision and effectiveness of 78.84

training
13 and 3 Communication and coordination among 78.87

organization and decision making at
district branch
14 and 4 Performance indicators and adequacy of 66.37

staff
Medium 5 Education level of employees 63.19
2 and 1 Government policies and education and 62.55

training of directors
Low 18 and 6 Miscellaneous problems and training to 51.23

employees
8 Bank management 49.00

125
Table 4.19: Aggregation of Clusters of Variables on the Performance of PACS’s

According to officials
Variable
Aggregation Degree of
code Name of the variable
of clusters similarity
Number
High 2, 5, 7 and 10 Involvement, communication, Bank 100

management and General problems
Miscellaneous problems
12 91.79
Functioning of board of management

6 90.18
Impact indicators
9 84.85
Performance indicators
8 73.03
Financial problems
11 67.93
Managerial capacity
3 63.58
Medium 4 Leading and supervision 41.72
Low 1 Education and experience 14.70

126
Table 4.20: Opinion of borrowers about the performance of PACS’s in Dharwad district
Particulars SF MF LF
Sl. No Views (n=15) (n=15) (n=15)
1 Accessibility Easy 3 (20) 9 (60) 8 (55)
Moderate 2 (10) 2 (10) 5 (35)
Difficult 10 (70) 4 (30) 2 (10)
2 Procedure of Simple 3 (20) 8 (55) 10 (70)
advance Moderate 2 (10) 3 (20) 3 (20)
Cumbersome 10 (70) 4 (25) 2 (10)
3 Adequacy of loan Adequate 9 (60) 2 (10) 5 (35)
Satisfactory 3 (20) 1 (5) 2 (10)
Inadequate 3 (20) 12 (85) 8 (55)
4 Time Taken Timely 8 (55) 11 (75) 6 (40)
Medium 2 (10) 1 (5) 4 (25)
Untimely 5 (35) 3 (20) 5 (35)
5 Rate of Interest Low 10 (70) 8 (55) 9 (60)
High 3 (20) 4 (25) 3 (20)
Not Known 2 (10) 3 (20) 3 (20)
6 Security Flexible 3 (20) 2 (10) 2 (10)
Moderate 2 (10) 3 (20) 5 (35)
Rigid 10 (70) 10 (70) 8 (55)
7 Technical guidance Provided 2 (10) 3 (20) 2 (10)
Some extent 2 (10) 1 (5) 3 (20)
Not provided 11 (80) 11 (75) 10 (70)
8 Repayment terms Easy 4 (25) 8 (55) 4 (25)
Moderate 3 (20) 3 (20) 3 (20)
Difficult 8 (55) 4 (25) 8 (55)
9 Loan supervision Frequent 3 (20) 2 (10) 2 (10)
Occasionally 1 (5) 1 (5) 4 (25)
Rarely 11 (75) 12 (85) 9 (65)
10 Staff treatment Good 12 (85) 11 (75) 9 (65)
Satisfactory 1 (5) 1 (5) 2 (10)
Bad 2 (10) 3 (20) 4 (25)
Note: Figure in the parenthesis indicate percentage to total
SF=Small Farmers, MF=Medium Farmers, LF= Large Farmers

127
Appendix I: Physical and financial indicators of PACS's in Dharwad taluk
Loan Share Cash Cash at

Sl. No Indicators Membership Employee Account Capital Borrowing Deposits in Bank Reserves Investment Advances Overdues recovery Loss Profit
Hand
PACS Hebballi
1 1999-00 1140 4 854 628006 1408800 2655432 102 25940 243772 157526 5736128 5541 33446 1311570 0
2 2000-01 1140 4 847 628006 1408800 2655435 102 25940 243775 157524 5763125 5736128 33645 729521 12132
3 2001-02 1134 4 847 670586 4543106 313212 83123 10321 219655 191821 4221123 54698 33485 709631 11321
4 2002-03 1134 4 848 667336 4665123 35351 95312 12231 249655 192831 4664012 47856 44561 729521 12132
5 2003-04 1136 4 856 655646 4865003 363762 103046 14229 259655 202922 4865003 4578 48971 749722 1242
6 2004-05 1134 4 857 655646 4543106 2655435 102321 14556 259655 157526 4865001 145678 47891 709631 11321
7 2005-06 1134 4 859 641102 4665123 313212 103123 14587 25467 157524 4856002 45621 41567 729521 12132
8 2006-07 1136 4 859 652508 4865003 35351 10236 14587 24569 191821 4856123 32145 147895 749722 1242
9 2007-08 1146 4 878 796123 3509660 32767 142 338220 308455 192831 3409660 456213 145623 724214 267899
10 2008-09 1145 5 898 796125 3509660 329987 154 12546 25641 202922 265471 12546 145687 729521 12132
11 2009-10 1148 5 899 769145 3509460 326587 1254 14569 25987 222955 25461 14587 78451 749722 1242
PACS Marewada
1 1999-00 503 4 250 770330 3930300 10848160 3837 2576954 598203 128375 6070131 2669270 3766221 0 155932
2 2000-01 503 4 253 888450 4076605 3779454 101247 101247 1017241 128375 3437225 2641440 3712669 0 55443
3 2001-02 503 4 236 935300 2050316 4012136 6357 101698 1432130 130186 3437225 1737332 3736633 0 51443
4 2002-03 516 4 239 935205 2054143 4050579 12670 1491500 1061441 128375 1754734 1754734 3736633 0 53442
5 2003-04 534 4 245 655646 2650330 4312831 6456 101247 1593130 150181 1754725 1818191 3712669 0 560485
6 2004-05 530 4 248 910605 2640320 4513735 1304 101698 1697120 160173 1754734 1910663 3736633 0 201494
7 2005-06 556 4 256 875435 3543121 4612885 6345 1491500 1706120 180185 1754725 1912762 3712669 0 13450
8 2006-07 599 4 287 924420 3745191 550965 1204 5069852 1708320 180375 3052793 1913861 3736633 3573 14750
9 2007-08 548 4 289 1060305 5682942 9976 451734 1754143 243375 3220989 1782346 3766221 2560 394163
10 2008-09 548 5 294 1067440 2640320 5044091 6254 4152886 1884818 243375 2640320 1734194 3712669 231 153032
11 2009-10 548 5 306 1068450 2650330 5041098 6823 4152886 1898816 253375 2360316 1733195 3736633 238 153068
Sl. No PACS Vanahalli
1 1999-00 567 2 256 441248 612123 552698 1572 12838 2211986 88230 456012 4788645 57226 1164523 0
2 2000-01 585 2 267 445398 611231 552897 1572 12838 2211989 88456 456121 4784564 572264 1164523 0
3 2001-02 589 2 245 445789 612750 552831 1572 12838 2211986 88230 4650627 4786430 57223 1164502 0
4 2002-03 589 2 256 445789 612750 552869 1578 12456 2214586 88974 4560612 4786430 57441 1164504 0
5 2003-04 589 2 267 445789 612753 552634 1658 12478 2245871 88974 4569871 4788645 57412 1164502 0
6 2004-05 591 2 245 449698 6127894 552696 1546 12478 2211986 88478 456012 4784564 57894 1164504 0
7 2005-06 593 2 249 449698 614561 552612 1548 12894 2211989 88478 456121 4786430 57412 1164523 0
8 2006-07 597 2 268 449698 694587 552634 1456 12365 2211986 88488 4650627 4786430 57456 1164523 0
9 2007-08 611 2 284 449698 6874156 552696 1789 12546 2214586 88478 4560612 4786430 57456 1164502 0
10 2008-09 611 2 286 449698 2569871 552612 1548 12456 2245871 88797 4569871 4786430 57456 46345 0
11 2009-10 679 2 293 449698 2621956 381758 1478 12458 2245897 88478 4598745 4788645 57456 46321 0
128
Appendix II: Physical and financial indicators of PACS's in Kalaghatagi taluk
Loan Share Cash Cash

Sl. No Indicators membership Employee Account Capital Borrowing Deposits in in Reserves Investment Advances Overdues recovery Loss Profit
Hand Bank
PACS Malakanakoppa
1 1999-00 382 2 261 100705 589523 31650 154 2456 12244 20634 14223 946990 45123 36936 0
2 2000-01 471 2 264 100705 589621 31680 145 2458 12254 20698 14772 349107 45123 13437 0
3 2001-02 471 2 267 100705 293196 173 388 2835 12728 20634 14236 349107 56231 13437 0
4 2002-03 471 2 268 100705 289148 3077 61 2596 12995 20634 14557 339107 15236 13350 0
5 2003-04 471 2 268 100705 289456 3088 85 1254 12998 20634 14882 299616 15412 13340 0
6 2004-05 471 2 281 100705 286458 2874 127 2834 12988 20634 14885 299616 14523 1523 0
7 2005-06 471 3 287 100705 72750 216396 139 1254 13796 20634 210000 2342 14523 57595 0
8 2006-07 479 3 289 100705 234140 215296 178 2546 13745 20634 211000 111973 14523 12356 53490
9 2007-08 479 3 294 100705 234140 241794 189 2456 13985 20634 431000 111264 14523 86187 0
10 2008-09 478 3 276 100705 234182 214987 158 2487 134598 20634 432000 111123 15623 12546 0
11 2009-10 481 3 281 100705 237180 2214654 198 2589 13256 20634 435000 11112 12563 25634 0
Sl. No PACS Guddad Hulikatti
1 1999-00 318 2 95 104950 195216 15000 6656 5710 10587 63906 480300 775039 420300 110582 0
2 2000-01 318 2 99 104950 775039 2400 6654 5720 10570 63906 480300 775039 420600 11245 0
3 2001-02 318 2 99 104950 129306 74417 653 4397 11405 63906 480300 1225059 420612 11456 0
4 2002-03 318 2 101 104950 1225957 199655 1055 1313 10587 63906 480300 1225059 420345 11456 0
5 2003-04 318 2 103 104950 1148959 29243 1928 4397 11944 64056 363095 1148959 336012 11458 0
6 2004-05 318 2 106 104950 1148959 59243 1586 2899 12314 64056 363095 363095 36123 68835 0
7 2005-06 318 2 109 104950 1148959 49243 1894 2897 12685 67156 363058 244039 33212 65487 0
8 2006-07 318 2 114 104950 183500 74243 1475 2899 13056 67156 363945 266181 33564 69887 0
9 2007-08 318 3 145 104950 183600 74654 1564 2456 13256 67456 363546 244039 32145 65489 0
10 2008-09 318 3 148 104950 1869200 74987 1897 2987 13469 67587 363587 266181 32145 654789 0
11 2009-10 318 3 149 104950 18568200 75123 1987 2998 13987 67987 363987 266181 31245 54789 0
Sl. No PACS Tabakad Honnihalli
1 1999-00 475 2 289 206080 1188736 92114 14 1823 9280 93107 1188736 200537 297908 100244 0
2 2000-01 494 2 287 207980 2005389 224065 216 93 12434 91907 2005389 2302784 1675001 45279 0
3 2001-02 494 2 289 207980 2005387 279801 12 53 15212 4724 2005387 2005387 297908 57638 16103
4 2002-03 494 2 301 207980 2005387 305872 59 53 15562 91957 2005387 1615466 1675001 61283 16103
5 2003-04 496 2 302 20880 1691167 305872 52 53 15562 91957 2005387 1615466 1872001 57638 0
6 2004-05 526 2 304 211180 1691167 333530 216 53 18094 91957 1691167 1691167 9000 61283 16103
7 2005-06 527 2 356 211280 1711115 422440 21 7373 19360 91907 1691167 1697815 610502 1595008 0
8 2006-07 536 2 358 212180 1711115 1819224 5809 73 19380 91907 1711115 1711115 87600 685929 0
9 2007-08 538 2 359 212180 2005387 333530 2076 265 19380 91957 1711125 1691167 9000 61283 0
10 2008-09 537 2 389 212180 2005387 422440 2097 456 18390 91907 1751123 1697815 610502 1595008 0
11 2009-10 539 2 398 212180 1691167 1819224 2068 456 19390 91907 1751129 1711115 87600 685929 0
129
Appendix III: Physical and financial indicators of PACS's in Navalgund taluk
Loan Share cash in cash in

Sl. No Indicators membership Employee Borrowing deposits Reserves investment advances overdues recovery loss profit
Account capital hand bank
PACS Javoor
1 1999-00 377 2 198 689170 6680829 2340 11789 26012 27245 1199402 6261772 6680829 556631 77838 0
2 2000-01 377 2 197 689520 6628209 19209 1025 1140 27245 209402 6611522 6628209 52900 93513 0
3 2001-02 379 2 201 705815 6680829 2340 11789 26012 27245 1199402 6261772 6680829 556631 77838 0
4 2002-03 379 2 202 704005 7026511 115429 946 4121 27245 209402 6299216 7026511 31245 1056671 0
5 2003-04 381 2 210 706405 6582205 284858 2080 4569 27245 209402 5773343 65.82 38.88 2262140
6 2004-05 381 2 214 706405 6568600 191748 2489 3572 29452 209402 5517708 6568600 272605 1018579 0
7 2005-06 381 2 215 706405 6568600 191748 2489 3572 29452 209402 5517708 6568600 272605 1018579 0
8 2006-07 392 2 216 710755 7026511 115429 946 4121 83634 209402 6299216 7026511 31245 1056671 0
9 2007-08 392 3 214 978060 6582205 284858 2080 4569 83635 209402 5773343 65.82 38.88 2262140
10 2008-09 400 3 217 961775 6568600 191748 2489 3572 73633 209402 5517708 6568600 272605 1018579 0
11 2009-10 412 3 218 961669 6568600 191748 2489 3572 73644 209402 5517708 6568600 272605 1018579 0
Sl. No PACS Shirkola
1 1999-00 682 3 338 1310535 23878064 377684 140582 4631 43072 898795 21377820 23878064 49196 2713892 0
2 2000-01 682 3 339 1310535 23878064 377684 140582 4631 43072 898795 21377820 23878064 49196 2713892 0
3 2001-02 681 3 334 80 23145253 695708 25853 13475 87583 930716 19365040 780000 49123 789505 0
4 2002-03 681 3 339 3680 24007508 709714 8.87 5841 43072 898795 20579758 24007508 159116 3154328 0
5 2003-04 681 3 338 1303680 23145253 695708 25853 13475 87583 930716 19365040 780000 49196 789505 0
6 2004-05 683 3 348 1303880 23145253 899112 9.6 6844 138963 898795 19338315 740000 49196 2926016 0
7 2005-06 683 3 349 1245440 15915515 1190856 66201 596906 195492 1042795 11810471 52859 49123 0 11436407
8 2006-07 683 3 350 1243900 19533579 1358634 1154 13619 446813 1060795 16028880 52874 159116 0 30858557
9 2007-08 683 4 361 1303880 23145253 899112 9.6 6844 138963 898795 19338315 84578 49196 2926016 0
10 2008-09 683 4 367 1245440 15915515 1190856 66201 596906 195492 1042795 11810471 52859 49123 0 11436407
Sl. No PACS Moraba
1 1999-00 1138 3 840 1086573 9439035 904544 51461 47211 212648 678855 9639211 9439035 2359990 660907 0
2 2000-01 1149 3 845 1101268 9676825 816179 57818 53252 212848 678855 9638979 9676825 5159643 2320829 0
3 2001-02 1198 3 846 1101268 9685823 816825 78 53223 212648 678855 963879 9676825 1545223 0
4 2002-03 1201 3 847 1097143 11658471 778042 21 20201 261946 678855 9768364 11258471 1462118 1087474 0
5 2003-04 1203 4 848 1097233 11590481 665165 22141 29918 261946 679855 9442193 1159041 5680127 0 4953527
6 2004-05 1206 4 901 109633 11596369 664187 20457 832267 216945 833674 9442193 1159048 0 1087474 0
7 2005-06 1220 4 910 1099076 9608548 745380 204 745552 254146 833674 7046130 9608548 10260600 5233099
8 2006-07 1220 4 912 1095876 9278578 938664 21 20201 269381 833674 7334800 0 0 0 0
9 2007-08 1525 5 954 1454276 7945936 478199 22141 29918 212848 678855 9638979 9676825 5159643 2320829 0
10 2008-09 1604 5 1102 1448076 5096300 1097713 20457 832267 347387 993674 2269204 7116429 901237 0
11 2009-10 1604 5 1152 1448076 5098312 1097713 204 745552 212848 678855 9638979 9676825 5159643 2320829 0
130
Appendix IV: Physical and financial indicators of PACS's in Hubli taluk
Loan Share Cash in Cash in

Sl. No Indicators Membership Employee Borrowing Deposits Reserves Investment Advances Overdues recovery Loss Profit
Account Capital Hand Bank
PACS Chabbi
1 1999-00 330 2 215 273735 1662100 385559 80241 66094 91759 74725 2701709 385430 0 5557
2 2000-01 330 2 221 287835 1110025 67005 30704 290937 57950 103825 1347205 2348206 2202669 0 28622
3 2001-02 334 2 235 282115 344000 1529718 42303 383437 146954 103825 2301906 676853 1321772 247318 329040
4 2002-03 336 2 256 332815 1110025 67005 30704 290937 57950 103825 1347205 2348206 2202669 0 28622
5 2003-04 340 2 258 338215 344000 1529718 42303 383437 146954 103825 2301906 676853 1321772 247318 329040
6 2004-05 340 2 256 332815 1110025 67005 30704 290937 57950 103825 1347205 2348206 2202669 0 28622
7 2005-06 340 2 258 338215 344000 1529718 42303 383437 146954 103825 2301906 676853 1321772 247318 329040
8 2006-07 238 2 258 235835 242400 2395322 6661 772507 154353 118825 2878000 328890 445250 0 44456
9 2007-08 268 2 256 267430 424500 3030895 66263 1814385 109712 135025 236939 328890 434230 0 350895
10 2008-09 278 2 258 319555 349600 2395322 6661 772507 154353 118825 2878000 328890 445250 0 44456
11 2009-10 282 2 195 332385 554800 3030895 66263 1814385 109712 135025 236939 328890 434230 0 350895
Sl. No PACS B. Aralikatti
1 1999-00 260 3 185 402467 1979712 409250 29553 37211 100149 72656 1753112 2217979 1678738 105651 2085
2 2000-01 293 3 187 425267 1986911 482227 10397 37211 51121 84766 2439662 2434413 3015063 0 2257
3 2001-02 297 3 189 423031 1986911 482227 10397 37211 51121 84766 2439662 2434413 3015063 0 2257
4 2002-03 298 3 191 424327 1792532 865933 22712 15759 67910 101765 2418795 1238795 533913 335851 0
5 2003-04 294 3 203 418452 1792532 865933 22712 15759 67910 101765 2418795 1238795 533913 335851 0
6 2004-05 300 3 223 419052 1444506 739791 2954 4966 169455 101766 1098224 1925096 229377 688561 0
7 2005-06 325 3 223 419052 1979712 409250 29553 37211 100149 72656 1753112 2217979 1678738 105651 2085
8 2006-07 504 3 301 439852 1986911 482227 10397 37211 51121 84766 2439662 2434413 3015063 688561 2257
9 2007-08 523 3 307 441752 1335512 600611 2954 4966 51121 845944 2439661 2434413 229377 105651 0
10 2008-09 534 3 315 444452 1355329 614059 29553 37211 208882 101766 1103066 993737 1678738 527962 0
Sl. No 2009-10 535 3 321 444451 135524 614046 10397 37211 208882 101788 1105077 993738 3015063 528964 0
1 PACS Varur
2 1999-00 441 2 125 932475 2142618 183141 56040 80308 23369 82586 2117195 2117195 1253218 70985 0
3 2000-01 440 2 126 512175 2389860 195519 24191 154556 23779 92386 1884880 2229560 1194926 60356 0
4 2001-02 120 2 116 434940 2452521 175230 94372 60579 38378 98386 2044374 44374 369250 216013 0
5 2002-03 119 2 112 430430 2422511 124133 7044 99862 38378 98386 184079 1840797 321577 175784 0
6 2003-04 119 2 103 431342 2452521 175230 94372 60579 38378 98386 2044374 44374 369250 216013 0
7 2004-05 118 2 104 421431 2422511 124133 7044 99862 38378 98386 184079 1840797 321577 175784 0
8 2005-06 116 2 104 410910 2152258 84037 21882 154873 82504 114640 1455302 1455302 1250884 228211 0
9 2006-07 118 2 125 932475 2142618 183141 56040 80308 23369 82586 2117195 2117195 1253218 0 7425
10 2007-08 124 2 126 512175 2389860 195519 24191 154556 23779 92386 1884880 2229560 1194926 60356 0
11 2008-09 129 2 116 434940 2452521 175230 94372 60579 38378 98386 2044374 44374 369250 216013 0
2009-10 140 2 112 430430 2422511 124133 7044 99862 38378 98386 184079 1840797 321577 175784 0
131
Appendix V: Physical and financial indicators of PACS's in Kundagol taluk
Members Loan Share Cash in Cash in Investmen

Sl. No Indicators Employee Borrowing Deposits Reserves Advances Overdues recovery Loss Profit
hip Account Capital Hand Bank t
PACS Yalival a
1 1999-00 1333 4 273 2318210 718210 386656 20784 571770 754023 616935 8686450 6174868 3713603 579101 0
2 2000-01 1346 4 275 2403000 71921869 386656 20784 571770 754023 616935 8686450 6784869 3713603 0 299777
3 2001-02 1467 4 276 2419375 10117106 421797 47143 555458 3754013 616935 3792701 6185813 3713603 579054 0
4 2002-03 1463 4 278 2405690 12002546 754013 40556 292121 754013 616935 3692700 12307944 1662779 1470114 0
5 2003-04 1465 4 279 2438760 12002546 754013 50445 292121 754013 436213 2103303 12307944 1672667 1277412 0
6 2004-05 1462 4 281 2365790 8925141 536885 80320 760880 3886138 436213 2103303 10914130 1672668 1288910 0
7 2005-06 1496 4 228 2314000 6401145 613091 6487 1223139 3886138 603285 9675300 10067071 10522359 1288910 1307876
8 2006-07 1493 4 232 2275430 6500146 1008674 65856 1581831 3806834 750081 1061814 10888179 10511369 0 59167
9 2007-08 1489 5 283 2542740 9326000 1044060 66856 1581843 3906939 760085 10757140 10669187 1672668 0 617789
10 2008-09 1489 5 285 2275430 9326000 1044060 66856 1581756 3906939 750081 1061814 1066987 10522359 1307876
11 2009-10 1489 5 285 2542740 9326000 1008674 65856 1591889 3906939 760085 10757140 1076912 10511369 59167
Sl. No PACS Kubihal
1 1999-00 499 2 240 1342336 1034800 457630 28052 492154 286722 334984 1232800 4706812 11854565 170541 0
2 2000-01 493 2 243 1382576 1035900 459630 28051 494103 286711 334985 1323900 4706538 1184569 180823 0
3 2001-02 491 2 246 1342336 1034800 457630 28052 492154 286711 334984 1232800 4706812 11854565 170541 0
4 2002-03 491 2 245 1367486 1035900 459630 28051 494103 285811 334985 1323900 4706538 1184569 180823 0
5 2003-04 491 2 244 1367486 2329940 403446 12885 314458 286711 334985 286711 3691869 3362243 0 808860
6 2004-05 489 2 249 1359476 1231061 286100 12884 251246 286711 334985 3558279 3558279 890317 0 2242
7 2005-06 498 3 257 135947 1231071 286100 28051 492154 285811 564319 1232800 3814154 11854565 26512 0
8 2006-07 498 3 284 1353096 2757729 573371 12885 494103 286711 564319 1323900 3815153 1184569 266544 0
9 2007-08 498 3 281 1418006 2029424 579173 22172 351827 287524 374770 351829 3739253 2961331 0 550678
10 2008-09 498 3 298 1353096 2757729 573371 28051 492154 286711 334984 1323900 4706812 11854565 0 55123
11 2009-10 498 3 323 1418006 2029424 579173 12885 494103 285811 334985 351829 4706538 1184569 0 55412
Sl. No PACS Kundgol
1 1999-00 1490 3 553 3827920 22608776 2842477 2739821 160873 579746 1362804 23643474 22608776 8165860 0 601216
2 2000-01 1555 3 591 4336280 24401280 4448302 1830362 165990 579746 2465310 27432450 27432450 15504934 0 970255
3 2001-02 1575 4 598 4450810 27606754 5475757 3602862 183146 609346 2334933 29164065 27606754 5895496 0 1776562
4 2002-03 1569 4 676 4437385 27606754 5475757 3602862 183146 609346 2334933 29164065 27606754 5895496 0 1776562
5 2003-04 1656 4 693 4423540 33752766 8476663 3945655 3554080 637096 2381776 28452948 28452948 25160042 5502908 0
6 2004-05 1679 4 720 4412845 33463797 5174193 1006 2175061 615396 2401779 29474443 33463797 3640357 0 3757463
7 2005-06 1729 4 853 4835495 2986613 1604276 971831 1433225 616809 2562779 25370192 25370192 27484221 2000254 0
8 2006-07 1834 5 1205 4959330 26925655 2302500 45 2619835 616809 2562779 29395318 29895318 12874964 490077 0
9 2007-08 1877 5 1312 5834040 2249754 54 2619874 665050 3719747 27996468 29395318 667820 0
10 2008-09 1729 4 853 4835495 2986613 1604276 971831 1433225 616809 2562779 25370192 25370192 27484221 2000254 0
11 2009-10 1834 5 1205 4959330 26925655 2302500 45 2619835 616809 2562779 29395318 29895318 12874964 490077 0
132
Appendix VI: Questionnaire for policy makers of the PACS

Name :
Designation :
Components of variables influencing the working of the society
Variables Opinions
1. Education and Training of the directors To great extent Some what NO
helps
2. Government policy relating to Excellent Good Satisfactory
a. Credit
b. Subsidy
c. Recovery
3. Decisions at the Head office Very well Somewhat Not at all
4. Office/Field staff Adequate Inadequate Poor
5. Education levels of employees High Medium Low
6. Training to employees Regular Rare Not at all
7. Effectiveness of training Excellent Good Satisfactory
8. Bank Management relating to Good Satisfactory Poor
a) Mobilization of funds
b) Allocation of funds
c) Monitoring
d) Evaluation
e) Personnel
9. Service provided to farmers Satisfactory Somewhat Poor
10. Impact of credit Satisfactory Somewhat Poor
11. Branch supervision Successfully Fairly Poorly
12. Communication &Coordination within Communication Coordination
the organization with respect to
Very Some Not Very Some Not
well what at all well what at all
a. Policy makers and executives
b. Office staff and field staff
c. Head office and district office
13. Communication and co-ordination among Very Some Not Very Some Not
the organizations well what at all well what at all
a. Sponsoring bank
b. NABARD
c. Other institutions
d. State government
e. Educational institutions
f. Others if any
133
Variables Opinions
14. Performance indicators Excellent Satisfactory Poor
a. Growth in account holders
b. Business turn over
c. Profitability
d. Annual growth
e. Increase in net worth
f. Number of activities
15. Impact indicators Excellent Satisfactory Poor
a. Market share with respect to MT
LT
b. families/area covered
c. Wellfare programme implemented
d. Branch supervision
e. Co-ordination of activities
16. General Good Moderate Poor
a. Implementation of plans
b. Recruitment of experienced/trained staff
c. Credit planning
d. Keen competition
17. Financial Good Moderate Poor
a. Funds Management
b. Overdues
c. Refinance
18. Miscellaneous Good Moderate Poor
a. Performance of the Head of the
organization
b. Maintenance of accounts
C. Experience/knowledge
d. Efficiency of executives
e. Control on subordinates
f. Employee relations
g. Customer relations
Suggestion for improving the performance of the society

134
Appendix VII: Questionnaire for officials of the PACS
Name of the official :

Designation :
Components of variables influencing the working of the society/Branches
Variables Opinions
1. a. Education Degree Intermediate Matriculation
b. Experience >20 years 10-20 years <10 years
c. Cadre level Management Middle Assistant
d. Training undergone >one one Nil
e. Recruitment Direct Sponsor Others
Bank
2. Involvement indicators High Moderate Low
a. Decision making opportunity
b. Sense of worthwhile accomplishment
3. Managerial capacities Excellent satisfactory poor
a. Delegation powers
b. Decentralization of powers
c. Communication
d. Co-ordination
i. Between section
ii. Within section
iii. Job satisfaction
iv. Decision making procedure
4. Leading &supervision of subordinates Excellent Good Satisfactory
a. Unity of direction
b. Supervision
c. Execution of plans and policies
d. Harmony among higher and lower level
official
e. Scope for subordinates to express their
views
f. Clarity in determination of
responsibility
g. Guidance, supervision, coaching and
advise to subordinates
h. Communication within organization
5. Communication between banks Excellent Good Satisfactory
a. Sponsor Bank
b. NABARD
c. Other institutions
d. State government
e. Educational institutions
f. Others if any
135
6. Functioning of the Board of Management Highly Satisfactory Not

Satisfactory Satisfactory
a. Regularity of meetings
b. Timing of decision
c. Supply of information to the board
d. Execution of decisions
e. Participation of Directors
f. Commitment of Directors to the Board
decision
7. Bank Management relating to Good Satisfactory Poor
a. Mobilization of funds
b. Allocation of funds
c. Monitoring
d. Evaluation
e. Personnel
8. Performance indicators Good Satisfactory Poor
a. Growth in account holders
b. Business turnover
c. Profitability
d. Annual growth
e. Increase in net worth
f. Number of activities
9. Impact Indicators Excellent Satisfactory Poor
Market share with respect to MT
LT
a. Families/ Area covered
b. Experience/ knowledge
c. Branch supervision
d. Co ordination
10. General problems Absent Moderately Commonly
present present
a. Implementation of plans
b. Recruitment of experienced/ trained staff
c. Credit planning
d. Keen competition
11. Financial problems Absent Moderately Commonly
present present
a. Funds management
b. Over dues
c. Refinance
12. Miscellaneous problems Absent Moderately Commonly
present present
a. Performance of the Head of
organization
b. Maintenance of accounts
c. Experience/ Knowledge
d. Efficiency of executives
e. Control on subordinates
f. Employee relations
g. Customer relations
Suggestion for improving the performance of the society.
136
Appendix VIII: Interview schedule for farmer-borrower
Title of the study : Performance of primary agricultural co-operative credit

societies in Dharwad district of Karnataka
I. General information:
(A) Name of the borrower:
(B) Age:
(C) Village:
(D) Taluk:
(E) Membership in financial institution: PACB/ DCCB/ PLDB
II. Family composition
No. involved in Income from

Category No. Non Non-Agri.
Agriculture
Agriculture Activity
Male
Female
Children
III. Land inventory
Area Leased Operational Value per

Particular Leased in
Owned out Area acre
1 Irrigated land
a) Tank
b)Bore well
c)well
2 Dry land
3 Garden
Total
IV. Borrowing particulars
Sl.
Particular PACB PLDB OTHERS
No.
1 Type of Loan
2 Purpose
3 Amount
4 Year of Borrowing and date
5 Duration
6 Security
7 Interest Rate
8 Amount Paid
9 Amount to be paid
10 Overdues if any
137
V. Cost of credit
A. NON- INTEREST COST

1 Time taken(in days) in getting loan from credit agency (from date
of application to the date of disbursal)
2 No. of trips made to credit agency
3 No. of hours usually spent on each trip
4 Travelling Expenses
5 Opportunity cost of total time spent to obtain Credit
6 Incidental extra expenses for food
7 Cost of obtaining Records (in Rs)
a. Record of rights
b. No due certificate from agencies
c. Declaration certification
d. Others (specify)
8. Quotation for Farm machinery
9. Geologist certificate
10. Photograph for Bank Ident ification
11. Third Party guarantee( Bus fare & misc)
12. Other Cost.
VI. Reasons for overdues

1.
2.
VII. Do you feel that the loan amount was sufficient and provided in time?
Yes/ No
If No, Purpose Requirement Actual Borrowed amount
1.
2.
3.
VIII. Did the borrowing helped you? Yes/ No
If Yes, 1.
2.
3.
IX. Which sources of the loan do you prefer and why?
1.
2.
3.
X. Which sources of the loan do you not prefer and why?
1.
2.
3.
138
PERFORMANCE OF PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT

SOCIETIES IN DHARWAD DISTRICT OF KARNATAKA
CHANDRAGOUDA MARIGOUDAR 2011 Dr. S. S. GULEDAGUDDA

Major Advisor
ABSTRACT
Farm credit is a strategic input and demand for it steadily increased with the
advent of modern technology. Among the various financial institutions, the
co-operatives have emerged as a major source of agricultural credit. A three- tier system
of co-operative credit structure came into existence to meet short term and medium term
credit requirements of the farmers. An enquiry into the performance of PACS’s in
Dharwad district could reveal interesting facts about the society’s performance
according to geographical variations. Fifteen PACS’s were selected for the study, which
represented three different agro-climatic zones. The study was based on both primary
and secondary data. The growth in the employees, membership and loan account was
positive and significant in most of the societies. Growth in financial variables like
overdues and loss showed positive for most of the societies. This implied that most of
the societies incurring losses. The liquidity and solvency position of the bank was found
to be sound. However, the net profit to net worth ratio was found to be negative.
The recovery percentage for the selected PACS’s increased over the years.
The principal component analysis revealed that almost all variables were closely
associated with performance of the societies in first component. The variations
explained by these variables were ranged from 67 per cent to 85 per cent in all selected
societies during the study period. Agricultural loan dominated among the loan amount
advanced for different purposes followed by non-agricultural loan for small and large
farmers, whereas, for medium farmers non-agricultural loan dominated. Demand and
collection of the societies showed an increasing over the years.

Chandragouda Marigoudar

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PERFORMANCE OF PRIMARY AGRICULTURAL CO-

OPERATIVE CREDIT SOCIETIES IN DHARWAD

DEPARTMENT OF AGRICULTURAL ECONOMICS

Thesis submitted to the

MASTER OF SCIENCE (AGRICULTURE)

DEPARTMENT OF AGRICULTURAL ECONOMICS

This is to certify that the thesis entitled "PERFORMANCE OF PRIMARY

JUNE, 2011 (S. S. GULEDGUDDA)

I have no words to express my heartfelt love and affection for persistent

It is always immense and immeasurable pleasure to applaud the auspicious

My diction is too poor to translate my gratitude to Dr. L. B. KUNNAL,

I am highly indebted to Dr. S. M. Mundinamani, Professor and

I am very glad to mention sincerely support from my senior friends Aravind

I extend my special thanks to the members of SNEHA TANDA Vitobha, Mallu,

Sl. Chapter Particulars

3.1 Salient features of the study area

3.4 Area Irrigated by Different Sources (2008-09)

3.5 Financial Institutions as on March 2008-09

3.6 Variables Influencing the Performance of Selected PACSs

4.1 Physical Performance Indicators of Selected PACS’s in

4.2 Financial Performance Indicators of Selected PACS’s in

4.5 Liquidity Ratios of Selected PACS’s in Dharwad district

4.6 Tests of Solvency of Selected PACS’s in Dharwad district

4.7 Tests of Strength of Selected PACS’s in Dharwad district

4.8 Test of Profitability of Selected PACS’s in Dharwad district

4.9 Tests of Efficiency of Selected PACS’s in Dharwad district

4.10 Principal Components and Factor Loadings of Physical and

4.11 Principal Components and Factor Loadings of Physical and

4.12 Principal Components and Factor Loadings of Physical and

4.13 Principal Components and Factor Loadings of Physical and

4.14 Principal Components and Factor Loadings of Physical and

4.15 Category-wise and purpose-wise Loan Disbursement in

4.16 Recovery performance of Selected PACS’s in Dharwad

4.17 Non-interest Cost Incurred by Borrowers

4.18 Aggregate Clusters of Variables on the Performance of

4.19 Aggregation of Clusters of Variables on the Performance of

4.20 Opinion of borrowers about the performance of PACS’s in

3.1 Map showing the study area

I. Physical and financial indicators of PACS's in Dharwad taluk

II. Physical and financial indicators of PACS's in Kalaghatagi

III. Physical and financial indicators of PACS's in Navalgund taluk

IV. Physical and financial indicators of PACS's in Hubli taluk

V. Physical and financial indicators of PACS's in Kundagol taluk

VI. Questionnaire for policy makers of the PACS

VII. Questionnaire for officials of the PACS

VIII. Interview schedule for farmer-borrower

In India, farm incomes still constitute a large proportion of national income.

Agriculture in India is changing rapidly due to availability of modern

According to statistics of the National Federation of State Cooperative Banks

The effectiveness of the service rendered by Primary Agricultural Credit

The planned and positive approach adopted by district of Dharwad somehow

Importance of the present study

PACS’s have been assigned a vital role in agricultural development of our

Hence, managing the PACS’s more efficiently, so as to serve at best, the

Specific objectives of the study

• To examine the growth in physical performance indicators of PACSs.

• To examine the growth in financial performance indicators of PACSs.

• To study the purpose-wise and category-wise loan disbursement and recovery.

• To analyze the opinions of the policy makers, officials and beneficiaries

• Physical performance of PACS’s is satisfactory.

• Financial performance of PACS’s is satisfactory.

Scope of the study

Presentation of the study