CHAPTER IV

ROLE OF STATE BANK OF INDIA (AGRICULTURAL DEVELOPMENT

BANK) IN AGRICULTURAL FINANCING WITH SPECIAL REFERENCE
TO AGRICULTURAL DEVELOPMENT BANK,
KADIRI BRANCH
ROLE OF STATE BANK OF INDIA (AGRICULTURAL DEVELOPMENT
BANK) IN AGRICULTURAL FINANCING WITH SPECIAL REFERENCE
TO AGRICULTURAL DEVELOPMENT BANK, KADIRI BRANCH

Agriculture plays an important role in the

economic development of our country. The development

of the agriculture depends among other things upon

capital in increasing production and productivity. The

Indian farmers with specific reference to marginal and

small farmers are not in a position to invest adequately

in the agricultural developmental activities. Further,

the agricultural labourers because of poor economic

base are not possessing income generating assets at

their disposal, and as such they are depending on wage

earnings only.

As a result of transformation of traditional

agriculture into modern agriculture, the farmer requires

adequate finance to cope up with the technological

changes to his advantage. As a result of inadequate

investment the productivity and returns from agriculture

will be found low. This again leads to lower availability

of capital. Hence, credit is a Sine-qua-non for the

farmer to overcome the said maladies.

In industrial sector also finance is a crucial

input in its production programme. However, the financial

 102

problems of agriculturists are altogether different

when compared to that of an industrialist.

The government has taken several steps to

provide finance to the agriculturists. The performance
of co-operative credit institutions indicated by several
committees and commissions is not of much help for the
farm producers with particular reference to weaker
sections. With a view to improve the socio-economic
conditions of the depressed sections the Government took
a bold step of nationalising the banks. However, the
nationalisation of the banks has not showed much progress
in meeting the credit requirements of agriculturists.
To overcome this malady the government thought of intro­
ducing the agricultural development branches in their
banks to meet the financial requirements without much
difficulty to the agriculturists.

The State Bank of India (SBI) initiated the

scheme of supplying credit to the cultivators directly
by launching the Rural Pilot centres scheme in 1964.
By November, 1967, the Bank had come forward to for
financing the farmers for the purpose of purchase of
tractor, pumpsets etc. By 1968, it was decided to
extend financial support for all types of agricultural
operations. Further, the nationalised banks provided
 103

moral boost to State Bank of India in substantially

financing agriculturists. It is important to note that

the State Bank of India took initiative in setting up

of Agricultural Development Branches with a view to

assist the agriculturists. It is also gratifying to

note that the State Bank of India Agricultural Develop­

ment Banks have evolved 'Area Approach' in financing.

TABLE 4.1

STATE BANK OF INDIA AGRICULTURAL DEVELOPMENT BRANCHES

IN INDIA

Year Branches

1. 1972 90

2. 1973 137

3. 1975 163

4. 1976 197

5. 1978 314

6. 1980 379

7. 1981 419

8. 1987 430

9. 1990 437

Source : State Bank of India Financing of

Agriculture. Annual Reports of SBI
(Bombay : £>tate Bank of India, from
1972 to 1990).
 104

It is important to note that in 1971, the

Bank adopted and implemented Agricultural Development

Branches (ADBs). To start with, in the year 1972, it

opened 90 ADBs, which facilitated in financing to 34,205

farmers. The loans outstanding were at Rs.5.2 crores.

By 1973» the number of ADBs increased to 137 which

resulted in financing to 1.32 lakhs of farmers and the

loans outstanding stood at Rs.22 crores.

By 1976, the number of ADB branches increased

to 197, and granted advances of Es. 237 crores. The

mrnber of ADBs were increased in the year 1980 and were

379 and with outstanding amount of Rs. 356 crores.

The ADBs branches position in the year 1987

is 430. The total advances of these branches is Hs.857

crores covering 17.5 lakhs farmers.

In 1990, the bank had 437 ADBs which had

financed 1.79 million farmers to the tune of Rs.10.62

billion accounting for 26.4 per cent of the total agri­

cultural credit provided by the bank.

Andhra Pradesh is one of the economically

backward states in India. However, it has enormous

resource potential. Glaring disparities among different

classes of people persist causing social tensions. Ever-

since nationalisation of banks, took place in 1969, there

 105

had been a rapid growth of number of commercial bank

branches especially agricultural development branches.

Of all the nationalised banks, the State Bank

had played an important role in the field of farm finance.
In Andhra Pradesh as a whole 71 ADBs were operating
during the year 1989. While in Rayalaseema there are
10 ADBs direct and indirect agricultural advances rose
from Rs.16.99 crores in 1983 to 30,58 crores in 1989.

Anantapur is one of the most backward and

chronically drought prone districts in Andhra Pradesh.
Due to scanty of rainfall and inadequate irrigation
facilities the district could not achieve the desired
development with specific reference to agriculture.
To mitigate the severity of the problem providing invest­
ment credit is one of the ways to increase the income
levels of the agriculturists. Further, development of
the farmers, agricultural labourers artisans, establish­
ment and development of small units will help the economy
of the district. The expansion of the banking sector in
the district has not showed much progress. To fill the
gap, the State Bank of India, has opened Agricultural
Development Branches to meet the requirements of the
people,

Anantapur has the first ADB Branch which was

opened on 2nd March, 1974. The number of accounts have
 106

increased from 1758 in 1979 to 3530 in 1990. The

deposits rose from Rs. 41.28 lakhs in 1979 to 274.32
lakhs at the end of December in 1989.

The second branch has started functioning

at Hindupur. It was opened on 24th September 1976.
The number of accounts rose from 1144 in 1979 to 3568
in 1990. The deposits have also increased from Rs. 17.45
lakhs in 1979 to te.140.15 lakhs in 1989.

The third ADB branch in Anantapur District

was started at Kadiri on 13th May, 1978. The branch
position is explained below :
FROGRESS OF SBI (ADB), KADIRI BRANCH :

Progress in terms of the number of borrowers

who have borrowed from agricultural branch is presented
in Table 4.2. The progress refers to the period of
1986-1993.

The number of borrowers are 2,948 in 1986,

which it rose to 3,713 by 1990. The figure stood at
7,622 in 1993. This shows how SBI (ADB), Kadiri branch
has done a commendable dob in increasingly financing
the agriculturists.
 107

TABLE 4.2

NUMBER OF BORROWERS IN AGRICULTURAL DEVELOPMENT BRANCH

OF STATE BANK OF INDIA IN KADIRI

si. % of
Year Borrowers
No. increase

1. 1986 2,948 100.00

2. 1987 3,121 105.87

3. 1988 3,250 110.24

4. 1989 3,300 111.94

5. 1990 3,713 125.95

6. 1991 4,476 151.83

7. 1992 5,631 191.01

8. 1993 7,622 258.55

Source : Annual Reports of the State Bank of

India, Agricultural Development Branch
of Kadiri from 1986-93.
 108

DEPOSITS IN ADB, STATE BANK OF INDIA :

Deposits constitute the single largest source

of bank funds. Hence, the successful performance of

its role depends crucially upon its ability to tap the

savings potential of all sections of society and in

particular the rural areas. This is because in the

absence of institutional facilities for tapping rural

savings. The surplus funds in rural sector tend to

find their way into less important form of holding

assets like gold, silver etc., and quite often such

surpluses are used for conspicuous consumption. This

kind of use of funds may be justifiable from the point

of view of the individuals concerned. But from the

view point of the national economy, the season resources

will have to be channelised into more socially purposive

lines. This signifies the importance of rural savings.

The progress in terms of deposit mobilisation

by agricultural development branch, Kadiri was shown

in the Table 4,3.

The data explained relates to the period 1986

ite
to 1993. The deposits increased from 120.97 lakhs in
1986 to 8s. 180,21 lakhs by 1990 and to Rs.320.64 lakhs

in 1993. The deposit mobilisation has shown a growth of

 109

125.73 percentage to 264,53 per cent during the years

1987 to 1993. The table explains that deposits are

increasing year by year.

TABLE 4.3

DEPOSITS IN AGRICULTURAL DEVELOPMENT BRANCH OF STATE

BANK OF INDIA OF KADIRI

si. Amount % of
Year
No. Rs. in lakhs increase

1. 1986 120.97 100.00

2. 1987 152.10 125.73

3. 1988 160.76 132.89

4. 1989 175.36 144.96

5. 1990 180.21 148.97

6. 1991 206.02 170.31

7. 1992 268.92 222.30

8. 1993 320.64 264.53

Source : Form 'A' file of the Agricultural

Development Branch of State Bank of
India at Kadiri from 1986-93.

DISBURSEMENT OF SHORT-TERM LOANS :

Short-term loans are crop loans, gold loans,

for purchase of seeds, fertilisers, manures. It is

repayable within one year to eighteen months.

 110
TABLE 4.4

DISBURSEMENT OF SHORT-TERM LOANS BY STATE BANK OF INDIA

(ADB) KADIRI BRANCH

si. Amount % of
Year
No. Rs.in lakhs increase

1. 1986 53.67 100.00

2. 1987 57.71 107.53

3. 1988 62.32 116.12

4. 1989 70.34 131.06

5. 1990 92.14 171.68

6. 1991 175.51 327.02

7. 1992 257.83 480.40

8. 1993 348.39 649.13

Source : Form 'A* file of Agricultural Development

Branch of State Bank of India at Kadiri
from 1986-93.

Disbursement of short-term loans in Agri­

cultural Development Bank, Kadiri branch is shown in

Table 4,4. The position of short-term loans improved

from Rs.53.67 lakhs in 1986 to Rs.348.39 lakhs by 1993.

The table explains that the disbursement of short-term

loans is increasing rapidly.

 Ill

DISBURSEMENT OF MEDIUM-TERM LOANS :

For the purpose of minor irrigation, digging

wells, purchase of pumpset, sheep rearing, milch animals,

poultry, land reclamation, levelling of land, etc.,

loans come under the category of medium-term loans.

TABLE 4.5

DISBURSEMENT OF MEDIUM TERM LOANS BY STATE BANK OF INDIA

(ADB), KADIRI BRANCH

Si.
Year
Amount % of
No. Bs» in lakhs increase

1. 1986 95.68 100.00

2. 1987 101.75 106.34

3. 1988 110.34 115.32

4. 1989 118.63 123.99

5. 1990 84.35 88.16

6. 1991 90.91 95.01

7. 1992 169.19 176.82

8. 1993 141.42 147.80

Source : Form 'A* file of Agricultural Development

Branch of State Bank of India of Kadiri
from 1986-93.
 112

Disbursement of medium-term loans is shown

in Table 4.5. Medium-term loans were sanctioned to
the tune of Rs.95.68 lakhs in 1986, which rose to
Rs.118.63 lakhs in 1989. However, during 1990 the loans

were sanctioned to the extent of Rs. 84.35 lakhs. In

1993» Rs.141,42 lakhs are disbursed. The table explain
the disbursement of medium-term loans growth is
fluctuating.

DISBURSEMENT OF LONG-TERM LOANS :

The duration of repayment of long-term loans

is 10 years. The long-term loans are sanctioned for
the purpose of sericulture shed, purchase of tractor,
bore & pumpsets, water tank, cattle shed, digging of
well.

Disbursement of long-term loans is slowly

improved from Rs.29.15 lakhs in 1986 to te.47.32 lakhs

in 1993. Thus the percentage of long-term loan

disbursement is also fluctuating year to year,

TOTAL DISBURSEMENT OF LOAN BY STATE BANK OF INDIA (ADB)

KADIRI BRANCH :

Total disbursement was shown in Table 4.7.

It includes short, medium and long-term loans, te.178.50
lakhs are sanctioned in the year 1988, te.547.13 lakhs
 113

TABLE 4.6

DISBURSEMENT OF LONG-TERM LOANS BY STATE BANK OF INDIA

(ADB), KADIRI BRANCH

SI. Amount % of
Year
No. fc.in lakhs increase

1. 1986 29.15 100.00

2. 1987 28.65 98.28

3. 1988 30.41 104.32

4. 1989 35.62 122.19

5. 1990 30.62 105.04

6. 1991 32.37 111.05

7. 1992 52.22 179.14

8. 1993 57.32 196.64

Source : Form 'A' file of Agricultural Development

Branch of State Bank of India of Kadiri
from 1986-93.
 114

are sanctioned in the year 1993. The disbursement of

loan percentage is increasing rapidly from year 1987

to 1993.

TABLE 4.7

DISBURSEMENT OF LOANS BY STATE BANK OF INDIA (ADB)

KADIRI BRANCH

SI. Amount % of
Year
No. Rs. in lakhs increase

1. 1986 178.50 100.00

2. 1987 188.11 105.38

3. 1988 203.07 113.76

4. 1989 224.59 125.82

5. 1990 207.11 116.03

6. 1991 298.79 167.39

7. 1992 479.24 268.48

8. 1993 547.13 306.51

Source j Form 'A* file of Agricultural Development

Branch of State Bank of India of Kadiri
from 1986-93.
 115

RECOVERY OF SHORT-TERM LOANS s

Table 4.8 reveals the recovery performance

of State Bank of India (ADB) from 1986 to 1993.

TABLE 4.8
RECOVERY OF SHORT-TERM LOANS BY STATE BANK OF INDIA
(ADB), KADIRI BRANCH

(Bs.in lakhs)

SI. %
Year Demand Recoveries 4 to 3
No.
1 2 3 4 5

1. 1986 53.67 26.89 50.1

2. 1987 57.71 31.7 55
3. 1988 62.32 32.23 51.72
4. 1989 70.34 38.96 55.39
5. 1990 92.14 56.39 61.2
6. 1991 175.51 103.73 59.1
7. 1992 257.83 168.11 65.2

8. 1993 348.39 209 60

Source ; Annual Reports of State Bank of India

Agricultural Development Branch at
Kadiri Branch from 1986-93.

The recovery performance is said to be highest

in 1992 vfith 65.2 per cent of their demand. While the
 116

position in 1986 shows the lowest figure i.e., 50.1

per cent. In the year 1993» the recovery performance

is 60 per cent with the recovery of Rs.209 lakhs.

RECOVERY OF MEDIUM-TERM LOANS :

Recovery performance of medium-term loans

is shown from 1986 to 1993 in the Table 4.9.

TABLE 4.9

RECOVERY OF MEDIUM-TERM LOANS BY STATE BANK OF INDIA

(ADB) KADIRI BRANCH

(Ks. in lakhs)

SI. % of
Year Demand Recoveries 4 to 3
No.
1 2 3 4 5

1. 1986 95.68 38.21 39.94

2. 1987 101.75 43.98 43.22
3. 1988 110.34 50.12 45.4
4. 1989 118.63 51.23 43.18

5. 1990 84.35 44.87 53.2

6. 1991 90.91 46.1 50.7
7. 1992 169.19 93.4 55.2
8. 1993 141.42 87.68 62

Source s Annual Reports of State Bank of India,

Agricultural Development Branch, Kadiri
from 1986-1993.
 117

In 1986, the recovery was very low as only

Ks. 38.21 lakhs (39*94 per cent) was recovered; while

the recovery was highest (62 per cent) in the year

1993. During the year recovery was reported at 8s.87.68

lakhs.

RECOVERY PERFORMANCE OF LONG-TERM LOANS s

The recovery performance is low when compared

to small and medium term loans. 29.86 per cent was

recovered in 1986 amounting to Rs. 8.7 lakhs. 49 per

cent was recovered in 1992 amounting to Rs.25.59 lakhs.

In the year 1993» the recovery performance was 47.3

per cent. (Rs.2.71 lakhs) long-term loans recovery

performance is shown in the Table 4,10.

TABLE 4.10
RECOVERY OF LONG-TERM LOANS BY STATE BANK OF INDIA (ADB),
KADIRI BRANCH
(8s. in lakhs)

Si. %
Year Demand Recoveries
No. 4 to 3

1 2 _____l_______ 4 _ - 2 . .

1. 1986 29.15 8.70 29.86

2. 1987 28.65 10.96 38.25
3. 1988 30.41 11.21 36.86
4. 1989 35.62 10.62 29.80
5. 1990 30.62 13.78 45.00
6. 1991 32.37 12.92 39.90
7. 1992 52.22 25.59 49.00
8. 1993 57.32 27.10 47.30

Source i Annual Reports of State Bank of India

(ADB), Kadiri Branch from 1986-93.
 118

RECOVERY OF TOTAL LOANS :

The recovery performance of the loans advanced

by Agricultural Development Bank, Kadiri branch is

analysed for the period starting from 1986 to 1993 in

Table 4.11,

TABLE 4.11

RECOVERY OF TOTAL LOANS OF STATE BANK OF INDIA (ADB)

KADIRI BRANCH

Si. Total disburse­ %

Year Recovery 4 to ;
No. ment of loans
(te.in lakhs)
1 2 3 4 5

1. 1986 178.50 73.80 41.34

2. 1987 188.11 86.64 46.1

3. 1988 203.07 93.56 46.1

4. 1989 224.59 100.81 44.9

5. 1990 207.11 115.04 55.5

6. 1991 298.79 162.75 54.5

7. 1992 479.24 287.10 59.9

8. 1993 547.13 323.78 59.2

Source j Annual Reports of State Bank of India

(ADB), Kadiri Branch from 1986-93.

Total recovery performance was low during

the year 1986 with Rs. 73*80 lakhs (41.34 per cent).
 119

Recovery performance was satisfactory during the year

1992 with te. 287.1 lakhs (59.9 per cent). Rs.323.78 lakhs
(59.2 per cent) was recovered in the recent year 1993.
Totally the percentage of demand to recovery is fluctuating.

RECOVERY PERFORMANCE IN RELATION TO DEMAND FOR SHORT,

MEDIUM AND LONG-TERM LOANS ADVANCED BY STATE BANK OF
INDIA (ADB), KADIRI BRANCH:
Demand and recovery position is examined in
Table 4.12. The table shows the recovery position of
short-term loans, medium-term loans and long-term loans.

In the year 1986, short-term loan demand was

Rs.53.67 lakhs and recovery was te.26.89 lakhs. Medium-
term loans demand was te.95.68 lakhs and recovery was
fc.38.21 lakhs, long-term loans demand was te.29.19
lakhs and recovery was only Rs.8.7 lakhs.

In the year 1993» the demand for short-term

loan was te.348.39 lakhs and recovered amount was te.209
lakhs. Medium-term loan demand was te.141.42 lakhs and
recovered money te.87.68 lakhs. Long-term loan demand
was te.57.32 lakhs and recovered finance was fe.27.1 lakhs.

Totally the loans disbursement was always

increasing during the review period. Significantly the
short-term loan disbursement is highly increasing to
compare with other medium and long-term loans.
 TABLE 4 .1 2
OVERDUE TO DEMAND FOR SHORT, MEDIUM AND LONG-TERM LOANS IN STATE BANK OF INDIA
(AGRICULTURAL DEVELOPMENT BANK, KADIRI BRANCH)

(Rs. In la k h s )

i
‘

1
1
1
1
1
1
1

'
i
'
I
i
;

1
,
1
|
1
1
.
1

I
i
!

1
1
•

1
11
1
11
1
t•

i
i
Jal
SI
wl
1
1

1
•1
1
1
1

i
i
i
i
1
t
t 1

1 1
1 o

I X!
!W
1 TJ
I*
I 0>
i *h
1 0)
1 4->

ig
1'

11 u
1 *4

1 <u
iy

o
I 4*
1 +*
1 O

ie
IS

Y ear
CD

ID
O

Demand Recovery Demand R ecovery Demand

i
i
i
1
ti 1
O 1

i
> 1
u t

i
T"

VO
CM
ON•
o

.
00•

IT\
kn
in
e-

1986 2 6 .8 9 9 5 .6 8 38.21
•4-
€0

r*
KN.

•
fA
0\

1987 57.71 101.75 2 8 .6 5 1 0 .9 6

VO

00
co
CM

CM•
KN

ON
3 2 .2 3 1 1 0 .3 4 5 0 .1 2 30.41 11.21

-4
O•
x-
CM
.

KN
un
KN

1989 3 8 .9 6 118.63 3 5 .6 2 1 0 .6 2
00
4.
r
00

KN
IA•

UN
e-

1990 9 2 .1 4 5 6 .3 9 4 4 .8 7 3 0 .6 2
T~

o.
CN
ON

1991 175.51 103.73 4 6 .1 3 2 .3 7 1 2 .9 2

*4
KN•
ON

1992 257.83 168.11 169.19 5 2 .2 2 2 5 .5 9

-4
-4

co
CM
4
CM

r
r*.

KN
ON
KN
ON
1993 8 7 .6 8 5 7 .3 2 2 7 .1 0

1
1
1
1
1
1
1
1

S o u rce : AT nnnual RI f oeco rd s o f A g ric u ltu

r*
ra l D evelopm ent Bank o f S ta te Bank o f
Q Q ^\ OX
I n dH ia
ia , K aH d^ iri B ranch from i 1986-93
120