13 Chapter 6

Chapter-6
RECOVERY OF LOANS AND NPAS

RECOVERY
Performance analysis of a bank cannot be conducted solely on the basis of
resources mobilised or advances made. Resources mobilisation, deployment of
resources and recycling of resources are three main centres of banking business
operations. Therefore, recovery is equally important activity in banking.
Recovery in co-operative banks is still more important as they are supposed to
meet their social commitments too. Any delay in recovery hampers the recycling of
funds and banks ability to return the loans to higher financial institutions is also
impaired. As a result, good borrowers and prospective members suffer.
Overdue problem is harmful for defaulter borrowers too. When they fail to
return the money, bank charges them penal rate of interest. It burdens them with more
financial liabilities and they could not avail of fresh loans. Any delay in recovery on
the part of co-operative bank management also creates a situation for mis-utilization
of funds at the hands of borrowers as they may spend their borrowings on nonproductive activities.
The advances of co-operative banks are mainly directed towards agriculture,
tiny/small scale industries and small business enterprises. These sectors are
characterised by higher risks and lower returns. These activities can easily succumb to
the vagaries of nature, changes in government policies and other pulls from various
quarters. (Padmanabhan, (1997) found that the following factors have a bearing on
recovery of loans in the agriculture and rural sector:
136
Low production/productivity level in the farms owned by small and marginal

farmers on account of inadequate finance, non-adoption of scientific
agriculture practices, etc;
Occurrence of natural calamities (drought, flood, pest attack, etc.)
A large number of small farmers/small units have been facing marketing

problems;
Crowding of activities leads to non-viability of large number small/tiny

industrial units;
Lack of managerial expertise and technical competence;
Imperfect rural markets-farmers/rural entrepreneurs not realising remunerative

prices and exploitation by middlemen;
Infrastructure constraints-absence of backward and forward linkage;
The mortality rate is very high in case small borrowers who are not getting
adequate extension support at the appropriate time from various agencies; and
The recovery climate has been vitiated by waiver of loans and therefore, a part
of borrower community, despite income generation, is unwilling to repay
banks dues.
Finding that the recovery of loans is essential for the smooth and efficient
working of co-operative banks, an effort has been made to study the recovery position
of some of these selected banks in Punjab and Haryana.
Absolute amount recovered during a year is important for a bank for its funds
management. It helps the bank to rotate and plough back the funds. On the other hand,
per centage of recovery to total demand of bank (demand means amount to be
recovered during the year/ season) is also an important factor and indicates the
137
efficiency of the bank in recovery management. Therefore both absolute and

relative recovery positions have been studied. Tables 6.1A, 6.3A, 6.5A, 6.7A, 6.9A,
6.11A, 6.13A and 6.15A present total demand of the DCCBs, which are annexured as
annexure I.
PUNJAB DCCBs
HIGH PROFITABILITY DCCBs IN PUNJAB
Trend Analysis
Table 6.1 :
Trends in Recovery of Loans in High Profitability DCCBs in

Punjab :1999-00 to 2007-08
(` in lakh)
Short-term
Agrl.
Non-Agrl.
1999-00
16048
2066
2000-01
17426
315
2001-02
17982
407
2002-03
20670
254
2003-04
21775
959
2004-05
24250
2253
2005-06
24994
2035
2006-07
23658
2672
2007-08
35605
2571
Average
22489.78
1503.56
C.V.
26.02
67.08
C.G.R.
8.55
23.56
t-value
6.76***
1.78
Trend Equation
Constant
12946.76
308.06
Beta
1908.80
239.10
t-value
5.26***
2.26*
Year
Source :
Medium-term
Agrl.
Non- Agrl.
180
304
214
992
218
1107
291
1978
401
1307
552
1644
682
2006
388
1645
176
2134
344.67 1457.44
51.64
40.53
8.00
18.76
1.20
3.01**
203.42
28.25
1.28
562.19
179.05
3.94***
Other
Loans
21
2291
1999
3146
1864.25
70.90
Total
Loans
18598
18947
19735
23193
24442
28699
32008
30362
43632
26624.00
30.39
10.53
8.96***
12920.25
2740.55
6.56***
Basic Data on Performance of District Central Co-operative Banks,

Published by NAFSCOB, Mumbai, 1999-00 to 2007-08
Note : *** Significant at 1% level

** Significant at 5 % level
*Significant at 10 % level
138
It is clear from Table 6.1 that total recovery increased significantly from
`18598 lakh in 1999-00 to `43632 lakh in 2007-08 at the compound growth rate of
10.53 per cent per annum in high profitability DCCBs, Punjab. Similarly, there was a
significant increase in the recovery of short-term agricultural loans (8.55%) and
medium-term non-agricultural loans (18.76%). Recovery of short-term agricultural
loans increased from `16048 lakh to `35605 lakh from 1999-00 to 2007-08, while
medium-term non-agricultural loans recovery increased from ` 304 lakh to ` 2134
lakh during the same period. Though there was an overall increase in recovery of
short-term non-agricultural loans and medium-term agricultural loans, but the increase
appeared to be non-significant.
Recovery in relation to Demand
A perusal of Table 6.2 provides that on the average the proportionate share of
total recovery out of demand came to be 96.23 per cent in high profitability DCCBs of
Punjab. It was 100.74 per cent of the demand in short-term agricultural loans. It
exceeded 100 per cent in the case of short-term agricultural loans, i.e., 167.16 per cent
recovery of demand during the year 2000-01.
Normally, it may not be more than 100 per cent as recovery cannot be
more than demand. But it was due to advance recovery received in that year.
Recovery as percentage of demand for loan came to be 76.54 percent in the case of
short-term non-agricultural loan, 81.04 per cent in medium-term agricultural loan and
71.18 per cent in medium-term non-agricultural loan. The recovery of other loans
could not be studied due to the absence of demand as well as demand for other loans
in 5 out of 9 years under study. There was a significant decline in recovery of
medium-term non-agricultural loans at the rate of -2.44 per cent compounded
annually.
139
Table 6.2 :
Recovery in relation to Demand for Loan in High Profitability

DCCBs in Punjab 1999-00 to 2007-08
(Percentage)
Short-term
Year
Agrl.
Non-Agrl
Medium-term
Agrl.
Non- Agrl.
Other
Loans
Total
Loans
1999-00
91.67
81.69
81.82
83.06
90.19
2000-01
167.16
53.03
88.80
77.80
151.15
2001-02
90.48
55.60
83.52
74.70
2002-03
90.94
90.07
89.26
67.51
88.29
2003-04
91.61
74.75
90.93
65.09
87.63
2004-05
91.84
78.42
89.61
67.13
88.73
2005-06
92.68
83.23
89.50
72.05
88.49
90.04
2006-07
94.22
87.18
93.72
70.03
89.88
91.56
2007-08
96.11
84.91
22.22
63.27
90.92
91.47
Average
100.74
76.54
81.04
71.18
68.92
96.23
C.V.
24.78
17.50
27.58
9.01
60.53
21.47
C.G.R.
-2.43
3.93
-7.86
-2.44
-2.26
t-value
0.97
1.68
1.53
3.19**
1.02
6.36
87.02
Trend Equation
Constant
117.06
63.30
98.65
80.20
110.16
Beta
-3.26
2.65
-3.52
-1.80
-2.79
t-value
1.01
1.70
1.27
3.19*
1.05
Source :

Note : ** Significant at 5 % level

On an average, medium-term non-agricultural loans were only 10.18 per cent
of total loan outstandings (Table 5.2), hence, their declining recovery per centage
would affect the per centage of total recovery only to a marginal extent. The overall
recovery position in high profitability DCCBs in Punjab seems to be good. High per
centage of recovery may be the reason for stagnation in recovery.
140
AVERAGE PROFITABILITY DCCBs IN PUNJAB

Trend Analysis
Table 6.3 :
Year
Trends in Loans Recovery in Average Profitability DCCBs in

Punjab: 1999-00 to 2007-08
(` in lakh)
Short-term
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
18728
Non-Agrl
1016
Agrl.
556
Non- Agrl.
981
1134
22415
2000-01
21374
1176
435
1120
3460
27565
2001-02
20569
1355
397
1216
4058
27595
2002-03
22260
1826
592
1456
5421
31555
2003-04
27871
2290
173
1958
6067
38359
2004-05
28368
3198
193
2503
6067
40329
2005-06
36056
3731
485
3326
3852
47450
2006-07
36852
3769
652
4013
3764
49050
2007-08
48838
3897
111
5820
5731
64397
Average
28990.67
2473.11
399.33
2488.11
4394.89 38746.11
C.V.
34.21
48.10
49.38
65.48
36.64
34.27
C.G.R.
12.06
21.04
-9.44
25.24
11.89
12.90
t-value
9.70***
10.84***
1.32
15.33***
1.82
15.45***
Trend Equation
Constant
11995.62
354.19
512.00
-287.06
2767.06 15340.37
Beta
3399.27
423.78
-22.53
555.03
325.57
4681.12
t-value
7.20***
11.74***
0.87
6.86***
1.76
9.81***
Source : Basic Data on Performance of District Central Co-operative Banks,

Table 6.3 depicts that recovery increased significantly from ` 22415 lakh in
1999-00 to `64397 lakh in 2007-08 in average profitability DCCBs in Punjab. It is
encouraging to note that the recovery of short-term agricultural loan, short-term nonagricultural loans and medium-term non-agricultural loans registered a significant
141
increase during the same period. It increased from ` 18728 lakh in 1999-00 to `48838
lakh in 2007-08 in short-term agricultural loans. The increase was from `1016 lakh to
`3897 lakh and from ` 981 lakh to `5820 lakh from 1999-00 to 2007-08
respectively in short-term non- agricultural loans and medium-term non agricultural
loans. Recovery in relation to Demand
Table 6.4 :
Year
Recovery in relation to Demand for Loan in Average Profitability

DCCBs in Punjab: 1999-00 to 2007-08
(Percentage)
Short-term
Agrl.
Non-Agrl
Medium-term
Agrl.
Non- Agrl.
Other
Loans
Total
Loans
1999-00
93.34
88.35
53.67
91.43
85.52
90.94
2000-01
94.42
86.47
33.75
89.53
94.00
91.22
2001-02
92.30
91.74
46.43
91.02
84.45
89.72
2002-03
89.52
93.50
76.98
88.94
86.89
88.98
2003-04
93.35
93.74
20.26
84.98
88.76
90.70
2004-05
93.45
94.78
21.98
84.25
88.76
90.80
2005-06
93.75
93.98
66.44
78.39
86.35
91.49
2006-07
91.85
91.24
94.08
79.15
84.79
90.08
2007-08
94.43
91.59
80.43
80.43
89.31
92.31
Average
92.94
91.71
54.89
85.35
87.65
90.69
C.V.
1.66
3.01
48.25
6.03
3.39
1.09
C.G.R.
0.06
0.61
7.18
-2.04
-0.12
0.14
t-value
0.27
1.74
0.91
6.71***
0.25
0.95
Trend Equation
Constant
92.65
88.96
32.13
94.10
88.12
90.08
Beta
0.06
0.55
4.55
-1.75
-0.11
0.12
t-value
0.27
1.72
1.41
6.80***
0.28
0.96
Source :
Note :

*** Significant at 1% level
142
A glance at Table 6.4 provides that the proportionate share of total recovery
out of total demand for loans worked out to be 90.69 per cent on the average of 9
years under study. The average proportion of recovery out of demand was the highest
to the tune of 92.94 per cent in the case of short-term agricultural loans, followed by
91.71 per cent in short-term non-agricultural loans, 87.65 per cent against other loans
and 85.35 per cent in the case of medium-term non-agricultural loans.
The recovery as a proportion of demand was found to be the lowest to the tune
of 54.89 per cent in the case of medium-term agricultural loans. The proportionate
recovery of medium-term non-agricultural loans showed a significant decline at the
rate of -2.04 per cent compounded annually. The recovery as percentage of demand of
all types of loans except medium-term non- agricultural loans has shown a stagnant
trend.
LOW PROFITABILITY DCCBs IN PUNJAB
Trend Analysis
It can be observed from Table 6.5 that total recovery of loans increased
significantly from ` 20687 lakh in 1999-00 to ` 49317 lakh in 2007-08 at the
compound growth rate of 12.85 per cent per annum. It is pertinent to note that
recovery of all types of loans, except other loans, increased significantly. The
Compound Growth Rate of recovery was the highest to the order of 63.52 per cent in
the case of medium-term agricultural loans, followed by 35.10 per cent in short-term
non-agricultural loans. Thus, in general terms, recovery of every type of loan
registered a significant increase during the period of study.
143
Table 6.5 :
Trends in Loans Recovery in Low Profitability DCCBs in Punjab :

1999-00 to 2007-08
(` in lakh)
Short-term
Year
Medium-term
Other
Loans
Total
Loans
Agrl.
Non-Agrl
Agrl.
Non- Agrl.
1999-00
20319
37
313
12
20687
2000-01
19024
1124
12
20172
2001-02
21133
15
16
1486
32
22682
2002-03
21909
23
10
1607
17
23566
2003-04
27467
27
75
2199
29773
2004-05
29082
30
80
2290
31490
2005-06
36566
51
259
2675
59
39610
2006-07
40836
71
288
3312
44514
2007-08
45546
59
285
3420
49317
Average
29098.00
32.33
117.00
2047.33
17.67
31312.33
C.V.
33.51
70.98
105.46
49.84
99.26
34.64
C.G.R.
12.19
35.10
63.52
26.99
-5.36
12.85
t-value
10.02***
9.93***
3.11**
4.53***
0.52
12.18***
Trend Equation
Constant
12065.18
-7.42
-83.25
209.58
16.83
12202.02
Beta
3406.38
7.95
40.05
367.55
0.17
3822.10
t-value
8.71***
7.93***
5.13***
15.94***
0.07
9.74***
Source :


Table 6.6 reveals that on an average, proportionate share of recovery out of
demand for loan appeared to be 83.05 per cent. The proportion of recovery out of
demand appeared to be the highest to the order of 85.18 per cent in the case of shortterm agricultural loans, followed by 68.50 per cent in medium-term non-agricultural
loans. The proportion of recovery out of demand was found to be the lowest to the
144
tune of 23.11 per cent in the case of other loans. The total recovery as a proportion of
total demand remained constant at about 83 per cent, while it increased significantly
in the case of short-term agricultural loans at the rate of 0.59 per cent and 16.33 per
cent compounded annually in medium-term loans.
Table 6.6 :
Year
Recovery in relation to Demand for Loan in Low Profitability

DCCBs in Punjab: 1999- 00 to 2007-08
(Percentage)
Short-term
Medium-term
Other
Loans
Total
Loans
Agrl.
Non-Agrl
Agrl.
Non- Agrl.
1999-00
84.20
26.09
50.00
77.09
25.00
83.81
2000-01
83.82
29.03
11.54
81.45
3.60
82.45
2001-02
84.12
39.47
41.03
78.21
4.51
81.56
2002-03
82.63
46.00
17.54
70.30
12.23
81.13
2003-04
85.10
48.21
68.18
69.63
5.75
83.43
2004-05
85.83
60.00
55.17
62.48
9.88
83.25
2005-06
87.11
37.23
84.36
59.22
95.16
84.28
2006-07
86.30
45.81
68.74
59.70
25.93
83.26
2007-08
87.54
37.82
66.43
58.38
25.93
84.30
Average
85.18
41.07
51.44
68.50
23.11
83.05
C.V.
1.92
25.15
47.39
13.08
123.66
1.36
C.G.R.
0.59
5.13
16.33
-4.43
22.04
0.24
t-value
3.99***
1.62
1.90*
8.36***
1.46
1.46
Trend Equation
Constant
82.68
32.18
21.31
83.99
2.31
82.06
Beta
0.50
1.78
6.03
-3.10
4.16
0.20
t-value
4.04***
1.42
2.44**
7.78***
1.15
1.47
Source :


145
On the other hand, the proportion of recovery out of demand declined

significantly at the rate of -4.43 per cent per annum in the case of medium-term nonagricultural loans. The proportion of recovery of other loans remained fluctuating
from 4.51 per cent to 95.16 per cent during the period of study. It shows that vast
fluctuations exist in the recovery of other loans in relation to the demand which
hamper the growth of these banks.
Total recovery had registered a significant growth rate in all the
categories of selected DCCBs during the period of study. Average recovery per
centage to demand in total loans during the period of study was 96.23, 90.69 and
83.05 per cent respectively in the high, average and low profitability DCCBs. It
may be inferred that recovery position of the DCCBs had directly affected with
the profitability of the banks. Short-term agricultural loans had recorded the
highest per centage of recovery in all types of selected DCCBs in Punjab.
Expertise of DCCBs staff in handling agricultural customers and immediate reavailability of the loan may be the important factor for this.
ALL SELECTED DCCBs IN PUNJAB
Trend Analysis
Table 6.7 describes that total recovery of loans increased significantly at the
CGR of 12.22 per cent per annum from ` 61700 lakh in 1999-00 to ` 157346 lakh in
2007-08 in all the selected DCCBs in Punjab. It is encouraging to observe that
recovery of all types of loans, except medium-term agricultural loan, increased
significantly during the period under study.
146
Table 6.7 :
Trends in Loans Recovery in the Selected DCCBs in Punjab :

1999-00 to 2007-08
(` in lakh)
Short-term
Year
Agrl.
Medium-term
Non-Agrl
Agrl.
Non- Agrl.
Other
Loans
Total
Loans
1999-00
55095
3088
773
1598
1146
61700
2000-01
57824
1500
652
3236
3472
66684
2001-02
59684
1777
631
3809
4111
70012
2002-03
64839
2103
893
5041
5438
78314
2003-04
77113
3276
649
5464
6072
92574
2004-05
81700
5481
825
6437
6075
100518
2005-06
97616
5817
1426
8007
6202
119068
2006-07
101346
6512
1328
8970
5770
123926
2007-08
129989
6527
572
11374
8884
157346
Average
80578.44
4009.00
861.00
5992.89
5241.11
96682.44
C.V.
31.11
51.68
36.09
51.07
41.07
32.97
C.G.R.
11.13
19.58
4.22
23.45
19.42
12.22
t-value
11.95***
3.82***
0.96
8.78***
3.54***
16.78***
Trend Equation
Constant
37003.28
654.83
632.17
484.72
1685.69
40466.36
Beta
8714.45
670.83
45.77
1101.63
711.08
11243.29
t-value
8.23***
5.08***
1.17
15.48***
5.62***
9.90
Source :


Recovery in relation to Total Demand
A perusal of Table 6.8 provides that on an average, the proportion of recovery
out of total demand worked at 88.98 per cent. It was highest to the order of 91.37 per
cent in the case of short- term agricultural loan, followed by 85.43 per cent and 84.39
per cent in short-term non-agricultural loan and other loans respectively. The average
proportion of recovery out of demand came to 75.04 per cent in the case of medium-
147
term non- agricultural loan and 59.68 per cent in medium-term agricultural loan in all
the selected DCCBs in Punjab. The recovery as a per cent of demand was stagnant in
all types of loans except a significant decline at the rate of -2.94 per cent in the case of
medium-term non-agricultural loan.
Table 6.8 :
Year
Recovery in relation to Demand for Loan in All the Selected

DCCBs in Punjab : 1999- 00 to 2007-08
(Percentage)
Short-term
Agrl.
Non-Agrl
Medium-term
Agrl.
Non- Agrl.
Other
Loans
Total
Loans
1999-00
89.29
83.41
58.12
86.61
83.41
88.20
2000-01
103.71
75.57
41.90
82.85
86.50
99.21
2001-02
88.71
79.08
54.63
80.73
70.33
86.17
2002-03
87.49
92.04
77.52
73.56
85.26
86.27
2003-04
89.77
86.62
46.19
73.15
83.02
87.44
2004-05
90.13
87.04
50.34
70.85
87.84
87.73
2005-06
90.89
88.78
79.27
69.36
87.20
88.59
2006-07
90.05
88.59
87.02
69.18
86.25
87.84
2007-08
92.32
87.74
42.09
69.07
89.70
89.42
Average
91.37
85.43
59.68
75.04
84.39
88.98
C.V.
5.27
6.08
28.86
8.85
6.72
4.46
C.G.R.
-0.35
1.43
2.04
-2.94
1.24
-0.40
t-value
0.52
2.10*
0.53
7.75***
1.41
0.70
Trend Equation
Constant
93.19
79.53
51.90
86.43
79.33
90.90
Beta
-0.36
1.18
1.56
-2.28
1.01
0.38
t-value
0.56
2.10*
0.68
7.22***
1.48
0.72
Source :


148
HARYANA DCCBs
HIGH PROFITABILITY DCCBs IN HARYANA
Trend Analysis
The data presented in Table 6.9 reveals that total recovery of loans increased
significantly from `23622 lakh in 1999-00 to `52293 lakh in 2007-08 at the
compound growth rate of 10.36 per cent per annum.
Table 6.9 :
Year
Trends in Loans Recovery in High Profitability DCCBs in

Haryana: 1999-00 to 2007- 08
(` in lakh)
Short-term
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
18810
Non-Agrl
1585
Agrl.
109
Non- Agrl.
544
2574
23622
2000-01
23139
2036
48
811
1713
27747
2001-02
26558
1987
60
692
3738
33035
2002-03
25438
3688
486
411
6760
36783
2003-04
28953
3541
265
728
5274
38761
2004-05
36058
2364
414
520
11399
50755
2005-06
36842
2061
557
444
7444
47348
2006-07
40052
5682
500
727
1879
48840
2007-08
40105
2791
611
1050
7736
52293
Average
30661.67
2859.44
338.89
658.56
5390.78
39909.33
C.V.
25.49
44.70
65.62
30.69
60.19
26.24
C.G.R.
9.93
8.64
35.48
2.79
11.59
10.36
t-value
9.97***
1.76
3.38**
0.67
1.25
8.03***
Trend Equation
Constant
16735.81
1643.94
-18.28
543.14
2624.36
21530.26
Beta
2785.12
243.10
71.43
23.08
553.28
3676.02
t-value
11.81***
1.61
4.90***
0.87
1.40
9.22***
Source :


149
Similarly, the recovery of short-term agricultural loans increased significantly

from `18810 lakh to `40105 lakh during the same period, while recovery of mediumterm agricultural loans increased significantly from `109 lakh in 1999-00 to `611 lakh
in 2007-08. Though an increase was recorded in recovery of all other types of loans
but the wide fluctuations turned the increase non-significant in high profitability
DCCBs in Haryana.
Table 6.10 : Recovery in relation to Demand for Loan in High Profitability
DCCBs in Haryana :1999-00 to 2007-08
(Percentage)
Short-term
Year
Agrl.
Non-Agrl
Medium-term
Agrl.
Non- Agrl.
Other
Loans
Total
Loans
1999-00
79.23
67.62
62.64
56.49
98.24
79.16
2000-01
81.69
75.27
41.38
68.38
94.33
81.26
2001-02
79.53
74.70
1.86
61.13
99.36
74.79
2002-03
79.82
81.11
82.37
46.13
99.75
82.33
2003-04
78.11
83.61
74.86
61.18
98.43
80.41
2004-05
83.75
77.58
81.50
52.58
98.95
85.86
2005-06
80.51
76.39
76.83
45.21
97.64
81.93
2006-07
79.53
94.12
71.94
56.58
91.75
80.82
2007-08
77.51
75.23
83.58
55.79
97.59
79.25
Average
79.96
78.40
64.11
55.94
97.34
80.64
C.V.
2.34
9.42
41.81
13.14
2.69
3.68
C.G.R.
-0.16
1.85
18.61
-1.80
-0.25
0.36
t-value
0.51
1.72
1.00
1.07
0.70
0.72
Trend Equation
Constant
80.58
71.17
37.07
61.24
98.55
79.24
Beta
-0.12
1.45
5.41
-1.06
-0.24
0.28
t-value
0.49
1.68
1.75
1.14
0.70
0.71
Source :

150
The analysis of data presented in Table 6.10 highlights that the proportion of
recovery out of total demand for loan emerged to be 80.64 per cent at the average
level in high profitability DCCBs in Haryana. The highest proportion of recovery out
of demand was found to be 97.34 per cent in the case of other loans, while it was
lowest to the tune of 55.94 per cent in medium-term non-agricultural loans. Shortterm and medium-term agricultural loans recorded 79.96 and 64.11 per cent as
average recovery. The proportion of recovery out of demand remained almost
stagnant in all types of loans. This indicated that level of recovery was stagnant in
high profitability DCCBs in Haryana. Thus, there is need to increase the
proportion of recovery, particularly in the case of medium-term agricultural and
non-agricultural loans.
AVERAGE PROFITABILITY DCCBs IN HARYANA
Trend Analysis
It is obvious from Table 6.11 that total recovery increased significantly at a
compound growth rate of 14.82 per cent per annum from ` 17630 lakh in 1999-00 to
` 54108 lakh in 2007-08 in average profitability DCCBs in Haryana. It is encouraging
to note a significant increase in recovery of all types of loans. The compound growth
rate was the highest to the order of 99.27 per cent in the case of other loans, followed
by 48.00 per cent in medium-term agricultural loan. The rate of increase was found to
be the lowest to the tune of 3.27 per cent in the case of medium-term non-agricultural
loan, followed by 12.83 per cent in the case of short-term agricultural loan and 18.39
per cent in recovery of short-term non-agricultural loan in average profitability
DCCBs in Haryana.
151
Table 6.11 : Trends in Loans Recovery in Average Profitability DCCBs in

Haryana:1999-00 to 2007-08 (` in lakh)
Short-term
Year
Agrl.
Medium-term
Non-Agrl
Agrl.
Other
Loans
Non- Agrl.
Total
Loans
1999-00
15435
1596
110
486
17630
2000-01
17613
1630
94
468
246
20051
2001-02
14762
2331
126
500
10
17729
2002-03
16592
3575
211
516
10
20904
2003-04
24851
4255
969
517
30
30622
2004-05
28702
4461
1140
528
37
34868
2005-06
30813
2433
950
558
600
35354
2006-07
32283
2467
1133
536
1511
37930
2007-08
36136
13628
1455
669
2220
54108
Average
24131.89
4041.78
687.56
530.89
518.56
29910.67
C.V.
34.03
92.63
79.14
10.98
155.69
40.64
C.G.R.
12.83
18.39
48.00
3.27
99.27
14.82
t-value
6.75***
2.39**
5.22***
4.30***
2.44**
7.94***
Trend Equation
Constant
9879.72
-268.97
-235.28
442.22
-637.28
9180.42
Beta
2850.43
862.15
184.57
17.73
231.17
4146.05
t-value
8.11***
2.15*
6.64***
3.99***
3.34***
6.92***
Source :


Table 6.12 brings out that on the average the proportionate share of
recovery out of total demand for loan appeared to be 77.95 per cent. It was highest to
the order of 83.45 per cent in the case of short-term non-agricultural loan and lowest
to the tune of 45.49 per cent in other loans. Average recovery performance in shortterm agricultural loans was 77.54 per cent and it was 78.22 per cent in medium-term
152
agricultural loans. The increase in proportion of recovery out of demand was found
to be significant in the case of short-term non-agricultural loan. The proportion of
recovery of all other types of loans registered almost stagnation in average
profitability DCCBs in Haryana.
Table 6.12 : Recovery in relation to Demand for Loan in Average Profitability
DCCBs in Haryana:1999-00 to 2007-08
(Percentage)
Short-term
Agrl.
Non-Agrl
1999-00
76.63
73.55
2000-01
77.65
74.36
2001-02
76.40
77.86
2002-03
77.15
81.36
2003-04
78.42
87.86
2004-05
81.35
89.08
2005-06
79.96
84.83
2006-07
75.79
85.01
2007-08
74.52
97.16
Average
77.54
83.45
C.V.
2.72
9.08
C.G.R.
-0.07
3.01
t-value
0.18
5.33***
Trend Equation
Constant
77.77
71.10
Beta
-0.04
2.47
t-value
0.15
5.21***
Year
Source :
Medium-term
Agrl.
Non- Agrl.
89.43
58.84
86.24
72.45
76.36
78.86
47.10
79.75
82.26
78.45
87.42
75.32
80.30
74.60
75.43
70.07
79.46
71.70
78.22
73.34
16.15
8.73
-0.26
0.87
0.10
0.70
100.00
80.66
13.33
13.33
7.46
8.79
40.49
69.38
76.00
45.49
80.00
0.43
0.03
75.79
77.31
76.45
77.22
78.98
81.63
78.89
75.95
79.33
77.95
2.45
0.41
1.39
80.23
-0.40
0.23
52.17
-1.33
0.27
76.33
0.32
1.38
70.72
0.52
0.61
Other
Loans
Total
Loans


LOW PROFITABILITY DCCBs IN HARYANA
Trend Analysis
Table 6.13 shows that total recovery of loans increased significantly at the
growth rate of 7.82 per cent compounded annually from ` 38860 lakh in 1999-00 to `
153
67531 lakh in 2007-08 in low profitability DCCBs in Haryana. Similarly, the recovery
of short-term agricultural loans increased significantly from ` 28402 lakh to ` 59013
lakh during the same period.
Table 6.13:
Year
Trends in Loans Recovery in Low Profitability DCCBs in Haryana

: 1999-00 to 2007-08
(` in lakh)
Short-term
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
28402
Non-Agrl
7832
Agrl.
577
Non- Agrl.
985
1064
38860
2000-01
34178
2762
330
750
2206
40226
2001-02
31223
4739
196
735
12
36905
2002-03
31547
6658
136
330
147
38818
2003-04
39832
5798
741
518
139
47028
2004-05
38673
8691
967
517
169
49017
2005-06
49874
7399
1356
493
200
59322
2006-07
50692
5954
1003
499
344
58492
2007-08
59013
6730
985
547
256
67531
Average
40381.56
6284.78
699.00
597.11
504.11
48466.56
C.V.
26.13
28.08
59.86
32.42
140.35
22.73
C.G.R.
9.14
4.87
20.73
-6.33
-8.77
7.82
t-value
7.36***
1.07
2.01*
1.89*
0.49
6.64***
Trend Equation
Constant
22346.66
5241.36
132.17
830.61
1205.78 29757.55
Beta
3606.90
208.68
113.37
-46.70
-140.33
3741.92
t-value
7.05***
0.91
2.93**
2.33*
1.71
6.70***
Source :


A slightly significant increase in the recovery of medium-term agricultural
loan (from ` 577 lakh to ` 985 lakh) during the same period was also observed. There
154
was almost stagnation in recovery of short- term non-agricultural loan as indicated by

the non-significant t-value, while abrupt changes in recovery of other loans (these
fluctuated between `12 lakh in 2001-02 and `2206 lakh in 2000-01) turned the
growth rate non-significant. A significant decline in the recovery of medium-term
non-agricultural loan could be observed in low profitability DCCBs in Haryana.
Table 6.14 : Recovery in relation to Demand for Loan in Low Profitability
DCCBs in Haryana: 1999-00 to 2007-08
(Percentage)
Year
Short-term
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
70.25
Non-Agrl
91.05
Agrl.
86.64
Non- Agrl.
48.12
97.88
73.55
2000-01
69.83
84.00
87.77
39.31
99.10
70.89
2001-02
70.73
86.97
80.99
40.36
85.71
71.43
2002-03
68.55
87.18
47.72
42.91
16.41
69.81
2003-04
75.36
91.51
79.85
31.74
41.62
75.74
2004-05
70.71
94.13
77.17
48.14
15.13
72.76
2005-06
75.68
91.22
89.45
39.57
15.66
76.00
2006-07
67.30
88.29
88.06
36.99
23.39
67.99
2007-08
71.36
91.06
105.80
37.26
15.27
71.71
Average
71.08
89.49
82.60
40.49
45.57
72.21
C.V.
3.94
3.46
18.73
13.07
82.51
3.64
C.G.R.
0.20
0.54
2.51
1.87
-22.43
-0.10
t-value
0.37
1.23
0.86
1.14
4.36***
0.20
Trend Equation
Constant
70.34
87.13
72.28
44.38
103.82
72.54
Beta
0.15
0.47
2.07
-0.78
-11.65
-0.07
t-value
0.39
1.22
1.04
1.17
4.24***
0.18
Source :

155
Table 6.14 presents that the proportion of recovery out of total demand for
loan came to be 72.21 per cent on the average of 9 years under study. The proportion
of recovery out of demand was the highest to the order of 89.49 per cent in the case of
short- term non-agricultural loan while it was lowest to the tune of 40.49 and 45.57
per cent in the case of medium-term non-agricultural loan and other loans. There was a
significant decline in proportion of recovery out of demand in the case of other
loans. It came down from 97.88 per cent in 1999-00 to only 15.27 per cent in 200708.
The proportion of recovery out of demand in all other types of loans remained
almost stagnant in low profitability DCCBs in Haryana.
On the basis of above analysis it can be inferred that absolute recovery
had registered a significant growth in all the selected DCCBs in Haryana during
the period of study. Average per centage of total recovery to demand during the
period of study was 80.64, 77.54 and 72.72 respectively in high, average and low
profitability DCCBs. Hence, it may be deduced that profitability had direct
correlation with recovery position of DCCBs . Proportionate recovery of shortterm agricultural loan was 79.96, 77.564 and 71.08 per cent respectively in high,
average and low profitability DCCBs.
ALL SELECTED DCCBs IN HARYANA
Trend Analysis
A glance at Table 6.15 provides that total recovery of loans increased
significantly from ` 80112 lakh in 1999-00 to `173932 lakh in 2007-08 in all the
selected DCCBs in Haryana at the compound growth rate of 10.34 per cent per
156
annum. Similarly, there was a significant increase in recovery of short-term

agricultural loans from ` 62647 lakh to `135254 during the same period.
Table 6.15:
Trends in Loans Recovery in the Selected DCCBs in Haryana:

1999-00 to 2007-08
(` in lakh)
Short-term
Year
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
62647
Non-Agrl
11013
Agrl.
796
Non- Agrl.
2015
3641
80112
2000-01
74930
6428
472
2029
4165
88024
2001-02
72543
9057
382
1927
3760
87669
2002-03
73577
13921
833
1257
6917
96505
2003-04
93636
13594
1975
1763
5443
116411
2004-05
103433
15516
2521
1565
11605
134640
2005-06
117529
11893
2863
1495
8244
142024
2006-07
123027
14103
2636
1762
3734
145262
2007-08
135254
23149
3051
2266
10212
173932
Average
95175.11
13186.00
1725.44
1786.56
6413.44
118286.56
C.V.
27.30
35.51
63.53
17.44
47.06
27.47
C.G.R.
10.28
10.48
29.85
-0.40
10.31
10.34
t-value
11.31***
2.97**
4.09***
0.16
1.83
13.22***
Trend Equation
Constant
48962.67
6616.33
-121.39
1815.97
3192.86
60467.96
Beta
9242.45
1313.93
369.37
-5.88
644.12
11564.42
t-value
11.45***
3.18**
6.34***
0.14
1.91*
11.57***
Source :


The increase was also found to be significant in recovery of short-term nonagricultural loans and medium-term agricultural loans. The recovery of short-term
non-agricultural loans increased from ` 11013 lakh in 1999-00 to `23149 lakh in
157
2007-08 while the recovery of medium-term agricultural loans increased from `796
lakh in 1999-00 to ` 3051 lakh in 2007-08. The abrupt increase in recovery of other
loans in 2007-08 turned the increasing trend non-significant.
Table 6.16 : Recovery in Relation to Demand for Loan in all the Selected
DCCBs in Haryana: 1999- 00 to 2007-08
(Percentage)
Short-term
Year
Medium-term
Other
Loans
Total
Loans
1999-00
Agrl.
74.30
Non-Agrl
83.97
Agrl.
82.66
Non- Agrl.
52.53
98.14
75.62
2000-01
74.96
78.53
78.54
54.25
95.81
75.34
2001-02
74.89
81.57
10.52
53.72
97.64
73.65
2002-03
74.02
83.97
62.96
54.49
89.27
75.78
2003-04
76.99
88.19
80.28
50.65
89.32
78.09
2004-05
77.75
89.75
82.25
56.62
88.87
79.57
2005-06
78.25
86.96
83.62
50.24
79.40
78.61
2006-07
73.11
89.93
79.02
51.84
65.54
73.96
2007-08
73.94
92.12
87.35
52.91
81.54
76.17
Average
75.36
86.11
71.91
53.03
87.28
76.31
C.V.
2.44
5.13
33.38
3.78
11.99
2.68
C.G.R.
0.07
1.63
8.06
-0.34
-3.76
0.25
t-value
0.21
4.34***
0.84
0.67
3.84***
0.71
Trend Equation
Constant
75.07
79.16
56.44
53.91
103.46
75.33
Beta
0.06
1.39
3.09
-0.18
-3.23
0.20
t-value
0.22
4.48***
1.00
0.66
4.21***
0.72
Source :


The analysis given in Table 6.16 shows that on the average of 9 years under
study, the proportion of recovery out of total demand for loans came to be 76.31 per
158
cent. It ranged from as low as 53.03 per cent in the case of medium-term nonagricultural loan to as high as 87.28 per cent in other loans. There was a significant
increase in the proportion of recovery out of demand for short-term non-agricultural
loan, while in spite of the highest average recovery, the proportion of recovery out of
demand for other loans declined significantly at the rate of -3.76 per cent per annum.
The overall recovery position of loans demands special attention in
certain areas of loans, particularly in the case of other loans where there has
been a declining trend. The stagnation in the proportion of recovery out of
demand for other types of loans is also a cause of concern for the selected DCCBs
in Haryana.
Comparison of Loans Recovery in Punjab and Haryana
Table 6.17:
Recovery
Comparison of Loans Recovery in DCCBs in Punjab and Haryana

during 1999- 00 to 2007-08
(` in lakh)
Punjab
Haryana
t-value
ST-Agrl.
Mean
80578
SD
25068
Mean
95175
SD
25983
1.21
ST-Non Agrl.
4009
2072
13186
4682
5.38***
MT-Agrl.
861
311
1725
1096
2.28**
MT-Non Agrl.
5993
3061
1787
312
4.10***
Others
5241
2152
6413
3018
0.95
Total
96682
31876
118287
32493
1.42
Source :


Table 6.17 presents the comparison of average recovery of different types of
loans in DCCBs in Punjab and Haryana. The total mean recovery came to be ` 96682
159
lakh in Punjab which was statistically at par with `118287 lakh in Haryana as
indicated by the non-significant t-value. However, the mean recovery of short-term
non-agricultural loan and medium-term agricultural loan was significantly higher in
Haryana as compared to that in Punjab. On the other hand, the recovery of mediumterm non-agricultural loan was significantly higher in DCCBs in Punjab as compared
to that in DCCBs in Haryana. Table 6.18 explains that proportion of recovery out of
demand for loan appeared to be 88.98 per cent in DCCBs in Punjab, which was
significantly higher than that in DCCBs in Haryana, i.e., 76.31 per cent. The
proportion of recovery out of demand for short-term agricultural loan and mediumterm non-agricultural loan was also significantly higher in DCCBs in Punjab as
compared to those in DCCBs in Haryana.
Table 6.18 : Comparison of Proportion of Recovery in Demand for Loan in

DCCBs in Punjab and Haryana during 1999-00 to 2007-08
Recovery/Demand
Punjab
Mean
Haryana
SD
Mean
SD
ST-Agrl.
91.37
4.82
75.36
1.84
ST-Non Agrl.
85.43
5.19
86.11
4.42
MT-Agrl.
59.68
17.22
71.91
24.00
MT-Non Agrl.
75.04
6.64
53.03
2.00
Others
84.39
5.67
87.28
10.46
Total
88.98
3.97
76.31
2.05
Source :
t-value


160
On the basis of whole analysis, it can be said that the proportion of

recovery out of demand for loan was more encouraging in Punjab as compared
to the fluctuating and unstable trends in DCCBs in Haryana. Therefore, the
recovery management of loans ought to be made efficient in Haryana.
NON - PERFORMING ASSETS IN CO-OPERATIVE BANKS
The Narasimham Committee (1991) on financial system made several
recommendations with regard to reforms in the financial sector. One of the most
important recommendations made by the committee relates to the reflection of actual
financial health of the banks in their Profit & Loss Accounts and Balance-sheets. The
committee recommended that
1.
The prudential norms for income recognition should be objective and based on
actual record of recovery rather than on any subjective consideration.
2.
The classification of assets should be done on the basis of objective criteria

which would ensure a uniform and consistent application of norms.
3.
The provisioning should be made on the basis of classification of assets into

four categories, viz. standard, substandard, doubtful and loss assets.
While accepting the above recommendations, RBI issued guidelines to
Commercial Banks and the Urban Co-operative Banks to adopt the above system
from the year 1992-93. Regional Rural Banks were advised to implement the norms
of income recognition and asset classification from the year ending 31st March, 1996
(Provisioning to be made from the year ending 31st March, 1997). Further, it was
decided by RBI that the prudential norms of income recognition, asset classification
and provisioning be extended to the State Co-Operative Banks and the Central Co-
161
operative Banks from the year ending 31st March, 1997 (PSCB, 2001). RBI (1996)
guidelines on the subject are summarised below:
(i)
a)
INCOME RECOGNITION
The State Co-operative Banks and Central Co-operative Banks (SCBs/CCBs)
should not take the unrealised income to Profit and Loss Account. In States
where the SCBs/CCBs are required to take such unrealised income to P and L
A/c as per the relative provisions of the State Act/Rules, those banks will have
to make full provisions for equivalent amount by charging interest to
overdue loans and if such interest remains unrealised, the same may not be
taken to income account and matching provision be made. Accrued interest
taken into account in the previous year should also be provided in full in cases
where the same has become overdue.
b)
Fees, commission and other income may be treated as income only if the
account is classified as Standard. Besides, a matching provision should be
created in the extent such items were treated as income in the previous year
but not realised in the subsequent year.
c)
Fees and commission earned as a result of renegotiation or rescheduling of

outstanding debit should be recognised on an accrual basis over the period of
time covering the renegotiated or rescheduling of credit.
d)
In the case of credit facilities guaranteed by government overdue interest can

be taken to profit and loss account only if matching provision is made.
e)
The bills purchased /discounted should be treated as overdue if the same

remain unpaid. Interest may be charged to search bills and taken to profit and
loss account only if matching provision is made.
162
(ii) CLASSIFICATION OF ASSETS

As per guidelines of RBI (1996), classification of agricultural and nonagricultural loans is required to be done into two broad categories:
Performing Assets (Standard Assets)
The borrower accounts which do not disclose any problem and do not carry
more than normal risk attached to business qualify for classification as standard
assets. In other words, all current loans, short-term agriculture loans and nonagriculture loans which have not become NPAs may be treated as standard assets.
Non-Performing Assets
The Securitization Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 defined non- performing assets (NPAs) as an asset or
account of a borrower, which has been classified by a bank or financial institution as
sub-standard, doubtful, or loss assets in accordance with the direction or guidelines
relating to assets classification issued by the RBI.
NPA is defined generally as a credit facility in respect of which interest and/
or principal in arrears have not been received for one quarter or more.
NORMS FOR ASSET CLASSIFICATION
Criteria for Classification of Assets
On the basis of age of overdues, classification of agricultural and nonagricultural loans is required to be done into the following four categories:
(1)
Good/Standard Assets
Standard asset is one which does not disclose any problem and which does not
carry more than normal risk attached to business. Thus, in general, all the current
163
loans, short-term agricultural and non-agricultural loans which have not become
NPAs may be treated as standard assets.
(2)
Sub-standard Assets
A non-performing asset may be classified as sub-standard on the basis of the
following criteria:
a)
An asset, which has remained overdue for a period not exceeding 3 years in
respect of both agricultural and non-agricultural loans should be treated as
sub-standard.
b)
In the case of all types of term loans, where instalments are overdue for a
period not exceeding 3 years, the entire outstanding term loan should be
treated as sub-standard.
c)
An asset, where the terms and conditions of the loan regarding the payment
of interest and repayment of principal have been renegotiated or rescheduled
after commencement of production, should be classified as sub-standard and
should remain so in such category for at least two years of satisfactory
performance under renegotiated or rescheduled terms. In other words, the
classification of an asset should not be upgraded merely as a result of
rescheduling unless there is satisfactory compliance of the above conditions.
3.
Doubtful Asset
A non-performing asset may be classified as doubtful on the basis of following
criteria:
a)
An asset which has remained overdue for a period exceeding three years in
respect of both agricultural and non-agricultural loans should be treated as
doubtful.
164
b)
In the case of all types of term loans, where instalments are overdue for more
than three years, the entire outstandings in term loans should be treated as
doubtful.
4.
Loss Assets
Loss assets are those where loss is identified by the bank/auditors/RBI/
NABARD inspectors but the amount has not been written off wholly or partly. In
other words an asset,which is considered unrealisable and/or of such little value that
its continuance as a doubtful asset is not worthwhile, should be treated as loss asset.
Such loss assets will include overdue loans in which cases (a) decree or execution
petitions have been time barred or documents are lost or no other legal proof is
available to claim the debt, (b) where the members and their sureties are declared
insolvent or have died leaving no tangible assets, (c) where the members have left the
areas of operation of the society leaving no property, their sureties have also no means
to pay the dues, (d) where the loan is fictitious or when gross misutilisation is
noticed, and (e) amounts, which cannot be recovered in case of liquidated societies.
(iii)
PROVISIONING
NORMS
CLASSIFICATION
ON
THE
BASIS
OF
ASSETS
Provisioning is necessary, considering the erosion in the value of security

charged to the banks over a period of time. Therefore, after the assets of
DCCBs/SCBs are classified into various categories (standard, sub-standard, doubtful
and loss assets) necessary provision has to be made for the same. The details of
provisioning requirements in respect of various categories of assets are mentioned
below (RBI, 1996).
165
1. Standard Asset
Provision is required to be made as follows:
(a)
On direct advances to agriculture and SME sectors : 0.25%
(b)
On all other types of advances : 0.40%
2. Sub-standard Asset
A general provision of 10% of the total outstandings in this category may be
made.
3. Doubtful Assets
(a)
100% is to be made of the extent to which the advance is not covered by

realisable value of securities to which the bank has a valid recourse and the
realisable value is estimated on a realisation basis
(b)
Over and above item (a), provision is to be made depending upon the period
for which an asset has remained overdue/NPA, 20% to 100% of the secured
portion (i.e., estimated realisable value of the outstandings on the following
basis:
IV.
1.
Criteria
% Provision
Overdues above 3 years and up to 4 years
20%
Overdues over 4 years, but not exceeding 6 years
30%
Overdues exceeding 6 years
100%
Loss Asset
The entire loss asset should be written off. If the assets are permitted to retain
in the books for any reason, 100% of the outstanding thereof should be fully
provided for.
166
2.
The following aspects, however, may be kept in view while making provisions
(RBI, 1996).
(i)
All agricultural loans may be treated as fully secured as the same are disbursed
against charge on land as provided in the respective State Co-operative
Societies Acts/Rules.
(ii)
Liability towards Provident Fund and gratuity should be estimated on actuarial

basis and full provided for
(iii)
Advances against term deposits, NSCs eligible for surrender, IVPs, KVPs
and life policies are exempted from provisioning. Therefore, the above
accounts may not be classified as NPAs/Overdue.
(iv)
Advances against gold ornaments, government securities and all other kinds of
securities are not exempted from provisioning requirements.
(v)
The investment portfolio of a bank would normally consist of both approved

securities (Predominately Government Securities) and Other (shares,
debentures and bonds of co-operative and other institutions). Investments in
approved securities should be bifurcated into permanent and current
investments. Permanent investments are those which banks intend to hold till
maturity and current investments are those which banks intend to deal in, i.e.,
buy and sell on a day-to-day basis. Banks should keep not more than 50% of
their investments in permanent category. While the depreciation in respect of
permanent investments is not likely to affect their realisable value on maturity,
depreciation need not be provided for investments in the permanent category.
Investments under current category should be carried at lower of cost value
167
of market value, on a consistent basis. Depreciation in the current investments, if

any, should thereof be fully provided for. Banks following a more prudent
method of valuation (e.g., all the investments marked to market) should
continue to do so and there should not be slip back in their case.
Investments should be shown in the balance-sheet net of depreciation. It is,
however, open to banks to show the book value of investments, the depreciation there
against and net amount of investments separately.
As regards valuation of securities other than approved securities these should
be valued at lower of cost price or market value. Investment in the shares of cooperative institutions, however, may be valued at carrying cost price.
NON-PERFORMING ASSETS IN DCCBs
Non-performing assets are a very serious problem in financial institutions.
NPAs have been the single most vexing problem faced by the banks. It resulted in
deteriorating the process of resources mobilization in terms of non-recovery of loans,
loss of interest thereof and the provisions made to accommodate these non-recovered
loans. This affects business activity very badly, particularly in terms of re-advancing
the loans and hence, earning interest. Banks that have been identified as weak are
mainly so because of loss of their income, high carrying cost of NPAs, both in terms
of their funding as well as provisioning and general stagnation of operations caused
by NPAs in their books. In DCCBs, this problem is more acute due to political
interference and subsidized finance (Sabina, 2008).
Therefore, it is very much relevant here to study the trends in non-performing
assets.
PUNJAB DCCBs
168
HIGH PROFITABILITY DCCBs IN PUNJAB

Table 6.19:
Trends in NPAs in High Profitability DCCBs in Punjab : 1999-00

to 2007-08
(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
1135.90
456.80
16361
6.94
2000-01
1375.61
516.67
24329
5.65
2001-02
1996.57
692.19
30013
6.65
2002-03
2758.85
659.43
34445
8.01
2003-04
2605.77
834.42
34615
7.53
2004-05
3054.75
965.61
35286
8.66
2005-06
3045.79
1228.25
39564
7.70
2006-07
3203.91
1924.88
32986
9.71
2007-08
3506.93
2197.57
43632
8.04
Average
2520.45
1052.87
32359.00
7.65
C.V.
33.10
58.98
24.99
15.35
C.G.R.
14.25
21.65
2.06
t-value
5.64***
11.03***
0.62
Constant
1073.51
5.70
8.47
Beta
289.39
209.43
0.16
t-value
8.05***
6.38
0.57
2014-15
5703.75
3356.58
11.03
2019-20
7150.70
4403.73
11.83
Trend Equation
Projections
% Change Over 2007-08

2014-15
62.64
52.74
37.23
2019-20
103.90
100.39
47.18
Source :

169
A cursory look at Table 6.19 reveals that NPAs increased from ` 1135.90 lakh
in 1999-00 to ` 3506.93 lakh in 2007-08, registering a significant growth at the rate of
14.25 per cent compounded annually. The provisions made also depict a significantly
increasing trend from `456.80 lakh to `2197.57 lakh during the same period in high
profit DCCBs in Punjab. The rate of increase was higher in provisions (21.65%) as
compared to NPAs (14.25%). It shows that these DCCBs had failed to recover
their old NPAs and due to ageing of the NPAs provisions had to be made as a
higher rate. Hence, recovery of old NPAs is essential for these banks. Trend
equation shows that NPAs would increase by 62.64 per cent in 2014-15 and further to
103.90 per cent in 2019-20 over those during 2007-08, if this trend is not checked.
The further trend is similar in the case of provisions made against NPAs. The
proportion of NPAs in outstanding loans fluctuated between a minimum of 5.65 per
cent in 2000-01 to a maximum of 9.71 per cent in 2006-07 with an overall average of
7.65 per cent during the period of study. Compound growth rate of percentage of
NPAs to loans outstanding was recorded at 2.06 per annum.
AVERAGE PROFITABILITY DCCBs IN PUNJAB
The analysis given in Table 6.20 indicates that the NPAs increased from `
711.48 lakh in 1999-00 to `2993.76 lakh in 2007-08 registering a significant
compound growth rate of 21.26 per cent per annum. The provisions made against
NPAs also showed significant increase during this period. This shows that average
profitability DCCBs in Punjab used to make proportionate provisions to accommodate
NPAs. It can be said that the NPAs would increase by 72.36 per cent in 2014-2015
and 123.83 per cent in 2019-20 over 2007-08 in the average profitability DCCBs in
170
Punjab, if present trend is not checked. The provisions against NPAs would increase
by 45.34 and 91.11 per cent in 2014-15 and 2019-20 respectively.
Table 6.20:
Trends in NPAs in Average Profitability DCCBs in Punjab: 199900 to 2007-08

(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans Outstanding
1999-00
711.48
224.82
25220
2.82
2000-01
704.67
248.26
33004
2.14
2001-02
1288.7
301.73
43510
2.96
2002-03
1433.98
377.98
58001
2.47
2003-04
1504.33
452.33
55941
2.69
2004-05
1864.2
665.75
50197
3.71
2005-06
2659.97
710.88
46960
5.66
2006-07
2767.75
802.7
52659
5.26
2007-08
2993.76
1253.66
64397
4.65
Average
1769.87
559.79
3.60
C.V.
48.79
59.75
35.96
C.G.R.
21.26
23.52
5.92
t-value
9.81***
16.49***
1.97*
Constant
228.94
-13.94
3.14
Beta
308.19
114.75
0.23
t-value
12.25***
7.26***
1.99*
2014-15
5159.98
1822.06
6.82
2019-20
6700.93
2395.81
7.97
Trend Equation
Projections

2014-15
72.36
45.34
46.70
2019-20
123.83
91.11
71.44
Source :


171
The proportion of NPAs in total outstanding loans indicated a significant

increase from 2.82 per cent in 1999-00 to 5.66 in 2005-06 but declined to 4.65 per
cent in the last year of study. The overall growth rate came to be 5.92 per cent
compounded annually. The NPAs as a per cent of outstanding loans would be 6.82 per
cent in 2014-15 and 7.97 per cent in 2019-20 in average profitability DCCBs in
Punjab. Higher compound growth rate of provisioning (23.52 per cent) as compared
to CGR of NPAs (21.26 per cent) is a cause of concern for these banks.
LOW PROFITABILITY DCCBs IN PUNJAB
The data provided contained in Table 6.21 reveals that NPAs increased from
`1597.83 lakh in 1999-00 to ` 7076.64 lakh in 2007-08, showing a significant growth
rate of 20.78 per cent compounded annually in low profitability DCCBs in Punjab.
The provisions made against NPAs also increased from ` 742.93 lakh to ` 2596.02
lakh during the same period with a significant growth rate of 17.90 per cent
compounded annually. This showed that NPAs and provisions went hand in hand in
low profitability DCCBs in Punjab. The NPAs as a proportion of outstanding loans
increased from 6.67 per cent in 1999-00 to 24.79 per cent in 2005-06 which declined
to 14.35 per cent in 2007-08, but over the period it increased significantly at a
compound growth rate of 5.89 per cent. Though NPAs had increased in these banks
but the compound growth rate of provisions (17.90 per cent) is less than CGR of
NPAs (20.78 per cent) during the period of study. It shows that these banks had
succeeded in recovering their old NPAs, which speaks about their good
management practices.
172
Table 6.21 : Trends in NPAs in Low Profitability DCCBs in Punjab : 1999-00

to 2007-08
(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
1597.83
742.93
23941
6.67
2000-01
1917.46
780.9
26078
7.35
2001-02
2835.66
812.67
30843
9.19
2002-03
3613.76
935.93
35893
10.07
2003-04
4668.14
1103.04
39711
11.76
2004-05
5286.05
1435.38
41058
12.87
2005-06
5934.12
1439.35
23941
24.79
2006-07
6194.24
2347.69
52361
11.83
2007-08
7076.64
2596.02
49317
14.35
Average
4347.10
1354.88
12.10
C.V.
45.03
50.71
44.45
C.G.R.
20.78
17.90
5.89
t-value
9.46***
9.10***
1.99*
Constant
795.86
199.42
10.05
Beta
710.25
231.09
0.63
t-value
23.54***
6.26***
1.84
2014-15
12159.86
3896.86
20.13
2019-20
15711.11
5052.31
23.28
Trend Equation
Projections

2014-15
71.83
50.11
40.29
2019-20
122.01
94.62
62.24
Source :


173
The trend equation indicates that NPAs would be higher by 71.83 per cent in
2014-15 and further to 122.01 per cent in 2019-20 over 2007-08, while provisions
made against NPAs would be 50.11 and 94.62 per cent higher in 2014-15 and 201920 respectively over those in 2007-08, if this trend of NPAs is not checked. The
proportion of NPAs in outstanding loans would be 20.13 per cent in 2014-15 and
23.28 per cent in 2019-20.
Increased NPAs would result in loss of principal amount, loss of interest
income and higher incidence of provisioning. Therefore, reduction in NPAs is of
utmost importance for low profitability DCCBs in Punjab to improve their
profitability and financial position.
ALL SELECTED DCCBs IN PUNJAB
Table 6.22 indicates that NPAs increased significantly from ` 3445.21 lakh in
1999-00 to ` 13577.33 lakh in 2007-08 at a compound growth rate of 18.88 per cent
per annum. Similarly, provisions made against NPAs also registered a significant
increase from `1424.55 lakh to ` 6047.25 lakh during the same period at the rate of
20.21 per cent compounded annually. The trend equations revealed that NPAs would
increase by 69.57 and 117.73 per cent in 2014-15 and 2019-20 respectively over
2007-08, if this trend continues. Similarly, provisions would be 50.08 per cent higher
in 2014-15 and 95.99 per cent in 2019-20 over those in 2007-08.
Table 6.7A shows that demand of the bank for recovery had constantly
increased from ` 69954 lakh in 1999-00 to `175965 lakh in 2007-08. Recovery as a
percentage of total loan had remained almost constant (between 86.0 per cent to 89.0
per cent in these years) except for 2000-01 when it was 99.21 per cent. As a result,
absolute amount of overdues and NPAs had increased during the period of study.
174
Table 6.22:
Trends in NPAs Recovery in the Selected DCCBs in Punjab: 199900 to 2007-08

(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
3445.21
1424.55
65522
5.26
2000-01
3997.74
1545.83
83411
4.79
2001-02
6120.93
1806.59
104366
5.86
2002-03
7806.59
1973.34
128339
6.08
2003-04
8778.24
2389.79
130267
6.74
2004-05
10205
3066.74
126541
8.06
2005-06
11639.88
3378.48
110465
10.54
2006-07
12165.9
5075.27
138006
8.82
2007-08
13577.33
6047.25
157346
8.63
Average
8637.42
2967.54
7.20
C.V.
41.71
54.83
26.61
C.G.R.
18.88
20.21
4.62
t-value
9.06***
12.97***
1.62
Constant
2098.32
191.18
6.85
Beta
1307.82
555.27
0.33
t-value
24.17***
6.95***
1.55
2014-15
23023.44
9075.50
12.13
2019-20
29562.54
11851.85
13.78
Trend Equation
Projections

2014-15
69.57
50.08
40.57
2019-20
117.73
95.99
59.69
Source :


NPAs in absolute terms had shown a significant growth in all the selected
DCCBs in Punjab during the period of study. CGR of NPAs was 14.25, 21.26 and
175
20.78 per cent in high, average and low profitability DCCBs respectively. NPAs
as proportion of outstanding loans remained constant in the selected DCCBs in
Punjab. This shows that banks were unable to recover old NPAs and/or some per
centage of new loans advanced also became NPAs.
Tables 6.19, 6.20 and 6.21 indicate that NPAs as a per centage of total
loan outstandings on the average were 7.65 per cent, 3.60 per cent and 12.10 per
cent respectively in high, average and low profitability DCCBs.
HARYANA DCCBs
HIGH PROFITABILITY DCCBs IN HARYANA
Table 6.23 demonstrates that NPAs increased from `631.80 lakh in 1999-00 to
` 4007.99 lakh in 2007-08, registering a significant rate of increase of 22.75 per cent
compounded annually. Similarly, the provisions made against NPAs increased
significantly from `532.05 lakh to `1599.30 lakh during the same period in high
profitability DCCBs in Haryana. A significant increase in the proportion of NPAs in
outstanding loans was also observed. It increased from 2.67 per cent in 1999-00 to
8.64 per cent in 2007-08 with overall compound growth rate of 12.13 per cent. These
are the only DCCBs under study in which compound growth rate of percentage NPAs
to loans outstanding, i.e., 12.13 per cent is more than compound growth rate of loans
outstanding, i.e., 9.41 per cent. This shows that NPAs increased faster than
outstanding loans. Compound growth rate of provisioning (17.38 per cent) which
was lower than compound growth rate of NPAs (22.75 per cent), indicates that
management of these DCCBs had succeeded in recovering old NPAs to some
extent. But increasing trend of NPAs with 12.13 CGR (more than CGR of total loan
outstandings) is a cause of serious concern for the management.
176
Table 6.23 : Trends in NPAs in High Profitability DCCBs in Haryana : 1999-00

to 2007-08
(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
631.80
532.05
23622
2.67
2000-01
910.19
553.19
22641
4.02
2001-02
1212.78
635.19
30194
4.02
2002-03
1581.21
693.61
33120
4.77
2003-04
3517.74
1093.24
37210
9.45
2004-05
2801.75
1142.44
38149
7.34
2005-06
3003.11
1473.64
40266
7.46
2006-07
2110.21
1518.0
43813
4.82
2007-08
4007.99
1599.30
46401
8.64
Average
2197.42
1026.74
5.91
C.V.
54.56
42.45
39.93
C.G.R.
22.75
17.38
12.13
t-value
4.32***
10.34***
2.76**
Constant
371.92
252.64
2.52
beta
365.10
154.82
0.56
t-value
4.00***
11.09***
2.37**
2014-15
6213.52
2729.76
11.48
2019-20
8039.02
3503.86
14.28
Trend Equation
Projections

2014-15
55.03
70.68
32.91
2019-20
100.57
119.09
65.32
Source :


177
Keeping in view the trend equations, it can be predicted that NPAs would
increase by 55.03 per cent in 2014-15 and further by 100.57 per cent in 2019-20 over
those in 2007-08 in high profitability DCCBs in Haryana, if this trend is not checked.
Similarly, the provisions would be 70.68 and 119.09 per cent higher as compared to
those in 2007-08. It is discouraging to note that NPAs as proportion of outstanding
loans would increase to 11.48 per cent in 2014-15 and 14.28 per cent in 2019-20 in
high profitability DCCBs in Haryana.
AVERAGE PROFITABILITY DCCBs IN HARYANA
Table 6.24 brings out that NPAs increased from ` 2518.64 lakh in 1999-00 to
`5328.30 lakh in 2007-08 at a significant compound growth rate of 8.26 per cent per
annum in average profitability DCCBs in Haryana. Similarly, the provisions made to
accommodate the NPAs were `917.95 lakh in 1999-00, which significantly increased
to `1870.38 lakh in 2007-08 at the growth rate of 9.27 per cent compounded annually.
NPAs proportion in outstanding loans was fluctuating throughout the study but
it always remained more than 9.47 per cent with overall average of 12.56 per cent.
The trend needs to be checked. If the trend is not checked NPAs in absolute terms
would be higher by 33.21 per cent in 2014-15 and 60.98 per cent in 2019-20 over
those in 2007-08 in average profitability DCCBs in Haryana. Similarly, provisions
would increase by 37.35 per cent in 2014-15 and by 68.54 per cent in 2019-20 over
2007-08.
178
Table 6.24 : Trends in NPAs in Average Profitability DCCBs in Haryana :

1999-00 to 2007-08
(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
2518.64
917.95
17165
14.67
2000-01
3049.84
1112.27
31045
9.82
2001-02
3014.77
924.3
23736
12.70
2002-03
4403.44
1058.46
26036
16.91
2003-04
3685.55
1158.36
29067
12.68
2004-05
3559.89
1279.38
31967
11.14
2005-06
4527.80
1580.4
34928
12.96
2006-07
4494.70
1665.33
47448
9.47
2007-08
5328.30
1870.38
41973
12.69
Average
3842.55
1285.20
12.56
C.V.
23.62
26.62
18.39
C.G.R.
8.26
9.27
-4.10
t-value
5.17***
6.98***
1.68
Constant
2362.90
701.70
17.11
beta
295.93
116.70
-0.60
t-value
5.25**
6.92***
1.51
2014-15
7097.78
2568.90
7.51
2019-20
8577.43
3152.40
4.51
Trend Equation
Projections

2014-15
33.21
37.35
-40.84
2019-20
60.98
68.54
-64.47
Source :


179
LOW PROFITABILITY DCCBs IN HARYANA

Table 6.25 : Trends in NPAs in low profitability DCCBs in Haryana : 1999-00
to 2007- 08
(` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
1358.16
293.65
46839
2.90
2000-01
1494.07
342.25
52740
2.83
2001-02
1744.79
393.25
40201
4.34
2002-03
1883.46
539.91
47449
3.97
2003-04
1688.71
657.7
50902
3.32
2004-05
2187.05
863.62
56098
3.90
2005-06
2540.75
1086.11
64368
3.95
2006-07
2167.24
1196.25
72017
3.01
2007-08
1943.36
1212.33
78940
2.46
Average
1889.73
731.67
3.41
C.V.
19.56
50.45
19.03
C.G.R.
5.92
21.99
-2.78
t-value
3.44**
14.72***
1.08
Constant
1368.41
69.50
4.38
beta
104.26
132.44
-0.09
t-value
3.22**
13.95***
0.94
2014-15
3036.57
2188.54
2.94
2019-20
3557.87
2850.74
2.49
Trend Equation
Projections

2014-15
56.25
80.52
19.42
2019-20
83.08
135.15
1.14
Source :


180
Table 6.25 indicates that NPAs increased from ` 1358.16 lakh to ` 1943.36
lakh from 1999-00 to 2007-08 at a significant growth rate of 5.92 per cent
compounded annually in low profitability DCCBs in Haryana. The provisions made
against NPAs increased from ` 293.65 lakh in 1999-00 to ` 1212.33 lakh in 2019-20,
registering a compound growth rate of 21.99 per cent per annum. The provisions
made against NPAs increased at a much faster rate than NPAs itself. The compound
growth rate of provisioning, i.e., 21.99 per cent was much higher than 5.92 per cent
CGR of total NPAs. The proportion of NPAs total loan outstanding was almost
stagnant. It establishes that management of these DCCBs had not been able to
recover old NPAs and ageing NPAs had increased provisioning requirements, it
needs to be checked. The NPAs would be higher by 56.25 per cent in 2014-15 and
83.08 per cent in 2019-20 as compared to those in 2007-08 in low profitability
DCCBs in Haryana, if present trend is not checked.
The proportion of NPAs in outstanding loans was 4.34 per cent in 2001-02 and
2.46 in 2007-08. In all other years during the study period, it remained almost
stagnant between 3 per cent and 4 per cent.
It is pertinent to note that NPAs as a per centage of total loans outstanding
were the lowest, i.e., 3.41 per cent (Table 6.25) in low profitability DCCBs as
compared to high profitability DCCBs (5.91 per cent, Table 6.23) and average
profitability DCCBs (12.56 per cent, Table 6.24). It may be inferred that profitability
of DCCBs is not affected by NPAs alone.
181
ALL SELECTED DCCBs IN HARYANA

Table 6.26 : Trends in NPAs in the Selected DCCBs in Haryana : 1999-00 to
2007-08 (` in lakh)
Total
NPAs
Year
Provisions
Made
Loans
Outstanding
% of NPAs
to Loans
Outstanding
1999-00
4508.60
1743.65
87626
5.15
2000-01
5454.10
2007.71
106426
5.12
2001-02
5972.34
1952.74
94131
6.34
2002-03
7868.11
2291.98
106605
7.38
2003-04
8892
2909.30
117179
7.59
2004-05
8548.69
3285.44
126214
6.77
2005-06
10071.66
4140.15
139562
7.22
2006-07
8772.15
4379.58
163278
5.37
2007-08
11279.65
4682.01
167314
6.74
Average
7929.70
3043.62
6.41
C.V.
28.02
37.22
15.16
C.G.R.
10.93
14.56
0.79
t-value
6.69***
13.45***
0.50
Constant
4103.24
1023.84
6.51
Beta
765.29
403.96
0.05
t-value
7.51***
12.01***
0.42
2014-15
16347.88
7487.20
7.31
2019-20
20174.33
9507.00
7.56
Trend Equation
Projections

2014-15
44.93
59.91
8.43
2019-20
78.86
103.05
12.14
Source :

Note :*** Significant at 1% level

182
The analysis presented in Table 6.26 shows that NPAs increased from `
4508.60 lakh in 1999-00 to `11279.65 lakh in 2007-08 at a significant growth rate of
10.93 per cent compounded annually. The provisions made against NPAs also showed a
significant increase at the rate of 14.56 per cent compounded annually. These
increased from `1743.65 lakh to `4682.01 lakh during the same period. This showed
that rate of increase in provisions was higher than that in NPAs in all the selected
DCCBs in Haryana. Trend equation shows that in future also the increase in
provisions would be 44.93 per cent in 2014-15 and 78.86 per cent in 2019-20, while
the increase would be 59.91 per cent in 2014-15 and 103.05 per cent in provisions
over that in 2007-2008.
Absolute NPAs in DCCBs in Haryana also had registered a significant
growth. Annual CGR of high, average and low profitability DCCBs was 22.75,
8.26 and 5.92 respectively. The NPAs as proportion of outstanding loans
remained constant despite increase in loan outstandings. It shows that new loans
advanced had also become NPAs, at already prevailing rate of NPAs which needs
to be checked.
As revealed by Tables 6.23, 6.24 and 6.25, NPAs as a proportion of loans
outstanding registered a significant increasing trend in high profitability DCCBs,
while in average and low profitability DCCBs it was constant.
Comparison of NPAs in DCCBs of Punjab and Haryana

The analysis given in Table 6.27 shows that average NPAs in DCCBs in
Punjab were ` 8637.42 lakh which appeared to be statistically at par with `7929.70
lakh in DCCBs in Haryana. Similarly, the provisions made against NPAs were at par
183
in both the states. However, the NPAs as per centage of outstanding loans were
significantly higher in DCCBs in Punjab, i.e., 7.20 per cent as compared to those in
DCCBs in Haryana, i.e., 6.41 per cent.
Table 6.27 : Comparison of NPAs in DCCBs in Punjab and Haryana during
1999-00 to 2007-08
Particulars
Punjab
Mean
Haryana
SD
Mean
SD
t-value
NPAs
8637.42
3602.72
7929.70
2221.90
0.51
Provisions
2967.54
1627.10
3043.62
1132.84
0.12
Loans O/S
116029.22
123148.33
%NPAs to
7.20
6.41
0.57
loans O/S
Source :

On the basis of whole analysis, it can be said that the position of NPAs in
DCCBs of both the states was not satisfactory. They were increasing and would
increase in future, if not checked. However, the NPAs as proportion of
outstanding loans, by and large, remained stagnant except in high profitability
DCCBs in Haryana despite increase in loan outstandings.
This shows that the recovery efforts of these banks failed to yield the
desired results as some per centage of new loans had also become NPAs, which
need to be curtailed.
184
REFERENCES
Narasimham, M.(1991), Report of Committee on Financial System, Govt. of India.
Padmanabhan, K.S.(1997), Management of Non- Performing Assets, Inter-faculty
note, BIRD, Lucknow.
PSCB (2001), Guidelines on Income Recognition and Asset Classification and
Provisioning, An Internal Publication of the Bank.
RBI (June 1996), Income Recognition, Asset Classification, Provisioning and Other
related Matters. Circular No. B.C. 155/07.37.02/ 95-96.
Sabina, Kumar (2008), Management of Non- performing Advances: A Study of
District Central Co-operative Banks of Punjab, An Unpublished Ph.D. Thesis,
Submitted to H.P. University Shimla, p.306.
185

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Chapter-6

RECOVERY OF LOANS AND NPAS

Low production/productivity level in the farms owned by small and marginal

Occurrence of natural calamities (drought, flood, pest attack, etc.)

A large number of small farmers/small units have been facing marketing

Crowding of activities leads to non-viability of large number small/tiny

Lack of managerial expertise and technical competence;

Imperfect rural markets-farmers/rural entrepreneurs not realising remunerative

Infrastructure constraints-absence of backward and forward linkage;

efficiency of the bank in recovery management. Therefore both absolute and

Trends in Recovery of Loans in High Profitability DCCBs in

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Recovery in relation to Demand for Loan in High Profitability

Basic Data on Performance of District Central Co-operative Banks,

Note : ** Significant at 5 % level

AVERAGE PROFITABILITY DCCBs IN PUNJAB

Trends in Loans Recovery in Average Profitability DCCBs in

Source : Basic Data on Performance of District Central Co-operative Banks,

Recovery in relation to Demand for Loan in Average Profitability

Basic Data on Performance of District Central Co-operative Banks,

Trends in Loans Recovery in Low Profitability DCCBs in Punjab :

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Recovery in relation to Demand for Loan in Low Profitability

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

On the other hand, the proportion of recovery out of demand declined

Trends in Loans Recovery in the Selected DCCBs in Punjab :

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Recovery in relation to Demand for Loan in All the Selected

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Trends in Loans Recovery in High Profitability DCCBs in

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Similarly, the recovery of short-term agricultural loans increased significantly

Basic Data on Performance of District Central Co-operative Banks,

Table 6.11 : Trends in Loans Recovery in Average Profitability DCCBs in

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Trends in Loans Recovery in Low Profitability DCCBs in Haryana

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

was almost stagnation in recovery of short- term non-agricultural loan as indicated by

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

annum. Similarly, there was a significant increase in recovery of short-term

Trends in Loans Recovery in the Selected DCCBs in Haryana:

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Comparison of Loans Recovery in DCCBs in Punjab and Haryana

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

Table 6.18 : Comparison of Proportion of Recovery in Demand for Loan in

Basic Data on Performance of District Central Co-operative Banks,

Note : *** Significant at 1% level

On the basis of whole analysis, it can be said that the proportion of

The classification of assets should be done on the basis of objective criteria