MANAGEMENT OF CREDIT DISTRIBUTION TO AGRICULTURE SECTOR BY KCC BANK
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Date
1999-08-30
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UNIVERSITY OF AGRICULTURAL SCIENCES GKVK BANGALORE
Abstract
Institutional credit being a powerful means to
improve agriculture, in modern agriculture, credit is a crucial
input. Among the various financial Institutions the co
operatives have emerged as a major source for agricultural
credit. In Karnataka most of the DCCB's are operationally sick
and suffering from inefficient and ineffective credit
management. The management of credit distribution to
Agriculture sector by KCC bank has been studied as it is one of
the largest lending institutions in Dharwad district.
The study is based on the secondary data for 10 years
(1986-87 to 1996-97). Tabular analysis and compound growth rate
were used for analyses of the data.
The deposit mobilization of KCC bank indicated a
three fold increase and the rate of growth in total deposits
indicated an increase by 13.88 per cent the total cost incurred
in mobilizing deposits was Rs. 11.03 per Rs.100 which included
both non-interest cost (Re. 0.48) and interest cost (Rs.
10.55). There was substantial increase in the total funds for
lending. The study showed that proportion of agricultural
advances in the total bank lending had increased during study
period. The total number of beneficiaries also showed
increasing trend. The non-interest cost incurred in lending Rs.
100 by the bank was Rs. 1.07. The percentage of overdues of
loans was more than 50 per cent in 7 years out of 10 years and
the growth rate of recovery was 23.68 per cent. The cost of
recovery of loans was Re. 0.68 on recovery of every Rs. 100 it
has lent. On an average, the bank spends Rs. 10.43 on every Rs.
100 lent and the average interest earned from lending was Rs.
12.46. Thus there was a profit margin of Rs. 2.02 per Rs. 100
lent. The bank incurred a loss of 0.53 per cent for Rs. 100
lent in the category of loans of less than Rs. 25000. The poor
recovery performance and lending in the category below Rs.
25000 of the bank need to be revitalized.
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