role of central bank of india in the development of...
TRANSCRIPT
Chapter 4
Formation and Progress of Central Bank of India
A] Formation of Central Bank of India
4.1 Establishment
4.2 Growth
4.3 'Centenary' Progress
B] Central Bank of India as a 'Lead Bank'
4.4 Introduction of Lead Bank Scheme
4.5 Objectives of LBS
4.6 Implementation of LBS
4.7 Allocation of District in India
4.8 State wise Allocation of Lead Districts of CBI
4.9 Maharashtra State and Central Bank of India
C] Progress of Central Bank of India
4.10 Banking Network in Ahmednagar District
4.11 Progress of CBI
4.12 Business Parameters of CBI
4.13 Deposits and Advances of CBI in Ahmednagar
District
4.14 Actual Position of CBI in Ahmednagar District
4.15 NPA of CBI in India (Sector wise)
4.16 Achievement of CBI
4.17 Compatibility of CBI
Chapter 4
Formation and Development
of Central Bank of India
A] Formation of Central Bank of India :
Commercial banking in India has its origin in eighteenth
century, it came in India with the establishment of trade centers by
East India Company. These agency houses carried on trading and
banking operations. In eighteenth century various joint stock banks
were developed in a large scale. In the initial years of nineties,
'Swedish Movement was on wave in India. Many Indian
entrepreneurs had launched banking institutions. Following the
Swadeshi movement, 'Central Bank of India' was one of the
important banking venture during that period. CBI was established
on 21st Dec 1911. In this chapter Formation and progress of CBI has
been discussed.
4.1 Establishment :
The idea of starting purely Indian Bank was first conceived in
the year 1911, by Mr. S. N. Pochkhanawala, who was fired with the
ambition to venture into a region which was practically the
monopoly of British and foreign institutions.
Mr. S. N. Pochkhanawala, born in a middle class family, had
lost his father when he was of six. Sorabji managed to complete his
school education and entered in the service of chartered bank as a
clerk on a salary of Rs. 20/- per month. By his untiring dedication to
work and largely by a process of self education he rose to a position
of a book-keeper, but soon found that in a foreign bank he could
aspire to go no further. Then he joined the Bank of India when it was
established. He had achieved the distinction of being the first Indian
to pass the London Institute of Banker's Examination. There was a
wide spread and intensive movement to spread the gospel of
"Swadeshi" and economic self reliance.
Sorabji felt that the establishment of a banking institution
wholly Indian in its outlook and approach and having the
development of indigenous enterprises as its main objective, was
essential, not only for the nation's economic progress but also for
bringing out the latent capacity of the Indian people to manage their
own affairs. A leading cotton merchant in Bombay, Mr. Kalianji
Vardhaman Jetsy, appreciated potentials of this young man, and
generously agreed to pay all the preliminary expenses involved in
launching the bank. Afterwards Sorabji was succeeded in inducing
Sir Pherozeshah Mehta to bless his efforts and accept the
chairmanship of the bank.
The Central Bank of India was accordingly born on 21st Dec.,
1911 with its registered office in Bombay and with an authorized
capital of Rs. 50 Lakh divided into 1 Lakh shares of Rs. 50/- each.
Early in 1913, the country faced an acute financial crisis. There
was a series of bank failures which starts with a toll of 29 banks in
Punjab, quickly spread over the rest of the country involving the
crash of 64 banks. In Bombay city alone, 11 banks had to close their
doors. It was very difficult period for the 'Central Bank' to go
through this hard times.
These crisis had been surmounted when the great war broke in
1914. There was general dislocation of trade and industry. The
Central Bank of India suffered a decline in its deposits. It came
down to Rs. 30 Lakhs at the end of 1914. Difficult conditions
continued for some time, but by 1916 it was turned and an upward
trend set in, which, baring occasional reversals, has continued for
many years.
In the Indian banking history, the year 1923 will always remain
memorable. It marked the taking over of the management of Union
Bank of India Ltd. and the amalgamation of the Tata Industrial Bank
with the Central Bank of India Ltd. It was Sir Sorabji
Pachkhanawala, who first conceived the idea of amalgamation. The
amalgamation not only established the Central Bank of India on a
sounder foundation but also preserve, the fair name of Indian
Banking.
As a result of this amalgamation, the Central Bank of India
gained considerable strength and status. Its paid-up capital increased
more than three-fold from Rs. 50 Lakhs to Rs. 168 Lakhs. While the
Reserves registered an equally improvement from Rs. 30 Lakhs to
Rs. 100 Lakhs. Deposits and working funds moved upto Rs. 15.74
Crores and Rs. 21.95 Crores respectively.
The late Sir Basil Blackett, formerly finance member to the
Govt. of India, laid special emphasis on this achievement, and
observed as follows, while opening the Bank's Calcutta premises on
12th July, 1924.
"Among the services which the Central Bank of India has
rendered to India, possibly not the least pregnant with results for the
future has been its absorption of the Tata Industrial Bank." 1
The developing picture, however changed in the years which
immediately followed. The bank had to face two severe problems,
due to false rumors. Between the years 1923 and 1936, Indian
banking suffered a serious set-back and there were many bank
failures. The economy of the whole world was in the grip of one of
the worst depressions in living memory. In 1931, one important
decisions was taken, the uncalled liability of Rs. 25/- per share was
converted into a Reserve liability and this helped further to
strengthen the faith of the public in soundness of Bank's structure.
In 1936, bank completed 25 years of its service to the nation. At
the time, the paid-up capital and Reserves stood at Rs. 2.5 Crores;
deposits Rs. 31 Crores and there were as many as 84 branches in
different parts of the country. The Bank had already achieved the
distinction of being the biggest of all Indian Joint Stock Banks.
An important event happened in 1936 i.e. the establishment of
the Central Exchange Bank of India Ltd. in London as a subsidiary
of the 'central'. Unfortunately, the subsidiary did not do too well and
had to be closed down in 1943, to be reborn as regular branch in
1953.
On 5th July, 1937, the Bank suffered a heavy loss by the
untimely passing of Sir Sorabji Pochkhanawala, who had founded
the Central Bank of India. His contribution to Indian banking had
been so outstanding that he was widely accepted as the father of
modern Indian banking. By his energy, devotion and financial
acumen, he had shown how a bank can be wholly managed by
Indians.
The Times of India, leading daily newspaper once observed,
"There is no single person in India to whom Indian banking owes a
greater debt of gratitude than Mr. Pochkhanawala. He has done more
than any other to familiarize many Indians, formerly : ignorant of
indifferent with the practice of modern banking, and if, in future,
powerful banks grow up in India, they will owe their success largely
to his pioneering work". 2
The second world war was started in Sept. 1939, and the entire
economy was affected by the war. There had been an enormous
increase in Govt. expenditure leading to the generation of
inflationary forces, scarcity of goods, rationing and price control.
The creation of new money resulted in a rapid growth of bank
deposits and an expansion of branch banking on a considerable
scale. The Central Bank of India took the fullest advantage of these
conditions and not only consolidated its position, but also expanded
its business substantially under all heads. Thus, during the period the
Bank's deposits registered an increase from Rs. 30 Crores to Rs. 105
Crores.
The end of the war was followed by India's fight for freedom
which gathered fresh momentum and after a prolonged and bitter
struggle, Britain peacefully relinquished her hold on India and the
country reached its long cherished goal of independence on 15th
August, 1947. Simultaneously, there was a partition and Pakistan
was born as a separate sovereign state. It was difficult time for banks
operating in the areas affected by the partition. At the time of
partition Central Bank of India had 77 offices in Pakistan, but after
few years as many as 67 of them had to be closed down. The bank
suffered considerable losses in post-partition period. In the year
1961, the bank had 338 offices in all, including 8 in Pakistan, one in
Rangoon and one in London.
4.2 Growth of Central Bank of India :
Mr. S. N. Pochkhanwala had established the bank with the
objective to start the banking institution with the help of Indian, for
the Indian in the monopoly of British Institutions. The basic aim and
objective of bank was to contribute to the development of the
country in every possible way. In 2011, bank celebrated its centenary
year. The extra ordinary steps and policies adapted by the bank were
responsible for the growth of Central Bank of India. Various
activities which itself pioneering were performed by the CBI, such as
- Ladies department, safe deposit vault, insurance scheme etc. These
activities can be divided into two periods. A) Pre-Nationalization
and B) Post - Nationalization
A. Pre-Nationalization -
• Ladies Department (1924) :
'The Central Bank of India is unique in setting up a
separate Ladies' Department for the benefit of its lady
customers. No other banks in India provides this
exceptional facility. The object of such department was for
attending to the needs of lady constituents is to enable the
latter to come freely to the Bank. The department was
established in 1924 and on the average, about a thousand
lady customers visit this department every month.'3
• Home Savings Safe Accounts (1921) :
In 1921, Central Bank had introduced this scheme for
the first time in the country to encourage the savings habit
amongst people of moderate means.
• Safe Deposit Vault (1926) :
The CBI started this facility in March, 1926. It was the
first bank in India to provide safe Deposits facilities for its
customers. It also introduce 3 year cash certificates - on the
analogy of post office cash certificates and issue of Rupee
Travelers Cheques.
• Insurance Scheme (1932) :
A novel scheme of insurance was framed by the
Central Bank of India in 1932 with the double object of
inculcating the saving habit and at the same time providing
life insurance cover for the account holders on attractive
terms and without unnecessary formalities.
• Executor and Trustee Department (1929) :
Among other important activities of the Central Bank
of India, there was the Executor and Trustee Department
which functioned as a separate company. It was formed in
1929 on the model of similar Trustee companies in
England and America.
• Recurring Deposits Scheme (1962) :
In 1962, Recurring Deposit scheme was introduced by
the bank to inculcate saving habit amongst customers.
B. Post - Nationalization -
Subsequently even after the nationalization of the Bank in
the year 1969, Central Bank continued to introduce a number
of innovative banking services as under:
• Merchant Banking Cell (1976) :
In 1976, Merchant Banking Cell was established by
the Central Bank, to provide facilities and services
specifically to the Merchants, Businessmen etc.
• Central Card (1980) :
The credit card facility was introduced by Central
Bank of India in 1980, to facilitate to the customers. CBI is
the first Indian Bank to introduce ATM, Credit Cards in the
history of Indian Banking.
• Platinum Jubilee Money Back Deposit Scheme (1986) :
In 1986, when the Central Bank of India completed its
75 years (i.e. Platinum Jubilee Year), this scheme was
launched.
• The Housing Subsidiary Cent Bank Home Finance Ltd.
(1989) :
In 1989, the housing subsidiary Cent Bank Home
Finance Ltd. was started with its headquarters at Bhopal,
Madhya Pradesh to finance to housing sector.
• Quick Cheque Collection Scheme :
In 1994, Quick Cheque Collection Scheme and Express
Service was set up to enable speedy collection of outstation
cheques.
Further in line with the guidelines from Reserve Bank
of India and also from Govt. of India, the Central Bank of
India has been playing an increasingly active role in
promoting the key thrust areas of agriculture, small scale
industries and also medium and large industries. The bank
also introduced a number of self employment schemes to
promote employment among the educated youth.
• Largest Network :
Among the public sector banks, Central Bank of India
can be truly described as an all India Bank, due to
distribution of its large network in 27 out of 29 states as
also in 3 out of 7 Union Territories in India. Central Bank
of India holds a very important place among the public
sector banks on account of its network of 3656 branches
and 178 extension counters at various centers throughout
the length and breadth of the country.
"In 2011, the Financial Express has declared Central
Bank of India as 13th Best Nationalized Bank on the basis
of various segments like, strength and soundness, growth,
profitability, efficiency and credit quality etc." 4
4.3 'Centenary' Progress
In 2011, Central Bank of India moved towards its centenary
year. On 21st December, Central Bank of India completed its 100
years of successful progress and in 2011, Bank celebrated its
centenary year. Following are some important footprints of the
centenary progress of CBI.
1. First Indian Bank :
100 years back, Sir Sorabaji Pochkanawala had established
Central Bank of India as a purely Indian Bank. This is India's first
bank, which was established by the Indian for the Indians.
2. First Rank Bank :
In 1969, at the time of nationalization, Central Bank of India
was the 1st rank bank. Today, there are 3800 branches of Central
Bank of India all over India.
3. Network :
Central Bank of India has the third largest branch network of
India. All the branches of Central Bank of India are in core banking
solution network.
4. Employees and Customers :
Central Bank of India had 34,000 employees in 2011 and 3
Crore customers all over India.Former Prime Minister, Pandit
Jawaharlal Nehru was the customer of Central Bank of India's
Allahabad branch.
5. Technology :
Central Bank on India is providing technological avenues like
ATM, Debit Card, Credit Card, Internet Banking, Online Trading,
Mobile Banking, SMS Alert etc.
6. Training :
Central Bank of India has 12 colleges to give training to
employees. Out of which, 9 are for clerical and subordinate staff and
3 are for executives."Sir Sorabji Pochkanwala College, Andheri, is a
joint venture of Central Bank of India and Dena Bank." 5 Every
employee amongst 34,000 gets training at least once in a year.
Central Bank of India has been updating knowledge of its employees
through such training.
7. Rural Branches :
"Out of total 3800 branches, 63% branches (i.e. more than
2000) are working in rural and semi-urban area." 6 A sapling
which was planted by Sir Sorabji Pachkanwala in 1911, has now
turned into a 100 years huge old Banyan Tree, whose roots are
spread unto the last. The Bank has achieved this only because of its
reliability, customers, foresight of the management and the bank will
celebrate definitely its second centenary in future.
B) Central Bank of India as a 'Lead Bank' :
Banking system in our country has passed through various
phases of development. There are conspicuous indications of a shift
from wholesale banking to retail banking or mass banking. Now
banks can be called as development agents / change agents. On
account of various social, economic, industrial and cultural
obligations commercial banks are aware of their responsibilities
towards rural and economical weaker masses, but their experience in
dealing with rural people and rural enterprises is limited. "To make
their work more effective and meaningful policies and plans must be
made available to bankers in particular and public in general." 7
4.4 Introduction of 'Lead Bank Scheme' :
The national credit council was set up in December 1967, to
determine the priorities of bank among various sectors of economy.
The council appointed a study group of the organizational
framework for the implementation of social objectives in October,
1968 under the chairmanship of Dr. D. R. Gadgil. "The Study Group
found that the commercial banks had penetrated only 5000 villages
as to June 1967, and out of the institutional credit to agriculture was
at 39% the share was negligible at 1%, the balance being met by the
co-operatives." 8 The banking need of Agriculture, SSI and allied
activities remained neglected. Therefore, the group recommended
the adoption of an area approach for bridging the spatial and
structural credit gaps. Later, All India Rural Credit Review
Committee, 1969, endorsed the view that commercial banks should
increasingly come forward to finance activities in rural areas. Prof.
Dr. D. R, Gadgil study group, submitted its report in October 1969.
The study group stressed the fact that commercial banks did not have
adequate presence in rural areas and also lacked the required rural
orientation. "Under the chairmanship of Shri. F. K. F. Nariman
(Nariman Committee), a committee of bankers, on Branch
Expansion Programme (November, 1969) recommend that, in order
to enable the public sector bank to discharge its social
responsibilities, each bank should concentrate on certain districts
where it should act as a 'Lead Bank'." 9
The lead Bank Scheme was introduced by the Reserve Bank of
India in December, 1969. The Lead bank is expected to assume
leadership role and act as a consortium leader for co-ordinating the
efforts of credit institutions and accordingly various districts of the
country were allotted to public / private sector banks. "At the end of
March, 2009, 26 banks (Public and Private sector) had been assigned
lead responsibility in 622 districts of the country. (except the metro
Politian cities of Mumbai, Delhi, Kolkata, Chennai and certain
Union Territories)." 10 In 1989, service area approach (SAA) was
introduced through Lead Bank Scheme. Under the chairmanship of
Prof. V. S. Vyas, Advisory Committee, on the flow of credit to
Agriculture and allied activities, observed that, ''SAA, introduced for
planned and orderly development of rural areas, had developed
rigidities and acted as a bottleneck despite built in measures to
provided flexibility.'' 11
Since the introduction of lead bank scheme in 1969, several
changes have taken place in financial sector, especially after 1991.
It include increasing liberalization and globalization of the Indian
economy and financial sector.
4.5 Objectives of Lead Bank Scheme :
The original objectives of the Lead Bank Scheme was as follows -
i ) To remove regional imbalances by extending banking
facilities to unbanked areas.
ii) "To identify the un-banked and under-banked centers in
districts to grasp their profile physiographic, agro - climatic
and socio - economic conditions through quick and
impressionistic surveys." 12
iii) To estimate the credit gaps in various sectors of the economy
of each district and to prepare the credit plan for each
district.
iv) To develop rapport with all the financial and non-financial
institutions, including administrative authorities, in the
improvement of the district economy.
v) To effect structural and procedural changes in banking
With the above objectives, Lead Bank Scheme was
introduced in 1969. 'The Lead Bank Scheme largely achieved its
original objective of bringing about overall improvements in branch
expansion, mobilization of deposits and lending to the priority
sectors, especially in rural and semi urban areas. "The population per
branch in the country had declined from 63 thousand to 16 thousand
and in rural and in semi urban area from 82 thousand to 17 thousand
during the period June 1969 to March 2007" 13
In 2009, High level committee recommended that, the scope
of scheme should be broadened to cover the financial inclusions. 'It
is also expected to open a financial literacy and credit counseling
center (FLCC) in every district where they have lead responsibility.14
4.6 Implementation of Lead Bank Scheme :
The implementation of Lead Bank Scheme can be divided
into six phases. The first phase covers 'allocation of districts' among
various commercial banks for assuming the lead role. 'The branch
expansion (1970-73) was the second phase and formation of District
Consultative Committee's (DCC's) the third phase (1971-73). The
fourth phase (1973-76) consists of preparation of credit plan on the
basis of credit gaps and potentialities of the districts." The review of
progress of Lead Bank Scheme was made in the fifth phase and in
final phase, the RBI has directed the lead banks to have a time bound
programme in the preparation of second round district credit plan." 15
The Lead Bank Scheme was implemented through above six phases.
The process on implementation of Lead Bank Scheme started with
the allocation of all the districts to various banks for assuming the
leadership role.
4.7 Allocation of Districts in India :
All the districts of the country were allocated by the Reserve
Bank of India to the State Bank Group, 14 nationalized commercial
banks and two non-nationalized banks."Initially, in 1970, 338
districts (630 at present) were allotted among 25 banks, on the
basis of size of the bank, contiguity of districts, adequacy of
resources, regional orientation of banks, desirability of each state to
have more than one lead bank operation in its territory." 16
Table 4.1 shows, the allocation of Lead Districts.
Table 4.1
Allocation of Lead Districts to Banks in India
(Position as at the end of March 2009)
Sr.
No. Name of the Lead Bank
Initial 1978
(No. of
Districts)
No. of District
allotted
(at present
2009)
1 Allahabad Bank 09 17
2 Andhra Bank 05 06
3 Bank of Baroda 30 44
4 Bank of India 32 48
5 Bank of Maharashtra 5 06
6 Bank of Rajasthan 01 -
7 Canara Bank 17 25
8 Central Bank of India 46 48
9 Corporation Bank - 03
10 Dena Bank 10 13
11 Indian Bank 09 17
12 Indian Overseas Bank 07 13
13 Jammu and Kashmir Bank - 11
14 Punjab National Bank 40 56
15 Punjab and Sind Bank 01 03
16 Syndicate Bank 18 25
17 Union Bank of India 08 13
18 United Bank of India 17 30
19 UCO Bank 24 34
20 Oriental Bank of Commerce - 03
21 Vijaya Bank - 03
22 State Bank of India 69 168
23 State Bank of Indore 03 06
24 State Bank of Hyderabad 07 08
25 State Bank of Saurashtra 06 08
26 State Bank of Mysore 03 03
27 State Bank of Patiala 03 07
28 State Bank of Bikaner and
Jaipur 07 09
29 State Bank of Travancore 02 03
Total Districts 379 630
Source : RBI, Publications, March 2009
As per the table, it is clear that total 630 districts were allotted
to 28 banks in the year 2010 and also the initial data of 1978 is given
in which 379 districts were allotted to 25 banks. The State Bank of
India is on the first position, as it has 168 branches wide network all
over India. Punjab National Bank is on the second position with 56
districts and both Central Bank of India and Bank of India are on the
third rank with 48 districts each.
The table reveals that there is a tremendous increase in number
of districts in case of the State Bank of India i.e. from 69 districts in
1978 to 168 districts in 2009. Initially, the State Bank of Bikaner and
Jaipur and Bank of Rajastan were jointly operating the scheme in
Udaipur district but afterwards it completely transferred to the State
Bank of Bikaner and Jaipur. ''Central Bank of India is
shouldering lead role in 48 districts of the country, with its wide
network of 3800 branches, out of which 63% (i.e. more than 2000)
branches are in rural and semi urban area.'' 17
4.8 State wise Allocation of Lead Districts of Central Bank of
India :
In 1970, Central Bank of India was allotted 39 districts of India
to perform the role of lead bank, which was afterwards increased to
46 districts in 1978 and 48 districts in 2009. Central Bank is
performing its lead responsibility in Bihar, Madhya Pradesh,
Maharashtra, Rajasthan, Uttar Pradesh, West Bengal etc.
Table No. 4.2 gives the overall picture of Central Bank of
India's lead districts at a glance. This table shows information of the
years 1978 and 2009. Central Bank is having largest number districts
in Madhya Pradesh i.e. 18. Initially Chhatisgarh was part of Madhya
Pradesh. Bihar is on the second position with 10 districts allotted.
Maharashtra is on the third position with 7 districts.
Table No. 4.2
Statewise Allocation of Lead Districts of Central Bank of India
(as on 2009)
Sr.
No.
Name of the
State / Union
Territory
No. of Districts allotted to
Central Bank of India
Initial
Dec. 1978
At Present
March 2009
1 Bihar 14 10
2 Chattisgarh - 2
3 Madhya Pradesh 17 18
4 Maharashtra 7 7
5 Rajasthan 2 3
6 Uttar Pradesh 3 5
7 West Bengal 3 3
Total 46 48
Source : RBI Publications March 2009
Today, Central Bank of India is having 3800 branches all
over India, through which it is performing its banking activities. In
Uttar Pradesh, Central Bank has the Lead role in 5 districts and in
Rajasthan and West Bengal Central Bank is having lead role to
perform in 3 districts respectively.
4.9 Maharashtra State and Central Bank of India :
In Maharashtra state, 7 districts are allotted to Central Bank
of India under Lead Bank Scheme. Initially, 8 districts of
Maharashtra were allotted to Central Bank of India. Out of which in
Aurangabad the role of lead bank is jointly performed by both
Central Bank of India and Bank of Maharashtra.
Table No. 4.3
List of Districts of Maharashtra allotted to Central Bank of
India
Sr.
No. Name of District
1 Akola
2 Amravati
3 Ahmednagar
4 Buldhana
5 Dhulia (Dhule)
6 Jalgaon
7 Yeotmal
8 Aurangabad (Jointly with Bank of Maharashtra)
In Maharashtra, Central Bank of India is having more than
500 branches.'' In Vidarbha, Central Bank of India is the Lead Bank
of 4 districts and Central Bank performs it jointly with Vidarbha
Gramin Bank, which has its headquarter at Akola.''18 Dhule
and Jalgaon is part of Khandesh and Ahmednagar is belonging to
Western Maharashtra. ''In 1969, when 14 banks were nationalized,
Central Bank of India was on the 1st position hence, the government
selected Central Bank of India to develop the backward and tribal
area of the country.'' 19
Hence, in those areas where Central Bank of India is
performing its responsibility of the lead bank for last 40 years.
Branch Expansion was the major part of this programme. Many
times, Central Bank of India has to face losses, but it has been
consistently performing the lead responsibility.
C] Progress of Central Bank of India :
After the Nationalisation of Banks in 1969, all nationalized
banks had to expand their branches. Just after the nationalization,
Lead Bank Scheme was implemented by the Govt. of India. Under
the Lead Bank Scheme, all the banks had to expand their branches in
both rural and semi-urban areas. In 1969, the Government selected
Central Bank of India to act as 'Lead Bank' of Ahmednagar district.
The Ahmednagar Branch of Central Bank of India was established
on 15th May 1970. Prior to it, Shrigonda Branch was established in
1969. Shrigonda Branch of Central Branch was the first rural bank
branch opened in India, after Nationalisation.
Afterwards, Central Bank of India opened various branches in
Ahmednagar District as per the Branch Expansion Program of Lead
Bank Scheme in last 40 years. In 1972, there were 10 branches of
CBI and today, there are 61 branches of Central Bank of India in
Ahmednagar District. Central Bank of India has wide rural branch
network of 44 branches, 16 branches semi-urban and 1 branch in
urban sector. Being the 'Lead Bank' of Ahmednagar District, the
Central Bank of India is co-ordinating all banks with various
government agencies. Various Govt. sponsored programmes are
monitored by Lead Bank. Central Bank of India is in consultation
with NABARD and considering the Potential Linked Credit Plan
prepared by NABARD.
Central Bank of India has to prepare, District Credit Plan
(DCP/ACP), for Ahmednagar District every year, for a period of 1st
April - 31st March. On the basis of Annual Credit Plan, targets for
loan disbursement under various sectors, like Agriculture, SSI, Other
Priority sectors are allotted to all the nationalized and co-operative
banks. The progress made, sanction and disbursement of loan
amount is monitored by Lead Bank through District Level
consultative committee forum headed by District collector. The
Annual Credit plan is prepared by Central Bank of India, and
published by District Collector.
4.10 Banking Network in Ahmednagar District :
As Lead Bank of Ahmednagar, Central Bank of India has to co-
ordinates all banks with various government agencies and also has
to monitor the Govt. sponsored programmemes. The Annual Credit
Plan prepared by Central Bank of India, is guideline for other banks
to finance to various sectors. In implementation of this Annual
Credit Plan, scheduled commercial Banks play vial role in
Ahmednagar district. The network of scheduled commercial Banks
in Ahmednagar district for 2009-10 is shown in following table.
Table on the next page
Table 4.4
Network of Scheduled Commercial Banks in
Ahmednagar .Year 2009-10
Sr.
No.
Name of the
Block
(Tahsil)
No. of
Banks
(SCB's)
No. of
Branches
(SCB's)
Deposits
(in lakh)
Credit (in lakh)
Agricul
ture
Sector
Business
Sector
(Non-
agricultu
re)
1. Akole 04 31 32,102 7,258 13,851
2. Sangamner 13 62 51,422 8,530 14,135
3. Kopargaon 08 33 42,389 9,421 15,986
4. Rahata 11 37 62,538 7,311 13,438
5. Shrirampur 09 32 35,444 8,772 14,985
6. Newasa 06 33 23,999 6,422 12,324
7. Shevgaon 04 28 21,536 7,966 14,345
8. Pathardi 08 27 32,514 7,922 13,634
9. Ahmednagar 28 87 2,82,995 11,434 17,872
10. Rahuri 06 39 32,521 8,977 14,425
11. Parner 04 37 22,652 7,694 13,683
12. Shrigonda 06 33 34,577 8,151 14,894
13. Karjat 07 26 22,915 8,647 13,435
14. Jamkhed 06 16 18,742 8,396 14,679
Total 120 520 7,16,346 1,16,901 2,01,686
Source : District Lead Bank (CBI) Ahmednagar
A glimpse of network of scheduled commercial banks is shown
in Table 4.4 In Ahmednagar district there is a wide network of
scheduled commercial banks of 520 branches. Out of which, 16.73%
(87) branches are situated at Ahmednagar tahsil, followed by
Sangamer with 11.72% (62) branches. Minimum branches are
situated at Jamkhed with only 3.07% (16) branches.
In case of deposits, total deposits of banks in Ahmednagar
district is Rs. 716346 Lakh, out of which 39.50% (2,82,995) deposits
are with Ahmednagar block followed by Rahata block with 8.73%
and of (Rs. 62,538 lakh) deposits. Minimum deposits are with
Jamkhed block which is 2.61% (Rs. 18,742 lakh). The C/D ratio of
2009-10 for Ahmednagar district is 44.47%.
It reveals that the Credit deposit ratio of Ahmednagar block is
the lowest i.e. 10.35% and highest credit deposit ratio is of Jamkhed
i.e. 123.11% followed by Shevgaon with 103.59% (C/D ratio).In
Ahmednagar district, there was a wide network of 520 bank
branches of scheduled commercial banks in 2009-10.
4.11 Progress of Central Bank of India :
The Central Bank of India was established in 1911. In last 100
years, the bank has achieved successful progress in each sector.
Today, there are more than 4000 offices and more than 34,000
employees working in the bank. The progress of the Bank from
2003-04 to 2009-10 and current position is shown in the following
table.
Table 4.5
Progress of Central Bank of India
(from 2003-04 to 2010-11)
Sr.
No. Year No. of Offices
No. of
Employees
1. 2003 -04 3,225 38,933
2. 2004 -05 3,247 38,303
3. 2005 -06 3,252 40,124
4. 2006 -07 3,320 39,055
5. 2007 -08 3,433 37,488
6. 2009 -10 3,894 34,000
7. 2010 -11 3,976 34,000
Source : Basic statistical Returns of Scheduled Commercial Bank in India, RBI, Vol. 36, March 2007
Table shows the progress of Central Bank of India for the
period from 2003-04 to 2010-11.' In terms of the number of offices
Central Bank of India shows growth every year from 3225 in 2003-
04 to 3976 offices in 2010-11.'20
"But in terms of the number of employees, it shows decrease
from 2006-07 onwards. In 2003-04 there were 38933 employees and
in 2005-06 the number was 40124 which decreased to 34000
employees in 2009-10." 21
Due to less number of employees in the bank, the speed of
transactions is not upto the mark. The recruitment of employees is
not satisfactory as compared to progress in the number of branches
or offices.
4.12 Business Parameters of Central Bank of India :
The Central Bank of India is providing loans to different
sectors. The business parameters and performance of the bank is
presented in following table. It shows Capital / Reserve and Surplus
and net NPA ratio.
Table 4.6
Business Parameters of Central Bank of India
(Amount in Crores)
Sr.
No. Year
Capital /
Reserves
and
Surplus
Deposits Net NPA
Ratio
1. 2002 -03 2,424 51,156 7.02
2. 2003 -04 2,974 55,909 5.57
3. 2004 -05 3,265 60,572 2.98
4. 2005 -06 2,442 66,483 2.59
5. 2006 -07 3,790 82,776 1.70
6. 2009 -10 - 1,62,107 1.69
7. As on 31/12/2011 - 1,88,226 0.65
Source : Statistical Tables relating to Banks in India (2006-07) Annual Accounts of Bank
The above table shows the performance of Central Bank of
India and the rate of NPA. It can be seen that the number of deposits
of Central Bank of India has been increasing every year. It has
increased from Rs. 51,156 crores in 2002-03 to Rs. 1,88,226 crores
on 31/12/2011.The NPA of Central Bank of India was 7.02 in 2002-
03 which is reduced to 1.70 in 2006-07 and to 0.65 on 31st Dec
2011.The most important part of any business is to make good credit
recovery and maintaining lower NPA which was achieved in 2010-
11.
4.13 Deposits and Advances of Central Bank of India in
Ahmednagar District :
The credit deposit ratio is the measuring rod of the bank's
performance in terms of credit disbursed against deposits. It is a
reflection of performance of the bank. Table 4.9 represents the
overall performance of Central Bank of India through Deposits,
Advances and Credit Deposit ratio.
Table 4.7
Trend of Credit Deposit Ratio of Central Bank of India
in Ahmednagar District for 2001-02 to 2010-11
(Amount in crores)
Sr.
No. Year
Central Bank of India
Deposits Advances C/D Ratio
1. 2001 -02 162 136 84%
2. 2002 -03 181 166 91%
3. 2003 -04 197 190 96%
4. 2004 -05 207 227 110%
5. 2005 -06 269 256 95.31%
6. 2006 -07 327.78 290.88 88.74%
7. 2007 -08 406.07 326.49 80.40%
8. 2008 -09 536.54 335.06 62.45%
9. 2009 -10 659.23 375.01 56.89%
10. 2010 -11 834.69 408.13 49%
Source : Central Bank of India, District Credit Plan, Ahmednagar
(2001-02 to 2010-11)
Table shows that the CD ratio of the Bank has increased by
26% by end of 2005 as compared to year 2002 and then it has
decreased continuously every year to 49% in 2010-11 (decrease is of
61% by 2010-11 as compared to 2004-05) which is an alarm for the
bank.
Since 2006-07, the CD ratio of Central Bank of India in
Ahmednagar district has been decreasing. In 2007-08 it decreased by
8.34%, in 2008-09 by 18.05%, in 2009-10 by 5.56% and in 2010-11
it decreased by 5.89% (as compared to last year).
It is observed that Central Bank of India's performance in
advancing loans in Ahmednagar district has been decreasing as
compared to its deposits. It means bank has to focus on this trend of
CD ratio and give more attention towards the extension of credit to
potential area.
4.14 Actual Position of Central Bank of India in Ahmednagar
District in 2010 and 2011 :
Net profit or Net loss are the parameters of banking business.
These parameters are always used to find out actual position of the
bank. The actual position of Central Bank of India in Ahmednagar
district for 2009-10 and 2010-11 is shown in following Table.
Table 4.8
Position of Central Bank of India in Ahmednagar
District on 31-3-2010 and 31-3-2011
(Rs. In crores)
Sr.
No.
Business
Parameters As on 31-3-2010 As on 31-3-2011
1. Current Deposits 40.79 32.82
2. Saving Deposits 263.42 338.7
3. CASA 304.21 371.52
4.
% of CASA to
Aggregate
Deposits
46.16% 44.52%
5. Aggregrate
Deposits 658.98 834.43
6. Aggregrate
Advances 374.76 397.88
7. Total Agriculture 169.10 166.38
8. Total Priority
Sector 311.82 315.24
9. Profit 20.5 24.82
10. NPA 25.63 12.80
Source : Central Bank of India, Regional Office, Ahmednagar
Table reveals that -
1. Actual positions of Central Bank of India in Ahmednagar as
on 31-3-2010 and 31-3-2011 respectively. Due to increase in
current and saving deposits CASA of 2011 has increased by
67.31 crores as compared to 2010.
2. Aggregate deposits have increased by Rs. 175.45 crores in
2011 as compared to 2010 and also Aggregate advances
have increased by Rs. 23.12 crores. But the Credit Deposit
Ratio decreased in 2011. In 2010 CD ratio was 56.86% and
2011 it was 47.68%.
3. Net profit of the bank was 20.5 crores in 2010 and Rs. 24.82
crores in 2011.
4. In 2010, NPA was 25.63 which decreased to 12.80 in 2011.
It is a good achievement of the bank in Ahmednagar
4.15 NPA of Central Bank of India in India (Sector wise)
For every commercial bank managing its NPA's is the most
important task because NPA level denotes the recovery performance
of that bank. In last few years commercial banks have managed to
reduce and control their NPA level. The sector wise NPA of Central
Bank of India in India as and on 31-3-2011 is presented in following
table.
Table 4.9
Sector wise Non-Performing Assets of Central Bank of
India as on 31st March 2011
(Amount in crores)
Sr.
No. Sector
Amount
(Rs)
Percent to
Total NPA
1. Agriculture 418 17.5%
2. Micro and Small
Enterprises 687 28.7%
3. Other Priority 226 9.4%
4. Total Priority 1,331 55.6%
5. Non Priority 1,064 44.4%
Total NPA 2,395 100
Source : Off-site returns (domestic)
It is revealed from the sector wise NPA of Central Bank of
India that out of total NPA, 55.6% NPA is from total priority sector,
and 44.4% NPA is from Non Priority sector.
NPA of agriculture sector (17.5%) is less than the small and
micro enterprises i.e. (28.7%) and the percentage of total NPA is
1.82% and of Net NPA is 0.65% which is satisfactory.
4.16 Achievements of Central Bank of India :
The current position of Central Bank of India as on 31st
December 2011 is presented in following Table.
Table 4.10
Current Position of Central Bank of India as on
31st Dec. 2011
(Amount in crores)
Sr.
No. Particulars
Amount as on
31.12.2011
(Rs)
% of increase
as compared
to 2010
1. Total Business 321543 15.08%
2. CASA 61079.33 -
3. Deposits 188229 15.40%
4. Advances 133317 14.62%
5. C/D Ratio 70.82% -
6. Net Profit 133 -
7. Total NPA (Rs) 2395 -
8. Total NPA (%) 1.82% -
9. Net NPA 0.65 -
Source : Quarterly Reports of Central Bank of India, as on 31st Dec 2011
Table shows the current position of the bank as on 31st Dec
2011. Total Business of the Central Bank of India in 2011 is Rs.
3,21,543 crores which is 15.08% more than 2010. Deposits and
advances have also increased in 2011 as compared to 2010, by
15.40% and 14.62% respectively. The credit deposit ratio is 70.82%
in 2011. Net NPA is 0.65% and Total NPA is 1.82%
4.17 Compatibility of Central Bank of India :
The 'Financial Express' Group reviewed all banks in India, in
the year 2010 (upto 31st March 2010). For assessment purpose, it
used five business parameters i.e. strength and soundness, Growth,
Profitability , Efficiency and Credit Quality. All figures pertaining to
March 31, 2010 were used for this assessment. After the evaluation,
ranks were given to all banks. As per these parameters the Central
Bank of India was ranked on 13th position amongst all the
Nationalized Banks. The statistics was published in the issue of
financial Express in March 2011. The business parameters
(segments) evaluating the compatibility of Central Bank of India is
presented in following headings and tables.The compatibility of
Central Bank of India is shown in following figures of banking
business.
Table 4.11
Compatibility of Central Bank of India
(As on 31st March 2010)
Sr.
No. Parameters Amount (Rs. In lakh)
1. Deposits 1,62,10,747
2. Borrowing 7,32,664
3. Investments 5,056,287
4. Advances 1,05,38,349
5. Net Worth 7,69,225
6. Total Assets 1,82,67,162
7. Interest Income 12,06,431
8. Interest Expenses 9,51,901
9. Other Income 1,73,525
10. Operating Expenses 2,22,202
11. Net Profit 1,05,823
12. NNPA 72,700
Source: The Financial Express, March 2011, pp. 56, 57
Table reveals the consistency of Central Bank of India. The
deposits were Rs. 16,210,747 lakh and advances were Rs.
10,538,349 lakh. Hence, credit deposit ratio (CD Ratio) is 65.00%.
The net NPA is Rs. 72,700 lakh. Net profit is Rs. 1,05,823 lakh
which has improved by 85.25% which ranks 2nd amongst all
nationalized banks.On the basis of the five parameters, following all
India ranks were given to CBI as on 31st March 2010.
Table 4.12
Ranking of CBI
(As per parameters) as on 31/03/2010
Sr. No. Parameter All India Rank
1. Strength and Soundness 16
2. Growth 5
3. Profitability 26
4. Efficiency 24
5. Credit and Quality 6
Source: The Financial Express, March 2011, pp. 48-57
From the above table it can observed that the, Financial Express
group has categorized CBI as 16th in strength and soundness, 5th in
growth, 26th in profitability, 24th in efficiency and 6th in credit and
quality in all India ranking of the banks.
References :
1. Sir Basil Blackett's Observation (1936) - The Rise and
Growth of Central Bank of India Ltd., Silver Jubilee (1911-
1936) Edition, P. 12.
2. The Times of India's Observation, (1960) Golden Jubilee
Edition of Central Bank of India, P. 28.
3. The Rise and Growth of Central Bank of India Ltd.,
(1936) Silver Jubilee Edition, CBI, P. 18.
4. The Financial Express, March 2011, P. 44
5. Narvekar Ramesh, 'Know Your Bank' - Aarthaparva,
Mumbai, 2011, P. 11.
6. Ibid, P. 12
7. Dr. Singh Awadh Bihari, (1987), 'Lead Bank Scheme',
Capital Publishing House, Delhi, P. 1.
8. www.sibckerala.com/pdf/lead bank
9. RBI Bulletin, 'Lead Bank Scheme - Progress and
Perspective', Nov. 1970, P. 1917.
10. High Level Committee Report, RBI, 2009, Executive
Summary, 2009, P. i
11. High Level Committee Report, RBI, 2009, point 2.19 -
Origin of Lead Bank Scheme, PP. 17-18
12. Dr. Singh Awadh Bihari, (1987), 'Lead Bank Scheme',
(1987), Capital Publishing House, Delhi, P. 3.
13. High Level Committee Report, RBI, point 3.1 - Origin of
Lead Bank Scheme, (2009), P. 29
14. High Level Committee Report (2009), RBI, (Para no. 3.7
and 3.25)
15. Prof. O. R. Krishnaswami, (1979), 'The Lead Bank
Scheme', Empirical Evaluation, Rainbow Publications,
Coimbatore, P. 22
16. Ibid, P. 36
17. Mr. Khadake, (2011) 'Central Bankechi Shataki Watchal' -
Aarthaparva, (Diwali Issue), P. 44
18. Narvekar Ramesh, (2011), 'Know Your Bank',
Aarthaparva, P. 12
19. Mr. Khadake Anil Kumar, (2011), 'Central Bankechi
Shataki Watchal' - Aarthaparva, (Diwali Issue), P. 44
20. Daily Loksatta - 1 Feb 2012 P. 9
21. Narvekar Ramesh (2011), 'Know Your Bank', Aarthaparva,
P. 10