GROWTH OF REGIONAL RURAL BANKS (RRBs)

GROWTH OF REGIONAL RURAL BANKS (RRBs) IN INDIA   :

GROWTH OF REGIONAL RURAL BANKS (RRBs) IN INDIA Presented by : Supervised by : Neeraj , A52(10907209) Mr.Anoop Mohanty Sachin , B54(10907322) Senior Lecturer Shivani,B61(10908081) LSM,LPU

INTRODUCTION:

INTRODUCTION To echo the thoughts of C.K. Prahlad , the “bottom of the pyramid” segments will be the growth drivers of the future – this is certainly being borne out by the market revolution that is taking place in India’s villages. The Narasimham committee on rural credit recommended the establishment of Regional Rural Banks (RRBs) in meeting the needs of rural areas.

INTRODUCTION contd…:

INTRODUCTION contd … The main objective of RRBs is to provide credit and other facilities particularly to the small and marginal farmers, agricultural laborers, artisans’ and small entrepreneurs and develop agriculture, trade, commerce, industry and other productive activities in the rural areas. RRBs came into existence to reduce regional imbalances and increase rural employment generation.

OBJECTIVES:

OBJECTIVES To study the growth of RRB’s in India. To study the present situation of RRB’s in India. To study the factors that influences the performance of RRB’s.

NEED:

NEED Rural development has always been an important issue in all discussions pertaining to economic development, especially of developing countries, throughout the world. Rural mass comprise a substantial majority of the population. Specialised and innovative schemes to improve rural penetration are the new mantra .

SCOPE:

SCOPE The present study is based on regional rural banks in India. In the study an effort has been made to check the growth of regional rural banks in India. The scope of study after the research would be that the regional rural banks which adopted the effective factors for growth are in sound position today and are influencing the other RRBs also.

LITRERATURE REVIEW :

LITRERATURE REVIEW Misra (2002) explains in “ The Performance of Regional Rural Banks (RRBs) in India. An attempt is made to enquire as to factors that influence the performance of the RRBs and the role-played by the sponsor banks . Sathye Milind (Nov 2003) examined the measures of the productive efficiency of regional rural banks in a developing country, that is, India. The study recommends that the existing policy of reducing non-performing assets and rationalization of staff and branches may be continued to obtain efficiency gains.

LITRERATURE REVIEW contd… :

LITRERATURE REVIEW contd … Reddy A .Amarender (March 2006) examines the total factor productivity of RRBs. In this Banks located in economically developed as well as low banking density regions exhibited significantly higher productivity growth. Pati A.P. (June 2010) explains that in India an array of financial institutions are operating in the area of rural financing. Among those institutions Regional Rural Banks (RRBs) are prominent . The idea was to provide efficient service to the rural sectors so that the rural economy could provide the necessary input to the overall economy.

EXECUTION OF RESEARCH METHODOLOGY:

EXECUTION OF RESEARCH METHODOLOGY Our research study is based on the secondary research and is descriptive in nature. The data and information have been collected from the publications of the Reserve Bank of India, annual reports & other valuable publications.

Slide 10:

RESEARCH DESIGN Research design is purely and simply the framework or plan for a study that guides the collection and analysis of the data. The research design indicates the methods of research i.e. the method of gathering information and the method or sampling. DESCRIPTIVE RESEARCH Descriptive research , also known as statistical research , describes data and characteristics about the population or phenomenon being studied. Descriptive research deals with everything that can be counted and studied. DATA COLLECTION Secondary data and information have been collected from the publications of the Reserve Bank of India, annual reports & other valuable publications.

RESEARCH INSTRUMENTS :

RESEARCH INSTRUMENTS Performance parameter of Regional Rural banks in India are mentioned below. Formula to check growth:- value of 2009 – value of1999 100 value of 1999

0:

0 Parameter 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Growth(%) No. Of RRBs 196 196 196 196 196 196 196 96 86 86 83 Capital 1380 1959 2049 2143 2141 2221 25354 48488 58990 67855 76392 5435.65 Deposit 27059 32226 39294 44539 49582 56295 69719 83143 99093 120184 124296 359.35 Investment 6680 7760 8800 9471 17138 21286 33486 45666 48559 62629 96699 1347.5 Advance 10559 12427 15050 17710 20934 25038 32692 40345 43456 46678 51283 385.62 Total Assets 35820 42236 49596 56802 62500 70195 436805 803416 844982 898760 984364 2648.3 Interest Earned 3281 3938 4619 5191 5391 5535 6041 6547 7729 7586 8786 165.94 Other Income 151 207 240 370 430 697 743 790 873 853 1023 577.4 Total Income 3432 4145 4859 5561 5821 6231 6784 7337 7602 8421 9809 185.8 Interest expanded 2131 2565 2966 3329 3340 3363 5902 8441 8860 8362 9260 334.5 Operating Expanses 982 1056 1165 1459 1667 1825 1958 2092 22134 2345 2598 164.6 Provision And Contigencies 99 96 128 163 132 289 329 369 434 590 699 606.3 Total Expenses 3113 3621 4130 4787 5107 5187 7860 10533 10994 10707 11758 277.7 Operating Profit 319 319 729 774 714 1044 985 926 1383 1859 1987 522.8

CAPITAL GROWTH:

CAPITAL GROWTH

DEPOSIT GROWTH:

DEPOSIT GROWTH

INVESTMENT:

INVESTMENT

INTEREST EARNED:

INTEREST EARNED

INTEREST EXPANDED:

INTEREST EXPANDED

TOTAL INCOME:

TOTAL INCOME

OPERATING PROFIT:

OPERATING PROFIT

CURRENT POSITION OF REGIONAL RURAL BANKS IN INDIA (NATIONLIZED BANK):

CURRENT POSITION OF REGIONAL RURAL BANKS IN INDIA (NATIONLIZED BANK)

PRIVATE BANKS:

PRIVATE BANKS

RRBs:

RRBs

RRBS – IMPORTANT BANKING INDICATORS :

RRBS – IMPORTANT BANKING INDICATORS

COORELATION ANALYSIS:

COORELATION ANALYSIS Correlation considers two variables x and y :- Y = a + bX If r = 1, then x and y are perfectly positively correlated. If r = 0, then x and y are not correlated. If r = -1, then x and y are perfectly negatively correlated.

CORRELATION ANALYSIS :

CORRELATION ANALYSIS

FINDINGS:

FINDINGS The investments of RRBs have significant impact on profitability. One unit change in investment causes .894 time changes in the operating profit of Regional Rural banks in India respectively. The advances,deposits and assets of RRBs have insignificant impact on profitability of rural sector banks. These variables have significant impact on profitability of Regional rural banks in India. But in all cases one unit change in these variables are able to explain very little change in profitability of respective banks.

RECOMMENDATION:

RECOMMENDATION FICO- score has been used (credit rating ). A type of credit score that makes up a substantial portion of the credit report that lenders use to assess an applicant's credit risk and whether to extend a loan. FICO is an acronym for the FAIR ISAAC CORPORATION , the creators of the FICO score.

RECOMMENDATION (contd…):

RECOMMENDATION ( contd …)

REFERENCES:

REFERENCES Sayilgan,G .& Yildirim,O .(2009) Determinants of Profitability in Turkish Banking Sector: 2002-2007. EuroJournals Publishing,Issue 28.[http://www.eurojournals.com/finance.htm] Singh,R .& Chaudhary , S. (2009) Profitability Determinants of Banks in India. International Journal of Global Business, 2 (1),pp. 163-180. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1630104 . Velayudham , T. K., and Sankaranarayanan , V. (1990): “Regional Rural Banks and Rural Credit: Some Issues”, Economic and Political Weekly,September 22, pp.2157-2164 ‘Are Regional Rural Banks (RRBs) Free from Overdues ? Some Experience in Karnataka’,In A Ranga Reddy ( ed ) Management of Overdues in Rural Banking, Mittal Publications,New Delhi, 2002 (S. Erappa ). http://rspas.anu.edu.au/papers/asarc/novcon2001/MilindSathye.pdf

REFERENCES:

REFERENCES NABARD, National bank News Review, (2004) “India’s RRBs : The Institutional Dimensions of Reform”, Nitin Bhatt & Y.S.P.Thorat , April-September. Bhatt, N and Y S P Thorat (2001), “India’s Regional Rural Banks : The Institutional Dimension of Reforms”, Journal of Microfinance, 3, pp 65-88. http://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/63142.pdf ‘Are Regional Rural Banks (RRBs) Free from Overdues ? Some Experience in Karnataka’,In A Ranga Reddy ( ed ) Management of Overdues in Rural Banking, Mittal Publications,New Delhi, 2002 (S. Erappa ). [httpwww.aus.educonferencessymp_sbmdocsaccountOlson%20and%20Zoubi%20(2010)%20MENA%20bank%20efficiency.pdf]