Lead Bank scheme and Banking Development

INTRODUCTION

One of t h e important objec t ives of n a t i o n a l i s a t i o n

of commeroial banks and t h e Lead Bank Scheme i s t o extend

banking f a c i l i t i e s t o the r u r a l , semi-urben, unbanked and

under banked cent res ident i f ied through surveys. Once t h e

branches a r e es tabl i shed i n t h e ident i f ied areas the

immediate task f o r t h e branches i s t o make them viable

by mobilising the deposits and advancing the c r e d i t

e s p e c i a l l y t o t h e under privileged sec t ions h i t h e r t o

neglected. Nevertheless, the branch expansion under t h e

lead bank scheme i s t o be undertaken on the guidelines

provided by t h e Reserve Bank of Indie under the l i c e n s i n g

pol icy so a s t o maintain a f a i r d is t r ibut ion of t h e r u r a l

c e n t r e s among the commercial banks working i n the area.

I t was a l s o expected t o provide banking f a c i l i t i e s t o

reduce t h e s p a t i a l gaps which are existing. The empirical

a n a l y s i s of t h e branch expansion, t h e deposit mobiliaation

and c r e d i t deployment f o r a period of 20 years (1969-89)

i n d i f f e r e n t regions viz., Northern, Southern, Eastern,

Western, Central, North Eastern e tc . , and also population

group-wise v iz . , r u r a l , semi-urban, Metropoliton end urban

i s t h e subjec t matter of t h i s chapter.

BRANCH EXPANSION

Soon a f t e r t h e completion of i n i t i a l surveys

branch expansion Programme has been i n i t i a t e d . The lead

banka i n 00-operation with o ther banks functioning i n

t h e d i s t r i c t s have taken the responsib i l i ty of planning

t h e branch expansion pmgromme and a l l o c e t i n e t h e iden-

t i f i e d c e n t r e s among various banks. The cent res w i l l be

d i s t r i b u t e d among banke depending on t h e branch n e t work

of t h e banks, t h e personnel avai lable with t h e banks,

proximity of t h e cent res , capacity of t h e banks i n terms

of i t s resources and the willingness of the banks.

The o v e r a l l performance of commercial banks s l n c e

t h e in t roduct ion of Lead Bank Scheme, In respect of branch

expansion i s very commendable. The progress achieved a t

All-India and Region levels , can be seen from t h e h b l e 5.1

The number of Offices i n the country has increased from

8262 i n 1969 t o 57197 a s on June '89, t h e increase being

near ly sevenfold.

Table 5.1 shows t h a t the number of branches has

increased from 1252 t o 8551 i n Northern Region, 109 t o

1551 i n North Eastern Region 901 t o 9710 i n Eastern Region,

1,106 t o 11,603 i n Central Region, 1952 t o 8475 i n Western

Region, 2942 t o 15145 i n Southern Region between 1969 and

TABLE - 5 .I

Region-wise dlatributlon o i commercial bank ofiioes in India

year Nor- North Ees- Cen- Wes- Southern All thorn Eaa- tern tral tarn

trrn Indla

1969 1252 109 901 1106 1952 2942 8262 1970 15% 119 1084 1392 2325 3615 10131 1971 1905 162 1312 1713 2699 4231 12013 1972 2160 194 1497 1913 3035 4739 13618 1973 2618 220 1704 2245 3315 5333 15435 1974 2871 243 1919 2493 3578 5832 16936 1975 3177 281 2192 2810 3884 6 3 6 I s n o 1976 3603 354 2629 3220 4224 6909 20939 1977 4184 501 3315 3902 47W 78% 24500 1978 4720 610 3873 4520 5210 9083 =I6 1979 5086 667 4234 4995 5504 9718 30204 1980 5394 699 4774 5582 5799 10171 32479 1981 5820 765 5607 4305 6244 10966 35707 1982 6289 844 6512 7257 6592 11683 39177 1983 6756 981 6998 8149 6932 12364 42156 1984 7205 1088 7385 9042 7420 13192 45332 1985 7977 1310 8811 10657 8083 14547 51385 1986 8241 1498 93% 11082 8270 14778 53265 1987 8357 1516 9492 11280 8316 14879 53840

March 1988 8551 1551 $710 11603 8475 15125 55015

June 1989 NA NA NA NA NA NA 57197

Note: N.A. - Not available

1988. The increase i n bank branches between 1969 and 19BB

was more than 14 times i n North Eastern Region, 10 t imes

i n t h e case Of Eastern and Central Regions, 7 t imes i n

Northern Region. Southern Region recoi.ded 5 timea increase

where a s Western Region regis tered only 4 times of increase

The l i n e a r and compound growth r e t e s cf branch

expansion of bank3 i n d i f ferent region8 velv c a l c u a t e d

and a r e presented in t a b l e 5.2 t o know t h e extent of branoh

expansion i n d i f f e r e n t regions during 1969-88. I t can be

observed t h a t highest growth of bank o f f i c e s i s found i n

the North Eas tern reglcn a s revealed by the l i n e a r growth

r a t e (LOR) and compound growth r a t e s (CGR) reoorded a t

11.98 per c e n t and 16.20 per cent respectively. For

Eastern region. they are 11.04 per cent and 14.11 per

cent . The LGR and CGR of western region are 6.81 per

cent and 7.81 per oent respectively. A t All-India l e v e l

the LGR and CGR are 8.75 per cent and 10.75 per oent

respeot ive ly . Coming t c the consistency i n t h e growth

of branches, t h e Western region exhibl t s more consistency

among a l l regions i n the oountry with a 00-ef f ic ient of

v a r i a t i o n of 39.36 per cent. A 8 againat t h i s t h e North

Eas tern Region shows inconsistencY With 70.79 Per cent

of co-ef f ic ient of var ie t ion . It shows t h a t high degree

of branch expansion was made i n the north eas tern region

followed by Eastern and cent ra l regions where a s lower

degrees were recorded i n case of Southern and Western

region. Trend l i n e s , f i t t e d f o r A l l India and d i f f e r e n t

regions a r e shown in Fig.5.1 and 5.2. For state-wise

d i s t r i b u t i o n of commercial bank off lces (See Appendix-I).

S imi lar trend i s noticed i n respect of population

group-wise branch expansion (3ee Tab. 5.3). The population

per branch has declined Prom 65000 i n 1969 t o 13,000 i n

1988. I t i s evident t h a t bank off ices have inoreased from

8,262 i n June 1969 t o 30,202 i n June, 79 and f u r t h e r t o

57,197 i n 1989, Between June 1969 and June 1989, 48,955

be* o f f i c e s were opened. Out of 57,197 o f f i c e s i n June

1989, a s many as , 32,577 o r 57 per cent were located i n

r u r a l a reas . The percentage of bank branohes i n ssml-urban

a r e a s t o t o t a l branohes has come down from 40.1 t o 19.5

dur ing 1969-89, though the number of branohes rose from

3,322 t o 11,157. During the sade period the propcrtion

of urban branches has declined from 17.5 per cent t o 13.1

per c e n t end t h a t of metropoliton/port towns from 20.0

per c e n t t o 10.4 per cent.

F 1 g 5 1 Distribution of Cornrnerc~al Bank Offices In lndla (1969- 881

6 0

o L 1 " " ' ~ 2 8 6 8 10 12 14 16 18 ;

Year

R0 5.2 Reglw-wise D~stribulion of Commercial Bank Offices In India (1969-88)

Year

W y ~1976,426 + 690,0593 t Southrn

W y E-767 115 + 601.1586 t Central

M y = 1519 115 t 362 6699t N~Tthem

y . - 7 0 h26+ 515 1834 t Eastern

0--E3 y E 573 1052t610 95% t WeXm

0 - 3 y a -176.231 + 81 9002 t North-Eastern

Year

160

TABLE - 5.1 Population Group-vise Distribution of Commercial Bank Offices (1969-89)

Rural No. of $4 t o off ices to ta l

Semi-"&an No .o f % t o off ices to ta l

Urban NO. Of % t o o f f i c e s to ta l

Metropoliton No. of % t o o f f i c e s t o t a l

A 1 1 India

Source: R.B.I.. R e l M n on Trend and ~roepss of bank in^ i n India. Remrt on Cumncr & Finance yar ous issues, are .

-i-n October, E!ombay~:999. ?%iZ,","ZJ ;:&!-' """" kZZ??Z ,

The l i n e a r end oompound growth r a t e s of branch

expansion acoording t o gopuletion groups were ca lcula ted

and e r a pmeented i n t a b l e 5 . 4 .

It can be seen from t a b l e 5.4 t h a t highest growth

of bank o f f i c e s i s found i n the Rural population group as

t h e l i n e a r and compound growth r a t e s of Rural population

gmup a r e reoorded a t 11.55 Per cant and 15.03 per cent

respect ive ly . The growth of o f f i c e s recorded i n oase of

urban population comes next In the order, with 7.41 per

cent and 8.86 Per Cent of l i n s a r and compound growth

r a t e s reSPeOtiV8lY. The l i n e a r and o o m ~ u n d growth r a t e s

of metropoliton cent res e r e 5.99 per cent and 6.92 per

cent a a a g a i n s t the lowest growth r a t e s of 5.79 per cent

l i n e a r and 6.53 per cant compound growth r a t e s i n semi-

urban cent res , when compared t o t h e A l l India l e v e l grovth

r a t e 8 of 8.72 per cent of l i n e a r and 10.41 per cent of

compound, t h e urban and aeml-wbm growth r e t e a a r e lower.

But oonsia tent growth waa found i n the oase of semi-urban

gmup which i s worked out a t 35.64 per cent of c o - e f f i c i e n t

of v a r i a t i o n . Figure 5.3 shows the t rend f o r population

group-wise expension of oommercial bank branches.

Fig 5.3 Po~ulation Group-wlse dlstrlbutlm of Commercial Bank Offices in lndra (1969- 88)

1 2 4 6 8 10 12 14 16 18 20 Year

y = 2555,61+ 2651,760 t A l l indlo

w y . -2838.03t 1674 517 t Rural

0--i) y = 2857,294+ W3.77661 Semi-urban

0-4 y = 981.0947t329 262Lt Urban

&-+ y . 1WL 85 +231.9526! Metropollton

I n o lde r t o know the direct ion of commerciel

bank's branch expansion policy, geographical quotient

has been computed fo r 1969 and 1989 for each s t a t e i n

Indie and the r e su l t s a re presented i n t ab le 9.5. By

and l a rge backward State8 received greater a t t en t l cn

of the commercial banks i n the matter of branch

expansion a s compared t o advanced States . For instance

the geographical quotient of backward s t a t e s l i k e Assam,

Bihar, Orissa, Jammu & Kashmir has improved from 32.96

p r cent, 31 . I 9 per cent. 30.25 per cent and 51.85 per

cent respect ively t o 64.94 per cent, 76.40 per cent,

84.49 per cent and 146.69 per cent respectively between

1969-89, while tha t of advanced Ptatea l i k e Gujarat,

Tamil nadu, Maharaahtra has declined from 193.62 per

cent, 167.28 per cent and 150.33 t o 114.48 per cent,

102.97 per cent, end 101.52 per cent respectively.

This t rend ind ica tes the r e su l t s of commarcial banks

branch expansion policy of opening branches i n rela-

t ive ly backward areas.

1.11 1'1 111 131 I,., a: 1111

Branch ExDaneion Policy 1985-90

While reviewing t h e previous l icens ing pclicy end

t h e branch expansion t h e Reserve Bank of India has observed

t h a t t h e branch l icens ing pclioy i s followed, so f a r , has

been ins t rumenta l i n Providing f a i r l y in tens ive banking

coverage i n r u r a l and semi-urban areas. I t i s , however,

f e l t t h a t t h e banking system in t h e country has been put

t o aevere s t r a i n on account of t h e phenomenal expension

since 1969. The massive geographical expansion coupled

with l a r g e s c a l e growth i n the volume of business and

c l i e n t e l e has brought i n i t s wake c e r t a i n a t tendsnt

problems a f f e c t i n g the operational effioiency of banks.

The Reserve Bank of India therefore f e l t t h a t under the

new l i c e n s i n g policy, attempts should be made t o provide

banking f a c i l i t i e s only i n those pockets of r u r a l a reas ,

where t h e r e a r e wide s p a t l a l gaps. Thus, t h e l ioences

should be granted on se leot ive bas is so t h a t t h e proposed

bank o f f i c e oan opers te on a f ihancia l ly v iable bas ls .

Guidelines

1) The new branch l icens ing policy cover t h e f i v e year

per iod commencing from April , 1985 t o March 1990.

2) The aim of the policy i s t o achieve a coverage of

17,000 population (1981 censua) per bank o f f i c e i n

r u r a l and semi-u~~ban arsas of each blCck.

3) The work of i d e n t i f y i n g t h e growth cent res i s t o be

e n t r u s t e d t o a Small group t o be formed i n each d i s -

t r i c t , c o n s i s t i n g of

a ) Lead Bank (Convenerl~o-ordinator) (b) two o t h e r

banks having a good n e t work of branches ( 0 ) RRB

d) a nominee of the d i s t r i c t adminis t ra t ion .

4) The group i s t o be advised by Reserve Bank of India

( a ) t h e need f o r addi t ional banking f a c i l i t i e s par-

t i c u l a r l y keeping i n view of t h e e x i s t i n g banking

f a c i l i t i e s i n t h e area (b) volume of business

( c r e d i t needs and f i n a n c i a l v i a b i l i t y of t h e proposed

branch) , ( c ) s p a t i a l gaps i n t h e a v a i l a b i l i t y of

banking f a c i l i t i e s (d) population of t h e c e n t r e and

t h e a d j o i n i n g a r e a s l i k e l y t o be covered by t h e

branch, ( 0 ) a v a i l a b i l i t y of minimum i n f r e s t r u c t u r e

such a s t r a n e p o r t , communlcation, Post Office, Pol ice

S t a t i o n e t o . , and ( f ) Specia l f s e t u r e s i n any of t h e

region deserving s p e c i a l cons idera t ion .

Depoait Mobi l l sa t ion and Credi t Deployment

Another i n d i c a t o r of t h e success of t h e Lead Bank

Scheme i s t h e progress made i n respect of deposi t mobllisa

t i o n and c r e d i t deployment. Table 5.6 shows t h e progress

achieved by t h e commercial banka i n deposi t mobi l l sa t ion

and c r e d i t advancement from 1969-1988. I t reveals t h a t ,

a s i g n i f i c a n t increase i n the mobiliaation of deposi t s

and advances has been regis tered between 1969 and 1988.

During t h e period deposits Of commeroial banks have

lncreaaad fromh5J72 crores t o 16.1,18,687 orores, while

advances r o s e from Rr.3.729 crores t o $.74,903 crores

regla ter ing t h a t m a r l y 23 and 20 times increase both

in tha case of depoaits and advances respectively.

TABLE - 5 .6

Year-wlse DeDosita and Advances of Commercial Banka i n India (1969-88)

(b. i n crorea)

3ouroe: Reserve Bank of Indla, S t e t i a t i c a l Tablea Rela t ing t o Banks i n India, Bombay, various issues. 2. Reserve Bank of India , R o r t on Currencv and m, Bombay, 1987-8?P.159.

The l i n e a r and compound growth r q t e s of deposi t s

and advances i n India (1969-88) which were worked out shows

t h a t t h e d e p o s i t s of commercial banks have grown a t a

l i n e a r r a t e Of 14.27 per cent and a t a compound r a t e of

18.98 p e r c e n t a s aaa ins t 13.68 per cent and 18.09 per

cent r e s p e c t i v e l y i n the cese of advances (See Table 5.7).

Trned l l n e s f i t t e d f o r both deposits and advances i n India

are presented i n Figure 5.4.

I t Can be seen 1rom t a b l e 5.8 t h a t both depos i t s

and c r e d i t advances inoreaaed subs tant ia l ly s ince , 1969 i n

a l l reg ions i n t h e Country. The deposits i n North Eastern

Region has r i s e n from k.54.16 crores t o ib.2,077 c r o r e s , t h e

increase being 30 times. More than 27 times increase was

notioed i n t h e c a s e cf northern region, and i n respec t of

Central end Southern regions the increase wns 30 and 26

times respec t ive ly . More than 20 times increase was

reg is te red i n t h e case of Eastern region and 16 times

(lowest) increase was noticed i n t h e western region between

1969-88. S i m i l a r t rend was noticed i n c r e d i t advancement.

Advances have increased from k.3,729 crorea t o P1.74.903

crorea dur ing t h e same period f o r All-India leve l . They

have increased from B.388 orores t o %.13,428 o r o r s s i n

NoPthern reg ion , b.21 crores t o 8.1,031 crorea i n North

Eastern reg ion , k.784 crores t o L.9,9W c r o r e s i n Eastern

region, Rt.261 orores t o k.8,502 crores i n c e n t r a l reg ion ,

from ib.1,388 orores t o Rt.20,585 crores i n Western reg ion ,

from ih.885 o r o r e s t o $.21,%7 crores i n Southern region.

T D B L L - 5 _ B

WEBION-kISE DEPOSITS ONf h D Y f i * C E S CF CCYESCIAL B A W L S ? * II'4EIi 1959-39 G* .? :-,-=s,

-., ,--, :: .I z 1 7- ;:? :s :.-: -: --:= -: - - . ~ .... .-. . . . . - . . .- . -- . .. . .. ..' - dl .; 2:: I -:s.:: - . .. -- - .-: . -. = 2 . :-5- .: 12: .- - $ -:-- . 535 -= --- -- .-..= --.=-. -.--.- .. ~c .-.. - . .- -_ _ _ _ _._. . ..._ > . l I I-.:: 1:LL.i

5- -= -,:a *I :..: =: ...< ;; -=: :* .:;:- 2: -:>. 2 - .. - --

Y .. .. . a: :-=: ?5 =I :: ::- :- =- -- - -- -

FIQ 5 5 Reglonwise growth of deposlts o f commerc~ai Banks In lndm (1969- 88)

Veo r - y .-463s,9? +1?63 .914t - Southern - y. -4740 37 -1296.262 t - North-Eastern - =-448001 + 1469 133 t - Western

oo .-31ii 03 4 957 3263f - Eastern

.-3271.06 + 844.0331 - Central

.-444 6sot 105 4506t - North-Eastern

Region wise growth r a t e s of depos i t s end advanoes

have been computed t o make ocmparison among regionsand a r e

rjresented i n t a b l e 5.9 and 5.13. For stete-wise d i s t r i -

bution of d e p o s i t s and advances (See Appendix-11 & 111).

I t i s evident from t a b l e 5.9 t h a t h ighes t growth

of d e p o s i t s i s found i n North Eastern end Cent ra l Kegionl.

The l i n e a r and compound growth r a t e s of North Eas te rn

region a r e . 15.91 per cent and 22.4 per cen t respec t ive ly .

For c e n t r a l reg ion they a r e found t o be 15.09 p e r cen t and

20.82 p e r cen t . The respective l i n e a r growth r a t e s i n

Western and Eas te rn regions are'13.42 per cen t and 13.79

per c e n t , and compound growth r e t e s 16.95 per cen t and

17.84 p e r cen t . The LGR and CCRa of depos i t s a t A l l Ind ia

l e v e l stood a t 14.27 per cen t and 18.98 per cen t respeo t ive ly .

Linear t r e n d / l i n e s f i t t e d f o r d i f f e r e n t regions e r e presented

i n Qiyre 5.5.

Table 5.10 shows t h a t regarding advances, the

North Eas te rn t o p s , with a l i n e a r growth r a t e of 16.78

per cen t and compound growth r a t e of 23.91 per cen t . While

the Eas te rn m g i o n occupies the lowest pos i t ion wi th a

l i n e a r growth r a t e of 12-43 per cent end oompound growth

r a t e of 15.04 p e r cen t . The other regions vary i n between

these two regions. The above ana lys i s s i @ i f i e d t h a t the

growth of depos i t s and advances i n backward reg ions l i k e

North Eas te rn and Cent ra l region i s much higher when com-

Pared t o t h e h i l l y regions l i k e Western and Eas te rn

mgions which oan be considered as a s i g n i f i c a n t end

FIQ 5 6 Region-wlse Growth of Advances of Commerclol

Banks In lndla (1969-88)

M y =-3677,66 + 1037,229 t -Southern

V-V y S-3171 05 11073,207t -Western

0-4 y .-2213,89 + 744'1709t -Northern

C - 4 y .-1149.78 + 468.2352t -Eastern

= -7712 46 + 42L,9253t -Central

~ o s i t i v e impact of the lead bank scheme introduced i n 1969.

Linear t r e n d l i n e s f i t t e d f o r d i f f e r e n t regions a r e pre-

sented i n F igure 5.6.

CREDIT DEPOSIT RATIO

C r e d i t depos i t r a t i o i s one among the i n d i c a t o r s

of the p r o g r e s s made by the banking sec tor . S ince , t h e

in t roduct ion of Lead Bank Scheme the c r e d i t depos i t r a t i o

i n the count ry have undergone considerable change.

Table 5.11 i n d i c a t e s t h a t the c r e d i t d e p o s i t r a t i o f o r

the count Iy has decreased from a2.09 per cent t o 61 p e r

cent from 1969 t o 1987, indicating t h a t the i n c r e a s e i n

depos i t s is n o t proper ly mstohed wi th the increase i n

c r e d i t . The region-wise d a t a shows t h a t i n t h e case of

Northern, North Eas tern and Cent ra l regions the i n c r e a s e

i n c r e d i t d e p o s i t r a t i o s was s i g n i f i c a n t end i n d i c a t e s a

b e t t e r periormance of banks. As i n t h e case of Eas tern

and Southern reg ions the c r e d i t deposit r s t i o has f s l l e n

very sharp ly .

TABLE .. 5.11

Repion Wise Oredit-deDosit r a t i o s of commeroial banks a g st t h e end of Dec.1969 and 1982

Region 1969 1987

North-eastern 38.81 47.2

Northern

Eas tern

CentFal

Weatern

Southern 97.01 32.9

A l l I n d i a 72.09 61 .O

Source: Reserve Bank c f I n d i a , Rerrort on Currencv and -, Bombay, 1987-88 Vol-I P.160.

Table 5.12 indlca tea t h a t both depoal ts and

advances i n c r e a s e d s u b s t a n t i a l l y s ince , 1969 i n t h e case

of a l l popula t ion groups. However, t h e increase i s more

l i g n i i i c a n t i n t h e case of r u r a l cent res a s compared t o

semi-urban, urban and metropoliton cent res . Consequently

t h e p r o p e r t i o n of depoalts of r u r a l c e n t r e s t o t h e t o t a l

deposi t s has increased from 6.4 per oent t o 14.6 per oent

and i n t h e c a s e of semi-urban cent res it has increased

from 21.8 p e r oent i n 1969 t o 23.8 per cent i n 1983 and

again gone down t o 21.8 per cent by 1988. Where a5 i n

respect Of urban and metropoliton cent res t h e deposi t s

have d e c l i n e d marginally. I n case of c r e d l t advancement

a l s o we f i n d a s i m i l a r t rend. Credi t advanced t o r u r a l

c e n t r e s as a percentage of t o t a l bank c r e d i t has i n -

creased from 3.3 per cent t o 14.9 per cent and i n semi-

urban and urban c e n t r e s it has regis tered a marginal

increase . While t h e percentage of c r e d i t i n metropoliton

cent res h a s decl ined considerably from 61.8 per c e n t t o

44.5 per o e n t s i g n i f y i n g t h e banking a c t i v i t y i s more

r u r a l l y o r i e n t e d than it was before t h e in t roduct ion of

Lead Barn Scheme. Figure 5.7 shows the t rend f o r popu-

l a t i o n group-wise deposi t s in India.

;#*,,I ', P rmyu la l l r i l l group ulna d ~ r t r r b o t l o n i le drpnsrtr

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The l i n e a r and compound growth r a t e s of cent re-

wise deposi t s have been computed and the r e s u l t s a r e

presented i n t h e t a b l e 5.13. It shows t h a t t h e deposi t s

i n r u r a l c e n t r e s have grown a t a l i n e a r r a t e of 16.16 per

cent and compound r a t e of 25.56 per cent between 1969 - 88,

while i n semi-urban, urban and metropoliton oentres. They

increased a t t h e LGR and CCRs stood a t 13.87 per c e n t and

1R.a per cent , 1b.27 Per cent and 19.23 per cent and 13.56

per c e n t and 17.70 per cent respectively. The semi-urban

and metropoliton cent res growth ra tea were below the

All-India growth ra tes of 14.15 per cent and 19.11 per

cent r e s p e c t i v e l y .

S i m i l a r t rend i s noticed i n case of centre-wise

advances a l s o ( s e e table 5.14) . The l i n e a r and compound growth ra tes of advances

i n r u r a l c e n t r e s were 16.90 per cent and 28.61 per Cent

respect ive ly . The l i n e a r and compound growth r a t e s of

semi-urban, urban and Metropoliton centre6 Were 14.30

per cent and 20.05 per cent, 13.84 per cent and 18-56 per

cent, 12.41 per cent and 16.08 per cent respect ive ly . It

can be seen t h a t t h e r u r a l oent res have regis tered h ighes t

growth r a t e s , Lieear Trend l i n e s are f i t t e d f o r d i f f e r e n t

population groups i n respect of advances and are Presented

in Figure 5.8.

Fig 5 7 Populati~n Group-wrse distribution of Deposrb of Commercral Banks m lndra (1969-88)

2 4 6 8 10 12 14 16 18 20

Yeor

x--x y = -18847,l * 3766 386 t Total

W y a-4098,47+ 1677,931 1 Metropoliton

0-4 y = - 2784,40* 849,235Lt Urban

y e -2337 42 * 666,1244t Semi-urban

Lh-3 y = - 2627,14 t 573 1332t Ruroi

FIQ 5 8 Populatton Group-w~se dlstr ibut~on of Advances

of Commerc~al Bank In lndta (1969-88)

Year

HI y =-188b7l+ 3766 ,386 t Total

ad 9.- 4098 47 + 1677 931 t Metropoltton

0--0 y. - 2784 40 + 849.2356 I Urban

0--0 Y. -2337 b2 t 666 12441 Semi-Urban

w Y Z - 2627 14 + 573.1332t Rural

I t i s evident from table 5.15 t h a t C/D r a t i o f o r

rura l a r e a s has increased rapidly from 37.64 per cent i n

1969 t o 64.44 per cent in 1988. In the case of semi-urban

cent res it increased *om 42.9 per cent t o 51.72 per cent

during t h e same period. Aa agalnet t h i s the C/D r a t i o s

i n respec t of Metropoliton and urban centres experlanoad a

aharp decrease, from 98.16 per cent i n 1969 t o 74.14 per

cent i n 1988 and 59.08 Per cent i n 1969 t o 55.64 per cent

i n 1988 respec t ive ly . This showa t h a t the pmblem of

d ivers i f ica t ion of ftmds from r u r a l areas t o urban and

Matropoliton areas was reduced during 1969-88.

TABLE - 5.15

c l ( i n percentage)

Population group 1969 1988

Rural 37.64 64.44

Semi-urban 42.99 51.72

Urban 59.08 55.64

Metropoliton 98.16 74.14

Total 71.90 63.11

Bouroe: Calculated from the data of Table 5.9 5.10.

The main objec t ives of t h e lead bank scheme was

the branch expansion i n the r u r a l Pockets which have been

i d e n t i f i e d through the i n i t i a l surveys, mobilising the

depos i t s from t h e r u r a l People d i tus ted i n t h e a reas where

the branches were es tab l i shed and deploying t h e o r e d i t t o

various purposes through which the r u r a l people can improve

t h e i r s t a t u s . The overa l l Performance of commercial banks

i n expanding t h e branches is highly s i g n i f i c a n t a s t h e

number of o f f i c e s i n the country has increased from 8,262

to 57,197 between 1969-89. The region-wise a n a l y s i s a l so

shows s i g n i f i c a n t progress wherein t h e expansion i s highly

commendable i n North Eastern and Eastern regions than

t h e i r counter -par t s . The population group-wise d i s t r i b u -

t i o n of branches, ca lcu la ted through geographical quot ien t

and l i n e a r and compound growth r a t e s reveal t h e expansion

i s highly skewed t o r u r a l a reas . Over a period of 20 years

the banks have a growth regis te red by more than 23 times

i n t h e case of depos i t s increas ing from b.5,172 crorea t o

h.1,18,687 o r o r e s and by about X) t imes i n t h e case of

advanoes i n c r e a s i n g from $.3,729 crores t o k.74,903

crorea. The l i n e a r and compound growth r a t e s worked out

for d i f f e r e n t regions as wel l a s r u r a l , semi-urban, urban

and metro-politon cent res confirm t h a t i n back-ward fitate8

and rural areas the bank branches have put i n conaiderable

e f fort i n fUlfilling the obJect lves for which the lead be*

scheme has been introduced.