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While on the subject of RRBs’ role in farm credit, we are attracted by a
special feature which is that their performance in agriculture credit has been
distinctly more impressive than that of other scheduled commercial banks
(SCBs). It is found that while the proportions of other SCBs in the number of
agriculture loan accounts and agriculture credit outstanding have consistently
declined in the 1990s, RRBs have played a unique role, in that they have not
only sustained their shares but have even improved upon them. This is based
on an independent source of data available in the RBI’s
Basic Statistical
Returns of Scheduled Commercial Banks in India.
As shown in Table 5.17,
RRBs’ share in total number of agriculture loan accounts went up from 24.2%
in March 1990 to 28.1% in March 2000 and further to 30.6% in March 2004. In
terms of amount outstanding, RRBs’ share in farm loans from 10.5% in March
1989 to 13.8% in March 2000 and further to 14.0% in March 2003. It is only
thereafter when the public sector banks and other SCBs were made to double
their loan portfolio that the share of RRBs has slightly slipped back. In terms
of the number of accounts, the RRBs’ share has fallen from 30.6% in March
2004 to 24.7% in March 2011 and in terms of amount, it has fallen from 14%
in March 2003 to 11.6% in March 2011. It is to be noted that this fall in the
share of credit amount has not been as sharp as in the case of the number of
accounts. Under the impulse of farm credit doubling by scheduled commercial
banks in the initial years, the RRBs’ share did decline from 13.2% March 2005
to 10.9% in March 2006, but thereafter the RRBs have sustained their tempo
of farm lendings, with their share remaining finally at 10.4% to 10.8% during
the next five years until March 2011. Also, it deserves to be noted that RRBs,
which account for only 3.0% of aggregate deposits and 2.0% of aggregate loans
of all scheduled commercial banks together, account for as much as 25% in
agriculture loan accounts or near 12% of farm loan amounts outstanding.
Inter-State Disparities in Credit Disbursements of Public Sector Banks
Within the banking sector as a whole, public sector banks have the
largest resources. They were brought under social control and nationalised with
the explicit objective of reorienting the distribution of their credit sectorally in
favour of informal sectors and regionally in favour underdeveloped and under-
banked regions and states. As alluded to earlier, a number of socially-oriented
policies like priority sector targets and higher credit-deposit ratios for rural
and semi-urban areas, have been prescribed for achieving, amongst other
things, better regional distribution of bank credit.
The above policies have primarily focused on the public sector banks.
With a view to evaluating their performance in regional distribution of
