Performance evaluation of central cooperative banks: a comparative study of Punjab and Haryana

Abstract

Co-operative credit structure is an important segment of the Indian Banking set up. At the advent of last century, these banks were established as a tool of state policy to provide adequate, timely and cheap credit to peasants, to save them from the clutches of money- lenders. These banks have played a crucial role in the Indian financial system. Agriculture being prime sector of Indian economy needs a very strong, efficient and effective institutional credit support even today. With their vast network, wider coverage and outreach extending to the remotest part of country cooperatives banks are and will be prime institutional agencies for agriculture and rural credit.Therefore it has been repeatedly stressed that vitality and viability of the co-operative institutions must be preserved to enable them to function efficiently. In this context present study is an attempt to evaluate the performance of DCCBs in Punjab and Haryana. The main aim of study was to examine the resource composition, loan portfolio, recovery position; NPAs, profitability and productivity of selected cooperative banks. The study covered the period of nine years i.e. 1999-2000 to 2007-2008 and secondary data was used. Profitability is an important indicator of performance in banking industry worldwide and there is a lot of variation in profitability of DCCBs. Therefore DCCBs were classified into three categories of high, average and low profitability. Six DCCBs had been selected from each State as sample size for this study. Of these six banks two DCCBs with high profitability, average profitability and low profitability category had been selected. Being a time series data, trend analysis and students? t-test was mainly employed to analyze the data. The study brought out that sources of funds, their components and loans outstanding had registered a significant growth in all categories of DCCBs in Punjab and Haryana and both were better managed in Punjab.