BHUBANESWAR: ALL is not well with the fundamentals of Regional Rural Banks in Orissa. The Ratio Index Method of evaluating the RRBs performance, which Nabard calls akin to the Human Development Index of UNDP, mirrors their below par performance. The evaluation brings to light RRBs’ abysmal lending to the agriculture sector.
The lackadaisical financial parameters of RRBs make the State languish at the 20th position of a total of 27. All the neighbouring and BIMARU states except Jharkhand and West Bengal are well ahead.
The aggregate per employee business of RRBs here has been estimated at ` 2.49 crore and per employee profit at a low of ` 0.01 lakh only. Given that the returns on average working fund is only 0.09 per cent and the non-performing assets hovering over 7 per cent, the aggregate composite value awarded to the State’s RRBs stood at a mere 0.560 points. The credit-deposit ratio stood at 53 per cent - well below the prudential norm of 60 per cent.
Orissa is the only State after Jharkhand where the average size of credit disbursed by the RRBs in 2008-09 was in the range of ` 15-19,000. This is so even though the Centre had asked to double the agri-credit after announcing loan waiver. The non-agri credit disbursal, however, is at par with the national average of around ` 57,000.
The two poor performing rural banking entities in Orissa are Kalinga Gramya Bank (KGB) and Rushikuliya Gramya Bank (RGB). While the KGB has been placed at 83rd rank of a total of 86, the RGB could manage only 63rd rank. Only Baitarani Gramya Bank figured within 60 with 54th position.
In case of KGB, the per employee net profit and return on average working fund are on the negative side. The NPAs stand at 11.63 per cent. The per employee net profit of RGB in 2008-09 was ` 0.32 lakh and gross NPA 6.17 per cent. The bank’s credit-deposit ratio of 45 per cent is the lowest in the State while Utkal Gramya Bank has the highest ratio of 60 per cent. Baitarani Gramya Bank has the lowest gross NPA of 4.9 per cent.
Poor productivity of RRBs and high NPAs impede banks lending business, says a recent review paper of the Ministry of Finance.