CHAPTER -XVIII
Banking and Commerce

18.1.0 Banks have an important role to play in stimulating economic development of a country of State. In Assam the network of Scheduled Commercial Banks have widened the horizon of Social Banking policies and programmes, which support all the vital sectors of the economy. According to the Quarterly Handout of Banking Statistics of Reserve Bank of India, Match 2003, the number of reporting Bank Offices of all Scheduled Commercial Banks in Assam stood at 1216, of which, 399 were Regional Rural Banks. The average population covered per bank branch office (based on the Census Population 2001) in the State stands 22,000 in March, 2003 which is quite unsatisfactory in comparison to the all India average of 16,000 population during the same period. The table 18.1 shows the number of Scheduled Commercial Bank Offices in Assam as well as in India and the trend of deposits and credit over the past few years.

TABLE – 18.1
GROWTH OF SCHEDULED COMMERCIAL BANKS IN ASSAM AND INDIA

18.1.1 The Banking network operating in the Country as well as in the State have been grouped under (i) State Bank of India and its Associates, (ii) Nationalized Banks, (iii) Foreign Banks, (iv) Regional Rural Banks and (v) Other Scheduled Commercial Banks. These Groups of Bank have a distinctive role to play in the economic scenario of the State and Central Sector. The position of the Bank Groups in Assam and India is shown in table 18.2.

TABLE – 18.2
BANK GROUP WISE SCHEDULED COMMERCIAL BANKS IN ASSAM AND INDIA AS ON MARCH, 2003

18.1.2 Majority of the Bank Branch Offices in Assam are located in rural areas. Out of the 1216 reporting offices (As on March, 2003) as many as 792 Branches i.e., about 65.13 per cent are located in the rural areas of Assam. During March 2003, the reporting Bank Branch Offices situated in semi-urban areas were 260 and 164 respectively. However, their corresponding credit-deposit ratio were far from satisfactory as the same remained at the level of 32.87 per cent in rural, 24.49 per cent in semi-urban and 23.59 per cent in urban areas.

GROWTH OF DEPOSITS AND CREDIT:

18.2.0 With the expansion of banking facilities over the years there has also been some augmentation not only in respect of volume of deposit but also in respect of disbursement on credit by these banks. The aggregate deposit with Scheduled Commercial Banks in Assam, which was Rs 3955.87 crore in March, 1995 increased to Rs 8444.15 crore in March, 2000, Rs 11515.19 crore in March 2002 and then to Rs 12921.31 crore in March, 2003. The volume of deposits was 12.21 percent higher in March, 2003 over that of March, 2002. In respect of per capita bank deposits, the position of Assam is however found to be unsatisfactory which was Rs 4858 only on March, 2003 as against Rs 12451 at National level (based on Population Census, 2001).

18.2.1 The disbursement of credit of Scheduled Commercial Banks of Assam indicates more or less same trend as seen in case of B\bank deposits. The total volume of credit disbursed by these banks amounted to Rs 1530.24 crore in March, 1995 which increased to Rs 2701.16 crore as on March, 2000, Rs 3655.90 crore in March 2002 and then to Rs 3695.12 crore as on March, 2003. Thus a marginal increase of 1.07 per cent only has been observed in March, 2003, over that of March, 2002. The State accounted for a meagre 0.49 per cent of the total disbursement of credit in the Country as a whole. The Per Capita Bank Credit as on March, 2003 in Assam was Rs 1389 as against Rs 7393 at National level (based on Population Census, 2001).

18.2.2 The Credit-Deposit ratio of Scheduled Commercial Banks in Assam has been worked out at 28.6 per cent as on March, 2003 which is quite unsatisfactory as compared to 59.4 per cent at all India level. According to the report "Basic Statistical Returns of Scheduled Commercial Banks in India" March, 2002, published by the Reserve Bank of India, the total volume of credit sanctioned in the State as on March, 2002 was Rs 3655.90 crore, credit utilised in the Sttae out of sanctioned amount was Rs 3642.47 crore, credit sanctioned in the State but utilized in other States was Rs 13.43 crore and credit utilized in the State but sanctioned in other States was Rs 4455.67 crore. The total volume of credit utilized in the State was Rs 8098.13 crore as against the all India level at Rs 655993.08 crore thereby sharing 1.23 per cent only. The credit-deposit ratio as per sanctions declined from 33.6 per cent as on March, 1998 to 31.7 per cent as on March, 2002 while the same for utilization increased from 37.8 per cent as on March, 1998 to 70.3 per cent as on March, 2002 in the State. The table 18.3 shows the Credit-Deposit Ratio in Assam as well as in India.

TABLE – 18.3
CREDIT – DEPOSIT RATIO AS PER SANCITONED AND UTILIZATION AS ON MARCH

OUTSTANDING CREDIT ACCORDING TO OCCUPATION

18.3.0 The latest available data on outstanding credit of the group-wise Scheduled Commercial Banks in the State under different sectors pertaining to March, 2002 is presented in Table – 18/4.

TABLE – 18.4: SECTOR-WISE AND BANK GROUP-WISE DISTRIBUTION OF OUTSTANDING CREDIT OF SCHEDULED COMMERCIAL BANKS IS ASSAM MARCH 2002 (Click to view)

The table shows that the outstanding total Bank Credit of the Scheduled Commercial Banks in the State as on March, 2002 was Rs 8098.13 crore which was higher by 115.39 per cent than that of Rs 3759.79 crore of the previous year. Among all the Sectors Industrial Sector of Assam occupies the top position with Rs 4305.85 crore i.e. 53.17 per cent of the total outstanding credit of Rs 8098.13 crore as on March, 2002 as against 35.62 per cent recorded in the previous year. Out of the total outstanding credit of the Industrial Sector, the share of Tea processing and Small Scale Industries were Rs 84.95 crore and Rs 172.41 crore respectively Industries like Petroleum and Coal accounted for a sizeable share with Rs 339.21 crore followed by Mining & Quarrying. Food Manufacturing & Processing and Construction with Rs 296.96 crore, Rs 125.00 crore and Rs 34.70 crore respectively. Electricity, Gas and Water alone share Rs 1964.02 crore of which Electricity Generation and Transmission share is Rs 1878.74 crore followed by Non-conventional Energy with Rs 75.01 crore and Gas, Steam and Water Supply with Rs 10.27 crore. The outstanding credit of Rs 678.55 crore under the Trade Sector consist of Wholesale trade of Rs 253.32 crore and Retail Trade of Rs 425.23 crore. The Agriculture Sector follows with Rs 386.90 crore, Transport Operator with Rs 141.61 crore and Artisans and Village Industries with Rs 68.23 crore.

REGIONAL RURAL BANKS:

18.4.0 The Banking facilities for the rural people are being served by a network of five Regional Rural Banks in Assam with a total number of 399 reporting branch Offices as on March 2003. The aggregate deposits with these Banks was Rs 1364.85 crore at the end of March, 2003 against Rs 1217.37 crore at the end of March, 2002 thereby registering an increase of 12.11 per cent. The volume of Credit disbursed by these Banks increased to Rs 465.64 crore at the end of March, 2003 from Rs 358.53 crore at the end of March, 2002, thus showing an increase of 29.87 per cent. The Credit-Deposit ratio of this Bank is 34.12 per cent during March 2002 as against 29.5 per cent during the same period of the previous year.

ROLE OF ALL-INDIA LEVEL FINANCIAL INSTITUTIONS:

18.5.0 The basic idea behind setting up several all-India level Financial Institutions during the post-independence period was to provide the much-needed thrust for the development of industrial and other important sector of the national economy. Another objective was to utilize these institutions as instruments for removing /reducing regional disparities in economic growth. The network of such all-India level financial institutions comprises institutions like IDBI, IFCI, CICI, IDFC, SIDBI, IIBI, Exim Bank, NABARD, LICI, GIC etc. besides the NEDFI, 28 SIDCs and 18 SFCs for catering regional/State needs.

Over the years operations of these institutions in the country have been expanding on a fairly large scale providing every year much needed finance to industry, trade, commerce etc. The volume of assistance sanctioned and disbursed by all-India level financial institutions and some State level financial institutions may be seen at Table – 18.5 and 18.6 respectively.

TABLE – 18.5
ASSISTANCE SANCTIONED AND DISBURSED BY ALL INDIA FINANCIAL INSTITUTIONS IN ASSAM AND INDIA (Rs in Crore)

TABLE – 18.6
ASSISTANCE SANCTIONED AND DISBURSED BY SOME STATE LEVEL INSTITUTIONS IN ASSAM
(Rs in Crore)

It has, however, been observed from the data available that Assam is not receiving due attention in respect of sanction and disbursement of finance by these institutions when compared with the position of some other developed Sates as well as for the Country as a whole. As a result, Assam has not been able to keep the pace with the developments witnessed in some parts of the Country. Table – 18.7 provides a comparative picture on institution-wise per capita assistance sanctioned and disbursed in Assam and India for each of the years from 1997-98 to 2000-2001.

TABLE – 18.7
PER CAPITA ASSITANCE SANCTIONED AND DISBURSED
(In Rupees)

Source: Report on Development Banking in India 2000-2001, Industrial Development Bank of India.

SMALL SAVINGS:

18.6.0 The position of Assam under Small Savings Schemes is encouraging as observed from the trend in the recent few years. The target for the net savings collection was fixed at Rs 675 crore up to the end of March, 2003 against which the achievement was Rs 645.38 crore thereby achieving 96 per cent of the targeted amount. The volume of gross savings collection in the State was Rs 1863.11 crore during 2002-2003 and Rs 1636.06 crore during 2001-2002 while the net saving collection was reported at Rs 645.38 crore and Rs 515.32 croe respectively for the same periods. Thus, in percentage term the net savings has increased by 25 per cent in 2002-2003 over 2001-2002.

18.6.1 In Assam, the popularly accepted type of Small Savings Schemes during the last few years were Post Office Recurring Deposit Scheme (POMIS), Kishan Vikash Patra (KVP), National Savings Certificate VIIII (NSCVIII) etc. As per the latest available information during the year 2002-2003 the net savings collections was highest under Post Office Recurring Deposits of Rs 185.73 crore followed by the Kishan Vikas Patra of Rs 162.68 crore. Post Office Monthly Income Scheme of Rs 159.61 crore, and National Savings Certificate VIII of Rs 115.24 crore. The net savings collection under Post Office Recurring Deposit has increased from Rs 61.62 crore in 2001-2002 to Rs 185.73 crore in 2002-2003 thereby registering a remarkable increase of 201 per cent during the aforesaid period. Increasing trend has also been observed in case of Post Office Time Deposit at 194 percent followed by Post Office Monthly Income Scheme at 91 per cent, Kishan Vikash Patra at 8 per cent and National Savings Certificates VIII at 7 per cent during 2002-2003 over the previous year. However, a decreasing trend has been observed in case of Public Provident Fund by 65 per cent and Post Office Savings Account by 5 per cent as compared to earlier position.

The security-wise collection of Small Savings in Assam is shown in the Table – 18.8.

TABLE – 18.8
SECURITY-WISE COLLECTIONS UNDER SMALL SAVINGS IN ASSAM
(Rs in crore)

LIFE INSURANCE:

18.7.0 The Life Insurance Corporation of India (LICI) is performing a very encouraging business in Assam. The Guwahati Division of LICI came to be a constituent unit of the Corporation with Branch Office at Guwahati, Nagaon, Jorhat, Tezpur, Dibrugarh, Digboi, Dhubri, Silchar and Sub-Offices at Sibsagar, Tinsukia, and Karimganj. Due to increase in the volume of business the bifurcation took place with creation of its Jorhat, Silchar and Bongaigaon Divisions. The total number of Policies involved as on 31.3.2003 were 866060 and the sum assured against these Policies amounted to Rs 5224.91 crore. The number of policies has increased from 760019 during 2001-2002 to 866060 during 2002-2003 and the sum assured has also increased to Rs 5224.91 crore during 2001-2002 thereby registering marginal increase by 0.52 per cent. Besides the normal insurance activities, the LIC is also engaged in investing and extending loans of a sizeable amount in the State of Assam. The Table 18.9 shows the performance of LICI in Assam during 2002-2003.

TABLE – 18.9
PERFORMANCE OF LIFE INSURANCE CORPORATION OF INDIA IN ASSAM DURING 2002-2003