View of A STUDY ON THE PERFORMANCE OF SARVA HARYANA GRAMIN BANK

VOLUME: 08, Issue 06, Paper id-IJIERM-VIII-VI, December 2021

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A STUDY ON THE PERFORMANCE OF SARVA HARYANA GRAMIN BANK

Sakshi Gupta¹,Dr. Surbhi Jain²

1Research Scholar, Department of Commerce and Management, Baba Mast Nath University, Asthal Bohar, Rohtak, Haryana (India)

2Assistant Professor, Department of Commerce and Management, Baba Mast Nath University, Asthal Bohar, Rohtak, Haryana (India)

Abstract- Regional rural banks play an important role in the overall rural development of India. RRBs came into existence in 1975 with 5 RRBs on the recommendation of the Narasimhan working Committee. The achievement of rural credit in India mainly depends upon financial soundness. RRBs play a significant role to fulfill the credit needs of rural areas. From total capital 50% is subscribed by the central government, 15% by the state government, and 35% by sponsor banks. This research helps to evaluate the growth performance of RRBs in Haryana. At present in Haryana, there is one regional rural bank that is Sarva Haryana Gramin Bank which is sponsored by PNB. This study covers the period from 2015-2016 to 2020-2021 and different statistical tools used in this research are Growth rate, AAGR, CAGR. Sarva Haryana Gramin bank has a network of 654 branches in 22 districts with 10 regional offices in Haryana. In this research, data is collected through secondary sources with annual reports of SHGB and NABARD.

Keywords: Regional Rural Banks, Growth Rate, Performance.

1 INTRODUCTION

Banking is blood for every economy whose role shows the strength of any country.

The banking commission suggests settling another organization to fulfill the needs of rural credit then the Indian government settles regional rural banks as a distinct institution for rural credit. RRBs were started by M. Swaminathan who is known as the father of regional rural banks.

Prathama bank was the first regional rural bank in India. RRBs are scheduled commercial banks in India which operate in different states in India. These banks provide financial help to those living in remote areas and also encourage the people of rural areas to promote savings.

At present 43 RRBs are working in India with 14494 branches. Kerala Gramin bank is the largest Gramin bank of India.

Uttar Pradesh has the largest number of RRBs. The main aim of RRBs is to give advance credit and other facilities to the marginal farmers, agriculturists, and small artisans to develop different activities in rural areas. From the total authorized capital, 50% of capital is subscribed by central government, 15%

by the state government, and 35% by sponsor banks.

1.1 Sarva Haryana Gramin Bank

After the amalgamation of Haryana Gramin Bank & Gurgaon Gramin Bank, a new bank that came into existence on

29.11.2013 is Sarva Haryana Gramin Bank. The Head Office of SHGB is in Rohtak. At present Sarva Haryana Gramin Bank runs in 22 Districts of Haryana with 654 branches in different districts. Sarva Haryana Gramin Bank is one of the largest banks of Haryana and it is Sponsored by PNB. Sarva Haryana Gramin Bank has 10 Regional Offices in Haryana in different districts such as Ambala, Bhiwani, Fatehabad, Gurugram, Hisar, Nuh, Palwal, Panipat, Rewari, and Rohtak. The main objective of this bank is to focus on the promotion of micro credit dispensation through Self Help Groups and alsoto satisfy the financial needs of the rural sector.

2 REVIEW OF LITERATURE

Ibrahim (2010) analyzed the performance appraisal of RRBs in India. This data was collected through secondary sources. It was found that after the merger overall progress of RRBs was improved. This study suggested that government has to take some measures to reduce the gap between the credit deposit ratio of RRBs and commercial banks.

Sharma (2011) studied the role of RRBs in the growth of the overall economy in Haryana and also discussed the zone-wise performance of Haryana.

This study revealed that RRBs built its best image as a bank by giving credit

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13 facilities to small and marginal farmers,

the agriculture sector, and small businessmen for production activities along with this it also gives different facilities related to various valuable schemes to their customers and also helps the development of the rural economy in Haryana.

Balamuniswamy (2018) studied the performance of the agricultural credit framework of RRBs in Andhra Pradesh and also evaluate the performance connected with loan facility by Andhra Pragathi Grameen Bank in the agricultural and nonagricultural zone.

This study revealed that Andhra Pragathi Grameen Bank got an achievement in increasing the rural economy of that state. It was found Recovery percentage of the nonagricultural sector was more than the agricultural sector.

Bhandari (2019) analyzed the working of RRBs based on the various region covered years from 2005 to 2013 with the help of numerous factors such as area wise branch network, net profit, NPA, loan and advance, and total recovery. The statistical tool used in this was ANOVA. It was found that due to amalgamation total number of branches based on the different regions was decreased and the growth rate of profit earning RRBs was increased. This study suggested that government should make various efforts regarding financial service arrangements for RRBs.

3 RESEARCH METHODOLOGY

This research is based on secondary data.

To attain the objective secondary data were collected through the annual reports of SHGB and NABARD. This study has been covered the year from 2015 to 2021.

In this research growth rate, AAGR, CAGR is calculated to know the overall performance of Sarva Haryana Gramin Bank by using given formulas.

 Growth rate= current year value- base year value/ value of base year

 Average Annual Growth Rate (AAGR)

= (1/n)*LN (Ending Value/

Beginning Value)*100

 Compound Annual Growth Rate (CAGR) = ((Ending Value/Beginning Value) ^ (1/n) – 1)*100

4 OBJECTIVE OF THE STUDY

1. To analyze the overall growth of Sarva Haryana Gramin Bank.

2. To analyze the financial performance of Sarva Haryana Gramin Bank.

5 ANALYSIS AND INTERPRETATION 5.1 Branch Extension

Branch Extension table 1.1 shows the overall growth of regional rural banks. It exhibits that the branches of Sarva Haryana Gramin Bank increased from 597 in year 2015-2016 to 654 in year 2020-2021. This table shows the effective growth of the bank in terms of the extension of branches.

Table 1.1 Branches extension of SHGB from 2015-2016 to 2020-2021

YEAR NUMBER OF

BRANCHES GROWTH PERCENTAGE

2015-2016 597 -

2016-2017 610 2.1

2017-2018 642 5.24

2018-2019 664 3.42

2019-2020 666 0.30

2020-2021 654 -1.80

Sources: Compiled through annual report of SHGB

Graph 1.1 Branches extension of SHGB from 2015-2016 to 2020-2021

3.1 Investment of SHGB

The given table 1.2 shows that the investment of SHGB increases from 2875.7 crores in 2015-2016 to 10039.38 crores in 2020-2021 and registering a growth of 25.004 percent (AAGR) on average basis and 28.40percent when compounded.

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14 Table 1.2 Total Investment of SHGB

from 2015-2016 to 2020-2021 (Amount in crores)

YEAR TOTAL

INVESTMENT GROWTH PERCENTAGE

2015-2016 2875.7 -

2016-2017 4304.98 49.70 2017-2018 5476.32 27.21 2018-2019 6244.82 14.03

2019-2020 7687.40 23.1

2020-2021 10039.38 30.5 AAGR% 25.0044

CAGR% 28.40817

Sources: Compiled through annual report of SHGB

Graph 1.2 Total Investment of SHGB from 2015-2016 to 2020-2021 (Amount

in crores)

3.2 Total Deposits of SHGB

From the below table 1.3 it can be concluded that total amount of deposits of Sarva Haryana Gramin Bank had been increased from 10123.69 in 2015-2016 to 17652.35 in the year 2020-2021. It has been observed that the AAGR in case of deposits stood at 11.11 percent and CAGR at 11.76 percent.

Table 1.3 Total Deposits of SHGB from 2015-2016 to 2020-2021 (Amount in

crores) YEAR TOTAL

DEPOSIT GROWTH PERCENTAGE 2015-2016 10123.69 - 2016-2017 12030.5 3.28 2017-2018 13556.46 12.68 2018-2019 14547.56 7.31 2019-2020 16189.12 11.28 2020-2021 17652.35 9.03

AAGR% 11.11981 CAGR% 11.76163

Sources: Compiled through annual report of SHGB

Graph 1.3 Total Deposits of SHGB from 2015-2016 to 2020-2021 (Amount in

crores)

3.3 Net Profit/ Loss of SHGB

Profit/loss plays an important role to show the performance of a bank. The given table 1.4 shows that the profit of 2019-2020 is 3.02 crores. It can be seen that profit has been reduced from 153.55 crores to 18.30 crores in 2020-2021.

Table 1.4 Profit/Loss of SHGB from 2015-2016 to 2020-2021 (Amount in

crores)

YEAR PROFIT/LOSS GROWTH%

2015-2016 153.55 -

2016-2017 153.15 -0.26 2017-2018 182.54 19.19 2018-2019 -83.02 -145.4 2019-2020 2.97 -103.63

2020-2021 18.30 516.1

AAGR% -42.543 CAGR% -34.6508

Sources: Compiled through annual report of SHGB

Graph 1.4 Profit/Loss of SHGB from 2015-2016 to 2020-2021 (Amount in

crores)

3.4 Credit-Deposit of SHGB

From the below table 1.5 it can be concluded that credit deposit ratio of Sarva Haryana Gramin Bank has been decline from 66.88 in 2015-2016 to 59.14in year 2020-2021.

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Table 1.5 Performance of Credit-Deposit of SHGB from 2015-16 to 2020-21 (in lakhs) YEAR CREDIT DEPOSIT CREDIT

DEPOSIT RATIO

GROWTH

% OF CREDIT

GROWTH %OF DEPOSIT

2015-16 677749 1013369 66.88 - -

2016-17 743234 1203050 61.77 9.662 18.71 2017-18 849367 1355645 62.65 14.27 12.68 2018-19 914952 1454756 62.89 7.72 7.31 2019-20 957452 1618912 59.14 4.64 11.28 2020-21 983872 1765235 55.73 2.75 9.03

AAGR% 7.4544 11.10007 CAGR% 7.739249 11.73957

Sources: Compiled through annual report of SHGB Graph 1.5 Performance of credit-

deposit of SHGB from 2015-16 to 2020- 21 (in lakhs)

3.5 Gross NPA and Net NPA

From the below table 1.6 it can be concluded that the Net NPA of Sarva Haryana Gramin Bank has been increased from 4.73 in 2015-2016 to 59.14 in the year 2020-2021.

Table 1.6 Gross NPA and Net NPA of SHGB from 2015-2016 to 2020-2021

(in crores) YEAR GROSS

NPA (Amt.)

GROWTH

% OF GROSS

NPA

NET

NPA GROWT H % OF

NET NPA

2015-16 328.21 - 172.07 -

2016-17 327.43 -0.23 187.46 8.9 2017-18 579.95 77.1 357.13 90.5 2018-19 1217.68 109.9 796.55 123.04 2019-20 1173.40 -3.63 603.90 -24.1 2020-21 998.55 14.90 151.51 -74.9

AAGR% 22.253 -2.545

CAGR% 24.9233

4 -

2.5128 8

Sources: Compiled through annual report of SHGB

Table 1.6 Gross NPA and Net NPA of SHGB from 2015-2016 to 2020-2021

4 CONCLUSION

This study concluded that the growth and performance of Sarva Haryana Gramin Bank slightly improved in terms of branch expansion, investment, and deposit but on another side, the value of NPA has been increased as Bank should take some important steps to reduce NPA as it creates a big risk for the bank. It was found that SHGB failed to earn a high value of profit so banks should try to increase their profitability and credit deposit ratio as it helps to extend the strength of the bank. This study suggested that Bank should follow some strategies to improve its financial performance through increasing profitability position and reducing NPA.

REFRENCES

1. Balamuniswamy, D.,& Erraiah, G.(2013). Regional Rural Bank in India, Online International Interdisciplinary Research Journal, III(V), 267-282.

2. Bhandari, G. P. (2019). Region Wise Working of the Regional Rural Banks (RRBs) in India. Journal of

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Rural and Industrial

Development, 7(1), 1.

3. Ibrahim, S. M. (2010). Performance evaluation of regional rural banks in India. International Business Research, 3(4), 203-208.

4. Sharma, R. (2011, December). Role of regional rural banks in development of rural economy of Haryana. RMS Journal of Management & IT, 68-77.

Websites

 www.shgb.co.in

 https://www.wikipedia.org/

 http://www.nabard.com. SS REPORT

 Sarva Haryana Gramin Bank annual reports from the year 2015-2016 to 2020-2021.