Chapter 4

Formation and Progress of Central Bank of India

A] Formation of Central Bank of India

4.1 Establishment

4.2 Growth

4.3 'Centenary' Progress

B] Central Bank of India as a 'Lead Bank'

4.4 Introduction of Lead Bank Scheme

4.5 Objectives of LBS

4.6 Implementation of LBS

4.7 Allocation of District in India

4.8 State wise Allocation of Lead Districts of CBI

4.9 Maharashtra State and Central Bank of India

C] Progress of Central Bank of India

4.10 Banking Network in Ahmednagar District

4.11 Progress of CBI

4.12 Business Parameters of CBI

4.13 Deposits and Advances of CBI in Ahmednagar

District

4.14 Actual Position of CBI in Ahmednagar District

4.15 NPA of CBI in India (Sector wise)

4.16 Achievement of CBI

4.17 Compatibility of CBI

Chapter 4

Formation and Development

of Central Bank of India

A] Formation of Central Bank of India :

Commercial banking in India has its origin in eighteenth

century, it came in India with the establishment of trade centers by

East India Company. These agency houses carried on trading and

banking operations. In eighteenth century various joint stock banks

were developed in a large scale. In the initial years of nineties,

'Swedish Movement was on wave in India. Many Indian

entrepreneurs had launched banking institutions. Following the

Swadeshi movement, 'Central Bank of India' was one of the

important banking venture during that period. CBI was established

on 21st Dec 1911. In this chapter Formation and progress of CBI has

been discussed.

4.1 Establishment :

The idea of starting purely Indian Bank was first conceived in

the year 1911, by Mr. S. N. Pochkhanawala, who was fired with the

ambition to venture into a region which was practically the

monopoly of British and foreign institutions.

Mr. S. N. Pochkhanawala, born in a middle class family, had

lost his father when he was of six. Sorabji managed to complete his

school education and entered in the service of chartered bank as a

clerk on a salary of Rs. 20/- per month. By his untiring dedication to

work and largely by a process of self education he rose to a position

of a book-keeper, but soon found that in a foreign bank he could

aspire to go no further. Then he joined the Bank of India when it was

established. He had achieved the distinction of being the first Indian

to pass the London Institute of Banker's Examination. There was a

wide spread and intensive movement to spread the gospel of

"Swadeshi" and economic self reliance.

Sorabji felt that the establishment of a banking institution

wholly Indian in its outlook and approach and having the

development of indigenous enterprises as its main objective, was

essential, not only for the nation's economic progress but also for

bringing out the latent capacity of the Indian people to manage their

own affairs. A leading cotton merchant in Bombay, Mr. Kalianji

Vardhaman Jetsy, appreciated potentials of this young man, and

generously agreed to pay all the preliminary expenses involved in

launching the bank. Afterwards Sorabji was succeeded in inducing

Sir Pherozeshah Mehta to bless his efforts and accept the

chairmanship of the bank.

The Central Bank of India was accordingly born on 21st Dec.,

1911 with its registered office in Bombay and with an authorized

capital of Rs. 50 Lakh divided into 1 Lakh shares of Rs. 50/- each.

Early in 1913, the country faced an acute financial crisis. There

was a series of bank failures which starts with a toll of 29 banks in

Punjab, quickly spread over the rest of the country involving the

crash of 64 banks. In Bombay city alone, 11 banks had to close their

doors. It was very difficult period for the 'Central Bank' to go

through this hard times.

These crisis had been surmounted when the great war broke in

1914. There was general dislocation of trade and industry. The

Central Bank of India suffered a decline in its deposits. It came

down to Rs. 30 Lakhs at the end of 1914. Difficult conditions

continued for some time, but by 1916 it was turned and an upward

trend set in, which, baring occasional reversals, has continued for

many years.

In the Indian banking history, the year 1923 will always remain

memorable. It marked the taking over of the management of Union

Bank of India Ltd. and the amalgamation of the Tata Industrial Bank

with the Central Bank of India Ltd. It was Sir Sorabji

Pachkhanawala, who first conceived the idea of amalgamation. The

amalgamation not only established the Central Bank of India on a

sounder foundation but also preserve, the fair name of Indian

Banking.

As a result of this amalgamation, the Central Bank of India

gained considerable strength and status. Its paid-up capital increased

more than three-fold from Rs. 50 Lakhs to Rs. 168 Lakhs. While the

Reserves registered an equally improvement from Rs. 30 Lakhs to

Rs. 100 Lakhs. Deposits and working funds moved upto Rs. 15.74

Crores and Rs. 21.95 Crores respectively.

The late Sir Basil Blackett, formerly finance member to the

Govt. of India, laid special emphasis on this achievement, and

observed as follows, while opening the Bank's Calcutta premises on

12th July, 1924.

"Among the services which the Central Bank of India has

rendered to India, possibly not the least pregnant with results for the

future has been its absorption of the Tata Industrial Bank." 1

The developing picture, however changed in the years which

immediately followed. The bank had to face two severe problems,

due to false rumors. Between the years 1923 and 1936, Indian

banking suffered a serious set-back and there were many bank

failures. The economy of the whole world was in the grip of one of

the worst depressions in living memory. In 1931, one important

decisions was taken, the uncalled liability of Rs. 25/- per share was

converted into a Reserve liability and this helped further to

strengthen the faith of the public in soundness of Bank's structure.

In 1936, bank completed 25 years of its service to the nation. At

the time, the paid-up capital and Reserves stood at Rs. 2.5 Crores;

deposits Rs. 31 Crores and there were as many as 84 branches in

different parts of the country. The Bank had already achieved the

distinction of being the biggest of all Indian Joint Stock Banks.

An important event happened in 1936 i.e. the establishment of

the Central Exchange Bank of India Ltd. in London as a subsidiary

of the 'central'. Unfortunately, the subsidiary did not do too well and

had to be closed down in 1943, to be reborn as regular branch in

1953.

On 5th July, 1937, the Bank suffered a heavy loss by the

untimely passing of Sir Sorabji Pochkhanawala, who had founded

the Central Bank of India. His contribution to Indian banking had

been so outstanding that he was widely accepted as the father of

modern Indian banking. By his energy, devotion and financial

acumen, he had shown how a bank can be wholly managed by

Indians.

The Times of India, leading daily newspaper once observed,

"There is no single person in India to whom Indian banking owes a

greater debt of gratitude than Mr. Pochkhanawala. He has done more

than any other to familiarize many Indians, formerly : ignorant of

indifferent with the practice of modern banking, and if, in future,

powerful banks grow up in India, they will owe their success largely

to his pioneering work". 2

The second world war was started in Sept. 1939, and the entire

economy was affected by the war. There had been an enormous

increase in Govt. expenditure leading to the generation of

inflationary forces, scarcity of goods, rationing and price control.

The creation of new money resulted in a rapid growth of bank

deposits and an expansion of branch banking on a considerable

scale. The Central Bank of India took the fullest advantage of these

conditions and not only consolidated its position, but also expanded

its business substantially under all heads. Thus, during the period the

Bank's deposits registered an increase from Rs. 30 Crores to Rs. 105

Crores.

The end of the war was followed by India's fight for freedom

which gathered fresh momentum and after a prolonged and bitter

struggle, Britain peacefully relinquished her hold on India and the

country reached its long cherished goal of independence on 15th

August, 1947. Simultaneously, there was a partition and Pakistan

was born as a separate sovereign state. It was difficult time for banks

operating in the areas affected by the partition. At the time of

partition Central Bank of India had 77 offices in Pakistan, but after

few years as many as 67 of them had to be closed down. The bank

suffered considerable losses in post-partition period. In the year

1961, the bank had 338 offices in all, including 8 in Pakistan, one in

Rangoon and one in London.

4.2 Growth of Central Bank of India :

Mr. S. N. Pochkhanwala had established the bank with the

objective to start the banking institution with the help of Indian, for

the Indian in the monopoly of British Institutions. The basic aim and

objective of bank was to contribute to the development of the

country in every possible way. In 2011, bank celebrated its centenary

year. The extra ordinary steps and policies adapted by the bank were

responsible for the growth of Central Bank of India. Various

activities which itself pioneering were performed by the CBI, such as

- Ladies department, safe deposit vault, insurance scheme etc. These

activities can be divided into two periods. A) Pre-Nationalization

and B) Post - Nationalization

A. Pre-Nationalization -

• Ladies Department (1924) :

'The Central Bank of India is unique in setting up a

separate Ladies' Department for the benefit of its lady

customers. No other banks in India provides this

exceptional facility. The object of such department was for

attending to the needs of lady constituents is to enable the

latter to come freely to the Bank. The department was

established in 1924 and on the average, about a thousand

lady customers visit this department every month.'3

• Home Savings Safe Accounts (1921) :

In 1921, Central Bank had introduced this scheme for

the first time in the country to encourage the savings habit

amongst people of moderate means.

• Safe Deposit Vault (1926) :

The CBI started this facility in March, 1926. It was the

first bank in India to provide safe Deposits facilities for its

customers. It also introduce 3 year cash certificates - on the

analogy of post office cash certificates and issue of Rupee

Travelers Cheques.

• Insurance Scheme (1932) :

A novel scheme of insurance was framed by the

Central Bank of India in 1932 with the double object of

inculcating the saving habit and at the same time providing

life insurance cover for the account holders on attractive

terms and without unnecessary formalities.

• Executor and Trustee Department (1929) :

Among other important activities of the Central Bank

of India, there was the Executor and Trustee Department

which functioned as a separate company. It was formed in

1929 on the model of similar Trustee companies in

England and America.

• Recurring Deposits Scheme (1962) :

In 1962, Recurring Deposit scheme was introduced by

the bank to inculcate saving habit amongst customers.

B. Post - Nationalization -

Subsequently even after the nationalization of the Bank in

the year 1969, Central Bank continued to introduce a number

of innovative banking services as under:

• Merchant Banking Cell (1976) :

In 1976, Merchant Banking Cell was established by

the Central Bank, to provide facilities and services

specifically to the Merchants, Businessmen etc.

• Central Card (1980) :

The credit card facility was introduced by Central

Bank of India in 1980, to facilitate to the customers. CBI is

the first Indian Bank to introduce ATM, Credit Cards in the

history of Indian Banking.

• Platinum Jubilee Money Back Deposit Scheme (1986) :

In 1986, when the Central Bank of India completed its

75 years (i.e. Platinum Jubilee Year), this scheme was

launched.

• The Housing Subsidiary Cent Bank Home Finance Ltd.

(1989) :

In 1989, the housing subsidiary Cent Bank Home

Finance Ltd. was started with its headquarters at Bhopal,

Madhya Pradesh to finance to housing sector.

• Quick Cheque Collection Scheme :

In 1994, Quick Cheque Collection Scheme and Express

Service was set up to enable speedy collection of outstation

cheques.

Further in line with the guidelines from Reserve Bank

of India and also from Govt. of India, the Central Bank of

India has been playing an increasingly active role in

promoting the key thrust areas of agriculture, small scale

industries and also medium and large industries. The bank

also introduced a number of self employment schemes to

promote employment among the educated youth.

• Largest Network :

Among the public sector banks, Central Bank of India

can be truly described as an all India Bank, due to

distribution of its large network in 27 out of 29 states as

also in 3 out of 7 Union Territories in India. Central Bank

of India holds a very important place among the public

sector banks on account of its network of 3656 branches

and 178 extension counters at various centers throughout

the length and breadth of the country.

"In 2011, the Financial Express has declared Central

Bank of India as 13th Best Nationalized Bank on the basis

of various segments like, strength and soundness, growth,

profitability, efficiency and credit quality etc." 4

4.3 'Centenary' Progress

In 2011, Central Bank of India moved towards its centenary

year. On 21st December, Central Bank of India completed its 100

years of successful progress and in 2011, Bank celebrated its

centenary year. Following are some important footprints of the

centenary progress of CBI.

1. First Indian Bank :

100 years back, Sir Sorabaji Pochkanawala had established

Central Bank of India as a purely Indian Bank. This is India's first

bank, which was established by the Indian for the Indians.

2. First Rank Bank :

In 1969, at the time of nationalization, Central Bank of India

was the 1st rank bank. Today, there are 3800 branches of Central

Bank of India all over India.

3. Network :

Central Bank of India has the third largest branch network of

India. All the branches of Central Bank of India are in core banking

solution network.

4. Employees and Customers :

Central Bank of India had 34,000 employees in 2011 and 3

Crore customers all over India.Former Prime Minister, Pandit

Jawaharlal Nehru was the customer of Central Bank of India's

Allahabad branch.

5. Technology :

Central Bank on India is providing technological avenues like

ATM, Debit Card, Credit Card, Internet Banking, Online Trading,

Mobile Banking, SMS Alert etc.

6. Training :

Central Bank of India has 12 colleges to give training to

employees. Out of which, 9 are for clerical and subordinate staff and

3 are for executives."Sir Sorabji Pochkanwala College, Andheri, is a

joint venture of Central Bank of India and Dena Bank." 5 Every

employee amongst 34,000 gets training at least once in a year.

Central Bank of India has been updating knowledge of its employees

through such training.

7. Rural Branches :

"Out of total 3800 branches, 63% branches (i.e. more than

2000) are working in rural and semi-urban area." 6 A sapling

which was planted by Sir Sorabji Pachkanwala in 1911, has now

turned into a 100 years huge old Banyan Tree, whose roots are

spread unto the last. The Bank has achieved this only because of its

reliability, customers, foresight of the management and the bank will

celebrate definitely its second centenary in future.

B) Central Bank of India as a 'Lead Bank' :

Banking system in our country has passed through various

phases of development. There are conspicuous indications of a shift

from wholesale banking to retail banking or mass banking. Now

banks can be called as development agents / change agents. On

account of various social, economic, industrial and cultural

obligations commercial banks are aware of their responsibilities

towards rural and economical weaker masses, but their experience in

dealing with rural people and rural enterprises is limited. "To make

their work more effective and meaningful policies and plans must be

made available to bankers in particular and public in general." 7

4.4 Introduction of 'Lead Bank Scheme' :

The national credit council was set up in December 1967, to

determine the priorities of bank among various sectors of economy.

The council appointed a study group of the organizational

framework for the implementation of social objectives in October,

1968 under the chairmanship of Dr. D. R. Gadgil. "The Study Group

found that the commercial banks had penetrated only 5000 villages

as to June 1967, and out of the institutional credit to agriculture was

at 39% the share was negligible at 1%, the balance being met by the

co-operatives." 8 The banking need of Agriculture, SSI and allied

activities remained neglected. Therefore, the group recommended

the adoption of an area approach for bridging the spatial and

structural credit gaps. Later, All India Rural Credit Review

Committee, 1969, endorsed the view that commercial banks should

increasingly come forward to finance activities in rural areas. Prof.

Dr. D. R, Gadgil study group, submitted its report in October 1969.

The study group stressed the fact that commercial banks did not have

adequate presence in rural areas and also lacked the required rural

orientation. "Under the chairmanship of Shri. F. K. F. Nariman

(Nariman Committee), a committee of bankers, on Branch

Expansion Programme (November, 1969) recommend that, in order

to enable the public sector bank to discharge its social

responsibilities, each bank should concentrate on certain districts

where it should act as a 'Lead Bank'." 9

The lead Bank Scheme was introduced by the Reserve Bank of

India in December, 1969. The Lead bank is expected to assume

leadership role and act as a consortium leader for co-ordinating the

efforts of credit institutions and accordingly various districts of the

country were allotted to public / private sector banks. "At the end of

March, 2009, 26 banks (Public and Private sector) had been assigned

lead responsibility in 622 districts of the country. (except the metro

Politian cities of Mumbai, Delhi, Kolkata, Chennai and certain

Union Territories)." 10 In 1989, service area approach (SAA) was

introduced through Lead Bank Scheme. Under the chairmanship of

Prof. V. S. Vyas, Advisory Committee, on the flow of credit to

Agriculture and allied activities, observed that, ''SAA, introduced for

planned and orderly development of rural areas, had developed

rigidities and acted as a bottleneck despite built in measures to

provided flexibility.'' 11

Since the introduction of lead bank scheme in 1969, several

changes have taken place in financial sector, especially after 1991.

It include increasing liberalization and globalization of the Indian

economy and financial sector.

4.5 Objectives of Lead Bank Scheme :

The original objectives of the Lead Bank Scheme was as follows -

i ) To remove regional imbalances by extending banking

facilities to unbanked areas.

ii) "To identify the un-banked and under-banked centers in

districts to grasp their profile physiographic, agro - climatic

and socio - economic conditions through quick and

impressionistic surveys." 12

iii) To estimate the credit gaps in various sectors of the economy

of each district and to prepare the credit plan for each

district.

iv) To develop rapport with all the financial and non-financial

institutions, including administrative authorities, in the

improvement of the district economy.

v) To effect structural and procedural changes in banking

With the above objectives, Lead Bank Scheme was

introduced in 1969. 'The Lead Bank Scheme largely achieved its

original objective of bringing about overall improvements in branch

expansion, mobilization of deposits and lending to the priority

sectors, especially in rural and semi urban areas. "The population per

branch in the country had declined from 63 thousand to 16 thousand

and in rural and in semi urban area from 82 thousand to 17 thousand

during the period June 1969 to March 2007" 13

In 2009, High level committee recommended that, the scope

of scheme should be broadened to cover the financial inclusions. 'It

is also expected to open a financial literacy and credit counseling

center (FLCC) in every district where they have lead responsibility.14

4.6 Implementation of Lead Bank Scheme :

The implementation of Lead Bank Scheme can be divided

into six phases. The first phase covers 'allocation of districts' among

various commercial banks for assuming the lead role. 'The branch

expansion (1970-73) was the second phase and formation of District

Consultative Committee's (DCC's) the third phase (1971-73). The

fourth phase (1973-76) consists of preparation of credit plan on the

basis of credit gaps and potentialities of the districts." The review of

progress of Lead Bank Scheme was made in the fifth phase and in

final phase, the RBI has directed the lead banks to have a time bound

programme in the preparation of second round district credit plan." 15

The Lead Bank Scheme was implemented through above six phases.

The process on implementation of Lead Bank Scheme started with

the allocation of all the districts to various banks for assuming the

leadership role.

4.7 Allocation of Districts in India :

All the districts of the country were allocated by the Reserve

Bank of India to the State Bank Group, 14 nationalized commercial

banks and two non-nationalized banks."Initially, in 1970, 338

districts (630 at present) were allotted among 25 banks, on the

basis of size of the bank, contiguity of districts, adequacy of

resources, regional orientation of banks, desirability of each state to

have more than one lead bank operation in its territory." 16

Table 4.1 shows, the allocation of Lead Districts.

Table 4.1

Allocation of Lead Districts to Banks in India

(Position as at the end of March 2009)

Sr.

No. Name of the Lead Bank

Initial 1978

(No. of

Districts)

No. of District

allotted

(at present

2009)

1 Allahabad Bank 09 17

2 Andhra Bank 05 06

3 Bank of Baroda 30 44

4 Bank of India 32 48

5 Bank of Maharashtra 5 06

6 Bank of Rajasthan 01 -

7 Canara Bank 17 25

8 Central Bank of India 46 48

9 Corporation Bank - 03

10 Dena Bank 10 13

11 Indian Bank 09 17

12 Indian Overseas Bank 07 13

13 Jammu and Kashmir Bank - 11

14 Punjab National Bank 40 56

15 Punjab and Sind Bank 01 03

16 Syndicate Bank 18 25

17 Union Bank of India 08 13

18 United Bank of India 17 30

19 UCO Bank 24 34

20 Oriental Bank of Commerce - 03

21 Vijaya Bank - 03

22 State Bank of India 69 168

23 State Bank of Indore 03 06

24 State Bank of Hyderabad 07 08

25 State Bank of Saurashtra 06 08

26 State Bank of Mysore 03 03

27 State Bank of Patiala 03 07

28 State Bank of Bikaner and

Jaipur 07 09

29 State Bank of Travancore 02 03

Total Districts 379 630

Source : RBI, Publications, March 2009

As per the table, it is clear that total 630 districts were allotted

to 28 banks in the year 2010 and also the initial data of 1978 is given

in which 379 districts were allotted to 25 banks. The State Bank of

India is on the first position, as it has 168 branches wide network all

over India. Punjab National Bank is on the second position with 56

districts and both Central Bank of India and Bank of India are on the

third rank with 48 districts each.

The table reveals that there is a tremendous increase in number

of districts in case of the State Bank of India i.e. from 69 districts in

1978 to 168 districts in 2009. Initially, the State Bank of Bikaner and

Jaipur and Bank of Rajastan were jointly operating the scheme in

Udaipur district but afterwards it completely transferred to the State

Bank of Bikaner and Jaipur. ''Central Bank of India is

shouldering lead role in 48 districts of the country, with its wide

network of 3800 branches, out of which 63% (i.e. more than 2000)

branches are in rural and semi urban area.'' 17

4.8 State wise Allocation of Lead Districts of Central Bank of

India :

In 1970, Central Bank of India was allotted 39 districts of India

to perform the role of lead bank, which was afterwards increased to

46 districts in 1978 and 48 districts in 2009. Central Bank is

performing its lead responsibility in Bihar, Madhya Pradesh,

Maharashtra, Rajasthan, Uttar Pradesh, West Bengal etc.

Table No. 4.2 gives the overall picture of Central Bank of

India's lead districts at a glance. This table shows information of the

years 1978 and 2009. Central Bank is having largest number districts

in Madhya Pradesh i.e. 18. Initially Chhatisgarh was part of Madhya

Pradesh. Bihar is on the second position with 10 districts allotted.

Maharashtra is on the third position with 7 districts.

Table No. 4.2

Statewise Allocation of Lead Districts of Central Bank of India

(as on 2009)

Sr.

No.

Name of the

State / Union

Territory

No. of Districts allotted to

Central Bank of India

Initial

Dec. 1978

At Present

March 2009

1 Bihar 14 10

2 Chattisgarh - 2

3 Madhya Pradesh 17 18

4 Maharashtra 7 7

5 Rajasthan 2 3

6 Uttar Pradesh 3 5

7 West Bengal 3 3

Total 46 48

Source : RBI Publications March 2009

Today, Central Bank of India is having 3800 branches all

over India, through which it is performing its banking activities. In

Uttar Pradesh, Central Bank has the Lead role in 5 districts and in

Rajasthan and West Bengal Central Bank is having lead role to

perform in 3 districts respectively.

4.9 Maharashtra State and Central Bank of India :

In Maharashtra state, 7 districts are allotted to Central Bank

of India under Lead Bank Scheme. Initially, 8 districts of

Maharashtra were allotted to Central Bank of India. Out of which in

Aurangabad the role of lead bank is jointly performed by both

Central Bank of India and Bank of Maharashtra.

Table No. 4.3

List of Districts of Maharashtra allotted to Central Bank of

India

Sr.

No. Name of District

1 Akola

2 Amravati

3 Ahmednagar

4 Buldhana

5 Dhulia (Dhule)

6 Jalgaon

7 Yeotmal

8 Aurangabad (Jointly with Bank of Maharashtra)

In Maharashtra, Central Bank of India is having more than

500 branches.'' In Vidarbha, Central Bank of India is the Lead Bank

of 4 districts and Central Bank performs it jointly with Vidarbha

Gramin Bank, which has its headquarter at Akola.''18 Dhule

and Jalgaon is part of Khandesh and Ahmednagar is belonging to

Western Maharashtra. ''In 1969, when 14 banks were nationalized,

Central Bank of India was on the 1st position hence, the government

selected Central Bank of India to develop the backward and tribal

area of the country.'' 19

Hence, in those areas where Central Bank of India is

performing its responsibility of the lead bank for last 40 years.

Branch Expansion was the major part of this programme. Many

times, Central Bank of India has to face losses, but it has been

consistently performing the lead responsibility.

C] Progress of Central Bank of India :

After the Nationalisation of Banks in 1969, all nationalized

banks had to expand their branches. Just after the nationalization,

Lead Bank Scheme was implemented by the Govt. of India. Under

the Lead Bank Scheme, all the banks had to expand their branches in

both rural and semi-urban areas. In 1969, the Government selected

Central Bank of India to act as 'Lead Bank' of Ahmednagar district.

The Ahmednagar Branch of Central Bank of India was established

on 15th May 1970. Prior to it, Shrigonda Branch was established in

1969. Shrigonda Branch of Central Branch was the first rural bank

branch opened in India, after Nationalisation.

Afterwards, Central Bank of India opened various branches in

Ahmednagar District as per the Branch Expansion Program of Lead

Bank Scheme in last 40 years. In 1972, there were 10 branches of

CBI and today, there are 61 branches of Central Bank of India in

Ahmednagar District. Central Bank of India has wide rural branch

network of 44 branches, 16 branches semi-urban and 1 branch in

urban sector. Being the 'Lead Bank' of Ahmednagar District, the

Central Bank of India is co-ordinating all banks with various

government agencies. Various Govt. sponsored programmes are

monitored by Lead Bank. Central Bank of India is in consultation

with NABARD and considering the Potential Linked Credit Plan

prepared by NABARD.

Central Bank of India has to prepare, District Credit Plan

(DCP/ACP), for Ahmednagar District every year, for a period of 1st

April - 31st March. On the basis of Annual Credit Plan, targets for

loan disbursement under various sectors, like Agriculture, SSI, Other

Priority sectors are allotted to all the nationalized and co-operative

banks. The progress made, sanction and disbursement of loan

amount is monitored by Lead Bank through District Level

consultative committee forum headed by District collector. The

Annual Credit plan is prepared by Central Bank of India, and

published by District Collector.

4.10 Banking Network in Ahmednagar District :

As Lead Bank of Ahmednagar, Central Bank of India has to co-

ordinates all banks with various government agencies and also has

to monitor the Govt. sponsored programmemes. The Annual Credit

Plan prepared by Central Bank of India, is guideline for other banks

to finance to various sectors. In implementation of this Annual

Credit Plan, scheduled commercial Banks play vial role in

Ahmednagar district. The network of scheduled commercial Banks

in Ahmednagar district for 2009-10 is shown in following table.

Table on the next page

Table 4.4

Network of Scheduled Commercial Banks in

Ahmednagar .Year 2009-10

Sr.

No.

Name of the

Block

(Tahsil)

No. of

Banks

(SCB's)

No. of

Branches

(SCB's)

Deposits

(in lakh)

Credit (in lakh)

Agricul

ture

Sector

Business

Sector

(Non-

agricultu

re)

1. Akole 04 31 32,102 7,258 13,851

2. Sangamner 13 62 51,422 8,530 14,135

3. Kopargaon 08 33 42,389 9,421 15,986

4. Rahata 11 37 62,538 7,311 13,438

5. Shrirampur 09 32 35,444 8,772 14,985

6. Newasa 06 33 23,999 6,422 12,324

7. Shevgaon 04 28 21,536 7,966 14,345

8. Pathardi 08 27 32,514 7,922 13,634

9. Ahmednagar 28 87 2,82,995 11,434 17,872

10. Rahuri 06 39 32,521 8,977 14,425

11. Parner 04 37 22,652 7,694 13,683

12. Shrigonda 06 33 34,577 8,151 14,894

13. Karjat 07 26 22,915 8,647 13,435

14. Jamkhed 06 16 18,742 8,396 14,679

Total 120 520 7,16,346 1,16,901 2,01,686

Source : District Lead Bank (CBI) Ahmednagar

A glimpse of network of scheduled commercial banks is shown

in Table 4.4 In Ahmednagar district there is a wide network of

scheduled commercial banks of 520 branches. Out of which, 16.73%

(87) branches are situated at Ahmednagar tahsil, followed by

Sangamer with 11.72% (62) branches. Minimum branches are

situated at Jamkhed with only 3.07% (16) branches.

In case of deposits, total deposits of banks in Ahmednagar

district is Rs. 716346 Lakh, out of which 39.50% (2,82,995) deposits

are with Ahmednagar block followed by Rahata block with 8.73%

and of (Rs. 62,538 lakh) deposits. Minimum deposits are with

Jamkhed block which is 2.61% (Rs. 18,742 lakh). The C/D ratio of

2009-10 for Ahmednagar district is 44.47%.

It reveals that the Credit deposit ratio of Ahmednagar block is

the lowest i.e. 10.35% and highest credit deposit ratio is of Jamkhed

i.e. 123.11% followed by Shevgaon with 103.59% (C/D ratio).In

Ahmednagar district, there was a wide network of 520 bank

branches of scheduled commercial banks in 2009-10.

4.11 Progress of Central Bank of India :

The Central Bank of India was established in 1911. In last 100

years, the bank has achieved successful progress in each sector.

Today, there are more than 4000 offices and more than 34,000

employees working in the bank. The progress of the Bank from

2003-04 to 2009-10 and current position is shown in the following

table.

Table 4.5

Progress of Central Bank of India

(from 2003-04 to 2010-11)

Sr.

No. Year No. of Offices

No. of

Employees

1. 2003 -04 3,225 38,933

2. 2004 -05 3,247 38,303

3. 2005 -06 3,252 40,124

4. 2006 -07 3,320 39,055

5. 2007 -08 3,433 37,488

6. 2009 -10 3,894 34,000

7. 2010 -11 3,976 34,000

Source : Basic statistical Returns of Scheduled Commercial Bank in India, RBI, Vol. 36, March 2007

Table shows the progress of Central Bank of India for the

period from 2003-04 to 2010-11.' In terms of the number of offices

Central Bank of India shows growth every year from 3225 in 2003-

04 to 3976 offices in 2010-11.'20

"But in terms of the number of employees, it shows decrease

from 2006-07 onwards. In 2003-04 there were 38933 employees and

in 2005-06 the number was 40124 which decreased to 34000

employees in 2009-10." 21

Due to less number of employees in the bank, the speed of

transactions is not upto the mark. The recruitment of employees is

not satisfactory as compared to progress in the number of branches

or offices.

4.12 Business Parameters of Central Bank of India :

The Central Bank of India is providing loans to different

sectors. The business parameters and performance of the bank is

presented in following table. It shows Capital / Reserve and Surplus

and net NPA ratio.

Table 4.6

Business Parameters of Central Bank of India

(Amount in Crores)

Sr.

No. Year

Capital /

Reserves

and

Surplus

Deposits Net NPA

Ratio

1. 2002 -03 2,424 51,156 7.02

2. 2003 -04 2,974 55,909 5.57

3. 2004 -05 3,265 60,572 2.98

4. 2005 -06 2,442 66,483 2.59

5. 2006 -07 3,790 82,776 1.70

6. 2009 -10 - 1,62,107 1.69

7. As on 31/12/2011 - 1,88,226 0.65

Source : Statistical Tables relating to Banks in India (2006-07) Annual Accounts of Bank

The above table shows the performance of Central Bank of

India and the rate of NPA. It can be seen that the number of deposits

of Central Bank of India has been increasing every year. It has

increased from Rs. 51,156 crores in 2002-03 to Rs. 1,88,226 crores

on 31/12/2011.The NPA of Central Bank of India was 7.02 in 2002-

03 which is reduced to 1.70 in 2006-07 and to 0.65 on 31st Dec

2011.The most important part of any business is to make good credit

recovery and maintaining lower NPA which was achieved in 2010-

11.

4.13 Deposits and Advances of Central Bank of India in

Ahmednagar District :

The credit deposit ratio is the measuring rod of the bank's

performance in terms of credit disbursed against deposits. It is a

reflection of performance of the bank. Table 4.9 represents the

overall performance of Central Bank of India through Deposits,

Advances and Credit Deposit ratio.

Table 4.7

Trend of Credit Deposit Ratio of Central Bank of India

in Ahmednagar District for 2001-02 to 2010-11

(Amount in crores)

Sr.

No. Year

Central Bank of India

Deposits Advances C/D Ratio

1. 2001 -02 162 136 84%

2. 2002 -03 181 166 91%

3. 2003 -04 197 190 96%

4. 2004 -05 207 227 110%

5. 2005 -06 269 256 95.31%

6. 2006 -07 327.78 290.88 88.74%

7. 2007 -08 406.07 326.49 80.40%

8. 2008 -09 536.54 335.06 62.45%

9. 2009 -10 659.23 375.01 56.89%

10. 2010 -11 834.69 408.13 49%

Source : Central Bank of India, District Credit Plan, Ahmednagar

(2001-02 to 2010-11)

Table shows that the CD ratio of the Bank has increased by

26% by end of 2005 as compared to year 2002 and then it has

decreased continuously every year to 49% in 2010-11 (decrease is of

61% by 2010-11 as compared to 2004-05) which is an alarm for the

bank.

Since 2006-07, the CD ratio of Central Bank of India in

Ahmednagar district has been decreasing. In 2007-08 it decreased by

8.34%, in 2008-09 by 18.05%, in 2009-10 by 5.56% and in 2010-11

it decreased by 5.89% (as compared to last year).

It is observed that Central Bank of India's performance in

advancing loans in Ahmednagar district has been decreasing as

compared to its deposits. It means bank has to focus on this trend of

CD ratio and give more attention towards the extension of credit to

potential area.

4.14 Actual Position of Central Bank of India in Ahmednagar

District in 2010 and 2011 :

Net profit or Net loss are the parameters of banking business.

These parameters are always used to find out actual position of the

bank. The actual position of Central Bank of India in Ahmednagar

district for 2009-10 and 2010-11 is shown in following Table.

Table 4.8

Position of Central Bank of India in Ahmednagar

District on 31-3-2010 and 31-3-2011

(Rs. In crores)

Sr.

No.

Business

Parameters As on 31-3-2010 As on 31-3-2011

1. Current Deposits 40.79 32.82

2. Saving Deposits 263.42 338.7

3. CASA 304.21 371.52

4.

% of CASA to

Aggregate

Deposits

46.16% 44.52%

5. Aggregrate

Deposits 658.98 834.43

6. Aggregrate

Advances 374.76 397.88

7. Total Agriculture 169.10 166.38

8. Total Priority

Sector 311.82 315.24

9. Profit 20.5 24.82

10. NPA 25.63 12.80

Source : Central Bank of India, Regional Office, Ahmednagar

Table reveals that -

1. Actual positions of Central Bank of India in Ahmednagar as

on 31-3-2010 and 31-3-2011 respectively. Due to increase in

current and saving deposits CASA of 2011 has increased by

67.31 crores as compared to 2010.

2. Aggregate deposits have increased by Rs. 175.45 crores in

2011 as compared to 2010 and also Aggregate advances

have increased by Rs. 23.12 crores. But the Credit Deposit

Ratio decreased in 2011. In 2010 CD ratio was 56.86% and

2011 it was 47.68%.

3. Net profit of the bank was 20.5 crores in 2010 and Rs. 24.82

crores in 2011.

4. In 2010, NPA was 25.63 which decreased to 12.80 in 2011.

It is a good achievement of the bank in Ahmednagar

4.15 NPA of Central Bank of India in India (Sector wise)

For every commercial bank managing its NPA's is the most

important task because NPA level denotes the recovery performance

of that bank. In last few years commercial banks have managed to

reduce and control their NPA level. The sector wise NPA of Central

Bank of India in India as and on 31-3-2011 is presented in following

table.

Table 4.9

Sector wise Non-Performing Assets of Central Bank of

India as on 31st March 2011

(Amount in crores)

Sr.

No. Sector

Amount

(Rs)

Percent to

Total NPA

1. Agriculture 418 17.5%

2. Micro and Small

Enterprises 687 28.7%

3. Other Priority 226 9.4%

4. Total Priority 1,331 55.6%

5. Non Priority 1,064 44.4%

Total NPA 2,395 100

Source : Off-site returns (domestic)

It is revealed from the sector wise NPA of Central Bank of

India that out of total NPA, 55.6% NPA is from total priority sector,

and 44.4% NPA is from Non Priority sector.

NPA of agriculture sector (17.5%) is less than the small and

micro enterprises i.e. (28.7%) and the percentage of total NPA is

1.82% and of Net NPA is 0.65% which is satisfactory.

4.16 Achievements of Central Bank of India :

The current position of Central Bank of India as on 31st

December 2011 is presented in following Table.

Table 4.10

Current Position of Central Bank of India as on

31st Dec. 2011

(Amount in crores)

Sr.

No. Particulars

Amount as on

31.12.2011

(Rs)

% of increase

as compared

to 2010

1. Total Business 321543 15.08%

2. CASA 61079.33 -

3. Deposits 188229 15.40%

4. Advances 133317 14.62%

5. C/D Ratio 70.82% -

6. Net Profit 133 -

7. Total NPA (Rs) 2395 -

8. Total NPA (%) 1.82% -

9. Net NPA 0.65 -

Source : Quarterly Reports of Central Bank of India, as on 31st Dec 2011

Table shows the current position of the bank as on 31st Dec

2011. Total Business of the Central Bank of India in 2011 is Rs.

3,21,543 crores which is 15.08% more than 2010. Deposits and

advances have also increased in 2011 as compared to 2010, by

15.40% and 14.62% respectively. The credit deposit ratio is 70.82%

in 2011. Net NPA is 0.65% and Total NPA is 1.82%

4.17 Compatibility of Central Bank of India :

The 'Financial Express' Group reviewed all banks in India, in

the year 2010 (upto 31st March 2010). For assessment purpose, it

used five business parameters i.e. strength and soundness, Growth,

Profitability , Efficiency and Credit Quality. All figures pertaining to

March 31, 2010 were used for this assessment. After the evaluation,

ranks were given to all banks. As per these parameters the Central

Bank of India was ranked on 13th position amongst all the

Nationalized Banks. The statistics was published in the issue of

financial Express in March 2011. The business parameters

(segments) evaluating the compatibility of Central Bank of India is

presented in following headings and tables.The compatibility of

Central Bank of India is shown in following figures of banking

business.

Table 4.11

Compatibility of Central Bank of India

(As on 31st March 2010)

Sr.

No. Parameters Amount (Rs. In lakh)

1. Deposits 1,62,10,747

2. Borrowing 7,32,664

3. Investments 5,056,287

4. Advances 1,05,38,349

5. Net Worth 7,69,225

6. Total Assets 1,82,67,162

7. Interest Income 12,06,431

8. Interest Expenses 9,51,901

9. Other Income 1,73,525

10. Operating Expenses 2,22,202

11. Net Profit 1,05,823

12. NNPA 72,700

Source: The Financial Express, March 2011, pp. 56, 57

Table reveals the consistency of Central Bank of India. The

deposits were Rs. 16,210,747 lakh and advances were Rs.

10,538,349 lakh. Hence, credit deposit ratio (CD Ratio) is 65.00%.

The net NPA is Rs. 72,700 lakh. Net profit is Rs. 1,05,823 lakh

which has improved by 85.25% which ranks 2nd amongst all

nationalized banks.On the basis of the five parameters, following all

India ranks were given to CBI as on 31st March 2010.

Table 4.12

Ranking of CBI

(As per parameters) as on 31/03/2010

Sr. No. Parameter All India Rank

1. Strength and Soundness 16

2. Growth 5

3. Profitability 26

4. Efficiency 24

5. Credit and Quality 6

Source: The Financial Express, March 2011, pp. 48-57

From the above table it can observed that the, Financial Express

group has categorized CBI as 16th in strength and soundness, 5th in

growth, 26th in profitability, 24th in efficiency and 6th in credit and

quality in all India ranking of the banks.

References :

1. Sir Basil Blackett's Observation (1936) - The Rise and

Growth of Central Bank of India Ltd., Silver Jubilee (1911-

1936) Edition, P. 12.

2. The Times of India's Observation, (1960) Golden Jubilee

Edition of Central Bank of India, P. 28.

3. The Rise and Growth of Central Bank of India Ltd.,

(1936) Silver Jubilee Edition, CBI, P. 18.

4. The Financial Express, March 2011, P. 44

5. Narvekar Ramesh, 'Know Your Bank' - Aarthaparva,

Mumbai, 2011, P. 11.

6. Ibid, P. 12

7. Dr. Singh Awadh Bihari, (1987), 'Lead Bank Scheme',

Capital Publishing House, Delhi, P. 1.

8. www.sibckerala.com/pdf/lead bank

9. RBI Bulletin, 'Lead Bank Scheme - Progress and

Perspective', Nov. 1970, P. 1917.

10. High Level Committee Report, RBI, 2009, Executive

Summary, 2009, P. i

11. High Level Committee Report, RBI, 2009, point 2.19 -

Origin of Lead Bank Scheme, PP. 17-18

12. Dr. Singh Awadh Bihari, (1987), 'Lead Bank Scheme',

(1987), Capital Publishing House, Delhi, P. 3.

13. High Level Committee Report, RBI, point 3.1 - Origin of

Lead Bank Scheme, (2009), P. 29

14. High Level Committee Report (2009), RBI, (Para no. 3.7

and 3.25)

15. Prof. O. R. Krishnaswami, (1979), 'The Lead Bank

Scheme', Empirical Evaluation, Rainbow Publications,

Coimbatore, P. 22

16. Ibid, P. 36

17. Mr. Khadake, (2011) 'Central Bankechi Shataki Watchal' -

Aarthaparva, (Diwali Issue), P. 44

18. Narvekar Ramesh, (2011), 'Know Your Bank',

Aarthaparva, P. 12

19. Mr. Khadake Anil Kumar, (2011), 'Central Bankechi

Shataki Watchal' - Aarthaparva, (Diwali Issue), P. 44

20. Daily Loksatta - 1 Feb 2012 P. 9

21. Narvekar Ramesh (2011), 'Know Your Bank', Aarthaparva,

P. 10