Performance appraisal of regional rural

bank of Bihar

A DISSERTATION
Submitted for the award of the degree of

Master of Commerce
of
Gopal Narayan Singh University
In
Finance
(Faculty of Management studies)
By
Shweta Kumari Singh
Roll No-MCM011

Under the Supervision of

Dr. Kishan Jee
(Assistant Professor)

FACULTY OF MANAGEMENT STUDIES

NARAYAN ACADEMY OF MANAGERIAL EXCELLENCE,
GOPAL NARAYAN SINGH UNIVERSITY,
ROHTAS

July 2020
 DECLARATION

I, Mrs. Shweta Kumari Singh, hereby declare that the research work presented
in this Thesis entitled “Performance appraisal of regional rural bank of
Bihar” is my original work carried out for the award of the degree of Master of
Commerce in Economics under the guidance and supervision of Dr. Kishan Jee
(Assistant Professor), Faculty Of Management Studies, Gnsu, Jamuhar (Sasara
m). Analysis presented in the thesis is based on my reading and understanding
of the original text. Other sources like books, articles, reports and websites
which I have made use of, have been duly acknowledged at the respective
places in the thesis.
I, further, declare that no part of this work has been previously submitted to this
University or any other institution for any degree or award.

Date:
Place: Jamuhar ( Shweta Kumari
Singh )
 PREFACE

Regional Rural Banks have been in being for around three decades in the Indian
financial situation. Commencement of regional rural banks (RRBs) can be
perceived as an unique experiment as well as experience in improving the
efficacy of rural credit delivery instrument in India. With joint shareholding by
Central Government, the concerned State Government and the supporting bank,
an effort was made to integrate commercial banking within the broad policy
push towards social banking keeping in view the local peculiarities. The origin
of the RRBs can be traced to the need for a sturdier institutional arrangement for
providing rural credit. The Narasimhan committee conceptualised the
creation of RRBs in 1975 as a new set of regionally oriented rural banks,
which would association the local feel and familiarity of rural problems
characteristic of collectives with the professionalism and large resource base of
commercial banks. Subsequently, the RRBs were set up through the declaration
of RRB Act of 1976. Their equity is held by the Central Government, concerned
State Government and the Sponsor Bank in the quantity of 50:15:35. RRBs
were made-up to evolve as specialised rural financial institutions for developing
the rural economy by providing credit to small and marginal farmers,
agricultural labourers, artificers and small entrepreneurs. The study is indicative
and exploratory in nature, and makes use of secondary data. The study found
that the performance of Magadh Bihar Gramin Bank in Rohtas District branches
has significantly improved over time, as steps for their improvement were
initiated by the Government of India.
 ACKNOWLEDGEMENT

I wish to sincerely thank all those who have contributed in one way or another
to this study. Words can only inadequately express my deep gratitude to my
guide, Mr. Kishan Jee (Asst. Professor), for her meticulous care, kindness and
generosity. His fruitful comments and insightful suggestions have been a crucial
formative influence on the present study. He has supported me in every possible
way since the beginning of my research. His critical and careful reading of my
writing has saved me from a lot of errors. Without his guidance and
encouragement, my research would have never come out in the present form. I
have seen in his an unpretentious and devoted scholar. Furthermore, it has been
a memorable and enjoyable experience for me to work with him..
I wish to express my sincere gratitude to Dr. Alok Kumar, the Dean of the
college, for his incessant inspiration, expert guidance, invaluable suggestions,
and, above all, his moral support.
Finally, I sincerely acknowledge the courtesy of the authorities of libraries:
GNS University’s for their cooperation needed by permitting me access data
and relevant materials while carrying out the present research

Shweta Kumari Singh

Contents
DECLARATION..................................................................................................3
PREFACE.............................................................................................................4
ACKNOWLEDGEMENT....................................................................................5
EXECUTIVE SUMMARY..................................................................................7
1. TOPIC INTRODUCTION.............................................................................8
1.1 Regional Rural Bank................................................................................9
1.2 Organisational Structure Of RRBs...........................................................9
2. RESEARCH PROBLEM DEFINITION......................................................11
3. OBJECTIVES OF THE STUDY.................................................................12
4. SCOPE OF THE STUDY............................................................................13
 EXECUTIVE SUMMARY

This research topic is a study on the performance of RRBs in. An exertion has
been made in the instant project to study and find out whether restructuring
through consolidation have made any effect on the financial viability of the
RRBs in this region. Since 1975 RRBs are being observed as one of most
important sources of institutional financing of rural credit in India. But at the
end of development phase (1987) financial viability of the RRBs occurred as an
important issue to the policy makers. Since 1991, many steps have been taken
up by GOI for strengthening the RRBs e.g. cleansing of balance sheets,
recapitalisation of designated RRBs etc. State-wise & Sponsor bank wise
merger of RRBs is the recent route of restructuring of RRBs for refining their
financial viability. There is continuously a need for up-gradation of the rural
banking systems in India through performance evaluation in the context of need
of institutional rural credit to the poor rural folk. Therefore, an effort is made to
study on the profitability performance of the RRBs in Bihar State.
1. TOPIC INTRODUCTION

Regional Rural Banks have been in existence for around three decades in the
Indian financial scenario. Inception of regional rural banks (RRBs) can be seen
as a unique experiment as well as experience in improving the efficacy of rural
credit delivery mechanism in India. With joint share holding by Central
Government, the concerned State Government and the sponsoring bank, an
effort was made to integrate commercial banking within the broad policy thrust
towards social banking keeping in view the local peculiarities. The Genesis of
the Regional Rural Banks can be traced to the need for a stronger institutional
arrangement for providing rural credit. The Narasimhan committee conceptual
ised the creation of RRBs in 1975 as a new set of regionally oriented rural
banks, which would combine the local feel and familiarity of rural problems
characteristic of cooperatives with the professionalism and large resource base
of commercial banks. Subsequently, the RRBs were set up through the
promulgation of RRB Act of 1976. Their equity is held by the Central
Government, concerned State Government and the Sponsor Bank in the
proportion of 50:15:35. RRBs were supposed to evolve as specialised rural
financial institutions for developing the rural economy by providing credit to
small and marginal farmers, agricultural labourers, artisans and small
entrepreneurs.
Regional Rural Banks were established under the provisions of an Ordinance
passed on September 1975 and the RRB Act 1976, to provide sufficient banking
and credit facility for agriculture and other rural sectors. These were set up on
the recommendations of the Narasimhan Working Group during the tenure of
Indira Gandhi's government with a view to include rural areas into economic
mainstream. Since that time about 70% of the Indian Population was of Rural
Orientation. The development process of RRBs started on 2 October 1975 with
the forming of the first RRB, the Prathama Bank. Also on 2 October 1976 five
regional rural banks were set up with a total authorised capital of Rs. 100
crore ($10 Million) which later augmented to 500 crore ($50 Million). The
Regional Rural Bank were owned by the Central Government, the State
Government and the Sponsor Bank. There were five commercial banks,
Punjab National Bank, State Bank of India, Syndicate Bank, United Bank
of India and United Commercial Bank, which sponsored the regional rural
banks who held shares in the ratios as follows: Central Government-50%,
State Government- 15% and Sponsor Banks- 35%.Earlier, the Reserve Bank
of India had laid down ceilings on the rate of interest to be charged by these
RRBs.

Over the years, the RRBs which are often viewed as the small man’s bank, have
taken deep roots and have become a sort of inseparable part of the rural credit
structure. They have played a key role in rural institutional financing in terms of
geographical coverage, clientele outreach and business volume as also
contribution to the development of the rural economy. A remarkable feature
of their performance over the past three decades has been the massive
expansion of their retail network in rural areas. From a modest beginning of
6RRBs with 17 branches covering 12 districts in December 1975, the
numbers have grown into 196 RRBs with 14,446 branches working in 518
districts across the country in March2004. RRBs have a large branch network
in the rural area forming around 43 per cent of the total rural branches of
commercial banks. The rural orientation of RRBs is formidable with rural and
semi-urban branches constituting over 97 per cent of their branch network. The
growth in the branch network has enabled the RRBs to expand banking
activities in the unbanked areas and mobilise rural savings.
1.1 Regional Rural Bank
Regional Rural Banks are local level banking organizations operating in
different States of India. They have been created with a view to serve primarily
the rural areas of India with basic banking and financial services. However,
RRB's may have branches set up for urban operations and their area of
operation may include urban areas too.
The area of operation of RRBs is limited to the area as notified by Government
of India covering one or more districts in the State. RRB's also perform a
variety of different functions. RRB's perform various functions under the
following heads --Providing banking facilities to Rural and Semi-Urban areas.
Carrying out government operations like disbursement of wages of MGNREGA
workers, Distribution of Pensions etc. Providing Para-Banking facilities like
Locker facilities, Debit and Credit cards.
1.2 Organisational Structure Of RRBs
The Organizational Structure for RRB's varies from branch to branch and
depends upon the nature and size of business done by the branch. The Head
Office of a RRB normally had three to seven departments.
The following is the decision making hierarchy of officials in a Regional Rural
Bank.
 Board of Directors
 Chairman & Managing Director
 General Manager
 Chief Manager/Regional Managers
 Senior Manager
 Manager
 Officer / Assistant Manager
 Office Assistant (Multipurpose
2. RESEARCH PROBLEM DEFINITION

The economy of the state of Bihar is mainly characterized by over- dependence

on agriculture, lack of socio-economic infrastructure and inadequate
exploitation of vast natural resources. In view of the large incidence of rural
poverty in the state, establishment of RRBs had a great importance as these
banks were created to cater exclusively to the credit needs of the rural poor,
particularly among the economically and socially marginalized sections in the
rural areas. Since their inception in 1975, RRBs in Bihar have been playing a
key role in the Socio- economic development by penetrating every corner of the
state. However, in response to the financial sector reforms initiated in 1991-92
and further the process of amalgamation began in 2005, the structure and the
way of operations of these banks has changed significantly. In this context, the
operational efficiency and commercial viability of these banks has emerged as
the most crucial factors in deciding about their desired role in emerging
economic scenario.4 Thus, it has become imperative to review the operational
efficiency of RRBs particularly in the State of Rajasthan.
Efficiency study of RRBs is needed in order to evaluate performance and other
reform measures and to locate the sources of inefficiencies. Further, necessary
policy measures can be suggested on the basis of the findings as the efficient
operation of these banks is very essential to achieve one of the major policy
objectives of the Government of India that is to eradicate rural poverty.
3. OBJECTIVES OF THE STUDY

 To analyze the growth and performance of Regional Rural Banks in

India as well as in Bihar in terms of physical and financial indicators.
 To analyze operational efficiency of Regional Rural Banks in Bihar
on the basis of various dimensions of their performance.
 To identify the factors which influence the operational efficiency of
RRBs in Bihar.
 To make important suggestions to improve the efficiency of RRBs
based of the major findings of the study.
4. SCOPE OF THE STUDY

The present study has been undertaken to analyze and evaluate the performance
appraisal of Regional Rural Banks, particularly in the State of Bihar. The study
covers a period of 1 year, from 2018-2019.
The study covers Magadh gramin banks working in Rajasthan during the period
of study. While evaluating the operformance efficiency of individual RRBs in
Rohtas district, study uses data for 4 RRBs during the period.
5. LITERATURE REVIEW

The literature available in the Working and Performance of RRBs in India is a

little limited. The literature obtained by investigators in the form of reports
of various committees, commissions and working groups established by the
Union Government, NABARD and Reserve Bank of India, the research
studies, articles of researchers, bank officials, economists and the
comments of economic analysts and news is briefly reviewed in this part.
Hazari, (1976), through his article made an attempt to study the participation of
Regional Rural Banks in rural development by introducing the concept of
command area development. He stated that for the integrated development of a
region, it is necessary to channelize the amenities to the groups of farmers
instead of solely depending on individual farmer.
Dutta, (1977), in his paper has evaluated the workings of RRBs in the initial
period of 1975 and 1976 by analyzing the growth in the number of Regional
Rural Banks, branches, deposits, and advances. He has made an attempt to
compare the different activities of Regional Rural Banks, primary co-operative
and commercial banks relating to interest, loan disbursement, operating cost etc.
He found that the cost of funds is necessarily high for the RRBs, as they pay
higher rate of interest than the commercial banks. On the other hand, they lend
at rates of interest equivalent to those charged by primary co-operatives.
The Committee on the Functioning of the Public Sector Banks under the
Chairmanship of James Raj, (1978), found RRBs to be useful and preferred
its expansion in the rural areas to the expansion of the rural branches of
commercial banks. Some relevant segment of the report revealed that “Regional
Rural Banks can play a significant role in the financing of the rural sector.
RRBs should not only open more branches in the rural areas but also gradually
take over the existing rural branches of commercial banks. Consequently all
public sector banks and large private sector banks and large private sector banks
should be allowed to open branches only up to the District Headquarters/
Mandal Ublock Level”.
The Working Group on Multi Agency Approach in Agricultural Finance,
(1978),under the chairmanship of
C.E. Kamath has made some relevant observations on the role of the RRBs.
According to them, the role of the RRBs is to supplement and not to supplant
the other institutional agencies in the field of rural credit. It further
recommended that the RRBs in their direct loaning should not enter in to
competition with the co-operatives. The Kamath group clearly preferred the
RRBs to the commercial banks for the future expansion of banking in rural
areas. It also favoured the idea of allowing the RRBs to allocate a part of their
total loans to the large and medium farmers.
The Committee set up by the Reserve Bank of India in (1977), to review the
working of regional rural banks for evaluation of the performance of the RRBs
in the light of objectives for which they were set up, indication of their Precise
Role on the Rural Credit Structure and making Recommendations with regard
to the scope, methods and procedures of their functioning. The committee
came to the conclusion that within a short span of two years, they have
demonstrated their capability to serve the purpose for which they were
established. Therefore, the program for the establishment of more regional
rural banks deserves to be accelerated. The committee on regional rural
banks constituted by the reserve bank of India conducted a study on the viability
of regional rural banks (1979). It revealed that it was not possible for all
branches to become viable because some branches were located at centres
where the potential had been limited. Some branches could not expand their
business because of keen competition from branches of commercial and co-
operative banks.
Kurulkar and Dogirikar, (1980), in a study on Marathwada Regional Rural
Bankhave found that major proportion of the beneficiaries belonged to
landless category, followed by small and marginal farmers. The study
revealed that there is a declining trend in the flow of credit to these weaker
sections and recommended for reconsideration of loaning policies of the
bank.
Patel and Shete, (1980), of the National Institute of Banking Management
made available analysis of performance and prospects of RRBs. They also gave
a comparative picture of performance in deposits, branch expansion and
credit deployment of the co-operative banks, commercial banks and RRBs
in a specified area. This was an eye opener for many researchers engaged in
this field of rural credit.
Rao, (1980), has made a study of the impact of programmes on target group
based on the performance of SreeVisakh Gramin Bank (SVGB). He selected
two branches of SVGB, namely, Kalingapatanam and Rajam to represent
irrigated and non-irrigated areas respectively. He found that the net return
from credit is considerably higher except for business activity in the irrigated
area than the non- irrigated area. The acquisition of assets has been found more
in categories where loans are provided in the form of assets itself. He
concluded that efficient work culture of the bank worker is the main reason
for such tremendous success.
Ministry of Finance, Department of Financial Services, (2011), in the letter
of “Operational Integration, human resource development and related issues
of RRBs” Stated that with a view to modernize and strengthen the technology
up gradation and functioning of RRBs to compete and play a more
meaningful role in the financial services sector.
M .Syed Ibrahim, (2011), in his article about “Role of Indian Regional Rural
banks in the priority sector lending – An Analysis” found that the real growth
of Indian economy lies on the emancipation of rural masses from poverty,
unemployment and other socio-economic backwardness. Keeping this end in
view, Regional Rural Banks were established by the Government of India to
develop the rural economy. He stated that “With the passage of three decades,
the RRBs are now looked upon with hope for rejuvenating the rural India”.
In the study, the role of RRBs in the rural credits structure was deeply analyzed.
The finding may be considerable use to rural banking institutions and policy
makers in developing and shaping the appropriate credit structure as RRBs are
integral part of the rural credit structure in India.
Versha Mohindra and GianKaur, (2011), concluded that over the years,
RRBs have proved to be the most active agencies in the process of
strengthening rural economy by purveying credit and mobilizing deposits from
rural areas through their vast network even in the remotest areas of the country.
Though the regional rural banks have faced a great threat initially, the
introduction of financial sector reforms and other policy initiatives (including
recapitalization) by Government of India, Reserve Bank of India and other
agencies concerned for strengthening the financial position of regional rural
banks have resulted in perceptible improvement in the functioning of these
banks. Evidence from the above, regional rural banks are thus required to
devote utmost attention to their performances to meet global aspirations.
Ishwara P., (2011), made an attempt to study the performance of the RRBs
from1980- 81 to2008- 09. In order to know the implications of transformation
of RRBs in 2004, the study focused on financial results before and after
amalgamation. After amalgamation, RRBs transformation had resulted in a
200 per cent increase in net profits, and a 100 percent increase in business.
There was a gradual reduction in the number of loss- making banks and addition
of 1,000 outlets. All this had been because of consolidation among RRBs.
Report of Trend and Progress of Banking in India, (2012), explained that as
in the case of SCBs, the consolidated balance sheet of RRBs registered lower
growth during 2011-12compared with the previous year. On the liabilities
side, the lower growth was mainly due to lower growth in deposits as well as
borrowings. On the assets side, the deceleration in the balance sheet was
attributable to reduction in balances with the Reserve Bank as well as
deceleration in investments. It is noteworthy that, the share of CASA
deposits in total deposits of RRBs was higher than the corresponding share
for SCBs during 2011-12, out of total 82RRBs operating in the country, 79
made profit whereas the remaining three RRBs incurred loss. Though net
profits of RRBs as at end-March 2012, priority sector advances comprised of
more than 80 per cent of the total credit of RRBs. Purpose wise composition of
credit disbursed by RRBs remained broadly unchanged during 2011-12, with
more than half of total credit going to the agricultural sector RBs witnessed
improvement in recent years, their net margin exhibited a mixed Performance of
banks during 2011-12 was conditioned by slowdown in the domestic economy
coupled with higher interest rate environment. However, Indian banks remained
well capitalized. In addition, the efficiency of banks improved as reflected by
lower cost- to-income ratio and NIM. Trend Progress made by banks under the
financial inclusion plans was broadly satisfactory.
Dr. Mohi-ud-Din Sangmi and Dr. Tabassum Nazir, (2018), in their study of
“Analyzing Financial Performance of Commercial Banks in India:
Application of CAMEL Model" explained that Sound financial health of a
bank is the guarantee not only to its depositors but is equally significant for the
shareholders, employees and whole economy as well. As a sequel to this
maxim, efforts have been made from time to time, to measure the financial
position of each bank and manage it efficiently and effectively. In this paper, an
effort has been made to evaluate the financial performance of the two major
banks operating in northern India .This evaluation has been done by using
CAMEL Parameters, the latest model of financial analysis. Through this model,
it is highlighted that the position of the banks under study is sound and
satisfactory so far as their capital adequacy, asset quality, Management
capability and liquidity is concerned.
6. RESEARCH METHODOLOGY

6.1 Research Design And Data Collection

The study is based on the Performance of Magadh Gramina Bank in Rohtas .

This study covers four branches ie Sasaram, Dehri On Sone, Darihat and Nokha
in Rohtas District to the fulfillment of Objectives of the study. The financial
performance of the magadh Gramina Bank in Rohtas District has been analyzed
with the help of key performance indicators of four branches in Rohtas District.
The year 2019-2020 was taken as the current year and year 2018-2019 was base
year from the four Taluk Branches in Rohtas. The present study is diagnostic
and exploratory in nature and makes use of secondary data. The study is
confined only to the specific areas like Balance Sheet Components and Trend
Analysis of each branch. Balanace sheet components like Deposits Mobilized,
Credits and Investments made by the Branches, Liabilities Position, Advances
with Priority and Non-Priority Sectors, Assets Positions of Individual Branches
of Magadh Gramina Bank.
 7. DATA ANALYSIS & INTERPRETATION

Demand Deposit Accounts offer greater liquidity and ease of access as

compared to Term Deposits but pay lower interest rates, and they may also
include various fees for handling the account. Depositors can withdraw any or
all of the funds in a demand deposit account at any time without penalty or prior
notice required.

7.1 Demand Deposits

TABLE-1 Demand Deposits
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
98.78113.28 +14.67 96.47 94.78 _-1.7 373.41 340.75 -8.74 110.79 57.74 - 47.88
(Source: Finanacial Statements)
SASARAM
250%
2.26

200%

150%

100%

50%

0%
1

DEHRI
9700000

9647457
9650000

9600000

9550000

9500000 9478842

9450000

9400000

9350000
1 2
 DARIHAT
250%
2.26

200%

150%

100%

50%

0%
1

NOKHA
250%
2.26

200%

150%
A xis Title

100%

50%

0%
1

Interpretation-
The above graph depicts that the Demand Deposit of Magadh Gramina Bank in
sasaram shows Increase trend in 2018 to 2019. Whereas in the branch of
Dehri it shows Decrease of 1.7 %, in the case of Darihat it shows 8.74 %
Decrease..But in the branch of Nokha is Highest Percentage of Decrease trend
of 47%..This shows the Customers of Magadh Gramina Bank Lacks interest in
demand deposits. Savings Account is generally opened in bank by Salaried
persons or by the persons who have a Fixed Regular Income. Savings accounts
can provide security and peace of mind as well as serve as a resource in case of
an emergency or a business opportunity. Savings accounts are opened to
encourage the habit of thrust of savings among people. This facility is also
given to Students, Senior Citizens, Pensioners and so on.
 7.2 Savings Bank Deposits

TABLE 2 Savings Bank Deposits

Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
530.42 636.89 +20 550.64 722.81 +31 1595.221696.34 +6.33 587.09 693.65 +18%
(Source: Finanacial Statements)

Sasaram
250%
2.26

200%

150%

100%

50%

0%
1

Dehri
250%
2.26

200%

150%

100%

50%

0%
1
 Darihat
250%
2.26

200%

150%

100%

50%

0%
1

Nokha
250%
2.26

200%

150%

100%

50%

0%
1

Interpretation-
The above graph shows that Saving Bank Deposit of Magadh Gramina Bank
Branches shows an Increasing trend of 20%,31%,6.33% &18% of Sasaram,
Dehri, Darihat and Nokha respectively. This clearly says that Customers are more
interested in Savings Bank Deposits in Magadh Gramina Bank as it earns
reasonable Interest on Saving Bank Deposit.
 7.3 Term Deposits

Term Deposits is also known as Fixed Deposits, are investment made for a Fixed
Period of Time, ranging from a few months to several years. The Depositor
receives a Fixed Rate of Interest for a fixed period of time. Funds deposited for
longer time periods command a higher interest rate. Term deposit accounts pay a
Higher Rate of Interest than Savings Accounts.
TABLE 3 Term Deposits
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
464.1 515.6 +11 840.25 1040.02 +23 1692.09 1950.48 +15 514.68 713.12 +38
(Source: Finanacial Statements)

Sasaram
250%
2.26

200%

150%

100%

50%

0%
1

Dehri
250%
2.26

200%

150%

100%

50%

0%
1
 Darihat
250%
2.26

200%

150%

100%

50%

0%
1

Nokha
250%
2.26

200%

150%

100%

50%

0%
1

Interpretations-
The above graphs clearly says that the Term Deposit of all branches in Magadh
Gramina Bank shows Increasing Trend from Sasaram, Dehri, Darihat and Nokha
is 11%,23%,15% and 38% respectively. It means Customers are interested in
Term Deposits also in this Bank.
 7.4 Interest Provision

TABLE -4 Interest Provision

Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
2.64 3.73 +40 3.25 4.49 +38 8.67 10.97 +26 3.82 4.38 +14
(Source: Financial Statements)

Sasaram
250%
2.26

200%

150%

100%

50%

0%
1

Dehri
250%
2.26

200%

150%

100%

50%

0%
1
 Darihat
250%
2.26

200%

150%

100%

50%

0%
1

Nokha
250%
2.26

200%

150%

100%

50%

0%
1

Interpretation-
Interest is one of the Liability in a Banking Sector. The above graphs clearly
says that Interest Provision of all branches in Magadh Gramina Bank shows
Increasing Results from Sasaram, Dehri, Darihatand Nokha is 40%, 38%,26%
and 14% respectively. It means that liability of each branch is increasing as in
the case of deposits.
 7.5 Other liabilities
TABLE-5 Other liabilities
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
1.09 0.71 -34 2.25 0.56 -75 4.98 5.19 +4 7.11 5.37 -24
(Source: Financial Statements)

Sasaram
250%
2.26

200%

150%

100%

50%

0%
1

Dehri
250%
2.26

200%

150%

100%

50%

0%
1
 Darihat
250%
2.26

200%

150%

100%

50%

0%
1

Nokha
250%
2.26

200%

150%

100%

50%

0%
1

Interpretation-
The above graph clearly depicts that Other Liability has a Decreasing Trend
in all the branches except Darihat branch. Other liabilities means other than
Interest Provision and Bills Payable. Other Liability is Decreased by 34%,
75% and 24% in Sasaram, Dehri and Nokha Branch respectively But in
Darihat branch it is increased by 4 %.
 ASSETS
7.6 Cash in hand
TABLE 6 Cash in hand
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
18.14 25.26 +39 24.91 22.81 -8 9.01 5.91 -34 43.57 16.91 -61
(Source: Financial Statements)
Sasaram

3000000
2526812
2500000
2000000
1500000 1814798

1000000
500000
0

12

Dehri

2550000
2491403
2500000
2450000
2400000
2350000
2300000
2250000
2200000 2281054
2150000

12
 Darihat

5000000 4357079

4000000
3000000
2000000
1691210

1000000
0

1 2

Nokha

1000000 901368

800000
591047
600000
400000
200000
0

1 2

Interpretation-
Cash in hand is one of the important Assets in RRBS. The above Graphs clearly
says that Cash in Hand in all the branches shows Decreasing Trend except
Sasaram. In the branches of Dehri, Darihat and Nokha, it is decreased by 8%,
34% and 61% respectively. But in case of Sasaram Branch it is increased by
39%.
 7.7 Balance with Bankers
TABLE 7 Balance with Bankers
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
0.81 7.97 +800 15.78 32.87 +108 232.06 108.67 -53 16.11 30.05 +86
(Source: Financial Statements)
Sasaram
1000000
797405
800000
600000
400000
200000
0

81937

12

Dehri

4000000 3287661
3000000
2000000
1000000
1578213
0

12
 Nokha

232060
25000000
63
20000000
15000000
10867034
10000000
5000000
0

12

Darihat

4000000
3005861
3000000

2000000 1611226

1000000

1 2

Interpretation
From the above graph it is clear that the Asset component Cash Balance with
Banker shows increasing in all branches except Darihat branch. Sasaram branch
balance increased compared to all other branches from Rs 81,937 to
Rs7,97,405, in Dehri branch increased by Rs 17,09,448. In Nokha branch
increased by Rs 13,94,635. In Darihat branch balance with banker is decreased
by Rs 1,23,39,029.
 7.8 Priority Sector
Priority Sector refers to those sectors of the economy which may not get timely
and adequate credit in the absence of this Special dispensation. Priority Sector
Lending is an important role given by the Reserve Bank of India (RBI) to the
banks for providing a specified portion of the bank lending to few specific
sectors like agriculture and allied activities, micro and small enterprises, poor
people for housing, students for education and other low income groups and
weaker sections. This is essentially meant for an all round development of the
economy as opposed to focusing only on the financial sector.
TABLE 8 Advances with priority sector
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
829.91 877.07 +5 793.2 91.34 -88 761.43 963.81 +26 1230.39 1218.3 -0.9

Sasaram

90000000 87701919

88000000

86000000
82991619
84000000
82000000
80000000

1 2
 Dehri

10000000 79320413

80000000
60000000
40000000
20000000
9134944
12

Nokha

96381903
12000000
10000000 76143268
80000000
60000000
40000000
20000000
0

1 2
 Darihat

12350000 123039762

12300000
12250000
121837237

12200000

12150000
12100000

1 2

Interpretation-
The above graph clearly shows that Advances with Priority Sector of Krishna
Magadh Gramina Bank is not the same compare to all these four branches.
Advances with Priority Sector of Sasaram and Darihat branches is increased by
5% & 26% respectively. But, in the case of Dehri and Nokha decreased by 88%
& 0.9% respectively.
 7.9 Advances with Non Priority sector

TABLE 9 Advances with Non Priority sector

Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
136.6 139.07 +1.75 103.36 164.99 +59 365.79 368.81 +0.7 152.38 181.32 +19
(Source: Financial Statements)
Sasaram

14000000 13907362

13900000

13800000 13667611
13700000
13600000
13500000

1 2

Dehri

20000000
16499654

15000000
10336241
10000000

5000000

1 2

Darihat
 36900000 36841334

36800000

36700000
36600000 36579798
36500000
36400000
12

Nokha
18500000
18132796
18000000

17500000

17000000

16500000

16000000

15500000 15238306
15000000

14500000

14000000

13500000
1 2

Interpretation-
As per the above graph Advances with Non-Priority Sector of Krishna Magadh
Gramina Bank has an increasing trend as per the RBI. The Priority Sector helps
in Economic Development of a Country. As in the same way Advances with
Non-Priority Sector also is important like Personal Banking, Credit Cards and
Credit facility for an Individual. Here, all the Branches Performance is
increased by 1.75%, 59%, 0.7% and 19% i.e. in Sasaram, Dehri, Darihat and
Nokha respectively.
7.10 Sundry Assets
TABLE 10 Sundry Assets
Sasaram Dehri Darihat Nokha
2019 2019 % 2019 2019 % 2019 2019 % 2019 2019 %
11.49 6.39 -44 4.52 2.04 -58 3.2 1.3 -59 19.51 2.69 -86
(Source: Finanacial Statements)

Sasar am
1400000

1200000 1149881

1000000

800000
639394
600000

400000

200000

0
1 2

dehri
600000

492961
500000

400000

300000

204343
200000

100000

0
1 2
 darihat
350000
320239

300000

250000

200000

150000 130758

100000

50000

0
1 2

nokha
2500000

2000000 1951322

1500000

1000000

500000
269523

0
1 2

Interpretation-
The above graph depicts that the Sundry Assets portion of Krishna Magadh
Gramina Bank shows not much Decreasing Trend. The sundry asset component
consists of Stock and Stamps, Prepaid Expenses, Receivables and Other assets.
The collection techniques of this bank is good one. The liquidity position is this
bank is optimum. All branches Sundry Assets shows Decrease Position
Compare with Base Year 2018. It shows Decrease of 44%, 58%, 59% and 86%
in Sasaram, Dehri, Darihat and Nokha branches.
7.11 Net Profits
TABLE 11 Net Profits
Sasaram Dehri Darihat Nokha
2018 2019 % 2018 2019 % 2018 2019 % 2018 2019 %
52.5 53.79 +2 4.86 15.89 +226 0 0 0 72.01 92.56 +28
(Source: Financial Statements)

sasaram
5400000
5379540

5350000

5300000

5250085
5250000

5200000

5150000
1 2

dehri
1800000
1589328
1600000

1400000

1200000

1000000

800000

600000
486672
400000

200000

0
1 2
 nokha
10000000
9256801
9000000

8000000
7201279
7000000

6000000

5000000

4000000

3000000

2000000

1000000

0
1 2

PERCENTAGE INCREASE 2018 TO 2019

250%

200%

150%

100%

50%

0%
sasaram Dehri Darihat Nokha

Interpretation
From the above graph it clearly understands that Profit Maximization is not
much in Krishna Magadh Gramina Bank Shimoga Branches. It depicts that
Profit of only Rupees 1.29 lakh increase in Sasaram Branch. In Dehri, its
Rupees 11.03 lakhs, in Darihat no Change in Profit and in Nokha Branch
Increase of Profit by Rupees 20.55 lakhs.
8. Findings

This Report contains the Results of the Research, which is drawn from the
data analyzed earlier. This brings the interpretations of the data, which is
been analyzed individually for Growth of Liabilities, Growth of Assets and
the Interpretations are as follows:
 Demand Deposit is very much volatile in this bank. The customer can
withdraw the deposit on demand & carries lower rate of interest.
Hence its showing fluctuation.
 Saving bank deposit is very much known to all Salaried Individuals
and other Business class as it carries attractive interest rate on their
Deposits. Hence showing an increase trend.
 Term deposit is one of the Fixed Investment made by the customers as
a long term investment. It carries a fixed rate of interest on the fixed
time period. Here it is very much increasing year by year. This
shows awareness about long term investment among the rural folk.
 As the number of deposits increases in any bank from customers,
automatically the liability of banks also increases as it has to pay
interest on deposits. So, in this Bank also we observe the increased
trend of payment of interest to the customers.
 Again, Other Liabilities of the bank shows lower liability than the
liability of interest provision. As it is not a major component in
banking, showing a decrease trend year by year.
 Banking business is purely depending on Cash Transaction. Again
availability of liquid cash depends on the flows of cash transactions.
Neither with the surplus cash in hand non availability of cash on
times is not a good sign of Good Banking Business. Here in this
bank, cash in hand shows good sign of liquid cash to meet the
transactions at any time by the bank.
 Cash Balance with Bankers is also most important component in
Banking Business. More balance with other banks is an Asset as it
earns Regular Interest for banks. Here it is showing an increasing
trend. Hence it is a strong and positive sign of its banking business.
 This Bank Advances towards Priority Sectors like Agriculture,
Housing and Education Loan and Others shows Increase in
 Granting Loans. This is the major objective of this bank. Except
Dehri branch, all other branches’ advances towards Priority Sector is
Positive. This bank achieving its main objective by lending money for
Priority Sector. In the case of Non-Priority Sector also it shows
Positive Result. This bank is attracting customers to borrow money
for other than Priority objective like Personal Banking.
 Apart from this, Sundry Asset of this Bank shows Good result. The
technique of Collection adopted by the Bank must be effective. Here
in this bank, collecting of the interest and loan are going on regular
intervals. Cash inflow of a bank shows Positive.
 Finally, the Performance of Magadh Gramina Bank can be
Evaluated by the Net Profit earned by the Branches of this Bank.
And all the branches of Rohtas are showing the Increase of Net
Profit every year. Hence this Bank is gradually achieving its goal of
attaining a maximum profit over the years.
9. Conclusion

Regional Rural Banks (RRBs), emerged as an important Financial Institution in

India for meeting the Rural Credit Requirement. It is always argued that the
RRBs have not been able to earn much profit in view of their Policy of
Restrictions over their operations to Target Groups. In spite of that, the RRBs
have made a Remarkable Performance.
To conclude, the Rapid Expansion of RRB has helped in reducing substantially
the regional disparities in respect of banking facilities in India. The efforts made
by RRB in its branch expansion, deposit mobilization, rural development and
credit deployment to weaker section of rural areas are appreciable. RRB
successfully achieve its objectives by taking banking to door steps of rural
households particularly in banking deprived rural areas, to avail easy and
cheaper credit to weaker rural section who are dependent on private lenders, to
encourage rural savings for productive activities, to generate employment in
rural areas and to bring down the cost of purveying credit in rural areas.
So, in the light of these lines, this Research paper concludes that the
Performance of Magadh Gramina Bank in meeting its objectives is successful
and appreciable based on the available data for the purpose of study. And the
paper conveys a message to the Government to take additional needful support
to these Regional Rural Banks to make them more viable and successful in
meeting the needs of rural credit in the coming years.
10. References

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 Bose, S. (2005). “Regional Rural Banks: The Past and the Present Debate
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Banking in India.” Kalyani Publishers, New Delhi.
 Ibrahim, M.S. (2010). “Performance Evaluation of Regional Rural Banks
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 LokSabha (2004). “Consideration of the Regional Rural Banks
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 Misra, B. S. (2007). “The Performance of Regional Rural Banks (RRBs)
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