Composite Analysis: A Study of Regional Rural Banks of Gujarat State for Post-Merger Period

Abstract

Rural credit is a small amount of money which gives to the poor peoples including small scale farmers and unemployed person as loan to start their own work by development banks or any other financial institutions. Till independence in India, the credit requirements of rural households were mainly met from the non-institutional sources, as the banking and cooperative movement were in the nascent stages. The rural households, both cultivators and non-cultivators, require credit for the productive and nonproductive purposes. Even now the purposes remain the same. At present, the productive purposes of cultivators include loans both working capital and fixed capital. Working capital is used to buy seeds, fertilizers, pesticides, etc., and to pay taxes to the government, etc. Fixed capital is meant for permanent improvements on land, digging and deepening of wells, fencing of land, and for purchasing implement s and machinery, etc. Non-cultivators also use loans for creation of income generating assets in the sense of formation of fixed capital and for circulating capital in the sense of working capital. The unproductive purposes are the same for both the cultivators and non-cultivators. In this paper an attempt is made to highlight the performance of RRBs for the period of 2006 to 2012 by using composite ratios which indicates the performance of RRBs in different parameters like deposits, advances, average working fund, operating expenses, other incomes and etc. which indicates the efficiency of bank for that particular parameters which is considered as composite ratio analysis, For each parameter, the different ratios are find out and average ratios are calculated. On the basis of the average ratios, the best performer bank is ascertained.