Potential Improvement of District Central Co-Operative Banks- Application of Data Envelopment Analysis

Abstract

The setting up of the Reserve Bank of India (RBI) in 1934 was a major development in the thrust for agricultural credit. The Reserve Bank of India Act, 1934 itself required the RBI to set up an Agricultural Credit Department. As cooperatives were to be the channels for rural development, with the establishment of popularly elected governments in 1935, programmers were drawn up in which rural indebtedness received priority. The Mehta Committee appointed in 1937 specifically recommended reorganization of Cooperative Credit Societies as multi-purpose cooperatives.The Registrars’ Conference in 1947 recommended that the Provincial Cooperative Banks be re-organized to give greater assistance to primary societies through Central Banks. For the first time an effective linking of credit with marketing, and providing assistance by way of liberal loans and subsidies for establishment of a large number of godowns and processing plants was considered.It would be appropriate to mention here some developments in Bombay vis-à-vis coop­eratives, which had an impact on the cooperative sector. Shri Vaikunth Bhai Mehta took over as Minister In-charge of Cooperation in the Bombay Government after which the cooperative movement in the province received a boost. A Committee on Cooperative Education and Training under the chairmanship of Sir Janardan Madan, made recommendations for cooperative educa­tion programmes and the setting up of an Education Fund. The Agricultural Credit Organization Committee, with Sir Manilal Nanavati as Chairman recommended State assistance in agricultural finance and conversion of all credit cooperatives into multi-purpose cooperatives. It also recom­mended a three-tier cooperative credit banking system,besides various other subsidies etc.Here , DEA is applied as output-oriented approach and potential improvement score is also calculated by considering the actual amount and the target amount of deposits and advances.