Indian Banks and Their HeadsPART I —BANKING

Banking industry is the nucleus of a district’s economy, touching various needs of all people. Throughout history, all economics with systematic trading have seen some men trying to earn at least part of their living by carrying on banking operations. These men have met one or more of the Community’s needs for a safe place to store valuables, including money. In the past, even temples also performed the functions of banking. Temples in Kanniyakumari district carried on the economic activities along with their normal religious functions. They received deposits from the public and afforded loans.2 Inscriptions in the temples show that the temples even arranged for pubfic auction of lands. (This would mean the tenancy rights). The money lending from the temporary treasury to the public, as well as the other functions such as the sale, mortgage and purchase of lands by the temple authorities on behalf of the temples have been engraved in the inscriptions found in Suchindrum temple.

Indigenous banking: Money lending is an old art. The origin of indigenous banking as a part of the Indian financial system can be traced back to ancient times. Until the middle of the 19th century, the indigenous bankers dominated the financial system orf the country.

Indigenous banking in South India:   Agriculture is the mainoccupation of, particularly the people of Kanniyakumari district and the agriculturists are in need of loans and advances to carry out agricultural operations in almost all seasons. The Brahmins of Kallidaikurichy of erstwhile Tirunelveli district and the Nattukottai Chettiyars of erstwhile Ramnad district were the two principal banking communities. They held transactions in the districts of Ramnad, Madurai and Tirunelveli. The Brahmins and the Vellalas owned larger extents of land and the income derived from agriculture was uniformly fair, since the yield from agriculture was good because of seasonal setting in of monsoon.5 Unlike now-a-days, there were no vagaries of monsoon in those days. The Brahmins of erstwhile Tirunelveli district are well known in the west coast for their trade and other allied activities, whereas the Vellalas confined their activities mainly to agriculture and local trade in cloths and groceries. Occasionally, the Vellalas combined money-lendingandbanking with trade. The nature of their transactions was such that they were to be termed money- lenders rather than bankers.

The Brahmins who traded in clothes in Malabar generally found money-lending more lucrative and they combined money-lending with trading and the cloth trade gradually receded, when money-lending became more attractive.

The Nattukottai Chettiyars : The counter parts of the Brahmins in the erstwhile Tirunelveli district, were the Nattukottai Chettiyars in the erstwhile Ramnad district who are also primarily traders. The Chettiyars were exporters and importers of commodities in large scale in the Far East Countries. The system of banking and money-lending by the Chettiyars is presented in the following words…” It is a tribute to the upright system of Chettiyar banking and money-lending that no other system of finances has yet been evolved which is capable of giving to agriculture and business of this province the impetus and stability which Chettiyars have achieved” (memorandum submitted by the Nagarathar’s association of Madras in the Madras Banking Enquiry Committee Report, Vol.Ill, p.1103.)

The Kallidaikurichy Brahmins: About the early history of theKallidaikurichy Brahmins, there are no authentic records. It may be said that the system of banking conducted by them is more than a century old. The Brahmins of Kallidaikurichy, Kuriyur and Valliyur were bankers to the Rajahs of Cochin and Travancore. (Travancore and Cochin were two small Indian States in South India). Thiru V.Krishnan, Professor of Banking, Co-operative Training College, Poona, in his publication “Indigenous Banking in South India” states. “Even to-day, on certain occasions, the old and influential bankers receive presents from the Rajahs in recognition of the banking services they rendered during wars and other troublous times. ”

In Kallidaikurichy there are two bankers to whom the Rajah of Cochin owes a large sum of money. The bankers declined to give the actual amount of the debt. They say that the debts were given to the above Rajah by their grandfathers probably about the year 1850. They are regularly receiving interest on the amount. On the ‘Onam’ day, they receive presents of clothes from Rajah.(The ‘Onam’ is a festival celebrated in a grand scale by Malayalees in the month of August.)Since the beginning of the last century, the Kallidaikurichy Br had a network of banking organisations extending over Travancor & Cochin. They might have helped the Rajahs of Cochin and Travel with money, for paying the soldiers and other officers.

Antiquity of Money – lending: Money – lending is an old art. Thau was in practice even in the early Aryan days is evidenced by the mentis of money-lending as one of the four honest callings, the other three beingVillage, trade and harvesting. (Cambridge History of India, Vol. I., p. 21a the rates of interest on loans are also specified, and usurious rates are condemned.

The business of banking consists of taking money on deposits and also of issuing crafts by which transfer of loanable capital is facilitated. The funds obtained as deposits together with the capital brought into the business by the bankers are employed in making advances in discounting bills, and making investments in giltedged securities, and a part is kept in cash to meet current requirements. The distinction between money lender and a banker was not rigid in the earlier days.

There was a practice in vogue among the indigenous bankers called ‘Thulai Transaction”. (Transaction that took place between the indigenous bankers in two or three or more trade centres). Wherein an urban financier used to ask another rural financier doing business with his own capital to collect money for the bills he drew on the traders in the village, for goods sent from urban centres to rural parts.

There were money-lenders who though they did business mainly with their own capital, at times, took deposits which lied with them for years, but did not allow cheques to be drawn upon them. There was another instance of money-lenders receiving recurring deposits in the shape of contributions towards chit fund.

The rural financiers who collected money for the drafts sent by theurban indigenous bankers did not take deposits as a matter of ordinarybusiness nor did they discharge the major function of allowing cheques tobe drawn upon them. So, they were not bankers, but banker-atffrmoney-lenders. There were cases where the financier conducted Chit Funds.

Money-lendet means a person who does not usually receive deposits, but who lends, mainly to agriculturists and artisans anddoes not allow cheques to be drawn upon him as in the usual course of business.

BANKER’ is a person or an institution who or which receives depositis in the course of business deals mainly with traders, and allows drafts to be drawn’ upon his or its funds. ‘Indigenous bankers’ would mean only such persons or banks who conduct their business along indigenous lines, following traditional practices excluding even those jointstock banks. The Negotiable Instruments Act of 1881 lays down that ‘the banker includes persons or corporation or company acting as ‘bankers’. According to Dr. H.L. Hart (Law of Banking) a banker is one who in ordinary course of business, honours cheques drawn upon him, by persons from and- for whom he receives money on current account.’ Sir John Poget, a well known authority says as thus, “It is, therefore, a fair deduction that no one and nobody corporate or otherwise, can be a banker who does not(1) take deposit account; (2) take current account : (3) issue and pay cheques drawn on himself, and (4) collect cheques crossed and uncrossed for his customers”.

The indigenous bankers in the erstwhile Tirunelveli district went by the name of ‘Hundi merchants’ and their bankers were called Hundi shops (Hundial kadai). Their business was commonly known as Hundiyal vyaparam (Hundial trade). The Nattukottai Chettiyars styled themselves as bankers though they did business similar to that done by the Kallidaikurichy Brahmins. In the language of indigenous bankers, no rigid distinction was observed between a banker (Hundi merchant) and a money lender. The hundi merchant advanced money on cash-credit basis, allowed Hundis to be drawn upon him, and received Hundis for collection and financed trade.

The money-lender financed agriculture, trade advances against the pledge of gold ornaments, lent money against the mortgage of house and landed property, allowed cash credits to the artisans and did not usually take deposits. Daily transactions consisted of receipt of interest from customers, repayment of loans taken, and advances made against Jewels. The agriculturists generally borrowed for conducting their agricultural operations or for consumption and paid the principal and interest only after a long interval of time. The clients of the Hundi merchants were mostly non-agriculturists depending on occupations other than agriculture and only 3 per cent of the customers of Hundi merchants were agriculturists.The Madras Banking Enquiry Committee says (Vol.l p. 237) use of the term bank’ carries with it, a certain dignity and a pn assumption that the banker is on a sounder basis of credit and person to be entrusted with funds than the money-lender but if have further enhanced by the restriction of the use of the title, some def 5 becomes necessary,” The use of the term ‘Bank’ in respect of indian bankers does not receive money either in town or village, but it is contrary in village side, for instance, in villages and even in towns, ft. Kadai (money lending shop) commands a greater dignity than banks.

One interesting feature that was noticeable in the former organs of Kallidaikurichy bankers was that it provided for great elasticity both r respect of organisation and dissolution without prejudicially affecting U efficiency of the firm. Another feature was the higher sense of business morality of these bankers and their respect for the decision of a boar: a committee set up either for settling disputes or conducting liquidator proceedings.

The Nattukottai Chettiyars did large portion of their business in Buraia the Federated Malay States, Straits Settlements and important places r the Malay Archipelago, French Indo-China, China and Ceylon, whietE Kallidaikurichy Brahmins had confined their activities to the ersto* districts of Ramnad, Madurai and Tirunelveli and the States of Travancor and Cochin.

The various devises which the Chettiyars adopted to raise comro’ funds like Mahimai, 7 Asthivari, 8 and Pullivari9 were not altogether la among the Kallidaikurichy Brahmins also. The latter also set apart s portion of the profit at the end of each year for Dharmam or Chants amount so collected was spent towards renovation of maintenance of choultries, performance of festivals etc. In the can both Chettiyars and the Brahmins, the amount so collected 8 Mahimai, Pullivari, Othapanam,etc. were not utilised in revew bankrupt.

In the case of Chettiyars, the interest payable by each party from time to time depended on the MNadappu Vatti” or the current Chetti rate prevailing in different centres, while the Kaljidaikurichy Brahmins fixed the rate of interest before hand and the rate charged by them to the customers depended upon the experience and financial strength of the customers seeking accommodation with them.

The indigenous banker financed the small traders, village artisans and the small scale industrialists directly. There were transactions between the indigenous bankers and the Imperial Bank. Incidentally, he dealt in produce trade combined with his money-lending business. Some money lenders financed agriculturists, the toddy drawers and the cultivators of betel- wine, with a view to get hold of the produce they derived. The professional money-lender, the ryot-money-lender, the trader money­lender, the mandimen, the grocer and other stray individuals having spare cash, all financed the agriculturists by advances made in kind or cash during the sowing season, which was repayable at the harvest season, either in kind or cash at a price fixed before hand or at the harvest price, that was prevailing.

Methods adopted by Money-lenders: Lending money on promissory notes was an universal feature of all these financing agencies. The money-lender advancing money to agriculturists on pro-notes did not in those days, care about the purposes for which the loan was required by the agriculturists. The indigenous bankers were particular that the loan was used generally for production purposes. The money lender financed directly the people engaged in small-scale industries such as mat weaving, brass and bronze- ware making and the weaving of coarse cotton fabrics.

Promissory note as an instrument to raise loans was resorted to by persons for unproductive purposes mostly on extravagant marriages, unnecessary litigation and costly tours in India and outside. The big money-lenders advanced money on pro-notes for such purposes. In taking a guarantor’s signature as surity, the money-lender used to remind him ofthe wise words of Quarles “Be thou careful for whom thou h surety and for no more than thou art able to discharge if the liberty.” In indigenous money lending system the borrower was a sia^ the lender, while the surety was a slave to both.     8

The village money-lender, who was the friend, philosopher and gui i of the ryot and the village artisan, lent money on pro- notes and again, jewels to them. The rate of interest charged by this type of money-ienfo compared favourable with the rate charged by the banker for his client and ranged from 12 to 18 per cent. The women of the village also did this money-lending business on pro-notes. Sometimes, pro-notes were registered Registration of the pro-notes offered to the lender greater security. The practice of registering a pro-note was the outcome of the necessity at W dealing with illiterate people, who could not even sign their names, in such cases, the thumb impression of the maker of the promissory note was taken.

Loans were also given in kind by ryot money-lenders. Such loans were in the form of advances of seed for sowing, paddy for domestic consumption etc. Giving loans in kind was not practised by bigger money-lenders. Loans in kind were common in the villages, particularly, among the lower classes of agricultural labourers. There were two types among the mandimen, who financed agriculturists. Mandimen, in the southern districts of Tirunelveli-Madurai and Ramnad meant wholesale buyers of paddy for retail trade, with the object of gaining profit This type of mandimen did not generally finance agriculturists. The other types of mandimen were commission agents noted for their simplicity. They did not buy the produce outright, but helped the ryot in marketing his produce, for a very small and moderate commission.

The practice that was in vogue was that the ryots used to get advances from a particular class of Brahmins such as purohits, temple priests, school masters, and widows, who had no land but who required a definite quantity of paddy for domestic consumption every year, stipulated at the time of lending that the loan should be repaid only in kind and that at a particular price, fixed before hand. The agriculturists also borrowed, money against mortgage and undertook to pay. Interest in kind ata stipulated price.

But, the system was different in the case of products like palmyf3, jaggery and betel-wine. The merchant money lender who was otherwise called In those days by the nick name of jaggery- Chetti, financed the small toddy drawers, since toddy was a seasonal produce. The merchants who advanced money stipulated that the advances should be repaid in kind, at a fixed price.

In the case of betel-wine cultivation, whenever the cultivator of betal-wine received advances from the trade-money lender, he had to return the advance in kind and at a fixed price up to the amount of the advances taken. The small alien money-lender’s terms were usurious and they collected the money back through horror.

“Sir A. Seshiah Sastri, (Organisation of India Banking, p.22), the late Dewan of Pudukkottai, points the village money lender with a loving hand and says that in the rural economy of India he (village money-lender) is an indispensable factor and he cannot be eradicated.” M.H. Sinha in his book [Progress of the Madras Presidency during the last 60 years, p.250 (appendices)], also more or less arrives at the same conclusion. Mr. Thakur (Early European Banking in India, p. 255) also has a kind word to say about them. Mr. Krishnan says that at any rate as far as Madras Presidency is concerned, he is a presiding genius of the village and he is not as pernicious as he is made out to be by some authors, and hence efforts should be made to preserve him, depriving him of his fangs.

The members of the Mohammedan community who were temporary emigrants from Tiruchirappalli district were also engaged in money lending and they too adopted the promissory note method of lending money by using printed forms with blank spaces, for being filled up with information regarding the maker, and the money lender, capital lent, rate of interest etc. TheJocaJ lenders were however, interested in the welfare of the ryots and other daily labourers, who were necessary for the cultivation of their lands.

Transmission of money from place to place, drawing and discounting of Hundis, money charging, receiving of deposits, and accepting valuables for safe custody, giving letters of credit on commission to merchants requiring money in several trade centres were some of the more important functions performed by the indigenous bankers. Financing the movement of produce from place to place, giving advances to traders, big village artisans and landlords for short periods, against personal security generally came next. The system of combining banking with trade, existed in the following trades namely in gold lace, yarn piece goods, salt, sugar, petrol and kerosene oil. Occasionally, the indigenous bankers took abkari and toll-gate contracts. The Kallidaikurichy Brahmins cannot claim to have financed any large scale industry, whereas the Chettiars no doubt financed the large scale industries.

For imparting banking education and encouraging the people to save, the atmosphere in South India was favourable, because the two indigenous banking communities of South India, the KaUidaikurichy Brahmins and the Nattukottai Chettiars by their banking and money lending activity had established the necessary condition for saving.

The indigenous banks in South India, the Chettiars and the Kallidaikurichy Brahmins received deposits from people not only belonging to their own communities but also from others. Receiving of deposits, though one of the important functions of a bank, was not important as far as the indigenous banks were concerned. Nevertheless the relation that existed between the customer and the banker as regards each item of deposit and the rights and liabilities of each party had to be studied.

The different kinds of deposits taken by indigenous bankers were fixed deposits (Thavanai KanakkU) and current deposits (Nadappu KanakkU). The Chettiars called current deposits as “Kadai Kanakkd’. The term fixed deposit meant deposits repayable after the expiry of a certain period which might vary from a few months to about 5 years. One feature of the deposit received by the Chettiars was that they did not fix term deposits. Two kinds of fixed deposits were known to Chettiars, the ‘Thavanai deposits” and ‘Veyan Vatti deposits”. The former were loans taken by Chettiars from the members of their own community for a period of 2,3,or 6 months and the interest on it was fixed monthly. In Veyan Vatti deposits which were also fixed deposits, the rate of interest was fixed at fluctuating rates of interest, described by its excess in annas per cent per mensem above the Nadappu rate, and the usual period was 3,6, or 12 months. The Chettiyars received deposits also on current account and the rates of interest charged for it was fixed on the 16th of every Tamil month and this was called Nadappu rate.

Unlike the Chettiars, the Kallidaikurichy Brahmins took fixed term deposits for periods varying 6 months to 6 years first as the joint-stock banks did. Like the Chettiars, the Brahmins also followed the mercantile system of accounting as between members of their own community while they followed cash loan system in their transactions with people belonging to other communities. The Brahmins had no Nadappu rate like the one invogue among Chettiars and t)c rates were fi/ed by mutual understanding between parties.

Nadappu rate, Kandu rate and Hundi rate, which were in existence then, are further defined as follows:

Nadappu rate- The rate of interest charged by the Chettiars on current account and on Hundis bearing interest was fixed month after month. The dealings between Chettiars themselves were governed by this Nadappu or current rate. This rate varied from 8 to 12 per cent per annum and from centre to centre. The Nadappu rate of interest system or current account rate prevailed In 1929-30 Nadappu rate and Tbavanai rate were applicable only to transactions among Chettiars.

Kandu rate.- Under this system, a loan was granted to be repaid in certain definite instalments. Interest on the amount of the loan at the rate settled between the parties was deducted before gr/irvg the loan Among the Tirunelveli Brahmins and Vysiya money-lenders, the Kandu rate, otherwise called “Shandi Vaddi” (shandi interest) (Shandi-mens weekly market) was prevalent.

Hundi rate.- The discount rate of the Imperial Bank Mas called the Hundi rate. It was the rate at which the Imperial Bank discounted the Hundis or trade bills drawn by the indigenous bankers and joint-stock banks on it. Bazaar rate was also common among the bankers.

Indigenous savings institutions like Chit funds were also prevalent before communications developed, when the village had to be largely self sufficient. The Nidhis were the counterparts of the Chit-funds practised in the northern districts of the Presidency.

Kuries or Chits.- Before the establishment of commercial banks and co-operative credit societies, Kuries or Chits discharged the functions of savings trust for a long time in the district. It is also met to some extent the purpose when the demand for credit for the productive activities increased with the dent of these regions, the resources mobilised by the kuries were inadequate and other forms of banking activities were started in the erstwhile Travancore State. As a result, yeta nidhi s on the pattern of kuries were set up in Southern Travancore region. These yela nidhis, which came into prominence after the passing of the Travancore Companies Regulation Act of 1885, gradually assumed the form of banking companies on the passing of the companies Regulation Act of 1917 by theTravancore State Government. The commercial banks gradually developed in the district with the influence of their counterpart’s jn Travancore.

Commercial Bank : In course of time, the rural artisans, and the industrialists of small scale industries in general and the agriculturists in particular had developed an attitude to ignore the conventional money lenders, as they got frustrated with the abnormal rate of interest charged by the money lenders later. The money lenders had no doubt served a useful purpose in supplying credit to agriculturists, but the almost fatal care, with which such credit could be obtained and the high rates of interest charged, had led to the overwhelming burden of standing debt. The money lenders did not trouble to find out whether the money they lent out was for productive or unproductive purposes. It had, therefore, become absolutely necessary to substitute for such credit a much cheaper and regularised form of credit.

While the money lender served a useful purpose in supplying money to ryots, the middlemen served an equally useful purpose in acting as a channel for the distribution of produce from the remote village to the markets of the world. But, the money lender had became a danger to the peasant in the same way, the middlemen had abused his position by resting merely all the surplus products from the ryots. Frustrated by such nefarious activities of the money lenders as well as middleman, the agriculturists, poor artisans and the like wanted a reform to substitute such sort of unscrupulous creditors. Gradually, the money lenders had to face a down fall, for reasons best known to them. Besides, the establishment of agency houses by the English traders, the unification of currency in 1835 the development of means of transport and communication, causing deflection of trade and commerce contributed to the decline of the activities of indigenous bankers.

Partly to fill the vacuum created by their down fall and partly to finance the growing financial requirements of English trade, the East India Company now came to favour the establishment of the banking institutions in western style. The British agency houses which combined banking business with their trading activities were the forerunners of the modern joint stock banks established on the European lines.

The first joint stock bank established was the Bank of Hindustan lounded in 1770 by the famous English Agency House of Messrs. Alexander. This bank was liquidated in 1832 due to financial crisis. The Bank of Bengal and the General Bank of India were established in 1785 The Bank of Bengal, the first of the three Presidency Banks, was established in Calcutta in 1806 under the name of the Bank of Calcutta. It was renamed in 1809 as Bank of Bengal. The two other Presidency Banks viz. the Bank of Bombay and the Bank of Madras were established in 1840 and 1843 respectively.

Although the Presidency banks had branches in important towns in the country, it was, however, felt that there was considerable duplication and overlapping in their activities and public opinion favoured a single Presidency bank for the whole country. In 1898, some witness who tendered their evidences before the Flower Currency Committee favoured the establishment of a central bank in the country, but the Government were apathetical to the suggestion. The Chamberlain Commission in 1913 suggested the appointment of a committee to examine the whole issue. The banking crisis of 1913-1917, however, brought to the fore the serious deficiencies of the existing banking system in the country showing the need for effective co-ordination, requiring the establishment of a Central bank. After repeated efforts, the three Presidency banks were fused into a single bank under the name and style Imperial Bank of India” in 1921.

Besides the three Presidency banks, other joint stock banks were established in the later half of the 19th Century. Around the turn of the century a great spurt was witnessed in the commercial banking activities in the country. With the spread of Swadesi movement in the country, there was great spurt in the number of banks. The number of small commercial banks started during this period (1906 to 1913) was much larger.

In the wake of this ‘banking boom’, followed a period of crisis, which gave a rude shock to banking development in the country during 1913 to 1924. The major ones contributing to this ‘debacle’ in the banking system had been neatly outlined by the Central Banking Enquiry Committee (1929) in its report. The principal factors were combination of the non-banking business with the banking business and absence of co-ordination in between joint stock banks. Again during the thirties, there were a considerable number of bank failures, due to global depression.

Hence, the demand for banking reforms in the country was voiced repeatedly, from all corners. Looking to these pressing demands, the Government appointed the Provincial Banking Enquiry Committees in eight provinces in 1929, besides appointing a separate Banking EnquiryCommittee for the centrally administered areas. Subsequently t completes the chain of enquiry, the Government appointed on July 22, 1929 the Indian Central Banking Enquiry Committee under the Chairmanship of Sri B.N.Mitra. The Committee recommended, among other things enactment of a comprehensive banking legislation covering the organisation, management, audit &nd liquidation of the banks in India.

These provisions together with the provisions of the Reserve Bank of India Act 1934 brought the establishment of the Reserve Bank of India in April 1935 as the Central Banking Institution in India. It was, however, felt that the provisions of the existing legislation were inadequate as well as difficult from the administrative point of view. The failure in 1938 of the Travancore National and Quilon Bank Limited followed by the banking crisis in South India, necessitated the enactment of comprehensive legislation to protect the interests of the bank depositors. The Indian Companies (Second Amendment) Act 1942 provided for the compulsory use of the words ‘Bank’ , ‘Banker’ or ‘Banking’ by every bank and the Banking Companies (Restriction on Branches) Act 1946, required banks to obtain permission of the Reserve Bank of India before opening new office or changing the location of the existing ones.

Scheduled and non-scheduled banks: Banks have been classified as scheduled banks and non-scheduled banks under the Reserve Bank of India Act. Scheduled banks are those banks which are included in the Second Schedule to Reserve Bank of India Act. During 1942-1943, there was considerable growth in the number of scheduled banks in the country.

A number of new banking companies were floated later of which, worth mentioning were Bharat Bank Limited, the Hindustan Commercial Bank Limited, the United Commercial Bank Limited and the Travancore Bank Limited.

Developments during planning: During the planning era, the commercial banking system in the country has experienced substantial changes both organisationally and structurally. The review during the planning period provided a perspective, on, how the Indian Commercial banking system and the Reserve Bank of India have adopted themselves to the continuously changing economic scene in the country both in the banking structure and the banking policy.

Another major development is the establishment of the State Bank ol India on July 1,1955 by acquiring the assets and liabilities of the lmperiaBank of India on the recommendation of the committee of direction of the All India Rural Credit Survey in order to stimulate banking development in the country, by providing facilities for the co-operative and other banks.

Other important developments are the review of the credit and banking policies, banks lending to agriculture and other priority sectors and the branch expansion policy under the short lived social control, nationalisation of 14 major commercial banks in July 1969 and of six commercial banks in April 1980.

Lead Bank scheme:     To help commercial banks march towardsvillages, the Reserve Bank of India formulated the Lead Bank scheme (LBS) which was introduced in December 1969. This was a sequal to the recommendation made by a study group appointed by the National Credit Council to the effect that the development of credit and banking in the country could best be achieved by taking into account the differing local conditions in various parts of the country. The study group, under the Chairmanship of late Prof. D.R. Gadgil urged an ‘Area approach ’ in this context, with a further suggestion that the administrative unit ‘district’ be taken as nucleus of this approach. After a further examination of these proposals and after considering similar recommendation of a special committee of bankers, the Reserve Bank of India formulated the Lead Bank scheme. Under the scheme, a nationalised bank where it is assigned the Lead bank role, helps in all round development of the district including Banking development. Indian Overseas Bank has been designated ‘Lead Bank’ for Kanniyakumari district.

Scheduled Banks: There were only few scheduled and non-scheduled banks during early 1960’s in the district The scheduled banks were State Bank of Travancore, Bank of Madura Limited, Canara Bank Limited, Indian Bank Limitied and Tamil Nadu Mercantile Bank Limited. The only non-scheduled bank was the Nanjinad Bank, the earliest one which was started in 1937.

In terms of banking coverage since nationalisation, Kanniyakumari is one ot the well banked district of Tamil Nadu. At the end of July 1972,46 offices of 12 commercial banks functioned in the district with an average population of 27,000 for each branch of a bank as against 28,000 in Tamil Nadu.

There has been a perceptible increase in the number of offices since nationalisation, the number having almost doubled, over a time-span of 3 years. From 23, in the month of June 1969 to 46 branches in July 1972a 100 per cent rise had helped in bringing down the average population per bank office from 51,000 to 27,000.

In June 1971, total deposits of Banks in the district, were of the order of Rs.569/ lakhs and advances Rs.249/ lakhs. Nagercoil, the district head quarters town accounted for bulk of the business viz., 61 per cent and 52 per cent towards deposits and advances respectively.

There were 81 branches of commercial banks in Kanniyakumari district as at the end of December 1977 spread over to 49 centres. All the nine Community Development Blocks have banking facilities.

Scheduled commercial banks in Kanniyakumari district(RS. IN LAKHS)

Year(V No. of office (2) Deposits(3) Advances(4)
1972 47 784 402
1973 51 1022 595
1974 55 1363 741
1975 63 1520 917
1976 73 1838 1230
1977 81 2269 1236
Increase 5 years 72.34 per cent 189.41


(Reserve Bank of India, Economic Department, Madras-1, Report dated 29 May 1980)

The above statement shows that the number of branches of commercial banks had increased by 72.34 per cent over a period of 5 years from 47 in 1972 to 81 in 1977. Regarding the growth of deposits, an increase of 189.41 per cent had been achieved during that period. The advances given by the commercial banks increased by 207.46 per cent in a period of 5 years i.e. from Rs. 402 lakhs in 1972 to Rs. 1236 lakhs in 1977.



Year(V Aghcufture(2) IndustriesW Servicesvr/ Total(5)
1 District Credit Plans (April 1978 to Dec. 1979) 1371.25 139.10 54.43 1564.78
II District Credit Plans (Jan. 1980 to Dec. 1982) 854.92 372.18 126.67 1353.77
III District Credit Plans (1983-1985) 1281.68 383.68 392.51 2058.09
IV District Credit Plans 4127.80 1157.54 2448.60 7733.94
Adviser (Priority Credit), Lead Bank Madras – Report dated 11 1989.



rears Agriculture(2) Industries0) Services Total (4) (5) Agriculture(6) Industries(0 Services Total(9) percentflQ
1980 567.36 110.33 38.47 716.16 969.88 219.80 12631 1315.89 184
1961 646.09 142.05 88.91 877.05 2095.65 436.85 306.92 283942 327
1962 746.10 149.91 121.48 1017.49 1306.11 441.16 266.86 201413 197
1963 916.99 169.38 172.92 125029 1520.31 229.13 256.10 200154 199
1984 997.78 188.49 207.23 1393.50 1486.87 19021 20887 198396 141
1985 1281 6S 468.75 291.17 2041.57 2211.04 1102.74 89324 400702 208
1908 199328 237.82 591.28 2822.16 2299 64 23921 1029 72 3568 57 Y2B
1987 2133 00 872JOO 736.00 3741.00 2313.79 37120 782.88 3475.65 14t

Statistical data on the operation of commercial banks   December 1984, 22 commercial banks were operating in the district a branch network of 110. The State Bank of India group, national banks and private sector banks were having 34, 46 and 28 branch respectively. Kanniyakumari District Central Co-operative Bank Limit 1 and State Land Development Bank were having 5 branches each. Tar Nadu Industrial Investment Corporation is also functioning in the district (Activities of the TIIC are dealt with in detail in the chapter on ‘Industries’). The commercial banks mobilised deposit to the tune of Rs, 79.73 crores and extended financial assistance to the tune of Rs.66.87 crores with credit deposit ratio of 80.11 per cent priori sector advances constitutes 74.28 per cent involving Credit disbursement amount to Rs. 47.45 crores. DRI advances exceed the national norm of 1per cent. It is significant that Rs.66.08 lakhs have been given as financial assistance to SC/ST beneficiaries by the commercial banks.

As on December 1985, 22 commercial banks viz., 2 State Bank of India 9 nationalised banks and 11 private sector banks having 114 branches were functioning in the district. The State Bank of India group, nationalised banks and private sector banks were having 37, 49 and 28 branches respectivery among nationalised banks, Indian Overseas Bank has 22 branches. State Bank of Travancore was having 22 branches. In the case of private sector banks, Tamil Nadu Mercantile Bank Limited has large number of branches (14), followed by Bank of Tamil Nadu Limited with 5 branches. Bank I Cochin has been taken over by State Bank of India the commercial banks in the district have mobilised a deposit of Rs.95.93 crores and their loans and advances aggregated to Rs.54.08 crores registering a satisfactory credit deposit ratio level of 56.4 per cent.

The commercial banks have extended a liberal financial assistance of Rs. 37.11 crores to priority sector accounting to 68.6 per cent of their total advances in the district. It seems that a DRI advance on the whole was good as the commercial banks have reached a level of 2.03 per cent with the total credit deployment of Rs. 1.10 crores. A sum of Rs. 12.34 crores had been deployed by the commercial banks for the development of agriculture by financing small and marginal farmers numbering 45162 persons. 4054 skilled village artisans were financed to the tune Rs.1.14 crores. 5827 SC/ST beneficiaries were assisted by banks to the tune of Rs.87.90 lakhs. An amount of 5.79 crores were disbursed und# 20 Point Programme.As on December 1986, the commercial banks in the district have mobilised a deposit of Rs.66.46 crores registering a satisfactory credit deposit ratio level of 55 per cent.

The commercial banks have extended a liberal financial assistance of Rs.42.38 crores to Priority Sector accounting 64 per cent of their total advances in the district. An advance on the whole is good as the commercial banks have reached level of 24 per cent with the total credit deployment of Rs.1.59 crores. Rs 24.79 crores have been deployed by the commercial institutions for the development of agriculture by financing small and marginal farmers. 6130 skilled village artisans were financed to the tune of Rs.1.64 crores. 8638 SC/ST beneficiaries were assisted by banks to the tune of Rs. 1.25 crores. An amount of Rs.7.33 crores were disbursed under 20 point programme.

Comparative Statement as at the end of December18

1984 1985 1986
1. No. of bank branches including KDCCB and SLDE I 115 115 115
2. Deposits (in thousands) 797320 959317 1209474
3. Outstanding Advances (in thousands) 668716 540855 664571
4. Credit-deposit Ratio 80.11 50 4 55
5. DRI Scheme 10665 11078 11Q00
6. SC/STbeneficiaries 10665 8750 12555


At the end of December, 1987, there were 115 branches of the commercial banks spreading over 97 centres.19 they served an average population of 12339 per bank office 10 public sector banks and 11 private sector banks have operated in the district in 1987.


  1. State Bank of Travancore
23 17
  1. State Bank of India
15 12
38 29
Public Sector Banks (Nationalised} -
  1. Indian Overseas Bank
22 18
  1. Canara Bank
13 9
  1. Syndicate Bank
4 4
  1. Indian Bank
3 3
  1. Central Bank of India
3 3
  1. Union Bank of India
2 2
  1. UCO Bank
1 1
  1. Vijaya Bank
1 1
49 41
Private Sector Banks-
  1. Tamil Nadu Mercantile Bank Ltd.
14 13
  1. Bank of Tami! Nadu Ltd
5 5
  1. Bank of Madura Limited
1 1
  1. Bank of Thanjavur Ltd.
1 1
  1. Catholic Syrian Bank Ltd.
  1. Dhanalakshmi Bank Ltd,
1 1
  1. Federal Bank Limited
1 1
  1. Karur Vysya Bank Limited
i 1
  1. Lakshmi Vilas Bank Limited
1 1
10, Nedungadi Bank Limited 1 1
  1. South Indian Bank Unified
il 1
28 27
Total 115 1 1 97
  1. Small Scale Industries -
  1. Engineering
46 508
  1. Coir Units
95 274
Total (Industries) 4026 23021
III. Services.-
  1. Transport Operations
  1. Taxi/Trucks
233 9581
  1. Others
433 1991
  1. Retail Traders /Small Business
8536 79537
  1. Professional & Self Employed
4005 11022
  1. Handloom /Educations
189 400
  1. Consumption
309 438
Total Services 13705 102972
Bankwise, Sectorwise, performance under Annual Action Plan 1986
$1.No. Banks (1) (2) Agriculture(3) Industries(4) Services(5) Total 
  1. State Bank of India
22882 2029 7720 32631
  1. State Bank of Travancore
38056 6657 12703 57276
  1. Indian Overseas Bank
28944 2517 5994 37455
  1. Syndicate Bank
6462 854 2144 9460
  1. Indian Bank
13321 132 1237 14S9C
6, Union Bank of India 2557 577 1398 1532
UCO BankCanara Bank 503315720 141098 3253634 540220452


  1. Vijaya Bank 10. South Indian Bank Ltd.
62314 57189 383785 5021288
Tamil Nadu Mercantile Bank Ltd.Dhanalakshmi Bank Ltd.

Bank of Tanjore Ltd.

14 Bank of Madura Ltd.

  1. Nedungadi Bank Ltd.



851516 1127215









16 Federal Bank Ltd. 999 274 492 1765
17 Catholic Syrian Bank Ltd. 35 89 1036 1160
18 Lakshmi Vilas Bank Ltd. 193 100 201 494
19 Karur Vysya Bank Ltd. 311 3 23 337
20 Kanniyakumari District Central co-operative Bank Ltd. 81480 7479 61597 150556
21. T.N. State Land Develop. Bank Limited. 4671 4671
Total 229964 23921 102972 356857






Block Centre












Banka Operating (2)

State Bank of India

Tamil Nadu Mercantile Bank Ltd.

Indian Bank.

State Bank of Travancore

Canara Bank State Bank of India

Indian Overseas Bank

Indian Overseas Bank

State Bank of India

Indian Overseas Bank







Indian Overseas Sank (IOB) : Indian Overseas Bank started its operation in Kanniyakumari for the first time in 1963 by taking over the Nanjinad Bank Limited which transferred 3 branches located at Nagercoil, Eraniel and Thittuvalai23 Thereafter, till nationalisation (i.e. 1969) the Indian Overseas Bank established only 2 more branches. But, in the post nationalisation era, 17 branches were opened, particularly in rural areas. Thus, 22 branches are now functioning in 18 centres of the district.

Rural Indebtedness: The problem of agricultural indebtedness has been a chronic malady. Admittedly, no single prescription can cure this problem. Mr. Pillai in his Economic condition of India states, “In treating the poverty and indebtedness of the people, it is essential to find out the root cause; else the treatment will be of the symptoms merely and not of the disease. The eradication of the evil of indebtedness cannot be effected by any single remedy, but will require the persistent and simultaneous action of a diversity of remedies, the most important of which is the education of the peasant himself.” The Royal Commission on Agriculture also struck the right note when they said:” It must be clearly recognised that the worst policy towards debt is to ignore it and do nothing”. In India, agricultural indebtedness is not a new phenomenon which has appeared in the recent past. Sir Frederick Nicholson, in 1895, estimated the total debt of the rural population of Madras at Rs.45 crores.24 In 1930, the Madras Provincial Banking Enquiry Committee estimated the debt at Rs.150 crores. But, the extent of indebtedness varies, not only with landed security which the agriculturist can offer, but also with the personal credit he commands.

Quite apart from the character of the people, agriculture in India the exception perhaps of the raising of a few commericai crops, is profitable proposition. The following observations of the Commission holds good even today.

The low standard of living to which the mass of India’s population attains is one of the first things that strike a western visitor. Wants are few diet is simple, climate is usually kind, and a deep rooted tradition tends to make the country man content with things as they are. “But the depth of the poverty, the pervading presence of which cannot escape notice, is not so easily realised.”

The peasantry were steeped in debt and relief was an urgent necessity. There was the rule by which re-payment of twice the amount of the debt borrowed by way of interest or principal or both, discharged the Agriculturists’ Relief Act, Act IV of 1938. but that did not go far enough. Later on, legislation was promoted to meet the rapidly worsening situation. It was not as if the agriculturist alone was in need of relief. There were others, the landless poor, who were in equally bad case. There was also the small income group who found it difficult to make ends meet and had to borrow at usurious rates of interest.

The documents of debt, however, recited rates of interest far below what had been agreed upon, and the excess interest was actually taken in advance by the lender from out of the principal amount agreed to be lent and recited in the documents of debt. And creditors rarely agreed to any abatement of interest. The legislature intervened and passed enactments, declaring moratoria from time to time, which barred action being taken in the law courts. Thereby, they afforded a little breathing space to the debtors.

The Act XXI of 1972 was passed and it afforded relief to the cultivating tenants, whose rent was in arrears as on 30 June 1971. It provided that, if the tenants paid the rent for the current year (from 1 July, 1972) the arrears would be wiped out.

The low income groups, it was felt, needed similar relief as urgently as did for the agriculturists, since the labourers, wage-earners and Government servants on the lower salary levels had been badly hit. The debt relief Act XXXVIII of 1972 was then passed with this in view. I” respect of debts incurred before the 1st of March 1972, if a debtor had twice the amount borrowed by way of interest towards principal or both, the debt stood discharged. In respect of usufructuary mortgages executed before 1st of March 1972, thirty years’ possession of the mortgaged property by the mortgagee discharged the mortgage and the owner (mortgagor) was entitled to recover the possession. If the mortgagee had been in possession for a less number of years, payment of a proportionate amount discharged the mortage and the mortgagor could recover. Also, mortgagers could redeem the property mortgaged though it had been given for a specified period and the said period had not expired. There were provisions in regard to details which smoothed the path of the debtor (mortgagor). Nine per cent per annum was fixed as the maximum rate of interest payable on any debt incurred on or after the 1st of March 1972.

The Act, VIII of 1973 (amended the Act IV of 1938) provided relief to debtors who happened to own lands in a municipal or a catchment area which, before amendment disentitled them to the relief. It also provided that all interest accrued before 1st March 1972 shall stand wiped out. All amount paid, whether as interest or principal were to go in reduction of the principal.

Before the amendment, mortgagers of house property alone situated in a municipal or cantonment area or in a panchayat were under a disability. They could not claim scaling down but, they could, after the amendment. Another disability also was removed i.e. Debtors could after the amendment, claim the relief or scalling down, even in the case of women-creditors who owned property worth less than six thousand rupees.

The Act, XLVIII of 1975 afforded a breathing space to debtors by declaring a moratorium for one year, i.e. up to the 16th January, 1976, which meant that debtors could not be proceeded against law. As per provisions interest will not accrue during the period when the moratorium was in force in respect of certain debts.



Mentions for the predominance of Agricutturaf Credit Societies in the Co-operative Movement: Co-operative movement made its •river »t in India in the year 1904 during the Viceroyalty of Lord Curzon. The mmn otyactiva of introducing co-operative movement was to relieve the predtfjrrunant peasantry of India from the ever tightening grip of urwuupulous private money lenders who were charging exhorbitant rates of irjiemt, ultimately leading to the estrangement of their landed property radually converting them into a class of landless labourers. Therefore, it became necessary to bring the agricultural community into UAd of some organisation, which will not only free them from the bear hug of private money lenders but also supply them with cheap credit and  inputs required for carrying out seasonal agricultural operations depending on private money lenders. The co-operative method with rts character of self help democratic management and the practice of thrift served the need of the hour well and so. as India is predominantly rural it economy being agricultural in nature, the co-operative agricultural credit societies came into the scene in a dominant way.

India lives m villages. Agriculture is the mainstay of the people. So, is in Tamil Nadu, Therefore, agricultural societies were organised in almost all the to meet the credit and other needs of agriculturists. These sooasas were organised in important villages and also by grouping a fujffitm of small hamlets depending upon their size of population. The pnmaty objective is that the entire peasantry should be brought into co optative fold.

NSW if cannot be said that all the agricultural credit societies are functioning, fulfilling the objectives with which they have been antvid. As agricultural operations in India mainly depend on monsoon, air as it does fluctuate so also the performance of agricultural credit it was reasoned that it is not the number of credit societies the volume of service they are able to render to the agrartim community which matters. Therefore, it was thought that all the anjuHural credit societies should be viable, financially sound and selfsupporting find be able to offer all services to the agriculturists in an effective manner With this objective, the Reserve Bank of India embarked on a policy Of forming agricultural credit societies on a viable basis according to which only the financially viable societies should be retained, the weak societies should either be amalgamated with a neighbouring viable society or liquidated. Grouping a number of small societies and forming them Into one vinble society is also one of the methods. This amalgamation process Is in force in Tamil Nadu from 1980 onwards, and as a result, credit societies, In Tamil Nadu which stood at 4785 had come down to 4091 at the end of the co-operative year 1982-83. The total number of agricultural societies as on 31 March 1987 was 4655 in Tamil Nadu and it was 117 In Kanniyakumari district. Therefore, these societies are predominant In co operative movement, neither by their number nor by their financial performance, but by their relevance to the lines of thepeople,Statistical Particulars relating to these societies in Kanniyakumari district are as follows (as on 30 June 1987) :

1. Number of agricultural societies 117 I laki
2. Number of members 2.12 SI
3. Paid up share capital 193.95 M
4. Reserve Fund and other Funds 62.50 n
Deposits 799.48 m
6 Borrowings 1557.29 m
7, Working Capital 3102.07 M
8, Loan, advanced(short term and medium term) 643.57 W
9, Loan outstanding of which overdue 189.30 W
10. Number of Societies working onprofit (1986-87) 74 M
amount 45.55 H
11, Number of Societies workingon loss (1986-87) 43 M
amount 16.08 N

An Appraisal of the steps taken to relieve the farmers from the clutches of money lenders.

Co-operatives are people s organistation, as the name itself implies- efforts through them prove successful in the implementation of the welfare schemes.

Tamil Nadu is a pioneer State to introduce the co-operative movement. The introduction of co-operative movement in Tamil Nadu in 1904 is the first and foremost measure in the direction of relieving farmers from the clutches of private money lenders. This movement made its advent in Tamil Nadu with the starting of Thiruvoor Co-operative Agricultural Credit Society in Chengalpattu M.G.R. district to meet the agricultural credit requirements of the farmers in the area. This is the first agricultural credit society in the State, which even today is meeting the credit needs of its members. The co-operative movements which made its beginning thus, has today virtually revolutionised the agricultural credit sector.

The agricultural credit structure in Tamil Nadu is a three tier one, the primary agricultural credit societies or agricultural service co-operative societies as they are called now, form the basic layer of this structure. The second layer is formed by central co-operative banks functioning at the rate of one each for every district except in Thanjavur where there are two central co-operative banks one at Thanjavur and the other at Kumbakonam. The third and the top layer of this three tier structure is the Tamil Nadu State Apex Co-operative Bank which is the head of this three tier system. The important role that these three types of co-operatives are playing in providing relief to farmers is discussed below.

Agricultural Service Co-operative Societies : (The nomenclature has since been changed as Primary Coop. Banks in 1988). These societies are formed in big villages or by grouping a number of hamlets. The primary objective of these societies is to provide short term and medium term loans to farmers to meet the expenses connected with seasonai agricultural operations and to meet their long term credit needs such as purchase of plough bulls etc. The periodicity of short term loan is generally one year (i.e.) the loan issued at the time of commencement of agricultural operations is recovered after the harvest is over. Thus, this type of loan is time bound and purely to meet the cost of agricultural operations An outstanding feature of this loan is, that it is not only advanced purely by way of cash, but it includes kind portion also, which consists of the main agricultural requisites such as fertilisers, seeds,pesticides etc. Thus, the short term loan is a package loan which meets all the necessities of a farmer for a particular period. To make the short term loan to serve Its purpose more effectively and to ensure that the loan reaches the poor and needy in time, a system namely Annual Credit Limit has been introduced in Tamil Nadu according to which the annual credit needs of the members are assessed and loan sanctioned to them. Subject to the limit, the farmer member can draw the amount, whenever he needs. The Annual Credit Limit contains cash and kind portions to ensure that unscrupulous staff of the agricultural service societies do not take undue advantage of the illiteracy of the members of the societies. A system of crediting the loan amount to the individual member’s account is followed and this system is known as the ‘pass-book’ system. This system is followed by all agricultural service societies in Tamil Nadu. This system, besides, protecting the members in rural areas from any malpractices, also inculcates a habit and knowledge of banking in them.

The agricultural service societies are equally responsible for meeting the medium term loan requirements of farmers needed for purposes such as, purchase of ploughbulls, power sprayers and other agricultural requisites. The periodicity of the^e loans is spread over a period of 3 to 5 years. The recovery of these medium term loan in conditions like failure of monsoon and other natural vagaries are rephased and thus repayment is made easier. Now, in keeping with the policy of Government, the waiver of these loans is also a possibility. Depending upon the conditions of monsoon, relief is given to farmers,,at times, by waiving penal interest, and in some cases principal too.

Another type of loan advanced by agricultural service co-operative societies is produce pledge or grain pledge loans. These loans are issued to farmers on the security of produce of the members, such as paddy. The periodicity is one year. On repayment of the loan, the stock of grain against which the loan was sanctioned is returned to the member. In case the member defaults, the grain so pledged is sold by the society and the amount of loan recovered. The balance if any, is paid back to the loanee. This kind of loan is very helpful to the farmer to meet his unforeseen and sudden requirements. Above all, this type of loan links credit with marketing. Thus, the Agricultural Service Co-operative Societies render service to the ryots and these measures have relieved the ryots to a very great extent from their dependency on private money lenders.

These Agricultrual Servjce Societies in oraer to meet the requirements of their members borrow from the District Central Co-operative Banks which are their financing banks. The Annual Credit Limit applications prepared by the Agricultural Service Societies incorporating the credit needs of members is sanctioned by the Central Co-operative Bank, which, in turn receives funds from Tamil Nadu State Apex Co-operativea Bank, which is the apex body as well as their financial bank.

Central Co-operative Banks : There are 17 Central Co-operative Banks in the State. The major activity of the Central Co- operative bank is to provide loans to the affiliated societies from its borrowings from the Tamil Nadu State Apex Co-operative Bank/National Bank and out of its own resources mostly raised by way of share capital and deposits.The State Government assist the Central Cooperative banks by investing in their share capital.

Apart from providing funds to the primary agricultural cooperative credit societies to sanction short term and medium term loans, the Central Co-operative banks are also implementing the scheme of provision of individual loans to the weaker section of the community by the cooperatives under differential rate of interest at 4 per cent from 1981-82. Under this scheme, loans are issued to the weaker sections, having an annual income from all sources which does not exceed Rs.2500 in rural areas and Rs.3,000 in urban and semi-urban areas. The difference between the normal interest rate and the concessional rate is subsidised by the State Government.

Further, the Central Cooperative Banks are also providing finance to the primary weavers societies for production and marketing of handloom products. The Central Cooperative Banks have also been permitted to lend for financing cottage, tiny, village and small industries under non-farm sector.

Risk Fund: From the year 1962-63, Government have been making contribution to Risk fund (formerly known as Bad Debt Reserve) of Central Co-operative Banks under the scheme of outright grants, for financing Agricultural Service Co-operatvie Societies functioning in the agency areas and the concerned agencies have been making contribution to the Central Co-operative Banks for financing the Agricultural Service Co-operative Societies. The-fund is meant for meeting the loss that may be incurred by the Central Co-operative Banks on account of the loanissued to small and marginal farmers, As per month the level pattern, the contribution is at 2 per cent of the additional shoit teen loans tabued by 10 central Co-operative Banks for financing the weakei sections of  population during a Co-operative year over tin previous yim and 2 pet cent of the medium term loans issued to small and maty Inal farmers in the Co-operative year. Consequent on the extension of Integrated Rural Development Programme to all blocks in the Statu with iff ect ti om

October 1980, Government have pointed out that contribution to  Fund will be made by agencies concerned from I and this scheme still continues.

Tamil Nadu State Apex Co-operative Bank: The Tamil Nadu State Apex Co-operative Bank is the Federation of Central Co operative Banks in the State. It is the apex agency at the State level, meeting the Short term ami medium term requirements of the Central Co-operative Hanks foi the purpose of providing agricultural credit. All the District Central Cooperative Hanks an members of the Tamil Nadu State Apex Co-operative Bank, betides tin State Government and 52 preference share holders

The Tamil Nadu State Apex Co-operative Bank receives funds from the National Bank for Agriculture and Rural Development and advent t* h- to the Central Co-operative Banks to finance seasonal agricultun.l operations every year. This bank, though a Federation 01 Central Co-operative Banks, which mainly finances seasonal agricultural operations through primary agricultural coop, bank/primary agricultural coop, society also finances Tamil Nadu Handloom Weavers Co operative Society, an apex body of handloom industry and to Tented, an apex body of marketing societies, which is incharge of distribution of fertilisers to the State.

Long Term Credit : Just as the Agricultural Service Co-operative Societies are incharge of short term and medium toim loans, the Primary Land Development Banks which are 181 in the State as a whole, take can of meeting the long term agricultural credit needs of the lyots in Tamil Nadu. The long term credit structure in the State is two tier one, the primaiy land development banks forming the basic layer with the Tamil Nadu State Land Development Bank, forming the top layer which is also the apex body,

The main objective of the primary land development hanks Is sanctioning of long term loans such as purchase of tractor, digging of new wells,deepening of existing wells, installation of pump sots, construction of pump shed, clearing of prior debts and reclaiming of Innd etc, They


The primary Kin?I development banks are playing a vital role in tar/, the ground walor potential in the state by advancing loans for sinking has wells, mhoto wellKin etc,, in collaboration with the Agricultural Engineer Department, which has been entrusted with sinking of such wells ik! stop ol tho primary land development banks has gone very far in tackfrom the Irrigation problem of tin who are mostly dependent on nature!

These banks are not merely advancing loans for sinking wells, but also hdlplliy the ryots to got relieved from heavy financial loss incase tho wtll sunk out of loan, proves Infructuous by meeting the loss by give financial iislitanc from the failed wells fund’ created for this specife purpose based on tho merit of the individual case.

Another impottant milestone in the service rendered by land development banks In providing relief to farmers is its switching over to lending for diversified purposes (i.e.) for lending for purposes other than agriculture, but closely associated with agriculture such as sbeec breeding, poultry farming, dairy development, sericulture, horticulture etc This sort of diversified lending by primary land development banks has gono to a very great extent in alleviating their poverty, as these schemes have proved to be tho channels of additonal supporting income to the farmers to find substitute employment during the lean season in agriculture,Tho primary land development banks are the members of the Ta’n Nadu State Land Development Bank, which is also their financing ban* Tho primary land development banks are controlled by the Tamil Nacu State Land Development Bank in its capacity as their financing bank. Funds flow to the primary land development banks only through the Tan^ Nadu State Land Development Bank, which, in turn, receives funds frorr tho NABARD, State and Cot Ural Government for formulating and Implementing all schemes meant for providing lasting relief to the need. The democratic aspects of constitution and management of Co- operative Agricultural Credit Societies.

The general administration of any co-operative society is vested with he general body which is the supreme body and it is constituted by ail the members of the society. Each member has got one vote. The General Body has to elect Board of Management of the society. The general body should be convened atleast once in a year. Special general body meeting may be convened by the Board. Ordinary general body meeting should be convened within one month from the date of receipt of notice under the following circumstances.

Such number of members or proportion of the total number ofmembers as may be specified in the by laws.When the managing committee of the financing bank makes arequest, orWhen the Registrar calls for a meeting of general body,Election of Board of Directors ;Consideration of annual audit report and its adoption and approval of budgets;Recommending amendments to by-laws viz., changes in the existing by laws, additions or deletions ;Removal of a member from the society.

Management: The executive management of a co-operative is vested with Board of Directors, who are elected by the general body.

As per section 33 (3) (e) of the TNCS Act, 1983 the board shall consist of in the case of a primary society (other than a primary society specified in schedule) not less than eleven and not more than twenty one members as may be specified in the rules or by-laws.

Proviso to Section 33 (1) a: In the board of every society, there shall be one representative for SC and ST, one representative for economically weaker section and one representative for women. Economically weaker section means farmers owning or cultivating not more than half a hectare


of irrigated land or one hectare of unirrigated land and where any owns or cultivates both irrigated and unirrigated lands, for the this clause [(section 33 (2) (B) (C) explanation 1)] one hectare of ijpt land shall be deemed to be equal to two hectares of unirrigated land- other persons whose annual income derived from all sources for the successive co-operative years immediately preceeding a period of M days prior to the date of election, or nomination does not exceed thousand and four hundred rupees.

Some of the important functions of the Board of Management are Admission of members, allotment of shares and additional shares to members and approving of transfer of shares.

The District Central Co-operative Bank has eight branches as on date in the district, and their location and date of inception are as follows


Branch Date of Starting
(1) (2)
1. Marthandam : 15 September 1965
2. Thuckalay : 20 October 1966
3. Monday Market 29 June 1969
4. Rajakkamangalam : 29 June 1969
5. Nagercoil Town : 27 December 1973
6. Elankadai : 10 February 1986
7. Puthukkadai 15 April 1987
8. Kulasekaram : 15 April 1987

The Kanniyakumari District Central Co-operative Bank : The apex organisation in the co-operative sector in the district is the Kanniyakumari District Central Co-operative Bank. The bank was started on September 1957, with a paid up share capital of Rs. 3.29 lakhs, with five branches, the bank had in its roll, as at the end of June 1969, 465 co-operative societies, as its members, and deposits and advances to the tune of Rs.37.8 lakhs and Rs. 166.1 lakhsrespectively.30


(1) (2) (3) (4) (5)
1959-60 7.04 39.54 40.78 46.67
1960-61 8.54 60.64 60.73 69.47
1961-62 13.06 75.41 76.20 88.91
1962-63 16.65 91.77 94.76 109.25
1963-64 19.71 112.39 106.71 133.36
1964-65 22.09 101.24 109.31 124.99
1965-66 22.92 114.03 119.43 139.65
1966-67 24.37 110.55 125.53 137.56
1967-68 27.06 132.99 145.27 163.16
1968-69 30.16 159.29 165.90 198.33
1969-70 31.53 146.78 165.37 190.28
1970-71 33.24 97.40 115.23 143.82
1971-72 39.66 188.46 198.70 241.86
1972-73 44.26 217.96 230.70 283.50
1973-74 46.94 208.09 220.54 285.61
1974-75 46.75 267.13 259.29 348.71
1975-76 50.77 248.53 239.14 343.11
1976-77 52.76 357.43 364.27 459.84
1977-78 62.20 420.03 419.36 527.30
1978-79 67.64 434.78 442.35 560.24
1979-80 71.53 507.66 570.90 726.. 28
1980-81 77.09 666.77 555.33 809.68
1981-82 90.41 1054.79 992.36 1229.97
1982-83 96.35 1118.01 1058.97 1338.63
1983-84 99.63 1299.30 1122.95 1537.85
1984-85 107.69 1483.89 1361.05 1749.53
1985-86 114.37 1771.25 1669.78 2048.10
1986-87 126.67 2111.96 1998.78 2436.05
1987-88 169.63 2746.45 2627.67 3192.55


Co-operative Banks :  The Kanniyakumari     District            CentralCo-operative Bank Limited is the financing agency of the co-operative sector in the district catering to the short and medium term credit needs of the co-operative institutions established there. Besides, extending financialassistance for raising crops, the bank provides medium term loans for agricultural purpose including subsidiary occupations such as dairying, work bullocks, bullockcarts, poultry development, bee-keeping, etc. The bank also finances the handloom weaver’s co-operative societies marketing and processing societies, consumer stores, urban banks, employees societies etc. The Kanniyakumari District Central Co-operative Bank Ltd., with its head office at Nagercoil has eight branches at Marthandam, Thuckalay, Monday Market, Nagercoil, Rajakkamangalam, Kulasekharam, Pudukkadai and Elankadai, Eight branches of the central co-operative banks cover 4 of 9 blocks in the district. The five blocks which have no branches are, however, being adequately served by the branches in the adjacent blocks. There are 118 primary agricultural co-operative societies. Besides, extending financial assistance for raising crops, the societies also distribute commodities such as rice, wheat,sugar etc. The Tamil Nadu State Co-operative Land Development Bank has 5 branches operating in the district. They provide long term loans to the farmers for the purpose like land levelling, minor irrigation, and horticultural crops. Besides, a People (Urban) Co-operative Bank is also functioning in this district.

Year Total Issued Kind component Percentage
(1) (2) (3) (4)
1982-83 239.34 47.43 19.81
1983-84 184.79 35.11 19.00
1984-85 287.05 55.44 19.31
1985-86 379.54 70.84 18.66
1986-87 463.75 100.10 21.58
1987-88 591.03 131.04 22.17
1988-89 611.35 127.16 20.8G
(up to 30 November 1988)

The above statement reveals that under the IRDP Scheme, a sum of Rs.56.24 lakhs was issued as medium term loans to 2827 persons in 1982-83. This amount increased to Rs.85.63 lakhs benefiting about 2907 persons in 1986-87.

Under the non-IRDP Scheme, a sum of Rs.21.95 lakhs was issued in 1987-88 to 890 persons. Under the Biogas Programme, a sum of Rs.4000/- was issued to only one person in 1982-83 and the amount of loan increased to Rs.2.55 lakhs benefiting 42 persons in 1986-87.

Progress in the issue of Jewel Loans34

Target  Achievement   by

Year(V (PACS)Primary





By By PACS branch of Central Co-op Bank(3) (4) By Branches of Central Cooperative Bank(5)
1982-83 800,00 30.00 408.08 26.49
1983-84 600 00 30.00 644.99 26.27



The Kanniyakumari District Central Co-operative Bank Ltd.,


(crop wise, acreage wise issue of loans from 1083>84 to 1986-87)


CROP(1) Acre­age






% of cover- age(4) Acre­age






%0f cover* age(7) Acreage




1 Paddy 6133 37.67 4.27 12954 93.13 9,01 13309
2 Tapioca 17146 119.46 49.96 19697 147.28 53.96 21377
3 Coconut 844 5.93 2.61 1556 12,15 4,82 2034
4 Groundnut
5 Banana 247 3.27 5.29 918 11.91 20.55 1722
6 Rubber 3532 18.46 18.15 3757 22.58 19.35 6929
7 Flowers
Total 27893 184.79 11.01% 38882 287.05 15,35% 45371



Statement – 2



(crop insurance particulars) Year(1) Amount of loanIssued RS. (2) Amountinsured








1 Kharif 1983 -1 Crop 14,006.00 04.846.36 520.00 30.50
2 Rabi 1983-84 II Crop 2,64,315.00 3,56,239.46 7,125.31 643.56
3 Kharif 1984 I Crop 2,30,587.00 3,59,763.00 10,894.15 381.60
4 Rabi 1984-85 II Crop 4,85,673.00 7,57,639.00 23,772.36 683.61
5 Kharif 1985 I Crop 9,26,850.00 13,90,266.00 27,805.73 551.60
6 Rabi 1985-86 II Crop 39,91,963.00 59,87,965.00 1,19,759.35 2367.05
7 Kharif 1986 I Crop 73,36,030.00 110,04,056.00 1,67,897.87 4275.79
8 Rabi 1986-87 II Crop 38,83,340.00 58,25,060.00 86,527.55 2177.8C
9 Kharif 1987 I Crop 62,97,323.00 94,45,995.00 1,46,666.66 3432.1J
10 Rabi 1987-8811 Crop 46,01,758.00 69,02,645.00 1,07,345.00 2481,41.4.’
11 Kharif 1988 I Crop
12 Rabi 1988-89 il Crop



Statement – 2 (Contd.)

covered No. of farmers Amount Area
(6) (7) (8) (9)


11 1 2,200.79 KURUNTHENCODE BLOCK A. Antonymuthu, Neyyoor Insurance – Rs. P. Company 1,650.59 Government 550.20
178 2,200.79
196 83 26,653.00 Rajakkamangalam Block
2142 100 13,016.30 Melpuram Block
3571 2088 24,83,573.28 Thovalai & Agasthiswaram Blocks.
1975 481 90,811.77 Thovalai Block
2725  1789 Season already over crop cutting results not received from General Insurance Corporation of India so far.
Present Rabi 1988-89 has Cooperative Societies. Season. Area selected for Rabi not been intimated to Central Bank by Registrar of Cooperative


Progress in the issue of loans under: —(RS. IN LAKHS) 1987-88   1988-89(up to 30 November 1988)

1. Non-Farm Sector for SSI 11.98 47.92
2. Small Road Transport Operators for purchase of vehicles 12.07 27.64
3. Loans to Fishermen for purchase of Out Board Oil Engine 8.94 5.24
4. Loans for purchase of Big Size Motor Boat. 2.00
5. Consumer loans for purchase of T.V., Scooter, etc. 40.11 30.63


Progress in the mobilisation of deposits:-

Year(1) Position at the begining of the year(2) Target for the Year(3) Achievement Position during the at the Year end of the year (4) (5)
1984-85 429.02 70.00 87.19 516.21
1985-86 516.’21 80.00 45.28 561.49
1986-87 561.49 120.00 54.49 615.98
1987-88 615.98 200.00 271.94 887.92
1988-89(Up to 30 November 1988) 887.92 200.00 194.44 1082.36


Government concession granted to the farmer members of Cooperative Credit Societies in Kanniyakumari District through Kanniyakumari district Central Cooperative Bank Limited, Nagercoil.

Numbers Amount
1. Penal Interest concession granted to Members who repaid their Loans 23586 4.51
2. To repay the Medium Term Crop Loan outstanding as on 31 March 1988 against small Farmers. 1731 6.22
3. Refund of Repayment made by Small Farmers from 1 July 1975 to 31 March 1980 in the medium term crop loan. 3279 1512
4. Interest Concessions to members (small and big farmers) who repaid their loans out standing as on 31 December 1980. 44437 41.72
5. Reduction in the rate of Interest of (medium term crop loans) 9021 0.25
6. 2 per cent Interest Rebate to prompt repayments of small farmers 12833 1.57
7. (i) Loans outstanding as on 31 March 1986 which are eligible for the present interest concessions by way of waiver. 27495 60.22
(ii) Interest concession by way of refund to those who have repaid their loans in full from 1 July 1985 to 31 March 1986. 16107 22.82


As on 30 November 1988, there were 11 agricultural banks, two farmers service societies, 102 primary cooperative banks and one hill tribe society in the district. The total number of members in the primary cooperative banks as on 30 November 1988 was 2,19,042 of which 10546were borrowing members.

These banks are very particular in bringing the weaker sections in their network. As on 30 November 1988 there were 15,627 scheduled castes and 876 scheduled tribes as members in the primary cooperative bankscovering 10,498 operational holding.

Land Development Banks: There are five primary land development banks functioning in the district. The loanable funds of the land development bank are derived from their apex bank i.e. Tamil Nadu State Cooperative Land Development bank, Madras.(RS. IN LAKHS)

1. Agasthiswaram 27.97 14.25 13.72 49.11
2. Munchirai 18.07 12.81 5.26 34.6
3. Thovalai 21.47 9.71 11.76 54.8
4. Thuckalay 38.26 21.66 16.60 43.4
5. Thiruvattar 11.39 6.87 4.57 39.7
TOTAL 117.16 65.30 51.86 44.3


The overdue position of these banks as on 30 June 1988 ranges from 34 per cent to 55 per cent. Most of the schemes are implemented by the NABARD. Refinance assistance, and also the schemes relate to land development and raising of certain commercial crops.

Refinance Facilities: NABARD and IDBI are the two important refinancing institutions to augment the resources. NABARD provides refinance in respect of term loan for agriculture, agriculture allied activities and rural artisans. Refinance to the extent of 90 per cent is made available for the eligible schemes under IRDP NABARD meets the IRDP banking plan as the schemes and sanctions refinance to the participating banks.

Storage Facilities:        Out of 117 Agricultural Service Cooperative

Societies in Kanniyakumari district 97 have their own godown and their estimates storage capacity is 13151 M.T.

Co-operative Printing Press: There is one Cooperative Printing Press in Thuckalay and its area of operation is the entire Kanniyakumari district. As on 30 June 1988 there are 366 ‘A’ Class Members and 7 ‘B’ Class Members in the Society and their paid up share capital is Rs.221085/-

One Cooperative Sub-Registrar has been appointed as Special Officer of the Cooperative Printing Press, with effect from 10 June 1976. The Society is also running two sales depots, one at Nagercoil and the other at Marthandam so as to provide easy access to the Cooperative institutions in the district for their printing requirements.

The business turnover from 1985-86 to 1986-87 are furnished below

Year(1) Business turnover (2)RS. Profit earned(3)


1985-86 14,00,000 43,000,00
1986-87 14,26,000 53.000,00
1987-88 13,69,545 86,929,19


Issue of Long Term Loans : There are five Primary Land Develop­ment Banks working in this district and the long term loans issued for the from 1985-86 to 1987-88 are furnished below :—

Name of the    Loans  Issued  (RS.     IN        LAKHS)

Land Development Bank

1985-86           1986-87           1987-88

Agasthiswaram Land Development Bank 10.16 12.64 16.45
Thovalai Land Development Bank 10.44 8.74 13.17
Thuckalay Land Development Bank 19.21 15.57 21.77
Munchirai Land Development Bank 8.69 10.80 10.80
Thiruvattar Land Development Bank 12.23 12.34 20.03
TOTAL 60.73 60.09 82.22


Marketingwig: There are 3 General Marketing Cooperatives and 9 Vegetable Growers Coop. Marketing Societies functioning in this district. The Agricultural produce marketed by them are detailed below

1985-86           1986-87           1987-88

Agricultural producemarketed            73.6 lakhs 81.28 lakhs 68;84 lakhs

The Kalkulam, Vilavancode Taluk Cooperative Marketing Society runs a fruit processing unit and a Tapioca Fruits Processing Unit with an annual production capacity of 120 m.t.

Fruit Processing Unit: The production during 85-86 was 70.81 M.T. During 1986-87, the processing was 52.81 m.t. and in 1987-88 it was 47.34 m.t.

Tapioca Processing Unit: The production during 1985-86 was 44-36 mt during 1986-87, the production was 48.58 m.t. and in 1987-88 the production was 38.96 m.t.

Vegetable Growers Co-op. Marketing Societies: The 9 Vegetable Growers Co-operative Marketing Societies are supplying vegetable to 902 noon-meal centres in this district. During 1985-86, these societies supplied vegetables worth Rs. 19.95 lakhs and in 1986-87, the supply was Rs. 18.23 lakhs. In 1987-88, they supplied vegetables worth Rs.16.14 lakhs.

Consumers Cooperative Stores: There are 18 Primary Cooperative Stores functioning in this region. The particulars regarding admission of members, share capital, collection of deposits, sale of controlled and non-controWed commodities during 1987-88 are furnished here under:-

No. of No. of Share Stores members Capital(RS.)

(V (2) (3)

Sale of Controlled Commodities (RS. LAKHS) (4) Sale ofNon Controlled Commodities (RS. LAKHS)




18 7139 3.71 lakhs 240.80 117.71 lakhs **
So§6i Uni Loss
No. Amount No. Amount
10 3.34 lakhs 8. 1.86 lakhs


There is one Co-operative Wholesale Stores by name Kanniyakumari District Co-operative Wholesale Stores.43 It is acting as the lead society and distributing wheat, maida, ravai and palmolein to the link societies. It is running Bagavathi Super Market, at Nagercoil and two mini super markets at Marthandam and Thittuvilai. It is also running a self service unit. The business turnover of the above said stores is as detailed below:-

Year Purchase (Lakhs) Sales (Lakhs)
1985-86 328.25 342.56
1986-87 355.35 385.01
1987-88 568.06 601.71


The Tamil Nadu Industrial Cooperative Bank Limited: 44 With a view to accelerate the growth of Industrial Cooperatives ana thereby generate more employments in rural and semi-urban areas, the administrative control of Industrial Cooperatives in the State was transferred to the Department of Industries and Commerce in the year 1956.

There was a huge gap between the credit needs of these Industrial Cooperatives and funding by cooperative banks. The working group constituted by the Government of India recommended for the setting up of a separate financing agency for meeting the credit needs of industrial cooperatives to relieve the burden of State Government. As the conditions were favourable for the formation of an Industrial Cooperative Bank, the Government of India also accepted in principle to State partnership to Industrial Cooperative Banks It is against this backdrop that the Tamil Nadu Industrial Cooperative Bank popularly known as ‘TAICOBANK’ came into being. The Bank was registered on 13 September 1961 and formally started functioning in November 1962.

ORGANISATION:    The Organisational set up of TAICOBANK is uniqueand broad based in the sense that it provides financial assistance to Industrial Cooperatives broadly classified as VSI Sectoi by NABARD. The broad categories of Industrial Cooperative financed by TAICOBANK are listed as under.Small Scale IndustriesCoir IndustriesHandicrafts.

The Head Office of the Bank is manned by a General Manager in the cadre of Deputy Director of Industries and Commerce (Industrial Cooperatives) and a Deputy General Manager from Bank’s Cadre. The branches are managed by branch managers. The branch at Nagercoil inaugurated by Thiru Syed Munir Hoda, IAS., then Collector of Kanniyakumari is functioning from 23 December 1987.

Growth: The Tamil Nadu Industrial Cooperative Bank commencing its banking business in a modest scale in the early stages has recorded substantial growth in all areas of banking activities during the last 2 years.

Thus, it has become a force to reckon within the matter of providing finance exclusively to Industrial Cooperatives in the State both for their block capital and working capital needs. This bank has made significant contribution to development of village and small scale industries in the State through Industrial Cooperatives on account of the policy of liberal financial assistance.

As regards the growth of the bank, it may be seen that the equity of the bank recorded a phenomenal spurt from Rs. 46.66 lakhs in the year 1971 to Rs. 296.00 lakhs as on 30 June 1988. The Reserve Fund and other reserves which stood at Rs. 11.47 lakhs in the year 1971 rose to Rs.222.22 lakhs as on 30 June 1988. The deposit which was in the order of just Rs. 46.61 lakhs in the year 1971 had reached Rs. 546.27 lakhs as on 30 June 1988. Similarly, in the matter of loans and advances which stood at Rs. 124.51 lakhs in the year 1971 had increased to the extent of Rs. 1081.52 lakhs as on 30 June 1988.

The Reserve Bank of India has permitted TAICO Bank to pay interest °n deposits at half a per cent above the rate paid by commercial banks. The number of beneficiary societies has also substantially increased.

The working of the Bank: The TAICO BANK provides the following types of financial assistances to Industrial Cooperatives functioning under the administrative control of the Commissioner of Industries:

Term loan

Cash credit loan

Bill discounting

Bridge loan

Key loan

Bank guarantee

As on date, there are 478 societies on roll as members of this bank, out of which, 237 societies have availed financial assistance from the bank. The term loans are sanctioned for meeting the block capital needs, while cash credits are sanctioned for meeting the working capital requirements.

The following are the rates of interest charged by the Bank for the loans and advances:- Term loan           Cash            Credit  LoanUp to Rs. 5.00 lakhs 13.5 per (a) Up to and inclusive of Rs.cent          5.00 lakhs — 14 per centOver and above Rs. 5.00 lakhs (b) Over Rs. 5.00 lakhs and up— 14.5 per centto and inclusive of Rs. 10.00lakhs —14.5 per centOver Rs. 10.00 lakhs weaker section societies up to Rs. 5.00 lakhs — 8 per cent.

Assistance from State Government: The Government of Tamil Nadu has extended the following assistance to this bank as noted against each(RS. IN LAKHS)State participation under share 193.30 Capital structure of the Bank. By way of guarantee tor the         500.00repayment of F.D., S.T.D.,accepted by the Bank from both the members and public (for principal and interest).Guarantee for repayment of clean 20.00cash credit accommodation availedfrom State Bank of India, Anna Salai, Madras-2. Ways and means advance 110.00The bank has repaid Rs. 95.00 lakhs towards the above ways and means advance, leaving an outstanding of Rs. 15.00 lakhs on date.

Source of Funds: The bank requires enormous funds for advancing loans to Industrial Cooperatives both for block capital and working capital needs. The same is raised by the Bank through the following meansThe amount raised from these sources is in the order of Rs. 1048.10 lakhs as on 30.6.1988.

1. Shares invested by the member societies 102.70
2. Shares taken by the Government 193.30
3. Government loan 15.00
4. Cash credit with Tamil Nadu State Apex Cooperative Bank 190.83
5. Deposits (including S.B. a/c., Current a/c., R.D. a/c and Cash Certificates, etc.) 546.27
Total .. 1048.10


This bank provides credit facilities only to the Industrial Co- operative Societies, which are under the administrative control of the Director of Industries and Commerce. The bank sanctions various kinds of loans such as clean cash credit, cash credit for working capital, term loan for block capital, bills discount and key loan cash credit to Industrial Co-operativeSocieties. In deserving cases, the bank undertakes to open letter of credit in favour of beneficiary societies subject to fulfilment of certain norms.

The deposit position of the Nagercoil branch as on 31 July 1988 was Rs.8, 71,864.80. In Kanniyakumari district, 13 Industrial Co-operative Societies had been enrolled as members in the bank, out of which, the bank had financed to nine Industrial Co-operative Societies.





(Deposit position as on 31 July 1988).

(a) Fixed Deposits -.Individuals Rs. P. 15,250.00
Fixed deposits – Societies 1,01,825.00
(b) Short Term Deposits – Individuals 1,000.00
Short Term Deposits – Societies 1,52,309.50
(c) Staff Security Deposit – Societies 1,200.00
(d) Recurring deposit – Individual 45,785.00
(o) Savings Bank A/c – Individual 29,546.11
Savings Bank Societies 4,68,288.01
(f) Current A/c – Others 1,000.00
Current A/c Societies 26,561.18
(g) Matured Fixed Deposit – Cash Certificate
(Individual) 29,100.00




Shares from societies in Kanniyakumari district

Kanya Indl. Coop. Printing Press                               5,800.00

Kanniyakumari Indl. Coop. Rubber Factory              40,000.00

Kanniyakumari Small Match Producers’ Service

ICS Limited                                                                60,000.00

Nagercoil Umbrella Makers’ ICS Limited                  9,300.00

Nagercoil Metal Casting Workers’ ICS Ltd.              10,200.00

Kanniyakumari District Central Coir MICS Ltd.       35,000.00

Engineers’ ICS Ltd., Konam                                      8,800.00

Ex-Servicemen Co-op. Engg. Works Ltd.                  15,700.00

Muhilankudiyiruppu Coconut Fibre ICS                    10,000.00

K.K. Cement Jolley Products Manu. ICS      Ltd.     8,500.00

K.K. District Adi Dravidar Chamber Brick Workers’ ICS Ltd. 1,000.00

K.K. Woodearvers’ ICS Ltd.                                     5.000.00

Nagercoil Bell Metal Workers’ ICS Ltd.                    2,500.00

The Tamil Nadu Industrial Investment Corporation Limited (TIIC) : TIIC was incorporated in 1949 as a company under the companies Act, to help industrial development in the State. It provides financial assistance to small scale and medium scale industrial units, for the creation of fixed assets. Every year, it sanctions about 4,000 to 5,000 loans ranging from Rs. 25,000 to Rs.60 lakhs amounting to about Rs.100 crores per year. At present, it has about 25,000 assisted units as its clients.TIIC grants financial assistance for setting up new industries and for the expansion, diversification, renovation and modernisation of existing industries.

The types of industries to which assistance is rendered by the TJIC are tabulated below:

Food manufacturing industries

Sugar factories and refineries

Paper and Paper products industries including printing and publishing.Manufactureof textilesManufacture of chemicals and chemical productsNon-metalic mineral products except products of petrole coal.     Imanufacture of machinery except electrical machinery.Basic meta l industriesManufacture of metal products

Manufacture of electrical machinery, apparatus, appliances and supplies.

Manufacture of transport equipments

Hotel industries

Transp ort including fishing trawlers

Miscellaneous Industries not elsewhere, classified (stone quarrying, tobacco, furniture and fittings, rubber, motion picture RMP, wood, petrol, and beverage)

TIIC hsis a branch office at Nagercoil functioning from 1979-80. All four taluks viz.., Agasthiswaram, Kalkulam, Thovalai and Vilavancode are eligible for central Investment subsidy of 10 per cent. In addition to this, Thovalaj taluk is eligible for 15 per cent State subsidy also for small scale industries.

So far as Kanniyakumari district is concerned assistance has beer rendered to food manufacturing industries, paper and paper products including printing and publishing, manufacture of chemicals and chemica products, hotel industries , Transport including fishing trawlers, anc miscellaneous industries such as stone quarrying, furniture and fittings rubber, RMP, Wood and beverage. ,

Assistance granted by the TIIC to various types of industries if Kanniyakumari district: 45.During the year 1985-86, a sum of Rs. 84. Lakhs was sanctioned to 115 units. Similarly, a sum of Rs. 160.00 lak; was sanctioned to 124 units. Cumulative sanction up to 31 March comes to Rs.767 lakhsto710units.The TIIC has been maintaining a steady improvement in the matter of covenes year after year. Sick industrial units are considered for rehabititatk) n, wherever necessary. The Corporation is operating the iDBI’s modernisation scheme to sanction financial assistance to industrial units, which seek to replace obsolete equipment with modern ones.

For well established units with good working results, urgent financial needs for purchase of indigenous/ imported equipment, term loans up to 80 per cent of cost of capital goods are sanctioned within 30 days. Assistance under this scheme is also available to set up small hospitals, nursing homes organised as proprietary partnerships privatepublic limited companies/ trusts duly backed by expert services of at least one Post Graduate Doctor on a full time basis. Under 4his scheme, term loan assistance upto Rs. 10 lakhs for acquiring fixed assets and also for working capital purposes to very small units is also sanctioned.The Branch Manager is empowered to sanction loan to the small and medium scale units to the extent of Rs.3 lakhs whereas the Regional Manager has power to sanction up to Rs.7.50 lakhs, as loan to such units, while the sanction limit of the .M.D at Madras is Rs.12.50 lakhs. The Branch Manager is empowered to disburse the loan to the extent of Rs.12.50 lakhs, after it is only sanctioned by the C.M.D. or the Regional Manager, as the case may be.

Insurance Companies: The progress of insurance business in any developing country like ours is greatly linked with the industrialisation and overall progress of the country. As India continues to progress in all spheres, so does insurance business.

The Government of India brought the General Insurance business under its fold through a holding company, viz., the General Insurance Corporation of India. The avowed objectives of nationalising this company were to spread the importance of Insurance throughout the country and to make insurance meaningful to the common man. After reorganisation, the industry set itself to work towards the achievement of these twin objectives. In public interest, the industry started opening of new Divisional and Branch Offices, all over the country, in a phased programme.

Branches of Life Insurance Corporation of India (LIC) In Kanniyakumari District: There are two branch offices of the LIC, one at Nagercoil and another at Kuzhithuraithe Nagercoil branch is functioning from 1 September 1956 which has jurisdiction over Agasthiswaram and Thovalai Taluks. The Kuzhithurai branch, which covers the Kalkulam and Vilavancode taluks, functioning from 12 September 1980.

The performance of LIC is as follows:

Performance of LIC from 1965-66 to 1969-70
0) 1965-66(2) 1966-67(3) 1967-68(4) 1968-69(5) 1969-70(6)
  1. No. of Policies
4165 3627 2690 3450 3458
  1. Sum assured (RS. LAKHS)
147.80 138.08 121.81 140.72 140.43
  1. Total Premium

Collected (RS. LAKHS) 23.15

21.36 21.85 22.30 22.70
Volume of business (RS. IN CRORES)
Year Nagercoil Branch Office Kuzhithurai Branch Office
: (V (2) (3)
1980-81 2.08 2.94
1981-82 2.52 3.38


P) (2) (3)
1982-83. 2.79 3,68
1983-84 3.46 5.28
1984-85 4.85 5.38
1985-86 6.50 6.45
1986-87 8.07 8.60
1987-88 9.70 10.64



Performance of New India Assurance Company Limited at Nagercoil:        NewIndia Assurance Company Limited has one branchoffice at Nagercoil. The volume of business during 1987 was as follows:-

Fire 2,89,000
Cargo 2,41,000
Hull 56,000
Motor 7,64,000
Miscellaneous -
T.B. 2,17,000
N.T.B. 3,31,000
Total 16,81,000


Branches of United India Insurance Company Limited: There are two branch offices of the United India Insurance Company Limited in Kanniyakumari district, one at Nagercoil opened on 4 April 1977 and the other at Marthandam functioning from 1 January 198G* A sum of Rs. 51.00 lakhs have been underwritten as premium from various types of insurance such as fire, motor, cargo and other Rural Insurance Schemes. A major thrust in the district is given for the benefit of rural population covering the cattle and livestock insurance. In this regard, the following steps have been taken by the United India Insurance Company:

Conducting cattle health survey camps, involving banks and other rural development agencies.Distribution of posters and pamphlets in local languages describing the advantages of insurance.Screening films and slides in rural areas to generate popular enthusiasm and awareness for the insurance covers.Public meetings in the rural areas and seminars with local leardership participation.Organising cattle shows/exhibition at which prizes are awarded for the best maintained cattle.Besides the cattle and livestock insurance, the following schemes forthe benefits of weaker sections are also introducedPersonal Accident Insurance Social Security Scheme for poor families.Composite package Industries for beneficiaries of IRDP, NREP, etc. in respect of dwelling premises and other belongings.Group Personal accident covers for fishermen, toddy tappers, factory workers, etc.Cover for artisans, village, cottage and small scale industries including bio-gas plants.Package policy for handloom weaversJanata and Gramin Personal AccidentAgricultural pumpsetsFailure of wellsPedal cycle rickshawsHut Insurance in rural areasBullock cartNational Insurance Company and Oriental Insurance Company. The National Insurance Company Limited and the Oriental InsuranceCompany Limited have one branch office each at Nagercoil. The branchOffice of the Oriental Insurance Company limited has been functioning from 9 July 1984.Post Office Savings Bank : Post Office Savings Bank system was first started in Kanniyakumari in the year 1882, when the Anchai system was in vogue in the erstwhile Travancore-Cochin State. Subsequently, the Anchai System was merged with the All India Postal System in 1950.Till 1970, there were only 55 post offices in the district, which had54saving bank facilities. They held a deposit of Rs. 82.68 lakhs in 35,865 accounts.Number of Post Offices in Kanniyakumari District transacting Savings Business from 1980 to 1988 (Yearwlse) :-1980 235
1981 : 236
1982 : 237
1983 239
1986 243

Savings Schemes run by the Post Office Savings Bank

(1) Post Office Savings Accounts
(2) Post Office Recurring Deposit
(3) Post Office Time Deposit
(4) Public Provident Fund Scheme
(5) Monthly Income Scheme
(6) National Savings Scheme.


Savings Certificate

(1) 7 year NSC III Issue
(2) 6 year NSC VI Issue
(3) 6 year NSC VII Issue
(4) 10 year Social Security Certificates
(5) Indira Vikas Patras
(6) Kisan Vikas Patras,


The Chit Corporation of Tamil Nadu Limited (An Undertaking of Government of Tamil Nadu).

The Chit fund is governed by the Chit Funds Act 1982 (Central Act No. 40 of 1982). This Act has been implemented with a view to regulate the Chit Funds and for matters connected therewith.

SCOPE: As per the Act. ‘Chit’ means a transaction whether called chit, chit fund, chitty, kury or by any other name or under which a person enters Into an agreement with a specified number of persons that every one of them shall subscribe a certain amount of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn as determined by lot or by auction or by tender or in such other manner as may be specified in the Chit agreement, be entitled to the prize amount. This Act is enforced by the Director of Chits, Madras.

ESTABLISHMENT OF CHIT CORPORATION: Chit transaction is an old fashioned method of savings in order to inculcate the habit of thrift in the minds of general public. This system still continues in the country. One can notice many private companies are conducting the business of Chits in urban centres, but their motive is to earn huge profit without fixing any ceiling for the discount offered, at the time of auction.

Realising the need to cultivate the habit of savings among people, and at the same time, to fix a reasonable ceiling for the discount offered during auction, in the interest of public, the Government of Tamil Nadu established a Chit Corporation in 1984, with the name of style ‘The Chit Corporation of Tamil Nadu Limited” with headquarters at Madras. This is an undertaking of Government of Tamil Nadu. The Government have invested Rs. 5.92 lakhs as equity share capital. Presently there are three branches at Madras, Tiruchirappalli and Coimbatore. The Headquarters of the Corporation is located in Madras under the control of a Managing Director in the cadre of District Revenue Officer. He has been provided with necessary complementary staff to look after the affairs of the Corporation. Any Citizen of India can subscribe for the Chit Groups.

Chit Groups The following Chit Groups are conducted by the Chit Corporation of Tamil Nadu Limited:

  1. No. Instalment No. of Chit

Amount           months                                   amount           RS.

(1)                                (2)                                (3)                    (4)

1. 1000 50 50,000
2. 1000 30 30,000
3. 1250 20 25,000
4. 1000 20 20,000 
(1) (2) (3) (4)
5. 500 30 15,000
6. 500 20 10,000
7. 250 40 10,000
8. 200 30 6,000
9. 250 20 5,000
10. 125 40 5,000
11. 100 30 3,000
12. 50 40 2,000


Payment of Subscription The subscription for the first instalment has to be paid along with the application for admission to Chit groups. The subscriptions can be paid in Cash. It can be paid by cheques drawn on in-station banks or by demand draft or by Money Order by outstation subscribers.Conduct of Auction As provided for in the Chit Funds Act, the Chit amount of the first instalment will be appropriated by the Corporation without auction. As soon as a chit group is fully subscribed, an intimation card indicating details of amount to be paid for the second instalment, last date fixed for payment, date and time of auction will be sent by post to all subscribers. The intimation card for the subsequent instalments will, in addition, carry the name of the prized subscriber of the previous instalment, his prized ticket number and the prize amount.

The subscribers are eligible for dividend from second instalment onwards. The dividend is arrived at by dividing equally among all subscribers the discount foregone by the prized subscribers the discount foregone by the commission due for the Corporation.

The date and time for auction once fixed will not be altered. Only those non-prized subscribers who have paid subscription up to date will be eligible for taking part in auction. The discount offered shall not however exceed 30 per cent of the Chit amount. One can take part in the auction in person or by tender or by proxy. If two or more persons offer to forego the same amount of discount, then the successfull bidder will be decided by drawing lot. For conducting auction at least two ticket holders should be present.

Special Features of the Chit Corporation: –

It has cent per cent security coverage, since it is aGovernment of Tamil Nadu undertaking.No fee is prescribed for admission to Chit group.

No fee need be paid for writing security documents also.Payment of prize amount is made in a day or two            afteracceptance of security. Thus, there is no delay whatsoever in the payment of prize amount.

Another important feature is that there is no need for the employees of State Government or Quasi Government to intimate their superiors or get their permission to enrole as subscribers.

Security The successful bidder before getting the prize amount should furnish sufficient security to the corporation for the due payment of future subscription.

Achievement: The achievement of this Corporation from 1984-85 tc October 1988 is furnished below:-

Year    No.      of         Chit     No.      of         Chit valuegroups Subscribers

  • (2)             (3)                                (4)


1984-85 79 2260 5.32
1985-86 135 4230 10.30
1986-87 199 6550 17.62
1987-88 258 8470 24.74
1988-89(up to 31 October 1988) 331 10870 32.43


Wide publicity has been given in Kanniyakumari district also, about the scope and special features of this scheme. A branch at Kanniyakumari has been proposed to be opened in 2 or 3 years.

Currency and Coinage: Around the year 1790, gold and silver coins and subsidiary copper coins were in circulation in the district as a part of the general system of Coinage of Travancore State. There were also other coins known as ‘Kaliyan Panam’ ‘Rasi Panam’ and ‘Katcha Rupee’ in vogue during the period. Most of these coins were issued from the royal Mint at Padmanabhapuram.

By 1869, the Indian Rupee standardised at 180 grams of Silver, was generally accepted all over the district and it was exchanged with the local currency at the rate of 28 Chuckrams per Indian Standard rupee.


It was in 1958 when the State Government passed the Madras Weights and Measures (Enforcement) Act that the final decision was taken to implement metric reform in this State. This decision followed the standard Weights and Measures Act of 1956 passed by Parliament58

The 1958 Act provides for enforcement of standard weights and measures in the State based on the metric system. It provides for marks of weights or measures on scaled containers showing the net weight or measures of the contents. It prohibits manufacture, repairs and dealing in weights and measures without obtaining a licence from the State Government.

To start with, the then Madras Government introduced the metric system of weights in four districts viz., Madras, Chengalpattu, South Arcot and North Arcot with effect from 1 October 1958 with a traditional period of the two years, during which, both the old and the new weights were to continue side by side. The use of metric weights was made compulsory in the above four districts with effect from 1 October 1960. Metric weights have also been introduced in the remaining districts of the State from 1 April 1960, with a transitional period of two years and became compulsory with effect from 1 April 1962.

Metric capacity measures have also been introduced in the districts of Madras, Chengalpattu, North Arcot and South Arcot with effect from 1 April 1961, and in Salem, Thanjavur, Tiruchirappalli and Ramanatha- puram with effect from 1 October 1961, with a transitional period of one year for making them compulsory. Capacity measures in the districts of Madras, Chengalpattu, North Arcot and South Arcot thus became compulsory from 1 April 1962. The use of capacity measures became compulsory in the whole of State of Tamil Nadu by 1st April 1963 in two more stages i.e., by 1 October 1962 and 1 April 196359.

Linear measures have also been introduced in the whole of the erstwhile Madras State with effect from 1 October 1961 and became compulsory on 1 October 1962.

METRIC MEASURES Conversion Tables


Acres to Hectares (0.1 to 100 acres)

Acres(1) Hectares(2) Acres(1) Hectares(2)
0.1 0.040 4 1.62
0.2 0.081 5 2.02
0.3 0.121 6 2.43
0.4 0.162 7 2.83
0.5 0.202 8 3.24
0.6 0.243 9 3.64
0.7 0.283 10 4.05
0.8 0.324 11 4.45
0.9 0.364 12 4.86
1 0.40 13 5.26
2 0.81 14 5.67
3 1.21 15 6.07
TABLE-2 (Acres to Hectares) (200 10 1000 acres)
Acres Hectares
(1) (2)
200 80.94
300 121.41
500 202.34


(V                                     (2)
600 £42,81
700 283.28
800 323.75
900 364.22
1000 404.69
(Acres to Hectares)
(2000 to 10000 acres)
Acres Hectares
2000 809.37
3000 1214.06
4000 .. 1618.74
5000 .. 2023.43
6000 .. 2428.11
7000 .. 2832.80
8000 .. 3237.49
9000 3642.49
10000 4046.86



(Ounces to Grams) (1 to 15 Ounces)
Ounces Grams
(1) (2)
1 28
2 57
3 85
(1) (2)
4 113
5 142
6 170
7 198
8 227
9 255
10 283
11 312
12 340
13 369
14 397
15 425


TABLE – 5(Pounds to Kilograms) (1 to 100 Pounds)
Pounds Kilograms Pounds Kilograms
(V (2) (1) (2)
1 0.45 13 5.90
2 0.91 14 6.35
3 1.36 15 6.80
4 1.81 16 7.26
5 2.27 17 7.71
6 2.72 18 8.16
7 3.18 19 8.62
8 3.63 20 9.07
9 4.08 21 9.53
10 4.54 22 9.98


Trade is a complex, worldwide business that has a direct bearing on the life of every citizen and country in general. So long as trade functions smoothly, it does mankind a very great service. It brings food, clothing, other necessaries and service from producer to the consumer. It makes possible for industries to concentrate upon one or a few products. This specialisation increases production and raises the standard, of living throughout the world. Business in local communities is good example of the trade that is carried on daily, throughout the world.

From time immemorial, the region which now forms Kanniyakumari district has been an important trading area. Kottar now a part of Nagercoil Muncipality was a commercial centre of fame in days of yore Ptolemy’s Geography and Pliny’s Travels clearly indicate that it was one of the most important cities during the beginning of the Christian era. Dr. Caldwell in his “Comparative Grammar of Dravidian Languages states” this is the name of a place in the country of Ays which is called ’Kottia-ra Metropolis with considerable trade “by Ptolemy and ‘Kottara’ by Pliny. Undoubtedly, the town referred to is Kottam or as it is ordinarily spelt by the Europeans, Kottar, and the principal town in South Travancore and now as in the time of the Greeks distinguished for its Commerce”.

There were many bazaars selling various goods. The main commodities of trade were pepper, ivory, teak, sandal wood, rosewood and fruits. Even now, the bazaar of Kottar is famous and it is locally called “Pandakasaalai”. Sambandar aptly describes the city as “Thozhil malgu Kottar” in his verses.65 It is a busy paddy milling centre. Mention has been, made that Kanniyakumari was once a harbour. Similarly, Manakudi and Rajakkamangalam were also ports and trade took place here.

MUTTAM: It is of interest to know the fact that several foreign coins were found at Muttam which was once a leading port and famous centre of foreign trade.

COLACHEL: This sea-coast town is situated about 22 km. west of Nagercoil 70 It is an ancient one, claimed to be the only natural port in theCoast, in which ships can come very near to the shore, It wm a port of call fof European merchants during the 16-18th centuries, The Dutch and the English had trading settlements here. A variety of commodities is exported from here, prominent among them being palmy rah and its fibre, mmerai sands, fish and salt. Foreign streamers used to lead palmyrah fibre and mineral sands.Fish is exported to Sri Lanka and plantains, vegetables, coconut, timber, pepper and rubber are sent to Kerala and other parts of Tamil Nadu. Coir products, cashew kernels and brushes are exported to foreign countries.


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