LOAN PURCHASE AND UTILIZATION BEHAVIOUR OF FARMERS IN A CREDIT COOPERATIVE SET-UP: A CASE STUDY OF GUJARAT STATE CO-OPERATIVE AGRICULTURAL AND

Rural Co-operative credit system provide various loans to farmers for the improvement of their livelihood. The banks consider many parameters before sanctioning a loan to the farmers. Land holding is an important consideration while sanctioning an agriculture loan to a farmer, besides other parameters. Among the regular loan borrowers, it is better to understand their behaviour in terms of their land holdings. A primary research survey was conducted among 450 regular loan borrowers of The Gujarat State Co-Operative Agricultural & Rural Development Bank Ltd. (GSCARDB), from three different regions of Gujarat State covering six districts. Descriptive analysis, Chi-Square test, Correlation analysis and Analysis of Variance (ANOVA) are carried out to understand the differences among the farmers in terms of their land ownership. The study findings shows that medium and large farmers segments are better aware of working of GSCARD bank. Majority of marginal farmers have borrowed the agricultural loan multiple times. Good and very good ratings on the loan services of GSCARD bank are more seen from large farmers segment. Majority from marginal, small and medium segments are ‘satisfied’ while majority from large farmers are ‘high satisfied’ with GSCARD bank. There is a significant difference among the four farmer segments in terms of average loan amount taken. Strong relationship exists among large farmers on their rating of loan services and satisfaction level. Banks perform many checks on a loan seeker before sanctioning a loan. Even then, there are loan defaulters who do not pay the loan instalments for a long time. This study aimed to understand their profile and behaviour. This study finding are based on the survey conducted among 150 loan defaulters of The Gujarat State Co-Operative Agricultural & Rural Development Bank Ltd. (GSCARDB), from three different regions of Gujarat. This study was conducted in six districts of Gujarat State. Descriptive analysis, correlation analysis, Chi-Square test and Analysis of Variance (ANOVA) are carried out. The study finding concludes that most loan defaulters are >45 years of age having more years of experience in agriculture. They have not gone through any kind of special training. They have taken loan for a medium to long term period (3 to 5 years and more). It is further observed that age, experience in agriculture, income per annum and number of times loan borrowed have no significant impact on the loan overdue amount. The loan defaulters from the three regions of Gujarat State behave similarly with no significant difference in terms of their opinion on overall loan services rating of the GSCARD bank.


INTRODUCTION
GSC ARD bank was established in the year 1951 with its Head Office at Rajkot in the erstwhile State of Saurashtra for providing loans to the tenant farmers in the five districts of the State of Saurashtra.The name of the bank at the time of its inception was The Saurashtra State Central Cooperative Land Mortgage Bank Limited, Rajkot.Consequent upon the bifurcation of the Bombay Sate and on formation of a separate State of Gujarat in the year 1960, this bank had extended its jurisdiction to the whole of Gujarat State in 1961 and accordingly the name of the bank was changed to The Gujarat State Central Cooperative Land Mortgage Bank Ltd., Ahmedabad.To implement the developmental banking from mortgage banking, the bank name was amended in 1965, as Gujarat State Cooperative Land Development Bank Ltd.Subsequently, in the eighties, the bank has started financing for rural non-farm sector activities also.Therefore, the name was restyled appropriately to the present one since 1990.
Peculiar circumstances responsible for the establishment of this bank were the necessity to have banking https://doi.org/10.56572/gjoee.2022.si.0014 agency to provide loans to tenant cultivators to enable them to purchase occupancy rights over the land tilled by them under the Saurashtra Land Reforms Act, 1949.In the initial stage of lending, this bank provided loans amounting to Rs. 2640 million to nearly 56000 tenant cultivators, which enabled them to become owners of the land that had been cultivated by them for years.This bank is an apex institution in the cooperative structure in the State of Gujarat for providing investment finance for the development of agriculture and allied activities and also rural non-farm sector activities.The bank adopted the unitary structure and does its business through the network of the branches numbering 176.It has 17 district offices to control the working of branches in their jurisdiction and to ensure the advantages of decentralized administration.The bank's registered office is in the city of Ahmedabad, Gujarat.
The bank is adopting production oriented loaning system and gives loans for productive purposes which enables the farmers to get sustained rise in his farm output and income.Sanction of loan is subject to technical feasibility and financial viability of the proposed activity.Repayment period of loan is decided on the basis of the economic life of the assets to be created coupled with the repayment capacity of the borrower as per the guidelines of NABARD.Security of the loan is agricultural land and the assets created by the loan, which are taken in to mortgage by the bank.
The Gujarat State Co-Operative Agriculture & Rural Development Bank Ltd.(GSCARDB) provides investment credit for the improvement in rural based farmers across the State of Gujarat.The bank finances medium and long-term agricultural loans to farmers.Land holdings of farmers plays an important role in sanctioning the agricultural loan and the loan amount.The loan borrowers become regular once they start to pay the loan instalments regularly and payback completely.It is better to understand the behaviour of these regular loan borrowers by their land ownership, which would help the bank to frame suitable policy and new schemes for the development of rural farmers.This rural cooperative credit system works as Long Term Co-Operative Credit Structure for providing investment credit to rural farmers.These are the oldest agriculture credit institution in the country.These types of SCARDBs in our country are operating in 16 States through 602 PCARDBs in 8 States and 1301 branches in others.All such banks which functions under LTCCS are affiliated with National Co-Operative Agriculture and Rural Development Banks Federation Ltd., Navi Mumbai.GSCARD bank has observed that there are considerable numbers of loan defaulters in various locations of Gujarat State, wherein they have disbursed the loan.Any financial institution should be aware of their loan borrowers' detailed profile and the profile of loan defaulters.An attempt is made here to learn about the profile and behaviour of loan defaulters of GSCARD Bank.

OBJECTIVES
(1) To understand the differences and commonalities among the regular loan borrowers of GSCARD bank in terms of their land ownership segments (2) To understand the profile of loan defaulters of GSCARD Bank in Gujarat State

METHODOLOGY
A quantitative primary research survey was conducted among regular loan borrowers of GSCARD bank using a pre structured survey questionnaire.North Gujarat, Lower Middle & South Gujarat, and Saurashtra-kutchh are the three zones selected for the study.The research was conducted among the 15 loan borrowers from each 30 branches of GSCARD Bank (North Gujarat=10 branches, Lower Middle and South Gujarat=10 branches, 10 branches from Saurashtra-Kutchh).In total, 450 regular loan borrowers are contacted individually for the survey.To understand the profiling of loan defaulters, from each selected 30 branches, 5 defaulters were selected, hence the total number of loan default respondents were 150.Primary data were received from empirical study through grass root level loan borrowers and loan defaulters.

Hypothesis framing for loan borrowers
Hypothesis-1 : The average agriculture loan amount is same among the different land ownership segments of regular loan borrowers.
Hypothesis-2 : Regular loan borrower's rating on loan services of GSCARD bank is independent of their land ownership segments.
Hypothesis-3 : The loan services rating and overall satisfaction level with GSCARD bank is strongly related across the farmer land ownership segments.

Descriptive analysis loan borrowers profiling comparisons of loan borrowers among the land ownership segments
The major findings from the descriptive analysis of regular loan borrowers are the following: The land ownership segments is spread across three selected regions of Gujarat.The survey coverage includes 42% of small farmers having 1 to 2 hectares of land, 31% of medium farmers having 2 to 4 hectares of land.Marginal and large farmers are comparatively less.Primary and high school qualified loan borrower farmers are found more, (39.1% and 42.7% respectively).Among medium and large farmers, high schools qualified are found more (44.9%).Comparatively more graduates are found in marginal farmers (18.9%).Around 48% of farmers have an annual income of Rs. 2, 00,001 to Rs.4, 00,000.Small and medium farmers have comparatively higher income than marginal farmers.Traditional method of agriculture is mainly followed by respondents as stated by 70.4% and the rest 29.6% follow modern method of agriculture.Nearly 42% from marginal farmers have borrowed the agricultural loan twice.Three times loan borrowing is reported by more from medium farmer's category (30.4%).
More than 90% of farmers in each segment are aware of loan schemes offered by the GSCARD bank.Almost all except some farmers from medium and Large Farmers are aware of such schemes.Similarly, more than 90% from each segment have visited the bank branch at least once for getting loan.Some farmers from small and medium land ownership segments have reported two times visit to the bank branch for the loan purpose.Three years period loan was commonly borrowed by marginal (64.2%), small (49.5%) and medium farmers (48.6%), while majority of large farmers (43.5%) have reported to taken loan of five years period.
The time lag for the loan varies among the farmer segments as below:  Across all the four farmer segments, more than 95% of respondents have stated that the loan tenure for repayment of loan was sufficient for them.The loan recovery procedure is found to be moderate for 38% of farmers at overall level.Majority of large farmers (47.8%) have stated it as liberal, 45.3% have mentioned it as moderate, and 44.7% from small farmers mentioned it as strict recovery procedure.About 93% of farmers have rated the bank's loan services as good and very good.Good and very good ratings are more seen from large (66.7%) farmer segment.

Hypothesis testing for regular loan borrowers
These tests was performed with 95% confidence interval and 5% error margin (alpha=0.05).
Hypothesis-1 : The average agriculture loan amount is same among the different land ownership segments of regular loan borrowers.
Ho : There is no significant difference among the land ownership segments in terms of the average loan amount taken from the bank.
H1 : There is a significant difference among the land ownership segments in terms of the average loan amount taken from the bank.
Analysis of variance test (ANOVA) is used here.The results are presented here.The lowest mean value here is Rs.161.62 (000') from marginal farmers, and the highest mean value is Rs.386.97 (000') is from large farmers.This shows that the average loan amount taken by these farmers segments varies.However, it needs to be proved statistically.
The Homogeneity of Variance Assumption is further checked.
Hence it is concluded that the variances of loan amount taken are significantly different.Here, the mean square is arrived by dividing the sum of square by its degrees of freedom.F ratio is calculated by dividing mean square between-groups by mean square within-groups.The final column gives the significance of the F ratio, the p value.If the p value is less than or equal to α level, then we can reject Ho that all the means are equal.
It is observed here that the p-value =0.001 is lesser than 0.05, Hence the null hypothesis is rejected.There is a significant difference among the four farmer segments in terms of average loan amount taken.The loan size is directly related with the land holding ownership.Small Farmers are given lesser amount while larger farmers are given higher loan amount.
Hypothesis-2 : Regular loan borrower's rating on loan services of GSCARD bank is independent of their land ownership segments.

Chi-Square test of independence of attributes is used to examine this hypothesis,
Ho : There is no significant difference among the farmers' category in terms on their response on rating of loan services of GSCARD bank.
H1 : There is a significant difference among the farmers' category in terms on their response on rating of loan services of GSCARD bank.
The chi-square value as per Chi-square test is 19.84 (6 degrees of freedom, 5% significance level).The significant value p=0.003 is lesser than 0.05.The null hypothesis has to be rejected.It is concluded that there is a significant difference among the four farmer categories on their response on ratings of bank loan services.More of very good ratings are seen from large farmers.

Hypothesis-3
: The loan services rating of the bank and overall satisfaction level with the bank are strongly related across the farmer land ownership segments.
Correlation analysis is used to examine this hypothesis statement.At overall level, the correlation analysis shows that there is a moderate level relationship between loan services rating and satisfaction level with the bank branch and it is significant at 0.01 level.Among marginal farmers, there is no strong relationship exists.Comparatively strong relationship exists among large farmers on their rating of loan services and satisfaction level, and it is significant at 0.01 level.Moderate level relationship between rating of loan services and satisfaction level is shown in small farmers and medium farmers, and they are significant at 0.01 level.

Hypotheses framing for loan defaulters
Hypothesis-1 : Age, experience in agriculture, income per annum and number of times loan borrowed have significant impact on the loan overdue amount Hypothesis-2 : Overall loan services rating of the GSCARD bank: There is no significant difference among the zones in terms of the overall loan services rating on the bank Hypothesis-3 : Loan recovery procedure is independent of land ownership Hypothesis-4 : Defaulters' rating on loan services of GSCARD bank is independent of their land ownership segments.

Descriptive analysis loan defaulters
The major findings from the descriptive analysis of loan defaulters are the following:

Profiling of loan defaulters
Out

Loan Borrowing
Nearly 47% have reported that they have borrowed loan once, and 32% have stated that they took the loan twice.
76% of them have utilized the loan taken for the actual purpose it was taken, while 24% have not.The loan amount ranges from Rs. 50,000 to Rs. 8, 00,000.Nearly 45% have taken Krishi Vikas Loan.For about 78% of defaulters, the loan tenure is 3 to 5 years.70% of loaners have mentioned that their agricultural income is increased due to impact of utilization of credit facilities, and 30% have stated that there is no change of agricultural income for them.
Majority (56%) of the defaulters have indicated that the loan procedure followed by bank was moderate, and 40% have mentioned that it was simple and easy procedure.About 51% have stated that loan recovery procedure followed by the bank is strict, while 31% have mentioned that it is moderate.
About 85% of them have rated the bank's loan services as good and very good.This leads that more than 90% of them are satisfied with GSCARD bank.

Hypothesis testing for loan defaulters
Hypothesis-1 : ge, experience in agriculture, income per annum and number of times loan borrowed have significant impact on the loan overdue amount.
Hypothesis-2 : There is no significant difference among the zones in terms of the overall loan services rating of the bank.
Hypothesis-3 : Loan recovery procedure is independent of land ownership category.
Hypothesis-4 : Defaulters' Rating on Loan Services of GSCARD bank is independent of their land ownership category.
Hypothesis-1 : Age, experience in agriculture, income per annum and number of times loan borrowed have significant impact on the loan overdue amount.
Correlation analysis is used to test this hypothesis.The correlation coefficient values (0.021, 0.034, 0.154) indicate that age, experience in agriculture, income per annum and number of times loan borrowed have no strong relationship with loan overdue amount.The significant values are more than 0.05.It is concluded that these aspects have no major impact or relationship with loan overdue amount.
Hypothesis-2 : Ho: There is no significant difference among the zones in terms of the overall loan services rating of the bank.
H1: There is a significant difference among the zones in terms of the overall loan services rating on the bank.The mean values for these zones are above 4 and below 4.3.The standard deviation values are reasonable.
The Homogeneity of Variance Assumption is further checked.

Variable
Levine Statistic df1 df2 Sig.Overall loan services rating of the GSCARD bank 3.039 2 147 0.051 Here the p-value is 0.051, which is greater than .05.Hence it is concluded that the variances of overall loan services rating of three zones are same.Here, the mean square is arrived by dividing the sum of square by its degrees of freedom.F ratio is calculated by dividing mean square between-groups by mean square within-groups.The final column gives the significance of the F ratio, the p value.If the p value is less than or equal to α level, then we can reject Ho that all the means are equal.

ANOVA Table (Using
It is observed here that the p-value =0.111 is greater than 0.05 (5% level).Hence the null hypothesis is accepted that there is no significant difference among the three regions in terms of overall loan services rating of the GSCARD bank.
Hypothesis-3 : Loan recovery procedure is independent of land ownership.
To examine this hypothesis, Chi-Square test of independence of attributes is used.
Ho : There is no significant difference among the farmers' category on their response on recovery procedure.H1: There is a significant difference among the farmers' category on their response on recovery procedure.The chi-square value as per Chi-square test is 4.545 (6 degrees of freedom, 5% significance level).The significant value p=0.603 is greater than 0.05.The null hypothesis has to be accepted when the p-value is greater than the significance level (0.05).In this case, the null hypothesis has to be rejected.It is concluded that there is a significant difference among the four farmer categories on their response on recovery procedure.

Value
Hypothesis-4 : Defaulters' rating on loan services of GSCARD bank is independent of their land ownership category.
To examine this hypothesis, Chi-Square test of independence of attributes is used.
Ho : There is no significant difference among the farmers' category on their rating on the loan services of GSCARD bank H1: There is a significant difference among the farmers' category on their rating on the loan services of GSCARD The chi-square value as per Chi-square test is 4.567 (6 degrees of freedom, 5% significance level).The significant value p=0.600is greater than 0.05.The null hypothesis has to be accepted when the p-value is greater than the significance level (0.05).In this case, the null hypothesis has to be rejected.It is concluded that there is a significant difference among the four farmer categories on their rating on the loan services of GSCARD bank.

CONCLUSION
GSCARD Bank is rural cooperative credit structure dispensing investment credit to farmers of the Gujarat State through 176 branches as its retail credit delivery units.
Bank performs through unitary structure.Powers for the management of the bank are vested with Board of Directors of the bank.Major areas hampering the progress of GSCARD Bank are low recovery, overdue, rising NPAs, lesser growth in loans & advances, limited scope for deposit mobilization, non-availability of Government guarantee, lack of skilled and professional staff, acute shortage of staff, weak internal systems, checks and controls, resource crunch for expansion of Credit, non-computerization, not availability of interest subvention scheme and high number of loss making branches.
The farmers are classified based on the area of land they own.Majority of respondent loan borrower farmers have long years of experience (20 to 30 years) in agricultural activities.Very high education (graduate and more) are found to be less among the farmers.The annual income is pretty low (` 2, 00,001 to Rs.4, 00,000) for many farmers as compared to other occupations.As these farmers have taken loan from GSCARD bank, almost all from medium and large farmers segments are aware of working of GSCARD bank.Majority of marginal farmers have borrowed the agricultural loan twice.More than 90% of farmers in each segment are aware of loan schemes offered by the GSCARD bank.The loan procedure was moderate for nearly half portion of farmers covered, while rest of them said it is simple.The loan recovery procedure is found to be moderate for 38% of farmers.Good and very good ratings are more seen from large farmers segment.Majority from marginal, small and medium segments are 'Satisfied' while majority from large farmers are 'Highly satisfied' with GSCARD bank.
There is a significant difference among the four farmer segments in terms of average loan amount taken.Lesser land owners have got less amount of loan and larger land owners have got high amount of loan.
More of very good ratings of the bank are seen from large farmers.Comparatively strong relationship exists among large farmers on their rating of loan services and satisfaction level.Land ownership is directly related to the loan amount, as the bank considers land holdings as an important parameter for loan sanctioning.
Major findings on the loan defaulters' profiling indicate that majority are > 45 years of age, attained primary school level education, having at least 2 hectare of land which falls under category of marginal & small farmers and have higher agricultural experience.They have not gone through any kind of special training.Most of them are aware of the loan schemes of GSCARD bank and functioning of the bank.Majority have taken Krishi Vikas Loan (KVL), taken the loan for a medium to long term period (3 to 5 years).Majority have stated that the loan recovery procedure of the bank is strict.
Age, experience in agriculture, income per annum and number of times loan borrowed have no significant impact on the loan overdue amount.There is no significant difference among the three regions in terms of overall loan services rating of the GSCARD bank.It is concluded that there is a significant difference among the four farmer categories on their response on recovery procedure and their rating on the loan services of GSCARD bank.

RECOMMENDATIONS
All the loan borrower farmers should be given awareness about different loan schemes, processing of loan and repayment schedules, providing trainings to the borrower farmers.Short term loan products and computerization (CBS) should be introduced by GSCARD Bank to facilitate borrowers.This will further increase the portfolio, reputation and trust on GSCARD across all levels of borrower farmers.
To reduce the loan defaulters in GSCARD bank, it is suggested that strict procedures as per norms should be followed while sanctioning the loans.Also, incentives or loan interest rebate shall be provided for those who repay the loan instalments regularly.Strengthening of loan policy, effective loan appraisal, exclusive monitoring of loans disbursed could further control the number of loan defaulters.
Bank requires urgent need of reforms to address deficiencies in its design as a non-resource based institution with the only business of providing term loans to farmers.The GSCARD Bank is required to bestow immediate attention for taking corrective steps to tackle the above major areas of concern for up scaling the business and financial performance.GSCARD Bank need to prepare effective action plans to step up lending, resource mobilization and timely recovery of loan instalments.GSCARD Bank shall seek enhanced support from Government of Gujarat and NABARD.

POLICY IMPLICATIONS
The research can be useful for SCARDB in Gujarat for strengthening their position for performance planning, monitoring and implementing effective and timely action plans to step up their business activities.This research can also be useful to authorities related to GSCARDB and policy makers as well as researchers.

ACKNOWLEDGEMENT
Authors are thankful to GSCARDB and Management of the bank for providing Annual reports, Statistical Bulletin and enhancing support for providing necessary information.Concerned District Manager and Branch Manager of selected area of the study are also acknowledged for their valuable support.

Table 6 . Awareness on working of GSCARD (n=450) Working Awareness of GSCARD Marginal farmers (Base=53) Small farmers (Base=190) Medium farmers (Base=138) Large farmers (Base=69) Total (450)
Almost all from medium and large farmers segments are aware of working of GSCARD bank.About 11.3% of marginal farmers are not aware of it.Loan Purchasing behaviour:

Table 9 : Time lag for loan approval
More than 50% of farmers from each segment have reported a time lag of up to 15 days.Considerable portions (43.5%) from large farmers have reported a time lag of 16 to 30 days as well.

Table 11 : Feedback on loan procedure of GSCARD bank
• Overall, for about 48% of farmers the loan procedure was moderate, and other 48% have found it to be simple.Nearly 61% from large farmers segment have stated that the loan procedure is simple, while 58.5% of marginal farmers have reported it as moderate.

Table 18 : Correlation analysis: Rating on loan services vs. Overall satisfaction with the bank branch (n=450) Correlation analysis Correlation with satisfaction level with the bank branch All farmers Marginal farmers Small farmers Medium farmers Large farmers
Analysis of variance test (ANOVA) is used here.The results are presented here.