(a) History of Indigenous Banking : As observed by the Assam Provincial Banking Enquiry Committee in 1920-30, the history of indigenous banking in Assam is shrouded in obscurity. During Pre-British days, Assam had a self-sufficient economy which was mainly based on the barter system. There was hardly any need for credit money itself was scarcely available to the public for day-to-day transactions except coins for smaller denominations and cowries or conchshells which were used in minor transactions. Such an economy would have never fostered the growth of any banking system or so-called indigenous banking as well as money-leading. People belonging to the higher echelon of the society were in the habit of hoarding money and valuable ornaments. On the other hand,''those in acute poverty could upon the help of their co-villagers in the shape of doles of paddy or facilities for cultivation''.


W.W. Hunter in his Statistical Account of Assam,1879, details the growth and development of Assam during the early British period. It was along with them that their coins and currency system came to circulation driving out gradually the old indigenous system. Meanwhile the British administration was consolidated in Assam and people became well acquainted with the new monetary system. Growth of the tea industry, and free trade and commerce resulted in their wake in the inflow of a number of business talents particularly from Rajasthan and Bengal as well as in the importation of employees and labourers. In rural Assam, the people had a surplus crop which they could dispose of in the local market in exchange of other necessities or to get the little money for payment of land revenue. In the permanently settled areas of Goalpara and Sylhet (then in Assam), the Zaminders often restored to coercive measures like arrest and detention of defaulter tenants who were compelled to pay the arrear rents by borrowing from some subordinates or relatives of the Zamindars on execution of a stamped bond.2


Money began to accumulate in the hands of Marwari businessmen who dominated and still do so in the entire trade and commerce of the country by establishing commercial enterprises in all important trade centres, tea gardens and even in some remote areas. These Marwari merchants as well as other upcountry traders particularly from Bengal (Dhaccayaa) had ready money which they could afford to lend at a profitable rate of interest beside investing in trade. Thus, money-lending business came into vogue. ''Accumulation of coin made by the lower classes are usually hoarded;the middle and upper classes employ their savings in trade and lend them out on usury.''3


The divide and rule policy of the alien rulers succeeded in reducing the old hierarchy and in bringing forth new social order mostly dominated by landlords, big landowners and the business community who maintained the supply line or credit money. The Marwari shops and firms and other merchants used to issue short term loans for which they maintained a register. They also transacted a large business in hundies, cheques or drafts. This type of banking transaction was a secondary type of business of these people in those days .Some of the businessmen succeeded in mobilising the savings in the rural sector. They used to accept deposit from the villagers and some firms paid interest on such deposits. This is evident from the statements of Marwari merchants recorded in different towns by the Banking Enquiry Committee in 1929-30 ''we accept deposits but pay no interest. There are Marwari traders who pay interest at 9 to 11 per cent on deposits which are used by them in business''4. The sense of security which these Marwari firms could instill in the minds of the depositors encouraged the latter to entrust those firms with their savings. The deposits were of the nature of deposits at call. Pass-books were rarely used though receipts were frequently granted to the depositors. The Marwari firms and other money lenders also made advances for short terms to agriculturists in the villages against their standing crops in stipulation to purchase at the market rate during harvest or at a stipulated price which would have been much lower than the harvesting season market price though,in fact,it meant a perpetual income and great profit to the lenders due to the under-estimation of the crop yield as the yield as the economically poor borrowers in most cases had never been able to repay the loan in time. The middle men or intermediate beparis who made such advances against crops at stipulated prices with borrowed money from big firms in the towns charged interests generally in terms of crops which in terms of money was exceedingly lucrative and such interest varied from 50 to 75 per cent.

          (b) General Credit Facilities Available : It was only during the early part of the current century that the credit structure of Assam economy took some concrete shape. So long credit facilities were provided by the money lenders,indigenous banks,friends and relatives of land lords as already referred to.

The money lenders had freehold upon the credit field and earned big profits on usury without check. Next is important as the sources of credit were friends and relatives of the borrowers. Government also provided loans in times on natural calamities but the proportion of such loans was quite insignificant. It is clear from Hunter's Statistical Account of Assam that there were no banking establishments in Assam where loans were conducted by the wealthy and holders and shop-keepers who combined their regular trade with money lending. The money lenders retained the predominant hold even after banking institutions like the co-operative credit societies and banks loan officers, etc., grew up. It was only in the forties of the current century that some commercial banks incorporated outside Assam opened branches in a few towns. The comparative position of the credit sources was money lenders who played the dominant role as financiers in rural areas. Contrary to common belief, the landowners (who are the owners of lands cultivated by the debtors) supply only a small portion of the credit need in the rural areas. The Government also played an insignificant part in supplying rural credit. Because of the poor development of the commercial banks in the State, they accounted for less than one per cent of the credit supply in most districts. Friends and relatives were the second (after money lenders) important sources of loan in rural Assam. It is,therefore,clear that four-fifth of the rural credit were supplied by the money-lenders,friends and relatives. The institutional credit was practically non-existent.5 The co-operative credit societies and banks also played very insignificant part in the credit field. The following table shows the comparative position of the credit sources as revealed by the series of the Rural Economic Surveys conducted during 1950-56 in the rural areas of erstwhile Darrang, Sibsagar, Nagaon and Karbi Anglong districts.6

Source of loan as percentage of total cash loans in Assam.






Karbi Anglong





2.Money Lenders





















































Note :-K.V -Karbi villages

Non-K.V -Non-Karbi villages.

From the above table, it is clear that the people in need were to look for help or loans from the source 'others' which include friends and relatives as an alternative to avoid the extraction of money-lenders particularly in the hill districts. The All-India Rural Credit Survey Report gave the percentage of sources for All-India as follow – (1) Professional Money-lenders, 44,8; (2) Agricultural Money-lenders, 24.9; (3) Relatives,14.2; (4) Traders and Commission Agents, 5.5 (5) Landlords,1.5; (6)Governments,3.3; (7) Co-operatives, 3.1; (8) Commercial banks, 0.9; (9) Others, 1.8.

            With the change of time,the relative position of the credit sources also changes as a consequences of various control measures and Acts passed in regard to money-lending and expansion of the other credit facilities after independence. The co-operative credit societies have come in a big way to meet the credit requirements in the rural sector. With a view to ensuring steady flow of credit organisational set-up of the rural credit has been refashioned recently with the Assam Co-operative Apex Bank at the top and the Primary Co-operative Credit Societies at the base. Thus, the amount of rural credit (extended by the Primary Agricultural Credit Societies)which stood at R.s 1.6 million in 1963-64 steady grew up in the succeeding years and reached Rs. 28.7 millions in 1968-69, (including Meghalaya). In addition to increasing co-operative credit facilities, banking facilities which were so far confined to the urban areas only have been gradually extended to the semi-urban and rural areas of the State. After nationalisation of the 14 big commercial banks in July,1969 and introduction of the Lead Bank scheme,there has been noticeable expansion of bank offices in the State though in comparison to other states it legs far behind. The number of bank offices in Assam reached 354 in 1977 against only 74 in 1969 showing a marked improvement in the coverage of population per bank office,the average number of population covered by each bank office being 41 thousand in 1977 against 188 thousand in 1969.7 Banking facilities are still inadequate in Assam and are mostly confined to urban and semi-urban areas.

         As a result, a vast majority of the rural population are still in the grip of money-lenders. The Kabuliwalas are still found engaged in their usurious business of money-lending all over Assam. With the expansion of various credit facilities,the demand for credit has also steadily gone up. It is difficult to ascertain the proportion of credit provided by different sources for want of data.

          The Planning Commission observed that easier credit facilities should be extended to small and marginal farmers in order to utilise the infrastructural facilities like irrigation, transport, ware-housing, technical methods employed in modern farm practice, etc. Credit is the critical requirement to purchase farm implements, fertilisers, and other agricultural inputs in the rural areas of Assam. Banks spreading to the rural areas extend credit only against security but the majority of the cultivators have no such tangible assets to mortgage as security. The nationalised banks provide only long term loans and are reluctant to give short term loans except on security. Consequently, the poor and marginal farmers are to approach the money-lenders for credit on usurious rates of interests. Recent moratoria and control measures have though brought some effects,the money-lenders cannot be eliminated from the credit field so long the real gap in the line of credit supply persist and the big traders act money-lenders. It is suggested that the rural banks should take the risk of lending on the basis of crop-loans and to realise the loan in kind through the marketing agency to achieve the desired end.

                (c)Indebtedness :

            Rural Indebtedness : There is considerable burden of indebtedness in the rural sector of the State. ''Growth of population and stagnation of rural productivity with limitation of employment opportunities are sure to lead to greater indebtedness''.8 B.C. Allen described in the old District Gazetteers of Assam, 1905 Series, that a considerable portion of the villagers were in debt but doubted that indebtedness could assume serious proportions in any district though a certain amount of petty borrowing went on. As time rolled on, the State of Assam began to lose self-sufficiency in production. Economic condition in the rural areas began to deteriorate due to various factors such as loss of occupation due to decay of cottage industries,increasing pressure of population on the soil, non-development of resource based industries in the State and the like. Imprudent habit of the people villages of incurring debt for performance of social ceremonies like marriage and srAdha by mortgaging the agricultural land which once mortgaged, caused greater indebtedness particularly after the First World War,the after effects of which led to the great economic depression since 1929. The magnitude of the problem was revealed by Provincial Banking Enquiry Committee's Report in 1929-30 which estimated the total volume of indebtedness in Assam at Rs.220 million. Indebtedness would have assumed a further dimension if all sorts of credit facilities had existed. According to the findings of the said committee,the average debt per family in Assam in 1929-30 was Rs.205, and per indebted family Rs.242. These figure would have been at a variance as 50% of the surveyed villages were in Sylhet district which went to Pakistan in 1947 and which showed higher indebtedness (Rs.243 per family)caused by unprecedented floods in the district in 1929.

        After the said Enquiry there was, however, much improvement in respect of proportion of indebted families to total families during the next twenty years ending in 1949 when a series of State surveys into rural economic conditions in the districts of Assam were conducted. Even then,two-fifth of the total number of rural families were in debt in 1948-49. Though the average debt per indebted family appears to remain at much the same level as in 1929,there was some improvement if the rise of the price level is considered. The following table gives a comparative idea of the extent of indebtedness in 1929-30 and 1948-49.9

Statement showing the extent of indebtedness in Rural Areas of Assam.


%of indebtedness

to total families

in the sample

Average debt

per family


Average debt

per indebtedness

family (Rs.)


                      A. Provisional Banking Enquiry,1929.30.

  Darrang                                81.5                                      108                                         229

  Nagaon                                 78.9                                      183                                         235

  Jorhat Subdivision                83.5                                      120                                         145

  Goalpara                               62.0                                      111                                          180

  Cachar                                  90.0                                      179                                          200

                      B. Rural Economic Surveys.

  Darrang                                42.2                                       96.0                                         227.0

  Sibsagar                               39.1                                       66.1                                         173.2

  Lakhimpur                             31.0                                       57.7                                         186.5

  Nagaon                                 39.2                                       74.4                                         189.7

  Karbi Anglong                                                                                                                                      

  (a)Karbi villages                  63.9                                        26.2                                           40.9

  (b)Non-karbi villages           48.9                                        49.4                                         103.1


              From the above, it appears that in 1929-30 among the districts, Goalpara occupied a better position in respect of incidence per indebted family while Darrang showed the highest percentage of indebted family. In the series of rural economic surveys, Karbi Anglong showed the highest percentage of indebted families while Darrang district topped the list of average debt incidence. No rural economic survey was done in the districts of Goalpara, Kamrup and Cachar while Kamrup was left out from all sorts of economic survey. The All-India Rural Credit Survey fixed the average debt per family in Assam at Rs.219. The All India Rural Debt and Investment Survey conducted by the Reserve Bank of India revealed that in Assam, 20.1 per cent of the rural households reported borrowing during the period from July, 1961 to June, 1962 against 49.1 per cent for all India. The amount borrowed during the period was Rs. 163 per borrowing rural household and the average amount borrowed per rural household was Rs.33, the average for cultivators and non-cultivators being Rs. 36 and Rs. 23 in Assam as against the corresponding all India average of Rs. 180, Rs.205,and Rs. 111 respectively. During the period,the proportion of households reporting repayment was 20.2 per cent and the amount of repayment per involved household and rural household were Rs.131 and Rs. 26 respectively. The following table shows the position of borrowings and repayment during the period.





% of house-holds rep-



per rep-



hold Rs.















per rep-



hold Rs.

















3.All rural house





















             The survey further revealed that in all states except Assam and Orissa, more than 50 per cent of the households reported outstanding loans. In Assam, the percentage of households reporting outstanding loans was 39.5 against 62.1 for all India. The following table shows the position of outstanding loans in Assam at the end of June,1962.11


% of households


Amount percentage reporting


Amount percentage household




3.All rural households











           Since then, rural indebtedness is believed to be mounting high due to credit revitalisation programme of the Co-operative Department and expansion of branch offices of the commercial banks in Assam. The increasing credit trend in the rural areas of Assam is more apparently noticed after nationalisation of 14 big commercial banks in 1969. As per Banking Statistics of Reserve Bank of India,outstanding credit of scheduled commercial banks in Assam stood at Rs. 882.88 lakhs in December,1974 against Rs. 6360.66 lakhs in December,1972. Agriculture and allied activities accounted for 52.4 per cent and industry for 29.1 per cent of the outstanding bank credit in the State. This coupled with outstanding credit from other sources shows the gigantic problem of increasing indebtedness in the rural areas of Assam.

             As has been already mentioned,the debt burden of the people in the rural areas of Assam increased considerably along with the great economic depression in 1931-33 and Government of Assam took several measures to relieve the rural people from the burden of indebtedness. With a view to reducing money-lenders extortions from debtors,the Assam Money Lenders Act was passed in 1934. This prohibited compound interest and restricted simple interest to 93/8 per cent and 123/8 per cent depending upon the security of the loan. In 1936, the Assam Debt Conciliation Act was passed and other it several Debt Conciliation Boards were established to help the debtors in setting old debts. The Second World War opened ample avenues of employment and vastly improved the trade and commerce of the province. The burden of debt in the rural sector have been materially affected by the soaring prices. Although the rise in price of agricultural products had to some extent relived the agriculturists in reducing their debt burden,the general price inflation that set in during the post war period offset the benefits and,as such,demand for credit in the rural areas began to increase. The average debt per indebted family as revealed in the series of rural economic surveys in Assam conducted by the State Government since 1948-49 appeared to be lower in comparison to that in the Assam Provincial Banking Enquiry Committee's Report, 1920-30; but it was actually not so in terms of the price hike in the latter period. Government had to take several measures to curb the usurious activities of the money-lenders. Government gave stress on the development of the commercial banking facilities and strengthening of the cooperative credit structure. Besides,Government also provided various kinds of loans,loans to flood and drought effected persons, etc. Though the credit facilities are gradually expanding to the rural areas, they fall far short of meeting the credit requirements in the rural areas of the State as the price inflation is going on unabated adversely reducing repaying capacity of the borrowers. Consequently, the volume of outstanding loans and overdues in the rural areas are cropping up year after year it is believed that the volume of indebtedness in the rural areas of the State has in recent years assumed very serious proportions.

            The debt in the rural sector is incurred for various purposes, viz., repayment of old debt, marriage and sradha ceremonies, purchase of farm cattle, implements, seeds and other inputs, purchase of land or its improve-ment, education of children, medical expenses, litigation and famine and failure of crops. As regards proportions of loans incurred for different purposes in Assam P.C. Goswami observed :Social ceremonies like marriage,sradha (funeral ceremonies),etc., account for one tenth to one-fifth of the total loans and productive purposes like purchase of cattle,seeds,implements, etc. and improvement of loans only for 15 to 30 per cent. The proportions of loans for education of children and medical expenses are quite insignificant. Famines and crop failures are the general causes of loans''.12 The proportion of loans for unproductive purposes is always higher than that for productive purposes. The proportion of unproductive loans would be more pronounced if the grain taken during famine and crop failure and credit purchase of consumer goods are also added to it. P.C. Goswami also quotes the proportion of debt from all India Rural Credit Survey Committee's Report for different purposes as follows :- '(a) Capital Expenditure on farm,Rs.27.8%, (b) Current Expenditure on farm,9.3%; (c) Non-farm Business Expenditure,6.6%; (d) Family Expenditure 50.2%; (e) Other Expenditure,5.7%; (f) More than one purpose.0.4%.13 But a striking contrast is noticed in case of Assam where loans under unproductive purposes such as purchase of flood articles,preference of social ceremonies, etc.,claim the highest proportion varying from 70 to 80 per cent from district to district as revealed in various State Sample Surveys. Such high proportion of debt under unproductive head is the national outcome of the low productivity of soil and crop failure due to frequent floods and other natural calamities. In recent years,indebtedness in the rural areas on such accounts has assumed alarming proportions due to flood shortage and ever increasing prices.

Generally, the debt burden is higher for the non-cultivating families than the cultivating ones and in both cases, the labourers bear heavier burden than the landless due to better credit worthiness of the landowners.

          Urban Indebtedness : The sources of credit in the urban areas of Assam are the same as those in the rural areas,but the role of each of those agencies is different in the two sectors. While in providing loans Mahajans or the landowners play insignificant role in the rural areas,the businessmen particularly wholesale dealers and Kabuliwallas, occupy an important place in this respect in urban areas. They allow credit to trusted retailers. No interest is usually charged on the outstanding amount for a certain period. In most cases, the transaction is completed on the basis of some entries in their registered, usually called Rocker. The total amount of credit proved in this way is believed to be more than what the petty dealers secure from other sources. The commercial banks have set up branches mostly in the urban areas. Various types of loans are advanced by banks for industry,trade and commerce and are availed by different sections of the people. The total loans advanced by all banks in the semi-urban and urban areas of Assam amounted to Rs. 16.31 lakhs and Rs. 16.62 lakhs respectively in December, 1973 against Rs. 1.74 lakhs in the areas. This shows how much greater is the volume of urban indebtedness in Assam on banking account alone and taking into account of credit from other sources including Government, Life Insurance Corporation, etc., which also provide different kinds of loans such as building loans; the total volume of urban indebtedness will reach by this time a gigantic from. The present inflationary trend is believed to have seriously affected the repaying capacity and the purchasing power of the people in the middle and lower income groups in the urban areas enhanced their debt burden .

      Prevalence of Usury : As has been already pointed out usury was the common practice of the private money-lenders who resorted to various extortions upon the debtors in exacting repayment of the loans and that Government had various legislation including Usurious Loans Act to curb such usurious activities. The rate of interest varied from 10 per cent to more than 50 per cent and sometimes to 150 per cent. ''The Provincial Banking Enquiry Committee,1929-30 found 371/2 per cent as the most usual rate of interest charged for loans in rural areas''.14 The high rates of interest charged by the money-lenders seriously affected the economic conditions of the rural people,many of whom had no tangible assets to give as security against the loan. As a result,most people once falling in the clutch of money-lenders and mahajans,had to give way to further poverty and become prey of their debtors who would engage them a clean labourers. The proportion of loans bearing high rates of interest was also very high. '' Twenty two per cent of the debt in Darrang, 38 per cent in Sibsagar,55 per cent in Lakhimpur, 51per cent in Nagoan, 89 per cent in the Karbi villages of the Karbi Anglong and 25 per cent of the non Karbi villages of the Karbi Anglong bear interest above 20 per cent per annum.15 As a result of the control measures, prevalence of usury had shown a declining trend. However, the rates of interest in case of loans taken in kind or in cash as advanced from the Kabuliwallas are exorbitant but the terms of repayment appear to be alluring to the villagers. These professional money-lenders famous for their usurious interest and extortions in repayment,were formerly confined to the tea-gardens but gradually they have extended their business to the interior villages all over Assam. These people not only charge high rates of interest but also do not pay the full amount of the loan and the loanee receives the principal less the interest thereon for the first year.

           In order to eliminate the usurious of the money-lenders,the real gap in the credit field should be bridged. In this respect,the nationalised banks can play a big role by extending their branches in the rural areas providing easier credit facilities. Recently,the Planning Commission suggested that the rural banks should take the risk of issuing crop-loans to achieve the elimination of usury of the private money-lenders. The rates of interest on loans issued by the Industries Department, co-operative banks, nationalised banks and other commercial banks varies from 4 to 10 per cent.

                The Role of Private Money-lenders and Financiers : It has been already pointed out that the private money-lenders, professionals and semi-professionals. Played predominant role in rural finance. In the past,they were the only persons to whom the people in distress could look for credit though friends and relatives too helped to some extent. In spite of legalisation for controlling the usurious activities of the money-lenders,expansion of banking institutions and co-operative credit societies,and various financial agencies,the money-lender continues to be the most important source of credit particularly in the rural areas. As revealed by the sample survey in the jute growing areas of Assam in 1963, the money-lenders, agricultural money-lenders and middlemen,and wholesalers in jute trade together accounted for 60.81 per cent of the total loans. Even at present, the money-lenders retain their predominant hold upon the society. This is due to the privileged position of the money-lender who is always at the door of the needy people whose requirements he fulfills immediately without much formality and security required by the banks or other sources. On the others hand,a viable net-work of the banking institutions is yet to grow up in the rural areas. As revealed by the Banking Statistics of June 75 there were only 214 banking offices all over Assam in 1975 the population coverage under each being 68,000 against 32,000 in India. It is difficult for the rural people to obtain loans from banks or other agencies in times of urgency due to ignorance or inability to go through the complicated procedure or for want of security. Thus, the money-lender is the saviour of the people in their urgency. The Planning Commission remarked that unless and until the gap in the credit structure was bridged by a viable network of banking institutions and used crop loan system, it would be very difficult to eliminate the predominant hold of the private financiers, agricultural money-lenders and landowners upon the rural society.

            (d) Joint Stock Banks and Loans and Investment Companies : In Assam, the growth of joint stock commercial banks is of comparatively recent origin. Before 1920, there was no organised banking sector in Assam except only tow banks viz., the Sylhet Loan Company (Registered in 1881) and the Sylhet National Company (Registered in 1863) which were little more than loan offices receiving deposits and in a very few cases providing for withdrawal by cheques. By 1926, a few more 'loan offices' registered with head offices in different places of Assam and nine private joint stock companies all except one being located at Shillong started functioning. The Provincial Banking Enquiry Committee 1929-30, found during its course of enquiry some such loan offices functioning in the districts of Assam. These loan offices in some cases extended their operational jurisdiction beyond the district of its incorporation. As for example, the Dhubri Loan Office incorporated within the district covered under its jurisdiction the Assam Valley Division and Bengal to some extent. In addition to these banks or loan offices,a few other non-scheduled commercial banks grew up in Assam viz.,the Tezpur Industrial Bank was established at Tezpur in 1918 as a private limited company and then converted to public limited company in 1921. Gauhati Bank was established at Guwahati in 1926. This Bank opened branches at some important towns of Assam. It may also be mentioned that Co-operative Central Banks and urban banks were established at most of the headquarters towns of the districts mostly around 1920. Gradually, more sophisticated scheduled banks incorporated outside Assam extended their branches to Assam. In this context,special mention may be made of the Imperial Bank of India,which had two branches in Assam,one at Shillong and the other at Dibrugarh which, in addition to its normal commercial functions, used to serve as the bank to the government. This Bank was nationalised in 1955 with its new name as the State Bank of India. The Cummila Union bank Ltd. Which later merged into the United Bank of India also opened a few branches at some district headquarters. The United Bank itself opened a branch at Dhubri on 26-9-38. Some other Banks such as the Sunlight Bank, Tripura Bank, Surma Valley Bank, Nath Bank, etc.,had a few branches but these Banks had to close their doors due to run in the Banks in the aftermath of the Second World War. Assam remained during the pre-independence period a predominantly agricultural province,agriculture being purely based on the traditional methods. Such an economy did not foster the growth of the sophisticated banking institutions. During this period,except the non-scheduled Gauhati Bank as already mentioned not a single scheduled commercial bank was incorporated in Assam. It was only after the independence that Assam saw the growth and expansion of banking institutions. The State Co-operative Apex Bank, a non-scheduled bank was set up in 1948. In the meantime, the Banking Legislation, 1949 ushered in a new era in the history of banking in the whole country and the launching of economic planning switched on the growth of bank and expansion of branches.

           It is, however, observed that the growth of banking and institutional credit system in Assam had been tardy till nationalisation of the 14 big scheduled banks in July, 1969. By the end of the Third Five Year Plan only seven scheduled commercial banks were working in Assam with or without branches. The total number of branches of all these banks stood at 42 in 1965,which were located in important towns of the State. Of the seven banks, the State bank of India had the largest number of branches (19) closely followed by the United Bank and the Assam Co-operative Apex Bank had 18 branches in the district and subdivisional headquarters towns of Assam. In 1966,the number of branches of the scheduled banks in Assam (excluding Meghalaya and Mizoram) increased to 47 which increased to 74bin June end 1969 in the eve of bank nationalisation. With a view to expanding banking facilities in the hitherto unbanked areas, the Reserve Bank of India introduced the 'Lead Bank Scheme' in December, 1969. This accelerated the pace of expansion of banking offices in the country including Assam but in comparison to other states such expansion in Assam has been rather a tame affair. Under the scheme,districts were allotted to the State Bank group (State Bank and its 7 subsidiaries),the 14 nationalised banks and 2 other Indian Banks. The districts of Assam have been allotted to the three major banks viz., the State Bank of India, the United Bank of India and Commercial Bank of India and accordingly the districts of Goalpara and Darrang have been allotted to the United Commercial Bank,the districts of Nagaon,Sibsagar,Lakhimpur,Dibrugarh and Cachar to the United Bank and the other district to the State Bank of India. As a result, the number of banking offices in Assam rose to 106 at the end of September, 1970, the new offices being generally opened in the hitherto unbanked areas.

         The total number of bank offices in Assam rose to 354 in June end 1977 from 74 in June end 1969 displaying a rise of cent over 1969,the coverage of population per bank office being 41 thousand and 188 thousand respectively. The table below shows the number of bank offices and population per bank office in Assam and All India from 1967 to 1977.



(June end)

Number of office

Average population

per bank office in



All India


All India

          1967                                  72                        6,985                          199                             73

          1969                                  74                        8,262                          188                             65

          1971                                122                      12,013                          120                             46

          1973                                168                      15,362                            87                             36

          1975                                 214                     18,730                            68                             29

          1977                                 354                     24,802                            41                             22


         It may be mentioned that banking facilities available in the State are still inadequate and far below India average. A vast majority of the population in the rural areas are still unable to take advantage of the banking facilities due to absence of bank office within an accessible area. In 1977,average population covered by a bank office in Assam was 22 thousand while it was below 20 thousand in most of the states of India like Gujarat,Haryana, Karnataka, Maharastra, Punjab, Tamilnadu, Kerela, etc. It shows that there is enough scope in Assam for expansion of banking facilities.

Growth of deposits and expansion of Credit :The volume of deposits of scheduled commercial banks and their advances to different sectors of the economy of the State have increased considerably over the past few years. Their deposits which stood at Rs. 66.54 crores in December, 1972 rose to Rs.82.19 crores in December, 1973 and then gradually rose to Rs. 102.50 crores and Rs. 124 crores in December, 1974 and 1975 respectively. Similarly,advances of these banks had also increased from Rs. 30 crores in December, 1972 to Rs.46 crores in December,1974 and then to Rs. 56 crores in December, 1975. However,advances made to the rural sector had shown little increase. The following table shows deposits and advances of the scheduled commercial banks in Assam districtwise for the past few years.

(In Rs. Crores)


December 1973


December 1974

December 1975















1. Goalpara              4.78                 1.28                 5.04                   1.65                 7.22                   2.73

2. Kamrup              29.10               17.58                36.67                 24.91               46.80                 31.20

3. Darrang               5.90                 1.42                  6.34                   1.47                 8.09                   1.72

4. Nagaon                4.49                 1.33                  5.04                   1.61                 6.57                   2.14

5. Sibsagar              8.61                 2.22                 10.25                   3.09               13.38                   3.71

7. Dibrugarh           21.20                 9.27                 30.43                 11.39               30.22                 11.49

8. Lakhimpur            1.08                10                        1.14                  14                     1.96                 18

9. Cachar                 6.34                 1.43                   6.80                   1.98                 8.59                   2.72

10. KarbiAnglong    34                     3                     36                        2                      51                        1

11. N.C.Hills             35                     1                     43                        1                      44                        1


Assam Total            82.19              34.67               102.50                 46.27               123.78               55.91


     In has been observed that ''agriculture and allied activities (including plantation)'' and industry are the two notable sectors receiving major share for credits from the commercial banks of the State. These two sectors accounted for 48.2 per cent 33.1 per cent respectively of the total outstanding bank credits in the State in December, 1975,against 52.4 per cent and 29.1 per cent respectively in December, 1974. The following table shows the occupation wise classification of outstanding credit of scheduled commercial banks in the State since 1972.

(Amount in Rs. Lakhs)












and allied activities

including plantation

2. Industry


4. Personal loans (including consumers


5.All Others





































Total Bank Credit






Although agriculture is the biggest recipient of bank credit,the major amount has been absorbed by plantation sector (about 95 per cent of the total other agricultural credit)while in other major plantation states like West Bengal, Tamilnadu, Andhra,etc., such discrimination to rural cultivation does not exist. This shows that agriculture and other allied occupations in the vast rural areas of the State have been very badly neglected by the national scheduled and commercial banks in the field of credit advancement. It is necessary to put greater emphasis on the expansion of banking facilities in the rural areas so as to develop the agricultural economy of the State. Similarly,outstanding credit under small scale industry sector accounted for 44.9 per cent of the total industrial credit in 1974 against 70.9 per cent and 49.1 per cent in 1973 and 1972 respectively. In this sphere also Assam experience total neglect from scheduled and nationalised banks, as it is evident from the table. The following statement will show that though deposits in scheduled commercial banks in Assam have been gradually increasing from year to year,advances by these banks have not increased so much and it is still below the accepted principle of 100:60 between deposit and advances.

The table below shows credit deposits ratio in other states,and in Assam in 1973.16










Madhya Pradesh

Uttar Pradaesh


West Bengal


1973 Dec.





























         The following table shows the development in banking and finance in Assam during the period 1980-1996 (March)


  Scheduled                        Unit           1980                1985                 1990                1995        1996

Commercial Banks


Banks branches                Nos.             488            805                 1137                  1228                    1232

Deposit                          Rs. crore          340           785                  1891                  3929                    4393

Credit                             Rs. crore         156            453                  1050                  1495                    1726

Population per

bank office                   Thousands        40.8           27.1                  21.5                  19.9                      20.3

Deposit per

bank office                     Rs. crore            0.70          0.97                   1.66                 3.20                      3.57

Deposit per person            Rs.                  171          360                    772                1606                        758

Credit per bank

office                                Rs, crore        0.32              0.56                   0.92                  1.22                   1.40

Credit per person                Rs.                 79                208                    429                    611                   691


ratio                                   percent            46.0             57.8                 55.5                    38.0                 39.3

All financial             

institutions                        Rs.crore          6.77              38.35                226.0                143.40            720.10


Disbursements                  Rs.crore          6.94              25.16                64.40                 98.70             127.30


Source :- Centre for Monitoring Indian Economy March 1997.

The following table shows the number of branches of commercial banks,regional rural banks (RRB)and co-operative banks in Assam in 1996.


Commercial Bank                              RRB                               Co-operative Bank

         827                                           404                                             67


The credit deposit ratio in these banks is as follows.

Commercial Banks : 35.81

RRB                       : 49.20

SCB                       : 61.23

           Source : Report On Currency & Finance,RBI,1996-97.


         The datas are sufficient to show that advanced in Assam is not as satisfactory as it is in case of other states. Rather it represents a dark picture of neglect.

         Joint Stock Companies : Jorhat Stock Companies generally grew up in the private sector in Assam. On the other hand, growth of such companies in the public sector has been very slow. In 1956-57, there were 369 Joint Stock Companies,109 Public Limited Companies and 260 Private Limited Companies at work in Assam. The number of companies showed some decreased in the next three years and came to stand at 351 in 1958-59 due to liquidation of some companies though 17 new ones were registered in that year in the private sector. The total number of companies registered an increasing trend since 1961-62 in which year it stood at 364 and gradually it was increasing to 404 in 1965-66. During the period,the increasing trend was maintained by annual registration of new companies in the private sector though some old ones went on liquidation. Registration of public limited companies was very except in 1962-63 (6 new ones being registered)which in the private sector it maintained a level between 13 and 19 nos. However,there was a set-back in the registration of few companies during the next years till 1969-70 and as a consequence affecting the growth of the total number of Joint Companies at work in Assam.

        In 1970-71, total number of Joint Stock Companies at work stood at 423-96 Public Limited Companies and 327 Private Limited companies. During the next year,the number of companies in both sector decreased but since 1972-73, both sectors shows increasing trend,the rate of growth in the private sector being much higher due to large number of new registration. The total number of Private Limited Companies increased by 103 in 1974-75 over 1973-74. Thus,the total number of Joint Stock Companies reached 689, of which 123 were public and 566 private in 1977-78. During 1976-77, altogether 54 new companies were registered in the State against 32 in 1975-76. Out of 54,38 were Private Limited and 16 were Public Limited Companies. The total authorised capital of these new companies amounted to Rs. 533 lakhs in 1976-77 and 94 lakhs in 1977-78. The total authorised capital of all the Joint Stock Companies numbering 364 at work in Assam in 1961-62 stood at Rs. 805.1 millions which increased to Rs.1062.0 millions in 1969-70, the share of Public Companies being only ¼ th of the total capital. The following table shows the number of Joint Stock Companies at work in Assam over the past few years.



Year                 No.of Public Ltd.                     No.of private                                 Total

                        Companies                              Ltd.Companies


1956                     109                                           260                                           369

1960-61                  92                                            261                                          353

1961-62                  93                                            271                                          364

1963-64                  95                                            284                                          379

1965-66                  95                                            309                                          404

1969-70                  95                                            314                                          407

1970-71                  96                                            327                                          423

1971-72                  86                                            314                                          400

1972-73                  90                                            334                                          424

1973-74                  97                                            395                                          492

1974-95                105                                            498                                          603

1975-76                107                                            528                                          635

1976 -77               115                                            543                                          658

1977-78                123                                            566                                          689

1990-91                390                                          1603                                        1993

1991-92                392                                          1720                                        2112

1992-93                404                                          1879                                        2283

1993-94                413                                           2040                                       2453


Source : Director of Economics & Statistics,Assam.

The following table shows the authorised and paid-up capitals of the Joint Stock Companies at work in Assam since 1961-62.



(Rs .In Millions)










Paid up



Capital Private




     1960-61             210.2                594.9                805.1                 55.3                   253.1               308.4

     1963-64             219.6                623.8                843.4                 60.5                   263.7               324.2

     1965-66             227.1*               667.4*              874.5*                64.2                 1272.2             1336.4

     1967-68             228.1                654.8                882.9                 64.4                   284.6               349.0

     1968-69             228.1                659.1                887.2                 67.2                   293.3               360.5

     1969-70             -----                   ----                 1062.0                  N.A.                    N.A.               481.5

     1973-74             534.8                 23.1                 557.9                  35.0                  10.0                 45.0

     1974-75             104.6                 28.9                 133.5                   1.0                    1.6                   2.6

     1975-76              6.00                53.37                  58.37                 5.09                   0.31                 5.40

     1976-77            42.00                11.32                  53.32                 8.12                     N.A.                N.A.

     1977-78              0.35                  9.00                     9.95               13.21                    0.31               13.52


Note: *Less authorised capital of the liquidated companies.

N.A. :Not available.


          Co-operative Credit Societies and Banks : The State of Assam is now served by the Assam Co-operative Central Bank Ltd., Guwahati at the top and nearly 4000 primary Co-operative Credit Societies including both agricultural and non-agricultural societies and banks at the bottom. There were seven District Central Co-operative Banks at Dhubri, Guwahati, Nagaon, Tezpur, Jorhat,Dibrugarh and Silchar which were merged the Assam Co-operative Apex Bank Ltd.. by the end of July,1976.

          The growth and development of the Co-operative Credit Societies in Assam can be traced back to 1904 when the Co-operative Societies Act was passed Under this Act, a number or rural agricultural credit societies (Gaolia Banks)were organised all over Assam. To cater to the needs of the urban areas Co-operative Town Banks were also organised in some towns. So long,the Act provided for formation of credit societies only and therefore,the Co-operative Societies Act of 1912 was passed to cover non-credit aspect within the co-operative fold. The societies both credit and non-credit generally worked with the share capital of the members in the initial years. There was no central organisation in any district for financing and coordinating the activities of the societies and as a result the societies could not make much headway. Soon afterwards, the District Central Co-operative Banks were organised in each district for financing the primary co-operative credit and non-credit societies. But these societies and banks passed through various stresses and strains during the pre-independence period. The co-operative movement in general received a serious set-back particularly since the depression of the thirties. By the time the country achieved her political independence,the entire movement was on the verge of decay and the credit societies, particularly the agricultural credit societies, were in moribund condition groaning under overwhelming burden of outstanding loans and overdues.

            After independence,efforts were renewed in Assam to recognise the co-operative societies. The Assam Co-operative Apex Bank was set-up at Shillong in 1948 (now transferred to Guwahati)and was entrusted with the onerous task of supplying credit to the primary co-operative credit societies through the district central banks. The Assam Co-operative Societies Act, 1949 was passed repealing the old Act.

             The introducing of national planning in 1951 brought about a spurt in the co-operative movement. The first plan emphasis on rehabilitation of the shattered structure and the second plan on systematic development of the co-operative sector on the basis of the recommendation of the Rural Credit Survey committee of the Reserve Bank of India and the State plan programme on co-operative structured on four distinct features viz., (1)State participation on different levels, (2) promotion of institutional credit, (3) formation of large size credit societies, (4) integration of different branches of co-operative activities through organisation of multipurpose societies. In pursuance of the policy decision of the National Development Council in 1958, the State co-operative movement underwent a further and the emphasis was shifted from viability to close contact, social cohesion and mutual obligation among members. Accordingly, 3,361 co-operatives (including those converted from primary credit societies) were formed during the last part of the second plan. During the third plan,the scheme for nationalisation of credit structure was taken up in 1963 and under it weak and uneconomic units were amalgamated and dormant societies were liquidated. As a result the number of agricultural credit societies came down from 5,225 in 1960-61 to 4,088 in 1965-66. Further,stress was laid on rural credit being made production oriented instead of being security and with this end in view,crop-loan system of credit was introduced in the areas of operation of revitalised Nagaon, Tezpur and Cachar Co-operative Banks.

        As a result of plan efforts, the co-operative movement in Assam has extended to various fields including the non-credit aspect during the past few years. But Assam lagged for behind in this respect in comparison to other states like Maharastra and Karnataka. In the credit sphere,the progress was handicapped by rough edges like conspicuously weak deposit base and alarmingly high overdues in relation to outstanding loans. The deposits of the primary agricultural credit societies constituted only a meagre 6.5 per cent of the working capital in 1968-69 while overdues at the levels of central banks and agricultural credit societies mounted to 74.1 per cent and 74.6 per cent of the outstanding loans respectively. To tide over these difficulties,the Rural credit Survey Committee (1969), constituted by the Reserve Bank of India recommended measures like putting stress on the need for viability of primary credit societies, rehabilitation of weak central banks, and active administrative and policy measures. It further suggested to mould the lending policy and procedure so as to make it small cultivator oriented. To achieve this objective a number of measures were suggested like (1) granting of loans to small cultivators equal to full entitlement on the basis of cropwise scales of finance,to medium cultivators only to the specified proportion; (2) higher rates of interest on large loans; (3) to oblige large cultivators make proportionately large contribution to the share capital of co-operatives while allowing small cultivators to contribute in installments.

       The following gives a brief account of the working of the credit societies and banks in 1976-77.

       Working of Co-operative Credit Societies in Assam during 1976-77.17

Name of Co-perative Society or Bank No. of Socie ties or bank Membership Working  capital Loan Advances Loanoutstanding

 Loan over


1 2 3 4 5 6 7

1.State Co-oper-

ative Bank                    1                       3.3               3934                 3158                   1844                 1040

2. Central Co-oper-

ative                             7                       3.6               1245                 113                      865                    811

3. Primary agricultu-

ral credit socities        3389                2199.0            1302                151                      722                    592

4. Primary non-agric-

ultural credit

societies.                   399                     3.9                836                  438                       461                   165

5. Primary Land

Development Bank    16                     123.0              135                 26                         102                      10



          State Co-operative Bank : The Assam Co-operative Apex Bank Ltd.was set up at Shillong in 1948 and now stands transferred to Guwahati after creation of Meghalaya in 1970. This Bank has been shouldering the responsibility of financing rural credit though the District Central Co-operative Banks. Its working capital went up to Rs. 64.62 million in 1962-63 with a total membership of 1898. Its working capital increased to Rs. 110.1 million in 1966-67, to Rs. 176 millions in 1968-69,to Rs. 250.2 millions in 1973-74 and then to Rs. 393.4 millions in 1976-77. The assets of the bank at the end of 1968-69 consisted of Rs. 22.6 millions in the form of cash and bank balances, Rs. 15 million in investments,Rs 141.6 millions as loans outstanding and Rs. 2.7 millions in other assets. The Bank released Rs. 212.0 millions as credit including cash credit and overdrafts in 1968-69 as compared to an amount further increased to Rs. 315.8 millions in 1976-77. It has been providing financial assistance to various organisations such as Assam Co-operative Apex Marketing Society Ltd., Assam Co-operative Sugar Mills, the Assam Co-operative Central Mortage Bank, the wholesale consumers co-operative stores,etc.,and a number of tea gardens.

         Central Co-operative Banks :The number of central banks stood at 9 in 1962-63 with a total working capital of Rs. 25.03 millions and a total membership of more or less stable while their working capital slightly rose to Rs. 25.66 millions. The number of central banks decreased to 8 in 1968-69 and went down further to 7 in 1975-76,but their working capital gradually increased to Rs. 124.5 million in 1976-77 from Rs. 48.8 millions in 1967-68. The loans (including cash credit and overdrafts)advanced by these banks amounted Rs. 39.2 millions in 1968-69 ,against Rs. 30.3 millions in 1967-68 and Rs. 25.8 millions in 1966-67 respectively. Formerly,the position of loans advanced by these Banks was not encouraging as the total loans advanced by them stood at Rs. 4.86 millions in 1964-65 against Rs. 2.87 millions in 1963-64. The position again deteriorated after 1970 and loan advances gradually declined to Rs. 16.6 millions in 1973-74 and then to Rs. 11.3 millions in 1976-77. Loans outstanding and loans overdue in the account of this bank in 1976-77 was Rs. 86.5 and Rs. 81.1 millions respectively indicating financial stringency of the bank.

         Agricultural Credit Societies : Before the beginning of the first plan the number of agricultural credit societies in Assam stood at 676 in 1950-51 with a total membership of 18 thousand and a working capital of Rs. 9 lakhs. The advance made by these societies stood at Rs. 1 lakh only. At the end of the first plan in 1955-56 their number rose to 1,973 and then to 5,225 at the end of the second plan in 1960-61 with a corresponding rise in membership from 43,087 to 266,805. The total amount of loans advanced by these societies went up from Rs. 4.2 millions during the first plan period to Rs. 45.2 millions during the second plan period. The working capital of these agricultural credit societies amounted to Rs. 24.7 millions at the beginning of the third plan in 1962-63. As a result of intensive efforts in the direction of credit rationalisation during this plan the number of credit societies showed a declining trend and came to stand at 4,088 in 1965-66 and further declined to 3,777 in 1967-68 but rose to 3,764 in 1968-69. On the other hand,membership went up to 383 thousand during the period. The total amount of working capital of the societies also rose to Rs. 64.3 millions in 1968-69. The total amount of rural credit advanced by these societies had gone down to Rs. 15 millions during the third plan. This decline was attributed to considerable drying up of the channel of rural credit due to heavy accumulation of overdues at primary and intermediate levels. It was in 1963-64 that rural credit extended by the agricultural credit societies slumped to the lowest level of Rs. 1.6 millions. Since then,rural credit began to register a steady recovery during the succeeding years and reached the level of Rs. 22.3 millions in 1967-68 and Rs. 28.7 millions in 1968-69. The following table shows the credit extended by these societies since 1950-51 to 1965-66.

(in thousand rupees)



                                                      Year                                           Credit



                                                     1950-51                                            75

                                                     1955-56                                       3,089

                                                     1956-57                                       7,517

                                                     1957-58                                     13,106

                                                     1958-59                                     13,650

                                                     1959-60                                       6,688

                                                     1960-61                                       4,190

                                                     1961-62                                       2,945

                                                     1962-63                                       2,938

                                                     1963-64                                       1,636

                                                     1964-65                                       3,521

                                                     1965-66                                       3,900


        During 1968-69,the total loans advanced by these societies amounted to Rs. 28.6 millions and outstanding loans to Rs. 53.4 millions,of which Rs. 39.8 millions was overdue. The total number of co-operative credit societies stood at 3812 during 1976-77 with membership of over 23 lakhs of people. During the year,an amount of Rs. 39 crores was advanced as loan. Total credit advanced by these societies increased from 5 lakhs in 1973-74 to Rs. 151 lakhs in 1976-77. Loans outstanding and loans overdue showed some improvement during 1976-77.

       Primary Non-agricultural Credit Societies : These societies include urban co-operative banks salary-earners' societies and other non-agricultural credit societies. The number of all these societies in Assam stood at only 162 at the end of the first five year plan in 1955-56,and rose to 359 at the end of the second plan in 1960-61. The member increased gradually and it stood at 3466 and 3898 in June 1973-74 and 1976-77 respectively. The membership of the societies increased from 17 thousands at the end of the first plan to 28 thousands at the end of the second plan and subsequently rose to 30 thousands in 1964-65. There was not much improvement in the number and membership of these societies. Rather in 1967-68,their number actually declined to 339 with membership of 29 thousands. In 1968-69,their number and membership increased again to 388 thousand respectively having a total working capital of Rs.51.2 millions. The working capital of Rs. 51.2 millions. The working capital of the societies was Rs. 13.6 millions in 1962-63,and increased to Rs. 39 crores in 1976-77 against Rs. 14 crores in 1973-74. The amount of advance by these societies was Rs. 17.8 millions in the second plan against Rs. 7.3 millions in the first plan. During the first four years of the third plan,the amount of advance rose up to Rs. 25.1 millions and came to stand at Rs. 20 millions in 1966-67,Rs. 42.9 millions in 1967-68 and Rs. 388 millions in 1968-69,(including figures of Meghalaya and Mizoram). Amounts of credit advanced by these societies 1950-51 up to 1976-77 are shown below.

Year                                               Credit in Lakh rupees.

                                    1950-51                                                        1.54

                                    1955-56                                                      17.45

                                    1956-57                                                      30.16

                                    1957-58                                                      24.02

                                    1958-59                                                      44.36

                                    1959-60                                                      44.94

                                    1960-61                                                      34.51

                                    1961-62                                                      42.05

                                    1962-63                                                      61.84

                                    1963-64                                                      72.14

                                    1964-65                                                      75.27

                                    1973-74                                                      73.01

                                    1976-77                                                    438.00


       Land Development Banks : The Central Land Development Bank was functioning with a total working capital of Rs. 2.5 millions and membership of 915 at the end of 1968-69. The Bank advanced Rs. 333 thousands as loans in 1968-69 against Rs. 626 thousands in the previous year. There were 16 primary land development banks all in the plain districts of Assam with a total membership of 6,742 in 1968-69,in which year their working capital stood at Rs. 216 millions and credit extended by them about amounted to Rs. 374 thousands. Its working capital rose from 71.33 lakhs in 1971-72 to Rs. 81.18 lakhs in 1972-73. The Bank generally advance long-term credit. Loans advanced by the Bank amounted to Rs. 13.21 lakhs in 1972-73 against Rs. 12.11 lakhs in 1971-72 and Rs. 12.55 lakhs in 1970-71. a disquieting feature of performance of the Bank was the increasing trend of loans overdue. The outstanding loans increased from Rs. 41.05 lakhs in 1970-71 to Rs. 51.21 lakhs in 1971-72 and Rs. 62.09 lakhs in 1972.73, the corresponding figures of overdues being Rs. 2.41 lakhs,Rs. 3.25 lakhs and Rs. 5 lakhs respectively.

         In 1972-73, the number of primary land development banks in Assam stood at the same level but membership increased to 10,253 and the working capital also rose to RS. 79.10 lakhs from Rs. 63.21 lakhs in 1971-72. An amount of Rs. 15.85 lakhs was advanced as loans by these banks in 1972-73 as against during 1972-73 were of the order of Rs. 61.76 lakhs and Rs. 61.76 lakhs and Rs. 6.49 lakhs respectively at against Rs. 49.00 lakhs respectively in the previous year.

           Under the scheme for reorganisation of co-operative credit structure in the State,the seven central co-operative banks,viz.,the Goalpara District Central C-operative Bank,the Nagaon Central Co-operative Bank,the Cachar Central Co-operative Bank, the Dibrugarh Central Co-operative Bank,the Sibsagar District Co-operative Bank and the Tezpur Central Co-operative Bank have been marged with the Assam Co-operative Apex Bank the end of July,1976.

             In view of the 20 point Economic Programme,the responsibilities of the Co-operative societies have gone up further. To attain the various objectives of the new economic programmes,mass involvement is necessary. The State Government,therefore,intended to make the Co-operative embraced the entire population with target of 100 per cent coverage of about 25 lakh households of the State. It was expected to bring each and every family of the State within the fold of the Co-operative movement by the end of 1976. Within these ends in view,664 Gaon Panchayat level multipurpose co-operative societies were set up during 1973-74 to shoulder the responsibility of channeling rural credit, distribution of essential commodities to consumers in the rural areas and rendering help in procurement of paddy and wheat by agencies of the State Government. Their share capital and working capital were augmented so as enable them to discharge their functions effectively. Liquidation of rural indebtedness and moratorium on recovery of debts from the landless poor and the enactment of the Assam Rural Indebtedness Relief Act, 1975 made the money-lenders reluctant to advance loans to the weaker sections of people. In view of this, it became more imperative on the part of State Government to streamline in multipurpose G.P. Level co-operative so that they might accept deposits and provide loans to the needy people.

            The fifth plan laid special emphasis on enrollment,consolidation and strengthening of co-operatives at all levels. Various measures were taken up to remove structural and managerial inefficiencies. The total expenditure under co-operative during the fourth plan period in the State was the order of Rs. 388 lakhs for general areas and Rs. 75 lakhs for hill areas against Rs. 675 lakhs and Rs. 75 lakhs respectively as per plan provisions during the fifth plan.

            In 1994, the share capital of the Assam Co-operative Apex Bank accounted to Rs. 321 lakhs of this the State government contributed 55 per cent and theco-operative institutions contributed 35 per cent. The total deposits of the bank stood at Rs. 18024.09 lakhs, of which 82 per cent was held by individuals. The borrowing of the bank was to the tune of Rs. 213.52 lakhs.

         The Banks short term advances to GPSS/LAMPS went down by 25 per cent over 1989-90 level. The short term advances to the tea sector registered a rise of about 40 per cent. During the period from 1989-90 to 1992-93,the short term agricultural advances declined by about 60 per cent. This was due to the high overdues at the primary level which lowered the absorption capacity of the GPSS/LAMPS.

       The co-operatives are not in a position to cater to the needs of a larger number of individuals and families as the average recovery percentage is very low. In four out of five districts where a survey was conducted,the recovery percentage was between 1 and 15 and in one district it was 34.

     Upto March,1994,the loans disbursed by the Assam State Co-operative Agricultural and Rural Development Bank (ASCARDB)amounted to Rs. 21.33 crores. In 1992-93, ASCARDB's loan outstanding was Rs.13.53 crores. Loan recovery position is discouraging with overdues touching 95 per cent.18

        (e) General and Life Insurance : General Insurance : Prior to nationalisation of the general insurance industry in India,only a few private companies were doing general insurance business with or without branches in Assam General insurance business against risks,theft,pilferage,etc.,in respect of tea in transit and all tea garden factories and other buildings were generally done in Calcutta with foreign concerns. Local petty cases of fire and motor insurance were,however,accepted by private companies like the New India Assurance Company,Ruby General Insurance Company of India,Henover Insurance Company,Hindustan General Insurance Society Limited,etc.,which had their branch office at Guwahati and generally field-staff in order district headquarters. The Scottish Union and General Insurance Company, a foreign concern with an Officer-in-Chief for India, stationed in Calcutta had been doing life and general insurance since the end of the 19th century. This company appointed an Inspector at Sibsagar only in 1954 for mobilisation of business in Assam and in 1960, opened a sub-branch office at Jorhat to render efficient and prompt service to tea concerns,Assam Oil Company and other private and semi and semi-government enterprise. The total business done by this company in Assam amounted to Rs. 1.55 lakhs (net premium)in 1963. Other companies had their branches or divisional offices at Guwahati with fieldstaff in other districts.

      After nationalisation, the General Insurance Corporation of India has been set up. It is an Apex body under which,Government of India has set up 4 subsidiary unit companies for operation all over India. The Unit companies are :-

      (1) The Oriental Fire and General Insurance Company Ltd.

      (2) The New India Assurance Company Ltd.

      (3) The Unit India Fire and General Insurance Company Ltd.

      (4) The National Insurance Company Ltd.

        Life Insurance : Before Independence,there was no proper organisation of any company in Assam to take up life insurance business. Only a few agents of private companies incorporated outside Assam carried out life insurance business in Assam. Mention may be made about the Bombay Mutual Life Insurance Society, Oriental life Assurance Company, Empire of India, National Indian,National Brawbans Life and some others which were doing life insurance business in Assam through agents or field staff. Even after independence,life insurance business remained sluggish in this State and the masses in the vast rural areas were quite ignorant about business covering the risk of life. On 31st August, 1956, life insurance was nationalised in India and the Government of India set up the life Insurance Corporation.

       Thereafter, for organising life insurance in the north-eastern region, a divisional office was established at Guwahati and under it branches offices were set up at every district headquarters and in some cases at subdivisional headquarters which are generally served by sub-offices. Requisite number of Development Officers, Inspectors and other fieldstaff were recruited in every district for mobilising the life insurance business. A number of agents on commission basis have now been engaged all over the State to spread the message and persuade people to make life insurance policies.

      At Present, life insurance business is making satisfactory progress in the State under the Guwahati which covers all the seven states in North Eastern Region. The performance of the life insurance business in the state of Assam in respect of business introduced and business completed over the past few years may be seen in the table below.


Year                   Business introduced

Business completed

                      No.of Policies

Sum assured

(Rs. Lakh)

No.of Policies

Sum assured

(Rs. Lakh)

 1972-73            43090                       3083                                    41860                        2959

 1973-74            45153                       3459                                    44481                        3395

 1974-75            45213                       3613                                    44494                        3553

 1975-76            56532                       4483                                    55417                        4350

 1976-77            64605                       5399                                    63504                        5238

 1977-78            55927                       5036                                    54971                        4895


      The performance of the corporation in respect of investment and credit is also noteworthy. The total investment of the corporation in Assam during 1976-77 was Rs. 4.50 crores which was, however, lower than the previous year's Rs. 9.97 crores. The following table shows the item-wise investment of the corporation in Assam for the past few years.

Head                               1972-73          1973-74           1974-75          1975-76          1976-77          1977-78
   1                                         2                     3                       4                     5                     6                      7

1.State Govt. Securities       1.77                2.83                  2.97                2.52                1.49                 2.29

2.Debt of Land Deve-

lopment Banks                      0.01                   –                       –                    –                     –                     .14

3.Bonds of State Elec-

tricity Board                          1.30                1.49                 1.25                2.97                 1.98                3.07

4.Loans to State Elec-

tricity Board                           1.70                1.50                    –                   3.45                   –                  1.80

5.Bonds and shares of

State Financial

Corporation                              –                   0.10                0.20                0.22                   0.49               –

6.Loans to State Govts.

For housing scheme               0.25                 –                   1.60                0.18                    0.20              –

7.Private Sector (Shares,

debentures and loans

to comprises)                          –                     1.01               (N)                   0.63                  0.34           0.31

Total                                      5.03                  6.93              5.92                  9.97                  4.50           7.61

N.B. (N) = Negligible.

     Small Savings : Since launching of the first five year plan,collection of small savings schemes has been in operation throughout India. This scheme aims at including the habit of savings amongst the people particularly in the rural sector and mobilising dormant capital for utilisation in planning and development. For successful operation of the scheme District Organisers with other staff have been posted in every district of Assam. Assam has achieved in respect of net collections more than the plan-wise targets fixed for the State. The following table shows the plan-wise targets and achievements of small savings in Assam.

Collection of Small Savings in Assam.


(Rs. in crores)




(Net Collection)



All India


All India






   First                             5                                  225                                  5                                  242

  Second                       10                                  500                                13                                  402

  Third                           18                                  600                                 22                                  574

  Fourth                         25                                1000                                 35                                1350

  Fifth                            65                                2022                                 50                                1562

(Four Years)


(Four Years)

          The following table shows the collection of small savings by type in Assam during 1974-75 to 1977-78.

                                                                                                        (Rs. in crores)

Type of savings
























  1.Post Office Savings Bank          23.48       0.71        20.17       2.93        1940         0.31       24.37        2.71

  2.Commulative Time Deposits          1.26       0.62          1.25      0.53         1.48           0.51        1.67        0.61

  3.Post Office Recurring

     Deposits                                      0.37       0.33          0.53      0.39         0.88           0.58        1.26        0.73

  4.Post Office Time deposits           1.82       1.53          3.16      2.17       10.42           7.97      18.12      15.88

  5.National Savings Certificate

    (7 years 11,111,IV,V issue)          7.30       7.03          6.06      5.70        2.49            0.93        2.00(-)    2.0

  6.POSD Interest on standing 

     balance                                       1.60       1.60          1.97      1.97         N.A.            N.A.         N.A.       N.A.



1. E.A. Gait, A History of Assam, Calcutta, 1967 reprint, p. 270.

2. W.W. Hunter, A Statistical Account of Assam, Vol. II, New Delhi, reprint, p.67,76.

3.W.W. Hunter : A statistical Account of Assam, Vol. II, New Delhi, reprint, p.81.

4.Report of Assam Provincial Banking Enquiry Committee, 1929-30, p 437

5.P.C. Goswami : The Economic Development of Assam, Calcutta, 1963, p.62-63.


7.Economic Survey of Assam, 1975-76 by the Directorate of Economics and Statistics, Govt. of Assam, Guwahati, 1979, p.62.

8.P.C. Goswami : The Economic Development of Assam, Calcutta, 1963, p.60.

9.P.C. Goswami: The Economic Development of Assam, Calcutta, 1963, p.61.

10.Economy Survey of Assam, 1970, by the Directorate of Economics and Statistics, Govt. of Assam,        p.111,112.


12.P.C. Goswami : The Economic Development of Assam, Calcutta, 1963, p.62.

13.Ibid, p.242.

14.P.C. Goswami : The Economic Development of Assam, Calcutta, 1963, p.64.

15.P.C. Goswami : The Economic Development of Assam, Calcutta, 1963,p.62.

16.Banking Statistics by the Reserve Bank of India, December, 1973.

17.Economic Survey of Assam, 1977-78, by the Director of Economics and Statistics, Govt. of Assam.

18.Study of Co-operative Credit Structure in Assam, Agricultural Finance Corporation Ltd., Bombay, 1994