The World Bank Report No: ISR9365 Implementation Status & Results India Strengthening India's Rural Credit Cooperatives (P102768) Public Disclosure Copy Operation Name: Strengthening India's Rural Credit Cooperatives (P102768) Project Stage: Implementation Seq.No: 11 Status: ARCHIVED Archive Date: 05-Feb-2013 Country: India Approval FY: 2007 Product Line: IBRD/IDA Region: SOUTH ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 26-Jun-2007 Original Closing Date 30-Jun-2012 Planned Mid Term Review Date 11-Jan-2010 Last Archived ISR Date 16-Oct-2012 Effectiveness Date 31-Dec-2007 Revised Closing Date 30-Jun-2013 Actual Mid Term Review Date 22-Jan-2010 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project helps to provide members of the rural cooperative credit system (CCS), including marginal and small farmers (the poorest groups in rural India), with significantly enhanced access to formal finance (credit, savings, etc.), by ensuring that the potentially viable CCBs in the participating states (PS) are transformed into efficient and commercially sustainable institutions. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Capacity building technical assistance 20.00 Information technology 20.00 CCS Financial Restructuring Support 555.00 Implementation 5.00 Public Disclosure Copy Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Overall Risk Rating Implementation Status Overview This ISR is an update to the ISR submitted in October, 2012. The recent update on project achievements and remaining challenges comes against project implementation that has been completely stalled due to a lack of counterpart funding to support remaining project activities. The assessment of the Project Development Objectives (PDOs) and the rating for Implementation Progress(IP) are both downgraded to Moderately Unsatisfactory from Moderately Satisfactory. The rating for the PDOs is lowered to Moderately Unsatisfactory. Page 1 of 6 The World Bank Report No: ISR9365 Significant progress has been made in achieving benchmark reform activities, which have critical implications for governance, sustainability, and transparency of the credit cooperative institutions. However, the reform agenda was to be accompanied by needed recapitalization and completion of the IT component in order to ensure the gains made under the project are sustained. At the same time, the IP has been lowered because project implementation has completely halted due to a lack of additional budget resources. This is because the Project, which covers five Bank-funded states, is tied to the Government's national level package to support the country's rural Credit Cooperative Structure (CCS) Public Disclosure Copy institutions. To fund the remaining program nationwide has far-reaching budgetary consequences at a time when fiscal imbalances are of increasing concern to the Government. Because of resource constraints facing the Project, it will not be possible to fully implement the IT and Financial Restructuring Support (FRS) components under the Project. However, it is important to still highlight the progress that has been made to date under the Project. In Bank-funded states, good progress has been made in terms of overall credit growth, outreach to small and marginal farmers, recovery rates for State Cooperative Banks (SCBs), and the conduct of elections for cooperative boards. Progress is mixed on recovery rates for District Credit Cooperative Banks (DCCBs) and Primary Agricultural Credit Societies (PACS), and DCCB profitability. Overall, profitability performance at SCBs has been one indicator that has been mixed and weaker than the other indicators, but was expected to improve significantly after the inflows of capitalization comes from the central government. There has also been significant progress across all states in terms of results indicators and project benchmark activities. (Benchmark activities are a series of wide- ranging legal and institutional reforms which form the basis of all support by the Government). The main implementation challenges in each of the 5 Bank-funded states revolve around the IT component and completion of all remaining benchmark activities that are linked to recapitalization under the Financial Restructuring Support (FRS) component. One state (Gujarat) completed all benchmark activities, and two others (UP and West Bengal) have only one remaining activity before they will have completed the full set of legal and governance reforms set out by the Government, and which has been a condition of recapitalization. Closing the loop on all remaining benchmark activities has been an important achievement, which has been transformational in pushing the CCS institutions on a path towards improved governance, sustainability, and becoming more client-oriented. Locations Country First Administrative Division Location Planned Actual India Uttar Pradesh State of Uttar Pradesh India Rajasthan State of Rajasthan India State of Orissa State of Orissa India Not Entered Republic of India India Haryana State of Haryana India State of Gujarat State of Gujarat India Uttarakhand State of Uttarakhand Public Disclosure Copy Results Project Development Objective Indicators Page 2 of 6 The World Bank Report No: ISR9365 Indicator Name Core Unit of Measure Baseline Current End Target Upward trend in Recovery rates in the Text Value Haryana:SCB 99.76%, 5-10% per year for PACS participating CCBs in the PS; DCCBs 75.30%, PACS Public Disclosure Copy 71.30% Orissa: SCB 89%, DCCBs 60%, PACS 74% UP: SCB 88.67%, DCCBs 53.05%, PACS 69.14% Gujarat:SCB 97.33%, DCCBs 70.03%, PACS 67% Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 Comments Baseline (03/31/2005): Haryana: SCB 99.82%, DCCBs 76.56%, PACS 67.77% Orissa: SCB 88%, DCCBs 65%, PACS 56% UP: SCB 72.05%, DCCBs 52.02%, PACS NA Gujarat: SCB 86.81%, DCCBs 75.14%, PACS NA Target (06/30/2013): 5-10% per year for PACS. Participating CCBs publish election schedules Text Value Mostly no election 100 % of CCBs and hold elections on regular basis over the Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 project period. Comments Baseline (03/31/2005): Mostly no election. Target (06/30/2013): 100 % of CCBs. Profitability improves in at least 2/3 of the Text Value Haryana: ROAs for DCCBs DCCBs 0.5% SCB 0.8% participating CCBs in the PS by the end of the -0.21% SCB 0.69% Orissa: Public Disclosure Copy project period. (relative to baseline). ROA for DCCBs 0.083% SCB 0.33% UP: ROA for DCCBs -1.54% SCB 0.70% Gujarat: ROA for DCCBs - 0.33% SCB 0.140% Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 Comments Baseline (03/31/2005): Haryana: ROAs for DCCBs 1.0%, for SCB 1.3% Orissa: ROA for DCCBs Page 3 of 6 The World Bank Report No: ISR9365 2.4%, SCB 0.9% UP: ROA for DCCBs -1.5%, SCB 0.65% Gujarat: ROA for DCCBs Public Disclosure Copy 0.7%, SCB 0.77% Target (06/30/2013): DCCBs 0.5% SCB 0.8% Rapid upward trend in the number of small and Percentage Value 0.00 101.25 50.00 marginal farmers who receive credit from CCBs Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 (50 percent increase by the end of the project, Comments relative to baseline) A rapid and upward trend (increase of 70% Percentage Value 0.00 111.25 70.00 over project life) in ground-level financing Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 (credit) extended to farmers through CCBs Comments inthe participating states. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Eligible CCBs in participating states receive Text Value 0% All eligible CCBs receive recapitalization support, so that 100% of restructuring support as per eligible CCBs covered by implementation the pre-determined criteria completion. Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 Comments Eligible CCBs in participating states receive Text Value 0% All CCBs in participating training and capacity building to strengthen states migrate to the new managerial and operational capabilities,so that Common Accounting System 100% of eligible CCBs covered by (CAS) within three years of implementation completion. signing the MoU Date 31-Mar-2007 31-Mar-2012 30-Jun-2013 Comments Public Disclosure Copy The new IT platform is installed in the Text Value 0% 100% participating states Date 31-Mar-2007 31-Mar-2012 30-Jun-2013 Comments Implementation capacity of NABARD, and state Text Value 0% 100% and district level implementing agencies is Date 31-Mar-2007 31-Mar-2012 30-Jun-2013 strengthened Comments Page 4 of 6 The World Bank Report No: ISR9365 Volume of Bank Support: Lines of Credit - Amount(USD) Value 356000000.00 555000000.00 Microfinance Date 31-Mar-2012 30-Jun-2013 Comments Expenditure on Public Disclosure Copy recapatalization Volume of Bank Support: Institutional Amount(USD) Value 7300000.00 45000000.00 Development - Microfinance Date 31-Mar-2012 30-Jun-2013 Comments Expenditure on TA, IT and Implementation Support component Outstanding Microfinance Loan Portfolio Amount(USD) Value 0.00 4861760000.00 0.00 Date 31-Mar-2012 30-Jun-2013 Comments Data gathered from retrofit No target available exercise Percentage of project-supported institutions Percentage Value 0.00 100.00 100.00 that are reporting on this indicator Sub Type Supplemental No of active loan accounts -Microfinance Number Value 23336448.00 Date 31-Mar-2012 30-Jun-2013 Comments Data gathered from retrofit No target available exercise Capital adequacy of CCBs Text Value -2% for DCCBs and 2.1% for Regulator defined target SCB Date 31-Mar-2005 31-Mar-2012 30-Jun-2013 Comments Data on Financial Performance (as of 04-Jul-2012) Financial Agreement(s) Key Dates Public Disclosure Copy Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P102768 IBRD-48620 Effective 26-Jun-2007 02-Nov-2007 31-Dec-2007 30-Jun-2012 30-Jun-2013 P102768 IDA-43380 Effective 26-Jun-2007 02-Nov-2007 31-Dec-2007 30-Jun-2012 30-Jun-2013 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P102768 IBRD-48620 Effective USD 300.00 300.00 0.00 136.23 163.77 45.00 P102768 IDA-43380 Effective USD 300.00 300.00 0.00 301.21 0.01 100.00 Page 5 of 6 The World Bank Report No: ISR9365 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation The team’s view has always been that full project implementation can be attained, and would be important to maximize the progress and achievments of the Project to date. However, given the resource constraints due to lack of counterpart funding, the remaining planned activities supported by the Project will remain partially fulfilled. While the situation is unfortunate, it should not detract from the transformational nature of the reforms undertaken by the participating states, and the key milestones which have been achieved covering a wide range of legal and institutional reforms, and fundamental changes in the capacity and potential for the CCS institutions covered by the Project. Restructuring History Level two Approved on 20-May-2011, Level two Approved on 20-Jun-2012 Related Projects There are no related projects. Public Disclosure Copy Page 6 of 6