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1.1 INDUSTRY PROFILE
Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. The first fully Indian owned bank was the Allahabad Bank, established in 1865. When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. Punjab National Bank is the first Swadeshi Bank founded by the leaders like Lala Lajpat Rai, Sardar Dyal Singh Majithia. The Swadeshi movement in particular inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.
1.2 ABOUT SUBJECT:“Microfinance” is often defined as financial services for poor and low-income clients. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs). These institutions commonly tend to use new methods developed over the last 30 years to deliver very small loans to unsalaried borrowers, taking little or no collateral. These methods include group lending and liability, preloan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly. In the development paradigm, micro-finance has evolved as a need-based policy and programme to cater to the so far neglected target groups (women, poor, rural, deprived, etc.). Its evolution is based on the concern of all developing countries for empowerment of the poor and the alleviation of poverty. Micro-finance programmes have, in the recent past, become one of the more promising ways to use scarce development funds to achieve the objectives of poverty alleviation. The basic idea of micro-finance is simple: if poor people are provided access to financial services, including credit, they may very well be able to start or expand a microenterprise that will allow them to break out of poverty. For development practitioners, the success of micro-finance programmes is encouraging. Too often in the past, costly large-scale development initiatives have failed to achieve any sustainable benefits, especially after funds have dried up. Thus, micro-finance has become one of the most effective interventions for economic empowerment of the poor.
1.3 GENESIS OF MICROFINANCE
The first major demonstration of this kind of lending came from Bangladesh, a country which was virtually synonymous with poverty. During 1976, Muhammed Yunus, then a professor of economics at Chittagong University, began an experiment aimed at helping impoverished villagers. Defying the usual rules, he lent them unsecured money to start small enterprises,
such as rice processing, rickshaw-driving and weaving. Instead of collateral, the borrowers were to form small groups( called Self Help Group) and agree to a fact of mutual liability, in
other words, the liability of the members will be both joint and several – viz., if one defaults the others will have to pay. The participants in the fact knew each other, which created peer pressure for successful repayment and along with the compelling need for a source of income in a place with few other opportunities, it produced surprising results. After first two years, prof. ,
Muhammed Yunus found that he was getting an outstanding payback of 99%. The experiment, by then officially known as the Grameen Bank, was expanded and has become legendry in the world of development banking. 1.4 Micro Finance in India – An Overview In the post nationalisation era, the banking sector witnessed flow of substantial amount of resources while the banking network underwent an expansion phase without comparables in the world. Credit came to be recognized as a remedy for many of the ills of poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experience gained. National Bank For Agriculture and Rural Development(NABARD), during the early eighties, conducted a series of research studies in association with MYRADA (a leading NGO from South India) and also independently which showed that despite having a wide network of rural bank branches that implemented specific poverty alleviation programmes and self-employment opportunities through bank credit for almost two decades, a very large number of the poor continued to remain outside the fold of the formal banking system. These studies also showed that the existing banking policies, systems and procedures, and deposit and loan products were perhaps not well suited to meet the most immediate needs of the poor. It also appeared that what the poor really needed was a better access to these services and products, rather than cheap subsidised credit. Against this background, a need was felt for alternative policies, systems and procedures, savings and loan products, other complementary services, and new delivery mechanisms, which would fulfil the requirements of the poorest, especially of the women members of such households. The pilot project has been making steady progress over the years. Beginning from 255 SHGs linked with banks during 1992-93, by 31 March 1996 around 4750 SHGs were linked with bank loan of Rs.605.84 lakhs and NABARD refinance of Rs.566.12 lakhs covering 28 commercial banks, 60 RRBs and 7 Cooperative Banks in 16 States and 1 Union Territory The Working
Group is of the view that the linking of SHGs with the banks is a cost-effective, transparent and flexible approach to improve the accessibility of credit from the formal banking system to the unreached rural poor.
1.5 Insight of Self Help Group (SHG) Self-Help Group (SHG) is a small voluntary association of poor people, preferably from the same socio-economic background. They come together for the purpose of solving their common problems through self-help and mutual help. The SHG promotes small savings among its members. The savings are kept with a bank. This common fund is in the name of the SHG. SHG is a group formed by the community, which has specific number of members from 5 to 20. SHGs basic aim is to promote thrift and saving habit among the members and financing them to meet their emergent credit need. The process helps them imbibe the essentials of financial intermediation including prioritization of needs, setting terms and conditions and accounts keeping. They also learn to handle resources of a size that is much beyond individual capacities of any of them. The members begins to appreciate that resources limited and had a cost once the group show this mature financial behaviour banks are encourage to make a loan to SHGs in certain multiples of accumulated saving of SHGs. These loans are given to the group without any collateral and at market interest rate and the group continuous to decide the terms of loans to their members. Since the groups own accumulated savings is a part and parcel of the aggregate loans made by the group to their members, peer pressure ensure timely repayment.
1.6 Objectives of SHGs To evolve a supplementary credit strategy for reaching the rural poor To build mutual trust and confidence between banks and rural poor. To encourage banking activities in rural areas. To sensitize people of target area for the need of SHG and its relevance in their empowerment process. To create group feeling among members.
To enhance the confidence and capabilities of members. To develop collective decision making among members. To encourage habit of saving among members and facilitate the accumulation of their own capital resource base. To motivate members taking up social responsibilities particularly related to development.
1.7 Features of SHGs 1. No. of members: SHGs are formed by a group of 5-20 members. There can be one person from one family in one SHG and one person cannot be a member of more than one SHG. 2. Member selection: The members select their own members to form groups. The members residing in the same neighbourhood ensure better character screening and tend to exclude deviant behaved ones. 3. Registration: it is not mandatory but still can be registered under Co-operative Societies act.
4. Small and fixed savings at frequent intervals: Small and fixed savings made at regular intervals coupled with conditions like compulsory attendance, penal provisions to ensure timely attendance, saving, repayment etc. 5. Savings first and credit later: The saving first concept enables the poor to gradually understand the importance of saving, appreciate the nuances of credit concept using their own money before seeking external support (credit) for fulfilling future needs. The poor tend to understand and respect the terms of credit better. 6. Intra group appraisal systems and prioritization: Essentials of good credit management like (peer) appraisal for credit needs (checking the antecedents and needs before sanction), (peer) monitoring- end use of credit; (peer sympathy) re-schedule in case of crisis and (peer pressure) collateral in case of willful non-payment etc all seems to coexist in the system – making it‟s one of the best approaches for providing financial services to the poor. 7. Credit rationing: The approach of prioritization i.e. meeting critical needs first serves as a useful tool for intra –group lending. This ensures the potential credit takers/users to
meticulously follow up credit already dispensed, as future credit disbursals rely on repayments by the existing credit users. 8. Shorter repayment terms: Smaller and shorter repayment schedule ensures faster recycling of funds, greater fiscal prudence in the poor and drives away the slackness and complacency that tends to set-in, in long duration credit cycles. 9. A multiple-eyed operation: The operations of the SHG are transacted in group meetings thus enabling high trust levels and openness in the SHG system. SHG members facilitating openness and freedom from unfair practices also generally conduct the banking transactions.
Models of linkage between SHGs and Banks: 1. Banks deal directly with individuals SHGs: The banks provide financial assistance to individual SHGs for lending to the individual members. 2. SHGs formed by the NGOs and linked to Bank: In the, NGOs would organize the poor into SHGs, undertakes training, help in arranging inputs extension and marketing, introduce savings and internal lending and help in maintenance of accounts and so on, Banks directly provide loans to SHGs, with the recommendation of NGOs. 3. NGOs form SHGs: And perform financial intermediation role as a lender to SHGs after sourcing loans from bank. Here the loans are given to NGOs by the bank for
Supportive policies of NABARD 1. Margin and Security Norms: As per operational guidelines of NABARD, SHGs are sanctioned savings linked loans by the banks (varying from a saving to loan ratio of 1:1 to 1:4). 2. Rate of Interest: NABARD would continue to provide refinance support to the banks under the linkage project. The present interest rate structure stipulated by NABARD at different levels under the SHG-Bank Linkage Programme is as under: NABARD to Banks (Refinance) 6.5% p.a. Banks to SHG 12.00%p.a.
SHG to members As decided by SHG
Note: The guidelines of NABARD have been regularized and moderated by RBI.Advantages of SHGs linkage The advantage of SHG linkage is are broadly classified as, advantages to Government, advantages to SHG, advantages to NGOs and the advantages to the bank. Advantages to Government: Rural poor not to dependent upon and not to look upon government to tackle their poverty It effects of various Government sponsored and poverty alleviation programs are checked i.e. wrong identification of beneficiary, mis-utilization of funds or subsidy, targeted approach , under or over financing and poor recovery Provide viable alternative to any credit program. Encourage NGOs to involve themselves in rural development activity Routine social programs through SHGs Voluntary participated of the people in the up liftment process
Advantages to SHG: Helps in resource mobilization of the group Helps in sharing of information with members Helps in capacity building of members It enhances the sustainability of the group It is mutually beneficial program for SHG and the bank
Advantages to bank It leads to increase in social base and also deposit base of the bank It leads to expansion of loan portfolio i.e. better quality lending and need based credit, coverage of large number of small borrowers, reduction in transaction cost by externalization of a part of the work items of credit cycle, cut in the time lag between application and actual sanction/disbursement of loan, provide social collateral security
and collective security and improvement in recoveries leading to wider coverage of target group. It enables simultaneous undertaking of social development. It leads to portfolio diversification
1.9 Responsibility of Self Help Group representatives: Following are the some of the important responsibility of the Self Help Group representatives 1. Meeting and Group functioning related To be at the meeting venue at least 10 minutes before the scheduled time and to bring all books and documents To ensure that the scheduled that the scheduled meeting takes place regularly To facilitate meaningful discussion and effective decision making in the meeting To ensure financial affairs of the group including maintenance of records, audits and funds management
2. Interpersonal Relationship To facilitate good working relationship between members and to ensure the smooth functioning of the group To facilitate the members to resolve any conflicts that may arise in the group in an amicable and just manner. 3. Relationship with others To build linkages between various Government and private institutions and the groups 4. Capacity Building of members and information sharing To share with the group all the information one has gathered while attending meetings in ones capacity as a representative To share all information obtained from training program with the rest of the members To encourage members to become literate To motivate members to participate in training programs and group activities.
5. SHG documentation related To prepare and present the monthly/yearly financial statement before the group members To record attendance of the meeting To ensure the updating of all books of accounts and other records before the meeting closes To ensure that books and documents are kept safely and in good condition and produce them whenever required To ensure that audit of the group finance To be trained in the maintenance of group books and documents To ensure that a second line of book writers is developed in the group
1.10 Responsibilities of Self Help Group Members The responsibilities of group members are as follows:1. Meeting and Group functions related To attend the SHG meeting on a specified date, time and venue without fail To actively participate in the proceedings of the meeting and provide effective suggestions during discussions To ensure rotation of representatives once in a year To maintain discipline and unity in the group 2. Saving and loans related To be regular in savings the minimum agreed amount in every meeting To obtain loans for genuine requirements and utilize for the specific purpose To be prompt in the repayment of the loan installments along with service charges To keep track of one‟s individual savings amount and loan record To ensure that other members of the group properly utilize and reply and repay the loan availed 3. Cash management and documentation related To conduct cash transaction with the group only during the meeting
To bring pass book for updating each meeting To ensure that the cash inflow to the group in remitted to the saving bank account at the earliest To ensure that the receipts are issued for any cash transactions with the group In case the members is illiterate, to make conscious efforts to become literate To ensure that the audit of all group transactions take place every year and to discuss the audit findings in the group and follow-up action.
1.9 Books of accounts, Registers and files of SHG The following are the books and registers which the SHGs has to maintain 1. Books and Registers: Visitor‟s books, Admission Register, Attendance register, Resolution/Minutes book, saving ledger, Loan ledger, Members individual pass book (saving & loan), the pass book & cheque book, Cash or bank book, General ledger, Asset register. 2. Documents: Receipts book, Voucher book, Demand promissory note, Loan application cum sanction letter. 3. Others: Correspondence file, programme report file, Bank loan file, Monthly/Annual financial Statement file.
The role of NGOs in Microfinance Self Help Groups are almost always formed with outside assistance. Developmental NGOs, often with considerable history of working in a particular area for projects like literacy, sanitation etc., take to organizing SHGs, bringing together people, explaining the concept to them, attending and helping coordinate a few of the initial group meetings, helping them maintain accounts and linking them with the banks. Of late, some of the rural banks themselves are being designated as Self Help Promoting Institutions (SHPIs) and they help in the formation and „nursing‟ of SHGs.
1.10 Challenges in Micro Finance Despite the significant progress of Micro Finance programmes in the country, there are some issues of concern, they are:
Appropriate legal structures for the structured growth of MF operations. Finding adequate levels of equity for the new entities to leverage loan funds. Ability to access loan funds at reasonably low rates of interest. Ability to attract and retain professional and committed human resources. Design of apt MIS including user friendly software for tracking accounts and operations. Appropriate loan products for different segments. Ability to innovate, adapt and grow by performing various R&D activities. Bring out a compendium of small and micro enterprises for the MF clients. Identify and prepare a panel of locally available trainers. The simultaneous development of investment potential and improvement of the skill levels of the borrowers.
Capacity to provide backward linkages or create support structures for marketing. Lack of an appropriate legal vehicle. Creation of awareness among SHGs as many is unaware about benefits provided by the government.
DESIGN OF THE STUDYS 2.1 TITTE OF THE STUDY
Title of the project is “A study of financing Self Help Groups of Syndicate Bank under the concept of Micro finance in Bangalore region”. 2.2 STATEMENT OF THE PROBLEM This study is made to identify that, Microfinance (i.e. Loans for SHG) is an opportunity for micro finance at Syndicate bank in Bangalore region. It has been seen that micro finance is consider to be of less importance by many financial institutions moreover micro finance activity is considered to be as social responsibility, the purpose of this study is to find out the fact that micro finance is also a business opportunity for the financial institutions. This study also helps to understand the impact of micro finance (SHGs) on the social and economical empowerment of the rural poor people.
2.3 OBJECTIVES OF THE STUDY The objectives of the study are broadly classified as main objectives and sub objectives. The main objectives are as follows: a. To study whether micro finance (for self help group) is an opportunity for micro finance business of syndicate bank Bangalore region. b. To study Micro finance (for self help group) help bank (syndicate bank) to increase social base and deposit base. c. To study Micro finance (loans for self help group) help bank (syndicate bank) to diversify their portfolio.
THE SUB-OBJECTIVES ARE AS FOLLOWS:
1. To know the impact and role of SHGs in improving banking habit of the rural poor and their social empowerment. 2. To know whether SHGs has generated economic growth of the members and society as hole. 3. To know the repayment habit of the people has increased because of SHGs.
2.4 SCOPE OF THE STUDY: The study is conducted in order to know how the SHGs have improved banking habit of the rural poor people of the Bangalore region and also to know the contributions of the SHGs to social empowerment and rural development. This study is conducted under the banner of Syndicate Bank Regional Office, Bangalore. The study is conducted in the month of Jan-Feb 2009 in Bangalore district. The data are collected with the help of questionnaires from the SHGs and also Syndicate Bank Managers of various branches in Bangalore region.
METHODOLOGY OF THE STUDY: Primary sources of data: Primary data are collected with the help of questionnaires from the SHGs and also Syndicate Bank Managers of various branches in Bangalore region. Secondary sources of data: A secondary source consists of readily available compendia and already compiled statistical statements and reports whose data may be used by the researcher for their studies.
The study has been undertaken based on both the primary and secondary sources of data.
The major sources of secondary data are given below: The bank annual report of last three years The bank circulars regarding the micro finance The bank broachers. The various journals and articles Company website Other websites
2.7 SAMPLING PLAN A sample is a subset or some part of a population; it is a small representative lot of population selected at random. The process of selecting a sample from a large population is called sampling.
The variable determined for the study was identified keeping in mind the population of SHGs located in villages covered by the Syndicate Bank Regional office Bangalore. 2.8 SAMPLING UNIT
The SHGs linked with Syndicate bank directly or through NGOs in Bangalore region and also Managers of various Syndicate Bank branches which comes under Bangalore regional Office. SAMPLING METHOD For this project non-probability method of sampling is adopted. In non-probability sampling convenience method of sampling is adopted. The convenience method of sampling is the method where population is selected on the base of convenience of researcher. SAMPLE SIZE Sample size consist of 20 respondents of SHGs along with this 3 Syndicate bank branch managers of Bangalore region are also surveyed.
FIELD WORK The study was mainly concentrated on the field work and her face to face interaction was done with the SHGs and with bank branch managers with the help of questionnaire. DATA ANALYSIS The data are collected is analyzed with help of statistical tools and presented in the form of tables, percentages, bar charts and pie charts. This method is used to describe relationship.of various items 2.7 LIMITATIONS OF THE STUDY Despite of all possible efforts to make an analysis pure, comprehensive and scientific a study of the present kind is bound to have certain limitations. The present study was an empirical work presented in the deceptive manner. Since the objective of the study may be attained by this kind of analysis, attempt has been made to provide comprehensive conceptual analysis. The following are some of the important limitations of the study. 1. The time available was insufficient to carry on an exhaustive study but the researcher has done every effort to make this study exhaustive one. 2. The respondents for this study are the representatives of SHGs and these people of rural background and less educated and it very difficult to collect the relevant information
from these people because of lack of knowledge about the concept and communication gap. But the researcher has done every effort to convince these people and collect relevant information. 3. The researcher has gone for convenience method of sampling and because of various constraints he could not go for probability method of sampling. One of the main constraints is that, the responSdents are spread across the Bangalore region. If the researcher has gone for probability method of sampling it is very difficult to reach each and every respondent within the limited period of time. 4. The sample size selected is 10 Branch managers and 40 SHG‟s respondents only therefore it is very difficult to give accurate judgments on the basis of this limited sample.
3 . COMPANY PROFILE Syndicate Bank was established in 1925 in Udupi, the abode of Lord Krishna in coastal Karnataka with a capital of Rs.8000/- by three visionaries - Sri Upendra Ananth Pai, a businessman, Sri Vaman Kudva, an engineer and Dr. T M A Pai, a physician - who shared a strong commitment to social welfare. Their objective was primarily to extend financial assistance to the local weavers who were crippled by a crisis in the handloom industry through mobilizing small savings from the community. The bank collected as low as 2 annas daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit Scheme started in 1928. This scheme is the Bank's brand equity today and the Bank collects around Rs. 2 crores per day under the scheme. The progress of Syndicate Bank has been synonymous with the phase of progressive banking in India. Spanning over 80 years of pioneering expertise, the Bank has created for itself a solid customer base comprising customers of two or three generations. Being firmly rooted in rural India and understanding the grassroots realities, the Bank's perception had vision of future India. It has been propagating innovations in Banking and also has been receptive to new ideas, without however getting uprooted from its distinctive socio-economic and cultural ethos. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid rich dividends. The
Bank has been operating as a catalyst of development across the country with particular reference to the common man at the individual level and in rural/semi urban centers at the area level. The Bank is well equipped to meet the challenges of the 21st century in the areas of information technology, knowledge and competition. A comprehensive IT plan is being put in place and the skills and knowledge of the Bank's personnel are being upgraded through a variety of training program to promote customer delight in every sphere of its activity. The Bank has launched an ambitious technology plan called Centralized Banking Solution (CBS) whereby 500 of our strategic branches with their ATMs are being networked nationwide over a 4 year period.
3.1 Background and Inception of the Bank On November 10, 1925-Business of Bank commenced in a small room in Udupi with only one employee. 1928- First branch was opened at Brahmavara, a village 13kms away from Udupi. 1932-First urban branch was started in Bangalore which became the district head quarters. 1937- Bombay branch was started and became member of clearing house. 1943- Deposits crossed Rs. one crore. 1949- Celebrates silver jubilee in all its 79 branches spread all over South India. 1953- The Bank took over the assets and liabilities of two local banks, Maharastra Apex Bank Ltd and Southern India Apex Bank Ltd. 1957- Staff training college came into existence at head office. 1961- Industrial Financial Department was set up to encourage advances to small industrial and entrepreneurs in keeping with the policy of assisting the common man.
1962- An innovation in the field of female employment in banking industry was made by opening a series of „All Women‟s Branches‟.
1963 - The name of the Bank was shortened from „Canara Industrial and Banking Synd Ltd‟ to „Syndicate Bank Limited‟; the head office was shifted to Manipal.
1969- Syndicate bank was nationalized along with 13 other big banks. During same year, a branch at Port Blair in Andaman and Nicobar Island was opened.
1972- Conducted 28 self employment clinics in different centres to encourage self employment ventures.
1975- The Bank completed 50 years of its service, by then it had grown into a big bank in public sector with deposits exceeding Rs500 crore.
1975-First regional rural bank appropriately called „Prathama Bank‟ in Moradabad in Uttar Pradesh.
1976 - London branch was opened. 1982 - The first rural development and self employment training institution was set up in Ujire in collaboration with Shree Dharmasthala Manjunatheshwara Education Trust and Canara Bank.
1985 - The diamond jubilee was celebrated when the deposits mobilized were over Rs 4000 crore.
1987 - The in-house computer at head office was upgraded. 1989 - Credit card scheme was introduced. 1993 - It established connectivity of SWIFT (society of worldwide interbank finance telecommunication).
1995 - Specialized branches like Asset Recovery Management Branch, Hi-tech Agriculture Branch, Small Scale Industry Branch and Housing Finance Branches were opened.
1996 - First telebanking facility was introduced at south block branch, New Delhi and first ATM was installed at Gandhinagar, Bangalore.
1998 - Kissan credit card was launched. 2002 - Centralized Banking Solution under the brand name “Syndicate-e-banking” launched at Delhi, Mumbai, Bangalore and Manipal.
2002 - First branch under CBS (Core Banking Solution) started operation at Bangalore. 2004 - Bank ties up with United India Insurance Co. Ltd. for distribution of Non-Life Insurance products
2005 - Introduced On-line reservation of Railway Tickets through Indian Railway Catering & Tourism Corporation Ltd. (IRCTC) for Internet banking customers of our Bank.
2005 - Implementation of Venture Capital Scheme of SMALL FARMERS AGRIBUSINESS CONSORTIUM (SFAC) Entered into MOU with SFAC for promoting of investments in Agri-business products.
2006 - Inauguration of SyndBank Services Limited, the 1st BPO outfit of a Nationalized Bank, a wholly owned subsidiary of Syndicate Bank & 525th CBS Branch.
2007 - First Branch Opened in Mizoram in Aizawl. 2008 - Branch network expanded to all States and Union territories except Manipur and Daman Diu.
Nature of Business Carried
Syndicate Bank being a major public sector banks in India, is well known for its banking operations that is, it provides various services and products to the customers by means of ATM, Debit Card, Credit Card, Internet Banking as the services and Retail Credit Scheme, Personal
Banking Loan Scheme, Deposit Schemes at CBS Branches, and Term Deposit Schemes as its products. Other than the banking operation it also provides Foreign Business, Mercantile Banking, Insurance Banking, General Banking, and Social Baking to the various customers in India as well as in abroad.
Vision Statement of the Bank
A vision statement outlines what a company wants to be. Vision statement describes a desirable state that a company wishes to attain at some time in the future. Vision statement of Syndicate Bank is as follows Consolidating position as a Premier Public Bank with increased global outreach. Emerging as a strong, vibrant, responsive competitive bank. Embracing state of art technology, harnessing human potential and effective participating in the process of nation building. Serving its constituents and stakeholders as a faithful and friendly financial partner.
Mission Statement of the Bank
A mission statement is a brief statement of the purpose of an organization. The intention of a mission statement is to keep members and users aware of the organization's purpose. Mission statement of Syndicate Bank is as follows: To redefine and redevelop peoples management technique to unleash human potential and drive growth. To guarantee highest level of satisfaction to the customer who is the purpose, the stakeholders for their valued interest and the regulators, the shepherd. To develop leadership of high quality corporate governance via best and sound business practices, enhance the shareholders value and retain the competitive edge through innovation and world class standards of delivery of contemporary services and products. To rebuild a vibrant and proactive financial institution fully committed to national development.
Quality Policy of the Bank
Quality Policy is the general direction and goals of the organisation referring to quality being officially published by the management.The quality policy provided by the Bank is of great excellence. It provides services to the customers especially in the rural areas. Special services are provided to special category like Kisan Cash Certificate, Small Scale Industries, Small and Medium Enterprises, Agriculture and Allied activities, Senior Citizens of India, Social Development like Syndicate Rural Development Trust, Rural Development and Self Employment Training Institute, SyndVidya and Lead Bank Scheme are provided to the customers.
3.6 PRODUCT PROFILE
Syndicate Bank provides various deposit products, loans and advances and other services. The retailing banking business provides financial products and services to the customers. They provide housing, retail trade, automobile, consumer education and other personal loans and deposit services such as demand savings and fixed deposits for the customers. The Bank has also focused on addressing the needs of priority sector customers and offer specialized products and services to these sectors. The Bank delivers its products and services through its extensive branch network, extension counters, ATM‟s, phone banking and internet. Following are the various types of products and services provided by the Bank. 1) Deposit Products The following are the various types of deposit products offered by the Bank
Savings Bank Account: These accounts are designed to help the individuals (personal customers) to inculcate the habit of saving money and to meet their future requirement of money.
Current Accounts: Current Accounts can be opened by individuals, partnership firms, private and public limited companies, specified associates, societies, trusts, etc.
Syndicate Suvidha Deposit: A Fixed Deposit with partial withdrawal facility - A flexible and convenient scheme whereby a deposit is made for a fixed period from which amounts can be withdrawn as and when needed. It is ideally designed for those who desire the high interest on their fixed deposit with the operational convenience of withdrawals in times of need.
Social Security Deposit: It is an ideal monthly income plan. Nothing provides greater comfort and peace of mind than a guaranteed and regular income. This is particularly for the aged and the pensioners who desire a monthly income through periodical investment of their accumulated savings.
Special Premium Savings Account: The Bank has introduced a Special Premium Savings Account at e-banking branches that combines full safety, easy liquidity and highest possible interest. The salient features of this scheme are that customer‟s money earns solid interest as a fixed deposit; it turns liquid to meet his urgent needs.
Pigmy Deposits: This deposit scheme suits the needs of everyone viz. businessmen, professionals, wage earners, teachers, salaried personnel, traders, housewives etc. The Bank's authorized agent collects the savings at our doorsteps at regular intervals.
Quick Money Deposit: A fixed deposit with overdraft facility. Convenience at its best could well be the name of this scheme. A onetime fixed deposit of Rs.25,000/- or more for a specified period automatically entitles to an overdraft limit of 80% of the deposits.
Vikas Cash Certificate: It is a Money Multiplier scheme and also an ideal and fast growing scheme for those with big future commitments in mind viz., children's education, daughter's marriage, and house purchase etc.
Senior Citizens' Security Deposit: A highly beneficial value added scheme, specifically designed for the benefit of the respected Senior Citizens (above 60 years of age).
2) Personal Loan Product The Bank is meeting varied personal credit requirements of different classes of people through the following loan schemes under personal banking.
SyndMahila: This type of loan is given to women employees and self employed in order to meet any genuine personal credit needs.
Syndvahan Vehicle Loans: This type of loan is given to the individuals to purchase new/old 4-wheeler and new 2-wheeler by individuals.
Syndvyapar - Loans for Traders: This scheme helps to meet the credit limit of all types of traders.
SyndShakti: Artisan friendly scheme for extending need based credit for purchase of power tools and to provide credit for purchase of power toolkits and need-based working capital to the artisans, enabling them to upgrade the level of technology and improve their work efficiency.
SyndVidya: The Scheme covers the entire spectrum of educational needs from the school education to super speciality courses including overseas courses.
SyndNivas Plus: This is a pre approved personal loan for housing loan customers with good payment record in order to meet any genuine personal or business credit requirement.
Syndpigmy: Syndpigmy is used to meet any contingent requirement of pigmy depositors. SyndSenior: SyndSenior is an exclusive personal loan scheme for pensioners.
Tele–Banking: Round the clock access regarding account details, balance enquiries, transfer of funds can be made from one account to another and utility bills like electricity, telephone, etc., can also be paid.
Internet Banking: The Bank is accessible from home, office or while travelling. A login password and transaction password has to be obtained, with these passwords one can login and
a. View account transactions. b. Effect transfer of funds c. Place requests for issue of Cheque books.
Any Branch Banking: Banking is no longer restricted to the physical boundaries of branch premises. One can Get cash payment of cheque up to a limit in any other CBS Branches. Get collection of cheques. Purchase DDs, or get online transfer of funds. Synd Bill Pay: A hassle free utility payment product wherein utility bills can be paid directly by the Bank. The modes of payment are done by registering with the Bank all for no charges.
Online Collection of Direct Taxes: Bank collects Central Board Direct Taxes from the customer at the selected branches identified for this purpose.
Western Union Money Transfer: The Bank has signed MoU with M/s Kuoni Travel (India) Pvt. Ltd. Agent for M/s Western Union Network (Ireland) Ltd to make payments of Western Union Money Transfer remitted by NRIs from foreign countries.
Life Insurance: The Bank is in alliance with M/s. Bajaj Allianz for the distribution of Life Insurance products under a Corporate Agency arrangement since October 2003.
SyndSona: The Bank has launched sale of gold coins under the brand name SyndSona. The coins are in denominations of 4 Gms, 8 Gms, 10 Gms, 20 Gms and 50 Gms with 999.9 % purity certificate and are sold through designated branches.
General Insurance: The Bank has tied up with United India Insurance Company Limited under a Corporate Agency arrangement for distributing General Insurance products.
AREA OF OPERATION- GLOBAL/NATIONAL/REGIONAL
Syndicate Bank is a major public sector bank which serves over 21 million plus customers through 2169 branch comprising of 644 rural, 492 Semi urban, 508 urban and 524 metro branches, a branch at London and with a total staff strength of 26637. As at march 2008 the
Bank has branches in all states and Union Territories except the State of Manipur and the UT of Daman and Diu. The Bank is known for Mass Banking through its innovative schemes ranging in scope from small savings and social lending to corporate finance and foreign business. There are five Regional Rural Banks sponsored by the Syndicate Bank covering 30 districts in 5 States (Andhra Pradesh, Haryana, Karnataka, Kerala and Uttar Pradesh) with a network of 1244 branches. Some of the RRB‟s occupy top slot among all RRB‟s in the country in respect of key business parameters. Total business of all RRB‟s stood at Rs.19995 crores and registered a growth of 23.26% during the year.
3.7 OWNERSHIP PATTERN: The shareholding pattern of Syndicate Bank as on 31 -03 -2008 is as follows: Sl. No. A 1 Promoter‟s Holding Promoters Government of India Foreign Promoters 2 Persons acting in concert Sub Total B 3 A B Non-Promoter Holding Institutional Investors Mutual Funds and UTI 1969055 0.38 6.31 346968282 Nil Nil 346968282 66.47 66.47 Category Number shares held of Percentage shareholding of
Banks, Financial Institutions, Insurance Companies 32897360 (Central/ State Govt. Institution/ Non-government Institutions) FII‟s Sub Total
4 A B C D
Others Private Corporate Bodies Indian Public NRIs/OCBs Any others Sub Total Grand Total 9564030 65019939 750380 262930 75597279 521968282 1.83 12.46 0.14 0.05 14.48 100.00
For any industries there are number of competitors who themselves try to emerge with innovative products and services, to compete with other industries. They provide products and services in order to satisfy the customers, which are economy to their purchasing habits. Likewise Syndicate Bank is also having its competitors like all Public Sectors Banks in India, and Private Sectors Banks, Foreign Banks etc. The main competitors of Syndicate Bank are SBI and its Associates, Punjab National Bank, Canara Bank, Corporation Bank, Indian Overseas Bank etc. 3.9 INFRASTRUCTURAL FACILITIES
During the financial year 2007-08, 46 branches including one Asset recovery management branch at Kolkata were opened by the bank. Out of the above, 10 branches were opened in minority concentrated districts and 21 under banked districts.
Ambience and Visibility: Good ambience encompassing neat and tidy business premises, attractive and comfortable interiors coupled with proper visibility has been ensured in all branches and offices, since these factors substantially impact the business.
Furnishing and Site Preparation: Timely and appropriate furnishing of premises to open new branches and offices, refurnishing of branches cutting out to CBS and TBM, Site preparation for opening ATM‟s facilitated rapid expansion of core banking and computerization of branches, as planned.
Energy saved is energy produced: Recognizing the fact that the use of energy efficient luminaries like Compact Fluorescent Lamps saves electricity substantially, conventional light fittings have been replaced with CFLs in 100 identified branches. In all new branches, renovated branches and offices, only CFL fittings are used. This major step taken by bank will not only save much needed electricity, but also economise on power charges. Records Pool: With the Right to Information Act, the nature and volume of bank‟s records to be preserved for a longer period has become necessary.
3.10 ACHIEVEMENT / AWARDS WON BY THE BANK OVER THE YEARS
Following are the awards won by the Bank 1972 - INDIAN MERCHANTS' CHAMBER AWARD for outstanding contributions towards welfare of community. 1974-INDIAN MERCHANTS CHAMBER AWARD for outstanding contribution in promotion of savings. 1975 - FICCI AWARD For outstanding achievements in agriculture. 1975-LAGHU UDYOG SAHAKARI AWARD by the national alliance of young entrepreneurs for Bank's significant contributions to the development of small scale industries and assistance to the young entrepreneurs through self employment clinics. 1999 - FICCI AWARD for institutional initiative in the field of "Rural Development" to RUDSETI jointly sponsored by Syndicate Bank. 2001 - Banking Technology Award for innovative use of Banking Applications on INFINET awarded by IDRBT, Hyderabad. 2003 - Banking Technology Award conferred on Syndicate Bank by IDRBT, Hyderabad. 1975 - INTERNATIONAL AWARD by JAYCEE INTERNATIONAL for self employment. 1975 - FICCI AWARD in recognition of corporate initiative in industrial relations. 1975 - CERTIFICATE OF MERIT for Bank's house journal "GIANT". 1976 - INTERNATIONAL AWARD by JAYCEE international for outstanding contribution to the cause of the JAYCEE movement. 1977 - ASSOCHAM AWARD for promotion of rural and agricultural activities of Syndicate Agriculture Foundation sponsored by the Bank. 1978 - INDIAN MERCHANTS CHAMBER AWARD for outstanding contribution towards welfare of the community. 1978 - NATIONAL TROPHY For outstanding export performance . 1981 - NATIONAL INVESTMENT AND FINANCE AWARD for Priority Sector lending.
2006 - Institute for Development and Research in Banking Technology (IDRBT), established by Reserve Bank of India has conferred Syndicate Bank, “Special Award for Use of IT for Customer Service in Semi-Urban and Rural Areas”. The award was given to Shri C P Swarnkar, Chairman & Managing Director, Syndicate Bank by Dr Y.V. Reddy, Honourable Governor, Reserve Bank of India on Sept. 02, 2006 at Hyderabad.
2008 -Won the Asian Banker Award for best core banking solution implementation among the large-sized banks in the Asia-Pacific region.
WORK FLOW MODEL OF SYNDICATE BANK
This is the work flow adopted by the Bank at the time of receiving the deposits from their customer.
Customer approaching the bank/ Enquiry Introduction
Saving, Fixed, current & Recurring A/C A/C Holder facilities Deposits
Withdrawal Cashier Cash supervisor Account of the customer
Cashier Cash supervisor Account of the customer
The following explains the detailed procedure adopted by the Bank at the time of receiving the deposits from their customers. The Bank has gone through the following steps while receiving deposits from their customers.
The first step in this process is customer approaching the bank. When the customers will have surplus money with them, they will be looking to invest that money in some place where they can get good returns out of it. Bank is one such place which accepts deposits from their customers and pays interest on them. So the customers will be looking for that bank which will pay them highest rate of interest on their deposits. Once the customer identifies the bank where he is going to deposit his amount, he has to go through the introduction stage, were the customer needs to be introduced to the bank. He may be introduced to the Bank by the customer or an employee of this Bank. The customer is asked for providing documents like Ration card or any license for address, age & income proof. Once the account is opened (i.e. Either S.B a/c, fixed deposits, recurring deposits or current a/c) he/she will provide with facilities like Cheque book, ATM or O.D if it‟s a current a/c. Once the customer opens an account in the Bank he can deposit any amount any number of times but in case of fixed deposit its one lump sum amount deposited till its maturity it is not withdrawn. When amount is deposited it goes to the hands of cashier and then to cash supervisor and then to his account, but now due to CBS in a minute we give to cashier and it is transferred to customers a/c. The depositors are eligible to withdraw the amount which is credited in their account and not more than that unless it is current account. Depositors can withdraw as an when they need but in case of fixed deposits prior 7 days notice to be given but today‟s banker will not ask for any notice just give it in the spot with penalty. The process of withdrawal is reverse of depositing where from his account it goes to cash supervisor from him to cashier finally to the hands of customer, again traditional work flow. Now all are computerized where in one person does all the activity. Automated Teller Machines have emerged as an alternative banking channel which facilitates low cost banking transaction. Now Banks customers need not go to the bank branches but can withdraw money through the
of ATM cards provided by the Bank to their customers. Customer can directly withdraw in ATMs or can directly issue Cheque to the other party. Advances This is the work flow model followed by the Bank at the time of giving advances to their customers. This involves the following series of steps, they are:
Interface with the Manager Know Your Customer Evaluation of project Sanction of Loan Documentation Transfer to S/B account
Interface with Manager Any party requiring funds through Bank first has to talk with the respective manager of a branch of his area. One thing the manager has to see that the amount of loan he has to sanction is in his power/ limit or else he has to concern his higher authority. In this stage the process of negotiation regarding rate of interest between party and Banker takes place.
Know Your Customer The important duty of a manager is to know his customer. There are many systematically techniques and process to know the real identification of the customers. This is done mainly to avoid anti-laundering.
Evaluation of Project The purpose of loan to be sanctioned should be clearly understood either by evaluating blue print of his project or balance sheet or performance proof of his existing business. This is mainly done to make sure that repayment of the amount is ensured and party won‟t become Bankrupt. In case of personal loan evaluation of the person is done through other person who is known to the Banker. Sanctioning Sanctioning is not actual giving of loan that is the amount to be paid is promised .The party in need of it is capable of withdrawing the amount not more than the amount sanctioned to him. Documentation The documentation deals with filling of forms that are in contractual form and most of the documentation process could be seen in all the stage. It also deals with submission of security for their loan and its formalities. Transfer to his Account The party which is borrowing loan from Bank need to have an account in that Bank, if not the Banker will create an account for this purpose. And most of time the loan amount is transferred to his account and rarely they give it in their hand, either in their hand, either in the form of DD, Cheque or cash it depends upon the Banker and the party .
STRUCTURE The bank has a well organized three tier structure with a sound foundation of 2113 business outlets and a well defined reporting architecture as the body to support. The corporate governance which is the breath sustaining the momentum is through a very talented board of directors including government appointed directors employee and office representative directors guided by RBI, Ministry of Finance, Government of India which forms the superstructure. In the organization structure at the top is the board of directors, consists of 11 directors and they are, The Present Board of Directors
Mr. George Joseph Mr. Ramesh Adige Mr. M Deena Dayalan Mr. K Seetharamu Mr. Vinay Kumar Sorake Mr. M Bhaskara Rao Mr. A R Nagappan Mr. Bhupinder Singh Suri Mr. Kawaljit Singh Oberoi Ms. Shobha Oza Mr. Dinkar S Punja Mr. Suresh Kumar Rustagi
Chairman & Managing Director Director Director Director Director Director Director Director Director Director Director Director
The organization structure is based on standard function of the management. The syndicate bank consists of a very talented board of directors, including government appointed directors, employees and officer‟s representative, directors guided by RBI, ministry of finance, and government of India which forms the superstructure.
3.13 Organizational Structure of Syndicate Bank
Board of Directors
Chairman and Managing Director
General Managers Portfolios 1. Corporate Credit Division – I (CCD-I) 2. Corporate Credit Division – II (CCD-II) 3. Retail Banking Department 4. Planning & Development Dept 5. Recoveries Dept & General Admn Unit 6. Dept. of Information Technology 7. Risk Management & Monitoring Dept. 8. Treasury & International Banking Division 9. Priority Sector Credit Dept 10. Premises & Maintenance Dept 11. Central Accounts & Legal Dept 12. Personnel Department 13. Inspection Department 14. Vigilance Department
Regional Offices- 35
4. DATA ANALYSIS
RESPONSES FROM SHG REPRESENTATIVES
1. it is required that the members of the SHG should be literate for smooth work flow as
well as proper documentation. TABLE 4.1 4.1 Table Showing Literacy Level Of SHG Members
Valid Percent 87.5
Cumulative Percent 87.5
Graph showing literacy level of SHG members:
From the above table it is clear that 87.5% of members of SHG‟s are literates whereas only 12.5% of the members are illiterates which shows that majority of customers are well educated.
2. SHGs is formed by the members who may be from different occupations hence this study
also helps us to know about the homogeneity of the groups TABLE 4.2 4.2 Table Showing Occupation Of Members
Valid Percent 37.5
Cumulative Percent 37.5
25 Non-Homogenous 40
4.2 Graph Showing Occupation Of Members
Occupation of the members
30 25 20 15 10 5 0 Homogenous Non Homogenous Occupation of the members
In Bangalore region it is found that most of the groups are non homogeneous in nature i.e. 62.5% and remaining 37.5% are homogeneous members.
3. The main motive behind formation of SHG is to motivate SMEs hence this study helps us to know how far the objective is applicable in present scenario.
If Homogenous have you any new business from the borrowed money
TABLE 4.3 4.3 Table Showing Self Employed Undertaken Due To Homogeneity:
Valid Yes No Total
Frequency 24 16 40
Percent 60.0 40.0 100.0
Valid Percent 60.0 40.0 100.0
Cumulative Percent 60.0 40.0 100.0
4.3 Graph showing self employed undertaken due to homogeneity:
It is inferred that most of the homogeneous groups utilize the credits for investing in SMEs. It is clear that 60% of the total respondent utilizes credit funds for the SMEs and remaining 40% members utilize fund for other purpose.
4. Most of the SHGs exist in the rural areas hence their occupation is related to primary sector especially agricultural related occupation
Table showing occupation of the members:
Valid Agriculture Self Employed Home maker others specify Total
Frequency 7 20 7 6 40
Percent 17.5 50.0 17.5 15.0 100.0
Valid Percent 17.5 50.0 17.5 15.0 100.0
Cumulative Percent 17.5 50.0 17.5 15.0 100.0
Graph showing occupation of the members:
It is inferred
that most of the respondents in Bangalore region dependent on self occupation, 17.5%
employment that is 50%, 17.5% respondents engaged in agricultural
respondents are home makers and the remaining 15% respondents engaged in other than this occupations.
5. Every member has some motive behind joining SHGs. This question shows the prime
motive of the members before joining SHG in Bangalore region.
4.5 Table Showing Prime Motive Of Members Behind Joining SHG
Valid For obtaining credit To improve saving habit For achieving economic self reliance To form social bond
Frequency 9 5 12 14 40
Percent 22.5 12.5 30.0 35.0 100.0
Valid Percent 22.5 12.5 30.0 35.0 100.0
Cumulative Percent 22.5 12.5 30.0.0 35..0 100.0
4.5 Graph Showing Prime Motive Of Members Behind Joining Shg
It is clear that 22.5% of the respondents joined SHGs to enjoy credit facility, the next 12.5%respondents joined SHG to improve saving habit, 30% of the respondents joined SHG for achieving economic self reliance and remaining 35% respondents joined SHG to form social bond.
6. SHGs have been graded on the basis of its age i.e. how old the group is and on that basis
the bank extend credit facility.
4.6 Table showing age of the group: Valid Less than 1 -year 1 to 3 years More than 3-years Total Frequency 0 0 40 40 Percent 0 0 100.0 100.0 Valid Percent 0 0 100.0 100.0 Cumulative Percent 0 0 100.0 100.0
TABLE 4.6 4.6 Graph Showing Age Of The Group
50 40 30 20 10 0 less than 1 year 1 to 3 year more that 3 years
Age of the group In this survey it has been found that all the groups aged more than 3 years. From this it can be inferred that from 2006 the formation of new group has come down drastically particularly in Bangalore region.
7. The SHG will conduct their meeting as decided by the members according to their
convenience. In the meeting they will decide about their activity and they collect the sayings money from each member and they verify their books of accounts. The meetings are conducted weekly or fortnightly or monthly according to their convenience and the groups which conduct weekly meetings are graded well by the banks.
TABLE 4.7 4.7 Table Showing Frequency Of Group Meeting:-
Fortnightly 1 monthly 2 40 5.0 100.0 5.0 100.0 5.0 100.0 2.5 2.5 2.5
Graph Showing Frequency Of Group Meeting:-
In Bangalore region 92.5% of the respondents replied that their groups conduct meetings once in a week, 2.5% of the groups conduct meetings fortnightly and the remaining 5% of them conduct once in a month. The groups which conduct the meeting once in a week are treated as more active groups.
The attendance of the group members indicates how active the group is and the group is
treated as active group when all members of the group are more than 85% of attendance in meetings. TABLE 4.8
Table Showing Attendance In The Meeting
Less than 60% Between 60% to 85% Above Total 85%
0 0 40 40
0 0 100.0 100.0
0 0 100.0 100.0
0 0 100.0 100.0
Graph Showing Attendance In The Meeting
Attendence in meeting
45 40 35 30 25 20 15 10 5 0 Less than 60% 60% to 85% Above 85%
In Bangalore region it is found that in all most all the groups more than 85% of attendance is found. Therefore it can be said that the SHG‟s of Bangalore region are active groups.
9. The group which follows democratic style of functioning can lead to social empowerment
because in a group all the members will get an equal opportunity for participation as well as decision making
TABLE 4.9 4.9 Table Showing Style Of Functioning & Group Discussion
Valid Democratic & Transparent Autocratic Total
Frequency 40 0 40
Percent 100.0 0 100
Valid Percent 100.0 0 100
Cumulative Percent 100.0 0 100.0
Graph showing style of functioning & group discussion:
Style of functioning
45 40 35 30 25 20 15 10 5 0 Democratic Autocratic
It is one of the interesting findings that all the groups in Bangalore region which are surveyed are following the democratic style of functioning and it will help in achieving the objectives of the SHGs and social empowerment. Therefore it can be said that these SHGs help full in empowering women in the society.
In olden days the rural poor who did not have any banking knowledge are hesitated to go
to banks because of lack of knowledge. But now because of SHG every member of the SHG has got the knowledge about the bank and now they are getting better response from the banks. Showing the change in the response of bank towards the SHG member‟s than as an individuals.
4.10 Table Showing Change In The Response From The Bank As A Member Of Shg Than As An Individual:
Valid Yes NO Total
Frequency 40 0 40
Percent 100.0 0 100.0
Valid Percent 100.0 0 100.0
Cumulative Percent 100.0 0 100.0
4.10 Graph showing change in the response from the bank as a member of shg than as an individual:
Change in response of banker towards members
45 40 35 30 25 20 15 10 5 0 Yes No
Among the total respondents it is found that 100% of the respondents agree that they get better response from the banker as a group than as an individual.
11. Ths is question will help us to know how often the bank managers will visit the SHG‟s and
attain their meetings and about the role of the bank in the development of the SHG‟s. Showing the frequency of Bank managers attending SHG‟s meeting.
4.11 Table Showinh Frequency Of Bank Managers Attending SHG’s Meeting
Valid monthly never Total
Valid Percent 30.0
Cumulative Percent 30.0
4.11 Graph Showing Frequency Of Bank Managers Attending SHG’s Meeting
From the survey it has been found that 30% of the respondents are of the opinion that bank managers attain their meeting once in a month and the remaining 70% of the respondents say that bank managers never attain their meeting, ctly.
12. One of the objectives of SHG is empowerment of the rural poor especially the rural women
for that it has to generate and develop decision making and leadership quality of the rural poor. This study helps to find whether every member in a group gets an opportunity to become a leader or representative of that group. Showing the leadership opportunity in the group TABLE 4.12
Table showing opportunity for becoming a leader in the group:
4.12 Graph showing opportunity for becoming a leader in the group:
Leadership opportunities in a group
45 40 35 30 25 20 15 10 5 0 Yes No
In this survey it is found that in every group each person gets an equal opportunity to become the leader of the group, which helps the members of the group to develop their leadership as well as decision making qualities. It is also found that the time gap between the changes of group leader is from 1 to 2 years.
4.13 This question is to know whether the member of the SHG‟s have undergone any training program conducted by banks or NGO‟s or any other government organizations.
4.13 Table Showing Training Program For The Members
4.13 Graph showing training program for the members:
From this survey it has been inferred that all the respondents of Bangalore region have attained some or the other training program, among which most were conducted by NGO‟s.
RESPONSES FRSOM BANK MANAGERS OF SYNDICATE BANK, BANGALORE REGION. Training Program for SHG’s: As for smooth running of the SHG and proper documentation, certain skills and knowledge of book keeping is essential for the group members, hence certain training needs to be provided to the SHG members. They should also be trained for making effective utilization of their funds and should be encouraged for forming SME‟s. Hence this questionnaire helps to know how far the bank is engaged in providing training to the SHG members. TABLE 4.14 4.14 Training program conducted for SHG's Cumulative Percent 30.0 70.0 100.0
Valid Yes No Total
Frequency 3 7 10
Percent 30.0 70.0 100.0
Valid Percent 30.0 70.0 100.0
From this survey it has been inferred that in Bangalore region only 30% of branches of Syndicate Bank provides various trainings to the SHG‟s and the remaining 70% of the branches do not provide any trainings. The reason behind this is most of the SHG‟s are related to bank through NGO‟s and hence those groups are been trained by the SHG. Percentage of default rate by SHG’s:
Earlier it was considered very risky to provide loans for rural people as the credit required by them was of smaller size hence bank has to incur high transaction cost as well as the default rate was higher. But now the scenario has been changed, this study helps us to find the default risk of loans given by Syndicate bank in Bangalore region.
TABLE 4.15 4.15 Percentage of default of SHG loans
Valid 00 to 0.5
Valid Percent 100.0
Cumulative Percent 100.0
From this survey it has been inferred that 100% of the respondents in Bangalore region are of the opinion that the default risk in lending to SHG is from 0 to 0.5% only. This low default rate helps banker to provide liberal credit policies to the SHG‟s.
. Probability that members of SHG‟s have opened saving bank a/c in their individual name:
One of the objectives of SHG is to generate savings. This study helps to find out whether the increase in the savings of the SHG members has lead to increase in the SB accounts in the banks which leads to increase in the deposit base of the banks.
TABLE 4.16 4.16 Probability that members of SHG‟s have opened SB a/c in their individual a/c Cumulative Percent 60.0 40.0 100.0
Valid Yes NO Total
Frequency 6 4 10
Percent 60.0 40.0 100.0
Valid Percent 60.0 40.0 100.0
Probability that members of SHG’s have opened SB a/c in their individual a/c
From the above survey it has been inferred that 60% of the SHG members opens the SB accounts in the banks, which leads to increase in the deposit base of the banks
.Banks motivation to SHG's to utilize fund for productive purpose:
The main purpose behind lending loans to SHG is to use it for productive activities. Hence this study helps to know the level of motivation provided by Syndicate bank for productive usage in Bangalore region. TABLE 4.17
4.17 Banks motivation to SHG's to utilize fund for productive purpose Cumulative Percent 100.0
Valid Percent 100.0
From the survey it has been found that 100% of the respondents motivate the SHG to utilize the funds for productive purpose.
Interpretation from secondary data.
Particulars Existing SHG's linked New SHG's linked Total SHG's linked
2006-07 63112 24304 87416
2007-08 87416 28180 115596
120000 100000 80000 60000 40000 20000 0 2006-07 2007-08 87416 63112 24304 New SHG's linked Existining SHG's linked 28180
The above figure shows the growth of SHG linked to Syndicate bank Bangalore region. The SHG linked to bank shows a growth rate of 32% in the year 2007-08. It seems to be a favourable figure as it leads to increase in the social and deposit base of the bank.
Particulars Existing SHG's Cr linked
2006-07 in crores 2007-08 in crores 322.103 496
New SHG's Cr linked Total
900 800 700 600 500 400 300 200 100 0 1 2 3 4 322.103 174.37 496 316 New SHG's Cr linked Existing SHG's Cr linked Particulars
The above figure shows the growth of SHG credit linked to Syndicate bank Bangalore region. The SHG credit linked to bank shows the approximate growth rate of 70% in the year 2007-08. It indicates that the banking habit of the rural poor in this area is increasing tremendously, which is a good opportunity for the growth of the bank.
1. SUMMARY OF FINDINGS Various findings of this study are as follows: from the above table it is clear that 87.5% of members of SHG‟s are literates whereas only 12.5% of the members are illiterates which shows that majority of customers are well educated. Only 37.5% of the SHG‟s members in Bangalore region are homogeneous in nature and the remaining 62.5% are non-homogeneous in nature. As a result it is found that a very small portion of credit i.e.22.5 %( 60%of 37.5% homogeneous) is utilized for SME‟s. The main motivators of the SHG in Bangalore region are NGO‟s; especially two NGO‟s are playing a vital role: Women and Child development department and Shri Kshetra Dharmastala Rural Development Program (SKDRDP). The prime motive of the members in Bangalore region to join SHG‟s is to form social bond i.e.35% and to achieve economic self reliance i.e.30% of the total respondents. It is found that all the respondent groups are formed before 2006, from this it can be inferred that before 2006 the SHG movement in Bangalore region was very strong but from the year 2006 onwards the formation of new SHG‟s has come down. Therefore proper measure has to be taken to motivate the SHG formulation. In Bangalore region 92.5% of the SHG‟s conduct their meeting once in a week and every member save a certain predetermined amount. This shows how the SHG‟s has generated saving habits in the minds of rural poor.
The groups are following democratic type of functioning and each and every member of the group has an equal opportunity for decision making and becoming a leader. sAlmost all the SHG members in Bangalore region have the opinion that they are getting better responses from the banks as a member than as an individual. Almost all the branch managers of Syndicate bank Bangalore region has the opinion that the banking habit of the members has been improved than that from the individuals. Almost all the branch managers of Syndicate bank Bangalore region have the opinion that the formulation of the SHG has increased the deposit base of the bank.
From this survey it has been found that the formulation of SHG has been drastically come down. It is necessary for Syndicate bank, Bangalore region to create awareness among rural people about. From this survey it has been found that only 70% of the bank managers don‟t attain the SHG meeting. By attaining the group meeting the bank managers get access to the difficulties faced by the group and also the other opportunities by lending to the group. From this survey it has been found that the formation of SHG leads to improvement in the banking habit of the people in that region. At this movement banks should motivate and educate people to improve saving habit by opening different accounts with bank. The bank should provide liberal policies for credit lending to SHG as the default rate is negligible. The lending rates to the SHG should be increased (From 9% to 12%) and the bank should. The bank should change their view about micro finance (loans for SHG) from a social responsibility to a business opportunity and this can be done by increasing a lending rate. The Syndicate bank Bangalore region should try to increase its credit base and use the refinance facility provided by the NABARD.
The Bank is well equipped to face the competition from the foreign banks as well as the private sector banks. The Bank has implemented the Core Banking Solution in most of its branches. The Bank has set up apex training institute in Manipal for training for its employees. The Bank has been offering innovative products to its customers and also it has set up separate branches to offer services in the field of housing Finance and small and medium enterprises. The Bank has been continuously expanding its branches throughout the India. The technological advancement made by the Bank is aimed at providing banking service to all the sections of the society besides using it as a management tool.
References: Bank Quest, vol-75, Oct-Dec 04. (the journal of Indian Institute of Banking & Finance) Annual Reports of Syndicate Bank, for the years 2006-07, 2007-08. N.S. Toor, “Handbook of Banking Information”, 25th edition, Jun-2007, Skylack publications, Delhi. Page no. 3.6. G C Beri, Marketing Research, 2007
Websites http://www.syndicatebank.in http://www.wekipedia.com. http://en.wikipedia.org/wiki/micro_finance http://www.rbi.org.in/scripts/Publications.aspx http://www.nabard.org/nabardrolefunct/nabardrole&functions.asp http://cgdif.nic.in/shg.htm# http://megselfhelp.gov.in/default.htm http//www.microfinance.in/presentation/sou.ppt