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A Project Report On Summer Training Undertaken at Credit Structure of Jaipur Central Co-operative Bank Submitted in the partial fulfillment

for the Award of degree of Master of Business Administration

Session: 2011-13 Submitted by: Santosh Kumari MBA sem III Submitted to: Mrs.Kaneenika Jain SSISTNT PROFESSOR



The main motive behind this project is to provide the knowledge about MICROFINANCE. In this report I tried to depict the subtle and major aspects of Microfinance in India with respect to current scenario. Sources of collection of information are Internet, Books, journals and Magazines. I have taken assistance from teachers and faculty of SIMCS. This report has been written in a very fair, simple and lucid language.


I am extremely please to express my gratitude to Mr. V. K. Varma (Managing Director,JCCB, head office Vaishali Nagar, Jaipur) for allowing me to undertake summer training as such estimate organization.

The satisfaction and euphoria that accompanied the successful completion of any task would be incomplete without the mention of the people who made it possible, whose constant guidance and encouragement crowned out effort with success. I take this opportunity to express our deep sense of gratitude and respect to our teacher Mrs. Kaneenika Jain Faculty Member for the valuable guidance for providing us with essential facilities for completing and presenting this project. I am greatly indebted to their help, which has been of immense value and has played a major role in bringing this to a successful completion. I would like to thank our family and friends for their constant support and encouragement throughout our project.

Santosh Kumari

Executive Summary

To study the Microfinance in India, microfinance as banking perspective. Understand the concept of Micro finance, need and importation of it. And study the Co-operative Banks their function, major roles and SHGs works. Threw JCCB mainly Customer satisfaction, customer expectation, perception etc




Page No.


Introduction to the Industry

An analysis of Micro finance Activity in Micro finance Micro finance in India 6-13 14 17-19


Introduction: The Jaipur Central Cooperative Bank

Goal, Mission, Value, Strategy Organization structure Branches Credit structure by Bank Bank special schemes 20-24 25 26 29 30-31 32-36 37-38 39-51 52-53 54

3. 4. 5. 6. 7.

SHGs Research Methodology Finding & Analysis SWOT Conclusion

8. 9.

Recommendations Biblography

55 56

An analysis of Micro finance


Chapter 1: Introduction
Microfinance is defined as any activity that includes the provision of financial services such as credit, savings, and insurance to low income individuals which fall just above the nationally defined poverty line, and poor individuals which fall below that poverty line, with the goal of creating social value. The creation of social value includes poverty alleviation and the broader impact of improving livelihood opportunities through the provision of capital for micro enterprise, and insurance and savings for risk mitigation and consumption smoothing. A large variety of actors provide microfinance in India, using a range of microfinance delivery methods. Since the ICICI Bank in India, Grameen banks various actors have endeavored to provide access to financial services to the poor in creative ways. Governments also have piloted national programs, NGOs have undertaken the activity of raising donor funds for on-lending, and some banks have partnered with public organizations or made small inroads themselves in providing such services. This has resulted in a rather broad definition of microfinance as any activity that targets poor and low-income individuals for the provision of financial services. The range of activities undertaken in microfinance include group lending, individual lending, the provision of savings and insurance, capacity building, and agricultural business development services. Whatever the form of activity however, the overarching goal that unifies all actors in the provision of microfinance is the creation of social value.

Microfinance Definition
According to International Labor Organization (ILO), Microfinance is an economic development approach that involves providing financial services through institutions to low income clients. In India, Microfinance has been defined by The National Microfinance Taskforce, 1999 as provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards. "The poor stay poor, not because they are lazy but because they have no access to capital." The dictionary meaning of finance is management of money. The management of money denotes acquiring & using money. Micro Finance is buzzing word, used when financing for micro entrepreneurs. Concept of micro finance is emerged in need of meeting special goal to empower under-privileged class of society, women, and poor, downtrodden by natural reasons or men made; caste, creed, religion or otherwise. The principles of Micro Finance are founded on the philosophy of cooperation and its central values of equality, equity and mutual self-help. At the heart of these principles are the concept of human development and the brotherhood of man expressed through people working together to achieve a better life for themselves and their children. Traditionally micro finance was focused on providing a very standardized credit product. The poor, just like anyone else, (in fact need like thirst) need a diverse range of financial instruments to be able to build assets, stabilize consumption and protect themselves against risks. Thus, we see a broadening of the concept of micro finance--- our current challenge is to find efficient and reliable ways of providing a richer menu of micro finance products. Micro Finance is not merely extending credit, but extending credit to those who require most for their and familys survival. It cannot be measured in term of quantity, but due weightage to quality measurement. How credit availed is used to survive and grow with limited means.

Who are the clients of micro finance?

The typical micro finance clients are low-income persons that do not have access to formal financial institutions. Micro finance clients are typically self-employed, often household-based entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as food processing and petty trade. In urban areas, micro finance activities are more diverse and include shopkeepers, service providers, artisans, street vendors, etc. Micro finance clients are poor and vulnerable non-poor who have a relatively unstable source of income.

Access to conventional formal financial institutions, for many reasons, is inversely related to income: the poorer you are, the less likely that you have access. On the other hand, the chances are that, the poorer you are, the more expensive or onerous informal financial arrangements. Moreover, informal arrangements may not suitably meet certain financial service needs or may exclude you anyway. Individuals in this excluded and under-served market segment are the clients of micro finance.

As we broaden the notion of the types of services micro finance encompasses, the potential market of micro finance clients also expands. It depends on local conditions and political climate, activeness of cooperatives, SHG & NGOs and support mechanism. For instance, micro credit might have a far more limited market scope than say a more diversified range of financial services, which includes various types of savings products, payment and remittance services, and various insurance products. For example, many very poor farmers may not really wish to borrow, but rather, would like a safer place to save the proceeds from their harvest as these are consumed over several months by the requirements of daily living. Central government in India has established a strong & extensive link between NABARD (National Bank for Agriculture & Rural Development), State Cooperative Bank, District Cooperative Banks, Primary Agriculture & Marketing Societies at national, state, district and village level.

The Need in India

India is said to be the home of one third of the worlds poor; official estimates range from 26 to 50 percent of the more than one billion population.

About 87 percent of the poorest households do not have access to credit. The demand for microcredit has been estimated at up to $30 billion; the supply is less than $2.2 billion combined by all involved in the sector.

Due to the sheer size of the population living in poverty, India is strategically significant in the global efforts to alleviate poverty and to achieve the Millennium Development Goal of halving the worlds poverty by 2015. Microfinance has been present in India in one form or anoth er since the 1970s and is now widely accepted as an effective poverty alleviation strategy. Over the last five years, the microfinance industry has achieved significant growth in part due to the participation of commercial banks. Despite this growth, the poverty situation in India continues to be challenging. Some principles that summarize a century and a half of development practice were encapsulated in 2004 by Consultative Group to Assist the Poor (CGAP) and endorsed by the Group of Eight leaders at the G8 Summit on June 10, 2004: Poor people need not just loans but also savings, insurance and money transfer services. Microfinance must be useful to poor households: helping them raise income, build up assets and/or cushion themselves against external shocks. Microfinance can pay for itself. Subsidies from donors and government are scarce and uncertain, and so to reach large numbers of poor people, microfinance must pay for itself. Microfinance means building permanent local institutions. Microfinance also means integrating the financial needs of poor people into a countrys mainstream financial system. The job of government is to enable financial services, not to provide them. Donor funds should complement private capital, not compete with it. The key bottleneck is the shortage of strong institutions and managers. Donors should focus on capacity building.


Interest rate ceilings hurt poor people by preventing microfinance institutions from covering their costs, which chokes off the supply of credit. Microfinance institutions should measure and disclose their performance both financially and socially.

Financial needs and Financial services

In developing economies and particularly in the rural areas, many activities that would be classified in the developed world as financial are not monetized: that is, money is not used to carry them out. Almost by definition, poor people have very little money. But circumstances often arise in their lives in which they need money or the things money can buy. In Stuart Rutherfords recent book The Poor and Their Money, he cites several types of needs:

Lifecycle Needs: such as weddings, funerals, childbirth, education, homebuilding, widowhood, old age.

Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or death.

Disasters: such as fires, floods, cyclones and man-made events like war or bulldozing of dwellings.

Investment Opportunities: expanding a business, buying land or equipment, improving housing, securing a job (which often requires paying a large bribe), etc.

Poor people find creative and often collaborative ways to meet these needs, primarily through creating and exchanging different forms of non-cash value. Common substitutes for cash vary from country to country but typically include livestock, grains, jewellery and precious metals.


As Marguerite Robinson describes in The Microfinance Revolution, the 1980s demonstrated that microfinance could provide large-scale outreach profitably, and in the 1990s, microfinance began to develop as an industry. In the 2000s, the microfinance industrys objective is to satisfy the unmet demand on a much larger scale, and to play a role in reducing poverty. While much progress has been made in developing a viable, commercial microfinance sector in the last few decades, several issues remain that need to be addressed before the industry will be able to satisfy massive worldwide demand. The obstacles or challenges to building a sound commercial microfinance industry include: Inappropriate donor subsidies Poor regulation and supervision of deposit-taking MFIs Few MFIs that mobilize savings Limited management capacity in MFIs Institutional inefficiencies Need for more dissemination and adoption of rural, agricultural microfinance methodologies

Role of Microfinance:
The micro credit of microfinance progamme was first initiated in the year 1976 in Bangladesh with promise of providing credit to the poor without collateral , alleviating poverty and unleashing human creativity and endeavor of the poor people. Microfinance impact studies have demonstrated that Microfinance helps poor households meet basic needs and protects them against risks. The use of financial services by low-income households leads to improvements in household economic welfare and enterprise stability and growth. By supporting womens economic participation, microfinance empowers women, thereby promoting gender-equity and improving household well being. The level of impact relates to the length of time clients have had access to financial services.


The Origin of Microfinance

Although neither of the terms microcredit or microfinance were used in the academic literature nor by development aid practitioners before the 1980s or 1990s, respectively, the concept of providing financial services to low income people is much older. While the emergence of informal financial institutions in Nigeria dates back to the 15 th century, they were first established in Europe during the 18th century as a response to the enormous increase in poverty since the end of the extended European wars (1618 1648). In 1720 the first loan fund targeting poor people was founded in Ireland by the author Jonathan Swift. After a special law was passed in 1823, which allowed charity institutions to become formal financial intermediaries a loan fund board was established in 1836 and a big boom was initiated. Their outreach peaked just before the government introduced a cap on interest rates in 1843. At this time, they provided financial services to almost 20% of Irish households. The credit cooperatives created in Germany in 1847 by Friedrich Wilhelm Raiffeisen served 1.4 million people by 1910. He stated that the main objectives of these cooperatives should be to control the use made of money for economic improvements, and to improve the moral and physical values of people and also, their will to act by themselves. In the 1880s the British controlled government of Madras in South India, tried to use the German experience to address poverty which resulted in more than nine million poor Indians belonging to credit cooperatives by 1946. During this same time the Dutch colonial administrators constructed a cooperative rural banking system in Indonesia based on the Raiffeisen model which eventually became Bank Rakyat Indonesia (BRI), now known as the largest MFI in the world.


Microfinance Today
In the 1970s a paradigm shift started to take place. The failure of subsidized government or donor driven institutions to meet the demand for financial services in developing countries let to several new approaches. Some of the most prominent ones are presented below. Bank Dagan Bali (BDB) was established in September 1970 to serve low income people in Indonesia without any subsidies and is now well -known as the earliest bank to institute commercial microfinance. While this is not true with regard to the achievements made in Europe during the 19th century, it still can be seen as a turning point with an ever increasing impact on the view of politicians and development aid practitioners throughout the world. In 1973 ACCION International, a United States of America (USA) based non governmental organization (NGO) disbursed its first loan in Brazil and in 1974 Professor Muhammad Yunus started what later became known as the Grameen Bank by lending a total of $27 to 42 people in Bangladesh. One year later the Self-Employed Womens Association started to provide loans of about $1.5 to poor women in India. Although the latter examples still were subsidized projects, they used a more business oriented approach and showed the world that poor people can be good credit risks with repayment rates exceeding 95%, even if the interest rate charged is higher than that of traditional banks. Another milestone was the transformation of BRI starting in 1984. Once a loss making institution channeling government subsidized credits to inhabitants of rural Indonesia it is now the largest MFI in the world, being profitable even during the Asian financial crisis of 1997 1998.

In February 1997 more than 2,900 policymakers, microfinance practitioners and representatives of various educational institutions and donor agencies from 137 different countries gathered in Washington D.C. for the first Micro Credit Summit. This was the start of a nine year long campaign to reach 100 million of the world poorest households with credit for self employment by 2005. According to the Microcredit Summit Campaign Report 67,606,080 clients have been reached through 2527 MFIs by the end of 2002, with 41,594,778 of them being amongst the poorest before they took their first loan. Since the campaign started the average annual growth rate in reaching clients has been almost 40 percent. If it has continued at that speed more than 100 million people will have access to microcredit by now and by the end of 2005 the goal of the microcredit summit campaign would be reached. As the president of the World Bank James Wolfensohn has pointed out, providing financial services to 100 million of the poorest households means helping as many as 500 600 million poor people.


Activities in Microfinance

Microcredit: It is a small amount of money loaned to a client by a bank or other institution.

Microcredit can be offered, often without collateral, to an individual or through group lending.

Micro savings: These are deposit services that allow one to save small amounts of money
for future use. Often without minimum balance requirements, these savings accounts allow households to save in order to meet unexpected expenses and plan for future expenses.

Micro insurance: It is a system by which people, businesses and other organizations make
a payment to share risk. Access to insurance enables entrepreneurs to concentrate more on developing their businesses while mitigating other risks affecting property, health or the ability to work.

Remittances: These are transfer of funds from people in one place to people in another,
usually across borders to family and friends. Compared with other sources of capital that can fluctuate depending on the political or economic climate, remittances are a relatively steady source of funds.




Microfinance in India
At present lending to the economically active poor both rural and urban is pegged at around Rs 7000 crores in the Indian banks credit outstanding. As against this, according to even the most conservative estimates, the total demand for credit requirements for this part of Indian society is somewhere around Rs 2,00,000 crores.

Microfinance changing the face of poor India

Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro-Finance scene is dominated by Self Help Groups (SHGs) - Banks linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the 'unreached poor'. In the Indian context terms like "small and marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly define micro-finance customers. Research across the globe has shown that, over time, microfinance clients increase their income and assets, increase the number of years of schooling their children receive, and improve the health and nutrition of their families. A more refined model of micro-credit delivery has evolved lately, which emphasizes the combined delivery of financial services along with technical assistance, and agricultural business development services. When compared to the wider SHG bank linkage movement in India, private MFIs have had limited outreach. However, we have seen a recent trend of larger microfinance institutions transforming into Non-Bank Financial Institutions (NBFCs). This changing face of microfinance in India appears to be positive in terms of the ability of microfinance to attract more funds and therefore increase outreach. In terms of demand for micro-credit or micro-finance, there are three segments, which demand funds. They are:

At the very bottom in terms of income and assets, are those who are landless and engaged in agricultural work on a seasonal basis, and manual labourers in forestry, mining, household industries, construction and transport. This segment requires, first and foremost, consumption credit during those months when they do not get labour work, and for contingencies such as illness. They also need credit for

acquiring small productive assets, such as livestock, using which they can generate additional income.

The next market segment is small and marginal farmers and rural artisans, weavers and those self-employed in the urban informal sector as hawkers, vendors, and workers in household micro-enterprises. This segment mainly needs credit for working capital, a small part of which also serves consumption needs. This segment also needs term credit for acquiring additional productive assets, such as irrigation pumpsets, borewells and livestock in case of farmers, and equipment (looms, machinery) and worksheds in case of non-farm workers.

The third market segment is of small and medium farmers who have gone in for commercial crops such as surplus paddy and wheat, cotton, groundnut, and others engaged in dairying, poultry, fishery, etc. Among non-farm activities, this segment includes those in villages and slums, engaged in processing or manufacturing activity, running provision stores, repair workshops, tea shops, and various service enterprises. These persons are not always poor, though they live barely above the poverty line and also suffer from inadequate access to formal credit.

Well these are the people who require money and with Microfinance it is possible. Right now the problem is that, it is SHGs' which are doing this and efforts should be made so that the big financial institutions also turn up and start supplying funds to these people. This will lead to a better India and will definitely fulfill the dream of our late Prime Minister, Mrs. Indira Gandhi, i.e. Poverty. One of the statement is really appropriate here, which is as: Money, says the proverb makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little.Adams Smith. Today India is facing major problem in reducing poverty. About 25 million people in India are under below poverty line. With low per capita income, heavy population pressure, prevalence of massive unemployment and underemployment , low rate of capital formation , misdistribution of wealth and assets , prevalence of low technology and poor economics organization and instability of output of agriculture production and related sectors have made India one of the poor countries of the world.

Present Scenario of India:

India falls under low income class according to World Bank. It is second populated country in the world and around 70 % of its population lives in rural area. 60% of people depend on agriculture, as a result there is chronic underemployment and per capita income is only $ 3262. This is not enough to provide food to more than one individual . The obvious result is abject poverty , low rate of education, low sex ratio, exploitation. The major factor account for high incidence of rural poverty is the low asset base. According to Reserve Bank of India, about 51 % of people house possess only 10% of the total asset of India .This has resulted low production capacity both in agriculture (which contribute around 22-25% of GDP ) and Manufacturing sector. Rural people have very low access to institutionalized credit( from commercial bank).

Poverty alleviation programmes and concepualisation of Microfinance:

There has been continuous efforts of planners of India in addressing the poverty . They Have come up with development programmes like Integrated Rural Development progamme (IRDP), National Rural Employment Programme (NREP) , Rural Labour Employment Guarantee Programme (RLEGP) etc. But these progamme have not been able to create massive impact in poverty alleviation. The production oriented approach of planning without altering the mode of production could not but result of the gains of development by owners of instrument of production. The mode of production does remain same as the owner of the instrument have low access to credit which is the major factor of production. Thus in Nineties National bank for agriculture and rural development(NABARD) launches pilot projects of Microfinance to bridge the gap between demand and supply of funds in the lower rungs of rural economy. Microfinance . the buzzing word of this decade was meant to cure the illness of rural economy. With this concept of Self Reliance, Self Sufficiency and Self Help gained momentum. The Indian microfinance is dominated by Self Help Groups (SHGs) and their linkage to Banks. Deprived of the basic banking facilities, the rural and semi urban Indian masses are still relying on informal financing intermediaries like money lenders, family members, friends etc.

2). The Jaipur Central Coprative Bank Ltd. Jaipur

A Brief History -: The Jaipur central cooperative bank ltd. Jaipur. The bank was established in the year 1951 on 26th of June and the registration no. of the bank is 547. Working area of the Bank consist of Jaipur district. Bank has 20 branches and 2 extension counters, which Are also in Jaipur district. In the working area of bank, there are total 279 primary Agriculture cooperative societies(PACS). NABARD is the apex institution for RRBs it gives guidance as well as control various functions of RRBs like JCCBL.

Following are the main services offered by The Jaipur central cooperative bank ltd. Jaipur :
Attractive Saving / Deposit Schemes. PGB Mitra Scheme (No Frill Accounts) Easy Loans Facilities. Krishi Card Scheme for Farmers & Credit facilities for various Agricultural Operations. Loan Facilities for Housing, Conveyance, Artisians, SMEs, SSI & Education. Swarozgar Credit Card Scheme. General Credit Card Scheme. Network of 153 branches in Punjab. Banking Services at door steps.

At The Jaipur central cooperative bank ltd. Jaipur our goal is simple we want to see poor people, especially the poorest and those living in harder to reach areas, have access to microfinance and technology and as a result of access to these services, move themselves out of poverty. We envision a world where the poor have broken the generational chain of poverty and lead lives of respect, dignity and opportunity.

The Jaipur central cooperative bank ltd. Jaipur had a network of 20 branches in Jaipur. It provide products and services that: 1) reach deeper into poor communities with microfinance and technology services; 2) provide access to microfinance and technology services among the poor and poorest in harder to reach areas

Our Mission
The Jaipur central cooperative bank ltd. Jaipur mission is to offer the best services to customers, to help in rural development and to uplift the weaker sector.

Our Values
In all our work, we embrace and draw inspiration from our rich Grameen Bank Heritage. Our core values are:

We seek to empower the worlds poor. We hold ourselves accountable for transparency and measurable results, including social and financial performance.

We first seek to form partnerships with those who can advance our mission before acting alone;

We respect, invest in and promote local social entrepreneurs and local ownership; and, We honor the voice, professionalism and integrity of our staff and volunteers.

Our Strategy
The Jaipur central cooperative bank ltd. Jaipur is a sponsored bank of The Jaipur central
cooperative bank ltd. Jaipur. Its total management is under The Jaipur central cooperative bank ltd. Jaipur, As per the strategic visioning of bank, the bank is working on aggressive growth plans as

per its vision , goals and objectives. The bank has been delivering reasonably good operational and financial performance over the last few years, despite some of the most challenging market conditions in the financial and credit markets for some time.

Membership of the bank is classified in these three categories:

1).Members of category A:
i) State Government ii) Apex bank For these the share capital is Rs. 10000.

2). Members of category B

i. ii. Primary agriculture Credit Society(PACS) Other Cooperative Socities

For these the share capital is Rs. 1000.

3). Members of category C

Autonomous body, Public Corporations and the other registered instiutions and Individuals.


The source for the capital of the bank is as follows: 1. Entrance Free 2. Share Capital 3. Deposits 4. Loan 5. Subsidies 6. Reserve and other funds 7. Loan debentures

Share Capital Bank:

The total authorized share capital of the bank should not exceed 15.00 cores.

Annual General Board Meeting:

According to the act and rules, it is necessary to call an Annual General Board Meeting every year. 1/5 part of the total members excluding the nominal members or 50 members whichever is more will make the corm.

Bord of Directors:
Board shall consist of 11 elected members, 4 nominated members by Govt. There sre total 15 board members. The no of members elected from Primary Agriculture Credit Society(PACS) is 9.


1. Loans to cooperative societies and person should be provided according to rules of Apex Cooperative Bank. 2. Facilities of overdraft loans and cash credit limit can be provided to PACS and the nominal members of category C under the rules describe by the Board of Directors, but it should according to the rules describe by the Bank/Apex bank. 3. Loan to permanent employees as decided by executive committee after approval from the register. 4. The time period of the loans provided by the bank would be provided to time by Reserve Bank of India/NABARD/ Apex Bank and Cooperative department, but in any condition it should not exceeds 15 years.

Profit Distribution:
The financial year of bank starts from 1st April to 1st March. According to Act and rules the profit should be distributed as under: 1. Minimum 25% in reserve fund: 2. Minimum 1% in education 3. Minimum 10% in dividend

Reserve Fund:
It will be undivided fund, no matter will have share in this.


The Jaipur Central Co-operative Bank Ltd. Jaipur Organization Structure General Body Board Chairman Managing Director Executive Officer
Additional AEO

Additional AEO

Chief Manager

Senior Manager

(Vigilance )e)

Manager (T.M.E.)

Manager (Internal Audit)

Manager (Planning & Development)

Manager (Account & Statistics)

Manager (Inspection & Supervision)


The Jaipur Central Co-operative Bank Ltd. Jaipur

Branches 1. Bassi 2. Chomu 3. Phagi 4. Kishangarh Renewal 5. Pavta 6. Smbhar 7. Shahpura 8. Chaksu 9. Kothputli 10. Dudu 11. Jamvaramgarh 12. Virat nagar 13. Kishanpole Bazar 14. Chandple, Nai Anaz Mandi 15. Chaura Rasta 16. Jhotwara 17. Sanganer 18. Bagru 19. Vaishali Nagar 20. Govindgarh 21. Jalsu 22. Kotkhawda 23. Tunga


The Jaipur Central Co-operative Bank Ltd.Jaipur

Reserve Bank of India


The Rajasthan State Cooperative Bank

Jaipur Central Co-operative Bank-29

Primary Agriculture Cooperative Socities


Here is how the hierarchy runs in JCCB From Top to Bottom


General Managers/ Regional Managers

Senior Manager (scale 3)

Branch manager (scale 2)

Scale 1 manager






The Jaipur Central Co-operative Bank Ltd. Jaipur Credit Facilities Provided the Bank
Indian economy is largely dependent on agriculture. Since majority of our population about their livelihood on agriculture. Cooperative bank plays a bite roles in agriculture economy. Such bank is focal point of finance which provides credit facility in rural area. At beginning the main object of cooperative bank is to provide short term loan to the Member of primary agricultural societies for seasonal agriculture Operation(S.A.O.) like facility to purchase fertilizer, seeds, pesticides etc. such type of loan repaid while crop comes in the market. Today about 75 to 80% agriculture(S.A.O.) is provided by through cooperative banks. It was felt that only(S.A.O.) loan does not fulfill the demand of rural economy.Cooperative bank borrow loan from NABARD through Apex Bank and lends to the primary agriculture cooperative societies. Only society provide direct loan to its members. It has been realized that agricultural alone cannot sustain the pressure of growing Population. Therefore as complementary activities like tiny, cottage and small scale Industries in rural area have to be provide stimulus. So that income level of rural families can be enhanced.

Besides Cooperative Banks were traditionally lending for agriculture. Banks know have to keep pace with the changing scenario and diversify their resources for non-farm activities. This will also help bank in build up their turnover, diffuse risk and enhance profitability. For this purpose under the section 25 of NABARD Act 1981, cooperative bank were allowed in non-farm sector advances directly and through member of cooperative society. Initially bylaws of cooperative banks did not allow direct advances to the borrower. Registrar of cooperative societies made amendment in cooperative act and allow to cooperative bank to amend their bylaws and allow direct membership.

Such members are known as nominal members. Nominal members do not have voting Fight. It is in interest of the bank that after becoming nominal member bank can apply Various sections of Rajasthan Cooperative Societies Acr 2003.


Krishi Card Scheme for Farmers & Credit facilities for various Agricultural Operations grant loans of up to Rs one lakh to farmers under the new Krishi Card scheme, depending on their land holdings. The interest charged will be only 13.26 per cent, calculated on the basis of prime lending rate and interest tax. the farmers can use the card to avail the loan facility from any of the branches of the bank in the district. Under the scheme, the farmers are not required to submit any bills. ``They can utilise the card to meet their agricultural input costs and domestic requirements such as education, consumer items and medical expenses. The Krishi Card valid for three years, would be issued only to literate farmer with a minimum land holding of 2.5 acres.

Swarojgar Credit Card Scheme SCC Scheme aims at providing adequate and timely credit ie. working capital or block capital or both to small artisans, handloom weavers, service sector personnel, fishermen, self employed persons, rickshaw owners, other micro-entrepreneures, SHGs, etc., from the banking system in a flexible, hassle free and cost effective manner.

Borrowers in urban areas can also be covered under SCC Scheme. Small business covered under priority sector is also eligible under SCC Scheme.

Any scheme/project that is income generating/ employment generating may be covered under the scheme. The facility may also include a reasonable component for consumption needs.


Farm sector activities like fisheries, dairy, etc., can also be covered under the scheme. Generally such of the self-employment activities which have regular turn-over/income stream on short-interval basis can be covered under SCC scheme.

KISAN MITRA SCHEME With the objective of financial inclusion of the common masses,the Trust has introduce KISAN MITRA Scheme at FTC Sacha Khera (dec.2006). Each of the four Kisan Mitra has been allotted 10 villages for helping the farmers in formation of kisan clubs, Self Help Groups and motivating them to undertake vermi compost units, orchard farming, attending training, opening of accounts in the bank, etc. Each Kisan Mitra visits the allotted villages for extension work and financial inclusion. So far, they have brought 41 villages under 100% financial inclusion.


FTCs provide the above mentioned facilities to all farmers of the neighbouring districts, irrespective of the fact that whether they have taken any loan from any financial institution or not or whether they are customers of PNB or any other bank or not. As on 31st March 2007, PNB's FTCs conducted 3,272 programmes and provided training to more than 87,000 persons. Besides, on location training is provided to more than 28,000 persons through 862 programmes. Besides, these FTCs arrange for (i) animal health check up camps; (ii) human health check up camps and (iii) farmers' visits to agri fairs/colleges, etc.

VILLAGE ADOPTION SCHEME Each FTC has adopted one village for developing it as a model village at a cost of Rs 5 lakh. The activities like establishment of village library (including color TV, book shelf, SFF items, etc.), water coolers and other electrical items for Government schools, adult literacy centre, solar lights, homeopathic clinics, sports materials, etc., have been undertaken under this Village Adoption Programme. The Trust has decided to start training, in collaboration with State Institute of Rural Development (SIRD), Assam for the economic empowerment of rural youth & women in North Eastern States.


Chapter 3: Self Help Groups (SHGs)

Self- help groups (SHGs) play today a major role in poverty alleviation in rural India. A growing number of poor people (mostly women) in various parts of India are members of SHGs and actively engage in savings and credit (S/C), as well as in other activities (income generation, natural resources management, literacy, child care and nutrition, etc.). The S/C focus in the SHG is the most prominent element and offers a chance to create some control over capital, albeit in very small amounts. The SHG system has proven to be very relevant and effective in offering women the possibility to break gradually away from exploitation and isolation.

3.1 How self-help groups work

NABARD (1997) defines SHGs as "small, economically homogenous affinity groups of rural poor, voluntarily formed to save and mutually contribute to a common fund to be lent to its members as per the group members' decision". Most SHGs in India have 10 to 25 members, who can be either only men, or only women, or only youth, or a mix of these. As women's SHGs or sangha have been promoted by a wide range of government and non- governmental agencies, they now make up 90% of all SHGs. The rules and regulations of SHGs vary according to the preferences of the members and those facilitating their formation. A common characteristic of the groups is that they meet regularly (typically once per week or once per fortnight) to collect the savings from members, decide to which member to give a loan, discuss joint activities (such as training, running of a communal business, etc.), and to mitigate any conflicts that might arise. Most SHGs have an elected chairperson, a deputy, a treasurer, and sometimes other office holders. Most SHGs start without any external financial capital by saving regular contributions by the members. These contributions can be very small (e.g. 10 Rs per week). After a period of consistent savings (e.g. 6 months to one year) the SHGs start to give loans from savings in the form of small internal loans for micro enterprise activities and consumption. Only those SHGs that have utilized their own funds well are assisted with external funds through linkages with banks and other financial intermediaries. However, it is generally accepted that SHGs often do not include the poorest of the poor, for reasons such as:


(a) Social factors (the poorest are often those who are socially marginalized because of caste affiliation and those who are most skeptical of the potential benefits of collective action). (b) Economic factors (the poorest often do not have the financial resources to contribute to the savings and pay membership fees; they are often the ones who migrate during the lean season, thus making group membership difficult). (c) Intrinsic biases of the implementing organizations (as the poorest of the poor are the most difficult to reach and motivate, implementing agencies tend to leave them out, preferring to focus on the next wealth category).

3.2 Sources of capital and links between SHGs and Banks

SHGs can only fulfill a role in the rural economy if group members have access to financial capital and markets for their products and services. While the groups initially generate their own savings through thrift (whereby thrift implies savings created by postponing almost necessary consumption, while savings imply the existence of surplus wealth), their aim is often to link up with financial institutions in order to obtain further loans for investments in rural enterprises. NGOs and banks are giving loans to SHGs either as "matching loans" (whereas the loan amount is proportionate to the group's savings) or as fixed amounts, depending on the group's record of repayment, recommendations by group facilitators, collaterals provided, etc.

3.3 How SHGs save

Self-help groups mobilize savings from their members, and may then on-lend these funds to one another, usually at apparently high rates of interest which reflect the members understanding of the high returns they can earn on the small sums invested in their microenterprises, and the even higher cost of funds from money lenders. If they do not wish to use the money, they may deposit it in a bank. If the members need for funds exceeds the groups accumulated savings, they may borrow from a bank or other organization, such as a microfinance non-government organization, to augment their own fund. The system is very flexible. The group aggregates the small individual saving and borrowing requirements of its members, and the bank needs only to maintain one account for the group as a single entity. The banker must assess the competence and integrity of the group as a microbank, but once he has done this he need not concern himself with the individual loans made by the group to its members, or the uses to which these loans are put. He can treat the group as a single customer, whose total business and transactions are probably similar in amount to the

average for his normal customers, because they represent the combined banking business of some twenty micro-customers. Any bank branch can have a small or a large number of such accounts, without having to change its methods of operation. Unlike many customers, demand from SHGs is not price-sensitive. Illiterate village women are sometimes better bankers than some with more professional qualifications. They know that rapid access to funds is more important than their cost, and they also know, even though they might not be able to calculate the figures, that the typical micro-enterprise earns well over 500% return on the small sum invested in it (Harper, M, 1997, p. 15). The groups thus charge themselves high rates of interest; they are happy to take advantage of the generous spread that the NABARD subsidized bank lending rate of 12% allows them, but they are also willing to borrow from NGO/MFIs which on-lend funds from SIDBI at 15%, or from new generation institutions such as Basix Finance at 18.5% or 21%.

SHGs-Bank Linkage Model

NABARD is presently operating three models of linkage of banks with SHGs and NGOs:

WHAT IS SHG BANK LINKAGE PROGRAMME? The Self-Help Group-Bank Linkage Programme (SBLP), which started as a pilot programme in 1992 has developed with rapid strides over the years. SHG-Bank Linkage Programme was started on the basis of recommendation of S K Kalia Committee.

MODELS OF SHG-BANK LINKAGE PROGRAMME SHG MODEL The strategy involved in this model is that of forming small, cohesive and participative groups of the poor, encouraging them to pool their savings regularly and using the pooled savings to

make small interest bearing loans to members and, in the process, learning the nuances of financial discipline. Subsequently, bank credit also becomes available to the group to augment its resources for the purpose of lending to its members. The SHG-bank linkage program has proved to be the major supplementary credit delivery system with a wide acceptance by banks, NGOs and various government departments. There are three models of SHG-bank linkages that have evolved over time, especially in India.


Bank Linkage



In this model, banks themselves take up the work of forming and nurturing the groups, opening their savings accounts and providing them bank loans. Up to March 2006, 20% of the total number of SHGs financed were from this category. This showed an increase of 61.63 per cent in bank loan to SHGs over the position as on March 05, reflecting an increased role of banks in promoting and nurturing SHGs.





Promotions Training & Credit Support




This model continues to have the major share, with 74 % of the total number of SHGs financed up to 31 March 2006 falling under this category. Here, NGOs and formal agencies in the field of microfinance act only as facilitators. They facilitate organizing, forming and nurturing of groups, and train them in thrift and credit management. Banks give loans directly to these SHGs.



SHG Members

In the model iii, banks take sole responsibility for promoting, developing, and financing SHGs. This programme requires considerable effort by the banking staff towards SHG formation. This model is not an encouraging one and only 8% of SHGs follow this model.



TYPE OF RESEARCH The research is descriptive in nature DESCRIPTIVE RESEARCH:
Descriptive research includes surveys and fact-finding enquiries of different kinds. The major. purpose of descriptive research is description of the state of affairs as it exists at present. In this project : A systematic research is done with the series of the following steps:Step 1. Knowing how SHG and SHG bank linkage are formed and role of bank with the the help of existing literature. Step 2. Getting information about how bank approach to the SHG and how SHG bank linkage functions with help of project guide. Step 3 Collecting feedback through questionnaire and unstructured interview of various SHG members. Step 4 Analysis how this linkage improves the standard of living of poor section of society.

1.SAMPLING PROCEDURE:- The type of sampling is convenient sampling and
judgmental sampling. I have chosen the sampling area according to the convience for getting more accuracy and feasibility in the information. Which is vital for survey.

2. SAMPLING AREA :- Out of 22 branches we have selected 8 branches, according to

the zones.

3. SAMPLE SIZE:- I have surveyed 120 members, i.e.30% of the total size, to maintain the
feasibility. 38


Research Methodology

Secondary Research

Primary Research


Face to Face Interview With Employees of the Bank

Bank Documents

Bank Face to Face Interview

Literature and books

With SHG members

Questionnaire filling by


SHG members


5). Finding and Analysis

1. Occupation
Salaried person 8%

Self Employed 16%

Business Enterprise 42%

Agriculture sector 34%

As per my survey I found that the majority of customer of JCCB are salaried person or Belongs to agriculture sector and it was also found that people who are self employed are not much friendly with bank yet.



3.5 3 2.5 2 1.5 1 0.5 0 less than 10000 10000-20000 20000-35000 35000 & above Column1

The above graph depicts that the maximum number of customers of JCCB are applying for the credit facilities whose level of income is above Rs.3500 or between 20-35 thousand. The income aspect is being considered by the Bank in order to find out the repaying capacity of the borrower or the customer. And the Bank considers the repaying capacity upto 25% of customers income.


3.What features a customer is expecting from the Bank ?

Less Documentati on 15%

Proper Information 10%

Quick service 50%

Vriety of Schemes 25%

As per the findings of the survey the most attracting attribute for a customer from a Bank is the requirement of less documentation for the purpose of loan with proper information. As it shows in the above pie chart that 50% of the customer are interested In less documentation and 25% of the customers feels that adequate information is an effective attribute.

4). What type of account the customers are operating with JCCB?

Any loan Account 10% FD/RD Account 20% Current Account 40%

Saving Account 30%


As per the findings of survey maximum number of customer are operating saving and current account and 20% of customers are operating FD/RD account and 10% of the customers are operating any of the account as above.


5). Customers remark on JCCB

Average 10%

Poor 0%

Excellent 20%

Good 70%

According to the customer they found JCCB satisfactory up to the level of their expectation


6).Which type of credit facility you prefer to have from JCCB?

Investment Credit 15%

Cash Credit Limit 25%

Kishan Credit Card 30%

Term Loan 30%

As per the survey 30% of customers who has preferred for term are the salaried persons who find paying monthly installment easy and comfortable. 25% of the customers who are businessman and professionals feels cash credit limit as a better source of finance. 30% of the customers are attracted towards Kissan Credit Card and Investment Credit as they belongs to agricultural sector of they have their own Business Enterprise.

7). According to you which schemes of JCCB attracts you the most?

self Help Group 15%

Mortagage lan 20%

Housing Loan 40%

Personal laon 25%

As per the survey 65% of the customers have taken personal loan and then housing loan, 35% of the customers have taken mortagage loan and self help group loan.


8). Which attribute attracts the customer while taking a loan from JCCB ?

less documentation 15%

Lower service charges 5%

Lower Interest rate 45% Less processing time 35%

As per survey, more than 50% of the customers are focused on lower interest rates offered to them and less documentation requirements. But for the remaining 20% customers less processing time and lower services charges is the attribute of attracting for them while taking a loan.


9). What should be the time period for repaying the above loan you preferred ?

Above 15 yrs 25%

5 yrs 15% 5-10 yrs 10%

10-15 yrs 50%

As per the findings, 50% of the customers are comfortable to repay the loan between 10-15 yrs and the 25% of customers feels that the loan repayment period should be more than 15 yrs. But the people who takes loans are comfortable to repay the loan within 5 yrs, as per conditions offered by the bank to them.


10). Which new credit services you are expecting from JCCB ?

Credit card 10% Vechicle Loan 30%

Industrial Loan 20%

Education Loan 40%

40% of the customers expects that JCCB should provide education loan to the customers as an extra benefit for them as a new credit facility, where 30% of the customers feels that it provide vehicle loan to the customers. 20% of the customers desired to have industrial loan credit facility from JCCB as a new aspect. Remaining 10% customers requires credit card facility.

11). Are you having an Agricultural land ?

NO 50%

YES 50%

The above pie chart depicts that the half of the majority customers of JCCB belongs to Agriculture sector and remaining half belongs to various others sectors.


12). Does JCCB fulfill your Agricultural requirement ?

No 15%

Yes 85%

The customers who belongs to agricultural sector have answered this question and 85% of them is satisfied with the schemes and services provided by the bank related to which the agriculture needs of customers are very much fulfilled. And 15% of the customers still want a improvement in JCCB schemes and credit facilities related to agriculture.


13). Which is the best agricultural loan scheme of JCCB according to you ?

Joint liability groups 1% MT loan(dairy, tractor) 35%

Kishan mitar yojana 41%

kishan samridhi yojana 23%

The customers of JCCB who have the agricultural land are taking the above loans accordingly as per their requirements in future.


SWOT Analysis:

SWOT stands for Strength, Weakness, Opportunity, and Threat.

Helped in reducing the poverty: The main aim of Micro Finance is to provide the loan to the individuals who are below the poverty line and cannot able to access from the commercial banks. As we know that Indian, more than 350 million people in India are below the poverty and for them the Micro Finance is more than the life. By providing small loans to this people Micro finance helps in reducing the poverty. Huge networking available: For MFIs and for borrower, both the huge network is there. In India there are many more than 350 million who are below the poverty line, so for MFIs there is a huge demand and network of people. And for borrower there are many small and medium size MFIs are available in even remote areas.

Not properly regulated: In India the Rules and Regulation of Micro Finance Institutions are not regulated properly. In the absent of the rules and regulation there would be high case of credit risk and defaults. In the shed of the proper rules and regulation the Micro finance can function properly and efficiently. High number of people access to informal sources: According to the World Bank report 80% of the Indian poor cant access to formal source and therefore they depend on the informal sources for their borrowing and that informal charges 40 to 120% p.a.


Huge demand and supply gap: There is a huge demand and supply gap among the borrowers and issuers. In India around 350 million of the people are poor and only few MFIs there to serving them. There is huge opportunity for the MFIs to serve the poor people and increase their living standard. The annual demand of Micro loans is nearly Rs 60,000 crore and only 5456 crore are disbursed to the borrower.( April 11)

Employment Opportunity: Micro Finance helps the poor people by not only providing them with loan but also helps them in their business; educate them and their children etc. Opportunity for Pvt. Banks: Many Pvt. Banks are shying away from to serve the people are unable to access big loans, because of the high intervention of the Govt. but the door open for the Pvt. Players to get entry and with flexible rules Pvt. Banks are attracting towards this segment.

High Competition: This is a serious threat for the Micro Finance industry, because as the more players will come in the market, their competition will rise , and we know that the MFIs has the high transaction cost and after entrant of the new players there transaction cost will rise further, so this would be serious threat. Neophyte Industry: Basically Micro Finance is not a new concept in India, but that was all by informal sources. But the formal source of finance through Micro Finance is novice, and the rules are also not properly placed for it. Over involvement of Govt.: This is the biggest that threat that many MFIs are facing. Because the excess of anything is injurious, so in the same way the excess involvement of Govt. is a serious threat for the MFIs



The customers of JCCB are satisfied with the bank and its services. As per the survey it was found that the majority of customer of JCCB are salaried person of belongs to agricultural sector and it was also found that people who are self employed are not much friendly with the bank yet. The customers of JCCB are satisfied with the rate interest offered by the Bank. The JCCB is dealing wiath both Micro and Macro finance aspect. Most of the customers are salaried of from the agricultural sector. The JCCB is playing a major role in financing the Self Help Groups(SHGs). The most important attribute which is attracting the customers is micro financing at lower interest rate while other factors are less processing time, and effective service, less documentation etc. Some of the customer feels that JCCB should develop more beneficial for the agricultural sector.


8). Recommendations and suggestions

Under mention are the few recommendations and suggestions, which I felt during my project on JCCB being a reputed organization still had certain area where improvement or change would be beneficial for the Bank for its credit structure.

Bank should provide attracting schemes for the self employed person too.

Bank should also provide credit facility for educational, vehicle, and industrial Loans as a new credit facility.

Bank should provide variety of schemes and quick service facility to make their credit structure more attractive.

As customers who are in need of loan or credit, mostly take loan from the commercial Bank and still majority of people are not very much aware about the functioning of Cooperative banks and there schemes of credit and loans for general public.


9). Bibliography

RSCB website:- JCCB Annual report Technical Brochres of JCCB htt:/ http:/ http:/ Yunus, Muhammad. Creating a World Without Poverty: Social Business and the Future of Capitalism. Public Affairs, New York, 2008. Vikram Akula, Business Basics at the Base of the Pyramid, Harvard Business Review, June, 2008