A PROJECT REPORT ON

“A STUDY ON FUND AND CREDIT MANAGEMENT

AT KAVERI GRAMEENA BANK”
A dissertation report submitted to Bangalore University in partial fulfilment of the
requirements for the award of the Degree of

MASTER OF COMMERCE
AT
BANGALORE UNIVERSITY

Submitted By
Thejeswini .V.G
Reg. No. 17BTCOM043

Under the guidance of

Reshma B.

Professor
P.G. Department of Commerce and Management

SESHADRIPURAM COLLEGE
Post Graduate Department of Commerce and Management
#27 Nagappa Street, Seshadripuram Bengaluru-
560020
2018-19
 CERTIFICATE OF ORIGINALITY

This is to certify that the project titled “A STUDY ON FUND AND CREDIT
MANAGEMENT OF KAVERI GRAMEENA BANK” is an original work of Ms.
Thejeswini .V.G bearing University Register Number 17BTCOM043 and is being
submitted in partial fulfilment for the award of the Master of Commerce Degree at
Bangalore University. The report has not been submitted earlier either to this
University/ Institution for the fulfilment of the requirement of a course of study.

Signature of Director Signature of Principal

Dr. Bhargavi V.R. Dr. Anuradha Roy

 GUIDE CERITIFICATE

This is to certify that Ms. Thejeswini .V.G. bearing university register number
17BTCOM043 has completed this project titled “A STUDY ON FUND AND
CREDIT MANAGEMNT AT KAVERI GRAMEENA BANK” under my
guidance. This project is based on the original study conducted by her and the report
has not formed a basis of awarding any other Degree/ Diploma/ Certificate by this
University or any other University.

Place: Bengaluru SIGNATURE OF GUIDE

DATE:
 STUDENT DECLARATION

I hereby declare that “A STUDY ON FUND AND CREDIT MANAGEMENT AT

KAVERI GRAMEENA BANK” is the result of the project work carried out by me
under the guidance of Reshma B. in partial fulfilment for the award of Master of
Commerce Degree by Bangalore University.
I also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or Institute for the award of any other degree or
Diploma or Certificate.

Place: Bengaluru Name: Thejeswini VG

Date: Register Number: 17BTCOM043

 ACKNOWLEDGEMENT

I take this as an opportunity to express my profound gratitude to who have been a

significant part of this project.

I express my deepest sense of gratitude to Dr. Bhargavi V.R., Director, Post

Graduate Department of Commerce and Management, Seshadripuram College for her
valuable guidance, suggestions and constant support.

I heartly thank Ms. Reshma B. faculty for her encouragement and co-operation in all
matters related to my project.

I express my deepest sense of gratitude to Mr. Swaroop R. faculty for his valuable
guidance, suggestions and constant support.

I wish to thank my parents, friends and family who always believed me and had faith
in me whatever I wished to do.

Date: Name: Thejeswini .V.G.

Place: Bengaluru Reg. No: 17BTCOM043

 TABLE OF CONTENTS

CHAPTER
INTRODUCTION PAGE NO.
01
1.1 EVOLUTION OF BANKS 1
1.2 MEANING OF FUND 2
1.3 DEFINITION OF FUND 2
1.4 SOURCES OF FUNDS 4-5
1.5 CLASSIFICATION OF SOURCES OF FUND 5-10
1.6 MEANING OF FUND MANAGEMENT 11
DEFINITION OF THE TERM FUND
1.7 12
MANAGEMENT
FUND MANAGEMENT IN REGIONAL
1.8 12
RURAL BANKS
IMPORTANCE OF FUND MANAGEMENT
1.9 13
IN RRB’S
1.1 SCOPE OF FUND MANAGEMENT 13-14
INTRODUCTION TO CREDIT
1.11 14
MANAGEMENT
1.12 MEANING OF CREDIT 15
1.13 CREDIT DEFINITIONS 15
 1.14 CHARACTERISTICS OF CREDIT 16
1.15 FEATURES OF RRB’S CREDIT 17
1.16 TYPES OF CREDIT 17
1.16.1 TRADITIONAL CREDIT PRODUCTS 18-19
1.16.2 INNOVATIVE CREDIT PRODUCTS 19-22
1.17 CREDIT INSTRUMENTS 22
1.18 CREDIT PROCESS 24
1.19 ADMINISTRATION OF CREDIT 25-26
1.2 CREDIT MONITORING 27-28
1.21 ADVANTAGES OF CREDIT 28-29
1.22 DISADVANTAGES OF CREDIT 29-30
CHAPTER
RESEARCH DESIGN PAGE NO.
02
2.1 REVIEW OF LITERATURE 31-33

2.2 TITLE OF THE STUDY 33

2.3 STATEMENT OF THE PROBLEM 33-34

2.4 NEED OF THE STUDY 34
2.5 OBJECTIVES OF THE STUDY 35
2.6 SCOPE OF THE STUDY 35

2.7 METHODOLOGY 35
 2.8 RESEARCH METHODOLOGY 36

2.9 LIMITATIONAS OF THE STUDY 36

CHAPTER
COMPANY PROFILE PAGE NO.
03
3.1 EVENTS OF KAVEERI GRAMEENA BANK 39-40
3.2 PERFORMANCE HIGHLIGHTS 41
3.3 VISION MISSION STATEMENT: 42-43
3.4 BOARD OF DIRECTORS 43
3.5 SERVICES 44
3.6 INTEREST RATES 45
3.7 BRANCH LOCATED 46
3.8 FEATURES OF KAVERI GRAMEENA BANK 47
3.9 DEPOSIT SCHEMES 48-54
COMPITATORTS OF KAVERI
3.11 54
GRAMEENA BANK
3.11 CORPARATE SOCIAL RESPONSIBILITY 55
3.12 SWOT ASSESSMENT 56
CHAPTER
ANALYSIS AND INTERPRETATIONS PAGE NO.
04
ANALYSIS OF SPREAD AND RETURN ON
4.1 58-69
INVESTMENT
 4.2 ANALYSIS OF CREDIT OPERATIONS 70
4.3 GROWTH OF NON-PERFORMING ASSETS 71-79
CAPITAL TO RISK ASSETS RATIO OF
4.4 80-84
KAVERI GRAMEENA BANK
4.5 GROSS NPA & TOTAL ADVANCES 85-86
4.6 GROSS NPAS & NET ADVANCES 87-88
CREDIT DEPOSIT RATIO & GROSS NPAS
4.7 89-90
TO TOTAL ADVANCES RATIO
GROSS NPAS TO TOTAL ADVANCES
4.8 RATIO AND CAPITAL TO RISK ASSET 91-92
RATIO
CHAPTER SUMMARY OF FINDINGS AND
PAGE NO.
05 SUGGESTIONS
5.1 FINDINGS 93-95
5.2 SUGGESTIONS 96-98
5.3 CONCLUSION 99-100
 TABLES

4.1 SPREAD ANALYSIS NET INTEREST INCOME

SPREAD RATIO (AS A PROPORTION OF TOTAL
4.2
ASSETS)
SPREAD RATIO (AS A PROPORTION OF
4.3
INVESTMENTS
4.4 RETURN ON ASSETS

4.5 RETURN ON INVESTMENT

PERCENTAGE OF GROSS NPAS TO TOTAL
4.6
ADVANCES
4.7 NET NPAS OF KAVERI GRAMEENA BANK

PERCENTAGE OF NET NPAS TO NET ADVANCES

4.8
OF KAVERI GRAMEENA BANK

CREDIT DEPOSIT RATIO OF KAVERI GRAMEENA

4.9
BANK

PERCENTAGE OF GROSS NPAS TO GROSS

4.1
PRIORITY SECTOR ADVANCES OF KAVERI
GRAMEENA BANK
4.11 CAPITAL TO RISK ASSETS RATIO
CAPITAL RATIO OF KAVERI GRAMEENA BANK
4.12
(TIRE-01)
CAPITAL RATIO OF KAVERI GRAMEENA
4.13
BANK (TIRE-02)
 GRAPHS

4.1 SPREAD ANALYSIS NET INTEREST INCOME

SPREAD RATIO (AS A PROPORTION OF TOTAL
4.2
ASSETS)
SPREAD RATIO (AS A PROPORTION OF
4.3
INVESTMENTS
4.4 RETURN ON ASSETS

4.5 RETURN ON INVESTMENT

PERCENTAGE OF GROSS NPAS TO TOTAL
4.6
ADVANCES
CREDIT DEPOSIT RATIO OF KAVERI GRAMEENA
4.7
BANK
PERCENTAGE OF GROSS NPAS TO
4.8 GROSS PRIORITY SECTOR ADVANCES OF
KAVERI GRAMEENA BANK
CAPITAL RATIO OF KAVERI GRAMEENA BANK
4.9
(TIRE-01)
CAPITAL RATIO OF KAVERI GRAMEENA BANK
4.1
(TIRE-02)
4.11 GROSS NPA & TOTAL ADVANCES

4.12 GROSS NPAS & NET ADVANCES

CREDIT DEPOSIT RATIO & GROSS NPAS TO

4.13
TOTAL ADVANCES RATIO

GROSS NPAS TO TOTAL ADVANCES RATIO

4.14
AND CAPITAL TO RISK ASSET RATIO
A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

CHAPTER -01
INTRODUCTION

1.1 EVOLUTION OF BANKS

The banking activities were started in different periods in different countries, there
is no unanimous view regarding the origin of the word Bank. The word bank is
said to have derive from the French word Banco or Bancus which means, a Bench.
In fact the early Jews in Lombardy transacted their banking in the banking
business by sitting in benches. When their business failed the benches were
broken and hence the word „Bankrupt‟ came into vogue. But Macleod in his book,
„Theory and practice of banking a expressed a different view, accordingly to him,
the Àmoney changers were never called Benchien in the middle ages. So, this
deviation may be near conjecture. Another common- held view is that the word
„bank might be originate from the German word Back which means a joint
stock fund, which was Italianized into Banco when the Germans were masters of a
great part of Italy. According to ancient European history, the Babylonians were
the earlier people to develop a systemized banking system. It is said that temples
of Babylon were used as banks and such as temples of Ephesus and Delphi were
famous great banking institutions. The anti –religious feelings which developed
afterwards led to the collapse of public confidence in depositing money in temples
and the priests ceased to perform the banking business. Whenever peace and
solidarity were threatened, the spread of banking business also was affected
entirely. However after the revived of civilization and with the development of
social and economic institution money transaction also was revived. It was in the
12th century that some banks were established in Venic and Genoa. The origin of
modern banking may be traced to money dealers in Florence who received money
in the deposits and lend it to business people.
SESHADRIPURAM COLLEGE PG DEPARTMENT OF COMMERCE AND
MANAGEMENT Page 1
1.2 MEANING OF FUND
Fund is one of the major elements, which activities the overall growth of the
economy. Fund is the lifeblood of economic activity. Fund mainly involves rising
of funds and their effective utilization keeping in view the overall objective of the
firm. Business fund that business activity which is concerned with the acquisition
and conservation of capital funds in meeting financial needs and overall objectives
of a business enterprise. In a broader sense financial includes determining what
has to be paid for raising the money on the best terms available and utilizing the
available funds to the best possible way.

1.3 DEFINITION OF FUND

According to Guttmann & Don gall - Business fund can be broadly defined as “the
activities concerned with planning, raising, controlling and administering of funds
used in business”.

1.4 SOURCES OF FUNDS

The sources of funds of RRBs comprise of owned fund, deposits, borrowings from
NABARD, Sponsor Banks and other sources including SIDBI and National
Housing Bank.

1. OWNED FUNDS: The owned funds of RRBs comprising of share capital,

share capital deposits received from the shareholders and the reserves stood at
`25,083 crore as on 31 March 2015 as against `22,17 2 crore as on 31 March 2014;
registering a growth of 1 3.13%. The increase in owned funds to the tune of `2,911
crore was mainly on account of accretion to reserves by the profit making RRBs.
The share capital and share capital deposits together amounted to `6,371 crore of
total owned fund while the balance amount of `18,7 12 crore represented reserves.

RRB ACT, 197 6-AMENDMENT-2015

 RRBs(Amendment) Bill, 2015 notified in Gazette of India dated 12.5.2015

 Operationalization of the amendment will require notification/instructions by

GoI

 RRB allowed to raise share capital from sources other than existing share
holders

 Tenure of a director nominated by the GoI U/s. 9(1) (a) of RRB Act, 197 6,
raised to 3 y ears.

 One person cannot be director in other RRBs

 No director can hold office for a total period exceeding 6 y ears

 RRBs to assess the position and advise GoI to nominate new names with
recommendation of Sponsor Bank by 28 February 2016

Recapitalization of RRBs

Dr. K.C. Chakrabarty Committee on “Recapitalization of RRBs for improving

CRAR” had recommended recapitalization of 40 out of 82 RRBs for
strengthening their CRAR to the level of 9 % by 31 March 2012. According to the
Committee, the remaining RRBs were in a position to achieve the desired level of
CRAR on their own. Accepting the recommendations of the committee, the GOI
along with other shareholders decided to recapitalize the RRBs by infusing funds
to the extent of `2,200 Crore, with proportion being 50:35:15 for GOI; Sponsor
Bank and State Government respectively. As on 31 March 2015, an amount of
`2,076.51 crore has been released to 38 RRBs in 20 States. The released amount
includes contributions from GoI: `1,038.24 crore, Sponsor Banks: `7 26.78 crore
and State Governments: `311.49 crore.

2. DEPOSITS: Deposits of RRBs increased from 2,39,494 crore to 2,73,018

crore during the y ear registering growth rate of 14 %. There are Thirty seven (37)
RRBs having deposits of more than 3000 crore each.

3. BORROWINGS: Borrowings of RRBs increased from 50,230 crore as on

31 March 201 4 to 59,422 crore as on 31 March 201 5 registering an increase of
18.3%. Borrowings viz-a-viz the gross loan outstanding constituted 32.8% as
against 31.5% in the previous year.
1.5 CLASSIFICATION OF SOURCES OF FUND:

FIGURE:1 classification of sources of fund

 According to time period:

Sources of financing a business are classified based on the time period for which
the money is required. The time period is commonly classified into following
three:

Long-Term Sources of Finance Long-term financing means capital requirements

for a period of more than 5 years to 10, 15, 20 years or maybe more depending on
other factors. Capital expenditures in fixed assets like plant and machinery, land
and building etc of a business are funded using long-term sources of finance. Part
of working capital which permanently stays with the business is also financed
with long-term sources of funds. Long-term financing sources can be in form of
any of them:

 Share Capital or Equity Shares

 Preference Capital or Preference Shares

 Retained Earnings or Internal Accruals

 Debenture / Bonds

 Term Loans from Financial Institutes, Government, and Commercial Banks

 Venture Funding

 Asset Securitization

 International Financing by way of Euro Issue, Foreign Currency

Loans, ADR, GDR.
 Medium Term Sources of Finance

Medium term financing means financing for a period of 3 to 5 years and is used
generally for two reasons. One, when long-term capital is not available for the
time being and second when deferred revenue expenditures like advertisements
are made which are to be written off over a period of 3 to 5 years. Medium term
financing sources can in the form of one of them:

 Preference Capital or Preference Shares

 Debenture / Bonds
 Medium Term Loans from
 Financial Institutes
 Government, and
 Commercial Banks
 Lease Finance
 Hire Purchase Finance

Short Term Sources of Finance

Short term financing means financing for a period of less than 1 year. The need
for short-term finance arises to finance the current assets of a business like an
inventory of raw material and finished goods, debtors, minimum cash and bank
balance etc. Short-term financing is also named as working capital financing.
Short term finances are available in the form of:

 Trade Credit
 Short Term Loans like Working Capital Loans from Commercial Banks
 Fixed Deposits for a period of 1 year or less
 Advances received from customers
 Creditors
 Payables
 Factoring Services
 Bill Discounting

According to ownership and control:

Sources of finances are classified based on ownership and control over the
business. These two parameters are an important consideration while selecting a
source of funds for the business. Whenever we bring in capital, there are two types
of costs – one is the interest and another is sharing ownership and control. Some
entrepreneurs may not like to dilute their ownership rights in the business and
others may believe in sharing the risk.

Owned Capital

Owned capital also refers to equity capital. It is sourced from promoters of the
company or from the general public by issuing new equity shares. Promoters start
the business by bringing in the required capital for a startup. Following are the
sources of Owned Capital:

 Equity Capital
 Preference Capital
 Retained Earnings
 Convertible Debentures
 Venture Fund or Private Equity
 Further, when the business grows and internal accruals like profits of the company
are not enough to satisfy financing requirements, the promoters have a choice of
selecting ownership capital or non-ownership capital. This decision is up to the
promoters. Still, to discuss, certain advantages of equity capital are as follows:

 It is a long-term capital which means it stays permanently with the business.

 There is no burden of paying interest or installments like borrowed capital. So, the
risk of bankruptcy also reduces. Businesses in infancy stages prefer equity capital
for this reason.

Borrowed Capital

Borrowed or debt capital is the capital arranged from outside sources.

These sources of debt financing include the following:

 Financial institutions,

 Commercial banks or

 The general public in case of debentures

According to source of generation:

Based on the source of generation, the following are the internal and external
sources of finance:

 Internal Sources
 External sources
 A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

Internal Sources

The internal source of capital is the capital which is generated internally by the
business. These are as follows:

 Retained profits
 Reduction or controlling of working capital
 Sale of assets etc

The internal source of funds has the same characteristics of owned capital. The
best part of the internal sourcing of capital is that the business grows by itself and
does not depend on outside parties. Disadvantages of both equity capital and debt
capital are not present in this form of financing. Neither ownership dilutes nor
does fixed obligation/bankruptcy risk arise.

External Sources

An external source of finance is the capital generated from outside the business.
Apart from the internal sources of funds, all the sources are external sources of
capital. Deciding the right source of funds is a crucial business decision taken by
top-level finance managers. The wrong source of capital increases the cost of
funds which in turn would have a direct impact on the feasibility of project under
concern. Improper match of the type of capital with business requirements may go
against the smooth functioning of the business. For instance, if fixed assets, which
derive benefits after 2 years, are financed through short-term finances will create
cash flow mismatch after one year and the manager will again have to look for
finances and pay the fee for raising capital again.

SESHADRIPURAM COLLEGE PG DEPARTMENT OF COMMERCE AND

MANAGEMENT Page 10
A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

1.6 MEANING OF FUND MANAGEMENT

Fund mainly involves rising of funds and their effective utilization keeping in
view the overall objective of the firm. This requires great caution and wisdom on
the part of management. The management makes use of financial techniques,
devices etc. for administering the financial affairs of the firm in the most effective
and efficient way. Fund management therefore means the entire gamut of
managerial effort devoted to the management of fund. This fund management is
mainly concerned with proper management of funds. The finance manager must
see that the funds are procured in manner that the risk, cost and control
consideration are properly balanced in a given situation and there is optimum
utilization of funds.

Fund is the science of funds management. Fund includes saving money and often
includes lending money. Fund works most basically individuals or investments
and charges interest on the loans. The field of fund with the concepts of time,
money and risk and how they are inter-related. It also deals with how money is
spent and budgeted central banks, such as the federal reserve system banks in the
united states and bank of England in the united kingdom, are strong players in
finance, acting as lenders of last resort as well as strong players in finance, acting
as lenders of last resort as well as strong influences on monetary and credit
condition in the economy.

1.7 DEFINITION OF THE TERM FUND MANAGEMENT

“Fund management is concerned with the management decision that result in the
acquisition and financing of long term and short term credits for the firm. As such
it deals with the situations that require section of specific assessed as well as the
SESHADRIPURAM COLLEGE PG DEPARTMENT OF COMMERCE AND
MANAGEMENT Page 11
 problem of size and growth of the enterprise”.

“The analysis of this decision is based on the expected inflows and outflows of
funds and their effects on managerial objectives”– Phillippatus.

1.8 FUND MANAGEMENT IN REGIONAL RURAL BANKS:

Funds management in regional rural bank is more complex task due to the day to
day fluctuations and frequent flow of funds. It is not possible for the banks to
deploy all the funds they mobilize because of the statutory obligations. So, their
net disposable resources will equal the funds they have mobilized minus statutory
reserves. Earning a satisfactory return on capital and meeting the demands for
money when they occur are the dual tasks of funds management in banks. In other
words, the sources and uses of funds need to be arranged in such a way as to keep
the bank funds as liquid as possible.

1.9 IMPORTANCE OF FUND MANAGEMENT IN RRB’S

In every organization, where funds are involved some fund management is

necessary. Some fund management is essential in both profit and non-profit
organizations. Fund management aims in maintaining the effective deployment of
funds in fixed assessed and in working capital.

1. Fund management also helps in ascertaining how the company would perform in
future. It helps in knowing whether the firm which generate enough funds to meet
its various obligations like repayment of the various installment due on loans,
redemption of other liabilities.
2. Sound fund management is indispensable for any organization. It helps in profit
planning, capital spending, measuring course, controlling inventories, accounts
receivable etc. Fund management essentially helps in optimizing the output from a
given input of funds.

1.10 SCOPE OF FUND MANAGEMENT

The scope of fund management increased with the introduction of the capital
budgeting techniques. In the modern dynamic environment, capital investment
and financing decision have become more risky than ever before, which has
enlarged the scope of finance. Fund management is concerned with both
acquisitions of funds as well as their optimum allocation. Funds requirement
decision is one the most important decisions that have to be taken in financial
management by taking into accounting both the fixed and working capital
requirement. Fund management also assists in taking finance decision, investment
decision which involves the evolution of different capital investment proposals
and selection of the best keeping in view the overall objective of the enterprise
and dividend decisions. The scope of fund management is extended to the banks
also. It plays a vital role in banks without which the banks may feel it difficult to
work.

1.11 INTRODUCTION TO CREDIT MANAGEMENT:

Every country has to undergo from the continuous process of development. Banks
play a vital role in this process. The Indian banking system has progressed as a
powerful mechanism of planning for economic growth. Banks channelize savings
to investments and consumption. Through that, the investment requirements of
savers are reconciled with the credit needs of investors and consumers.
Out of all principal roles of the banks, lending is the most important role in which
banks provide working capital to commerce and industry. Importance of credit is
not only because of its social obligation to cater the credit needs of different
sections of the community but also because lending is the most profitable activity,
as the interest rates realized on business loans have always been well above those
realized on investments. Credit being the principal source of income for banks and
usually represents one of the principal assets of the banks so its proper
management becomes all the more necessary. The extension of credit on sound
basis is therefore very essential to the growth and prosperity of a bank. With the
increasing role of commercial banking in capital formation, employment
generation and production facilitation, the credit operations of commercial banks
are expected to be in harmony with the requirements of the economic system. Till
today, banks are the major suppliers of working capital to the trade and industry
and they have privilege of having massive lending facilities produced by the
banks. Hence, the management of bank credit operations is required to be more
creative than the traditional approach followed by it earlier.

1.12 MEANING OF CREDIT:

The word „credit‟ has been derived from the Latin word “credo‟ which means “I
believe‟ or “I trust‟, which signifies a trust or confidence reposed in another
person. The term credit means, reposing trust or confidence in somebody. In
economics, it is interpreted to mean, in the same sense, trusting in the solvency of
a person or making a payment to a person to receive it back after some time or
lending of money and receiving of deposits etc.
1.13 CREDIT DEFINITIONS:

Prof. Kinley: “By credit, we mean the power which one person has to induce
another to put economic goods at his deposal for a time on promise or future
payment. Credit is thus an attribute of power of the borrower.”

Prof. Gide: “It is an exchange which is complete after the expiry of a certain
period of time”.

1.14 CHARACTERISTICS OF CREDIT:

Some characteristics of credit are of prime importance while extending credit to

an individual or to a business enterprise.

1. Confidence: Confidence is very important for granting or extending any credit.

The person or authority must have confidence on debtor.

2. Capacity: Capacity of the borrower to repay the debt is also very crucial thing
to be considered. Before granting or extending any advance, creditor should
evaluate the borrower‟s capacity.

3. Security: Banks are the main source of credit. Before extending credit, bank
ensures properly about the debtor‟s security. The availability of credit depends
upon property or assets possessed by the borrower.

4. Goodwill: If the borrower has good reputation of repaying outstanding in time,

borrower may be able to obtain credit without any difficulty.

5. Size of credit: Generally small amount of credit is easily available than the
larger one. Again it also depends on above factors.
6. Period of credit: Normally, long term credit cannot easily be obtained because
more risk elements are involved in its security and repayments.

1.15 FEATURES OF RRB’S CREDIT:

1. Banks provide credit majority to trade and industries than agriculture. Because
of the greater risks and inability of agriculturists to furnish good security.

2. The short term loans are given for the seasonal needs and working capital
requirements.

3. Short term loans may be in the form of cash credit and overdraft, demand loans
and the purchase and discount of bills. Among these, cash credit and overdraft are
the most popular.

4. Indian banks sanction loans against sound security.

5. Banks take all possible protective steps to minimize their risks while granting
loans to the firms.

1.16 TYPES OF CREDIT:

The credit assistance provided by a banker is mainly of two types, one is fund
based credit support and the other is non-fund based. The difference between fund
based and non-fund based credit assistance provided by a banker lies mainly in the
cash out flow. Banks generally allow fund based facilities to customers in any of
the following manners. 
1.16.1 TRADITIONAL CREDIT PRODUCTS:

1. Cash credit: Cash credit is a credit that given in cash to business firms. A
cash credit account is a drawing account against a fixed credit limit granted by the
bank and is operated exactly in the same manner as a current account with all
overdraft facilities. It is an arrangement by which, a bank allows its customers to
borrow money up to a certain limit against tangible securities or share of approved
concern etc. cash credits are generally allowed against the hypothecation of goods/
book debts or personal security. Depending upon the nature of requirement of a
borrower, bank specifies a limit for the customer, up to which the customer is
permitted to borrow against the security of assets after submission of prescribed
terms and conditions and keeping prescribed margin against the security. It is on
demand based account. The borrowing limit is allowed to continue for years if
there is a good turnover in account as well as goods. In this account deposits and
withdrawals may be affected frequently. In India, cash credit is the most popular
mode of advance for businesses.

2. Overdraft: A customer having current account, is allowed by the banks to

draw more than his deposits in the account is called an overdraft facility. In this
system, customers are permitted to withdraw the amount over and above his
balance up to extent of the limit stipulated when the customer needs it and to
repay it by the means of deposits in account as and when it is convenient.
Customer of good standing is allowed this facility but customer has to pay interest
on the extra withdrawal amount.

3. Demand loans: A demand loan has no stated maturity period and may be
asked to be paid on demand. Its silent feature is, the entire amount of the
sanctioned loan is paid to the debtor at one time. Interest is charged on the debit
balance.

4. Term loans: Term loan is an advance for a fixed period to a person engaged
in industry, business or trade for meeting his requirement like acquisition of fixed
assets etc. the maturity period depends upon the borrower‟s future earnings. Next
to cash credit, term loans are assumed of great importance in an advance portfolio
of the banking system of country.

5. Bill purchased: Bankers may sometimes purchase bills instead of

discounting them. But this is generally done in the case of documentary bills and
that too from approved customers only. Documentary bills are accompanied by
documents of title to goods such as bills of loading or lorry and railway receipts.
In some cases, banker advances money in the form of overdraft or cash credit
against the security of such bills.

6. Bill discounted: Banker loans the funds by receiving a promissory note or

bill payable at a future date and deducting that from the interest on the amount of
the instrument. The main feature of this lending is that the interest is received by
the banker in advance. This form of lending is more or less a clean advance and
banks rely mainly on the creditworthiness of the parties.

1.16.2 INNOVATIVE CREDIT PRODUCTS:

Since the liberalization period there have been drastic changes in the way loans
have been granted to individual customers and businessmen. The changing pattern
of banks from universal to branch banking after the liberalization period also
forced banks to adopt easy lending. Due to the increase in the number of mergers
and acquisitions in this sector, expectation went very high. Banks have come
under immense pressure to meet the targets of deposits and loans.8 Post
globalization, Liberalization and Privatization, bankers began to focus on both
corporate and retail banking activities. The international financial markets have
witnessed a sea change in the last decade. Banks are likely to undergo more
changes in the future. In view of these developments, banks in India are also
adopting certain new practices and technology based services to cater to the needs
of people. This is because it enables customers to perform banking transactions at
their convenience.

Technology has supported the development of financial service industry and

reduced the cycle of money to the shortest possible duration. A number of
financial institutions, including banks have started online services. The growth of
innovative retail products offered by Indian banks is increasing sharply.

1. Credit cards: Credit cards are alternative to cash. Banks allow the customers
to buy goods and services on credit. The card comprises different facilities and
features depending on the annual income of the card holder. Plastic money has
played an important role in promoting retail banking.

2. Debit cards: Debit card can be used as the credit card for purchasing
products and also for drawing money from the ATMs. As soon as the debit card is
swiped, money is debited from the individual’s account.

3. Housing loans: Various types of home loans are offered by the banks these
days for purchasing or renovating house. The amount of loan given to the
customer depends on the lending policies and repayment capacity of the customer.
These loans are usually granted for a long period.
A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

4. Auto loans: Auto loans are granted for the purchase of car, scooter etc. it may
be granted for purchasing vehicle.

5. Personal loans: This is an excellent service provided by the banks. This loan
is granted to the individuals to satisfy their personal requirements without any
substantial security. Many banks follow simple procedure and grant the loan in a
very short period with minimum documents.

6. Educational loans: This loan is granted to the student to pursue higher

education. It is available for the education within the country or outside the
country.

7. Loans against securities: These loans are provided against fixed deposits,
shares in demat form, bonds, mutual funds, life insurance policy etc.

8. Consumption loans for purchase of durables: Banks fulfill the dreams

and aspirations by providing consumer durable loans. These loans can be
borrowed for purchasing television, refrigerator, laptop, mobile etc.

9. Hybrid loan products: For improving the business environment and to win
in the competition, banks must adopt new technologies. With fluctuating interest
rates and inflation, there is a need for the banks to protect the interest of the
borrowers. So banks now offer hybrid products to their customers. These products
have the virtues of both fixed and floating interest rate loans. The products
introduced by the different banks have their own distinctive features.

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1.17 CREDIT INSTRUMENTS:

Credit instruments prove very helpful in encouragement and the development of

credit and help in the promotion and development of trade and commerce. Some
of the credit instruments are,

1. Cheque: Cheque is the most popular instrument. It is an order drawn by a

depositor on the bank to pay a certain amount of money which is deposited with
the bank.

2. Bank draft: Bank draft is another important instrument of credit used by

banks on either its branch or the head office to send money from one place to
other. Money sent through a bank draft is cheaper, convenient and has less risk.

3. Bill of exchange: It enables a seller of commodity to issue an order to a

buyer to make the payment either to him or to a person whose name and address is
mentioned therein either on the site of the bill or within a period of time specified
therein.

4. Promissory note: According to the Indian negotiable instrument act, „a

promissory note‟ is an instrument in writing containing an unconditional
undertaking signed by the maker to pay a certain sum of money only to or the
order of certain person or the bearer of the instrument.

5. Government bonds®: Government issues a sort of certificate to the person

who subscribes to these loans. Such certificates are called government bonds.
Some of them are income tax free.

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6. Treasury bills: These bills are also issued by the government. They are
issued in anticipation of the public revenues.

7. Traveller’s cheque: This is the facility given by bank to the people. It was
most useful when recent technological instrument like ATMs were not available.
A customer was used to deposit money with the banks and banks give traveler‟s
cheque in turn. It was used to avoid risk of having cash while travelling.
1.18 CREDIT PROCESS:

FIGURE 2: credit process

1.19 ADMINISTRATION OF CREDIT:

1. Appraisal: The norms for appraisal should be spelled out in the loan policy.
The format, credit information, financial observation, method of lending etc.,
should be included.

2. Pricing: Fixing of loan pricing should be based on the cost of funds and nature
of the risks. The cost of fund should be spelled out by bank depending on credit
rating of the borrower and probability of default.

3. Expiry Terms: The terms of expiry of the loan should be based on maturity
pattern of resources and movement in interest rates and life of collateral.

4. Sanctioning: Sanctioning power of the authority should be clearly mentioned in

loan policy. The sanction should be in written form and within the delegated
authority. Time schedule for reporting sanctions and exceptions for confirmation
of the higher authorities should also be spelled out.

5. Documentation: Documentation starts with a written loan application by the

borrower followed by signed loan covenants like, right of set off, right to enforce
collateral / securities on default, right to debit account for charges, right to freeze
operation on misuse of facilities, right to receive statements of business etc. The
borrower should be given a sanction letter in standard format and borrower’s
written acknowledgment in terms of sanction should also be obtained.

6. Disbursement: Proper authorization for disbursement of loan should be there.

Adequate drawing power and security cover within stipulated margin should be
taken carefully while disbursing. This should be made after proper documentation.
It should be ensured also that the use of credit is for the purpose for which it was
granted.

7. Supervision: The main purpose of supervision is to ensure that the loan is

utilized for the purpose for which it has been granted. This is achieved through the
periodical statements, visits of the borrower, monitoring operations, credit reports
etc.

8. Monitoring: The loan portfolio is centrally monitored at the head office for
returns from branches.

9. Recoveries And Rehabilitation: In the loan policy, procedures for prompt

follow up on due dates should be spelled out. To avoid such ambiguity, time
schedule may also be highlighted.

10. Income Recognition and Provisioning: Some information and norms regarding
NPA should also be spelled out in loan policy.

11. Internal Controls: The internal control system regarding policy, the procedure
to be followed in this regard should be stated.

12. Loan Review: Loan should be reviewed by an independent middle office. The
job of this department is to make analysis of portfolio risk. This is an emerging
concept. The basic fundamental of the overall loan policy should be to ensure
safety of funds with returns.
A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

1.20 CREDIT MONITORING:

A good lending is that the amount lent, should be repaid along with interest within
the stipulated time. To ensure that safety and repayment of the funds, banker is
necessary to follow-up the credit, supervise and monitor it. Credit monitoring is an
important integral part of a sound credit management. The bank should always be
careful for that fund properly utilized for what it has been granted. Banker keeps
in touch with the borrower during the life of the loan. There are some steps from
the banker‟s point of view, to ensure the safety of advance. 1. Documentation:
Once the loan is sanctioned by the bank, the borrower must provide certain
documents. The properly executed and stamped documents are essential which
should be dully filled and authenticated by the borrower. 2. Disbursement of
advance: The advance should be disbursed only after obtaining the documents.
Loan account should be scrutinized to ascertain that the funds are utilized for the
business purpose only. 3. Inspection: The unit and the securities charged to the
bank should be inspected periodically. The banker stipulates different terms and
conditions at the time of granting the advance. And the banker should continue to
keep a watch that all these are observed. In this, the team of financial and
technical officers visits the borrower’s firm to get view about customer’s affairs.
101 4. Submission of various statements: All the statements required by a banker
should be regularly obtained and thoroughly scrutinized. The health of the
borrower’s accounts are indicated by control formats, so, should be reviewed
properly. Borrower’s accounts show movement of accounting and operation stage.
Financial statements and balance sheets should be examined along with credit risk
rating at least once in a year. The positive and the negative progress of the loan
assets are indicated by these verifications. 5. Annual review: Every loan account
should be revised annually. A borrower makes lending decision on certain
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A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
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assumptions. So, it is necessary to hold those as good throughout the continuance

of the advances. Annual review provides an insight view of the borrower‟s general
and financial conditions. 6. Market information: The banker should keep in touch
with the market environment. Market reports are an important source to get the
present information regarding trade and industry. The banker should have resource
for such information. Hence, bank must take all the precautions before sanctioning
loans and after in follow-up also. The post sanctioning period is also most
important to avoid the risk of NPA. It is helpful to banker to prevent the debt to be
converted into bad debt.

1.21 ADVANTAGES OF CREDIT:

Credit plays an important role in the gross earnings and net profit of commercial
banks and promotes the economic development of the country. The basic function
of credit provided by banks is to enable an individual and business enterprise to
purchase goods or services ahead of their ability. Today, people use a bank loan
for personal reasons of every kind and business venture too. The great benefit of
credit with a bank is probably very low interest rates. Majority people feel
comfortable lending with bank because of familiarity.

1. Exchange of ownership: Credit system enables a debtor to use something

which does not own completely. This way, debtor is provided with control as
distinct from ownership of certain goods and services.

2. Employment encouragement: With the help of bank credit, people can be

encouraged to do some creative business work which helps increasing the volume
of employment.

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3. Increase consumption: Credit increases the consumption of all types of
goods. By that, large scale production may stimulate which leads to decrease cost
of production which in turn also lowers the price of product which in result rising
standard of living.

4. Saving encouragement: Credit gives encouragement to the saving habit of

the people because of the attraction of interest and dividend.

5. Capital formation: Credit helps in capital formation by way that it makes

available huge funds from able people to unable people to use some things. Credit
makes possible the balanced development of different regions.

6. Development of entrepreneurs: Credit helps in developing large scale

enterprises and corporate business. It has also helped the different entrepreneurs to
fight with difficult periods of financial crisis. Credit also helps the ordinary
consumers to meet requirements even in the inability of payment. One can borrow
money and grow business at a greater return on investment than the interest rates
of loan.

7. Easy payment: With the help of various credit instruments people can pay
without much difficulty and botheration. Even the international payments have
been facilitated very much.

8. Elasticity of monetary system: Credit system provides elasticity to the

monetary system of a country because it can be expanded without much difficulty.
More currency can be issued providing for proportionate metallic reserves.
9. Priority sector development: Credit helps in developing many priority
sectors including agriculture. This has greatly helped in rising agriculture
productivity and income of the farmers. Banks in developing countries are
providing credit for development of SSI in rural areas and other priority sectors
too.

1.22 DISADVANTAGES OF CREDIT:

Credit is a mixed consent. It involves certain advantages and some dangers also at
the same time. Credit is useful as well as harmful to the user even. So it should be
used very cautiously otherwise it may spoil all industries and enterprises. Credit, if
not properly regulated and controlled it has its inherent dangers.

1. Encouragement of expenditure: Credit encourages wasteful expenses by

the individuals as well as commercial institutions. As people irresponsibly think
that the money is not their own. Easy availability leads to over trading over
exposure that ultimately leads to bad debts.

2. Encourage weakness: Credit encourages big entrepreneurs to continue to

hide their weakness. Their own shortcomings are met by the borrowed capital.
Even the loosing concerns continue with the help of borrowed capital in the hope
to survive. In this condition, if business fails, it not only leads the borrowers in
dangers but also thousands of those people who advanced credit to such people.

3. Economic crisis: In several occasions credit is directly responsible for

economic crisis. It leads to recession and depression in an economy as boom of
credit facilities has its own evil effect on the economy. Financially weak concern
having credit facility takes the economy to weaker effects.
4. Dangers beyond limit: Credit in a country expanded beyond certain limits
which results in over investment. Over issue credit takes beyond safe limits that
result in over investment, over production and rise of prices. This danger has been
emphasized by Prof. Thomas in his „Elements of Economics‟, in his words:
“There is no automatic limit to the expansion of a credit system as there is to an
expansion of a metallic circulation through the intervention of human element.
Uncertainty and variableness is the chief source of danger in a credit
organization”.

5. Evil of monopoly: Credit system has also resulted in the creation of

monopolies; monopolistic exploitation is due to money placed at the disposal of
individuals or companies that leads to monopolist exploitation. The different
organizations have growth with the emergence of credit and have worked to the
damage of both the consumers and the workers.

6. Encourage inefficient: Credit gives encouragement to certain inefficient

and worthless producers. Inefficient business concerns availing the credit and not
using efficiently, accumulate money in their hands. People come into the market
with the feeling that they have nothing to do but just to play only with other‟s
money. So, by this it can be said that it is clear that the government or the central
banking authorities must keep the credit within limit so that no evil is allowed to
crop up in the economy.
 CHAPTER 02
RESEARCH DESIGN

2.1 REVIEW OF LITERATURE:-

Rao D.N. and Rao S.B. (2009):- conducted research on the general
perception among Indian Investors and Fund Managers that (A) Market
outperforms Balanced and Income Funds during Bull run (B) Balanced and
Income Funds outperform the stock market during Bear run (C) Market
outperforms Balanced and Income Funds over a long holding period (a minimum
period of three years). The objective of the study was to empirically investigate
whether the above stated perceptions are valid in the Indian context. For this
purpose, six hypotheses were tested. The performance of the Balanced and 72
Income Funds were analysed in terms of Return, Risk, Return per Risk and Sharpe
ratio over the three years, 2006, 2007 and 2008 during which period the Indian
Stock Market had witnessed much volatility. Further, the performances of these
funds were compared with that of the Market and Benchmark Indices. The Null
Hypotheses were rejected leading to the acceptance of Alternate Hypothesis in all
the six cases, This led to the conclusion that the Market outperformed both the
Balanced and Income Funds over Bull Run and 3 year period while both the funds
outperformed the Market over Bear run period which confirms the popular belief
of the Investors and Fund Managers in India.

Treynor and Mazuy (2010):- evaluated the performance of 57 fund managers

in terms of their market timing abilities and found that, fund managers had not
successfully outguessed the market. The results suggested that, investors were
completely dependent on fluctuations in the market. The study adopted Treynor's
(1965) methodology for reviewing the performance of mutual funds.

Sharpe (2011) :-who developed a composite measure that considers return and
risk evaluated the performance of 34 open-ended mutual funds during the period
1944-63 by the measures developed by him. He concluded that the average mutual
fund performance was distinctly inferior to an investment in the Dow Jones
Industrial Average (DJIA)

Smith and Tito (2011):- reviewed three widely used composite measures of
investment performance and examined their inter-relationships and put forward
another alternative measure which was then compared empirically. While ranking
the funds on the basis of ex-post performance, the alternative measure produced
little difference in performance. In contrast, when performance comparisons were
made with the market, their conclusions differed significantly. In view of this, the
alternative measure suggested by them was referred to as the modified Jensen
measure.

Fama (2012):- developed methods to distinguish between observed return due

to the ability to pick up the best securities at a given level of risk from that of
predictions of price movements· in the market. He introduced a multi-period
model allowing evaluation on a period-by-period basis and also on a cumulative
basis. He was of the opinion that, return on a portfolio constitutes of return for
security selection and return for bearing risk. His contributions combined the
concepts from modern of portfolio selection and capital market equilibrium with
more traditional concepts of good portfolio management.
Jensen (2012):- developed a composite portfolio evaluation technique
concerning risk-adjusted returns. He evaluated the ability of 115 fund managers in
selecting securities during the period 1945-66. Analysis of net returns indicated
that, 39 funds had above average returns, while 76 funds yielded abnormally poor
returns. Using gross returns, 48 funds showed above average results and 67 funds
below average results. Jensen concluded that, there was very little evidence that
funds were able to perform significantly better than expected as fund managers
were not able to forecast securities price movements.

Treynor (2012):- developed a methodology for evaluating mutual fund

performance that is popularly referred to as reward to volatility ratio. This
measure has been frequently used both by researchers and practitioners for
performance evaluation of mutual funds. The approach developed by Treynor
takes beta or systematic risk to assess the premium per unit of risk.

2.2 TITLE OF THE STUDY:

“A STUDY ON FUNDS MANAGEMENT AT KAVERI GRAMEENA

BANK”

2.3 STATEMENT OF THE PROBLEM:

The problem definition for the system is to launching the online system enquiry
system about the status of the availability of the hardware items
(printer/laptop/scanner) along with the facility to apply online and also to
automate the issuing procedure.

Time delay: it is inefficient to deal with voluminous data manually in the existing
system, record stored in different files.

Redundancy; as the branches are located in different locations, same files have to
be stored at all branches which involve a lot of complications and duplication
works thus causes redundancy.

Accuracy: since same data is compiled at different branches the possibility of

tabulating data wrong increases also data more, validation becomes difficult. It
may result in loss of accuracy of data.

2.4 NEED OF THE STUDY:

The main purpose of doing this project is to know about the customer behavior
towards Kaveri Grameena Bank. It also helps in understanding different services
provided by the bank. Some people are selecting bank on their comfort ability and
services but most of them are select bank on the basis of Interest rate. It helpful to
identify the Customer preferences of both bank regarding its services, images,
interest rate and scheme.
2.5 OBJECTIVES OF THE STUDY:

1. To examine the impact of credit management on the profits of the bank.

(using interest earned – interest paid and Return on investment)

2. To examine the effects of non performing on gross advance and net

advances on the profitability of the bank

3. The Impact of Capital Adequacy Ratio on the Performance of the Bank.

2.6 SCOPE OF THE STUDY:

The scope of the project is limited to the study and analysis of funds management
at Kaveri grameen bank. The study is analytical in nature as the financial position
of last 3 years is analyzed. Past figures of balance sheet are analyzed to find out
the overall management of available fund in the bank. Since the study involves
financial data, no primary data can be collected and the available data are
secondary in nature. The data collected are within a period ranging from 2016 to
2018. Various management tools are used to find out the liquidity and profitability
of the bank.

2.7 METHODOLOGY:

The study was started with a discussion with the Manager at Kaveri Grameena
Bank. – DESCRIPTIVE RESEARCH
2.8 RESEARCH METHODOLOGY:

The research is analytical in nature within which the research is conducted. It

consists of collection of both primary and secondary data. The collected data was
be analyzed with the help of statistical tools and efficient of techniques used as
derivatives, percentage whenever necessary the data was be presented by using
tables chart diagram and graph.

2.9 LIMITATIONAS OF THE STUDY:

1. The information given from the bank is limited.

2. In this study only selected ratios are used.

3. Since the study relates only to the fund and credit management of KGB,
the findings and suggestions cannot be generalized.

4. The duration given was only four weeks so much economic fluctuations
are not seen.
CHAPTER SCHEME

CHAPTER: 1 INTRODUCTION

Meaning, Definition, Types, Process, Administration, Sources Of Funds,

Classification, Features, Importance, Scope, Instruments, Advantages And
Disadvantages

CHAPTER: 2 RESEARCH DESIGN

The design consists of the title of the study, statement of the problem, objectives
of the study, scope of the study, need of the study, limitations, review of literature,
sources of data, plan of analysis.

CHAPTER: 3 COMPANY PROFILE

This chapter contains the company profile also the industry profile. The detail
information about the company will be stated here.

CHAPTER: 4 DATA ANALYSIS AND INTERPRETATION

The data collected as secondary nature will be explained in detail with using the
graphs, tables, and charts.

CHAPTER:5 SUMMARY OF FINDINGDS AND CONCLUSION

The summary of the findings, conclusions and suggestion on the observations will
be stated and the recommendations are drawn on it.
 CHAPTER 03

COMPANY PROFILE
Kaveri Grameena bank is a Regional Rural
Bank established under Regional Rural
Banks’ Act 1976, is a Scheduled Bank jointly
owned by Government of India, State Bank
of India(formerly by State Bank of Mysore)
and Government of Karnataka (share capital
contributed in the ratio of 50 :35:15 respectively), permitted to carry all kinds of
banking business. The Bank is operating in 10 Districts of South Karnataka,
having its Head Office at Mysore City with Nine Regional Offices at Mysuru,
Mandya, Bengaluru, Tumakuru, Hassan, Chamarajanagar, Madikeri, Chikmagulur
and Ramanagara

The Bank came into existence on 1 November 2012 (Sponsored by State Bank Of
Mysore) by Amalgamation of Cauvery Kalpatharu Grameena Bank, Chikmagalur
Kodagu Grameena Bank and Vishvesvaraya Grameena Bank, Sponsored by State
Bank of Mysore, Corporation Bank and Vijaya Bank respectively.
A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
GRAMEENA BANK

3.1 EVENTS OF KAVEERI GRAMEENA BANK

1. 2012 - The Bank was established as 'Kaveri Grameena Bank', on

1 November.
2. 2014 - Bank has recorded a growth rate of 36.52 per cent during 13-14.
3. 2014 - Bank launches financial inclusion scheme.
4. 2014 - Bank opens four branches in Mandya district.
5. 2015 - The Kaveri Grameena Bank has enrolled over
48,000 subscribers for the PMSBY in Mysore.
6. 2015 - Kaveri Grameena Bank has enrolled 1,01,104 subscribers to
the insurance schemes underlining the popularity of the social security
schemes in rural areas.
7. 2015 - The Kaveri Grameena Bank plans to extend internet and
mobile banking services to its customers.

Kaveri Grameena bank was formed on 1st November 2012 on amalgamation of

erstwhile Kaveri Grameena bank, Chikmaglur-Kodagu Grameena bank and
Visveshvariaha Grameena bank. The bank is jointly owned by government of
India (50%), Government of Karnataka (15%) and state bank of India (35%). The
bank is intensively catering the banking needs of our clientele in our operational
area spread across ten southern districts of the state viz., Mysore, Hassan,
Bengaluru rural, Ramanagara, Bengaluru urban, Tumkuru, Chamrajanajar,
Kodagu, Mandya, Chikmagalur districts. The bank has 502 branches with a
customer base of 43lacs.The bank has its head office in Mysore city and eight
regional offices at Mysore, Bengaluru, Mandya, Tumkuru, Hassan, Chikmagluru,
Chamrajnagar; and Madikeri for operational convenience and effective control.
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A STUDY ON FUND AND CREDIT MANAGEMENT AT KAVERI
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The bank is a forerunning in catering to the needs and aspirations of the farming
community, business class and rural population covering 1/3rd of geographical
area of Karnataka state.All our branches are fully computerized and functioning
under core banking platform with 1783 dedicated personal rendering effective,
timely and needy services to our customers. The bank’s initiative in forming,
nurturing and credit linking Self-help groups has given micro financing activity of
the bank a Godspeed and this been appreciated in all forums.The bank has
registered has a business growth of 18.02% during the last financial year 2016-17,
reaching a level of Rs.15395.67crores. Growth is deposited is 26.11%, whereas
advances growth is 6.59%. The bank has registered a profit of Rs.85.23crores.
Bank has taken up implementation of financial inclusion.

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3.2 PERFORMANCE HIGHLIGHTS

As on 31.03.2018 As on 31.03.2019
PARTICULARS (amount in crores) (amount in crores)

DEPOSITS 9632.53 7638.12

ADVANCES 5763.15 5406.76
TOTAL BUSINESS 15395.68 13044.91
CD RATIO 59.83 70.79
PROFIT 85.23 68.81
CAPITAL ADEQUECY 11.4 10.56
NPA GROSS (As% to total advances) 5.57 3.89
NET NPA (As% to net advances) 3.74 2.52

PRODUCTIVITY

01. PER BRANCH BUSINESS

TURNOVER 30.67 26.79

02. PER EMPLOYEE BUSINESS 8.66 7.24

 3.3 VISION MISSION STATEMENT:

VISSION:

As a state co-operative bank, Kaveri Grameena bank shall be a dominant financial

institution in the state to economic prosperity.

1. They shall be the model of an effective, protective, dynamic and financial sound
organization. Respectively to state goals and aspiration.

2. They shall maintain highly trained and motivated professionals committed

to the higher standards of ethics and excellence.

3. They shall contribute to building progressive and standard of co- operative

societies in the service of farmers and rural mass.

4. A strong and dynamic Co- Operative bank that cares for the sustained economic
up liftmen of its members and the society

MISSION:

To ensure best quality life and success to its farmers, agriculture co- operative
societies and districts controls co-operative banks, clients and employees.

1. For farmers: we shall continue to improve socio-economic status through timely

financial and technical support.

2. For clients: we shall deliver innovative and advanced products and services in
productive and services in productive and effective manner to meet their local
demands.
3. For Employees: we shall a work atmosphere of mutual respect and team work
within a system of recognition and regards. We shall provide appropriate training
and value enhancement to ensure the highest degree of professionalism and
integrity. We shall hold their organization composed of highly competent people
driven by superior technology.

4. For people: we commit unvarying loyalty and dedicated services.

3.4 BOARD OF DIRECTORS

Board of directors of Kaveri Grameena bank after amalgamation wef 01.11.2012

is represented by officers from the sponsor bank, NABARD, RBI and GOVT OF
INDIA headed by the chairman. The board of directors of the bank consists of:

CHAIRMAN, KAVERI GRAMEENA

BHUVANENDRAV TAKOOR.M
BANK
GENERAL MANAGER, A & S DEP.T.
S. GANESAN
STATE BANK OF INDIA
DEPUTY GENERAL MANAGER,
B. UDAY SHANKAR
NATIONAL BANK OF INDIA.
DEPUTY GENERAL MANAGER,
SRI. PANCHANAN JOSHI
RURAL BANKING UNIT.
DEPUTY GENERAL MANEGER,
SMT. JAYANTHI.N FINANCIAL INDUSION AND
DEVELOPMENT DEP.T
ADDITIONAL SECRETORY, FISCAL
SMT. PRACHI PANDEY
REFORMS
CEO, Z.P MYSORE NOMUNATED
P. SHIVA SHANKAR
BY GOVT OF INDIA.
3.5 SERVICES:

When the bank commenced operations in 2012 services was primarily focused on
the growth and development of the rural sector. Today varieties of specialized
banking services are offered through the various branches. These type of loans are
services are offered to customers.

1. Housing Loan

2. Mortgage Loan.

3. Vehicle Loan.

4. Education Loan.

5. Gold Loan.

6. Agricultural Loan.

7. E-stamping papers.

8. Small & medium scale enterprise Loan( Business Loan).

 3.6 Interest Rates

Period of interest Existing interest rates Revised interest rates

15 days to 45 days 5.50% 5.25%

460days to 90 days 6.50% 6.25%

91 days to 179 days 6.50% 6.25%

180 days to less than 1Year 6.75% 6.50%

1 Year 7.10% 6.80%

Above 1 year less than 2Year 7.10% 6.60%

2 year to 3 years 6.75% 6.50%

Above 3 years 6.50% 6.50%

Kaveri – laxmi 6.50% 6.50%

Kaveri Lakhpathi 6.50% 6.50%

Kanakadhara 7.10% 6.60%

3.7 BRANCH LOCATED

Districts:

1. RAMANAGARA.

2. BENAGALURU URBAN.

3. BENGALURU RURAL.

4. MANDYA.

5. HASSAN.

6. MYSORE.

7. CHAMARAJANAGARA.

8. TUMKUR.

9. CHIKMAGLUR.

10. KODAGU
 3.8 FEATURES OF KAVERI GRAMEENA BANK

1. They are organized and managed on the principle of co-operative self- help and
mutual funds help. They function with the rule of “one member one vote”.

2. These banks perform all the main banking functions of deposits mobilization
supply of credit and provision for remittance facilities.

3. Kaveri grameena banks are perhaps the first government supported agency in
India.

4. A bank belongs to money market as well as capital markets.

5. Kaveri grameena banks accept current, savings, fixed and other type of time
deposits from individuals and institutions including banks.

6. Kaveri grameena banks do banking business mainly in the agriculture and rural
sector.

7. All the banks are schedule banks.

8. Kaveri grameena banks also required to comply with requirement of SLR liquidity
requirements as other scheduled banks.

3.9 DEPOSIT SCHEMES:

 Fixed Deposit Scheme:

Fixed Deposit means the money deposited by customers with a bank for a fixed
specific period of time. This is repayable on the expiry of the specified period of
time. Fixed deposit accounts are also known also known as “Time Liabilities” of
a banker. This scheme is ideal for common people, retired persons and housewife
among others, the fixed deposits schemes provide regular income at monthly,
quarterly or yearly intervals.

Rate of interest on fixed deposits as on 1-01-2017

Particulars Common citizens Senior citizen

45 days to 90 days 4.50% 5.00%

91 days to 180 days 7.50% 8.00%

181 days to 1 year 10.0% 10.50%

Above 1 year to 3 year 10.50% 11.00%

Above 3 years to 5 years 9.50% 10.00%

Above 5 years 9.00% 9.50%

Savings account 4.00% 4.00%

  Savings bank account:

A savings bank account is an account which is for a people whenever they can
deposit and withdraw money as they wish. But there is a limitation that only once
or twice a week they make the transaction.

 Current account:

A current account is a type of deposit account repayable on demand and hence it

is known as demand deposit or demand liability of a commercial bank. Current
accounts are opened by business men, firms, companies, public enterprise etc.,
whose banking transactions happen to be numerous on every working day.

According to the Dictionary of banking a current account has been defined as “a

running and active account on which cheques are drawn, and to which credits are
paid”.

3.10 LOANS AND ADVANCES:

Over the year the bank has introduced many schemes that cater the people

1. Housing loan.

2. Secured and unsecured loans.

3. Vehicle loans…… etc.

HOUSING LOAN:

1. Eligibility:

Membership for 6 months.

2. Purpose:

Loans sanctioned for constructions of house. Purpose of flat / house repair /

renovation / alteration of existing house / flat purchase of BDA sites.

3. Legal opinion:

To be obtained from advocate of banks panel.

4. Amount of loan:
a) Maximum of 10 lakhs.
b) Rs.1 lakh for repairing RBI norms.
5. Security:

Mortgage of immovable security.

6. Interest:

12% p.a plus 25 for delayed payment of installments’ wherever applicable.

7. Service charge:

0.5% on the amount of loan and minimum Rs. 750/- along with the application.
 8. Margin to be met by the applicant:

 40% of the values of the immovable property.

 30% of the cost in the case construction repairs.

9. Share amount:

5% of the loan sanctioned.

10. Stages of release:

Foundations: 25% of the sanctioned limit. Roofing / plastering: 50% on the

completion and ready for occupation 25% of the sanctioned limit.

The applicant has to submit the stages of the eligibility amount building will be
inspected by the bank official before release of the installments.

11.Repayable:

Up to 18 months where the loan is availed for the purchase and construction
house / flat installments will commence one month after registration. Where
the loans is availed for construction of house for the repayment of installments
towards the principle will start after 12 months from the date of first release or
completion of the building whichever is earlier. However the interest payment
will start from the following month of withdrawal of loan.

12.Other Conditions:
The security will be released only after the borrower clears all other liabilities
to the bank including indirect liabilities.

MORTGAGE LOANS:

1. Eligibility :

Membership for 6 months te applicant can utilize the sanctioned limit for any
purpose.

2. Security:

The building should be mortgage to the bank. Copy of the return to the
produced loans of Rs.500000 above.

3. Limit:

Maximum 10 lakhs based on repaying capacity of the applicant.

4. Quantum of loans:

50% of the values of the building will be considered for sanction.

5. Repayment:

120 months.

6. Documents to be produced:

Original titled deed of the property along with E< C and connected reserve
record. Followed by the satisfactory legal opinion from the advocate of the
banks panel.

7. Service charge:

0.5% on the limit sanctioned.

8. Share amount:

5% on the limit sanctioned.

Joint loan:

1. Eligibility:

Membership for 6 months. Permanent government employees and PSU‟s,

corporation and private sectors with a minimum 5years’ service.

2. Quantum of loans:

Up to Rs.10000/- for unproductive purpose. (5 times of net salary)Up to

Rs.25000/- for productive purpose. (10 times of net salary) Up to Rs.50000/-
for productive purpose, check of facility is available from the employer. (10
times of net salary)

3. Share amount:

10% of the loan sanctioned. Re-payment maximum of 50 installments

depending on the quantum of loans.

4. Rate of interest:
14% subject to revision from time to time.

5. Security:

Hypothecation of asset purchased. Third party guarantee.

3.11 COMPITATORTS OF KAVERI GRAMEENA BANK

The major competitors are-

1. Corporate banks.

2. Commercial banks.

3. Small industrial development bank of India.

4. Amanath scheduled bank.

5. Land bank.(agriculture bank)

6. Small industrial service institution.

7. Sham rao vital co-operative bank.

3.12 CORPORATE SOCIAL RESPONSIBILITY

Kaveri grameena bank follows certain „standard of conduct‟ or „quality policy‟ that
will be enforced equitability at the organization levels.

They are:-

Towards customers

o Quality service

o Error reconciliation

Towards employees

o Equal employment opportunities

o Good work place environment

o Employee privacy

o Employee development

o Compensation & benefits

Towards share holders

o Protection of assets

o Timely payment of dividends.

3.13 SWOT ASSESSMENT

Kaveri grameena bank was great learning experience and certainly enables me for
the systematic evaluation of the strength, weakness, opportunities and threats of
the bank anf Indian financial sector.

STRENGHS:

 As the support of government in its functioning.

 It is on open pro-active, team based and learning organization.
 Repayment period is very flexible.
 One of the top best rural bank in India.

WEAKNESS:

 Governmental culture in the organization.

 It operates only in the regional level.
 Lakh of advertising.
 Requires training program due to introduction of many new schemes &
technologies

OPPORTUNITIES:

 Introduce online and mobile banking.

 Mutual funds schemes.
 Insurance schemes.
 Raising the capital from the entire source.
THREATS:

 There will be no guarantee of the recovery of credit.

 Fails to provide update facility to their customers.
 Establishment of private banks, increasing the completion.
 Global economic slowdown.
 CHAPTER 04

ANALYSIS AND INTERPRETATIONS

Objective 1- The Impact of Credit Management on the Profits of

Bank.

4.1ANALYSIS OF SPREAD AND RETURN ON INVESTMENT

(ROI):

The spread is a reward for liquidity risk generated by transforming money into
loans and also a reward for the selection and monitoring of the right kind of
borrowers. It is thus an information premium. The spread also provides sufficient
margins for banks to continue operating in the market.

Return on Investment (RoI) is the investment’s ability to achieve a return due to

its use. Return on investment is expressed as a percentage of investment used
(Almaghbob, 1991). RoI reveals area where capital is being effectively employed.
This information is helpful in obtaining a desired balance in the use of facilities
(Terry, 1985). The major reasons for using the RoI are:

1. Most people can understand RoI equally.

2. RoI combines three critical performance measures – variables scale,

earnings and investment.

3. The RoI technique is popular with financial analysts, investors, creditors

and other external information users.

4. There are some advantages for using RoI. RoI focuses on profits, objective
 to cost and profits and the readily available data.

Interest rate spread of a banking institution indicates the difference between the
interest rate charged to borrowers and the rate paid to depositors. Bank specific
factors play a significant role in the determination of interest rate spreads. These
include bank size, credit risk as measured by non-performing loans to total loans
ratio, return on average assets and operating costs all of which positively influence
interest rate spreads.

Return on Investment determines the comprehensive performance of an

organization. The performance of such a unit is best measured with a metric that
relates profits earned to the level of physical and financial assets employed in the
investment center. Return on Investment (ROI) is the most important ratio which
is the percentage of return on funds invested in the business by the organization.
ROI reveals area where capital is being effectively employed. The discussion in
this chapter is focused on the analysis of spread and Return on Investment of the
Kaveri Grameena Bank during the study period.
4.1.1 SPREAD ANALYSIS OF KAVERI GRAMEENA BANK

Data regarding the spread indicating the difference between interest earned minus
the interest paid was obtained for a period of five years from 2013-14 to 2017-18.

.TABLE 4.1 SPREAD ANALYSIS NET INTEREST INCOME

Year Interest Earned Interest Paid Spread

2013-14 5289748 2931323 2358425

2014-15 6899490 4112954 2786536

2015-16 8711234 5315444 3395790

2016-17 9623548 6221542 3402006

2017-18 11547192 7798684 3748508

. * SPREAD = INTEREST EARNED – INTEREST PAID

14000000

12000000

10000000

8000000 Interest Earned

Interest Paid Spread
6000000

4000000

2000000

0
2013-142014-152015-162016-172017-18

GRAPH 4.1 SPREAD ANALYSIS NET INTEREST INCOME

INTERPRETATION:

The details in the above table indicate a continuous rise in the interest earned from
the loan assets during the five years from 2013-14 to 2017-18. The rise in the
interest earned has been quite steep during the last three years from 2014-15 to
2017-18. This indicates the Bank’s enhanced level of its loan assets during the
period. Bank’s interest earned rose from Rs.5289748 thousand in 2013-14 to
Rs.8711234 thousand in 2016 and further to Rs.11547192 thousand in 2017-18.
Similarly, interest paid by the Kaveri Grameena Bank has indicated a continuous
and a sharp increase during the corresponding period. Interest paid on deposits
and borrowings rose from Rs.2931323 thousands in 2016-17 to Rs.5315444
thousand in 2018-19 and further to a high of Rs.7798684 thousand in 2017-18.
This shows an increase of more than double the amount of interest paid in 2017-
18 compared to the interest amount paid in 2013-14.

The increase in the spread which is the difference between interest earned and
interest paid during the five years from 2013-14 to 2017-18 has indicated a similar
trend. The spread has gone up from Rs.2358425 thousand in 2013-14 to
Rs.3748508 thousand in 2017-18. A continuous and positive increase in the
spread indicates that Kaveri Grameena Bank has managed its assets and
liabilities well in terms of loaning and deposits mobilization during the five
years covered by the study.
 TABLE 4.2 SPREAD RATIO (AS A PROPORTION OF TOTAL ASSETS)

Year Spread Total Assets Spread Ratio (%)

2013-14 2358425 74990268 3.145

2014-15 2786536 84080107 3.314

2015-16 3395790 103922506 3.268

2016-17 3402006 123285286 2.759

2017-18 3748508 141085533 2.657

Spread Ratio (%)

3.500

3.000

2.500

2.000
Spread Ratio (%)
1.500
1.000

0.500

0.000
2013-142014-152015-162016-172017-18

GRAPH 4.2 SPREAD RATIO (AS A PROPORTION OF TOTAL ASSETS)

INTERPRETATION:

The spread Ratio has remained largely stable during the first three years from
2013-14 to 2015-16. However the Ratio had declined during the next two years.
The ratios indicate a fluctuating trend as the spread Ratio declined marginally rose
3.1450 in 2013-14 to 3.3141 in 2014-15 but declined to 3.2676 in 2014-15 but
declined to 3.2676 in 2015-16. A further decline to 2.7595 in 2016-17 and
reaching a low of 2.6569 in 2017-18. The declining trend of spread ratio during
the last 3 years from 2015-16 to 2017-18 indicates that the Kaveri Grameena
Bank interest and earnings have not been able to continue consistently to the
total assets of the bank during the study period.
SPREAD RATIO (AS A PROPORTION OF INVESTMENTS)

TABLE 4.3 SPREAD RATIO

Year Spread Investment Spread Ratio (%)

2013-14 2358425 72489908 3.253

2014-15 2786536 79815736 3.491
2015-16 3395790 100215120 3.389
2016-17 3402006 118367723 2.874
2017-18 3748508 137138987 2.733

Spread Ratio (%)

4.000
3.500
3.000
2.500
2.000
1.500
1.000 Spread Ratio (%)
0.500
0.000

2013-142014-152015-162016-172017-18

GRAPH 4.3 SPREAD RATIO

INTERPRETATION:

Investment by Banks constitutes an important income earning assets. Kaveri

Grameena Bank has made investment of a huge magnitude ranging from
Rs.72489908 thousand in 2013-14 to Rs.137138987 thousand in 2017-18. The
spread during the same period rose from Rs.2358425 thousand to Rs.3748508
thousand. The Spread Ratio as a proportion of Investment has shown a declining
trend during the four years from 2014-15 to 2017-18. Spread Ratio as a proportion
of Investment rose from 3.2535% in 2013-14 to 3.4912 in 2014-15. However it
declined to 3.3885% in 2015-16 and further to a low of 2.8741% in 2014 and to
2.7334% in 2017-18. Thus, the contribution of interest spread to Bank’s
investment has been inconsistent and on a lower side during the study period.
4.1.2 RETURN ON ASSETS (ROA) OF KGB

Return on assets of the bank is calculated by dividing Net Profit by Total

Assets viz.

The Return on Assets on KAVERI GRAMEENA BANK indicated

for a period of 5 years

TABLE 4.4 RETURN ON ASSETS

Return on Assets
Year Net Profit Total Assets
(%)

2013-14 2749446 74990268 3.666

2014-15 3771498 84080107 4.486
2015-16 5426230 103922506 5.221
2016-17 6365746 123285286 5.163
2017-18 7403210 141085533 5.247
 Return on Assets (%)
6.000

5.000

4.000

3.000
Return on Assets (%)

2.000

1.000

0.000
2013-14 2014-15 2015-16 2016-17 2017-18

GRAPH 4.4 RETURNS ON ASSETS

INTERPRETATION:

The details in table indicate a continuous rise in the ratio of Return on Assets of
Kaveri Grameena Bank during the five-year period from 2013-14 to 2017-18. The
ratio calculated by dividing Net Profit by total assets has gone up from 3.6664 in
2013-14 to 4.4856 percent in 2014-15 and further to 5.2473 percent in 2017-18.
Thus, there has been a good contribution of net profits to total assets of the KGB
during the corresponding period. It is significant to note that there is a continuous
rise in the net profit and total assets simultaneously during the corresponding
period. Hence the continuous rise in the percentage Return on Assets is an
encouraging trend for the Bank’s Assets management during the period.
4.1.3 RETURN ON INVESTMENT (ROI) OF KAVERI
GRAMEENA BANK:

Return on Investment (ROI) is financial ratio, which is commonly used to

evaluate performance of a company. Bank’s investment process is based on a
systematic combined top down/bottom up approach to market and securities
analysis. Bank’s experience portfolio managers constantly track the development
of their assets, paying particular attention to their requirements and actively
implementing the guidelines set out in their investment policy according to their

investment strategy.
The details of the Return on Investment (ROI) of Kaveri Grameena Bank
are indicated

TABLE4.5 RETURN ON INVESTMENT

Interest Return on
Year Investment
Income Investment (%)

2013-14 72489908 5289748 7.297

2014-15 79815736 6899490 8.644
2015-16 100215120 8711234 8.693
2016-17 118367723 9623548 8.130
2017-18 137138987 11547192 8.420
 Return on Investment (%)
9.000

8.500

8.000

7.500
Return on Investment (%)

7.000

6.500
2013-14 2014-15 2015-16 2016-17 2017-18

GRAPH 4.5 RETURNS ON INVESTMENT

INTERPRETATION:

The details in indicate a continuous rise in the interest on investment and the
amount of investment during the five years from 2013-14 to 2017-18. Based on
these figures the ratio of Return on Investment has been shown in the Table There
is an almost continuous rise in the Return on Investment from 7.2972 percent in
2013-14 to 8.4201 percent in 2017-18. Thus, the performance of the KGB in
managing its investment earnings is satisfactory.
4.2 ANALYSIS OF CREDIT OPERATIONS

Credit risk of a bank relates to the inability or unwillingness of a borrower or

counter party to meet its obligations in accordance with the agreed terms. Credit
risk is defined as the possibility of losses associated with diminution in the credit
quality or counter parties. In a bank’s portfolio, losses stem from outright default
due to inability or unwillingness of a customer or counterparty to lending, trading,
settlement and other financial transactions. Alternatively losses result from
reduction in portfolio value arising from actual or perceived deterioration in credit
quality.

Credit risk arises from a bank’s dealings with an individual, corporate, bank,
financial institution or sovereign. Credit risk is inherent to a financial intermediary
and its management is perhaps more important than managing interest rate and
liquidity risks.

Credit risk management involves evaluating and managing the growth and
diversification of loans/investments and establishing the tolerance limits for credit
and investment. The entire exercise of credit risk management can be segregated
into micro and macro level risk management. While the credit risk management at
the micro level focuses independently on each credit transaction of the bank, the
macro level credit risk management targets the total credit exposure of the bank.
Credit risk management encompasses (i) identification (ii) measurement (iii)
monitoring and (iv) control of the credit risk exposures.
Objective 2- To Examine The Effects Of Non Performing On Gross
Advance And Net Advances On The Profitability Of The Bank

4.3 GROWTH OF NON-PERFORMING ASSETS OF KAVERI

GRAMEENA BANK– AN ANALYSIS

Growth of Non-performing Assets in India has been a major concern for banks.
NPAs reflect the performance of banks and they are primary indicators of credit
risk. The gross NPAs of all the scheduled RRB’S were at 5.1 percent of the total
advances in September 2017-18. The ratio of stressed assets including the
Strategic Debts Reconstruction was at 11.3 percent. In money terms the impact is
Rs.7 lakh crore which is ruining the health of the banks and progress of the
economy. High level of NPAs suggests high probability of large number of credit
defaults that affect the profitability and net worth of banks and also erodes the
value of the asset. The NPAs growth involves the necessity of provisions, which
reduces the overall profits and shareholders’ value. At present the core financial
problem of the banks is NPAs. Concrete efforts have to be made to improve
recovery performance and control the growth of NPAs.

NPAS POSITION OF KAVERI GRAMEENA BANK

Kaveri Grameena Bank has been experiencing a trend of growing NPAs during
the study period from 2013-14 to 2017-18. The different indicators of the growing
NPAs of the Bank have been analyzed here as part of credit risk of the Bank.
4.3.1 PERCENTAGE OF GROSS NPAS TO TOTAL ADVANCES

The data obtained from the official publications of Kaveri Grameena Bank
during the study period indicate a slowdown in the Gross NPAs from Rs.2.58
crores in 2016-17 to Rs.88.93 crore in 2018-19. However a sharp increase in the
gross NPAs during the last two years to reach a high of Rs.213.85 crore in 2017-
18 is observed. During the same period the percentage of Gross NPAs and
percentage of total advances have indicated a similar trend. There is a decline of
Gross NPAs from 2.54% in 2013-14 to 1.58% in 2015-16 and an increase from
then onwards to reach 2.96% of the total advances in 2017-18. The trend of the
Gross NPAs to total advances during the corresponding period is similar.

TABLE 4.6 PERCENTAGES OF GROSS NPAS TO TOTAL ADVANCES

% of Gross
Trend in % of
Gross Total NPA to
Year Gross NPA to
NPA Advances Total
Total Advance
Advances
2013-14 92.58 3640.81 2.54 100
2014-15 89.17 4616.89 1.93 75.98
2015-16 88.93 5622.14 1.58 62.21
2016-17 126.65 6445.01 1.97 77.56
2017-18 213.85 7229.52 2.96 116.54
 % of Gross NPA to Total Advances
3.5

2.5

2 % of Gross NPA to Total

Advances
1.5
1

0.5

0
2013-14 2014-15 2015-16 2016-17 2017-18

GRAPH 4.6 PERCENTAGES OF GROSS NPAS TO TOTAL ADVANCES

INTERPRETATION:

The details in the above table indicate that the Bank has increased its loan
advances at faster rate during the study period from Rs.3640.81 crore in 2013-14
to Rs7229.52 crore in 2017-18. However the Bank’s performance in recovery of
the loans has not been satisfactory. The percentage of Gross NPAs has gone up
considerably by the end of the five year period and the growth trend of Gross
NPAs has gone up steeply from 75.98% in 2014-15 to 116.54% in 2017-18.
Hence the Bank’s performance in managing its loan assets has been
unsatisfactory.
4.3.2 NET NPAS OF KAVERI GRAMEENA BANK

Net NPAs of the Bank have indicated an upward movement from Rs.43.57 crore
in 2014 to Rs124.04 crore in 2017-18. Net NPAs refer to the amount of NPAs
after deducting provisions from Gross NPAs i.e.

TABLE 4.7 NET NPAS OF KAVERI GRAMEENA BANK

Provision for
Year Gross NPA Net NPAs
NPA’s
2013-14 92.58 92.58 0
2014-15 89.17 89.17 0
2015-16 88.93 88.93 0
2016-17 126.65 83.08 43.57
2017-18 213.85 89.81 124.04

The sharp increase in the Net NPAs of Kaveri Grameena Bank indicates the
failure of the Bank in effective management of its loan assets during the two years
of the study period.
4.3.3 PERCENTAGE OF NET NPAS TO NET ADVANCES

It is significant to note that net advances of Kaveri Grameena Bank have gone
up continuously from Rs3548.24 crores in 2013-14 to Rs.7139.73 crore in 2017-
18. During this period net NPAs were zero for the first 3 years i.e. 2013-14 to
2015-16. However the steep increase in net NPAs during the last two years
reached a high level of Rs.43.57 crore in 2016-17 and Rs.124.04 crore in 2017-18.
During the same period net advances have gone up from Rs.3548.24 crore in
2013-14 to Rs.7139.72 crore in 2017-18. The net NPAs as percentage of net
advances were negative during 2013-14 to 2015-16 but stood at 0.68% in 2016-17
and rose to 1.74% in 2017-18. The trend ratio of net NPAs to net advances were
high at 168% in 2016-17 and 348% in 2017-18. The data clearly indicates the
Bank’s failure in controlling net NPAs during the two years 2016-17 and
2017-18.

TABLE 4.8 PERCENTAGES OF NET NPAS TO NET ADVANCES OF KAVERI

GRAMEENA BANK
% of Net NPA
Net
Year Net NPA to Net Trend (%)
Advances
Advances
2013-14 0 3548.24 0 100
2014-15 0 4427.72 0 100
2015-16 0 5533.21 0 100
2016-17 43.57 6361.93 0.68 168
2017-18 124.04 7139.72 1.74 348
4.3.5 CREDIT DEPOSIT RATIO OF KAVERI GRAMEENA BANK
DURING THE STUDY PERIOD

Credit Deposit Ratio indicates the use of bank’s deposits for loan advances at a
particular ratio. A higher ratio of credit deposits may create risks for the banks in
case of lower recovery and its inability to meet the depositor’s claims on their
deposit amount. It is considered safe to maintain a credit deposit ratio of 65%
beyond which the bank’s risks of meeting deposit liabilities may be more.
In case of the Kaveri Grameena Bank the credit deposit ratio has been higher
than the norm of 65% during the entire period of five years from 2013-14 to 2017-
18. Hence the credit risk is higher as indicated by the ratio. Credit deposit ratio
of the Bank rose from 67.35% in 2010-11 to 76.05% in 2015-16 and stood at
73.16% in 2017-18. Hence Bank’s credit deposit ratio has been unsafe and
credit risk is more. The trend ratio of credit deposit ratio is indicative of higher
level and hence unsatisfactory.

TABLE 4.9 CREDIT DEPOSIT RATIO OF KAVERI GRAMEENA BANK

Credit Deposit Ratio

Year Trend (%)
(%)
2013-14 67.35 100
2014-15 74.63 110.81
2015-16 76.05 112.92
2016-17 74.69 110.9
2017-18 73.16 108.63
 Trend (%)
115

110

105

100
Trend (%)

95

90
2013-14 2014-15 2015-16 2016-17 2017-18

GRAPH 4.7 CREDIT DEPOSIT RATIO OF KAVERI GRAMEENA BANK

4.3.6 PERCENTAGE OF GROSS NPAS TO GROSS PRIORITY
SECTOR ADVANCES OF KAVERI GRAMEENA BANK
There has been a continuous increase in the Gross NPAs from Rs.92.58 crore in
2013-14 to Rs.213.85 crore in 2017-18. Similarly there is a continuous increase in
gross priority sector advances from Rs.3338.38 crore in 2013-14 to Rs.6141.89
crore in 2017-18. This has resulted in the increase in the percentage of Gross
NPAs to gross priority sector. Advances rose from 2.77 percent in 2013-14 to 3.48
percent in 2017-18. The trend rate of growth of Gross NPAs to Gross Priority
Sector Advances has gone up from 83.75% in 2014-15 to 125.63% in 2017-18.
Thus the NPAs growth has been reflective of the credit risk of the Bank which has
created much imbalance between assets and liabilities. This calls for better
management of the loan assets to priority sector to control the growth of NPAs.

TABLE 4.10 PERCENTAGES OF GROSS NPAS TO GROSS PRIORITY SECTOR

ADVANCES DURING THE STUDY PERIOD

Gross Priority
Gross % of Gross
Year Sector Trend (%)
NPA NPA to GPSA
Advance
2013-14 92.58 3338.38 2.77 100
2014-15 89.17 3842.25 2.32 83.75
2015-16 88.93 4779.15 1.86 67.15
2016-17 126.65 5598.34 2.26 81.59
2017-18 213.85 6141.89 3.48 125.63
 % of Gross NPA to GPSA
4
3.5
3
2.5
2
1.5

% of Gross NPA to GPSA

1
0.5
0

2013-142014-152015-162016-172017-18

GRAPH 4.8 PERCENTAGE OF GROSS NPAS TO GROSS PRIORITY SECTOR ADVANCES

DURING THE STUDY PERIOD
Objective 03- The Impact Of Capital Adequacy Ratio On The
Performance Of The Bank.
4.4 CAPITAL TO RISK ASSETS RATIO OF KAVERI
GRAMEENA BANK
Capital Adequacy Ratio is a measure of bank’s capital. It is expressed as
percentage of a bank’s risk weighted credit exposure. It is also known as “Capital
to Risk Weighted Assets Ratio-CRAR”

Ever since its introduction in 1988, capital adequacy ratio has become an
important benchmark to assess the financial strength and soundness of banks. The
stipulated regulatory norm of CAR is a percent. The CRAR of Kaveri Grameena
Bank has remained above the norm during the study period from 2013-14 to 2017-
18. The Ratio has varied between 17.84 percent in 2017-18 and 19.46 percent in
2015-16. Thus, the bank has maintained a healthy ratio of capital as it has been
above the norm of 9 percent. However, the ratio has fluctuated during the five
year period from year to year. The change was -0.11% in 2014-15 compared to
2013-14 and increased to +0.05% in 2015-16 but slipped further to -0.55% in
2016-17 over 2015-16 and further to -0.94% in 2017-18 over 2016-17. The trend
in CRAR has varied between 99.06% in 2017-18 and 108.05% in 2015-16.
 TABLE 4.11 CAPITAL TO RISK ASSETS RATIO

Trend in CRAR
Year CRAR (%) % of Change
(%)
2013-14 18.01 0 100
2014-15 17.99 -0.11 99.89
2015-16 19.46 8.05 108.05
2016-17 17.91 -0.55 99.45
2017-18 17.84 -0.94 99.06

4.4.1 TIER-I – CAPITAL RATIO OF KAVERI GRAMEENA

BANK
There has been a decline in the CRAR of Tier-I Capital Ratio from 17.12%, in
2013-14 to 17.10% in 2014-15. However, there has been a good rise in the CRAR
of Tier-I capital ratio to 18.59% in 2015-16. But a decline to a lower level of
CRAR to 16.74% of Tier-I capital ratio in 2016-17 and further to 16.59% of Tier-
I capital ratio of Kaveri Grameena Bank in 2017-18. Percentage change in
CRAR has indicated a negative decline to -0.12% in 2014-15 compared to 2013-
14 and a steep rise to +8.59% in 2016. Again a declining trend to -2.22% in 2017
and -3.10% in 2017-18 is observed. The trend ratio of the CRAR of Kaveri
Grameena Bank during the same period has indicated similar movement. From
100% in 2013-14 the trend declined to 99.88% in 2014-15 with a steep rise to
108.59% in 2015-16. There is again a decline to 97.78% in 2016-17 and marginal
decline to 96.90% in 2017-18.
 TABLE 4.12 TIER-I CAPITAL RATIO OF KAVERI GRAMEENA BANK

CRAR Tier-I
Year % Change Trend (%)
Capital (%)
2013-14 17.12 100
2014-15 17.1 -0.12 99.88
2015-16 18.59 8.59 108.59
2016-17 16.74 -2.22 97.78
2017-18 16.59 -3.1 96.9

CRAR Tier-I Capital (%)

19

18.5

18

17.5
CRAR Tier-I Capital (%)
17
16.5

16

15.5
2013-142014-152015-162016-172017-18

GRAPH 4.9 TIER-I CAPITAL RATIO OF KAVERI GRAMEENA BANK

4.4.2 TIER-II CAPITAL RATIO OF KAVERI GRAMEENA BANK
There has been an upward movement CRAR in Tier-II capital of Kaveri
Grameena Bank during the study period from 2013-14 to 2017-18. The CRAR
was 0.89% during 2013-14 and 2014-15 but marginally declined to 0.87% in
2015-16. There has been a good rise in CRAR of the Kaveri Grameena Bank to
1.17% in 2016-17 and further to 1.25% in 2017-18. The percentage change in the
CRAR of the Bank shows a negative change of -2.25% in 2015-16 compared to
the previous period. A steep increase to +31.46% in 2017 and further to 40.45% in
2017-18 is observed. The trend movement of CRAR of the Bank indicates decline
from 100% in 2013-14 and 2014-15 to 97.75% in 2015-16. However the CRAR of
the Bank has steeply increased to 131.46% in 2016-17 and further to 140.45% in
2017-18.
The CRAR position of the Kaveri Grameena Bank has been unsatisfactory in
relation to its Tier-II capital while it is favorable in case of Tier-I capital.
 TABLE 4.13 TIER-II CAPITAL RATIO OF KAVERI GRAMEENA BANK

CRAR Tier-II
Year % Change Trend (%)
Capital (%)
2013-14 0.89 100%
2014-15 0.89 100%
2015-16 0.87 -2.25% 97.75%
2016-17 1.17 31.46% 131.46%
2017-18 1.25 40.45% 140.45%

CRAR Tier-II Capital (%)

1.4

1.2

0.8
CRAR Tier-II Capital (%)
0.6
0.4

0.2

0
2013-142014-152015-162016-172017-18

GRAPH 4.10 TIER-II CAPITAL RATIO OF KAVERI GRAMEENA BANK

 4.5 GROSS NPA & TOTAL ADVANCES

Year Gross NPA Total Advances

2013-14 92.58 3640.81

2014-15 89.17 4616.89
2015-16 88.93 5622.14
2016-17 126.65 6445.01
2017-18 213.85 7229.52

Correlation (r) = 0.7943 N = 5

Test of significance of a correlation co-efficient

T-value = 2.2644 Degree of Freedom = 3

Directional probability = 0.05423496

Non-directional probability = 0.10846992

 GRAPH 4.11 GROSS NPA & TOTAL ADVANCES

8000

7000

6000

5000
Gross NPA
4000 Total Advances

3000
2000

1000

0
2013-142014-152015-162016-172017-18

INTERPRETATION:

The above table and graph shows the Gross NPA and Total Advances for the
study period. During the study period Gross NPA decreased continuously till the
financial year 2015-16. After 2015-16 there is greater increase in Gross NPA,
whereas total advances increased continuously. Further, the table shows that the
correlation co-efficient between the variables is 0.7943. This shows that there
exists positive correlation between the variables. The direction of probability of
testing the significant of the relationship between the variables is 0.05423496
which is greater than the significance level probability of 0.05. Therefore, we
accept H0 and hence, the said correlation between the variable is not
significant @ 5% significant level for 3 degree of freedom.
 4.6 GROSS NPAS & NET ADVANCES

Year Gross NPA Net Advances

2013-14 92.58 3548.24
2014-15 89.17 4427.72
2015-16 88.93 5533.21
2016-17 126.65 6361.93
2017-18 213.85 7139.72

Correlation (r) = 0.7952 N = 5

Test of significance of a correlation co-efficient

t-value = 2.2712 Degree of Freedom = 3

Directional probability = 0.05388721

Non-directional probability = 0.10777442

 8000

7000

6000

5000
Gross NPA
4000 Net Advances

3000
2000

1000

0
2013-142014-152015-162016-172017-18

GRAPH 4.12 GROSS NPAS & NET ADVANCES

INTERPRETATION:

The above table and graph shows the Gross NPA and Net Advance for the study
period. During the study period Gross NPA decreased continuously till F.Y. 2015-
16. After 2015-16 there is greater increase in the gross NPA, whereas Net
Advances increased continuously. Further the table shows that the correlation co-
efficient between the variables is 0.7952. This shows that there exists a positive
correlation between the variables. The directional probability of testing the
significance of the relationship between the variables is 0.05388721 which is
greater than the significant level probability of 0.05. Therefore, we accept H0
and hence, the said correlation between the variables is not significant @ 5%
significance level for 3 degree of freedom.
 4.6 CREDIT DEPOSIT RATIO & GROSS NPAS TO TOTAL ADVANCES RATIO

Credit Deposit Gross NPAs to total

Year
Ratio (%) Advances Ratio (%)

2013-14 67.35 2.54

2014-15 74.63 1.93
2015-16 76.05 1.58
2016-17 74.69 1.97
2017-18 73.16 2.96

Correlation (r) = -0.6030 N = 5

Test of significance of a correlation co-efficient

t-value = -1.3092 Degree of Freedom = 3

Directional probability = 0.14085276

Non-directional probability = 0.28170551

 80

70

60

50 Credit Deposit Ratio (%)

40
Gross NPAs to total Advances
30 Ratio (%)
20

10

0
2013-142014-152015-162016-172017-18

GRAPH 4.13 CREDIT DEPOSIT RATIO & GROSS NPAS TO TOTAL ADVANCES RATIO

INTERPRETATION:

The above table and graph shows the Credit Deposit Ratio and Gross NPAs to
total Advances Ratio for the study period. During the study period the Credit
Deposit Ratio was lower in the F.Y. 2013-14 and it was higher in the F.Y. 2015-
16. Whereas Gross NPAs to total Advances Ratio was lower in the F.Y. 2015-16
& it was higher in the F.Y. 2017-18. Further, the table shows that the correlation
co-efficient between the variables is -0.6030, this shows there exists negative
correlation between the variables. The directional probability for testing the
significance of the relationship is 0.14085276, which is higher than the significant
level probability of 0.05 and therefore we accept H0 and hence, the said
correlation between the variables is not significant @ 5% significance level and
for 3 Degree of freedom.
4.8 GROSS NPAS TO TOTAL ADVANCES RATIO AND CAPITAL TO RISK ASSET RATIO

Gross NPAs to total Capital to Risk Asset

Year
Advances Ratio (%) Ratio (%)
2013-14 2.54 18.1
2014-15 1.93 17.99
2015-16 1.58 19.46
2016-17 1.97 17.91
2017-18 2.96 17.84

Correlation (r) = -0.6629 N = 5

Test of significance of a correlation co-efficient

t-value = -1.5377 Degree of Freedom = 3

Directional probability = 0.4134236

Non-directional probability = 0.22268472

 25

20

15 Gross NPAs to total Advances

Ratio (%)
Capital to Risk Asset Ratio (%)
10

0
2013-142014-152015-162016-172017-18

GRAPH 4.14 GROSS NPAS TO TOTAL ADVANCES RATIO AND CAPITAL TO RISK
ASSET RATIO

INTERPRETATION:

The above table and graph reveals the Gross NPAs to total Advances Ratio and
capital to risk Asset Ratio for the period. During the study period, Gross NPA to
total advances Ratio was lower in the F.Y. 2015-16 and it was higher in F.Y.
2017-18. Whereas, Capital to risk Asset Ratio was lower in the F.Y. 2016-17 and
it was higher in the F.Y. 2015-16.
Further, the table reveals that the correlation co-efficient below the variables is -
0.6629. This shows there exists a negative correlation between the variables.
The directional probability for testing the significance of the relationship is
0.11134236 which is higher than the significance level probability of 0.05 and
therefore we accept H0 & hence the said correlation below the variables is not
significant @ 5% significance level.
 CHAPTER 05

SUMMARY OF FINDINGS AND SUGGESTIONS

The study has revealed significant trends regarding the credit Management in
general by the study unit of Kaveri Grameena Bank in particular. A summary of
these findings based on the study have been provided in this Chapter to provide an
overall view of the research study in its different dimensions. The findings have
given an insight into the different areas of Asset-Liability Management and the
constraints faced by the bank in implementing the same. In the light of these
findings a few
useful suggestions have been offered for improvement.

5.1 FINDINGS

OBJECTIVE 01: THE IMPACT OF CAPITAL ADEQUACY RATIO ON

THE PERFORMANCE OF THE BANK

 Capital adequacy ratio (CAR) is an important measure of “safety and

soundness” for banks and depository institutions because it serves as a
cushion for absorbing losses.
 It has become one of the major benchmarks for financial institutions.
This study is an attempt to empirically examine influential factors
(precisely seven financial factors) over capital adequacy.
  The results obtained indicate that there is a significant positive
relationship between bank size and capital adequacy ratio of banks,
which means when bank size rises.

OBJECTIVE 02: TO EXAMINE THE IMPACT OF CREDIT

MANAGEMENT ON THE PROFITS OF THE BANK.

 Interest Rate Risk is caused by changes in market interest rates

affecting a bank’s financial position. Changes in interest rates impact a
bank’s earnings through changes in Net Interest Income (NII).
 Changes in interest rate also impact a bank’s Market Value of Equity
(MVE) through changes in the economic values of its interest sensitive
assets and liabilities and off balance sheet positions.
 The analysis of the Kaveri Grameena Bank’s interest earned and
interest expended has indicated significant trend. Both interest earned
and interest expended by the Bank have gone up during the study
period from 2013-14 to 2017-18.
 The amount of interest earned has been higher than the interest
expended during all the five years. This indicates a good and favorable
management of the asset liability by the Bank. Further testing the
hypothesis to rate of interest earned and rate interest expended reveals
that there is significant variation between the two.
 Deposits and borrowings constituting the liabilities of the Bank have
gone up substantially during the study period. The growth rate of
deposits has been particularly higher during the last three years of the
study period.
  The growth of deposits of Kaveri Grameena Bank has been
continuous. Compared to the total deposits, the borrowings of the Bank
during the study period from 2013-14 to 2017-18 have been much
lower.

OBJECTIVE 03: TO EXAMINE THE EFFECTS OF NON PERFORMING

ON GROSS ADVANCE AND NET ADVANCES ON THE
PROFITABILITY OF THE BANK

 NPA’s Non-performing assets are the assets of the banks which are not
performing, banks to run the economy also provide short-term and
long-term loans to the industries, individuals, farmers, a bank also gives
loan against the home, vehicles and many more.
 The borrower unable to pay the interest amount on time as well as
unable to return the principal amount too, in that case, bank declares
that amount as nonperforming.
 The bank also runs the recovery scenario for that amount, the impact of
NPA on the profitability of banks brings a dent on the balance sheet of
the bank, but until then the amount is nonperforming.in the current
scenario the non-performing assets level is favorable to the bank as it is
5% only.
5.2 SUGGESTIONS

To improve the working of the RRBs, the Dantawala Committee (1978), the
Kelkar Committee (1986) and the Khusro Committee (1989) have made a number
of suggestions. Some of these are enumerated below:

1. To improve the viability of RRBs, the Khusro Committee recommended that

the RRBs should be merged with the commercial banks. The merger would solve
the problems of accumulated losses, of insolvency, and of the in-built non-
viability of the majority of RRBs.

But it is wrong to presume that after merger with sponsor banks, the RRBs will be
viable because many branches of commercial banks are incurring huge losses.
Therefore, the suggestions made by the Kelkar Committee should be
implemented. They are the bifurcation of unwieldy RRBs, and the amalgamation
of small RRBs.

2. In order to strengthen the capital structure of RRBs, the Kelkar Committee

recommended the raising of issued capital of RRBs from Rs.25 lakhs to
Rs.100 lakhs and the authorised capital from Rs.1crores to Rs.5 crore.

3. As the very purpose of establishing RRBs is to transfer funds from urban

money market to rural centres, the State Governments should permit the
Panchayats and other quasi-government bodies functioning in rural areas to keep
their funds with the RRB branches functioning within their area of operations.

4. The State Governments should either re-organise agricultural credit societies

or establish new Farmers’ Service Societies through which RRBs can provide
production credit on a large scale and thereby the cost of servicing will be reduced
considerably.

5. The sponsor banks should play a more active role in advising and helping their
RRBs in managing their funds, in appraising loan schemes, in making proper end-
use of credit, and in providing staff for internal audit of RRBs.

6. The sponsor banks should charge a lower interest rate on the refinance to RRBs
and involve themselves less in RRBs short-term and non-schematic loans.

7. The sponsor banks should invest the deposits of RRBs in long-term

Government securities which are being kept in non-interest earning current
accounts.

8. To increase the profit margin, the RRBs should extend credit facilities to non-
target groups subject to a ceiling of 25 percent of their total outstanding
advances. The State Government should help the RRBs in recovering dues by
creating a proper climate for recovery and in taking action against willful
defaulters.

9. The RRBs should have their own recovery system with adequate trained
staff and organize recovery camps involving the Government officials, local
leaders and branch staff.

10. The business of rural branches of commercial banks should be handed over
to RRBs.

11. There should be uniform scales of pay for all the RRBs staff.
12. The RRBs should devise suitable strategies to develop banking habits
and practices among the rural folk by imbibing banking education and
awareness.

13. The RRBs should widen their sphere of activity. Instead of concentrating
mainly on lending, they should provide rural consultancy services, phased
credit programmes, create better avenues for employment, and take over the
work of farmers’ service societies.

14. Since RRB is an area specific and target specific bank, its working hours
should be suitably amended to enable the customers to make full use of its
facilities. It is inconsistent to have the usual office hours between 10 AM and 5
PM in a village where the customers are busy in the fields at that time.,
Therefore, the working hours of RRBs should be fixed according to the needs of
the area.

15. New RRBs should be opened in areas where SC/ST population predominates.

16. The entire recruitment process in the RRBs should be streamlined. Local
people should be preferred and training should be given on the problems of
rural life which are peculiar to the RRBs.
 5.3 CONCLUSION:

RRBs which were setup with the intention of extending credit to the rural poor
have succeeded in the objective of taking banking services to the villages, but
have however, failed to make a clear dent on credit to the rural poor during the
past 30 years of their existence. This has to be viewed in the context of the policy
framework for rural development adopted in India with focus on income and
employment generation and poverty alleviation. The renewed emphasis on
agricultural and rural development by the Government of India would lead to a
growing demand for different types of financial services in the rural areas, as
financial needs of the rural economy becomes diversified. The present structure of
rural credit may not be able to cater to the same. RRBs would be called upon to
play a greater role in providing such services due to their rural character and feel.
RRBs have to take over a larger share of credit disbursements calling for much
larger resource mobilization, as also greater efforts for their institutional
strengthening.
After nearly three decades of existence, the RRBs are facing many constraints
warranting an overhaul and serious consideration on the part of the policy makers
for their strengthening. This can be achieved not only through recapitalization, but
by simultaneously establishing a revamped legal, regulatory and supervisory
framework with emphasis on high quality of governance and management that
recognizes the real challenges confronting the RRBs. Only then can RRBs be
expected to meet the expectations of becoming vibrant rural financial institutions
capable of meeting the growing requirements of rural India.
In conclusion we can say that there is an imperative need for Indian banks to
address the issues relating to the establishment of ALM system in right earnest
and make it an effective tool for total Balance Sheet Management. Therefore,
Asset Liability Management is essential to both domestic and international
banking. The success of the RRB experiment of our state could set a unique
example of successful rural financial institutions with its set objective.