A

SYNOPSIS REPORT

A STUDY ON AGRICULTURAL FINANCING ANDNSURANCE

WITH REFERENCE TO

KOTAK MAHINDRA

A synopsis report submitted to Osmania University

In partial fulfillment for the Award of the Degree of

MASTER OF BUSIUNESS ADMINISTRATION

Submitted by

M. LIKITHA

HT NO: 2121-20-672-014

UNDER THE GUIDANCE OF

---------------------------------------

ARISTOTLE PG COLLEGE
(Affliated To Osmania University,Hyderabad)
Recognized By UGC under section 2(f) of UGC Act 1956
Beside Moinabad Police Station,
Chilkur, Moinabad ,Ranga Reddy District, Telangana.
(2020-2022)

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INTRODUCTION

Agricultural financing and insurance in India is an examination of credit to farm borrowers

for the financing and liquidity services. It is also regarded as studying those financial
intermediaries who provide the financial markets and agriculture with loan funding where
those intermediaries receive their loan capable funds. "Agricultural financing is just as
important as other inputs for agricultural production. Only if the farmers have money (funds)
can technical inputs be bought and used. Yet his own money is always insufficient and he
needs money or credit outside of it. Capitalizing farmers into new investment and/or adoption
of new technologies is farm finance. The significance of agricultural credit is further
strengthened by the unique role of Indian agriculture and its important role in alleviating
poverty in the macroeconomic framework. Since the start of the planned development era in
India, the emphasis on the institutional framework for agricultural credit is stressed in
recognition of the importance of agricultural credit in promoting agricultural growth and
development. It aims to address and assess the development of India's history and need for
agricultural funding, sources and magnitude of Agricultural financing and insurance in
india.

Until 1935, the money lenders had been farming the only source of credit. They used to
charge excessively high interest rates and follow severe practices while lending and
recovering. As a result, farmers had to pay heavy debts and many of them continued debt. By
the Reserve Bank of India Act of 1934 the Central Co-op of District. Agricultural lending and
improved agricultural lending have received momentum as well as the Bank's Act and Land
Development Banks Act. There was created a powerful alternative agency. A large credit was
easily available in terms of both granting and recovery loans at reasonable interest rates.

While the co-operative banks began financing agriculture in 1930 with their establishments,
the real impetus came only after the Independence, when appropriate legislation and policies
had been enacted. Then, by opening branches in rural areas and drawing deposits, bank
lending to agriculture has made phenomenal progress.

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HISTORY OF FINANCING AGRICULTURE IN INDIA
Until 1935, the money lenders had been farming the only source of credit. They used to
charge excessively high interest rates and follow severe practices while lending and
recovering. As a result, farmers had to pay heavy debts and many of them continued debt.
The Reserve Bank of India Act 1934 was adopted.
Central Co-op District. Agricultural lending and improved agricultural lending have received
momentum as well as the Bank's Act and Land Development Banks Act. There was created a
powerful alternative agency. A large credit was easily available in terms of both granting and
recovery loans at reasonable interest rates. Though the co‐operative banks began financing
their farmers in the 1930s, their real impetus was only received after independence, when
appropriate legislation had been adopted and policies had been drawn up. Then, by opening
branches in rural areas and drawing deposits, bank lending to agriculture has made
phenomenal progress. Until 14 major trade banks were nationalized in 1969, the major
financial agencies for agriculture were cooperative banks. Following nationalization, the
banks were required to provide financing as a priority to agriculture. These banks have
conducted special branch expansion programs and have created a nationwide banking service
network and have begun large-funding of agriculture. Thus, the credit for agriculture has
become multi-. New technologies and financing available are being developed and adopted
together The farmers ' short-and long term needs are met by a wide number of formal
agencies, such as Cooperatives, Regional Rural Banks (RRBs), Scheduled Commercial
Banks and Non Banking Financiers (NBFIs) as well as Self-Help Groups (SHGs). Several
initiatives were taken to strengthen the rural credit system institutional mechanism. The
White Revolution and the Yellow Revolution have played a crucial role in bringing "Green
Revolution" finance. The share of commercial banks in total agricultural loans increased
dramatically during the first half of the 2000s In the 1990s there was a growing share of
short-farm credit in total farm loans. To ensure easy access to credit, new credit delivery
systems have been introduced in the form of Kisan Credit Card (KCC). The procedures and
loan amounts have been standardized for various purposes. "Crop loans" (Short-term credit)
have the biggest share of the diverse purposes. Farmer farmers also have loans to buy electric
motors with pumps, tractors and other equipment, digging wells, pike lines, irrigation, fruits
orchards planted, dairy animals and their feed, poultry and cattle farming, and for many more
allies. Furthermore, farmers are awarded loans for pumps and tractors. The flow of ground
level credit increased dramatically in the 12-year period from 2000-to 2011-, in particular
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after the' doubling' period (2004-), showing nearly ten times more In the next five years of
FYP XIII, another Rs35 to 42,000 lakh crore has been paid (12th Five Year Plan Estimates)
in the amount of roughly Rs 28 lakh crore. Agricultural credit has obviously come to be an
important strategy for accelerating farm investment.
The PM-KISAN Scheme was introduced to provide financial support to farmers. Under this
scheme, the government offers Rs 6,000 every year in three instalments of Rs 2,000 each to
over 14.5 crore farmers across India.
Paramparagat Krishi Vikas Yojana has been launched to motivate groups of farmers to
take up organic farming. A special scheme has also been launched in North-Eastern Region
for promotion of organic farming and export of organic produce.
Pradhan Mantri YUVA Yojana - Launched in August this year, the scheme is aimed at
upskilling the youth of the country by providing skill development training. It also aims at
providing entrepreneurship education in order to enable better business opportunities for the
youth.
The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana) is a government
scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as
minimum income support. This 75,000-crore scheme aims to cover 125 million farmers,
irrespective of the size of their landholding in India.

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 CHAPTER-II
REVIEW OF LITERATURE

DEFINITION OF AGRICULTURAL INSURANCE:

Murray (1953) defined agricultural. finance as “an economic study of borrowing funds by
farmers, the organization and operation of farm lending agencies and of society’s interest in
credit for agriculture .”
Tandon and Dhondyal (1962) defined agricultural. finance “as a branch of agricultural
economics, which deals with and financial resources related to individual farm units.”
Nature and Scope:
Agricultural insurance can be dealt at both micro level and macro level. Macro- finance deals
with different sources of raising funds for agriculture as a whole in the economy. It is also
concerned with the lending procedure, rules, regulations, monitoring and controlling of
different agricultural credit institutions. Hence macro-finance is related to financing of
agriculture at aggregate level.
Micro-finance refers to financial management of the individual farm business units. And it is
concerned with the study as to how the individual farmer considers various sources of credit,
quantum of credit to be borrowed from each source and how he allocates the same among the
alternative uses with in the farm. It is also concerned with the future use of funds.
Therefore, macro-finance deals with the aspects relating to total credit needs of the
agricultural sector, the terms and conditions under which the credit is available and the
method of use of total credit for the development of agriculture, while micro-finance refers to
the financial management of individual farm business.

INSURANCE IN INDIA
Insurance in India started without any regulations in the nineteenth century. It was a typical
story of a colonial era: a few British insurance companies dominating the market serving
mostly large urban centers. After the independence, the Life Insurance Company was
nationalized in 1956, and then the general insurance business was nationalized in 1972. Only
in 1999 private insurance companies were allowed back into the business of insurance with a
maximum of 26 per cent of foreign holding (World Bank Economic Review 2000). The entry
of the State Bank of India with its proposal of bank assurance brings a new dynamics in the
game. On July 14, 2000 Insurance Regulatory and Development Authority bill was passed to

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protect the interest of the policyholders from private and foreign players. The following
companies are entitled to do insurance business in India.

The private insurance joint ventures have collected the premium of Rs.1019.09 crore with the
investment of just Rs.3,000 crore in three years of liberalization. The private insurance
players have significantly improving their market share when compared to 50 years Old
Corporation (i.e.LIC). As per the figures compiled by IRDA, the Life Insurance Industry
recorded a total premium underwritten of Rs. 10,707.96 crore for the period under review. Of
this, private players contributed to Rs.1, 019.09 crore, accounting for 10 percent. Life
Insurance Corporation of India (LIC), the public sector giant, continued to lead with a
premium collection of Rs.9,688.87 crore, translating into a market share of 90 per cent. In
terms of number of policies and schemes sold, private sector accounted for only 3.77per cent
as compared to 96.23 per cent share of LIC (The Economic Times, 21 March, 2004).

The ICICI Prudential topped among the private players in terms of premium collection. It
recorded a premium of Rs. 364.9 crore and a market share of 25 per cent, followed by Birla
Sun Life with a premium under- written Rs.170 crore and a market share of 15 percent,
HDFC Standard with 132.7 crore and Max New York Life with Rs.76.8 crore with a market
share of approximately 15 per cent each. Unlike their counterpart in the life insurance
business, private non-life insurance companies have not yet started addressing the retail
market. All is set to change in the coming years. Like in the banking sector, non-life
insurance companies will soon have no choice but to focus on individual buyers.

In case of private non-life insurance players, that their market share rose to 14.13 per cent,
recording a growth of 70.75 per cent on an annual basis, while the market share of public
sector stood at 85.87 per cent, registering a marginal growth of 6.34 per cent. The overall
market has recorded a growth of 12.32 per cent by the end of January 2004. Among the
private non-life insurance players, ICICI Lombard topped the list with a premium collection
of Rs.403.62 crore in one year period with a market share of 3.05 per cent and with an annual
131.6 per cent, followed by ICICI BANK LIFE INSURANCE with a premium of Rs.385.02
crore and 2.91 per cent market share and Tata AIG with 300.49 crore premium and 2.27 per
cent market share with an annual growth rate of 62.60 per cent.

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Among the public sector players, New India garnered a market share of 24.38 per cent,
Rs.3,229.49 crore premium and an annual growth rate of 0.38 per cent, followed by National
with a market share of 21.43 per cent, Rs.2,839.11 crore premium and an annual growth rate
of 19.88 per cent, United India with a market share of 19.47 per cent (Rs.2,578.83 crore
premium) and Oriental with a market share of 18.25 per cent, Rs.2,417.17 crore premium and
an annual growth rate of 1.86 per cent. It is significant to note that HDFC Chubb and Chola
mandalam have registered annual growth rates of 4030.26 per cent and
1101.20 per cent respectively, whereas New India has registered it as 0.38 per cent. If this
trend continues, private insurer would dominate the public sector like New India Insurance
Corporation. It is obviously reflect the insurance sector has facing the challenges with foreign
counter parties as well as private counter parties and lot more opportunities are prevailing to
penetrate the insurance business among the uncovered people and area of India. Further, it
leads to economic development of the country. In this regard, it assumes greater significance
to conduct debate among the inter- disciplinary persons.

2.2ARTICLES
ARTICLE: 1
TITLE: Examined the crop insurance in India and the dependence.
AUTHOR: Gurudev Singh
YEAR: (2010)
ABSTRACT:
Examined the crop insurance in India and the dependence of Indian agriculture on uncertain
risk. In addition the farmer‟s experience of other production and marketing risks relate to
different cropping patterns and for different agro climatic and areas. It also analysed the need
for crop insurance as an alternative to manage production risk. It discussed the presently
available crop insurance products for a particular crop and regions and also it discussed the
two important products namely National Agricultural financing and insurance Scheme and
Weather Based Insurance Schemes. The study conclude identifying some difficulties in the
two major insurance products.

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 CHAPTER-III
RESEARCH METHODOLOGY

NEED OF THE STUDY

Agriculture insurance assumes vital and significant importance in the agro – socio –
economic development of the country both at macro and micro level. It is playing a catalytic
role in strengthening the farm business and augmenting the productivity of scarce resources.
When newly developed potential seeds are combined with purchased inputs like fertilizers &
plant protection chemicals in appropriate / requisite proportions will result in higher
productivity. Use of new technological inputs purchased through farm insurance helps to
increase the agricultural productivity. Accretion to in farm assets and farm supporting
infrastructure provided by large scale financial investment activities results in increased farm
income levels leading to increased standard of living of rural masses.
.

SCOPE OF THE STUDY

In India, traditionally risk would be managed either privately or through implicit contracts
within the family or network (caste groups/extended families/joint families). Such contracts
can be quite useful to handle non covariant risks. However, yield risks are often locally
covariant, implying that these traditional contracts within village and families would not
perform well to insurance against yield risks. Another form of risk coping strategy among
farmers is income diversification/crop diversification that will reduce variance of their
income. If benefits of reduced risk exposure from such crop diversification are large, then
farmers may be willing to forego some of the possible gains from trade/specialization; that is
they would diversify crop rather than specialize in the activities in which they have a
comparative advantage. This strategy is may seems optimal from individual point of view,
but it may undermine the competitive advantage of a nation through specialization that
hinders national development. Productivity labour would likely increase under specialization.
Also, agricultural research could focus on fewer products and thereby increase its
effectiveness in developing new technologies. A Project Of 45 Days

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OBJECTIVES OF THE STUDY
1. To develop rural economy.
2. To provide credit for agriculture and allied activities.
3. To encourage small scale industries, artisans in the villages.
4. To reduce the dependence of weaker sections (Marginal farmers, small farmers and
rural artisans) on private money lenders.
5. To fill the gap created by the moratorium on borrowings from private money lenders.
6. To make backward and tribal areas economically better by opening new bank
branches.
7. To help the financially poor people in their consumption needs.
8. Stability in Income: It protects the farmers against losses caused by crop failure.
9. It acts like a tool that allows farmers to manage their yield and price risks.
10. Minimal Debts: Farmers are able to repay their loans even during the time of crop
failure with the support of the right insurance partner

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RESEARCH METHODOLOGY
TYPES OF RESEARCH
RESEARCH:
Research is an art of scientific investigation. Research is defined as a “scientific and
systematic search for information on a specific topic”.
The purpose of search is to discover answers to questions through the application of scientific
procedures.
METHODOLOGY:
The data used for analysis & interpretation is received from the responses of employees for
the questionnaire. Comparison of response is used for interpreting the data.
The project is presented by using tables, column charts, with their interpretation. A survey is
undertaken to know the facts about the training.
AREA OF RESEARCH : Hyderabad
DATA COLLECTION:
The researcher has wide varieties of methods to consider either single or in combination they
were grouped first according to whether this use secondary or primary sources of data.

PRIMARY DATA:

Data originally collected for an investigation known as primary data concluding personal
interviews through questionnaire. Most of the study for this project is based on primary data
itself.

SECONDARY DATA:

Data which is not originally collected rather obtained from published or unpublished sources,
is know as secondary data. It can be defined as data collected by someone else for purposes
other than solving the problems.

Secondary data for the present study is retrieved from company profile and text books.
RESEARCH INSTRUMENT:
The structural questionnaire with multiple choices.

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 The data collected from the survey has been tabulated and analyzed. The data is
represented graphically by using column charts for easy understand ability.
METHOD OF SAMPLING
The methodology used for this purpose is Survey and Questionnaire Method. It is a time
consuming and expensive method and requires more administrative planning and supervision.
It is also subjective to interviewer bias or distortion.

Sample Size: 100 respondents

Sampling Unit: Businessmen, Government Servant, Retired Individuals

PERIOD OF STUDY
 A Project Of 45 Days
Survey Tools using in the study
Statistical Tools: MS-excel and pie and bar diagrams are used to analyze the data.


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LIMITATIONS OF THE STUDY

A one man research is always confronted with various bottlenecks and the present
study is not an exception to these limitations. The present study is more of a descriptive
in nature. The study was carried out in two different nations in a limited time frame. The
socio – economic and cultural aspects are completely diverse in both the countries.

One of the most important limitations of the case study (Warangal district, Andhra
Pradesh) undertaken was that the study was confined to a particular agro-climatic and
agro-economic region and hence the conclusions drawn are applicable to that area and
areas with similar conditions only. Therefore, the extent of generalization has to be
cautiously made. Secondly, the data were collected through the survey method by
interviewing farmers. Therefore, the objective of the data is limited to the extent that the
farmers are able to sum up from their memory, as they do not maintain any records.
However, all care has been taken to get reliable data from informants. Due to fluctuation
in the prices of the selected crops, the average price during the study period has been
taken for the computation of the production, cultivation and input costs. Hence it could
be considered as one of the limitations of the study. The study is also confronted with the
constraints of limitation of time, sample size and resources at the disposal of the
investigator.

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 CHAPTER-IV

COMPANY PROFILE

Kotak Mahindra Bank is the fourth largest Indian private sector bank by market
capitalization, headquartered in Mumbai, Maharashtra.

Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has been a
steady and confident journey leading to growth and success. The milestones of the group
growth story are listed below year wise.

Our Businesses

Multiple businesses. One brand.

Kotak Mahindra is one of India's leading banking and financial services groups, offering a
wide range of financial services that encompass every sphere of life.

Kotak Mahindra Bank Ltd

 Kotak Mahindra Bank Ltd is a one stop shop for all banking needs.
The bank offers personal finance solutions of every kind from savings accounts to
credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra
Bank offers transaction banking, operates lending verticals, manages IPOs and
provides working capital loans. Kotak has one of the largest and most respected
Wealth Management teams in India, providing the widest range of solutions to high
net worth individuals, entrepreneurs, business families and employed professionals.

For more information, please visit the Kotak Mahindra Bank website
www.kotak.com/bank/personal-banking/

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Kotak Mahindra Old Mutual Life Insurance Ltd

 Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint

venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A
Company that combines its international strengths and local advantages to offer its
customers a wide range of innovative life insurance products, helping them take
important financial decisions at every stage in life and stay financially independent.
The company covers over 3 million lives and is one of the fastest growing insurance
companies in India. www.kotaklifeinsurance.com

Kotak Securities Ltd

 Kotak Securities is one of the largest broking houses in India with a

wide geographical reach. Kotak Securities operations include stock broking and
distribution of various financial products including private and secondary placement
of debt, equity and mutual funds.

Kotak Securities operate in five main areas of business:

o Stock Broking (retail and institutional)

o Depository Services
o Portfolio Management Services
o Distribution of Mutual Funds
o Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products

For more information, please visit the Kotak Securities website

www.kotaksecurities.com

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Kotak Mahindra Capital Company (KMCC)

 Kotak Investment Banking (KMCC) is a full-service investment

bank in India offering a wide suite of capital market and advisory solutions to leading
domestic and multinational corporations, banks, financial institutions and government
companies.

Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private
Equity Advisory, Restructuring and Recapitalization services, Structured Finance
services and Infrastructure Advisory & Fund Mobilization.

For more information, please visit the Kotak Investment Banking website
www.kmcc.co.in

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 CHAPTERIZATION

CHAPTER-1

INTRODUCTION

CHAPTER-2

REVIEW OF LITERATURE

CHAPTER-3

RESEARCH METHODOLOGY

 NEED OF THE STUDY

 OBJECTIVES OF THE STUDY

 SCOPE OF THE STUDY

 DATA COLLECTION

 LIMITATIONS

CHAPTER-4

INDUSTRY/COMPANY PROFILE

CHAPTER-5

DATA ANALYSIS

CHAPTER-6

FINDINGS

CHAPTER-7

SUGGESTION & CONCLUSION

BIBLIOGRAPHY

ANNEXURES

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