CHAPTER I

INTRODUCTION

1.1 Definition of Bank:

A Bank is a Financial Institutions that accepts deposit from the public and creates
a demand deposit which simultaneously making loans. OR
Bank is a lawful Organization which accepts deposit that can be withdrawn on
demand it also lends money to Individuals and Business houses that needs it.

1.2 Early History OF Banks In India:

The word ‘bank’ is derived from the word ‘bancus’ or ‘Banque’ that is French.
A bank may be defined as an institution that accepts deposits, makes loans, pays checks
and provides financial services. A bank is a financial intermediary for the safeguarding,
transferring, exchanging, or lending of money. A primary role of banks is connecting those
with funds, such as investors and depositors, to those seeking funds, such as individuals
or businesses needing loans. A bank is a connection between customers that have capital
deficits and customers with capital surpluses.
Banks distribute the medium of exchange. Banking is a business. Banks sell their
services to earn money, and they must market and manage those services in a competitive
field. Banks are financial intermediaries that safeguard, transfer, exchange, and lend
money and like other businesses that must earn a profit to survive. Understanding this
fundamental idea helps you to understand how banking systems work and helps you
understand many modern trends in banking and finance.

1.3 Types of Bank:

The mainly types of bank is following

1) Central Bank (RBI)
2) Commercial Banks
a. Public sector Bank
b. Private sector Bank
c. Foreign Bank

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3) Development Bank
4) Cooperative Banks
a. Primary Agricultural Co-operative Credit Societies (PACS)
b. District Central Cooperative Banks (DCCB)
c. State Cooperative Banks (SCB)
1) Central Bank:
A Bank is entrusted with the functions of guiding and regulating the banking
system of a country is known as a Central Bank such a bank does not deal with the general
public. The Central Bank provides guidance to other banks whenever they face any
problem it is therefore known as Bankers Bank.
The Central Bank generally performs the following functions

a) Bank of note Issue:

The Central Bank has the sole monopoly of note issue in almost every country.
The currency noted printed and issued by the central bank becomes unlimited legal tender
throughout the country. The monopoly of central bank to issue the currency notes may be
partial in certain countries.

b) Bankers Agent and Advisor to the government :

1. The central bank function as bankers agent and financial advisor to the
Government.
2. As a banker to Government, the central bank performs the Same function For
Government as a commercial bank performs For the its customer.
3. It maintain the account of the central as well as state Government. It receive
Deposit from Government it make short term advances to the government it collect
cheques and draft deposited in government account.
c) Bankers Bank :

Custodian of the Cash reserves of the commercial Banks.

As the leader of the resort and as clearing agent .in this Way, the central bank act as a
friend, philosopher and guide to the Commercial banks.

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d) Lenders of last resort :

As the supreme bank of the country and bankers bank the central bank acts as the
lenders of the last resort. In Others words, in case the commercial Banks are not able to
meet their financial requirement from other sources, they can as the last resort approach
the central bank for financial accommodation.

e) Clearing Agent :

As the custodian of the cash reserve of the commercial Banks the central banks
act as the clearing house for these banks. Since all banks have their accounts with the
central bank the central bank can easily settle the claims of various banks against each
other with least use of cash.

f) Controller of the credit :

Controlling credit is the most important functions of the central banks in other
words of De kock. It is function which embraces the most important question the central
banking policy and the one through which practically all the functions are united and mode
to serve a common purpose. Uncontrolled credit causes economic fluctuation in the
economy.

e) Developmental Role:

In the underdeveloped or developing country the central bank beside

performing the traditional function also performs developmental and promotional
functions in these countries the central bank on the on hand helps to develop money and
capital markets and on the other hand undertakes suitable measure to promote economic
development and maintain price and exchange rate stability.

2) Commercial Banks:
This are Banking institutions that accepts deposit and grants short term loans and
advance to their customers. In addition to giving short term loans Commercial Banks also
gives medium term and long term loan to business enterprises. Now days some of the
commercial Banks are also providing housing loans an the long term basis to individuals
commercial Banks are of
1. Public Sector Bank
2. Private Sector Bank

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 3. Foreign Sector Bank
1. Public sector Banks – A bank where the majority stakes are owned by the
Government or the central bank of the country.
2. Private sector Banks – A bank where the majority stakes are owned by a private
organization or an individual or a group of people
3. Foreign Banks – The banks with their headquarters in foreign countries and branches
in our country, fall under this type of bank

• Given below is the list of commercial banks in our country:

Table 1.1: list of commercial banks in our country

Commercial Banks
Public Sector Banks Private Sector Banks Foreign Banks

State Bank of India Catholic Syrian Bank Australia and New Zealand

Allahabad Bank City Union Bank Banking Group Ltd.

Andhra Bank Dhanlaxmi Bank National Australia Bank

Bank of Baroda Federal Bank Westpac Banking

Bank of India Corporation

Jammu and Kashmir Bank

Bank of Maharashtra Bank of Bahrain & Kuwait

Karnataka Bank
BSC
Canara Bank Karur Vysya Bank
AB Bank Ltd.
Central Bank of India Lakshmi Vilas Bank
HSBC
Corporation Bank Nainital Bank
CITI Bank
Dena Bank Ratnakar Bank
Deutsche Bank
Indian Bank South Indian Bank
DBS Bank Ltd.
Indian Overseas Bank Tamilnad Mercantile Bank
United Overseas Bank Ltd
Oriental Bank of Axis Bank
Commerce J.P. Morgan Chase Bank
Development Credit Bank
Punjab National Bank Standard Chartered Bank
(DCB Bank Ltd)

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 Punjab & Sind Bank HDFC Bank There are over 40 Foreign
Banks in India
Syndicate Bank ICICI Bank

Union Bank of India IndusInd Bank

United Bank of India Kotak Mahindra Bank

UCO Bank Yes Bank

Vijaya Bank IDFC

IDBI Bank Ltd. Bandhan Bank of Bandhan

Financial Services.

3) Development Bank:
Business often requires Medium and long term capital for purchase of machinery
and equipment for using latest technology or for expansion and modernization such
financial assistant is provided by development banks.

4) Co-operative Bank:
People who come together to jointly serve there common interest often from a
Cooperative Society act when cooperative societies engages itself in banking business is
called as cooperative Banks.
1. Primary Agricultural Co-operative Credit Societies (PACs)
2. District Central Cooperative Banks (DCCB)
3. State Cooperative Banks (SCB)
A) Primary Agricultural Co-operative Credit Societies (PACS)

With the enactment of cooperative societies Act of 1994,PACS

came into existence following the guidelines of Raiffeissen model The cooperatives
principles are framed for their smooth and efficient functioning .These societies will
function at villages level providing the farmer required short term and medium term loan.
PACS also help in formulating and implementing the agriculture development plan.

• Functions of PACS :
1. They borrow adequate and timely funds from DCCBs and help its members by
providing required finances.

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2. To inoculates the habits of thrift they attract local savings of members towards share
capital and deposit from the villages.
3. They supervise the end use of credit.
4. They distribute fertilizer seeds and pesticide to the needy farmers.
5. They provides machinery to the farmers on hire basis
6. They help the farmer in marketing finance.

B) District Central Cooperative Banks (DCCB)

They act as link between state cooperative banks and primary

agriculture cooperative credit societies. DCCBs also undertake normal banking functions
like accepting from public, collection of bills,cheque and draft etc. They also provide
required credit for needed persons.in DCCBs membership is open to individuals and other
societies falling under its area of operation. Marketing societies, consumers, societies,
farming socities,urban banks and PACS usually enroll as its members.

• Specific functions of DCCBs are :

1. They supervise and inspect the activities and function of PACS and help them to
function smoothly.
2. Apart from providing they also provide leadership to PACS.
3. They also undertaken non-credit activities like supply of seeds, fertilizer and also
consumer items like sugar, kerosene etc.
4. They provide requisite credit for societies under their control.
5. They accept deposit from the members societies as well as from public.

C) State Cooperative Banks (SCB)

These are the apex credit organization existing at the state level. District
cooperative central bank (DCCB) and primary agricultural cooperative credit societies will
be act as members of these banks. These SCBs supervise activities of the members and
mobilize and deploy the financial resources among the members banks. They serve as a
bridge between RBI and PACS.

• Functions of State Cooperative Banks :

1. They help the state government in formulating Developmental plans pertaining to
cooperative institutions.

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2. They also help in coordinating they cooperatives with the government.
3. They formulate and implement uniform credit policies pertaining to cooperative
Development in the state.
4. They act as Bankers bank to DCCBs.
5. They will grant subsidies for the smooth functioning of DCCBs.
6. Similar to any other commercial Banks they also performs the normal banking
operations.

5) Specialized Banks:
There are some banks to the equipment and provide overall support for setting up
business in specific areas of activity EXIM, SIDBI, NABARD banks. They engaged
themselves in some specific area or activity this called specialization banks.
1) Export Import Banks of India (EXIM)
2) Small Industries Development Banks of India (SIDBI)
3) National Banks for Agricultural and Rural Development (NABARD)

1.4 Importance of Bank in Agricultural Sector:

The important of bank in Agriculture to provide the loans and advance of various
forms. Bank are provide the loan of farmer to gives timely of credit of farmer.

1. Collections of Savings and Advancing Loans:

Acceptance of deposit and advancing the loans is the basic function of commercial
banks. On this function, all other functions depend accordingly. Bank operates different
types of accounts for its customers.

2. Money Transfer:
Banks have facilitated the making of payments from one place or persons to
another by means of cheques, bill of exchange and drafts, instead of cash. Payment through
cheques, the draft is more safe and convenient, especially in case of huge payments, this
facility is a great help for traders and businessmen. It really enhances the importance of
banks for the business community.

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3. Encourages Savings:
Banks perform an invaluable service by encouraging savings among the people.
They induce them to save for profitable investment for themselves and for the national
interest. These savings help in capital formation.

4. Transfer Savings into Investment:

Bank transfer the savings collected from the people into investment and thus
increase the amount of effective capital, which helps the process of economic growth.

5. Overdraft Facilities:
The banks allow the overdraft facilities to their trusted customers and thus help
them in overcoming temporary financial difficulties.

6. Discounting bill of exchange:

The importance of banks can be seen through the facility of discounting the bill of
exchange. Banks discount their bill of exchange of consumers and help them in financial
difficulties. By discounting a bill of exchange, they able to get the desired amount for the
investment they want.

7. Financing Internal & External Trade:

Banks help merchants and traders in financing internal and external trade by
discounting a foreign bill of exchange, issuing of letters of credit and other guarantees for
their customers.

8. Act as an Agent:
The bank act as an agent and help their customers in the purchase and sales of
shares, provision of lockers payment of monthly and dividends on the stock.

9. Issue of Traveller’s Cheques:

For the convenience and security of money for travelers and tourists, the bank
provides the facility of traveler’s cheques. These cheques enable travelers and tourists to
meet their expenses during their journey, as these are accepted by issuing bankers,
restaurants, and other businessmen both at home and abroad. No doubt, this is also one of

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the great functions of banks and shows the importance of banks for us in more precise
ways.
10. General Utility Services:
The existence of commercial banks is essential for contribution to general
prosperity. Banks are the main factors in raising the level of economic development of the
world. In addition to the above-cited advantages, banks also provide many services of
general utilities to the customers and the general public.

1.5 Nationalization of Banks:

The provide sector Banks being predominantly urban oriented and controlled by a
few large industrialists were not properly equipped to help the achievement of the basis
Socioeconomic objectives.
Sr.No. 1st Spell of Nationalization -19 July 2nd spell of Nationalization -15th April
1969 1980

1 Central Bank of India Punjab and sindh Bank

2 Bank of India Andhra Bank
3 Punjab National Bank New Bank of India
4 Bank of Baroda Vijaya Bank
5 United Commercial Bank Oriental Bank of Commarce
6 Canara Bank Coopration Bank
7 United bank of India -
8 Dena bank -
9 Union Bank of India -
10 Allahabad Bank -
11 Syndicate Bank -
12 Indian Bank -
13 Bank of Maharastra -
14 Indian Overseas Bank -

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1.6 Objective of Nationalization Banks:

1. Social welfare:
It was the needs of the hour to direct the funds for the needy and required sectors
of the Indian economy sector such as agricultural small and village industries were in need
of funds for their expansion and further economic development.
2. Controlling private Monopolies:
Prior to nationalisation many banks were controlled by private business houses and
corporate families. It was necessary to check these monopolices in order to ensure a
smooth supply of credit to socially desirable sections.
3. Expansion of Banking:
In a large country like India the numbers of banks existing those days were
certainly inadequate. It was necessary to spread banking across the country. It could be
done through expanding banking network in the un-banked areas.
4. Reducing Regional Imbalances:
In a country like India where we have a urban rural divide, it was necessary for
banks to go in the areas where the banking facilities were not available.
5. Priority sector Lending:
In India, the agriculture sector and its allied activities were the largest contributor
to the national income. Thus these were labeled as the priority sectors.but unfortunately
they were deprived of their due share in the credit. Nationalsation was urgently needed for
catering funds to them.
6. Developing Banking Habits:
In India more than 70% population used to stay in rural areas.it was necessary to
develop the banking habit among such a large population.

1.7 Merging of Banks:

1) Oriental Bank of Commerce (OBC) and United Bank of India will be merged
into Punjab National Banks (PNB). After the merger, these together will form the second-
largest public sector bank in the country, after State Bank of India (SBI), 1 April 2020.
2) Syndicate Bank will be merged into Canara Bank, which will make it the fourth-largest
public sector lender.
3) Indian Bank will be merged with Allahabad Bank, 1 April 2020.

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4) Union Bank of India will be merged with Andhra Bank and Corporation Bank.
5) Customers, including depositors of merging banks will be treated as customers of the
banks in which these banks have been merged with effect from 1 April 2020.
6) After the merger, there will be 12 PSUs - six merged banks and six independent public
sector banks.
• Six merged banks - SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union
Bank of India, Indian Bank
• Six independent banks - Indian Overseas Bank, Uco Bank, Bank of Maharashtra,
Punjab and Sind Bank, Bank of India, Central Bank of India.
7) The Oriental Bank of Commerce and United Bank of India will operate as the branches
of the Punjab National Bank from tomorrow (1 April 2020).
8) Syndicate Bank will function as the branch of Canara Bank effective 1 April 2020.
9) Similarly, all Allahabad Bank branches will be treated as branches of the Indian Bank
10) All branches of Andhra Bank and Corporation Bank will function as Union Bank of
India branches with effect from today i.e. 1 April, 2020.
1.8 Functions of Banks:
The major functions of banks are almost the same but the set of people each sector
or type deals with may differ. Given below the functions of the banks in India:
1. Acceptance of deposits from the public
2. Provide demand withdrawal facility
3. Lending facility
4. Transfer of funds
5. Issue of drafts
6. Provide customers with locker facilities
7. Dealing with foreign exchange

1.9 Role of Commercial Banks in the Economy:

As we know the main objectives of a commercial bank are to earn profit by the
process of accepting of deposits and advancing loans through different methods. Although
these functions are the basic function of commercial banks, but there are a lot more
functions that enhance the importance of banks today.
1. Acceptance of deposits, by opening different kinds of bank accounts

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2. Advancing of loans to needy persons through different methods and requirements
3. Provisions of agency and general utility services to his customers
4. Making new investments in different organizations and increasing the productive
capacity of the country
5. Promote capital formation in the country by mobilizing and collection of savings for
the purpose of investments
6. Development of industries in the country according to the requirements of the economy
7. Balanced development in the economy is achieved in different sectors & regions
through the resources of bank funds
8. Development in agricultural production is made possible by providing different kinds
of loans
9. These banks help in reducing reliance on foreign assistance by their efforts in the
mobilization of domestic savings
10. These banks help in the implementation of an effective monetary policy according to
the objective to the central bank.
11. Commercial banks also help in the creation and distribution of money through the sales
and purchase of securities.
12. Commercial banks are the custodian and distributor of liquid capital of the country,
which is the lifeblood of all commercial and economic activities of a country.

1.10 Objectives of study

1. To study the banking customer deposits in return for paying customers an annual
interest payment.
2. To acquire the knowledge of different types of agricultural loan.
3. To study the scale of finance of different crop.
4. To study the loaning procedure, credit advances and working capital of bank.
5. To study the documentation of agricultural loan.
6. To study the Pre sanction appraisal proposal and post sanction follow up of crop and
development loan.

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 CHAPTER II
REVIEW OF LITERATURE
Schuler and Jackson (2001) conducted a study on a three stage model of mergers
and acquisitions that systematically identified several human resources issues and
activities. Numerous examples were offered to illustrate the issues and activities in each
of the three stages. The study concluded with a description of the role and importance of
the HR department and leader has its presence in business environment, in order to get
competitive advantage the acquirer must consider the HR perspective to bring
effectiveness in a deal of a merger.

Bhayani, S.J. (2003) in his study entitled as, “Empirical Study on Retail Banking
Awareness” has focused on the Retail Banking Awareness by conducting a survey on 200
customers having their current accounts with private banks, nationalized and cooperative
banks in Rajkot city of Gujarat. The main objectives of his study was to compare the
services provided by different private sector banks in the Rajkot City and also to know the
customers awareness about the services provided and how often they utilized these
services. The study concludes that in India, due to various factors like illiteracy etc, the IT
awareness of the customers was still very low. That’s why the banks needed to put major
efforts towards educating the customers for building up an IT savvy customer base”. Paul
(2003) conducted a study on the merger of Bank of Madura with ICICI Bank. The
researcher evaluated the valuation of the swap ratio, the announcement of the swap ratio,
share price fluctuations of the banks before the merger decision announcement and the
impact of the merger decision on the share prices. It was concluded that synergies
generated by the merger would include increased financial capability, branch network,
customer base, rural reach, and better technology. However, managing human resources
and rural branches may be a challenge given the differing work cultures in the two
organizations.
Neetu Prakash (2006) conducted a comprehensive study on “Growth of Retail
Banking in India” in which she had focused on high growth pattern of the retail Banking.
The main findings of the study indicate that growth & development of Retail Banking is
an important milestone in Indian banking sector development, though the growth of Retail
banking in India is very small as compared to world standards. The study also finds that

13
the performance of Private sector banks in respect of growth of retail banking is much
better than that of their public sector counterparts.
Dhandapani Algieri (2007) in his article entitled as, “Retail Banking: Challenges”
has focused on the Retail banking with increased consumer spending and increased
challenges in the form of competition and technological upgradation that comes along.
Product innovation and competitive packaging services are the most important issues for
the new 11generation customers. It has increased the uses of the mobile and e-banking
facilities, security and confidentiality have become very difficult to maintain and that has
become a major challenge for the banks. The study emphasized that credit delivery
mechanism improved considerably with the advent of technological advances and more
methodical credit evaluation and credit scoring models. The study also dwells on the
implications of Basel II for retail banking.

Murthy (2007) conducted a study on five bank mergers in India viz. Punjab
National Bank and New Bank of India, ICICI Bank and Bank of Madura, ICICI Ltd. and
ICICI Bank, Global Trust Bank and Oriental Bank of Commerce and Centurion Bank with
Bank of Punjab. It was concluded by the author that consolidation is necessary due to
stronger financial and operational structure, higher resources, wider branch network, huge
customer base, technological advantage, focus on priority sector, and penetration in rural
market. Further, some issues as challenges in aforesaid mergers were identified as
managing human resources, managing the client base, acculturation, and stress of bank
employees.

Saraswathi (2007) conducted a study on the merger of Global Trust Bank and
Oriental Bank of Commerce. It was found by the author that this merger paved the way to
several things in the transition period and pre-merger strategy. It visualized the need for
the diverse cultures to arrive at an understanding and to work hand in hand. Apart from
the integration of diverse cultures, a way to inherit the advanced processes and expertise
of the staff in a phased and systematic manner should be paved. It is also equally important
and challenging for the transferee bank in handling the issues relating to continuance of
the services of employees of the transferor bank and their career planning.

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 S.Venkata Seshaiah & Vunyale Narender (2007) in their study entitled as,
“Factors Affecting Customer’s Choice of Retail Banking”, have identified various factors
affecting customer’s choice and study consumer behavior with respect to the people’s
choice of retail banks. In this study efforts have been made to go deep into the psychology
of the customer’s loyalty. Through a survey is different factors have been identified (1)
Safety of deposits (2) size and strength (3) Accuracy (4) General Survey Quality (5) Speed
of delivery (6) proximity (7) Security of Environment (8) Cordiality of staff (9) Price &
services charges (10) Product packaging (11) General Public Impression (12) Peer Group
Impression (13) Face lift (Structural) (14) Friendship with staff (15) advertising &
Publicity. The findings showed that retail banking must reorganize their activities to
achieve their corporate mission through customer orientation.

Bajaj (2008) suggests that mobile banking also spells more business for banks,
especially as they ride the wireless telephony boom in India's rural hinterland, which has
a large population of the financially excluded.

Manoj Kumar Joshi (2008) in his article entitled as “Customer Service in Retail
Banking in India” deals with the service aspects of banks in retail banking. It attempts to
highlight that customer service of high standard and quality implemented through the use
of modern technology helps banks to succeed in the competitive world of retail banking.
Banks should also provide comprehensive information to the borrowers with regard to the
fees / charges levied while processing the loans. Banks, by standardizing the procedures,
shall make the customer’s visit to banks hassle free and direct them to the right officials to
save the customers from making time-consuming enquiries.

Paul (2008)“A study reveals that many factors like education, knowledge in
computer, eagerness, zeal, receptiveness of the people, people‘s level of convenience and
awareness etc. are responsible for the successful operation of E-banking in any area. Again
a large no of people (especially the old generation) having no computer knowledge are till
now prefer the conventional banking but along with some medium and moderate changes
and quick service delivery system. A thorough study of the data reveals that the young
generation is more known to computer and internet banking. So they are more interested
in using the E-banking system.
Birender Kumar (2009) in his report entitled as, “Performance of Retail Banking
in India”, highlights the financial performance of retail banks in the financial quarter

15
(2010). It shows that Indian retail banking sector which mainly depends upon transaction
directly with consumers saving and lending, registered a decline in its share of 5.02%
during the first quarter of FY’10 as compared to the corresponding period last year as per
analysis of thirty public and private Indian banks.

Shah and Clarke (2009) “A study taken says that many banks and other big
organizations are anxious to use this channel to deliver their services because of its
relatively lower and bearable delivery cost, higher sales capacity and potential for offering
greater convenience for customers. It is seen as a revolutionary development
Sultan Singh (2009) in his paper entitled as, “Impact of ATM on Customer
Satisfaction” highlights the impact of ATM on customer satisfaction. It is a comparative
study of three major banks i.e. SBI, ICICI Bank and HDFC Bank. It includes the review
of the various services provider by the three banks. A sample of 360 respondent’s equally
representing each bank has been taken through questionnaire which shows the level of
satisfaction among different customers.

Adepoju and Alhassan (2010) Automated Teller Machine is a computerized

telecommunications device that provides the customers of a financial institution with
access to financial transactions in a public space without the need for a human clerk or
bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM
card with a magnetic stripe or a plastic smartcard with a chip that contains a unique card
number and some security information, such as an expiration date. Security is provided by
the customer entering personal identification number (PIN).
R. Nagesh (2010) in his study entitled “A Study on Quality of Services as a Tool
from Enhancement of Customer Satisfaction in Banks”, assesses the quality of services
offered by two banks in Chennai and compares the service performance of these two banks
respectively. The study has also focused on identifying the changes to be brought about at
these banks in their service quality so that they act as a major delivery vehicle for service
and play a vital role in enhancing customer satisfaction. The study has also concentrated
on finding the discrepancy between customer’s service experiences and expectations,
which acts as essential catalyst to enhance the customer satisfaction so that a better
relationship is created between the service provider and the customer13

Rasal (2011) in his study on performance of DCCB during past reform period with
special reference to Ahmednagar district found that banks has three major sources of

16
income viz. Interest earned, commissions received and income from other sources. Interst
earned income is important source of income which contributes to about 97 to 99%.

Mahesh, R., & Prasad, D. (2012), conducted a study to examine whether the
private sector banks of India have attained financial performance efficiency during the
post-merger & acquisition period especially in the areas of profitability, leverage, liquidity,
and capital market standards, by using Paired sample t-test. It was concluded that there is
irrelevant improvement in return on equity, expenses to income, earning per share and
dividend per share post-merger.

State Bank institutions of rural Development report (2012) stated the

eligibility, components of crop loan. Security norms for and documentation for agricultural
crop loans, repayment, disbursement procedure are mentioned in the report under natural
calamities like flood hailstorm, cyclone, drought, pest attack crop loan is converted into
term loan.

Walia and Jain (2012) suggest that at present, Indian banking system needs a fresh
outlook and keeping in mind the various distortions, government should introduce third
banking sector reforms. In the end the key to banking reform may lie in the internal
bureaucratic reform of banks, both private and public. In part this is already happening as
many of the newer private banks (like HDFC, ICICI) try to reach beyond their traditional
clients in the housing, consumer finance. The major factors, which are critical for the
success in the complex scenario, are: Commitment to develop strong long lasting
relationship with customers and to provide quality services; Professional, motivated and
innovative staff; Commitment to earn the highest possible profits with consistent produce
and management of risk; Obsess for growth.

Aditya Sharma (2014) attempts a study on comparative study of financial

performance of Syndicate Bank &Canara Bank. He examined that financial statement is
necessary because it helps in depicting the financial position on the basis of past and
current records. Analysis of financial statement helps in making the future decision and
strategies. Financial performance analysis has now become an important technique of
credit appraisal. The investors, financial experts, management executives and the bankers
all analyze this statement. His paper is initiated a comparative study of financial
performance of Syndicate bank and Canara Bank14.

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 Sarvanan and muthaulakshmi (2016) in their study pointed out some
Development in technology making the banking smarter and fast. The various technology
used are E cheques, real time, gross settlement (RTGS) ,National Electronic funds transfer
(NEFT), Electronic clearing service (ECS) Automatic teller machine (ATM), Internet
banking, Mobile banking etc.

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 CHAPTER –III

METHODOLOGY

3.1: Selection of Study Area:

The area of the research is Sangamner, taluka – Sangamner, Ahmadnagar district.

Ahmadnagar district is located in the Maharashtra state, India.

Selected bank is IDBI Bank Sangamner.

Selection of the Banks

Table 3.1: Survey of different banks

Sr. No. Name of bank Address

1. Bank of India Sangamner,Dist-Ahmadnagar
2. Axis bank Ward no.2,Gr Fir, Gulab shree Bunglow , namdar Road,
sangamner
3. Indian Overseas Sangamner, Nagar Road, Dist Ahmadnagar
Bank
4. YES Bank Ground Floor,S.No 151 ,New nagar Road sangamner
5. IDBI Bank Jantaraja Marg, Vidyanagar Sangamner
6. Union bank Vidhyanagar, Sangamner
Table 3.1 Says that I had surveyed 6 different banks in my locality and gathered
information about them. On the basis of bank in agriculture sector I had selected IDBI
bank Sangamner for my project.

3.2: Method of Data Collection:

Data relating to bank and financial performance analysis are collected from Both
Primary data and secondary data are used in research .The primary data is collected in
order to fulfill the information requirement of certain objectives. Thus, primary data I
collected to describe the present scenario of bank sector. The secondary data is collected
to fulfill the information requirement of few Objectives.

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Primary Data:

Primary data were used in the study. The primary data from bank manager of the
unit Canara bank on the types of loan, loaning procedure, rate of interest etc. Were
collected with the help of pre-tested questionaries and other set of questionaries.
Personal Interview:
The personal interview are conducted in IDBI Bank are taken to gather the
information required for study.

Secondary data:
a) Websites:
Websites are the important source which is helped to gathered secondary data .the
government of the India websites for bank sector along with some research institutes
websites also used to collect required information for project work
b) Research paper:
Research paper related to the objectives of the study were used to get knowledge
related to the project work

c) Reference books:
1. Agriculture Finance and Management
2. State Bank institutions of rural Development report

20
Fig.3.2: Location of IDBI Bank – Vidhynagar, Sangamner

INDIA MAP MAHARASHTRA

MAP

AHMADNAGAR IDBI Bank

DISTRICT MAP

21
 CHAPTER IV

RESULT AND DISCUSSION

4.1 Survey of banks

Table 4.1: Survey of banks

Sr. No. Name of bank Address

1. Bank of India Sangamner,Dist-Ahmadnagar
2. Axis bank Ward no.2,Gr Fir, Gulab shree Bunglow , namdar
Road, sangamner
3. Indian Overseas Bank Sangamner, Nagar Road, Dist Ahmadnagar
4. YES Bank Ground Floor,S.No 151 ,New nagar Road
sangamner
5. IDBI Bank Jantaraja Marg, Vidyanagar Sangamner
6. Union bank Vidhyanagar, Sangamner
Table 4.1 shows the name and address of different banks and I select IDBI bank
from above 6 survey.

4.2 Introduction of IDBI Bank:

IDBI ( Industrial development Bank of India ) BANK

The Founder IDBI Bank is Government of India By an Act of Parliament

Industrial Development Bank of India (IDBI Bank Limited or IDBI Bank or

IDBI) was established in 1964 by an act to provide credit and other financial facilities for
the development of the fledgling Indian industry. It is a development finance institution
and a subsidiary of Life Insurance Corporation which is also under the ownership of
Ministry of Finance of the Government of India. Many national institutes find their roots
in IDBI like SIDBI, India Exim Bank,[4] National Stock Exchange of India and National
Securities Depository Limited.

Mission : Delighting customers with our excellent service and comprehensive suite of
best-in-class financial solutions. Touching more people's lives with our expanding retail
footprint while maintaining our excellence on corporate and infrastructure financing

22
Logo :

1. Bank Name : IDBI Bank

2. Branch Address: Jantaraja Marg, Vidhyanagar Sangamner Dist - Ahamadnager
3. Bank type -Government of India Bank
4. Established Year- 1964
5. Branch Name: Vidhyanagar
6. Founder : LIC ( Life Insurance Corporation )
7. IFSC Code: IBKL0001278
8. Swift Code: BARBINBBXXX
9. Contact Person: Customer care
10. City: Ahmadnagar
11. District: Ahamadnager
12. State:Maharashtra
13. Country: India
14. Email: IBKL0001278@idbi.co.in
15. Landline Number: 0141-2231674
16. Official Website: http://www.IDBIbank.com

4.3 Staffing pattern:

Table 4.2 : Staffing Pattern

Sr. No. Name of staff Post
1. Vikram Chandrakanth Gokhale Bank Manager
2. Deepak Kumar Operation officer
3. Vilas Tiwari Relationship officer
4. Rahul Pathak Relationship officer
5. Barak Kakulte Asset officer
6. Ajay Kulkarni Special assistant

23
 Table 4.2 explain the staffing pattern in canara bank. There are 1 manager,
1operation officer , 2 relationship officers, 1 asset officer and 1 special assistant. Hence
there are total 06 members.
4.4 Capital structure (Source of fund) Deposit:
1) Deposits :

Deposits raised locally have always been considered as an ideal method of raising
the capital. It is recommended that after a member’s shareholding in the society reached
the limit of 18 percent of borrowings, the society may collect thrift deposit at 6 percent of
his borrowing each year.
Table 4.3: Deposits in 2020-21

Sr. Year Saving Accounts Current Accounts Fixed Deposit

No No Amount No Amount No Amount
(Crore) (Crore)) (Crore)
1. 2017-18 7942 9.77 2356 20.78 1413 34.25
2. 2018-19 9123 11.50 3011 21.67 1798 36.20
3. 2019-20 11851 12.80 3892 22.56 2256 37.80
4. 2020-21 13456 14.36 4102 23.80 2932 39.12
5. 2021-22 15352 15.22 5637 25.00 3512 40.20
Total 57724 63.65 18998 113.81 11911 187.57
CGR 18.61 11.72 22.8 4.74 25.98 4.05
MIN 11,545 12.73 3,800 22.762 2,382 37.514
Standard
2486.17 1.78 1015.04 1.36 692.25 1.92
deviation
Coefficient
21.53 14.02 26.71 6.01 29.05 5.13
Variation
Table 4.3 interpreted that in 2020-21 85 crore money is deposited from 24,501
customers in that crore in saving account, 25 crore in current account and 40 crore in fixed
deposits.

24
2) Credit Advance (loan)
Table 4.4: Credit Advance in 2020

Sr. Years Types of loans

No
Short term loan Medium term loan Long term loan
(6 – 18 Months) (15 Months – 5 Year) (5 Year – 20 Year)
No. of Amount No. of Amount No. of Amount
loans (Crore) loans (Crore) loans (Crore)
1. 2017-18 90 4.75 39 45.45 33 34.66
2. 2018-19 98 5.80 48 16.55 38 35.30
3. 2019-20 114 6.69 53 17.60 44 36.10
4. 2020-21 123 7.60 68 18.85 49 38.00
5. 2021-22 148 8.80 80 20.30 56 40.10
Total 573 33.64 288 118.75 220 184.16
CGR 12.99 16.22 19.54 15.97 14.01 3.72
Mean 114.6 6.72 57.6 23.75 44 36.83
SD 22.73 1.567 16.34 12.21 9.02 2.21
CV 19.83 23.29 28.38 51.41 20.51 6.01
Table 4.4 shows credit advance in 2020-21 IDBI bank give 68 crores advance to
284 customers. For short term they give 8 crore, for medium they give 20 crore, for long
term they give 40 crore credit.
4.5.1 Loaning procedure:

4.5.1 Meaning of Loans

Loans are money granted by creditor to a debtor to be paid in a future fixed period
with an interest. To the debtor, loan means getting the purchasing power (i.e., money) now
by a promise to pay at some time in future. In a sense, the words credit, debt and Loan are
synonymous: credit or loan is the liability of the debtor and the asset of the bank (creditor).
1. Interview with the farmer
2. Submission of loan application by the farmer
3. Scrutiny of records
4. Visit to the farmer’s field before sanction of loan
5. Criteria for loan eligibility

25
6. Sanction of loan
7. Submission of requisite documents
8. Disbursement
9. Post credit follow up measures
10. Recovery of loan

1. Interview with the farmer

A Banker studies the farmer – borrower in the interview regarding his credit
characteristics such as honesty, integrity, frankness, progressive, thinking, indebtedness,
repayment capacity etc. the banker explains to the farmers the terms and condition under
with the loan is going to be sanction. Interview helps the banker to understand the genuine
credit needs of the farmer. So interview is more than a mere formality, as it facilities the
banker to study the farmer in details and asses his credit requirement.

2. Submission of loan application by the farmer

After setting satisfied with the crediationals of the farmer, the banker give a loan
application form to him. Details regarding the location of farm, purpose of the loan, cost
of the scheme, credit requirement, farm budgets, financial statement etc., as require in the
form are filled by the farmer. A passport size photograph (4 Photos) is affixed to the loan
application from.

3. Scrutiny of records
The ownership and extend of land as indicated in the relevant certificate are
verified by bank offices with village or village revenue offices.

4. Visit to the farmer’s field before sanction of loan

After verifying the records the field officers of the bank pays a visit to the farm to
verify the particular given by the farmer. The pre-sanction visit is expected to helps the
banker to identify the farmer and granter , locate boundaries of land as per the map and
asses the managerial capacity of the farmer in farming and allied enterprises and the farmer
attitude to words latest technology . Details and economics of crop and live-stock
enterprises, physibilities for implementing proposed plan, farmer loan position with non-
institutional sources, certain in the pre sanction visit. Thus, pre-sanction visit of the bank

26
officials is very important to verify credit worthiness and trust worthiness of the farmer-
borrower. While apprising different types of loans, different aspects should be verify for
e.g., to advance loan for the well digging, the location on proposed well, ground water
availability , distance from the nearly well rainfall command area of the well etc. are
verified in the pre-sanction visit. Similarly, for other loans, pertinent aspects are verified.
All these aspects included in the report submitted to the branch manager for taking a final
decision in the section of the loan.

5. Criteria for loan eligibility

The following aspects considers in judging the equability of farmer – borrower to
receive loan.
1. He should have sound character and financial integrity
2. His dinning’s with friends, neighbor, financial institution, etc., must be proper ( he
should not be defaulters in the past )
3. He must have progressive outlook and be receptive to modern technology.
4. He should sincerely implement the proposed scheme and insure proper use of credit,
he the security provided by the farmer must be pre-from any sort of income branches
and litigation.

6. Sanction of loan
After examining all the aspects presented in the pre-sanction farm inspection
report, we branch manager takes a decision whether to sanction the loan or not. Before
sanctioning, the branch manager considers the technical physibilities economics viability
and bank ability of proposed projects including repayment capacity risk baring ability and
sureties’ offered by the farmer-borrower. If the loan amount beyond the sanction power of
the branch manager, it’s forwarded to regional manager of head office of the bank, in co-
operating his recommendation. The Authority at the respective offices take the final
decision on the proposed projects and communicate their decision to the branch manager
for further action.
7. Submission of requisite documents
a. 7/12
b. 8 A
c. Aadhar card

27
d. PAN card
e. Voting card
f. Land position / direction
g. Valuation
h. Income certificate from tehsil
i. Registration deed
j. 4 photos
k. Stamp named by canara bank
l. No dues certificate
m. NF987
n. NF482/803
o. NF963
p. Sanction latter
q. Land charge letter

8. Disbursement of loan
As soon as the execution of documents is completed, the loan amount is credited
to borrowers account. The loan amount is disabused a phase manner, that to after insuring
that the loan is used by the farmer, borrower properly. A realistic repayment plan is framed
and given to the farmer keeping in view the income flow of the proposed projects.

9. Post credit follow up measures

The branch manager or agricultural officer pays a visit to the farmer to ascertain
the proper used of credit. This also benefits of farmer for, they can get the technical advice
if any needed from the agriculture officer in the implementation of the scheme. This visit
is also meant for developing close repo between farmer and banker. This visit is more
informer than formal, which are supposed to inculcate. The feeling of friendly lineness
and underlining the obligation of the farmer to reply loan when it falls due. Such visit also
facilities in assessing any further requirement of supplementary credit to complete scheme.

10. Recovery of loan

The bank remind the farmer-borrower in advance about repayment of loan in time.
If needed cans, special drives, village meeting, etc. are organized at an appropriate time.

28
All appropriate measure are taken to persuade the farmer-borrower to repay the loan in
time. In the case of failure, the reasons for the are a certain to find out whether the borrower
is deliberate defaulter or not. If the reason genuine, the borrower is further help by
expending finance to accelerate farm production in such situation, a closer supervision is
necessary. If the bank official fined that the borrowers are will full- defaulters. Stringent
measure are initiated to recover loans through court of law in all possible cases the bank
officers make tie-up arrangements, that the recovery of loan linked with marketing
rephrasing of repayment plan is allowed in the case of justifiable cases.

4.6 Working capital

Sources of Working Capital

1. Share Capital - The share capital constitute the basis sources of the working capital
of the apex banks. There exists linking of the shareholding by the members institutions.
2. Reserve funds - The State Co-operative Banks maintain various type of reserve fund,
statutory funds, bad debt reserve funds, agricultural credit stabilization funds and other
funds.
3. Stabilization Funds - The agricultural credit stabilization funds also been constituted
in the apex banks so that short term loan for Agriculture purpose can’t be converted
into medium term loan if repayment becomes difficult on account of natural calamities
like famine, drought etc.
4. Owned Funds - The owned funds is important for considerable great as they serve as
a margin of security for the creditors and also ability to borrow also rests on capital
base.
5. Barrowing: Borrowings constitute the main important source of the working capital
of the bank. The provides the loan to the short term loan and medium term loan for
Agricultural purposes. The banks also barrow from the state government and State
Bank of India are generally used for financing marketing and processing society’s
consumer stores and government food grain procurement scheme.
6. Loan Operation - The banks advance loans to the affiliated central banks and to
societies mostly through its branches.
7. Rate of Interest - The rate of interest charged by the state cooperative banks on its
loans and advances shows considerable variations from State to State. The average

29
 lending rate of these banks for short term agricultural advances ranged depends on
loan.
4.7 Over dues position (2020)

Overdue position up to January

Repayment amount – 65,36,05,500 crore

Debt exorbitant amount – 92,26,800 crore

4.8 Number of villages:

Table 4.5: Number of villages adopted IDBI bank

Sr. No. Name of village

1. Sukewadi
2. Sawargav Ghule
3. POkhari Hawali
4. Varudi pathar
5. Hivargav Pawasa
6. Sangamner Proper
Table 4.5 shows there are 06 villages are under canara bank .

4.10 Types of loan

Table 4.6 : Types of loan

Sr.No. Types of loans Loan Disbursement in amount (Crore)

1 Agricultural Term loan 4.5
2 Small business loan 5.9
3 Tractor loan 3.2
4 Polutry loan 5.6
5 Gold loan 1.5
6 Vehicle loan 2.4
7 Education loan 0.50
8 Consumer durable loan 0.25
9 Kisan credit card schme 6.7

30
 10 Farm structure loan 5.7
11 Dairy farm loan 4.6
12 Machinery loan 2.3
13 Land development loan 7.8
14 Horticulture loan 6.4
15 Personal loan 2.1
16 Home loan 7.9
17 Other 1.85
Total 69.2
Table 4.6 shows the different types of loan operated by IDBI bank.

4.11 Special nature of advance in selected area of institution.

NRML: National Rural Livelihood Mission (NRLM) is a scheme implemented by the

Ministry of Rural Development (MoRD), Government of India. NRLM aims to create
efficient and effective institutional platforms of the rural poor enabling them to increase
household income through sustainable livelihood enhancements and improved access to
financial services.
4.12 Schemes being operated by the institution under the auspices of
financial institution such as NABARD, World Bank etc.

Various Schemes

1. Kisan Credit Card Scheme (Kccs)

2. Dairy Devleoment Schems
3. Pradhan Mantri Fisal Bima Yojana
4. New Agricultural Marketing Sschme
5. Agriclinic and Agribusiness center Scheme
6. Rajiv Gandhi House Scheme
7. Drip and Sprinkler Irrigation Scheme
8. Prdhan Mantri Jeevan Jyoti Bima Yojana
9. National Mission For Sustainable Agriculture
4.13 Documentation for agricultural Loan (crop loan)

1. 7/12

31
 2. 8 A
3. Aadhar card
4. PAN card
5. Voting card
6. Land position / direction
7. Valuation
8. Income certificate from tehsil
9. Registration deed
10. 4 photos
11. Stamp named by canara bank
12. No dues certificate
13. NF987
14. NF482/803
15. NF963
16. Sanction latter
17. Land charge letter

4.13 Guideline for project formulation and implementation of

agricultural development schemes

Before discussing the factors considered most critical in arriving at workable

concepts on which to base a project design, it may be useful to recapitulate briefly the
usual sequence of events between the conception of a project idea and the point at which
implementation can be started. Although one stage of what is sometimes termed the
"project cycle" ideally merges with the next and the time required to pass through each
stage varies considerably, it has become conventional to distinguish the four major stages
of identification, preparation, appraisal and implementation. The first two stages - on
which these guidelines focus - are the responsibility of the government which intends to
seek financing for a project. When governments request external assistance with project
design, more than one assistance mission may be required for each stage, and workshops
or seminars may usefully be scheduled between each.

32
1. Identification involves : - A review of alternative approaches or options for addressing a
set of development problems and opportunities; The definition of project objectives and
scope at the degree of detail necessary to justify commitment of the resources required to
complete feasibility studies; The identification of the major issues that must be tackled before
a project based on this concept can be implemented.

The next chapter argues that this is the most critical stage of the cycle, although
one which is often treated too lightly. Yet, if the potentially most viable concept is
overlooked at the time of identification, there is little prospect that it will be retrieved at a
later stage, when the emphasis shifts from examining options to filling in the details of a
specific proposal. It is also difficult and costly to abort the preparation of a project, even
if questions are raised about its feasibility, once it is considered to have been positively
identified.
2. Preparation : - Refers to the completion of the feasibility studies on which financing
institutions usually base their appraisal of a project. The objective of project preparation
is to demonstrate that a project based on the chosen concept is:
- In accordance with the country's development objectives and priorities; - technically
sound and the best of alternatives;
- Attractive to the intended beneficiaries;
- Operationally and managerially workable;
- Economically and financially viable;
- Sustainable and environmentally sound.
Feasibility studies must provide sufficiently accurate estimates of costs and
expected results to enable decisions to be taken on project financing. In addition, the
definition of the project components, organizational arrangements and procedures should
usually be detailed enough to permit the executing agencies to use the study and its
supporting working papers as a source of guidance for project implementation. The project
preparation report, however, is not a complete substitute for a detailed project
implementation plan or manual; these are normally drawn up later, often by management
at the outset of implementation.
3. Project appraisal : - Is the prerogative of the financing institution and involves the
critical review of the feasibility study and the formulation of funding recommendations,

33
including conditionality where applicable. These recommendations are then submitted for
the approval of the financing institution's board of directors.
4. Implementation : - Is essentially a country responsibility but one which the lending
institutions supervise at regular intervals during the project's disbursement period.
Although the formal implementation phase only starts after loan negotiations and approval
by the financing institution, certain activities, such as the completion of final designs for
major civil works and preparation of tender documents, implementation plans and
manuals, may be initiated immediately after project appraisal.
During the course of implementation, supervision missions may agree with
governments on significant modifications to projects, for instance to the reallocation of
funds between components or to adjustments in targets or phasing. The need for such
changes may emerge from the findings of monitoring or management information systems,
or may be identified in the course of mid-term evaluations, foreseen in the original design
of the project. Such mid-term reviews have gained in importance during the past decade
and this trend is expected to continue in line with a tendency to move towards more open
and flexible project designs.
Most financing institutions require that a post-evaluation be carried out for each project at
the end of the disbursement period. The resultant project completion reports take stock of
achievements, reassess the likely impact of the project and seek to draw lessons from its
performance. Some projects are revisited several years later - when they should have
reached full development - in order to make a more definitive impact evaluation.
Even when the exact terms used above are not applied, the process of project
elaboration will still usually move in steps from an initial concept to a final design. The
stages described above, however, need to be tailored to the particular requirements of each
project and can sometimes be telescoped. Thus, to bring area development projects
involving small-scale farmers up to the point at which they are ready for appraisal, the
following operational sequence may be appropriate. Its first two steps give special
prominence to thorough identification. The final shape of the project to be prepared may
emerge only when the third step - formulation - is complete.
5.Reconnaissance : A lightweight input aimed at generating sufficient information on
project options to enable the government and financing agency to select a priority project:
this also provides an opportunity for reaching agreement with the government on

34
arrangements for preparation work, including the setting up of steering committees or
national preparation teams.
6. Diagnosis : - social and farming systems analysis, usually involving the application of
rapid rural appraisal techniques, to generate socio-cultural information on the target group
for the project, on the agricultural systems in the project area and on the aspirations of the
potential beneficiaries.
7. Formulation : - refinement of the project concept and strategy by a multidisciplinary
team on the basis of the findings of the diagnostic work, leading to a first approximation
of a specific project and to the definition of any further studies (e.g. preliminary design of
irrigation systems) and analyses required to complete project preparation. If no such
studies are needed, formulation and final preparation can be combined as a single exercise.
8. Final Preparation : - completion of the feasibility study to the point at which the project
can be submitted for appraisal.
For projects in which investments are to underpin policy or institutional reforms,
the sequence usually begins with a sectoral or sub-sectoral review aimed at establishing
longterm goals and priorities, identifying constraints and examining possible strategies for
overcoming them. Such reviews may include the identification of projects.
The evolution of a project from its initial identification through to the point at
which it is ready for implementation is an iterative process. If not carefully organized, the
progressive deepening of the levels of investigation and analysis between each decision-
making stage may lead to an undue amount of duplication in reporting. To avoid this,
documentation at each stage needs to focus mainly on those elements which are required
as a basis for arriving at well informed decisions as to whether to proceed to the next step.

4.14 Scale of finance for different crops and development loan proposal

Table 4.7 : Scale of finance (For crops)

Sr. No. Name of the Crop Scale of finance (Per hectare) ( in Rs. )

1. Jowar 50,000

2. Bajara 50,000

3. Paddy 58,000

35
 4. Maize 36,000

5. Onion 80,000

6. Tomato 80,000

7. Sunflower 27,000

8. Marigold 41,000

9. Rose 27,000

10. Soyabean 49,000

11. Tur 40,000

12. Mung 20,000

13. Udid 20,000

14. Banana 1,00,000

15. Grapes 2,25,000

16. Pomogranate 1,50,000

17. Citrus 60,000

18. Groundnut 38,000

19. Sugarcane -

Adsali 1,32,000

Preseasonal 1,15,000

Seasonal 1,15,000

4.15 Pre sanction appraisal proposal and development loan

1. Visit to site
2. Collect documents like location, entrance to location , NOC from Nagarpalika or
Municipal Corporation , photos
3. The pre-sanction visit is expected to helps the banker to identify the farmer and granter
, locate boundaries of land as per the map and asses the managerial capacity of the
farmer in farming and allied enterprises and the farmer attitude to words latest
technology . Details and economics of crop and live-stock enterprises, physibilities for

36
 implementing proposed plan, farmer loan position with non-institutional sources,
certain in the pre sanction visit. Thus, pre-sanction visit of the bank officials is very
important to verify credit worthiness and trust worthiness of the farmer-borrower.
While apprising different types of loans, different aspects should be verify for e.g., to
advance loan for the well digging, the location on proposed well, ground water
availability , distance from the nearly well rainfall command area of the well etc. are
verified in the pre-sanction visit.

4.16 Post sanction follow up of crop and development loan

1. Giving step by step amount to customer from his/her loan
2. Complete construction photo
3. This visit is meant for developing close repo between farmer and banker. This visit
is more informer than formal, which are supposed to inculcate. The feeling of
friendly lineness and underlining the obligation of the farmer to reply loan when it
falls due.
4. Post sanction follow up development loan.
5. Sanction of loan facilities

4.17 Rate of interest and periodicity of charging interest on different

types of agricultural loan

Table 4.8 : Rate of interest and periodicity

Sr.No. Type of loan Rate of interest (%)

1 Kisan credit card 2
23 Housing loan 6.9
4 Pipeline loan 8.7
5 Small Business loan 10.50
6 Goat & sheep loan 8.5
7 Nursury loan 7.5
8 Small irrigation loan 8.2
9 Horticulture loan 10.8
10 Land Improvement Loan 8.00

37
11 Farm pond loan 9.5
12 Tractor loan 8.6
13 Education loan 8.9
14 Gold loan 7.3
15 Vehicle loan 7.5
Table 4.11 explains the rate of interest and periodicity for different loans

1. Small business loan:

IDBI Bank offers loan to self employed and businessmen for financing
the expansion or working capital requirements of their business. There are some
benefits of taking loan from Bank of Baroda:

• You can prepay part of your loan anytime after paying 1 % prepayment
charges
• You can foreclose your entire Business loan anytime after paying 1 EMI's
at foreclosure charges - Nil prepayment charges
• IDBI Bank has over 5,373 branches in India where you can avail service

2. Education loan:

Every child needs a quality education in order to lead a complete,

successful and comfortable life. Unfortunately, such education comes at a cost that not
everyone who deserves it can afford. That is where education loans comes into play.
Education loans are funds offered by banks and financial institutions to meritorious
students to help them pursue their dream course.

IDBI Bank Education Loan Interest Rate is quite competitive for education in India’s
finest institutes and on studying abroad. Interest rates on Education Loans are floating,
and vary with the changes in MCLR. IDBI Bank Education loan interest rates are in
the range of 8.00% and 10.00%..

3. Gold loan:
Gold Loans are loans availed by pledging your gold ornaments with a bank.
IDBI Bank gold loan can be taken for meeting urgent personal expenses like children
education, marriage and other financial emergencies in the family as well as for

38
business purposes. The gold mortgaged acts as a security to the loan. Taking a loan
IDBI Bank has the following benefits:

4. IDBI Bank offers gold loans for long tenure of up to 36 months, which allows you
to repay the loan in EMIs of low amount.
5. The bank does not charge any foreclosure fees on its gold loan products, thus
ensuring that the customers have full flexibility in managing their loan repayments.

4. Land Development Loan

Purpose: It covers activities of terracing, bonding, leveling, kyari preparation, drainage

lay out and reclamation of saline, alkaline and ravine lands

Eligibility : All persons engaged in raising crops, fruit gardens, plantations and nursery
crops as owners of land or permanent tenants or as lease holders (for reasonably long
period).

Nature of facility : Term loan

Repayment Period :

For small and Marginal Farmers -Above 8 yrs

For other farmers – Max 7 Years with One year holiday/moratorium period

5. Horticulture loan:

Purpose - For establishing new or maintaining of existing orchards, gardens,

plantations and nurseries. All capital cost for development of horticulture and
maintenance costs of plants, seedlings, grafts, fertilizer, insecticides, pesticides, wages
salaries is financed.

Eligibility : All persons engaged in raising fruit gardens, plantations and nursery crops
as owners of land or permanent tenants or as lease holders (for reasonably long period)

Nature and facility : Term Loan/ Cash Credit

Repayment period : Term loan- Maximum period of 5 to 15 years excluding gestation

period
Cash Credit :12 month

39
 6. Kisan Credit card scheme:

IDBI Bank Kisan Credit Card The Kisan credit card scheme aims to provide
credit support of the banking system under a single window to the farmers for their
cultivation and other farming requirements mentioned below- Meeting the short-term
credit needs for cultivation of crops, including fodder crops Post-harvest expenses
Produce marketing loan Consumption requirements of farmer’s family Daily usage of
cash for maintenance of farm and activities related to agriculture like dairy, poultry,
fisheries, piggery, sericulture, etc The Capital requirement for agriculture and related
activities like - purchase of farm equipment or machinery, such as pump saints,
sprinklers/drip irrigation equipment, pipeline, power tiller, tractor, sprayers, milk animals,
vehicles for transportation of farm production, etc

IDBI Bank Kisan Credit Card Eligibility Tenant farmers, oral lessees,
sharecroppers, etc., can apply for the scheme Self Help Groups (SHGs) or Joint Liability
Groups (JLGs) of farmers, including tenant farmers, sharecroppers, etc. Registered
sharecroppers and tenant farmers, those who are cultivating crops for a period not less
than five years. All individual All individual agriculturists and proprietorship who are
residing in the village for at least for three years are eligible for IDBI Bank Kisan Credit
Card.

4.18 Various types of securities taken for agricultural loan such as

hypothecation, mortgage etc.

4.21.1 Hypothecation:

Hypothecation occurs when an assets is pledged as collateral an asset is pledged

as collateral to secure a loan.
4.21.2 Mortgage:
A mortgage is usually a loan sanctioned against an immovable assets like a house or
a commercial property. The lender keep the assets as collateral until the borrowers repays
the total loan amount.

40
Table 4.9: List of hypothecation and mortgage

Sr. No. Hypothecation Mortgage

1. Vehicle Land
2. Gold Building
3. Livestock Farm house
4. Tractor Home
Table 4.12 shows the example of mortgage and hypothecation.

4.19 Recovery of agricultural loan i.e. basis of fixed period and amount
of installments

Table 4.10: Recovery of agricultural loan

Sr. Financial Year Amount Amount of loan Loan

No Sanctioned Recovered Recover (%)
(Crore)
1. 2016-17 59.63 58.45 98.02
2. 2017-18 60.23 59.65 99.03
3. 2018-19 62.78 61.45 97.88
4. 2019-20 63.52 62.57 98.50
5. 2020-21 65.37 64.25 98.28
Total 311.53 306.37 491.71
CGR 2.39 2.39 -
MIN 62.306 61.274 98.342
Standard
Deviation 2.124021 2.058131 0.404791
Coefficient
variation 3.409015 3.358898 0.411616

41
4.20 General problems encountered in sanction, follow up and recovery
of agricultural advances with emphasis on the problem of overdue and
supervision and steps taken to improve the situation.

1. The rent paid for building- The building of IDBI bank is rental building.
2. The problem in the process of sanction is the incomplete documents- due to incomplete
documents the sanctioning of loan procedure required long time.
3. The problem in process of follow up is some time roads from bank to the site is not
good so bank staff is can’t reach to that spot.
4. Sometimes there is problem in process of recovery of agricultural advance because
of natural calamities, price fall in market.
5. Problem in overdue situation because farmers or customer cant paid amount on
time to time.
6. The problem in supervision is the staff is insufficient.
7. The problem in staffing pattern because many time change staff member
8. Incomplete documents: farmer are not provide proper documents to the bank for
loan procedure then bank are reject this loan procedure .
9. The most time net problems to payment.
10. The main problem to taken agricultural loan most of time farmer land is another
person name the bank not gives easily loan.

42
 CHAPTER V
SUMMERY AND CONCLUSION
5.1 Summery
Table 5.1: Summery
Sr. No. Particulars Findings

1. Staff 06 members

2. Villages adopted 06 numbers

3. Total borrowers 24,501 customers

4. Deposit Rs. 85,00,00,000 cr

5. Loan Disbursement Rs. 68,00,00,000 cr

6. Saving account 15,352 Customers

7. Current account 5,637 Customers

8. Fixed deposit 3,512 Customers

9. Short term 6 to 18 month

10. Medium term 15 Month to 5 Year

11. Long term 5 year to 20 year

12. Rate of interest 2.5 % to 10.5 %

13. Scale of finance (for crops)(in per hectare) Rs.10,000 to Rs.3,20,000

14. Scale of finance (for green house production) Rs.45,000 to Rs.1,40,000

15. Scale of finance (for Agricultural attached Rs.9120 to Rs. 23,000

project (Dairy, Poultry, Fishery)

Table 5.1 shows summery of project.

43
5.2 Conclusion

1. IDBI bank has many borrowers.

2. IDBI bank has sanction loan amount to checked various type of securities, civil
score, bank statement etc.
3. IDBI bank provides various types of loan and services to customer.
4. IDBI bank provides total clear information and solution to the customer of any
problem.
5. It gives detail information to farmers about agricultural scheme.
6. The relation of bank with customer is very good.
7. IDBI bank gives proper service of ATM and CDM machine to the customer for
24 hours.
8. IDBI bank support both farmers and business man also various agricultural,
business and development loan .

44
 CHAPTER VI
EXPERIENCE GAINED

1. I got information about IDBI Bank like staffing pattern, sourcing of working capital.
2. I got knowledge about how many interest on different types of loan.
3. I got experience about how to communicate with the seniors.
4. I got information about different schemes of agriculture & how implemented in
farmer.
5. I got information about documentation for agricultural loan.
6. I got knowledge about types of loans and sub – types of loans.
7. I got knowledge about Loaning procedure of any agricultural loan.
8. I also got information about scale of finance.
9. I got knowledge about the various types of securities taken for agricultural loan i.e.
hypothecation and mortgage.
10. I got knowledge about rules of bank.
11. I got knowledge about capital structure ( source of fund ) of IDBI Bank.
12. I got information about importance of bank.
13. I got information about which villages are under IDBI bank & how many customer
are attach to IDBI bank.
14. I got knowledge about recovery of agricultural loan e.g. Crop loan their loan period
and number of installment.

45
 CHAPTER –VII
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PHOTO GALLERY

IDBI Bank jantaraja marg

vidhyanagar sangamner

48
Cash collect & withdrawl
counter

Deposit slip

49
Suggestion & complaint box

IDBI Bank timing board

50
ATM Machine DD NEFT RTGS Form

51