reasons for slow growth in personal and agricultural loan
DESCRIPTION
summer training project report of State Bank of India by Shashankk DTRANSCRIPT
ANALYZING REASONS FOR SLOW GROWTH IN PERSONAL AND AGRICULTURAL LOAN IN BORSAD AND ANAND ROAD
BRANCHES OF STATE BANK OF INDIA
Guided by
Dr. Mahesh R Prajapati
Asstt. Professor
SUMMER TRAINING PROJECT PRESENTATION
ON
Presented by
Shashank Jain
04-2062-2012
Content of presentation
• Introduction
• Objectives of study
• Results analysis and discussion
• Conclusion
• Suggestions
• References
Introduction
• The banking sector is the most dominating sector of the
financial system in India. Significant progress has been made
with respect to the banking sector in new economic era (post
liberalization period).
• Deregulation has opened new opportunities for banks to
increase revenue.
• Liberalization has created the more competitive environment
in banking sector.
CONCERNS.....
• The macroeconomic situation continues to raise concerns.
Even as growth has slowed significantly, inflation remains
well beyond the comfort level of the Reserve Bank.
• The impact from domestic and international economic
developments posed challenges to the banking sector during
the year 2012-13
• Higher capital requirements and the need for meaningful
financial inclusion are the primary challenges before banks.
• Under extreme shocks, some banks could face moderate
liquidity problems and their profitability could be affected.
Advances
• India has recorded syndicated loan volume of only $7.2
billion for the first nine months of 2012, just one-third of the
$21.2 billion closed by the end of the third quarter last year.
• Volume has dropped significantly this year in the absence of
large offshore M&A deals, previously a big volume booster.
And deal flow has been muted amid a dramatic slowdown in
economic growth.
Trends in advances
• Over the past 12 months, total bank loans have risen by less than
four percent, while deposits have increased over eight percent.
• The overall loan-deposit ratio for the banking industry is getting
lower.
• Business loans are the fastest growing segment, with real estate
and consumer loans just barely expanding.
• SBI expects to achieve lower advances growth rate of 16% in
2013 advances as compare to 21% of previous year
Challenges for bank
• Financial inclusion
• Profitability
• Non-Performing Assets
• Credit risk
State Bank Of India - A Brief Introduction
Products Portfolio
• Personal Banking
• Agricultural & Rural Banking
• NRI Services
• International Banking
• Corporate Banking
• Services
• Govt. Business
• SME
Kisan Vikas Patra
• Kisan Vikas Patra is a saving scheme that was announced by
the Government of India that doubles the money invested in
eight years and seven months
• The “kisan” in Kisan Vikas Patra does not mean that only
farmers can buy these saving certificates but means that the
revenue mobilized by this scheme will be used by the
Government of India in welfare schemes for farmers.
OBJECTIVES OF THE STUDY
To find out the reasons behind the slow growth/ negligible growth in personal and
Agricultural loan.
To know the view of people regarding institutional loan and its procedures with
particular emphasis on SBI’s Personal and Agricultural loan.
To know the awareness regarding loan against Kisan Vikas Patra or securities.
RESEARCH METHODOLOGY
• Background of study-
• The growth in retail advances of the bank has become
stagnant. Also the asset quality is getting degraded day by
day; the study aims to identify the reasons which are
responsible for the slow growth in loan segment. The study
is based on analysis of Factors (of bank and customers) and
their linkages, within the research framework of 10 weeks.
Source of data
• Primary data:
Data collected from the bank officials as well as from people
(customers as well as other) through semi structured
questionnaire.
• Secondary data:
Secondary data collected from the bank’s annual reports,
financial journals, economic issues, as well as RBI & SBI
websites
Research design:
Sampling method: Non Probability Sampling
Sampling technique: Convenient Sampling
Sample area: Borsad and Anand region
Sample size: 100
Sampling unit: Customers and non customers of Bank.
Analytical tools: Interpreting using charts, graphs and tables etc.
4. RESULTS AND DISCUSSIONS
FIG 4.1 Deposits v/s Advances
Jan/08 Jan/09 Jan/10 Jan/11 Jan/12 Jan/130
100000
200000
300000
400000
500000
600000
DEPOSIT
ADVANCES
FIG 4.2 Accounts facilitated with followings
11 39 61
144 176
493
FIG 4.3 Regular v/s Defaulted accounts in different facilities
overdraft term loan
agri term loan recalled
assets demand loansagri cash
credit cash credit
0
50
100
150
200
250
300
350
400
450
500
61
493
39
0
144176
11
1 25 53
120
2 115
no of accounts no of NPA accounts
Fig 4.4 Amount disbursed in regular and defaulted accounts
agri term loan4%
demand loans5%
cash credit10%
agri cash credit12%
overdraft 13%
term loan56%
amount in different accounts
overdraft 6%
term loan20%
agri cash credit21%
agri term
loan25%
cash credit29%
Amount in NPA in defaulted account
NPA accounts in
different segments
Agriculture79%
Per-sonal5%
SBF17%
Agriculture57%
Personal
8%
SBF35%
Amount of NPA in segments
FIG 4.5
• ANALYSIS OF CUSTOMER RESPONSES
Occupation
other service agriculture business
7
23
3436
FIG 4.6
Annual income
below 200000 above 1000000 500000 - 1000000 200000 - 500000
8
12
38
42
FIG 4.7
Do you have an account in any bank
yes94%
no6%
FIG 4.8
source of loan
institutional58%
non institutional42%
yes53%
no47%
Taken loan from any where
FIG 4.9
Reason for non institutional
b. flexibility of amount
9%c. personal rela-
tions14%
e. No other op-tion14%
d. timeliness 23%
a. easy availabil-ity
41%
FIG 4.10
Types of institutional loan
home loan27%
Car/vehicle loan12%
Agriculture loan23%
educational loan16%
other22%
FIG 4.11
Source of institutional credit
other10%
private banks13%
Other public sector banks 19%SBI
58%
FIG 4.12
Reasons for choosing SBI loan
transparency13%
Low cost28%
offer from the institute
20%
trustworthyness 34%
other5%
FIG 4.13
Difficulties / Problems of institutional
loanslack of
awareness8%
other10%
more time consuming
22%
heavy paper work61%
FIG 4.14
Start up / continue taking up SBI loan
yes85%
no15%
FIG 4.15
If no then what is the reasonno time-liness 13% inflexibil-
ity of amount
13%
less cooperation 20%
heavy paper work 53%
FIG 4.16
Reason for continuity/starting up loan from SBI
low interest rate 27%
good service 14%
reliability48%
other11%
FIG 4.17
Valuation or scale of finance is satisfactory
yes 12%
no88%
FIG 4.18
Do you know about Kisan Vikas Patra saving?
yes28%
no72%
FIG 4.19
yes72%
no28%
Aware of loan against KVP
no100%
Taken up loan against KVP
FIG 4.20
Conclusion from discussion with bank
• Although the growth in advances is at par with deposits but still
the overall loan deposit ratio is less.
• Rising NPA causing degradation in asset quality hence it is
adversely affecting the lending abilities of bank.
• The recovery of agricultural loan is not efficient in rural areas like
Borsad which is ultimately creating the burden on other segments
e.g. Personal and small financing.
• The officers who process loan is made responsible if it defaults.
• Farmers who own the land jointly with other
family members find it difficult to take the
loan.
• Lack of staff is also causing the loss of
customers as many customers are left
unaddressed of their problems.
Conclusion of customer analysis
• The customer processing time is huge in loan application as an average it
takes minimum 10 days to process a loan from application to final
sanctioning.
• People think that loan from institutions is a tiring procedure and requires
heavy paperwork and lot of time.
• Respondents of semi urban and rural areas were having less awareness
of various schemes and facilities provided by the bank to promote the
advances, as loan against securities and KVP had less impact on the
people.
Recommendations
• Need of little flexibility in terms of amount under
consideration, time and documents requirements.
• Banks should promote the schemes related to loan against
the KVP, property and other collateral according to socio-
economic profile of the region.
• The complaints of customers should address as quickly as
possible.
• The recovery of loan should be done professionally.
• The staff should be given more authority and power to
verify the loan procedure and to recover it, so they can
feel free while sanctioning the loan.
• Employee turnover should be reduced as it takes time to
build the relations again with new staff and customers
Recommendations
REFERENCES• Anonymous; http://data.gov.in/catalogs?page=2&filter=agency%3A1202;
accessed on 18 July 2013.
• Anonymous; www.rbi.org.in; RBI web page accessed on 20 Aug 2013.
• Anonymous; www.sbi.co.in; accessed on 15 July 2013
• Bhatt, O. P.; State Bank of India: Pioneer in Agricultural lending.
• Hunt Robert; Case Study: State Bank of India, World's Largest Centralized
Core Processing Implementation
• Singh Anurag. B.; Priyanka Tandon; “A study of financial performance: a
comparative analysis of sbi and icici bank” International Journal of
Marketing, Financial Services & Management Research; Vol.1 Issue 11,
November 2012, ISSN 2277 3622.