summcomparative study of financial aspects of rural financial institutions in sagar distter...

7/27/2019 SummComparative study of financial aspects of Rural Financial Institutions in Sagar Distter Internship Program

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SUMMER INTERNSHIP PROGRAM

A PROJECT REPORT ON

COMPARATIVE STUDY OF AGRICULTURAL

FINANCING BY RURAL FINANCIAL INSTITUTIONS

(RFIs) IN SAGAR DISTRICT.

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

CORPORATE GUIDE: FACULTY GUIDE:

Mr. KULDEEP SINGH Prof. R.C. MATHUR

SUBMITTED TO: SUBMITTED BY:

FMS-IRM GAURAV JAIN

Roll No-1769

PGDRM

FMS-IRM


2/12

CERTIFICATE:-

Certified that this project report entitled Comparative study of Agriculture

Financing by Rural Financial Institutions (RFIs) in Sagar District is a record

of project work done independently by Mr. Gaurav Jain under my guidance and

supervision, and it has not previously formed the basis for the award of any degree,

fellowship or association with him.

Date: Prof. R.C. Mathur

Faculty Guide


3/12

CERTIFICATE

This is to certify that MR. GAURAV JAI Nstudent of Post Graduate Diploma in

Rural Marketing, Faculty of Management Studies- Institute of Rural Management,

Jaipur (Rajasthan) was selected under Summer Placement Scheme 2011 of

NABARD and he has completed his project from NATIONAL BANK FOR

AGRICULTURE AND RURAL DEVELOPMENT (NABARD), MADHYA

PRADESH REGIONAL OFFICE, BHOPAL under the able guidance and

supervision of MR. KULDEEP SINGH, ASSISTANT GENERAL MANAGER

(ECONOMIC SERVICE) MADHYA PRADESH REGIONAL OFFICE,

BHOPAL from 05/05/2011 to 08/07/2011.

He has successfully completed his Summer Internship Report which has requisite

standard for the partial fulfillment of the Post Graduate Degree in Rural

Marketing. To the best of our knowledge no part of this report has been reproduced

from any other report and the contents are based on original research.

During the project period with this organization, we found him sincere and

dedicated. We wish him very best of his future endeavors.

(Kuldeep Singh)

Assistant General ManagerMP RO, NABARD, BHOPAL


4/12

DECLARATION

I do hereby declare that this project Report entitled Comparative study of

Agriculture Financing by Rural Financial Institutions (RFIs) in Sagar

District is a bonafide work done by me with the financial support of NABARD

under Summer Placement Scheme 2011. I also declare that it has not previously

formed the basis for the award to me for any degree/diploma, associate ship,

fellowship, or other similar title of any other institute/society. The publication of

this work is the sole authority of NABARD and any publication by undersignedwill be done with the necessary approval of NABARD.

(Gaurav Jain)

Date: ________ Enroll. No.-RM/July/10/4/2269


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ACKNOWLEDGEMENT

I strongly believe that for the successful completion of any significant work, there

is immense support and guidance from various persons. I here take this opportunity

to express my deep gratitude towards some of these guiding souls.

First of all, I would like to express my heartful thanks to NABARD for providing

me an opportunity for undertaking a work related to Rural Banking. My sincere

thanks to Sh. S.Akbar, Chief General Manager and his team for reposing faith in

me for selection under the Summer Placement Scheme of NABARD. I am also

thankful to Sh. S. Selvaraj, General Manager, Sh. A.S. Bable, DGM, Dr. K.

Rabra, AGM, Sh. Poonabalam, Manager, Sh. Kabilan ,AM &Sh. Dhanesh, AM

for supporting me during the entire project period. I owe my gratitude to my

project guide Sh. Kuldeep Singh, AGM (Economic Service) who helped me to

bridge the gap between text book learning and practical realities.

I also wish to express my deep regards to my faculty guide, Prof. R.C. Mathur

(Faculty Coordinator), FMS-IRM, Jaipur, who at each and every step of my

project contributed with his valuable suggestions which proved extremely fruitful

for the successful completion of my summer project. I would also like to express

my regards to all the FACULTY MEMBERS ofFMS-IRM for inculcating me

knowledge, which helps in smooth conduct of my Research Project.

Lastly, I am highly thankful to all the branch managers of various banks and

sample farmers for sharing valuable time and information during the course of my

field visit. Last but not the least, I would like to thank my parents, friends and

relatives and all those, who directly and indirectly helped me during my project.


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TABLE OF CONTENTS:-

CHAPTER

NO.

TITLE PAGE

NO.

ACKNOWLEDGEMENT

LIST OF TABLES

LIST OF DIAGRAMS

ABBREVIATIONSEXECUTIVE SUMMARY

1. INTRODUCTION/DESIGN OF STUDY

1.1 Agriculture in Indian Economy

1.2 Agriculture Credit System

1.3 Types of Credit

1.4 Agencies for disbursing Agriculture Credit

1.5 Research Problem

1.6 Objective of the Study

1.7 Research Methodology

1.8 Practical utility of the Study

1.9 Limitations of the study

1-15

1

1

2

7

10

10

11

14

15

2. ORGANISATION AND AREA PROFILE

2.1 NABARD

2.2 Sagar District

16-18

16

17

3. ANALYSIS AND INTERPRETATION 19-29

4. SUMMARY OF FINDINGS AND 30


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OBSERVATIONS,SWOT

ANALYSIS,SUGGESTIONA AND

CONCLUSION

5. BIBLIOGRAPHY 43

6. APPENDIX 44


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LIST OF TABLES:-

S.No.

TITLE PAGENo.

1. Agriculture Credit Flow in 2009-10 & 2010-by various

Agencies (Rs. in crore)

9

2. Percentage Shares of Institutional & Non institutional Sources

in Borrowing of Cultivator Households

10

3. Details of Districts / Banks / Branches visited during the study 12

4. Branch wise details of Selected Farmers 13

5. Average age (in Years) and Literacy Rate of Selected Farmers 19

6 Average Size of Land Holdings of Selected Farmers 20

7. Details of Animals of Selected Farmers 20

8. Details of ATL 21

9. Average Ground level Credit Flow of Selected Branches in

2010-11

(Rs. in lakh)

22

10. Composition of Agri. Credit of Selected Branches during 2010-

2011

23

11. Details of Time taken in Sanction of KCC limit 25

12. Average limit per acre 26

13. Average limit per KCC 28

14. Comparative Findings Of All RFIs in respect of KCC and ATL 30


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LIST OF DIAGRAMS:-

Sr. No. Title Page No.

1. Average Ground Level Credit Flow through KCC by

RFIs (Rs. in lakhs)

22

2. Repayment performances of KCC by RFIs (in %) 24

3. Time taken by RFIs in sanction of KCC limit (in days) 25

4. Average limit by RFIs (in Rs. Per acre) 27

5. Average KCC limit by RFIs (in Rs.) 29


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ABBREVIATIONS:-

ATL Agricultural Term LoanCB Commercial Banks

CCB Central Cooperative Bank

DCC District Consultative Committee

DDM District Development Manager

DLTC District Level Technical Committee

GOI Government of India

GLC Ground Level Credit

KCC Kisan Credit Card

LSR Legal Search Report

MF Marginal Farmer

NABARD National Bank for Agriculture and Rural

Development

PACS Primary Agricultural Credit Society

RBI Reserve Bank of India

RFIs Rural Financial Institutions

ROI Rate of Interest

RRB Regional Rural Bank

SCB State Cooperative Bank

SF Small Farmer

SLBC State Level Bankers' Committee

SLTC State Level Technical Committee

ST Short Term


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EXECUTIVE SUMMARY:-

Agriculture and rural economy is the mainstay of Indian economy and this fact isstrengthened by the reason that about 60% of Indian population is depended on this

sector and about 17% of countrys GDP is contributed by agriculture and allied

sector. Managing and disbursing the credit requirement of this huge sector is really

a daunting task. In the union budget, the total plan outlay for this sector has been

increased by 19.79% to Rs.147.44 bn. Effective and Proper utilization of this huge

amount is in the hand of multi-agency system being followed in our country

constituting of Cooperative Banks, RRBs and Commercial Banks. The success of

these institutions in disbursing agricultural credit is guided and depended mainly

on ensuring adequate and timely availability of credit at reasonable rates through

the expansion of institutional framework, its outreach, scales of finance and direct

lending and most importantly by way of successful implementation and execution

of various govt. schemes.

The present study focuses on the comparative analysis of one such govt. schemes

i.e. KCC and disbursement of agricultural term loans by RFIS in Sagar district of

M.P. KCC had been implemented by all RFIS since its inception in Aug. 1998 all

over the country. Through this study I try to understand and compare the

performances of KCC and agricultural term loans schemes by various RFIs which

is also the objective of my study, practical difficulties faced by credit institutions,

problems with the scheme, feedback in the form of suggestions and

recommendations from both bankers and sample beneficiaries. The criteria for

comparison between institutions are adequacy of credit, timeliness in

disbursement, realistic scales of finance, appraisal criteria, repayment status, share

in ground level credit flow etc.


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The study was carried systematically in stages starting with review of literature to

know the general banking scenario of Sagar district, then selection of sample

branches of RFIS. Two branches, one rural and one semi-urban, had been studied

for better coverage of sample beneficiaries in case of Commercial banks and

RRBS. Lead Bank of district Central Bank of India was taken as a representative

for commercial bank, Madhya Bharat Kshetriya Gramin Bank for RRBS and

Sagar District Cooperative Bank for Cooperative Bank. Regarding sample

beneficiaries, 5 KCC holders and 5 agricultural Term loanee were studied from

each branch taking a proper mix of small, marginal and big farmers.

This study surely helped me a lot in understanding the practical aspects and ground

realities of rural banking sector in general and about KCC and agricultural term

loan scheme in particular. In findings and observation part I have discussed that

which RFIS is performing effective than others and in which area along with

reasons. A policy implication that comes from my study is discussed in suggestions

part.

I would be extremely happy if any policy implications, findings, recommendations

etc. suggested by me proves helpful to NABARD or any other credit institutions in

managing KCC and agricultural term loans scheme.

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