Redy Project

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere
INTRODUCTION
Banks are in the business of accepting deposits for the purpose of lending. Banks are the ancient monitory institutions have become indispensable pillar in the modern economic life of the world. The Economic development of our country depends upon the banks. They act as financial intermediates between depositors who are in need of fund. Banks occupy a pivotal place in the payment system for government, business and households. They are, therefore accountable to the government, RBI as well as to the public, who are keeping their funds, not put the depositors interests to jeopardy. Banks are using the deposits in lending and investments. The risk of business loss is equally associated with the lending activities as in other business. The primary role for government/ RBI is to limit the risk and loss to depositors and thus maintain public confidence as well as prevent collapse of the banking system. Therefore RBI has regulatory authority is issuing from time to time various guidelines to the banks and financial institution for proper credit administrations. Finance is the life blood of every productive operations of business. Many of the business problems find their solution in financial strength of the unit. Financial institutions have been playing a major role in development of the small scale industries. They are major sources of finance to the entrepreneur to meet their financial requirements. In India major portion of industrial credit is provided by the financial institution especially banks as the entrepreneurs do not have access to the capital market for their requirements. Today modern commercial banks particularly public sectors banks like SBI, SBM and nationalized banks playing important role in starting, developing and achieving objectives of the deferent kinds of Small Scale and cottage industries in India. Small Scale and Cottage industries are back bone of the rural people like craft-men etc by creating sufficient employment opportunities. In this study I tried to highlight the financial requirements of SSI and remedial measures under taken by the state and central government of our nation. The significant development in field of commercial banking in India in recent year is the spread of network of bank branches in unbanked and under banked rural and semi urban areas. The commercial banks have made available the banking facilities in all parts of the
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Bapuji Academy Of Management And Research. Davangere

country. Through a network of branches spread over in all parts of the country the banks have developed banking habits among all type of people.
ORIGIN OF THE TERM BANK:Authorities on banking are divided in their opinion regarding origin of the term Bank. According to some of the English world Bank is derived from the Italian word Banco and the Latin Word Bonus and French word Banque which means a bench. According to the others the term bank is derived from German word Banck which means a joint stock fund or common fund raised from the public.
ORIGIN OF BANKING:The origin of commercial banking can be traceable in the early times of human history. In the ancient Rome and Greece, the practice of storing precious metals and coins at safe places and loaning out money for public and private purposes on interests was prevalent. In England, banking has its origin with London gold-smiths who in the 17th century begin to accept deposits from merchants and others for safe keeping of money and other valuables. As public enterprise, banking its first appearance in Italy in the year 1157 when the bank of Venice was founded.
DEFINITION GIVEN BY INDIAN BANKING REGULATION ACT 1949:Section 5 (1) (c) of the Indian banking regulation act 1949 defines the banking company as Any company which transacts the business of banking in India. Section 5 (1) (b) of same act defines the term banking as Accepting for the purpose of lending and investment of deposits of money for the public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise.
INDUSTRY PROFILE
History of Banking in India
Banking in India has a very old origin. It started in the Vedic period where literature shows the giving of loans to others on interest. The interest rates ranged from two to five percent per month. The payment of debt was made pious obligation on the heir of the dead person. Modern banking in India began with the rise of power of the British. To raise the resources for the attaining the power the East India Company on 2nd June 1806 promoted the Bank of Calcutta. In the mean while two other banks Bank of Bombay and Bank of Madras were started on 15th April 1840 and 1st July, 1843 respectively. In 1862 the right to issue the notes was taken away from the presidency banks. The government also withdrew the nominee directors from these banks. The bank of Bombay collapsed in 1867 and was put under the voluntary liquidation in 1868 and was finally wound up in 1872. The bank was however able to meet the liability of public in full. A new bank called new Bank of Bombay was started in 1867. On 27th January 1921 all the three presidency banks were merged together to form the Imperial Bank by passing the Imperial Bank of India Act, 1920. The bank did not have the right to issue the notes but had the permission to manage the clearing house and hold Government balances. In 1934, Reserve Bank of India came into being which was made the Central Bank and had power to issue the notes and was also the banker to the Government. The Imperial Bank was given right to act as the agent of the Reserve Bank of India and represent the bank where it had no braches. In 1955 by passing the State Bank of India 1955, the Imperial Bank was taken over and assets were vested in a new bank, the State Bank of Bank Nationalization After the independence the major historical event in banking sector was the nationalization of 14 major banks on 19th July 1969. The nationalization was deemed as a major step in achieving the socialistic pattern of society. In 1980 six more banks were nationalized taking the total nationalized banks to twenty.

Structure of schedule commercial banks The composition of the board of directors of a scheduled commercial bank shall consist of whole time chairman. Section 10A of the Banking Regulation Act, 1949 provides that not less than fifty-one per cent, of the total number of members of the Board of directors of a banking company shall consist of persons, who shall have special knowledge or practical experience in respect of one or more of the matters including accountancy, agriculture and rural economy, banking, co-operation, economics, finance, law, small-scale industry, or any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the banking company. Out of the aforesaid number of directors, not less than two shall be persons having special knowledge or practical experience in respect of agriculture and rural economy, co-operation or small-scale industry. Besides the above the board of the scheduled bank shall consist of the directors representing workmen and officer employees. The Reserve Bank of India and the Central Government also has right to appoint their nominees into the board of the banks. Present scenario of the banks in India: Banks are extremely useful and indispensable in the modern community. The banks create the purchasing power in the form of bank notes, cheques bills, drafts etc, transfers funds bring borrows and lenders together, encourage the habit of saving among people.
The banks have played substantial role in the growth of Indian economy. From the meager start in 1860 the banks have come to long way. At present in India there are 20 nationalized banks, State bank of India and its seven Associate banks, 21 old private sector banks and 8 new private sector banks. Besides them there are more than 30 foreign banks either operating themselves or having their branches in India. The statistical table hereunder shows the financial position of the banks as on 31.03.2012. The banks in India are operating through 55530 branches. All the banks together had the net worth of Rs. 149385 crores as on 31st March, 2005. The banks also had the deposit base of Rs. 1836985 crores and the advances of Rs. 1151113 crores taking the total business to Rs. 2988098 crores. During the year 2004-05 the banks had earned the interest income of Rs. 154761 crores. The average net NPA ratio of the banks was also less 3.84% in year 2005.

Future is bright: The Information Technology (IT) is becoming an important component of the banking sector. The customers have become more demanding and they need value added services from the banks. The foreign banks have raised the expectations of the customers causing the bank to invest strongly on IT. The Indian banks have started to meet the expectations of the people by opening both onsite and offsite ATMs. Banks have also started telebanking, anytime/anywhere banking, mobile banking and Internet banking to give the facilities to the customers. Banks have also following the RBI sponsored technology programmes like mail messaging, Electronic fund transfers (EFT), Structured Financial Messaging System (SFMS), (Real Time Gross Settlement (RTGS), Centralized Fund Management System (CFMS) and Negotiated Dealing System / Public Debt Office (NDS/PDO). Banks have been given more teeth to tackle the Non performing assets by passing the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Under this Act, the banks can take over the assets of the defaulters either by themselves or with the help of Court. The power is in addition to the power to recover through the Debt Recovery Tribunal. The Asset Reconstruction Companies have been formed which also take over the distress assets from the banks.
NABAD ROLE IN BANKING INDUSTRIES

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas. In discharging its role as a facilitator for rural prosperity NABARD is entrusted with 1. Providing refinance to lending institutions in rural areas 2. Bringing about or promoting institutional development and 3. Evaluating, monitoring and inspecting the client banks Besides this pivotal role, NABARD also: Acts as a coordinator in the operations of rural credit institutions Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development

Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development Acts as regulator for cooperative banks and RRBs Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development Acts as regulator for cooperative banks and RRBs
SOME OF THE MILESTONES IN NABARD'S ACTIVITIES ARE: Refinance disbursement under ST-Agri& Others and MT-Conversion/ Liquidity support aggregated Rs.19452 crore during 2009-10.
Refinance disbursement under Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible financial institutions during 2009-10 aggregated Rs.12009.08 crore.
Through the Rural Infrastructure Development Fund (RIDF) Rs.12387.54 crores were disbursed during 2009-10. With this, a cumulative amount of Rs.86939.74 crore has been disbursed as on 31 March 2010 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management and the Bharat Nirman Project (BNP).
Under Watershed Development Fund with a corpus of Rs.1102 crore as on 31 March 2008, 513 projects in 14 states have benefited. Farmers now enjoy hassle free access to credit and security through 906.40 lakh Kisan Credit Cards that have been issued through a vast rural banking network. Under the Farmers' Club Programme, a total of 54805 clubs covering 104648 villages in 587 districts have been formed, helping farmers get access to credit, technology and extension services.

NABARD MISSINON Promoting sustainable and equitable agriculture and rural development through effective credit support, related services, institution building and other innovative initiatives. In pursuing this mission, NABARD focuses its activities on: Credit functions, involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes Development functions, concerning reinforcement of the credit functions and making credit more productive Supervisory functions, ensuring the proper functioning of cooperative banks and regional rural banks NABARD OBJECTIVES NABARD was established in terms of the Preamble to the Act, "for providing credit for the promotion of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting IRDP and securing prosperity of rural areas and for matters connected therewith in incidental thereto". The main objectives of the NABARD as stated in the statement of objectives while placing the bill before the LokSabha were categorized as under : 1. The National Bank will be an apex organisation in respect of all matters relating to policy, planning operational aspects in the field of credit for promotion of Agriculture, Small Scale Industries, Cottage and Village Industries, Handicrafts and other rural crafts and other allied economic activities in rural areas. 2. The Bank will serve as a refinancing institution for institutional credit such as longterm, short-term for the promotion of activities in the rural areas. 3. The Bank will also provide direct lending to any institution as may approved by the Central Government.

4. The Bank will have organic links with the Reserve Bank and maintain a close link with in
Major Activities
Preparing of Potential Linked Credit Plans for identification of exploitable potentials under agriculture and other activities available for development through bank credit. Refinancing banks for extending loans for investment and production purpose in rural areas. Providing loans to State Government/Non Government Organizations (NGOs) /Panchayati Raj Institutions (PRIs) for developing rural infrastructure. Supporting credit innovations of Non Government Organizations (NGOs) and other non-formal agencies. Extending formal banking services to the unreached rural poor by evolving a supplementary credit delivery strategy in a cost effective manner by promoting Self Help Groups (SHGs) Promoting participatory watershed development for enhancing productivity and profitability of rainfed agriculture in a sustainable manner. On-site inspection of cooperative banks and Regional Rural Banks (RRBs) and iff-site surveillance over health of cooperatives and RRBs.
Role and Functions

NABARD is an apex institution accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas. It is an apex refinancing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas It takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc. It co-ordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation.

It prepares, on annual basis, rural credit plans for all districts in the country; these plans form the base for annual credit plans of all rural financial institutions It undertakes monitoring and evaluation of projects refinanced by it. It promotes research in the fields of rural banking, agriculture and rural development
LENDING TO PRIORITY SECTOR

At a meeting of the National Credit Council held in July 1968, it was emphasized that commercial banks should increase their involvement in the financing of priority sectors, viz., agriculture and small scale industries. The description of the priority sectors was later formalized in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971. On the basis of this report, the Reserve Bank prescribed a modified return for reporting priority sector advances and certain guidelines were issued in this connection indicating the scope of the items to be included under the various categories of priority sector. Although initially there was no specific target fixed in respect of priority sector lending, in November 1974 the banks were advised to raise the share of these sectors in their aggregate advances to the level of 33 1/3 per cent by March 1979. At a meeting of the Union Finance Minister with the Chief Executive Officers of public sector banks held in March 1980, it was agreed that banks should aim at raising the proportion of their advances to priority sectors to 40 per cent by March 1985. Subsequently, on the basis of the recommendations of the Working Group on the Modalities of Implementation of Priority Sector Lending and the Twenty Point Economic Programmed by Banks, all commercial banks were advised to achieve the target of priority sector lending at 40 per cent of aggregate bank advances by 1985. Sub-targets were also specified for lending to agriculture and the weaker sections within the priority sector. Since then, there have been several changes in the scope of priority sector lending and the targets and sub-targets applicable to various bank groups. On the basis of the recommendations of the Internal Working Group, set up in Reserve Bank to examine, review and recommend changes, if any, in the existing policy on priority sector lending including the segments constituting the priority sector, targets and subtargets, etc. and the comments/suggestions received thereon from banks, financial

institutions, public and the Indian Banks Association (IBA), it has been decided to include only those sectors that impact large segments of population & the weaker sections, and which are employment-intensive, as part of the priority sector. I. CATEGORIES OF PRIORITY SECTOR The broad categories of priority sector for all scheduled commercial banks are as under: (i) Agriculture (Direct and Indirect finance): Direct finance to agriculture shall include short, medium and long term loans given for agriculture and allied activities directly to individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual farmers without limit and to others (such as corporates, partnership firms and institutions) up to Rs. 20 lakh, for taking up agriculture/allied activities. (ii) Small Scale Industries (Direct and Indirect Finance): Direct finance to small scale industries (SSI) shall include all loans given to SSI units which are engaged in manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed the amounts specified in Section I, appended. Indirect finance to SSI shall include finance to any person providing inputs to or marketing the output of artisans, village and cottage industries, handlooms and to cooperatives of producers in this sector. (iii) Small Business / Service Enterprises shall include small business, retail trade, professional &self employed persons, small road & water transport operators and other service enterprises as per the definition given in Section I and other enterprises that are engaged in providing or rendering of services, and whose investment in equipment does not exceed the amount specified in Section I, appended. (iv) Micro Credit: Provision of credit and other financial services and products of very small amounts not exceeding Rs. 50,000 per borrower to the poor in rural, semiurban and urban areas, either directly or through a group mechanism, for enabling them to improve their living standards, will constitute micro credit. (v) Education loans: Education loans include loans and advances granted to only individuals for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and do not include those granted to institutions;
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(vi) Housing loans: Loans up to Rs. 15 lakh for construction of houses by individuals, (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged houses of individuals up to Rs.1 lakh in rural and semiurban areas and up to Rs.2 lakh in urban areas. (2) Investments by banks in securitised assets, representing loans to agriculture (direct or indirect), small scale industries (direct or indirect) and housing, shall be eligible for classification under respective categories of priority sector (direct or indirect) depending on the underlying assets, provided the securitised assets are originated by banks and financial institutions and fulfil the Reserve Bank of India guidelines on securitisation. (3) The targets and sub-targets under priority sector lending would be linked to Adjusted Net Bank Credit (Net Bank Credit plus investments made by banks in non-SLR bonds held in HTM category) or Credit Equivalent of Off-Balance Sheet Exposures, whichever is higher, as on March 31 of the previous year. (4) In order to encourage banks to increasingly lend directly to the priority sector borrowers, the banks' deposits placed with NABARD/SIDBI on account of non-achievement of priority sector lending targets would not be eligible for classification as indirect finance to agriculture/SSI, as the case may be. II. TARGETS/SUB-TARGETS The targets and sub-targets set under priority sector lending for domestic and foreign banks operating In India are furnished below: Domestic commercial banks Total Priority Sector Advances Foreign banks
40 per cent of Adjusted Net 32 per cent of ANBC Bank Credit (ANBC) or credit or equivalent amount of Off- credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher
Balance Sheet Exposure, whichever is higher.
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Total agricultural advances 18 per cent of ANBC or credit equivalent amount of Off Balance Sheet Exposure, whichever is higher Of this, indirect lending in excess of 4.5% of ANBC or credit equivalent amount of OffBalance Sheet Exposure, whichever is higher, will not be reckoned for computing performance under 18 per cent target. However, all agricultural advances under the categories 'direct' and 'indirect' will be reckoned in computing performance under the overall priority sector target of 40 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher SSI advances Advances to SSI sector will be reckoned in computing performance under the overall priority sector target of 40 per cent of ANBC or credit equivalent amount of OffBalance Sheet Exposure, whichever is Higher. Micro enterprises within SSI (i) 40 per cent of total SSI advances should go to units having investment in plant and machinery up to Rs 5 lakh, 10 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is Higher Same as for domestic banks No target.
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(ii) 20 per cent of total SSI advances should go to units with investment in plant & machinery between Rs 5 lakh and Rs. 25 lakh (Thus, 60 per cent of SSI advances should go to the micro enterprises). Export credit Export credit is not a part of priority sector for domestic commercial banks. 12 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher Advances to weaker sections 10 per cent of ANBC or credit equivalent amount of OffBalance Sheet Exposure, whichever is higher. Differential Rate of Interest Scheme 1% of total advances outstanding as at the end of the previous year. It should be ensured that not less than 40 per cent of the total advances granted under DRI scheme go to scheduled caste/scheduled tribes. At least two third of DRI advances should be granted through rural and semi-urban branches. No target No target
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AGRICULTURAL DIRECT FINANCE AND INDIRECT FINANCE

DIRECT FINANCE Finance to individual Farmers [including Self Help Groups (SHGs) or Joint Liability Group (JLGs), i.e. groups of individual farmers] for Agriculture and Allied Activities Short-term loans for raising crops, i.e. for crop loans. This will include traditional/nontraditional plantations and horticulture. Advances up to Rs. 10 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, irrespective of whether the farmers were given crop loans for raising the produce or not. Working capital and term loans for financing production and investment requirements for agriculture and allied activities. Loans to small and marginal farmers for purchase of land for agricultural purposes. Loans to distressed farmers indebted to non-institutional lenders, against appropriate collateral or group security. Loans granted for pre-harvest and post-harvest activities such as spraying, weeding, harvesting, grading, sorting, processing and transporting undertaken by rural and semi urban households or groups/cooperatives of rural and semi-urban households. Finance to others up to an aggregate amount of Rs. 20 lakh per borrower for the purposes listed at 1.1.1 to 1.1.3 above. INDIRECT FINANCE Finance for Agriculture and Allied Activities Loans to entities covered less than 1.2 above in excess of Rs. 20 lakh in aggregate per borrower for agriculture and allied activities. In such cases, the entire amount outstanding shall be treated as indirect finance for agriculture. Loans to food and agro-based processing units with investments in plant and machinery up to Rs. 10 crore, undertaken by other than rural and semi-urban households. Loans to Non-Banking Financial Companies (NBFCs) for on lending to individual farmers.
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(i) Credit for purchase and distribution of fertilisers, pesticides, seeds, etc. (ii) Loans up to Rs. 40 lakh granted for purchase and distribution of inputs for the allied activities such as cattle feed, poultry feed, etc.. Finance for setting up of Agriclinics and Agribusiness Centres. Finance for hire-purchase schemes for distribution of agricultural machinery and implements. Loans to farmers through Primary Agricultural Credit Societies (PACS), Farmers Service Societies (FSS) and Large-sized AdivasiMulti Purpose Societies (LAMPS). Loans to cooperative societies of farmers for disposing of the produce of members. Financing the farmers indirectly through the co-operative system (otherwise than by subscription to bonds and debenture issues) provided a certificate from the State Cooperative Bank/State Cooperative Agriculture and Rural Development Bank (SCARDB), as the case may be, is produced, certifying the end use of such loans. Investments by banks in special bonds issued by NABARD with the objective of financing exclusively agriculture/allied activities (not eligible for classification under priority sector lending with effect from April 1, 2007) Loans for construction and running of storage facilities (warehouse, market yards, god owns, and silos), including cold storage units designed to store agriculture produce/products, irrespective of their location. If the storage unit is registered as SSI unit, the loans granted to such units may be classified under advances to SSI, provided the investment in plant and machinery is within the stipulated ceiling. Advances to Customs Service Units managed by individuals, institutions or organizations who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers, combines, etc., and undertake work for farmers on contract basis. Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural machinery, irrespective of their location, subject to the following conditions:(a) The dealer should be dealing exclusively in such items or if dealing in other products, should be maintaining separate and distinct records in respect of such items. (b) A ceiling of up to Rs. 30 lakh per dealer should be observed. Loans to Arthias (commission agents in rural/semi-urban areas functioning in markets/mandies) for extending credit to farmers, for supply of inputs as also for buying the output from the individual farmers/ SHGs/ JLGs.
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Fifty per cent of the credit outstanding under loans for general purposes under General Credit Cards (GCC).
SMALL SCALE INDUSTRIES

DIRECT FINANCE Direct Finance in the small scale industry sector will include credit to: Small Scale Industries: Units engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed Rs. 5 crore. Micro Enterprises: Small scale units whose investment in plant and machinery (original cost) excluding land and building is up to Rs. 25 lakh, irrespective of the location of the unit, are treated as Micro Enterprises. KVI Sector: All advances granted to units in the KVI sector, irrespective of their size of operations, location and amount of original investment in plant and machinery. Such advances will be eligible for consideration under the sub-target (60 per cent) of the SSI segment within the priority sector. INDIRECT FINANCE Indirect finance in the small-scale industrial sector will include credit to: Persons involved in assisting the decentralised sector in the supply of inputs to and marketing of outputs of artisans, village and cottage industries. Advances to cooperatives of producers in the decentralised sector viz. artisans village and cottage industries. Subscription to bonds issued by NABARD with the objective of financing exclusively nonfarm sector (not eligible for classification under priority sector lending with effect from April 1, 2007). Loans granted by banks to NBFCs for on lending to SSI sector.
SMALL BUSINESS / SERVICE ENTERPRISES Loans granted to small business and service enterprises such as, Small Road and Water Transport Operators, Small Business, Professional & Self Employed Persons, etc. engaged in providing/rendering of services (which are industry or non-industry
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related), and whose investment in equipment (original cost and excluding land and building) does not exceed Rs. 2 crore. Advances granted to retail traders dealing in essential commodities (fair price shops), consumer co-operative stores, and; (ii) Advances granted to private retail traders with credit limits not exceeding Rs. 20 lakh. Loans to NBFCs for the purpose of on-lending to various categories of small business and service enterprises. MICRO CREDIT Loans of very small amount not exceeding Rs. 50,000 per borrower, provided by banks to the poor in rural, semi-urban and urban areas, either directly or through a group mechanism, for enabling them to improve their living standards. Loans to urban poor indebted to informal sector Loans to distressed urban poor to prepay their debt to lenders in the informal sector would be eligible for classification under priority sector. Urban poor for this purpose may include those families in the urban areas who are below the poverty line. Such loans to urban poor may be classified under weaker sections within the priority sector. STATE SPONSORED ORGANIZATIONS FOR SCHEDULED CASTES/SCHEDULED TRIBES Advances sanctioned to State Sponsored Organizations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs to and/or the marketing of the outputs of the beneficiaries of these organizations. EDUCATION Educational loans should include only loans and advances granted to individuals for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and not those granted to institutions. HOUSING Loans up to Rs. 15 lakh, irrespective of location, for construction of houses by individuals, excluding loans granted by banks to their own employees.
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Loans given for repairs to the damaged houses of individuals up to Rs. 1 lakh in rural and Semi-urban areas and up to Rs. 2 lakh . Assistance up to Rs. 1.25 lakh per housing unit given to any governmental agency/ nongovernmental agency (approved by the NHB for the purpose of refinance) for construction/reconstruction of houses or for slum clearance and rehabilitation of slum dwellers. Weaker Sections The weaker sections under priority sector shall include the following: a) Small and marginal farmers with land holding of 5 acres and less, and landless labourers, tenant farmers and share croppers. b) Artisans, village and cottage industries where individual credit limits do not exceed Rs. 50,000. c) Beneficiaries of Swarnjayanti Gram SwarozgarYojana (SGSY). d) Scheduled Castes and Scheduled Tribes. e) Beneficiaries of Differential Rate of Interest (DRI) scheme. f) Beneficiaries under SwarnaJayantiShahariRozgarYojana (SJSRY). g) Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS). h) Advances to Self Help Groups. i) Loans to distressed urban/rural poor to prepay their debt to non-institutional lenders, against appropriate collateral or group security. Export Credit This category will form part of priority sector for foreign banks only. PENALTIES FOR NON-ACHIEVEMENT OF PRIORITY SECTOR LENDING TARGET / SUBTARGETS Domestic scheduled commercial banks Contribution by banks to Rural Infrastructure Development Fund (RIDF): Domestic scheduled commercial banks having shortfall in lending to priority sector target (40 per cent of ANBC or credit equivalent amount of Off-Balance Sheet
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Exposure, whichever is higher) and / or agriculture target (18 per cent of ANBC or credit equivalent amount of Off Balance Sheet Exposure, whichever is higher) shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD. The concerned banks will be called upon by NABARD, on receiving demands from various State Governments, to contribute to RIDF. The corpus of a particular tranche of RIDF is decided by Government of India every year. Fifty per cent of the corpus shall be allocated among the domestic commercial banks having shortfall in lending to priority sector target of 40 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher, on a pro-rata basis, and fifty per cent of the corpus shall be allocated among the banks having shortfall in lending to agriculture target of 18 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher, on a pro-rata basis. The amount of contribution by banks to a particular tranche of RIDF will be decided in the beginning of the financial year. The interest rates on banks contribution to RIDF shall be fixed by Reserve Bank of India from time to time. Details regarding operationalisation of the RIDF such as the amounts to be deposited by banks, interest rates on deposits, period of deposits etc., will be communicated to the concerned banks separately by August of each year to enable them to plan their deployment of funds. FOREIGN BANKS DEPOSIT BY FOREIGN BANKS WITH SIDBI The foreign banks having shortfall in lending to stipulated priority sector target/subtargets will be required to contribute to Small Enterprises Development Fund (SEDF) to be set up by Small Industries Development Bank of India (SIDBI). The corpus of SEDF shall be decided by Reserve Bank of India on a year to year basis. The tenor of the deposits shall be for a period of three years or as decided by Reserve Bank from time to time. Fifty per cent of the corpus shall be contributed by foreign banks having shortfall in lending to priority sector target of 32 per cent of ANBC or credit equivalent amount of Off Balance Sheet Exposure, whichever is higher, on a pro-rata basis, and fifty per cent of the corpus shall be contributed by foreign banks having aggregate shortfall in lending to SSI sector and export sector of
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10 per cent and 12 per cent respectively, of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher, on a pro-rata basis. The concerned foreign banks will be called upon by SIDBI, as and when required by them, to contribute to SEDF, after giving one months notice. The interest rates on foreign banks contribution to SEDF shall be fixed by the Reserve Bank of India from time to time. COMMON GUIDELINES FOR PRIORITY SECTOR ADVANCES Banks should follow the following common guidelines prescribed by the Reserve Bank for allCategories of advances under the priority sector. PROCESSING OF APPLICATIONS Completion of Application Forms: In case of Government sponsored schemes such as SGSY, the concerned project authorities like DRDAs, DICs, etc. should arrange for completion of application forms received from borrowers. In other areas, the bank staff should help the borrowers for this purpose. Issue of Acknowledgement of Loan Applications: Banks should give
acknowledgement for loan applications received from weaker sections. Towards this purpose, it may be ensured that all loan application forms have perforated portion for acknowledgement to be completed and issued by the receiving branch. Each branch may affix on the main application form as well as the corresponding portion for acknowledgement, a running serial number. While using the existing stock of application forms which do not have a perforated portion for acknowledgement is separately given, care should be taken to ensure that the serial number given on the acknowledgement is also recorded on the main application. The loan applications should have a check list of documents required for guidance of the prospective borrowers. Disposal of Applications: (I) All loan applications up to a credit limit of Rs. 25,000/should be disposed of within a fortnight and those for over Rs. 25,000/-, within 4 weeks. (ii) All loan applications for SSI up to a credit limit of Rs. 25,000/- should be disposed of within 2 weeks and those up to Rs. 5 lakh within 4 weeks, provided the loan applications are complete in all respects and are accompanied by a 'check list'.
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Rejection of Proposals: Branch Managers may reject applications (except in respect of SC/ST) provided the cases of rejection are verified subsequently by the Divisional/Regional Managers. In the case of proposals from SC/ST, rejection should be at a level higher than that of Branch Manager. Register of Rejected Applications: A register should be maintained at the branch, wherein the date of receipt, sanction/rejection/disbursement with reasons therefore, etc., should be recorded. The register should be made available to all inspecting agencies. MODE OF DISBURSEMENT OF LOAN With a view to providing farmers wider choice as also eliminating undesirable practices, banks may disburse all loans for agricultural purposes in cash which will facilitate dealer choice to borrowers and foster an environment of trust. However, banks may continue the practice of obtaining receipts from borrowers. REPAYMENT SCHEDULE Repayment programme should be fixed taking into account the sustenance requirements, surplus generating capacity, the break-even point, the life of the asset, etc.,and not in an "ad hoc" manner. In respect of composite loans, repayment schedule may be fixed for term loan component only. As the repaying capacity of the people affected by natural calamities gets severely impaired due to the damage to the economic pursuits and loss of economic assets, the benefits such as restructuring of existing loans, etc. as envisaged under our circular RPCD.CO.PLFS.NO. BC 16/05.04.02/2006-07 dated August 9, 2006 may be extended to the affected borrowers. RATES OF INTEREST The rates of interest on various categories of priority sector advances will be as per RBI directives issued from time to time. In respect of direct agricultural advances, banks should not compound the interest in the case of current dues, i.e. crop loans and instalments not fallen due in respect of term loans, as the agriculturists do not have any regular source of income other than sale proceeds of their crops
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When crop loans or instalments under term loans become overdue, banks can add interest to the principal. Where the default is due to genuine reasons banks should extend the period of loan or reschedule the installments under term loan. Once such a relief has been extended, the over dues become current dues and banks should not compound interest. Banks should charge interest on agricultural advances in respect of long duration crops, at annual rests instead of quarterly or longer rests, and could compound the interest, if the loan/installment becomes overdue PENAL INTEREST The issue of charging penal interests that should be levied for reasons such as default in repayment, non-submission of financial statements, etc. has been left to the Board of each bank. Banks have been advised to formulate policy for charging such penal interest with the approval of their Boards, to be governed by well accepted principles of transparency, fairness, incentive to service the debt and due regard to difficulties of customers. No penal interest should be charged by banks for loans under priority sector up to Rs 25,000 as hitherto. However, banks will be free to levy penal interest for loans exceeding Rs 25,000, in terms of the above guidelines. SERVICE CHARGES / INSPECTION CHARGES No service charges/inspection charges should be levied on priority sector loans up to Rs.25,000/-. For loans above Rs. 25,000/- banks will be free to prescribe service charges with the prior approval of their Boards, in terms of circular No.
DBOD.Dir.BC.86/03.01.00/99-2000 dated September 7, 1999. INSURANCE AGAINST FIRE AND OTHER RISKS Banks may waive insurance of assets financed by bank credit in the following cases: No. (a) Category All categories of priority sector advances up to and inclusive of Rs. 10,000/Type of Risk Fire & other risks Type of Assets Equipment current assets and
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(b) Advances to SSI sector up to and inclusive of Rs. 25,000/- by way of Composite loans to artisans, village and cottage industries All term loans Working capital where these are against non-hazardous goods Fire Equipment current Assets, Equipment, Current Assets and
Where, however, insurance of vehicle or machinery or other equipment/assets is compulsory under the provisions of any law or where such a requirement is stipulated in the refinance scheme of any refinancing agency or as part of a Government-sponsored programmes such as SGSY, insurance should not be waived even if the relative credit facility does not exceed Rs. 10,000/- or Rs. 25,000/-, as the case may be PHOTOGRAPHS OF BORROWERS While there is no objection to taking photographs of the borrowers for purposes of identification, banks themselves should make arrangements for the photographs and also bear the cost of photographs of borrowers falling in the category of Weaker Sections. It should also be ensured that the procedure does not involve any delay in loan disbursement. DISCRETIONARY POWERS All Branch Managers of banks should be vested with discretionary powers to sanction proposals from weaker sections without reference to any higher authority. If there are difficulties in extending such discretionary powers to all the Branch Managers, such powers should exist at least at the district level and arrangements be ensured that credit proposals on weaker sections are cleared promptly MACHINERY TO LOOK INTO COMPLAINTS There should be machinery at the regional offices to entertain complaints from the borrowers if the branches do not follow these guidelines, and to verify periodically that these guidelines arescrupulously implemented by the branches.
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AMENDMENTS These guidelines are subject to any instructions that may be issued by the RBI from time to time
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COMPANY PROFILE INDIAN OVERSEAS BANK

Chidambaram Chettyar and a group of persons wanted to invest their surplus money in something that will being them profits. So they decided to start a bank with their surplus money. 6the bank was incorporated in 1932. Since it had many branches abroad, it was given the name Indian Overseas Bank. Its main function was giving loans. Since its inception, the Indian Overseas Bank has grown with a number of branches in India and abroad. It has branches spread in most of the states in India. The Banks operation s range from an array of deposits schemes, and advances. It has a wide network of Branches in Urban, Semi-Urban, rural areas. The Bank Caters to specific needs like foreign trade, Merchant Banking, Agriculture etc. through specialised branches lie, Industrial Finance Branches, SSI branches. The bank also has NRI branches to cater to the needs of the NRI s. Bank +started a specific loan schemes to promote higher education, encourage woman entrepreneurship, liquid securities and popular consumers. The Bank has been defined differently by different Authors. Some of the definitions and
meaning of Bank/Banking are given hereunder. Banker is a person or company carrying on the business of receiving money and collecting draft for customer subject to obligation of honoring cheques drawn upon them from time to time by customers to the amount available on their current accounts. Banking is accepting for the purpose of lending or investment, deposits of money from the public repayable on demand or otherwise withdrawable by cheques, drafts order or otherwise. The Corporate strategy in the light of its mission, philosophy, structure, system, staff, managerial styles, skills and sense of super-ordination and environmental conditions, National and International, prevailing at the movement. The other details explained in the chapters here-to-after will throw light on the manner, method and ways in which it has taken place and the results achieved by the Bank. Retail banking is not without its disadvantages. Large number of small accounts add additional burden on the follow up. While expressing these views, A L . Chandramouli(General Manager, Indian Overseas Bank) also provides brief details of retail schemes of Indian Overseas Bank like easy deposits, re-investment deposits and gift cheques. He also notes that his bank is the pioneer in promoting personal loan scheme, which is a loan to individuals for acquisition of consumer durables.
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GENESIS OF IOB Indian Overseas Bank (IOB) was founded on February 10th 1937, by Shri.M.Ct.M. Chidambaram Chettyar, a pioneer in many fields-banking, Insurance and Industry with the twin objectives of specializing in foreign exchange business and overseas banking. It had the unique distinction of commencing business on 10th February 1937 (on the inaugural day itself) in three branches simultaneously-at Karaikudi and chennai in India and Rangoon in Burma (presently Myanmar) followed by a branch in Penang. IOB started serving Independent India with 38 branches in India and 7 branches abroad in 1947. Deposits stood at Rs. 6.64 Crs and Advances at Rs.3.23 Crs at that time. Pre-nationalization era (194-69) During the period , IOB expanded its domestic activities and enlarged its international banking operations. As early as in 1957, the Bank established a training center which has now grown into a Staff college at Chennai and with 9 training centers all over the country. 7IOB is the first Bank to venture into customer credit. It introduced the popular Personal Loan scheme during this period. In 1964, the Bank made a beginning in computerization in the areas of inter-branch reconciliation and provident fund accounts. At the time of Nationalisation (1969) IOB was one of the 14 major banks that were nationalised in 1969. On the eve of Nationalisation in 1969, IOB had 195 branches in India with aggregate deposits of Rs. 67.70 Crs. And Advances of Rs. 44.90 Crs. Post- nationalisation era (1969-92) In 1968, IOB established a full-fledged department to cater exclusively to the needs of the Agriculture sector. In 1973, IOB had to wind up its five Malaysian branches as the Banking law in Malaysia prohibited operation of foreign Government owned banks. This led to creation of United Asian Bank Berhad in which IOB had 16.67% of the paid up capital.
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In the same year Bharat Overseas Bank Ltd was created in India with 30% equity participation form IOB to take over IOBs branch at Bangkok in Thailand. In 1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency Banking Unit in the free trade zone in Colombo. Regional Rural Banks- towards reaching mass The Bank has sponsored 3 Regional Rural Banks Viz. PuriGramya Bank, PandyamGrama Bank, DhenkanalGramya Bank The Bank has setup a separate computer policy and planing department (CPPD) to implement the programme of computerisation, to develop software packages on its own and to impart training to staff members in this field. POST REFORM PERIOD UNPRECEDENTED DEVELOPMENT (1992 & AFTER) Computerization towards customer delight: 270 branches have been totally computerised and 350 branches have been partially computerised as of December 1999. Automated Teller Machines (ATM) 17 in operation and 14 more planned for the current year. IOB entered Web site during the month of February 1997 The bank released Citizen Charter on the Founders Day (1.e) 20th November 97 IOB is the first bank to enter gold trade. IOB got autonomous status during 1997-98 Seed bank scheme was launched in coordination with Dr.M.S.Swaminathan Research foundation on 6th February 98 IOB stated STAR services in December 1999 for speedy realization of outstation checks. Now the Banks has 14 STARS centers and one Controlling Center for providing this service. IOB has launched Any Branch Banking services in Chennai, Delhi and Mumbai during 1999. IOB had the distinction of being the first Bank in banking industry to obtain ISO 9001 Certification for its computer policy and planing department from Det Norske Veritas (DNV), Netherlands in September 1999. This Certifications cover Design, Development,
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Implementation. and Maintenance of software developed in-house, procurement and supply of hardwired and execution of turnkey projects During 1999, IOB started tapping the potential of internet by enabling ABB card holders in Delhi to pay their telephone bills by just logging on to MTNL web site and by authorizing the Bank to debit towards the telephone bills. IOB launched a novel scheme called AAROGYA under tie-up arrangement with Apollo Hospita, Chennai which facilitate free medial check up in this hospital As of March 2000, IOB had 1419 branches in India and 6 branches in overseas. The banks global deposits stood at Rs. 24,318 Crore and global gross advances stood at Rs. 11,573 crore. The banks domestic deposits stood at Rs. 23,613 Crore and domestic gross advances stood at Rs. 10,170 Crore. Fourth ABB center was put in Calcutta on May 18, 2000. Simultaneously on the same day, inter-city connectivity was provided among the four metores-Calcutta, Chennai, Delhi And Mumbai Consequently the customers o any one of 129 branches in the four metros can bank with any of these 129 branches with their ABB cards Internet Banking scheduled to take off in August 2000 IOBNET connects Central Office with all Regional Office
IOBS MAIN FEATURES

Credit card scheme The bank took a policy decision to market only Canara Visa in view to idea acceptability and marketability. The card was redesigned to give market visibility to the Bank. Computerisation The bank has setup its own network employing the latest available technology. Tele-banking facility is also introduced. The Bank Opened Regional Computer Centers (Rccs) in 20 regional offices and with this all the regional offices have been provided with RCC set up. Customer service Customer Service continued to be the thrust area for the bank. Prompt redressal of grievances was given top priority. The Booklet Contain information about various schemes and services offered by the bank for the benefit of customer.
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Sakthi Job Chidambaram Chettyar Memorial Trust This trust was launched by the bank and its staff through their respective organization in memory of Founder of the Bank. The courses include tailoring, computer application, screenprinting and stenography. The training progammes are conducted in coordination with Voluntary organizations. ABC services The Agriculture Business Consultancy Services the specialized outfit of the bank offering consultancy to corporate, government Companies & entrepreneurs. The bank is association with M.S. Swaminathan Research Foundation launched, and innovative Wasteland development Project for small and marginal farmers. The project aimed at production of quality pulses seeds in dry parts of Tamil Nadua by using rain water harvesting technology.
Agriculture products of Indian overseas bank

TABLE: 3.01 NEW KISAN CREDIT CARD New Kisan Credit Card Objective Eligibility Purpose To meet investment and credit requirements of farmers. Existing farmer clients & also the prospective farmers Investment credit need and allied activities. Revolving Cash Credit for crops & for allied activities Amount Loan amount / Limit fixed on annual basis depending upon the cropping pattern, Scale of Finance for the crop and the extent of cultivation. Margin Security UptoRs 100000 Nil Above Rs 100000/- 15 % to 25 % UptoRs 100000 Hypothecation of crops / assets created out of loan. Above Rs 100000/- Suitable Collateral or TPG at the discretion of the Bank & Hypothecation of crops / assets created out of loan. Repayment Term loan - Max. 5 years
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Holiday Period Rate of Interest Remarks Depending on the asset created You may Contact the nearest Branch for Interest details.

Card validity - 5 Years The limit to be availed in full within one yr from the date of sanction.
TABLE: 3.02 AGRI GENERAL PURPOSE CREDIT CARD Agri General Purpose credit card Objective To provide liquidity to meet any financial needs relating to Agricultural Investments or Consumption. Eligibility Customers in rural and semi-urban areas, members of Self Help Groups and Joint Liability Groups Purpose Amount Margin Security Repayment Holiday Period Rate of Interest Remarks For any genuine purpose Maximum .Rs.25000. Nil Nil Cash Credit Periodically reviewed NA At Banks Prime Lending Rate

It is based on assessment of cash flow. It is a Cash Credit. No card issued & no Cheque book or Pass book issued & withdrawal by loose cheque. Women given preference
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TABLE: 3.03 AGRI CLINIC Agri Clinic Objectives
To supplement the efforts of Government extension system To make available supplementary sources of input supply and services to needy farmers To provide gainful employment to agriculture graduates in new emerging areas in agricultural sector
Eligibility
Agriculture graduates or graduates in horticulture, animal husbandry, fisheries, dairy, under the scheme. vet nary , poultry, Pisciculture& other allied activities can apply for a loan
Purpose
To set up Agri-clinic, Agri-Business centers for input supply & services to farmers. An illustrative list of activities which can be financed under the scheme is given below :
Soil and water quality cum inputs testing laboratories (with Atomic Absorption Spectrophotometers)
Pest surveillance, diagnostic and control services Maintenance, repairs and custom hiring of agricultural implements and machinery including micro irrigation systems (sprinkler and drip).
Agri Service Centres including the three activities mentioned above (Group Activity). Seed Processing Units. Micro-propagation through Plant Tissue Culture Labs and Hardening Units. Setting up of Vermiculture units, production of bio-
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fertilisers, bio-pesticides, bio-control agents.
Setting up of Apiaries (bee-keeping) and honey & bee products' processing units. Provision of Extension Consultancy Services. Hatcheries and production of fish finger-lings for aquaculture. Provision of livestock health cover, setting up veterinary dispensaries & services including frozen semen banks and liquid nitrogen supply.
Setting up of Information Technology Kiosks in rural areas for access to various agriculture related portals Feed Processing and testing units.
Value Addition Centres.. Setting up of Cool Chain fro the farm level onwards (Group Activity). Retail marketing outlets for processed agriproducts. Rural marketing dealerships of farm inputs and outputs
Any combination of two or more of the above viable activities along with any other economically viable activity selected by the Graduates, which is acceptable to the Bank. Amount Maximum of Rs.10 lacs for Individuals and Rs50 lacs for group of 5. Margin Security Up to Rs. 5 lacs Nil
>Rs 5 Lacs 15% - 25 % Up to Rs.5 lacs - Hypothecation >Rs.5 lacs Collateral /guarantee
Repaymnt
5-10yrs depending upon the activity
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Holiday Period Rate of Interest Maximum of 2 yrs. Up to Rs. 50,000 - 9.50% >50,000 to 2 lacs @ BPLR 2 to 25 lacs @ BPLR+.50% >25 lacs @ BPLR+1%
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RESEARCH DESIGN
Advertising is a paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. 1. RESEARCH PROBLEM Analysis the awareness level of Contract Farming in Farmers. Seek the general perception of INDIAN OVERSEAS BANK Agriculture Finance towards Farmers and Company. To find the performance of Contract Faming in INDIAN OVERSEAS BANK to other BANK.
2. RESEARCH OBJECTIVES & RELATED SUB OBJECTS To know the Interrelation between Company, Farmer and Bank. To know in which segment Contract farming is are mostly like/preferred. To know the preference of INDIAN OVERSEAS BANK with comparison to other competitive Banks. To know the factor affecting preference for seeking the Agri loan from INDIAN OVERSEAS BANK.
3. INFORMATON REQUIREMENT First, I had to know about all the competitors present in the Banking industries who providing Contract farming. Before going for the survey I had to know the comparative Company which existing in the market with engaged with farmer and doing contract farming. Since RBI Act of financing in direct and indirect sector and which are the priority sector of financing I had Learn. 4. CHOICE OF RESEARCH DESIGN ALTERNATIVE AND CHIOCE
Despite the difficulty of establishing an entirely satisfactory classification system, it is helpful to classify marketing research on the basis of the fundamental objectives of the research. Consideration of the different types, their applicability, their strengths, and their weakness will help the student to select the type best suited to a specific problem.
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The two general types of research are

EXPLORATORY RESEARCH CONCLUSIVE RESEARCH
5. RESEARCH INSTRUMENT USED - DETAILS & WHY? If one wants to know what type of dentifrice people use, what they think of, television commercials, or why they buy particular brands of cars, the natural procedure is to ask them. Thus, the questionnaire method has come to be the more widely used of the two data collection method. Many consumers are now familiar with the telephone caller who greets them with We are making a survey, and then proceeds to ask a series of questions. Some interviews are conducted in person, others by telephone, and others by mail. Each of these has its special advantages and disadvantages and limitations. The questionnaire method in general, however, has a number of pervasive advantages and disadvantages. Discussion of particular variations will be more meaningful if these characteristics of the general methods are brought out first. A questionnaire consists of list of questions to be asked from the respondents and the space provided to record the answer /responses. Questionnaire can be used for the personal interviews, focus groups, mails and telephonic interviews. The choice among these alternatives is largely determined by the type of information to be obtained and by the type of respondents from whom it is to be obtained. The common factor in all varieties of the questionnaire method is this reliance on verbal responses to question, written or oral
Questionnaire in the project consists of:

Multiple choice questions Dicthomus
MULTIPLE CHOICE QUESTIONS Questions of this type offer the respondents an alternative to choose the right answer among others. It is faster, time saving and less biased. It also simplifies the tabulating process.
OPEN END QUESTIONS: In this type respondents are free to answer in their own words and express the ideas they think are relevant, such questions are good as first questions or opening questions. They introduce the subject and obtain general reaction.
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DICTHOMUS: These are the questions which are Boolean in nature. These answers are straight forward and respondents have to answer them in as straight way. That means the answer can only be either Yes or No.
SAMPLING TECHNIQUE USED & SAMPLE SIZE - WHY? Sample design is a definite plan of obtaining some items from the whole population. The sample design used in this project is three states sampling i.e. Cluster, Convenience and Simple random sampling scale. In the probability sampling methods, each items in the sample is chosen one at a time from a complete list of universe elements. In marketing research practice, it will sometimes be more expedient to select clusters or groups of universe elements, rather than to choose sample items individually.
NONDISGUISED, STRUCTURED TECHNIQUES The non structured techniques for attitude measurement are primarily of value in exploratory studies, where the researcher is looking for the salient attributes of given products and the important factors surrounding purchase decisions as seen by the farmers. Structured techniques can provide a more objective measurement system, one which is more comparable to a scale or a yardstick. The term scaling has been applied to the efforts to measure attitudes objectively, and a number of useful scales have been developed.
SAMPLING METHODS Sample design is a definite plan of obtaining some items from the whole population. The sample design used in this project is two state sampling i.e. cluster sampling and convenience sampling. And the whole zone was divided into some geographical areas and I have chosen BathiGudda Kunduvadakere BathiGudda Kondajji Shamanur
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Anekonda Santhebennur
Ramapura Hunamanalli
TOTAL SAMPLE SIZE WAS 100. CLUSTER SAMPLING Here the whole area is divided into some geographical area and definite number of Farmer which can divide in to pure farming and contract farming was to be surveyed.
CONVINIENCE SAMPLING This type of sampling is chosen purely on the basis of convenience and according to convenience. I visited according to bank advice and contract farming company which takes me on field to meet farmers.
SAMPLING Hypothesis To identify signification level of beneficial use of contract farming by farmers.
To study IDBI bank awareness of Agricultural finance product in farmers.
Sampling Technique Sample Unit available
Non probability sampling Farmers who doing contract farming with company and IDBI bank which finance farmers for contract Farming
Sample size Method
100 respondents Direct Interview through Questionnaires And Telephone Interview
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Data analysis method Area of survey Timing Of Survey Graphical method North District As per Availability and Convinced of farmers
FIELD WORK- METHOD USED FOR DATA COLLECTION
Questionnaire was prepared keeping the objective of research in mind. Questions were asked to respondents as regards to their Willingness to give answer of Private and confidential questions. The help of questionnaires conducted direct interviews, in order to get accurate information. And Telephone Interviews which can taken for those farmers who are not available or far located.
I visited as many respondents as I can and asked them their real beneficial and preference of bank and company about contract farming,
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ANALYSIS OF DATA AND INTERPRETATION

1. How old are you?
TABLE 4.1 Particular 0-30 30-40 40-50 50 or above Total % Respondents 11 20 22 47 100
% Respondents
0-30 11% 50 or above 47% 40-50 22%
30-40 20%
ANALYSIS: From the above table it is seen that in there are 11 respondents in the age group of 0 30, 20 respondents fall in the age group of 30 40, 22 respondent in the age group of 40 50 and 47 respondent above the age group of 50.
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2 what is your highest level of formal education? TABLE 4.2
Particular No education Primary Education Graduation Master Degree Total
% Respondents 42 29 18 11 100
% Respondents
Master Degree 11%
Graduation 18%
No educaton 42%
Primary Education 29%
ANALYSIS: From the above mentioned table it can be analyzed that 29% have done PUC, 18% are graduate and 11% are post-graduate, but most of them have no education.
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3. Do you have own agriculture land ? Yes If no go to question-15 No
Do you have own agriculture land
Contract Own Land 78 %
ANALYSIS: From the above mentioned table it can be analysed that 78% farmers have their own land and 28% farmers having land on contract based. 4. what is your farm size? (In Acres)
TABLE 4.3
Particular 1 to 3 4 to 6 7 to 10 10 or above Total
% Respondents 8 34 17 41 100
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% Respondents
1 to 3 8% 10 or above 41% 4 to 6 34% 7 to 10 17%
ANALYSIS: From the above table it is seen that in there are 8 respondents having 3 acre land, 34 respondents having 4-6 acre of land, 17 respondents having 7-10 acre of land and 41 respondents having more than 10 acre land. 5. which crop is produces for contract farming in your farm? Rice sugar cane Vegetable
% Respondents
Others 21% Rice 37% Vegetable 11%
Sugar 31%
ANALYSIS: From the above pie chart we can infer that most of the respondents are farming rice, vegetable and sugar cane products. Only 21% of respondents are farming or growing other products.
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6. If yes, how many years ago have you doing agriculture ? 1-5 years 10-15 years 5-10 years 15-20years
Sales
1 to 5 years 15% 5 to 10 years 25%
15 to 20 years 38%
10 to 15 years 22%
ANALYSIS: From the above table it is seen that in there are 15% respondents are doing agriculture from 5 years, 25% respondents are doing from 10 years, 22% respondents are in this field from 15 years and 38% respondents are doing agriculture from 20 years. 7. How do you know about contract farming? Company employee Bank guidance
Other 7%
other
% Respondents
Company employee 39%
Bank gidence 21%
Other farmer suggetion 33%
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ANALYSIS: The main reason to get awareness of contract farming is know from by the company employee. Company employee and other mediator are main factor to engage company and farmers for contract farming. And other factor is give information from other farmers. 8. Have you taken any financial assistance for agriculture modification? Yes If no go to question-15 No
Respondent
yes 26%
NO 74%
ANALYSIS: From the above pie chart we can infer that 26% of farmers have taken financial assistance for agricultural modification and other 74% of farmers modifying agricultural activities by their own fund. 9. If yes please specify the financial institution from which you have availed finance? ICICI bank I.O.B HDFC IDBI SBI If Others, Specify ________________
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30.00% 25.00% 20.00% Series 1 15.00% 10.00% 5.00% 0.00% ICICI BANK HDFC SBI I.O.B IDBI Otrher
ANALYSIS: From the above table it is seen that in there are 8% respondents have taken financial assistance from ICICI Bank , 13% respondents borrowed money from HDFC, 21% respondents from SBI and 26% respondent have taken from I.O.B, and remaining 18% respondents from IDBI and 14% from other financial institutions. 10. Do you know about IOB Bank Agriculture finance Product?
Yes
No
Respondents
0% No 35% Yes 65% 0%
ANALYSIS: The above pie chart shown that among 100 respondents 65 respondents known about the Indian Overseas Banks agricultural products.
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11. What made you to select the financial institution? Amount of finance Rate of interest
0
Service Brand name
Sales
Brand name 18% 0% Amount of finance 15% Service 21% Rate of interest 46%
ANALYSIS: From the above mentioned table it can be analysed that 46% farmers have selected particular financial institution on the basis of rate of interest and 18% farmers selected on the basis of brand name and 21% of respondents go to financial institutions which rendering efficient service and remaining selected on the basis of lending capacity of financial institutions. 12. Rank your preferences for following financial institution in respect of Agriculture loan facility is considered? First preference-1 Last preference-6 TABLE 4.5 FINANCIAL INSTITUTIONS ICICI HDFC SBI I.O.B IDBI OTHERS_________________ RANK 12 19 29 24 8 8
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30 25 20 15 10 5 0 ICICI HDFC SBI
I.O.B
IDBI
OTHERES
ANALYSIS: Through analysing from above graph we can infer that 25% of respondents prefer I.O.B for housing loan facility so this bank is ranked as 1st place and IDBI considered as last preferred bank for housing loan facility. 13. Are you satisfied with the service provided by existing financial Institution? TABLE 4.6 Highly Dissatisfied Processing of Loans Rate of Interest Quality of Services Legal procedures & documentation Quantum of Finance 22 31 32 28 26 37 32 14 37 31 27 22 24 18 16 12 14 10 9 5 8 Dissatisfied 4 Neutral 3 Satisfied 27 Highly Satisfied 11
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40 35 30 25 20 15 10 5 0 Highly Dissatisfied Dissatisfied Neutral Satisfied Highly satisfied Legal procedures & documentation Quantum of finance Processing of loans Rate of Interest Quality of Services
ANALYSIS: Here we can say that this bank is well prefer by their agricultural product range, trusted nationalized bank and ROI. But this bank is not prefers because of highly processing time and less customization. 14. Would you like to go development land or modification in near future? Yes If no go to question-18 No
Respondent
No 35%
Yes 65%
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ANALYSIS: from the above pie chart we can analysed that 65% of farmers want to modify and develop their land and 35% of farmers are not ready to modify their land presently. 15. Do you have seen any agriculture advertisement from IOB Bank? Yes
Respondents
No 30%
Yes 70%
ANALYSIS: From this analysis we came to know that most of the farmers (70%) have known and seen the advertises of I.O.B and few farmers (30%) didnt aware about the I.O.B advertises related to agriculture. 16. If Yes Would you like to go for agriculture finance facility in Indian Overseas bank? Yes No If No, Go to question 18.
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Respondents
No 30%
yes 70%
ANALYSIS: The above pie chart shown that among 100 respondents 70 % respondent want to take agriculture finance facility in Indian overseas bank and other 30 % respondent want take other bank agriculture finance facility. 17. If yes, choose the financial institution that you prefer to go?
ICICI SBI IDBI
HDFC I.O.B OTHERS ______________
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% ICICI BANK HDFC SBI I.O.B IDBI Otrher
ANALYSIS:
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From the above table it is seen that in there are 8% respondents prefer to go for ICICI Bank , 13% respondents chosen HDFC, 20% respondents prefer to go for SBI and 25% respondent prefer to g0o for I.O.B, and remaining prefer to go for IDBI and others. 18. Give Rank Your opinion about Indian overseas bank agriculture finance facility? RANK OPINION
Good Very good Bad Very bad 38 50 7 5
Very bad 5% Bad 7%
Respondents
Good 38%
Very good 50%
ANALYSIS: From the above chart it is seen that in there are 38 respondents opinion was good, 50 respondents opinion was very good, 7 respondents opinion was bad, 5 respondents opinion was very bad.
51
FINDINGS
1. 45% of the loans taking customers are in between the age of 20 30 while another 29% of customers are in between the age 30 40. 18% of the customers belong to the 40 50 age categories while 8% are above the age of 50. 2. 88% of the loan takers are male while only 12% are female. 3. 35% of loan taking customer are working at the government sector, 15% professional, 24% private and 26% customers are engaged in his / her own business. 4. It can be observed that majority of customers are under the income group of 1,00,000 1,50,000 which is 48% followed by the income group of Rs. 50,000 1,00,000, at 28%. The group earning less than Rs. 50,000 owns 20% and at last the income group of Rs. 1,50,000 and above owns 4%. 5. 45% of respondent are made aware about loan by IOB employee while 35% are made aware by magazine. 13% and 7% of customer are made aware of IOB bank by newspapers and friends. 6. Majority of the EMI was paid by the borrower in between 5,000 10,000 and least EMI was paid by borrowed in between 20,000 30,000. 7. 30% of customer of Indian overseas Bank are taking loans below 5,00,000, While 45% are taking between 5,00,00 10,00,000 , 20% are taking between 10,00,000 15,00,000 by 22% and only 5% borrowed in between 15,00,000 20,00,000. 8. 53% of the customers are satisfied with the loan amount while 25% are moderately satisfied and 15% are extremely satisfied but 7% are unsatisfied. 9. It is also found that there is an impressive continuous growth in vehicle loan, education loan and personal loans which is remarkably outstanding for the bank. 10. Home loan segment has a better increasing trend in coming years since it has a high rate of demand in the current market.
52
SUGGESTIONS
1. The banks variety of loans and advances are unlimited but they are not communicated well enough to customers. Hence, it is suggested to make additional efforts to provide information to the customers about the range of Agriculture loans and advances 2. Attractive and competitive interest rates should be adopted since it is the main factor considered for taking loans by the customers. 3. Since all the banks are providing loans with the same features. It is recommended that bank should offer some unique features to its products to acquire strong identity and can be easily distinguished. 4. At the present scenario, Indian overseas Bank should intensify their advertisement campaign in order to gain new customers, make people aware of the new schemes available to them and also take advantage of the current market. 5. Service level provided by the bank should be more efficient and effective for the customer. The customers are very keen on the service provided by the bank. They would rate it as one of the important factor while selecting the loans. 6. The bank should adopt attractive and competitive rate of interest in order to induce customers to take personal loans and to attain more shares from its competitors. This is also one of the critical factors for selecting the loans. 7. Increase in short- term lending such as cash credits, Overdraft and Loans repayable on demand is most favourable to bank to earn short- term gain and maintain liquidity. 8. A suggestion is made to the bank to expand the business globally and offer more and more services to the people abroad 9. Bank should follow guidelines towards priority sector and get benefits out of it. 10. Offer best customer services, lending on profitable ventures, diversifying the business to cope with the competition. 11. Bank should use latest technologies in banking activities. 12. Few customer has not selected the branch because of less branches in southern region compared to the other region.
53
CONCLUSION
Human beings are no more constraint to the basic necessities in their lives. Their needs have diversified through the ages placing an increase demand on resources. The economic boom in the country has wide open the new challenges and opportunities to the people. This has necessitated timely and easy availability of funds to meet the requirements of institutions and individuals in meeting their goals. Thus to keep up with the pace of this increasing demand, the banking industry have come forward with the credit portfolio to provide funds on relatively easier terms and conditions. Today, banks are committed towards providing more and more number of people with finance with a view to make their lives better. The ever increasing demands of the customers have forced the banking sectors to emerge with new retail products bearing new unique features in them. The competition among the banks cannot be neglected. They have been supplying loans for the purpose of purchase of vehicles , pursue of higher education, or to meet their other personal requirements. The banking industry is witnessing a boom at present boosted by the increasing demand for retail loan products. The demand has arisen as a result of genuine individual needs. From an overall view point demand for retail loans is ever rising and the same would be reflected on the demand for funds. Hence the profitability of this particular industry is expected to take a positive track in the future ahead.
54
BIBLIOGRAPHY
Books Referred: Dr.K.N Ganeshaiah -Agricultural book- Sapna publisher - page no 5 to 56 Mk Sheikh, Manjula N-Agricultural Magazine Page no 12 to 24 Websites: www.iob.com . Last accessed on 13th March 2013 www.agri.gujarat.gov.in Last accessed on 13th March 2013 www.agriculturalinformation.com Last accessed on 13th March 2013 www.rbi.org.in Last accessed on 13th March 2013 www.indg.in/india Last accessed on 13th March 2013 www.nabard.org Last accessed on 13th March 2013
55

QUESTIONNAIRE 1. How old are you?
20 to 30 40 to 50 30 to 40 50 or above
2.
what is your highest level of formal education?

SSLC Graduation PUC Master Degree
3. Do you have own agriculture land ? Yes If no go to question-15 4. what is your farm size? (In Acres)
1 to 3 7 to 10 4 to 6 10 or more
No
5. which crop is produces for contract farming in your farm? Rice Vegetable Other 6. If yes, how many years ago have you doing agriculture ? 1-5 years 10-15 years 7. How do you know about contract farming? Company employee Bank guidance Other Farmer suggestion Other 5-10 years 15-20years
8. Have you taken any financial assistance for agriculture modification? Yes If no go to question-15 9. If yes please specify the financial institution from which you have availed finance? No
56

ICICI bank I.O.B HDFC IDBI SBI If Others, Specify ________________
10. Do you know about IOB Bank Agriculture finance Product? Yes No
11. What made you to select the financial institution? Amount of finance Rate of interest
0
Service Brand name
12. Rank your preferences for following financial institution in respect of Agriculture loan facility is considered? First preference-1 Last preference-6 RANK
FINANCIAL INSTITUTIONS ICICI HDFC SBI I.O.B IDBI OTHERS_________________
13. Are you satisfied with the service provided by existing financial Institution? Highly Dissatisfied Processing of Loans Rate of Interest Quality of Services Legal procedures Dissatisfied Neutral Satisfied Highly Satisfied
57

& documentation Quantum of Finance
14. Would you like to go development land or modification in near future? Yes If no go to question-18 15. Do you have seen any agriculture advertisement from IOB Bank? Yes 16. If Yes Would you like to go for agriculture finance facility in Indian Overseas bank? Yes No If No, Go to question 18. 17. If yes, choose the financial institution that you prefer to go? ICICI SBI IDBI HDFC I.O.B OTHERS ______________ No
18. Give Rank Your opinion about Indian overseas bank agriculture finance facility? OPINION
Good Very good Bad Very bad RANK
ssssss
58

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A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

NABAD ROLE IN BANKING INDUSTRIES

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Role and Functions

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

LENDING TO PRIORITY SECTOR

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Balance Sheet Exposure, whichever is higher.

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

AGRICULTURAL DIRECT FINANCE AND INDIRECT FINANCE

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

SMALL SCALE INDUSTRIES

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

COMPANY PROFILE INDIAN OVERSEAS BANK

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

Bapuji Academy Of Management And Research. Davangere

A Study On Agriculture Loans Advances At Indian overseas Bank Davangere

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