Académique Documents
Professionnel Documents
Culture Documents
(MBA - 043)
ON
“FINANCE TO PRIORITY SECTOR FROM ALLAHABAD
BANK”
1
Shri Ram Murti Smarak College of Engineering & Technology,
Bareilly (U.P.)
This is to certify that Mr. ANUP SINGH, a student of MBA IV Semester has
completed his Research Project Report titled “Finance to priority sector from
It is further certified that He has personally prepared this report that is the result of his
Supervisor
(DR. S. P. GUPTA)
2
DECLARATION
I, shikhar agrawal, hereby declare that I have carried out project report on Topic
I further declare that project work is my original work and no part of this report has
been published or submitted to anybody or university for award of any other degree or
Diploma.
ANUP SINGH
3
ACKNOWLEDGEMENT
The extensive endeavour, bliss and euphoria that accompany the successful completion
of the task that would not be complete without the expression of gratitude to the people
who made it possible .I take this opportunity to acknowledge all those who guided
guidance throughout my Project work. I would also like to extend my feelings of gratitude
towards my faculty mentor Dr. S. P. Gupta ,for his constant guidance, support and
correcting where I was wrong. I thank them with full zeal and enthusiasm that they gave
ANUP SINGH
PLACE-
4
TABLE OF CONTENT
PAGE NO.
CHAPTER-1 Introduction 1-27
1.1 Introduction 1-1
CHAPTER-6 55-55
Bibliography 55-55
5
LIST OF TABLE
PAGE NO.
Table no -1 Advance to priority sector. 43-43
Table no -6 Finance to sector such as housing loan education loan etc. 49-49
6
LIST OF FIGURE
PAGE NO.
Figure no -6 Finance to sector such as housing loan education loan etc. 49-49
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CHAPTER-1
INTRODUCTION OF THE TOPIC
1.1 Introduction
The research project report on financing to priority sector from Allahabad bank is
taken as a part of my 4th semester course of MBA. Finance to priority sector is a prime
This chapter contains a brief summary about Allahabad bank and the research topic.
Section 1.2 deals with about Allahabad bank. Section 1.3 deals with principles of
lending and priority sector lending. The section 1.4 contains target & sub target under
priority sector. The section 1.5 contains common guidelines for priority sector advances.
The section 1.6 deals with advances to priority sector by Allahabad bank. The last Section
Allahabad Bank was founded by group of Europeans on April 24 1865. The Allahabad
Bank has a history of 3 centuries. The Allahabad Bank is the oldest joint stock Bank
in India. Due to business considerations the head office of Allahabad Bank was
The Allahabad bank has main branches in Kanpur, Lucknow, Nanital, Kolkatta,
Jabalpur, Meerut, Nagpur, Mumbai, and New Delhi. The Chairman and Managing
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Director of Allahabad Bank is Sri K.R. Kamath. Sri K.K. Agarwal and Sri J.P. Dua
salaries employees, businessman. The Allahabad bank offers three kinds of products
Deposit products, Retail Credit Products and Other Credit Products. The Flexi-fix
Deposit, Rs.5 Banking, Tax Benefit Term Deposit are some of the famous Deposit
The Allahabad Bank also offers its services to NRI customers. It offers International
Banking facility for its NRI customers. The deposit schemes, tax benefits schemes,
remittance facility, forex services are offered by the Allahabad Bank. The NRI
services are available in 312 branches of the Allahabad Bank all over the country.
2
Nineteenth Century
The Oldest Joint Stock Bank of the Country, Allahabad Bank was founded on April
Trade and Banking started taking shape in India. Thus, the History of the Bank spread
April 24, 1865's The Bank was founded at the confluence city of Allahabad
by a group of Europeans.
Twentieth Century
Business considerations.
July 19, 1969 Nationalized along with 13 other banks, Branches - 151
October, 1989 United Industrial Bank Ltd. merged with Allahabad Bank.
3
Twenty-First Century
October, 2002 The Bank came out with Initial Public Offer (IPO), of 10
February, 2007 The Bank opened its first overseas branch at Hong Kong.
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Vision
To put the Bank on a higher growth path by building a Strong Customer-base through
Re-organization.
Mission
To ensure anywhere and anytime banking for the customer with latest state-of-the-art
product innovation.
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1.3 Introduction of priority sector
Disposing of money or property with the expectation that the same thing (or an
loan) by one party to another party where that second party does not reimburse the
first party immediately, thereby generating a debt, and instead arranges either to repay
• Lenders - A loan is a type of debt. Like all debt instruments, a loan entails the
Today ,the important types of banks, commercial and merchant banks, operating under
the regulation of the Central Bank. The commercial banks engage in retail banking
services through branch networks and operate with a broad deposit base consisting of
demand and time deposit – they provide short term lending. On the other hand,
merchant banks are licensed to provide wholesale banking, take deposit and arrange
banks, including other financial institutions, to finance capital intensive projects. From
the foregoing, it is realized that banks are generally debtors; they borrow money in
order to lend them out to make profit. No bank can ever survive by just being a
custodian of deposit, but they exist by lending from the deposit on fixed interest
or security.
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Since banks depend largely on lending, the need to adhere to the basic principles of
depositors and shareholders’ funds, increase profitability and make a healthy turn
over. Such advances in turn assist in the transformation of rural environment, promote
rapid expansion of banking habit and improve and boost the nation’s economy.
The basic considerations in bank lending are the character of the client seeking loan
from the bank. The client must be an honest, upright customer whose record of
For effective credit administration, the bank must assign functioning lending officers,
and reporting findings to relevant senior schedule officers, for further consideration
vigorously by the bank to minimize the risk of default from borrowers. The successful
banks operating within the financial system are those that consider and coordinate
The major business of banking company is to grant loans and advances to traders as
well as commercial and industrial institutes. The most important use of banks money
is lending. Yet, there are risks in lending. While lending loans or advances the banks
usually keep such securities and assets as a supports so that lending may be safe and
secured. Suppose, any particular state is hit by disasters but the bank shall get
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advantages from the lending to another states units. Thus, the effect on the entire
business of banking is reduced. So the banks follow certain principles to minimize the
risk. Following are the important areas to be taken care while lending:
Basic principles
The success of banks depends upon the basic principles. These are the prime
Safety
Liquidity
Profitability
Safety
Normally the bank uses the money of depositors in granting loans and advances.
Because of that while granting loans the banker should think about the safety of
depositor’s money. The purpose behind the safety is to see the financial position of the
borrower, whether he can pay the debt as well as interest easily. Ensuring safety
means reducing risk associated with lending. The risk involved in lending money is
the credit risk.ie the possibility of the borrower not repaying the amount back on the
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due date. It is necessary for the banks to maintain expert staff to appraise every credit
proposal received by it. Market risk also there , it can be avoided by preferring high –
Liquidity
It is a legal duty of a banker to pay the total deposited money to the depositor on
demand. So the banker has to keep certain percent cash of the total deposits in hand.
Moreover the bank grants loan. It is also for the addition of short term or productive
capital. Such type of lending is recovered on demand. A bank must have sufficient
liquid assets to meet the demands of the depositors .The liquid assets must have
SLR : The Banking regulation act of 1949 , section 24 . states that every commercial
bank have to maintain liquid assets in the form of cash , gold, and gilt edged securities
– which is not less than 25 % and not more than 40 % of NDTL ( Net Demand and
Time Liabilities )
Profitability
Commercial banks are profit earning institutes; nationalized banks are also not an
exception. They should have planning of deposits in a profitability way to pay more
interest to the depositors and more salary to the employees. Before taking any decision
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PRIORITY SECTOR LENDING
The Government of India through the instrument of Reserve Bank of India (RBI)
mandates certain type of lending on the Banks operating in India irrespective of their
origin. RBI sets targets in terms of percentage (of total money lent by the Banks) to be
lent to certain sectors, which in RBI's perception would not have had access to
organised lending market or could not afford to pay the interest at the commercial
rate. This type of lending is called Priority Sector Lending. Financing of Small Scale
Industry, Small business, Agricultural Activities and Export activities fall under this
Financing Priority Sector in the economy is not strictly on commercial basis as not
only the general approach is liberal but also the rate of interest charged on such loans
is less. Export finance is, in fact, available at a discount of 20% or more on the normal
rate of interest to Indian corporates. Part of the cost of this concession is borne by RBI
activities undertaken by entrepreneurs in the areas which are consider "priority sector"
by RBI.
• Liquidity with a banker means Cash on Hand, Cash and Bank balances and
10
• Customer profitability analysis means Assess the profitability of customer’s
business
• Banker can reduce risk in lending to a borrower by ensuring that there will be
no default on account of lack of liquidity and lack of willingness to pay on the part of
the borrower
borrower
1. Agriculture
4. Small business (Original cost of equipment used for business not to exceed Rs 20
lakh)
6. Professional and self-employed persons (borrowing limit not exceeding Rs.10 lakh
of which not more than Rs.2 lakh for working capital; in the case of qualified medical
practitioners setting up practice in rural areas, the limits are Rs 15 lakh and Rs 3 lakh
respectively and purchase of one motor vehicle within these limits can be included
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9. Housing [both direct and indirect – loans upto Rs.5 lakhs (direct loans upto Rs 10
lakh in urban/ metropolitan areas), Loans upto Rs 1 lakh and Rs 2 lakh for repairing of
10. Consumption loans (under the consumption credit scheme for weaker sections)
11. Micro-credit provided by banks either directly or through any intermediaty; Loans
to SHGs
12. Loans to the software industry (having credit limit not exceeding Rs 1 crore from
13. Loans to specified industries in the food and agro-processing sector having
Direct Agricultural advances denote advances given by banks directly to farmers for
agricultural purposes. These include short-term loans for raising crops i.e. for crop
months, where the farmers were given crop loans for raising the produce, provided the
Direct finance also includes medium and long-term loans (Provided directly to
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agricultural implements and machinery, Development of irrigation potential,
structures, etc. Other types of direct finance to farmers includes loans to plantations,
development of allied activities such as fishery, poultry etc and also establishment of
bio-gas plants, purchase of land for agricultural purposes by small and marginal
through other agencies. Important items included under indirect finance to agriculture
are as under :
(i) Credit for financing the distribution of fertilisers, pesticides, seeds, etc.
(ii) Loans upto Rs. 25 lakhs granted for financing distribution of inputs for the allied
(iii) Loans to Electricity Boards for reimbursing the expenditure already incurred by
them for providing low tension connection from step-down point to individual farmers
(iv) Loans to State Electricity Boards for Systems Improvement Scheme under Special
(v) Deposits held by the banks in Rural Infrastructure Development Fund (RIDF)
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(vi) Subscription to bonds issued by Rural Electrification Corporation (REC)
agriculture/allied activities.
(ix) Loans to Arthias (commission agents in rural/semi-urban areas) for meeting their
inputs.
agriculture.
Small scale industrial units are those engaged in the manufacture, processing or
preservation of goods and whose investment in plant and machinery (original cost)
does not exceed Rs. 1 crore. These would, inter alia, include units engaged in mining
or quarrying, servicing and repairing of machinery. In the case of ancillary units, the
investment in plant and machinery (original cost) should also not exceed Rs. 1 crore to
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The investment limit of Rs.1 crore for classification as SSI has been enhanced to Rs.5
crore in respect of certain specified items under hosiery and hand tools by the
Government of India
‘Tiny Enterprises’
The status of ‘Tiny Enterprises’ is given to all small scale units whose investment in
plant & machinery is upto Rs. 25 lakhs, irrespective of the location of the unit.
Industry related service and business enterprises with investment upto Rs. 10 lakhs in
fixed assets, excluding land and building will be given benefits of small scale sector.
For computation of value of fixed assets, the original price paid by the original owner
supply of inputs and marketing of outputs of artisans, village and cottage industries.
iv. Term finance/loans in the form of lines of credit made available to State
vi. Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively
15
vii. Subscription to bonds issued by NABARD with the objective of financing
viii. Financing of NBFCS or other intermediaries for on-lending to the tiny sector.
special bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc.
under tiny sector may be treated as indirect lending to SSI (Tiny) Sector.
1. Small and marginal farmers with land holding of 5 acres and less and landless
2. Artisans, village and cottage industries where individual credit limits do not
Scavangers (SLRS).
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1.4 Targets under priority sector lending
The targets under priority sector lending would be linked to Adjusted Bank Credit
(ABC) (total loans and advance plus investments made by UCBs in non-SLR
on August 30, 2007, made by banks in non-SLR bonds held in HTM category will
not be taken into account for calculation of ABC. However, fresh investments by
banks in non-SLR bonds will be taken into account for the purpose. For the
may use current exposure method. Inter-bank exposures will not be taken into
The targets and sub-targets set under priority sector lending for UCBs are furnished
below:
Total Priority 40 per cent of Adjusted Bank Credit (ABC) or credit equivalent
Agriculture
No target.
Advances
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Sheet Exposure, whichever is higher.
Rs.2lakh;
Micro enterprises
within Small ii) 20 per cent of total advances to small enterprises sector
enterprises).
sections.
Within the overall target for priority sector lending and the sub-
Advances to target of 25 per cent for the weaker sections, sufficient care may
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The targets and sub-targets set under priority sector lending for domestic and
Total Priority Sector 40 percent of net bank credit 32 percent of net bank credit
advances
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1.5 COMMON GUIDELINES FOR PRIORITY SECTOR ADVANCES
REPAYMENT SCHEDULE:
requirements, surplus generating capacity, the break-even point, the life of the asset,
RATES OF INTEREST:
The rates of interest on various categories of priority sector advances will be as per
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 will be free to levy penal interest for loans exceeding Rs 25,000
Rs. 25,000/-.
For loans above Rs. 25,000/- banks will be free to prescribe service charges with the
PHOTOGRAPHS OF BORROWERS
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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.
DISCRETIONARY POWERS
All Branch Managers of banks should be vested with discretionary powers to sanction
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
AMENDMENTS
These guidelines are subject to any instructions that may be issued by the RBI from
time to time.
following:-
1. Processing of Applications
i. Loan Application
Revised Simplified application form will be used for Micro and Small Enterprise. The
existing Common loan Application form applicable to all loans irrespective of limit,
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Each branch will issue an acknowledgement for loan applications received from the
borrowers towards financing under this sector and maintain the record of the same.
(Provided the loan applications are complete in all respects and accompanied by a
b. Branch Manager may reject application (except in respect of SC/ST). In the case of
proposals from SC/ST, rejection should be done at a level higher than Branch
Manager.
c. The reason for rejection will be communicated to the borrower in line with
v. Photographs of Borrowers
While there is no objection to take photographs of the borrowers, for the purpose of
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.
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2. Composite Loan
A composite loan with maximum limit upto Rs.1.00crore may be considered by bank
to enable the Micro and Small Enterprises {both for manufacturing and service
sector} to avail of their working capital and Term loan requirement through Single
Window.
3. Types of Loans
The Bank may provide all types of funded and non funded facilities to the borrower
under this sector viz, Term Loan, Cash Credit, Letter of Credit, Bank guarantee, etc.
4. Margin
Up to Rs.25000.00 Nil
i. While considering proposals under MSME sector, the book debt upto six months
may be treated as a current assets, for the purpose of computation of permissible bank
ii. The margin on the book debts may also be considered at 20% to 25% on merit of
the case.
iii. In regard to age of the book debts, a certificate preferably from Auditors
iv. All book debts more than 180days are to be treated as Non-current asset.
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5. Security
5.2 In case of good track record of the borrower Collateral Security and or third party
guarantee may be waived beyondRs. 5.00 Lac but up to Rs.100.00 Lacs, where
respect of term loan and/or working capital facilities extended to new and
existing entrepreneur. It has also been stipulated by CGTMSE that all proposals of
sanction of Guarantee approvals for credit facilities above Rs.50.00 Lacs and up to Rs.
100.00 Lacs will have to be rated internally by MLIs and should be of investment
grade. Accordingly, all proposals above Rs. 50 Lacs are to be rated on Credit Risk
Grading (CRG 2) as per applicable internal rating modules prescribed under Bank’s
Credit Risk Management Policy and proposals rated as AB-1 to AB-7 would only be
5.4. In case of Loan above Rs.25000/- and up to Rs.10.00 Lacs, a minimum asset
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5.5. In case a loan is not covered under CGTMSE scheme for valid reasons, the
Security coverage Ratio for such loan above Rs.10.00 Lac will be based on the Risk
AB-1 1.25:1
AB-2 1.5:1
AB-3 1.75:1
** In each of the above case, Primary + collateral Security /Loan amount should
1. Nevertheless, availability of collateral security shall not be the mere criterion for
2. In case of loan accounts not covered under CGTMSE scheme, it may be explored as
far as practicable that the credit facilities/loans extended, are supported by collaterals
3. Collateral security shall not be insisted upon in those cases where the RBI
directives specifically advised the banks not to insist on obtaining Collateral security
25
/third party guarantee, in certain priority sector credit or Government sponsored
schemes.
closely observed.
enterprices
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1.7 Objectives of the study
3) To analyse the progress made by the Allahabad bank in the various components of
the priority sector lending i.e. agriculture, small scale industries and other priority
4) To make an in-depth study of the priority sector lending of the selected bank.
6) To suggest ways and means for improving the quality of lending to this sector.
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CHAPTER-2
Literature Review
The primary objective of social control and nationalisation is to ensure a better
alignment of the commercial banking system to meet the needs of the economy. It is
the duty of the banks to see that credit flows into channels, which are most productive
and most helpful to our growth and development. To promote the welfare of the
people who are socially and economically backward, the concept of priority sector
Quantitative targets were set for lending to priority sector and separate subtargets were
also set for lending to agriculture and weaker sections of the society. As a result,
flow of credit to the different sectors assisted the developmental activities and thereby
Several studies on this subject in a restricted sense have been undertaken by particular
by the Govemment of India and RBI have also studied the banking problems of the
V. V. Bhat (1970) proposed a scheme of appoved dealers to assist the Lead Banks in
finance and guidance effectively, the banks would have to collect the required
information, ensure recovery of loans and interest, assist in obtaining after sales
28
service and keep a watch on the working of the assisted enterprise. This work can be
P. N. Joshi (1972) requested the RBI to give clear and specific definition of the
different components of priority sectors. Some of the bankers are not clear about the
precise scope of agricultural lending. Guidance from the RBI would help them to
M. A. Oommen (1972) found that among the institutional sources of finance to SSI in
Kerala, commercial banks provided the lion’s share. The assistance of commercial
small artisans in relation to bank financing. The survey revealed that the average
amount borrowed per artisan from bank was Rs. 1,040 and from non-institutional
source was Rs. 3,133. The maximum amount borrowed by an artisan from a
commercial bank was Rs. 2,000 and from non-institutional source was Rs. 17,000.
The small artisans therefore were denied sufficient funds from the commercial banks
forcing them to borrow from non-institutional sources at higher rates of interest. Due
to lack of adequate financial accommodation from the banking system, the artisans
buy raw materials through other financiers at higher prices and sell the product to the
same agency at a low price. With the financial assistance from the banks, this vicious
29
N. K. Thingalaya (1974) conducted a study among the village artisans of Kamataka
and found that they are receiving an insignificant per cent of their total credit
requirements from banks. Thus artisans are living under the influence of
moneylenders.
Vadilal Dagli (1975) is of the opinion that the aim of the banking policy should be to
uplift the under privileged class of the society in rural India from subsistence
existence to surplus existence. The concept of priority sector should include only the
real poor of the country and by providing them necessary financial assistance; they
can be lifted from the pitches of animal existence to the heights of human existence.
R. K. Hazari (1976) made it clear that institutional financing does not mean replacing
should enable the agriculturists to move on to a level of new technology that will
increase agricultural output and employment. This means productivity of both land
and human beings. Data relating to finance must be able to provide a basis for
assessing how much financing has really contributed to additional output and
employment.
P. C. D. Nambiar (1977) pointed out that the role of commercial banks in the priority
sectors is not confined merely to the provision of finance. They have to evaluate the
feasibility of the project and assist the entrepreneurs to select the right type of project.
30
He also emphasised the need for proper co-ordination between govemment agencies
nationalisation has found that the banks, which have relatively low priority sector
lending have been the ones with higher than the average credit deposit ratios. Another
finding noticed among the banks is that in regard to the priority sectors, a few
branches of banks achieved impressive ratios, to the neglect of the rest of the areas.
I. G. Patel (1979) reminded the banks about their socio-economic responsibility in the
up-liftment of the poorest strata of the society. A substantial portion of the people live
in abject poverty and the first priority should be to provide productive employment
opportunities to the very poor- whether they are in rural or urban areas. Banks should
equip themselves fully to serve as instruments of development for the poorer sections
of people.
Singh and Balraj (1979) conducted a study on commercial bank lending in Hissar
district of Haryana and concluded that villagers are relieved from the exploitation of
moneylenders by the operation of a nationalised bank. At the same time they also
31
procedure of loan repayment and the absence of easy accessibility of banking
facilities.
L. D’Mello (1980) is very much doubtful about the capacity and suitability of
commercial banks to provide large amount of credit to the priority sectors. Since
banks are high cost organisations, existing developmental agencies can be used by
commercial banks to reduce the cost and to improve efficiency in the use of credit.
C. L. Khemani and K. V. Balakrishnanu (1981) are of the opinion that if the borrower
selected under IRDP is made to approach the money lender for his very genuine
consumption needs, then the very objective of institutional finance for priority sector
will be defeated. Consumption credit granted on the basis of specific needs of the
target groups are not going to cause problems. The actual consumption loans will have
A. R. Patel and M. R. Patel (1983) proposed the need for assigning the task of
evaluating the working of various schemes under the 20-point programme to outside
agencies not connected with its implementation. This will result in correct evaluation
of the role played by implementing agencies, benefits derived by the beneficiaries and
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V. B. Angadils (1983) observed the concentration of priority sector advances in
general and agricultural advances in particular in a few States. The reasons for such
concentration are number of bank offices, deposit mobilisation, total cropped area,
land under certain food and cash crops, extent of irrigated land in respective States,
adoption of high yielding varieties, the availability of co- operative credit and the level
advised the banks to remember the philosophy behind the policy towards priority
sector and to develop faith in this philosophy. Priority sectors should be looked upon
B. K. Sarkarl (1983) is of the opinion that to launch a successful marketing drive for
the target groups in the priority sector, the environment pertaining to each segment of
the society has to be carefully scanned and vital information relevant to market
be analysed. The best result can be derived only if the customer and his real need
performance under DRI scheme. The study revealed that the banks had positively
responded to the increasing needs of SC/ST borrowers in respect of DRI loans and had
been able to increase their share of SC/ST borrowers, both in terms of number of
33
borrower accounts and the amount outstanding. At the same time, banks are finding it
extremely difficult to finance all those eligible identified beneficiaries who approach
them in view of the limited loanable funds available under the scheme. Thus, demand
and supply forces in respect of this scheme have created problems at the branch level
beneficiaries have so far remained out of the fold of this scheme, a good number of
K. V. Patel and N. B. Shete (1984) analysed the behaviour of weaker section accounts
districts in the states of Raj asthan, Madhya Pradesh and Kamataka. The study brings
out the very positive aspects of borrowers’ willingness to repay and the bankers’
promptness in making efforts for recovery. The analysis helps in clearing some of the
banking.
K. V. Patel and N. B. Shete (1984) analysed the priority sector lending by commercial
banks in India from 1969 to 1980 and concluded that quantitatively a very impressive
coverage is achieved during the period of twelve years. The total priority sector
advances have gone up by more than fourteen times. But the credit absorption
capacities of the weaker sections are constrained by a variety of factors, which may
not be under the direct control of the banking industry. Therefore, the co-coordinated
34
efforts of executives and developmental agencies require special care and attention in
this matter.
I. Satya Sundaram (1984) opines that there is no point in setting up more and more
credit agencies to help the rural poor. The presence of numerous agencies is creating
confusion in the filed of rural credit. What is required is the proper co-ordination
among the various agencies in implementing the schemes that will be useful to the
rural poor.
Raut (1984) conducted a study on the scope and problems of financing tribal farmers
and concluded that the problem of overdues was mainly due to the misutilisation of
loans by the tribal farmers. The tendency to misutilise the loan was due to the fact that
the consumption priorities of tribal farmers were of more urgent nature than asset
building priorities.
Balishter and Roshan Singh (1984) found in their study of IRDP financed by SBI in
Bichpuri Block of Agra district that the recovery of loans advanced by the bank under
IRDP was satisfactory in all categories of families and this nullified the common
bad debts.
35
Anil Kale and Namdeo Mali (1984) conducted a study in some of the drought-affected
villages of Pune and Nagar districts among the farmers and landless labourers. From
the analysis of data collected it is found that the poor people in rural areas are
B. S. Viswanathan (1985) stated that the overdues to a large extent were on account of
wilful default, which was either due to ineffective recovery machinery or because of
D. P. Khankhoje and V. T. Godse (1985) found that procedural flaws and gaps cause
delays in the process of loaning activity in the priority sector. So the systems and
review the progress and working of the Lead Banks and concluded that the banks
which were assigned the lead role undoubtedly made considerable efforts in their lead
deposit mobilisation and credit deployment to priority sectors. Thus the Lead Bank
Scheme holds out the promise to attain socio-economic objects in the society and to
36
S. B. Dangat, S. R. Radkar and M. P. Dhongade (1986) conducted a micro level study
into the borrowings and utilisation of medium and long term loans in Ahmednagar
district and reported that the medium and long term loans were diverted for conduct of
marriages, for consumption and for construction of residential buildings in all the size
loan proposals, follow-up and supervision after the disbursement of loans were
I. Satya Sundaram (1986) pointed out some of the problems facing the DRI scheme.
Funds are allocated, they are officially spent and yet the poor remains in the same old
state. If necessary safeguard are provided, the funds allocated for this purpose can
Economic Research Department of the State Bank of India, Central Office, Bombay
(1987) conducted a study to observe the impact of bank credit on weaker sections in
Kerala. The study revealed that bank loans enabled the borrowers to become self-
employed businessmen or artisans whereas previously they were mere wage eamers.
The utilisation of bank loans generally raised the income and employment of the
37
N. J. Kurian (1987) conducted a concurrent evaluation of IRDP and found that
commercial banks account for 69 per cent of the loans, 23 per cent is accounted by
RRBs and the balance 8 per cent is provided by the co-operatives. The repayment of
loans by IRDP beneficiaries is no worse than that of other debtors who generally are
commercial banks to the weaker sections of the society and concluded that giving
advances to them will be of no use, unless it is ensured that the recipients use these
Suresh Mehta (2000) noticed that though the banks are flush with surplus funds, they
do not find it profitable and safe in lending to the SSI sector because they are already
saddled with high NPAs in this sector. To reduce the NPAs level, banks have to
strengthen their appraisal system and credit monitoring mechanism; and SSI units
have to develop capabilities to manage borrowed funds more prudently and more
transparently in business operations. These arrangements will help both the banks and
Economic Policy and Problems faced by Agricultural Sector in Kerala” alleged that
while the banks have given the farmers a raw deal, it had written-off the loans availed
by top industrialists to the tune of rupees one lakh crore as non- performing assets.
38
The poor farmers’ house and properties are auctioned for recovering the loan amount
A critical perusal and review of the studies reveal that most of these studies were not
scientifically designed and the opinion surveys were not properly structured. Also
most of the findings were just in the fonn of generalised observations made with out
Despite the availability of sufficient literature on priority sector lending and rural
credit, no comprehensive and schematic effort has been made to analyse the subject
based on the experience of bank managers and borrowers. The available literature on
the subject is only descriptive, partial and often biased. It covers only some micro
Priority sector lending is done through District Credit Plans. An analysis of priority
sector lending in the State through District Credit Plans is not attempted by any
scholar so far. This study is also an attempt in this direction. It is designed to analyse
the working of District Credit Plans, the weakness in the lending procedures, methods
of making priority sector lending profitable and beneficial and the difficulties
Hence in this study, different aspects of lending to priority sector together with its
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CHAPTER-3
RESEARCH DESIGN
This chapter describe the research methodology, research design, method of data
collection and tools & technique which are used for the better presentation and right
problem. It is a written game plan for conducting research. It tends to describe the step
background.
It tends to describe methodology for solution of the problem that has been taken for
the purpose of study this project focuses on the methodology for technique used for
the collection, classification & tabulation of the data. This plan throws light on the
research problem, the objective of study & limitation of the study. Therefore, in order
40
3.2 RESEARCH DESIGN:
Study is all about the research & analysis of credit to priority sector.
Study is being made for the purpose of analysis of credit to priority sector by the
Allahabad bank that predicts the future growth of the bank by providing better
The secondary data collected from the already sanctioned annual report.
Project proposal.
41
Tools and Techniques:
As no study could be successfully completed without proper tools & techniques, same
with this project. For the better presentation and right explanation researcher used
tools of statistics and computer very frequently and Basic tools which have been used
-BAR-CHARTS
- TABLES
Bar chart is very useful tools for every research to show the result in
a clear, simple way. Because researcher used bar charts in my project for showing data
in a systematic way. So researcher need not necessary for any observer to read all the
theoretical detail, simple on seeing the charts anybody that what is being said.
Technological Tools:
MS -WORD
MS-EXCEL
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CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
18,774
24,279
2008
2009
2010
20,435
Interpretation:
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Credit to priority sector grew from Rs.18,774 Crore as on March 2008 to Rs.20,435
Crore as on March 2009 and Credit to priority sector grew from Rs.20,435 Crore as on
growth of Rs.3844 Crore (18.81 %). Bank has exceeded the National Goal (40.00%)
financing to agriculture
9,146
11,567
2008
2009
2010
9,568
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Interpretation:
Rs.9,568 Crore as on March 2009 and Agriculture Credit increased from Rs.9568
absolute YOY growth of Rs.1999 Crore (20.90%). Bank has exceeded the National
agriculture
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direct finance to agriculture
6,571
8,340
2008
2009
2010
7,306
Interpretation:
Direct finance to agriculture of the Bank grew by Rs. 6,571 crores as on 31.3.2008 to
Rs. 7,306 crores as on 31.3.2009 and Rs. 7,306 crores as on 31.3.2009 to Rs. 8,340 as
on 31.3.2010.
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- Indirect finance to agriculture sector from Allahabad bank.
2,575
3,227 2008
2009
2010
2,262
Interpretation:
Indirect finance to agriculture of the Bank grew by Rs. 2,575 crores as on 31 march ,
2008 to Rs. 2,262 crores as on 31 march , 2009 and Rs. 2,262 crores as on 31.3.2009
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2. Financing to Micro Small Enterprises Sector from Allahabad Bank.
3,530
2008
8,118
2009
2010
4,593
Interpretation:
Credit to Micro and Small Enterprises (MSE) grew from Rs. 3,530 Crore as on March 2008 to Rs.4593
Crore as on March 2009 and grew from Rs.4593 Crore as on March 2009 to Rs.8,118 Crore as on
March 2010, registering an absolute YOY growth of Rs.3595 Crore (78.27%). Share of Micro
Enterprises to total Micro & Small Enterprises has exceeded the National Goal (60%) by achieving
62.25% as on Mar’10.
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3. Financing to other sector such as housing loan education loan etc. From
Allahabad bank.
4,524
6,098
2008
2009
2010
6,275
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Interpretation:
Credit to other sector such as housing loan, education loan etc. grew from Rs. 6,098 Crore as on
March 2008 to Rs.6,275 Crore as on March 2009 but in 2010 credit to other sector was decline from
Rs. 6,275 Crore as on March 2009 to Rs. 4,524 Crore as on March 2010.
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Financing to weaker section
4,455
6,150
2008
2009
2010
5,010
Interpretation:
Credit to weaker section grew from Rs. 4,455 Crore as on March 2008 to Rs. 5,010
Crore as on March 2009 and credit grew from Rs. 5,010 Crore as on March 2009 to
Rs. 6,150 Crore as on March 2010. Credit to weaker section from Allahabad bank
increased year to year .Credit to weaker section was 10.77% of ANBC as against
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CHAPTER -5
5.1 Findings
has exceeded the National Goal (40.00%) by achieving 41.29% as on Mar 10.
Share of Micro Enterprises to total Micro & Small Enterprises has exceeded the
Credit to other section such as housing loan education loan has been increased
as on march 2009 but march 2009 to march 2010 credit to other section has
been decreased.
Credit to weaker section from Allahabad bank increased year to year .Credit to
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5. 3 Conclusion
My research in the field of financing to priority sector from Allahabad bank and
Allahabad bank has been grew year to year. This has some interesting facts which can
Share of Micro Enterprises to total Micro & Small Enterprises has exceeded
Credit to other section such as housing loan education loan has been
increased as on march 2009 but march 2009 to march 2010 credit to other
Credit to weaker section from Allahabad bank increased year to year .Credit
10%.
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5. 2 Suggestion:
priority sectors are big source of revenue for banks, so bank should encourage
also the unregistered units by providing more facilities like less paper work.
Bank has to increase their credit limit and also decrease the installment amount.
The best way to encourage lending to micro small industries is to improve the
programmes.
Building awareness among small business people about the financial sources
offering by bank. Especially in the case of housing loan and education loan is
While granting the loans the bank does not adhere with the margin.
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Bibliography
2. Shekher K C & Shekher Lekshmy , Banking theory and practice 19th Edition,
Kalyani publishers,2006 .
WEBSITES
www.allahabadbank.com
www.banknetindia.com
www.mybankersbank.com
http://www.rbi.org.in
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