INTRODUCTION: Bank is an institution which borrows money by accepting deposits from the public for the purpose of lending

to those who are in need and for investing in government and industrial security. The term BANKING means accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdrawal by cheque,draft.order or otherwise. The origin of bank of bank is traced to a Latin word Baucus which mean a bench. European money lenders and money changes used to transact their business at bench or table. They followed the practice of receiving gold b and other metals as deposits and issuing receipts. The bench or table used by the trader in money was the symbol of the business of banking of dealing in money. The success or failure in trading was associated with his bench. When a banker failed, his bench used to be destroyed by the people. Some authorities observed that the word bank was originally derived from the German word bank which means a joint stock fund. This word was initialized into BANCO by the Germans when they were the rules of a major part of Italy. This term was again changed into BENVH which has now been universalised. The term bank or banker is used in almost all the countries of the world to denote a financial institution dealing in money. In India the bank are regulated by the reserve bank of India under the banking as an activity of accepting of deposit, which shall

be repayable on demand from the depositors. Banks may be classified into following major headings. 1. 2. 3. 4. 5. 6. 7. 8. 9. Central Bank Commercial Bank Co- Operative bank Industrial Bank Exchange Bank Development Bank Agricultural Bank Indigenous Bank Regional rural Bank

About regional Rural Bank

The regional rural banks were set up by the Government by promulgating an ordinance in September, 1975. The ordinance was replaced by the regional Rural Bank Act, 1976. The regional Rural Bank were set up on the recommendation of a working group headed by Mr. Narasimhan. To start there were only 5 Regional Rural Banks on October 2, 1975 with an authorised capital of Rs. 1 corer each every rural bank is expected to cover a population of 1 crone through about 100 branches. OBJECTIVES 1. To know the liquidity position of the concern. 2. To analysis for profitability. 3. To study the deposit and lending pattern SCOPE OF THE STUDY

The scope of the study is restricted to some of the aspects related to regional Rural Banking Limited in uses relating to promotion of the economic development, employment generations and financing aspects have been dealt with. The concerned have been studied for the periods of 4 years deposit or lending facilities. METHOLODGY A sincere attempt has been made by the research to collect data from secondary sources. The data were collected from book, internet, magazines, periodically is made by applying simple statistical ratios and percentages. SIGNIFICANCE 1. 2. 3. 4. LIMITATION The following problems arise the time of preparation of the project. Due to limited quantitative data relating the financial matters, problems arises in preparation of financial constraint. Time and resources factors are the constraint for this study Cash factors are one of the minor problems for research. Chapterisation The project report is derived in to 4 chapters Stimulation of saving Creation of credit Support to small scale industries Service to trade, commerce, and industry

CHAPTER-1 A brief introduction of Neelachal Gramya Bank has been studied. The scope, significance methodology etc. Have been in corporate. CHAPTER-2 Deals with a brief profile of Neelachal Gramya Bank CHAPTER-3 A conceptual study on financial analysis of different types of Deposit & lending. CHAPTER-4 CONCLUSION, SUMMERY, FINDING

CHAPTER-2
GRAMYA BANK- AN OVERVIEW A BRIEF PROFILE ON BANK Bank is an institution which deals in money and credit .It borrows money by accepting deposits from the public and lend to those who are in needs of funds. It also helps the businessman in receiving and marketing payments. According to Kenneth Mackenzie, the business of banking may be briefly defined as dealing in money and instruments of credit. FUNCTION OF BANK 1. Acceptance of deposit by opening (a). Fixed deposit accounts, (b). Current accounts

2. Grant of loans in the form of overdraft, cash credit, discounting of bills of exchange. 3. Issue of drafts, travellers cheques, etc. For the sending and carrying money from one place to another. 4. Collection of cheques. 5. Making payments on behalf of the customers. 6. Locker facility. 7. Merchant banking- underwriting of shares and debentures, handling new issues, etc. TYPES OF BANK Reserve Bank of India defines banking as an activity of accepting of deposits, which shall be repayable on demand from the depositors. Bank may be classified into the following major headings. 1. 2. 3. 4. 5. 6. 7. 8. 9. Central bank Commercial bank Co-operative bank Industrial bank Exchange bank Development bank Agricultural bank Indigenous bank Regional rural bank

About Regional Rural Bank The share capital of Regional Rural Banks was subscribed by the central government, state Government and sponsor bank in the ratio of 50:15:35 respectively. The sponsor bank is a commercial bank. The sponsoring

commercial bank provides them with funds. Guidance, direction and managerial skill. The Regional Rural Banks raises their resource through. Owned capital Deposits from the sponsor banks Borrowings from the sponsor banks Refinance from NABARD

OBJECTIVES OF REGIONAL RURAL BANK The objectives of establishing the Regional Rural Banks was to develop the rural economy by developing agriculture, trade, commerce and industry and other productive activities in the rural areas. Apart from this, the regional rural banks are expected to help the small and marginal farmers, agricultural labours, artisans and small entrepreneurs. The Board of Directors consisting of nominees of the government of India, state Government and sponsoring bank managers the regional rural banks. In short, the regional rural banks are to act an alternative agency to provide institutional credit in the rural areas and replace the money lenders in course of tie. At the same time, the regional rural bank should supplement the activities of co-operative banks. The board of directors shall consist of a chairman, appointed by the concerned sponsor bank in consolation with NABARD AND THE FOLLOWING OTHER MEMBERS.

 Not more than three Directors, to be nominated by the central Government. Not more than two Directors, to be nominated by the concerned state stare Government. Not more than three Directors, to be nominated by the Sponsor Bank. BUSINESS OF A REGONAL RURAL BANK Every Regional Rural Bank shall carry on business of banking and such of the business as may be transacted by a bank under Banking Regulation Act, 1949. Every regional bank shall in particular undertake the following types of business. (1) The granting of loans and advances, particularly to small and marginal farmers and agricultural labourers, whether individually or in groups and the co- operative societies, including agricultural marketing societies, agricultural credit so cites or farmers service societies for agricultural purposes or agricultural operation or for other purpose connected there with. (2) The granting of loans and advances, particularly to artisans, small entrepreneurs and persons of small means engaged in trade, commerce, industry, or other productive activities within the notified areas in relation to the Regional Rural Bank. HISTORY OF FINANCIAL GRAMYA BANK Indian overseas Bank sponsored two Regional Banks namely Puri Gramya Bank and Dhenkanal Gramya Bank in the state of Orissa. With aims & objective of catering to the banking needs of the people or erstwhile.

Puri Gramya Bank is the First RRB in the state. Which came in to operation from 25th Feb 1976? Undivided coastal district of puri was the command area of the bank. Puri district later got fragmented into three districts namely chard, puri, Nayagarh. Head-Quarter of Puri Gramya Bank was located in Pipili. Dhenkanal Gramya Bank the second regional rural bank sponsored by the Indian overseas bank in Orissa, commenced its operation from Aug 12, 1981 with its command areas covering the un-divided Dhenkanal district which later got bifurcated into Dhenkanal and Anugul. Head office of Dhenkanal Gramya Bank was located at Dhenkanal. As per directives of department of financial services, ministry of finance, Govt of India vide notification no. F.1/4/2006-RRB dated 31.08.2007 issued under sub section (1) of section 3 of Regional Rural Bank at 1976, both puri gramya bank and dhenkanal gramya bank merged and the amalgamated bank, Neelachal gramya bank was born on 31st AUG 2007. The purpose of integration was to achieve economy of scale, operational efficiency, wide network and speedier growth. The new bank is vested with the responsibilities of carrying foreword the activities of both the erstwhile bank in its command districts of puri. Nayagarh, Khurda, Dhenkanal and Angul with renewed energy vigor.The head office of the amalgamated Bank are located in Bhubaneswar. Neelachal Gramya bank has played a participative role in the upliftment of economic well-being of people in the command area and also has been a beneficiary economic activity which is demonstrated by its impressive growth in business. The bank has identified itself with the mass during its short span of time and has become a part and parcel of the

economic development process of the people in its command area. It has developed an emotional bonding with the clientele it caters to and has earned brand quality in its trade name called Neelachal Gramya bank. Merged entity has of course a long way to go to establish long term sustainable growth and viability for which the entire team of work force of the Bank are rendering devoted and dedicated service. BRANCH NETWORK After reorganization of district in Orissa, presently the Bank is operating in three (3) districts viz. Khurda, Nayagarh, and Puri with a network of 113 branches, 3 satellite Offices and 4 Extension Counters, as details below.

TABLE Branche Branche Branche Satellit Total Ares Extensio s of s in s in e branche office n urban semi rural offices s s counter urban centre puri 2 2 38 1 42 1 2 Nayagar nil 2 23 1 25 1 h khurda 12 3 31 1 46 2 total 14 7 92 3 113 2 4 Name of the district

During the year on the extension countries namely SCERT. Extension. Counter was upgraded as a new branch namely Kharavela Nagar Branch on 05.07.2004. SHARE CAPITAL

The authorised capital of the bank is Rs.5 corers and subscribe capital is Rs.1 corer contributed by Govt. Of India, sponsor Bank and Govt. Of Orissa in the ratio of 50:35:15 respectively. Further, a sum of Rs. 2402000 thousands has been received as additional equity support under comprehensive restructuring package, from the three shareholders the details capital are indicated below.

SL.NO.

Name of the share holder

Share capital

Additional share capital sanctioned 120100 84070

1 2

Govt. of India Indian overseas Bank Govt. Of Orissa Total

5000 3500

Additional share capital actually received 120100 84070

1500 10000

36030 240200

36030 240200

Borrowings Takings into account of the cost and importance of refinance as a source of funds, the Bank has made optimum use of available sources of refinance. During the year 2007-2008, Bank availed refinance to the tune of Rs. 1309493 thousands from the NABARD and Rs. Nil from sponsor Bank as detailed below Commitment for repayment of instalment and interest has always been met promptly without any default. Moreover, Bank has repaid Rs. 1782 Lacks in advance to NABARD as it recovered loans to that

extent from ultimate borrowers before due date. Cost of borrowings has been reduced from 7.41% to 6.47% as on 31.03 2008.

Category

Limit sanctioned 12800 31500 NIL 1039510 1199010

Utilization made 12800 31500 Nil 1149993 1309493

ST. (SAO) ST. (OSAO) M. T.(NONSCH) M. T. (SCH) TOTAL

Repayment Outstanding made as on 31.03.2005 1026200 98925 15000 16500 Nil Nil 383008 504208 988965 1104390

FROM SPONSOR BANK

Category ST. (SAO) ST.(OSAO) M.T (NONSCH) TOTAL

Limit NIL NIL NIL NIL

Utilization NIL NIL NIL NIL

Repayment Outstanding as on NIL NIL NIL NIL NIL NIL NIL NIL

OTHER LIABILITIES- DICGC The bank has opted out of DICGC since 01.04.95. The DICGC claim position as on 31.03.2008 is noted below. CLAIM LODGED NO Amount 87146 153405 CLAIM SETTLED NO. Amount 86683 146800

CASH AND BALANCE WITH BANKS The bank has an established system of cash management. Details of the position for three years are furnished below: As on 31.03.2006 52466 0.89 As on 31.03.2007 67804 0.93 As on 31.032008 81179 1.10

Cash held by the bank Average cash as % to average deposit Balance with RBI in current account Balance in C/A with other banks Income from balance with RBI Income from balances with sponsor bank Income from balances with other banks Average cash held Total income in

158370

212247

232711

13778

25969

19936

4590

3682

3599

392

NIL

NIL

NIL

NIL

NIL

31968 392

67804 NIL

81179 NIL

bank balances in C/A Interest earned 22156 23250 4419 on share capital The bank has earned interest of Rs. 4419 thousands on share capital deposit during the reporting year. INVESTMENT As on 31.03.2007 outstanding Interest 1050327 76779 856327 540832 54381 32842 As on 31.03.2008 Outstanding Interest 1099997 72524 1099997 761209 _ 47898

SLR Investment Out of which Govt.& other Non-SLR investment

The investment portfolio of the Bank chiefly of Govt. Of India securities, govt. Approved securities. Bonds and debentures of PAUs, mutual funds, and term deposits with Banks including sponsor bank. CHAPTER-3 ANALYSIS OF DEPOSIT & LENDING TYPES OF DEPOSIT Deposit Accounts are one of the important sources of Banks fund. In order to attract customer, the bank offer attractive facilities to different types of deposit account holders. Deposit may be 1. Fixed Deposit 2. Current Deposit

3. Saving bank Deposit FIXED DEPOSIT They are also known as time liabilities or term deposit. These are deposits which are made with the bank for a fixed period specified in advance. The bank need not maintain cash reserves against these deposits and therefore, the bank offers high rates of interest on such deposits. These deposits generally constitute more than half of the deposits with the banks. CUURENT DEPOSIT ACCOUNT In case of current or demand deposits the bank undertakes the obligation of paying all cheques drawn against it by the customer till it has adequate funds of the customer with it. The current account is a running account and therefore, it never becomes time barred. SAVING DEPOSIT ACCOUNT These deposits are mostly of small amounts and are accepted by banks to encourage persons of means to makes savings frequent withdrawals are not allowed and interest is generally allowed on monthly balances. The cheque facility facility is also available in case available in case the depositor agrees to maintain a minimum balance. TYPES OF ADVANCES OR LENDING The advances made by commercial banks can broadly be classified into categories. 1. Loans, cash Credits and Overdrafts 2. Bills discounted and purchases LOANS

A loan is a kind of advance made with or without security. In the case of a loan the bank makes a lump sum payment to the borrower or credits his deposit account with the money advanced. It is given for a fixed period at an agreed rate of interest. The rate of interest charged by a bank in case of loan is usually lower than in case credits and overdrafts on account of the following reasons: It involves lower cost of maintenance on account of not frequent operation of the account. The bank gets interest on the total amount sanctioned whether the customer withdrawals the whole money or not. Loan may be a term loan or demand loan. Term loan payment is spread over a long period. It includes a medium term loan (repayable within 3 to 5 years) and a long term loan (repayable after 5 years). Demand loan is payable on demand. Thus it is for a short period. CASH CREDIT A cash credit is an arrangement by which a banker allows his customer to borrow money up to a certain limit. Cash credit arrangements are usually made against the security of commodities hypothecated or pledged with the bank. OVERDRAFTS The customer may be allowed to overview his current account with or without security if he requires temporary accommodation. This arrangement, like the cash credit, is advantageous from the customers point of view, as he required paying interest on the actual amount used by him. A cash credit differs from an overdraft in the sense that the former is used for a long term by commercial and industrial concern doing regular business, while latter is supposed to be a form of bank credit to be made use of occasionally and for shorter duration.

BILLS DISCOUNT AND PURCHASE The bank also gives advances to their customer by discounting their bills. The net amount after deducting the amount of discounting the amount of discount is credited to the account of the customer. The bank may discount the bills with or without any security from the debtor in addition to the personal security of one or more persons already liable on the bill. TABLE DEPOSITS As on 31st march (Rs. In 000) TYPES OF DEPOSITS CURRENT DEPOSITS SAVING BANK DEPOSITS TERM DEPOSIT TOTAL DEPOSIT ANALYSIS The table-1 reflects the total deposit of the bank from the year to year. The total deposit bank able to create was Rs. 16,57,24,82,000. Maximum deposit was under the head Term Deposit amounting to Rs. 10,47,50,93,000 followed by saving deposit amounting to Rs. 5,73,00,76,000 and the lowest one was under the head current deposit amounting to Rs. 36, 73,000. 2005 50177 994173 2006 74091 1228583 2007 99445 99445 2008 143600 143600

2390037 3434387

2578578 3882232

2644692 4399547

2860786 4856296

In the year 2005 the total deposit was Rs. 3,43,43,87,000. The maximum deposit in the year was from term deposit that is 69.5% following by the saving deposit 28.9% and lowest from the current deposit that is 1.4% 0f the total deposit. In the year 2006 the total the lowest was from the current deposit 1.9% and the maximum from the deposit 66.4% followed by the saving deposit that is 31.6% of the total deposits amounting Rs. 3,88,22,52,000. In the year 2007 the total deposit was Rs. 4,39,95,47,000 and the maximum was same as previous from the head term deposit 60.1% followed by the saving deposit 37.6% and the lowest from the current deposit 2.2% of the total. In the year 2008, the lowest from the head current deposit that is 2.9% and the maximum from the head term deposit 58.9% followed by saving deposit 38.1% of the total deposits amounting to Rs. 4,85,62,96,000. DURING THESE FOUR YEARS 2005 2006 2007 2008

AVERAGE DIPOSIT PER BRANCH 30664 85293 39282 42976 AVEARAGE DEPOSIT PER EMPLOYEE 5495 6221 7296 7922

TABLE LOANS AND ADVANCES As on 31st march (Rs. In 000) Sector S. T crop including J. L(Ag) Agricultural 2005 3,58,001 2006 3,44,900 2007 3,44,408 2008 4,40,293

1,18.664

1,06,331

1,46,611

1,87,371

Term Loan Agricultural Allied Act. Rural Artisan/SSI Other P. S. Advances Total Non-P. S. Advances Total Advances ANALYSIS

32,840 43,783 11,92,126 5,18,837 22,64,25

35,400 55,098 13,48,614 6,94,672 25,84,995

37,951 66,672 18,94,368 7,96,778 32,86,868

1,27795 66,663 20,84,789 7,72613 36,79,474

After the deposit know its time to know something regarding the loans and advances of the bank. Table-2 gives a clear picture of such loans and advance during these year four years. The total advances made by the bank were Rs. 11,81,55,88,000. In the year 2005, the total advances were Rs. 2,26,42,51,000. The maximum advances allowed by the bank were under the head other priority sector Advances Rs. 1,19,21,26,000. Followed by total non-priority sector advance Rs. 88, 37,000 and the lowest under the head Agriculture Allied Act Rs. 3, 28, and 40,000. In the year 2006 the total advances was Rs. 2,58,49,95,000 the maximum advances were made under the head other priority sector Advance amounting Rs. 13,48,614,000 followed by non-priority sector amounting to Rs. 69,46,78,000 and the lowest under the Agriculture Allied Act Rs. 3,54,00,000. In the year 2007 the lowest amount advanced under the head Agriculture Allied Act Rs.3, 79, 51, 00 and the maximum advanced under

the head either priority sector advances Rs. 79, 67, 78,000. And the total advances made by the bank this year were Rs. 3,28,68,68,000. In the year 2008 the same thing was repeated as before. The maximum advances was made under the head other priority sector Rs.2,08,47,89,000 followed by non-priority sector advances amounting to Rs. 77,26,13,000 and the lowest under head Rural Artisan/SSI amounting Rs. 6,66,63,000 and the total advances in this year was Rs. 3,67,94,74,000. TABLE-3(A) RECOVERY OF LOANS

Demand Collection Balance

2005 371597 228388 143209

2006 418947 238804 180143 TABLE-3(B) Non-farm sector

2007 453943 232708 221235

Demand Collection Balance ANALYSIS

2005 1121889 927818 194071

2006 1317662 1072384 245278

2007 1829144 1511111 318033

The above table is reflecting the recovery of the loans. The above table is divided into 2 parts, table-3(A) & table-3(B). The first table-3(A) shows the recovery of loans from farm sector and the second table that Table-3(B) shows the recovery from non-farm sector.

Table-3(A) In the year 2005, the demand for recovery of loan was Rs.3,71,597 and collection was Rs.2,28,388 from the demanded amount and the rest were balance overdue that is Rs.1,43,204 only 61.4% of the total advanced was collected. In the year 2006, the demand for recovery of loan was Rs. 4,18,947 and collection was Rs. 2,38,804 from the demand amount and the rest were balance overdue Rs. 1,80,143.Only 57% of the demands were collected of the demanded amount. In the year 2007 the demand for recovery of loan was Rs. 4,83,943 and collection was Rs. 2,32,708 from the demanded amount and the rest were balance overdue Rs. 2,21,235. Only 51.2% of the demands were collected of the demanded amount. Table3(B) This table shows the loan recovery from non-farm sector. In the year 2005, the collection was 82.7% of the demand i.e. the collection was Rs. 9,27,818 and the demand was Rs. 11,21,889 and the rest were balance overdue amounting to Rs. 1,94,071. In the year 2006 the collection was 81.3% of the demand i.e. the collection was Rs. 10,72,384 and the demand were Rs. 13,17,662 and the rest were balance overdue amounting to Rs. 2,45,278. In the year 2007 the collection was 82.6% of the demand i.e. the collection was Rs.15,11,111 and the demand was Rs. 18,29,144 and the rest was the balance overdue amounting to Rs. 3,18,033. Table-4 Bank performance in last 4 years 2004-05 2005-06 2006-07 2007-08

1. Number of 110 branches 2. Extension 5 counter 3. Number of 2 Area officers 4. Deposit (Rs. 34343.87 In lakh) 5. Deposit 307142 account 6. Per capital 11181 deposit 7. Advances 2264251 (Rs. In lakh) 8.Loan Account 9.Per capita advance 10.Credit deposit ratio 11.Staff position 12. Business per staff (Rs. In lakh) 13. Total expenses (Rs. In 000) 14. Total earning (Rs. In 000) 133891 16911 6593

110 6 2

112 5 2

113 4 2

38822.52 33823.39 11478 25849.96

43995.47 345634 12728 32868.68

48562.96 343657 14131 36794.74

140390 18413 66.58

149495 21986 74.71

153457 23977 75.77

625 91.18

625 103.64

620 123.97

613 139.25

457827

459092

483706

493328

459623

463903

488545

513548

15. Profit / Loss (Rs. In 000) ANALYSIS

1796

4811

4839

20220

The above table signifies the performance of the bank during these 4 years. A simple comparison of the performance of the bank is taken in the Table-4. If we analyse these facts we get that the number of the branches was there in the year 2007-08 had rise to 113 comparisons to 200405(110). Same number of branches was there in the 2005-06 branches opened in 2006-07 and the year 2007-08. In case of number of areas offices, it remains same during four years. No office has been opened during these 4 years. But in case of extension counter there is a fluctuating number. In the year 2004-05 the number of counters was 5.This rises up to 6 in the year 2005-o6 and diminishes to 5 again in the year 2006-07 and again reduced to 4 in the year 2007-08. Deposit made by the bank increased in year to year. I n the tear 200405 it was 3434.87 lakh. It increased to Rs. 38822.52 lakh in the year 200506 and increasing tendency continues that in the year 2006-07 it becomes 43995.47 lakh and in the year 2007-08 it raises up to 48562.96 lakh. But if we view the deposit account during these 4 years then in the year 2007-08 it was lowest as compared to the year 2006-07 but more in comparison to the year 2004-05 and 2005-06. Per capita deposit (in Rs) is increasing from the year to year. In the year2004-05 was 11181 and increased to 14131 in the year 2007-08. Similarly the per capita advances also increased, It was 16911 in the year 2004-05 becomes 23977 in the year 2007-08.

The advances & loans also have the same situation during these 4 years. In the year 2004-05 the advances and loans were 22632.51 lakh and 133891 respectively and increased to 36794.74 lakh and 153457 respectively in the year 2007-08. Staff position of bank reduces from year to tear. In the year 2004-05 it was 625 and remained same in the year 2002-03 it was 459092 lakh, 483706 lakh in year 2006-07 and become 493328 lakh in the year 200708. Total earning in the year 2007-08 was 513548 lakh as compared to the year 2004-05. It was only 459623 Lakh. The bank made profit during these four years, but the different is that it is in fluctuating manner. In the year 2004-05 the profit was 1796 it was increased too 4811 in the year 2005-06 and became 4839 in the year 2003-04 but reduced to 20220 in the year 2004-05. TABLE-5 4 YEARS BALANCE SHEET OF NEELACHAL GRAMYA BANK (AS ON 31ST MARCH) (Rs. In 000) 2005 Capital and liabilities Capital Share Capital Deposit Account Reserve and surplus Deposits Borrowings 2006 2007 2008

10000 210170

10000 221550

10000 231500

10000 240200

3434387 839990

3882252 781107

4399547 1160710

4856296 1104390

Other liabilities and Provisions Total

719991

872009

1230112

599225

5214538

5766918

70319199

6810111

Asset Cash and Book Balance with RBI Balance with Banks and money at Investment Advances Fixed Assets Other Asset Total ANALYSIS

242624

210836

280051

313990

1027172

499676

459476

32848

550312 2193704 4733 1195993 5214538

1164222 2515406 4252 1372526 5766918

1380165 3201038 4750 1706439 7031919

1843706 3583380 5919 1030268 6810111

The balance sheet of a concern bank, the accurate profit and loss of the bank and draws proper financial position of the concerned bank. In the above table 4 years balance sheet of NEELACHAL GRAMYA BANK is described. The four years balance sheet is based as on 31st march and it is expressed in thousand means (Rs. In 000). The capital and liabilities side of the balance side of the balance sheet contains that in 2005 the capital of the bank was 1, 0000. Which rises to 10000$ in 2006 and then it was reduced to 10000 in 2007 and 2008 in 2005, the share capital deposit

account was 210170 which increased to 221550 and 2007 and 2008 it rises to 231500 and 240200. The Reserve & Surplus account was to be completely Nil in these 4 year that 2005 to 2008.Deposit side in 2005 was 3434387 which arise 3882252 in 2006 and the increased work goes on 4399547 and 4856296 till 2007 and 2008 respectively. Borrowings side must be exceed to 839990 in 2005 while a slight slowdown maintained in 2003 then suddenly the amount of 2007 and 2008 raised top 1160710 and 1104390. Other liability and provision was to be increased accordingly 719991, 872009, 1230112, and 599225. The total liability side in 2005 was 5214538, in the year 2006 it was 5766918, in 2007 it was 7031919 and lastly in 2008 it was 6810111. Finally we concluded that in the year 2004 the bank suffered more because the liability side was increased than other tree years. The assets side of the balance sheet mentioned that in 2005 cash and balance with RBI was 242624, which reduced to 210836 in 2006 then and 280051 in 2004 and 313990 in 2008. Money at call short notice was 1027172 in 2005 and 499676, 45976, 32848 in 2006, 2007 and 2008 respectively. Investment side of the assets described that in 2005 it was 550312, in 2006 it was 1164222, in 2007 it was 1380165 and lastly in 2008 it was 1843706. Advance in 2005 was 2193704 and 2517406, 3201038 and 3583380 in 2006, 2007 and 2008 respectively. Fixed assets of bank was 4733 in 2005, 4522 in 2006, 4750 in 2007 and 5919 in 2008. Finally the total assets side of the balance sheet and tallied with the total liability side of the balance sheet. TABLE-6 PROFITABILITY ANLYSIS (AS ON 31ST MARCH) (Rs in 000) 2005 Interest 2006 2007 2008

paid on Deposit 259422 258246 B0rrowings 55650 65335 Opening expenses Salary 113630 119407 Other 15402 16104 operating expenses Provision made during the year Against NAPs 9223 Other provisions 4500 Interest received on Loans and 261463 advances Current account 89 with sponsor SLR 86204 investment/money at call/TDR with banks and Nil Nil 246454 60860 254065 76208

137067 17978

121289 21442

10778 10569

19667 506

290128 392 85448

295265 Nil 76779

364882 Nil 72524

Non SLR Investment Misc. Income Profit/Loss

56846 31881 1796

54430 14175 4811

42842 50409 4839

47898 28093 20220

ANALYSIS

The above table reflects clear picture of the financial position of the bank, which discloses the profitability of the concern. In the year 2005 the deposit was 259422, which decreased to 258246 in 2006 and 246554 in 2007 and increased to 254065 in 2008. But the profitability in case of borrowing in the year 2005 was 55650, which raised to 65335 in 2006 and 60860 in 2007 and 76208 in 2008. The operating expenses of the concern that includes salary 113630 in 2005 which rises to 119407 in 2006, 137067 in 2007 and 121289 draw a fall down slope in 2008. In 2005 the other operating expenses was 15402, which rises to 16104 in 2006 and 17978 in 2007 and 21441 in 2008. The provision made during the year 2005 against NPAs was 9223, which was reduced to Nil 2006, 10778 in 2007 and 19667 in 2008. Other provision was 4500 in 2005, which reduced to nil 2006, increased to 10569 in 2007 and reduced to 506 in 2008. Interest received on loans and advances in 2005 was 261463, which was increased to 290128 in 2006 and 295265 in 2007 and 364882 in 2008. In current account the sponsor bank/ other bank was 89 in 2005 which was increased to 392 in 2006 and reduced to Nil in 2008, SLR investment/ money at call/ TDR with banks and approved securities in 2005 was 86204 which decreased to 85448 in 2006 and 76779 in 2007 and 72524 in 2008. Non-SLR investment in 2005 was 56846 in 2006, it reduced to 54430 and in 2007, and it decreased to 42842 and 47898 in 2008. In the head of misc. Income the profitability of the concern in 2005 was 3181; it was reduced to 14175 in 2006, increased to 50404 in 2007 and decreased to 28093 in 2008. In case of profit and loss, the profitability of the concern in 2005 was 1796, in 2006 it was increased to 4811 and in 2007 was increased to 4839 and in 2008 it was increased to 20220.

CHAPTER-4 ROLE OF NABARD AND ITS FUNCTIONS

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in and other branches are all over the country. It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector and completed its 25 years on 12 July 2007 It has been accredited with "matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India". History NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement theNational Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premiere agencies to provide credit in rural areas.

Associated with NABARD International associates of NABARD ranges from World Bank-affiliated organizations to global developmental agencies working in the field of agriculture and rural development. These organizations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimizing the agricultural process. Role NABARD is the apex institution in the country which looks after the development of the cottage industry, small industry and village industry, and other rural industries. NABARD also reaches out to allied economies and supports and promotes integrated development. And to help NABARD discharge its duty, its been given certain roles as follows: 1. Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas 2. 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. 3. Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation 4. Undertakes monitoring and evaluation of projects refinanced by it.

5. NABARD refinances the financial institutions which finances the rural sector. 6. The institutions which help the rural economy, NABARD helps develop. 7. NABARD also keeps a check on its client institutes. 8. It regulates the institution which provides financial help to the rural economy. 9. It provides training facilities to the institutions working the field of rural upliftment. 10. It regulates the cooperative banks and the RPBs NABARD's refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations or co-operative societies, production credit is generally given to individuals. NABARD has its head office at Mumbai, India. NABARD operates throughout the country through its 28 Regional Offices and one Suboffice, located in the capitals of all the states/union territories.Each Regional Office[RO] has a Chief General Manager [CGMs] as its head, and the Head office has several Top executives like the Executive Directors[ED], Managing Directors[MD], and the Chairperson.It has 336 District Offices across the country, one Sub-office at Port Blair and one special cell at Srinagar. It also has 6 training establishments. NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to lend to self-help groups (SHGs). Because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. As of March 2006 2.2 million SHGs representing 33 million members had to been linked to credit through this programme.[7] NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose. Rural innovation NABARD's role in rural development in India is phenomenal. National Bank For Agriculture & Rural Development (NABARD) is set up as an apex Development Bank by the Government of India with a mandate for facilitating credit flow for promotion and development of agriculture, cottage and village industries. The credit flow to agriculture activities sanctioned by NABARD reached Rs 1,574,800 million in 2005-2006. The overall GDP is estimated to grow at 8.4 per cent. The Indian economy as a whole is poised for higher growth in the coming years. Role of NABARD in overall development of India in general and rural & agricultural in specific is highly pivotal. Through assistance of Swiss Agency for Development and Cooperation, NABARD set up the Rural Infrastructure Development Fund. Under the RIDF scheme Rs. 512830 million have been sanctioned for 2,44,651 projects covering irrigation, rural roads and bridges, health and education, soil conservation, water schemes etc. Rural Innovation Fund is a fund designed to support innovative, risk friendly, unconventional experiments in these

sectors that would have the potential to promote livelihood opportunities and employment in rural areas The assistance is extended to Individuals, NGOs, Cooperatives, Self Help Group, and Panchayati Raj Institutions who have the expertise and willingness to implement innovative ideas for improving the quality of life in rural areas. Through member base of 250 million, 600000 cooperatives are working in India at grass root level in almost every sector of economy. There are linkages between SHG and other type institutes with that of cooperatives. The purpose of RIDF is to promote innovation in rural & agricultural sector through viable means. Effectiveness of the program depends upon many factors, but the type of organization to which the assistance is extended is crucial one in generating, executing ideas in optimum commercial way. Cooperative is member driven formal organization for socio-economic purpose, while SHG is informal one. NGO have more of social color while that of PRI is political one. Does the legal status of an institute influences effectiveness of the program? How & to what an extent? Cooperative type of organization is better (Financial efficiency & effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs Recently in 2007-08, NABARD has started a new direct lending facility under 'Umbrella Programme for Natural Resource Management' (UPNRM). Under this facility financial support for natural resource management activities can be provided as a loan at reasonable rate of interest. Already 35 projects have been sanctioned involving loan amount of about Rs 1000 million. The sanctioned projects include honey collection by tribals in Maharashtra, tussar value chain by a women producer company ('MASUTA'), ecotourism in Karnataka etc

About NABARD
socioeconomic characteristics listed were statistically significant at 0.05 probability level. The mean differences, except for age and distance from the agency, were all positively signed indicating larger values for cooperative societies with access to the services of NACRDB Ltd. The implication could be that the higher these values are the more chances a cooperative had to access the services of the bank. The mean differences for age and distance from the agency were negatively

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:

Total production credit disbursed at end March 2011 was

34196 crore.

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 201011 aggregated 13485.87 crore.

Through the Rural Infrastructure Development Fund (RIDF) 12060.04 crores were disbursed during 2010-11. A cumulative amount of 121488.40 crore has been sanctioned for 444162 projects as on 31 March 2011 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc.

Under Watershed Development Fund which has a balance of 1847.69 crore as on 31 March 2011, 579 projects in districts of 14 states have benefited.

Farmers now enjoy hassle free access to credit and security through 1009.30 lakh Kisan Credit Cards that have been issued through a vast rural banking network. During 2010-11, 72.6 lakh KCC were issued by banks with a sanctioned limit of 43370 crore.

Under the Farmers' Club Programme, during the year 21903 clubs were launched, taking the total to 76708 clubs as on 31 March 2011 helping farmers get access to credit, technology and extension services.

 Village Development Programme (VDP) is being implemented in 801 villages across 25 states.

Under Tribal Development Fund, cumulative sanction amounted to 917.60 crore for 317 projects covering 2.5 lakh families. During 2010-11 financial assistance of 373.97 crore was sanctioned for 126 projects benefiting 94,163 tribal families.

Under Farm Innovation and Promotion Fund (FIPF), cumulatively 123 projects in various states, involving financial support of 11.65 crore were sanctioned as on 31 March 2011.

Farmers Technology Transfer Fund (FTTF) 512 innovative projects in 27 states with grant assistance of crore were sanctioned during 2010-11.

44.97

There were more than 69.53 lakh savings linked SHGs and more than 48.51 lakh credit linked SHGs covering 9.7 crore poor households as on 31 March 2011, under the microfinance programme.

Nabard slams rural, co-op banks on money laundering rules Sanjay Jog / Mumbai November 17, 2011, 0:43 IST Ads by Google Sr Jobs in Top Companies : High Quality Jobs across Industries & Locations. Register with us now! headhonchos.com/Senior-Jobs Regional rural banks (RRBs), state co-operative banks (SCBs) and district central cooperative banks (DCCBs) would be penalised if they fail to implement know your customer (KYC), anti-money laundering (AML) and combat financing of terrorism (CFT) guidelines. State-run National Bank for Agriculture and Rural Development (Nabard) said during its inspection it found many banks lack implementation of these guidelines, while some are yet to formulate a policy on this regard. A Nabard official told Business Standard: Our bank, as a supervisor of SCBs, CCBs and RRBs, was involved in monitoring, sensitising and imparting training to the client banks on KYC and AML guidelines. However, during the course of our statutory inspections, it was observed that even after more than six years since the Prevention of Money Laundering Act

came into effect in 2005 and despite various initiatives by Nabard, many such banks failed to implement the guidelines. He said if this continued, Nabard would critically evaluate the status and in case of any shortcoming, would take a decision to recommend to the Reserve Bank of India for imposition of penalty for violation of the Banking Regulation Act. The official said cooperative banks and RRBs which have not prepared a KYC/AML policy, had been asked to get these done within a month. A copy of the same may be furnished to the regional office of Nabard for information within a period of one month from the date of receipt of this circular, goes the order. Based on the policy, operational guidelines should be issued to branches clearly indicating the documents acceptable to the bank for customer identification, he added. Nabard has also asked co-operative banks and RRBs to appoint a sufficiently senior officer as Principal Officer (PO), who would be responsible for implementation of KYC/AML/CFT in the bank. Further, these banks need to categorise the customers into low-risk, medium and high-risk, based on the risk perception. There are 83 RRBs, 31 state co-operative banks and 317 DCCBs in the country. What is the difference between regional rural banks(RRBs) and cooperative banks? Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focussed upon the agro sector. Regional rural banks in India penetrated every corner of the country and extended a helping hand in the growth process of the country. SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI is spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to North East. The total number of SBIs Regional Rural Banks in India branches is 2349 (16%). Till date in rural banking in India, there are 14,475 rural banks in the country of which 2126 (91%) are located in remote rural areas. Apart from SBI, there are other few banks which functions for the development of the rural areas in India. whereas, cooperative banks are based on cooperation. for instance a bank can be based on cooperation betwend the local rich man and some other small company. In the paper, the role of cooperative banks in development of agriculture and rural areas in Poland was presented. The research results indicate that cooperative banks are the most important institutions financing this development by granting credits. They are also the main

intermediaries in direct payments flow between EU agricultural funds and Polish farms. Empirical analysis results show that the increase in the level of agricultural loans granted by the cooperative banks positively influence development of agriculture in Poland. Keywords: cooperative banks, agricultural loans, direct payments, agriculture development. CO-OPERATIVE BANK AND ITS ROLE TO INDIAN SECTOR Cooperative banks belong to the oldest forms of the collective action in Poland playing essential role in the realization of the agricultural and in local development. They serve both rural and urban population, and are main banks in Poland supporting development of agriculture and rural areas. Their key role is to give credits financing various rural based enterpreneurships. Agricultural credits play a number of significant functions of which the primary include the intensification and growth of the agricultural production. Moreover, they are supposed to encourage the introduction of technical, biological and social progresses in agriculture-related activities. Credits are regarded as the most flexible tool for governing agriculture industry. They affect farming in spatial-structural dimension, sectoral and subject dimensions related to the level, orientation and structure of agricultural production.

Warsaw University of Life Sciences, Department of Economics and Organization of Enterprises, Warsaw, Agricultural loans may be classified into investment and operating loans. Investment loans accelerate the process of fixed capital formation and enable the modernization and restructuring of agricultural holdings. Working capital loans help to achieve full utilization of resources possessed by the farm as well as to purchase current inputs necessary for the normal production cycle. In Poland, agricultural credits are indispensable for increasing efficiency and competitiveness of national agriculture, activating rural regions and supporting their multifunctional development, and for improving both physical production and social infrastructure in rural areas. In addition to granting the loans, the main task performed by the cooperative banks in Poland since 2004 has been the redistribution of EU financial support to agriculture in the form of

single area payments and other direct payments to farmers. Therefore, the paper aims at presentation of the cooperative banks achievements in execution of those two tasks. THE PURPOSE, RANGE AND METHODS OF THE RESEARCH The main purposes of the research are as follows: (1) to assess the level of agricultural loans including preferential loans (with Agency for Restructuring and Modernization of Agriculture interest subsidies) granted by the cooperative banks in Poland, (2) to assess the size of redistribution of EU direct farm payments through the cooperative banks channel, (3) to assess an impact of agricultural credits extended by the cooperative banks on development of agricultural sector in Poland. Data referring to agricultural loans were collected from the cooperative banks across whole Poland (1373 observations for period 1996-2006). Banks financial statements were here the main source of information. Data on preferential credits extended by the cooperative banks were derived from the Agency for Restructuring and Modernization of Agriculture (ARMA). General Inspectorate of Banking Supervision (GIBS) was source of data on allocation of direct farm payments, whereas the Central Statistical Office of Poland on macroeconomic and sectoral variables related to agricultural and rural development. Research generally covers a ten-year period 1997-2006, with the exception of analysis of direct farm payments where data were available only for years 2004-2005. ANOVA was applied to determine an impact of study year, banks own capital and communes/voivodships type (rural, urban) on the value of loans given by cooperative banks to agriculture. Statistical significance of differences between entry means was determined using Role of the cooperative banks Socio-economic determinants of cooperative societies access to the services of the Nigerian Agricultural Cooperative and Rural Development Bank 1The introduction of modern cooperative business into Nigeria dates back to the year 1935 following the acceptance, by the Colonial Administration, of Mr. C.F. Stricklands Report on the prospects of cooperatives in Nigeria. After seventyfour years of operation, the cooperative movement in Nigeria can boast of a membership of more than five million persons distributed in more than thirtysix thousand cooperative societies (FMA&RD, 2002). Unfortunately, cooperative

businesses in Nigeria are still contending with problems that have hampered their development. One such problem is the lack of access to investment credit. 2The government has intervened several times to inject credit into the cooperative sub-sector of the economy. One intervention was the change, in 1976, of the Nigerian Agricultural Bank Ltd to Nigerian Agricultural and Cooperative Bank Ltd so as to give special attention to cooperative activities (CBN Annual Report, 1976; Ukpanya, 1997). Furthermore, in the year 2000, the government renamed the Nigerian Agricultural And Cooperative Bank (NACB) Ltd to become the Nigerian Agricultural Cooperative And Rural Development Bank (NACRDB) Ltd to reflect the rural nature of cooperative activities in Nigeria (FGN Budget, 2000). In the year 2005 the Federal Government domiciled the sum of N50 billion with the NACRDB Ltd to lend to cooperatives and other farmer organizations at concessionary interest rates. A recent study of the patterns of disbursement of the N50 billion intervention fund showed that more than 75% of the fund went to private farmers and other farmers organizations that are not cooperative societies (Onyeagocha, 2008). 3Some factors have been responsible for the poor access of cooperative societies to the intervention fund domiciled with the NACRDB Ltd. Socioeconomic characteristics of cooperative societies have been singled out as the major constraints to cooperative societies access to services of agencies established to help them in Nigeria (Ijere, 1977; Okafor, 1979). Such socioeconomic characteristics include membership size, the cooperatives asset base and membership participation. As part of the conclusions from his study of the use of women cooperative societies for transfer of cassava technologies Agbo (2000), emphasized that the socio-economic characteristics of cooperatives that hinder cooperatives access to development resources include the sex of cooperative members, the age of the cooperative society, and the distance the cooperative society has to cover to get to the location of the services provider. Botomley (1989) adds to the list of such socio-economic characteristics to include the type of cooperative, the sector of the economy where cooperative intervention is implemented, the levels of functional and cooperative education possessed by cooperative members, as well as the quality of cooperative management available. In his own study, Ambruster (2001) isolated, among others, the system of delivery of the services needed by cooperatives, the process used to determine the sector that needs intervention, and the mode of selection of beneficiaries as the most critical factors affecting cooperatives access to development resources. 4To provide empirical evidence on what has actually been responsible for the poor access to N50 billion credit mediated by the NACRDB Ltd., this study

became necessary. Moreover, since NACRDB Ltd still remained the most important government owned development finance institution through which official financial services were provided to farmers cooperative societies, organizers of cooperative societies could also draw lessons from the result of the study to improve upon those socio-economic characteristics that have hindered access to the services of NACRDB Ltd. Objectives of the study 5The broad objective of this study was to identify the factors that determined cooperative societies access to the N50 billion intervention fund administered by NACRDB Ltd. 6The specific objectives included:
to

identify the socio-economic characteristics of cooperative societies that applied for loans from the intervention fund; to determine if these socio-economic characteristics affected the cooperative societies access to the intervention fund; to determine how the cooperative societies perceived the operational guidelines of NACRDB Ltd., under the intervention fund; to use the result of the study to make recommendations as to how to improve the access of cooperative societies to the services of NACRDB Ltd. Materials and methods 7This study covered the activities of NACRDB Ltd (under the intervention programme). Nigeria is composed of 36 States and the Federal Capital Territory, Abuja. For administrative convenience the component states are divided into six zones, namely, the Southeast zone (5 states), the South South zone (6 states), the Southwest zone (6 states), the Northeast zone (6 states), the Northwest zone (7 states), and the North Central zone (6 states). The Federal Capital Territory is within the North Central zone. 8Sample selection was carried out in stages. In stage I, one state was randomly selected from each zone giving a total of 6 states. In stage II, the list of cooperative societies that applied for credit facilities under the intervention scheme from various branches of the NACRDB Ltd in each of the six selected states was obtained. From this list, thirty cooperative societies whose applications succeeded were randomly selected in each state. Furthermore, another set of thirty cooperative societies whose applications failed was also

randomly selected. This gave a total of 180 cooperative societies (30x6) that obtained credit from the bank and another set of 180 cooperative societies that failed to obtain loan from the bank. 9Structured questionnaires were used to obtain information on the 360 cooperative societies studied. The structured questionnaires sought to obtain information on socio-economic characteristics of the cooperative societies including age of cooperatives, membership size, gender of members, educational attainment of members, size of shareholding, size of asset holding, credit history and others. Trained research assistants were used to collect data. 10Data were collected from the NACRDB Ltd headquarters in Kaduna, its branches in the states sampled as well as from the cooperative societies selected for the study. Results and discussion Socioeconomic characteristics of cooperative societies 11The socioeconomic characteristics studied included age of cooperative society, membership size, gender of members, number of years of schooling of members, asset holding of the cooperative societies, shareholding of the cooperative societies, size of liability of the societies and distance of societies to the nearest branch of NACRDB Ltd. Table 1: Statistical description of the socioeconomic characteristics of the cooperative societies under study

Zoom Original (jpeg, 72k) Source : Computed from field data, 2005

12Table 1 above presents the statistical description of the socioeconomic characteristics of the cooperative societies under study. The mean value for age of cooperative societies with access (10) was lower than that of those without access which was 12. The implication of this was that cooperative societies with access in the survey were younger. Cooperative societies with access had higher mean value of 31 for membership size than those without access with mean value of 23. Both cooperative societies with access and those without access had higher male members than female members as both had mean values for male membership of 24 and 23 respectively as against mean values for female membership of 19 and 21 respectively. 13Members of cooperative societies with access spent more years in school with a mean score of 13 year as against a mean score of 11 years for cooperative societies without access. In the areas of shareholding, asset holding, size of liability the cooperative societies with access scored higher mean values. For distance to the nearest branch of NACRDB cooperative societies with access scored lower mean value of 47km as against 62km for cooperative societies without access. 14Generally speaking cooperative societies with access were relatively younger, had higher membership size with more educated membership. The study also showed that cooperatives that accessed intervention fund had higher share values, more assets and more liabilities, they were also found to be located closer to NACRDB Ltd. 15The reason for a lower age value may be that cooperative societies were registered in response to particular NACRDB credit schemes. Baring other influences it was expected that older cooperative societies with track records of performance would have had more access. Membership size is a sign of strength and probably offers a greater chance of mobilizing more share capital. Cooperative societies with higher membership size stand better chances of enjoying economies of scale. This might have improved the chances of the cooperative societies under survey to access the credit services of the bank. 16The size of liability of a cooperative society is an index of the societys credit history. Cooperative societies that have borrowed in the past with a good repayment record stand better chances of borrowing again. This could be the case of the cooperative societies with access in the study. 17Distance to the NACRDB has some socioeconomic implications. For instance, distance affects the cost of transportation to the agency. It may also have implication for the awareness of the existence and services of the agency. It is very likely that groups located nearer to the agency may be more aware of the

services of the agency. This might have counted in favour of the cooperative societies that had access. 18Higher educational attainment may also favour higher awareness of government programmes and how to access such programmes. The implication is that cooperative societies with more enlightened members stood better chances of accessing NACRDB programmes. 19To ascertain if there were significant differences between the mean values for cooperative societies with access and those without, the Levenes test for equality of means was carried out. The result of the test is shown in table 2 below. Table 2: Levenes test for equality of means of socioeconomic characteristics of cooperative societies with access to services of NACRDB and those without

Zoom Original (jpeg, 24k) Source: Computed from Field Data, 2005 * = Significant at 0.05 probability level AGCOOP = Age of cooperative, Memsize = Membership size MEMGENDER = Gender of members, ASSHOLD = Cooperative societies level of asset holding, EDULEVEL = Educational level of members and DISAGENCY = Distance from NACRDB Ltd. Results from Levenes test for equality of means (table 2) indicated that the differences between the means of seven signed probably indicating that the younger a cooperative was and the nearer it was to NACRDB the better its chances of accessing the services of the bank. Guidelines for the operations of Nacrdb Ltd The N50 billion domiciled with the NACRDB for on-lending to farmers cooperative societies was part of the Federal Government of Nigerias special Presidential Initiative on cassava production and export. Part of the objectives

of the initiative included the expansion of primary processing and utilization of cassava, identification and development of new market opportunities for import substitution and export, stimulation of increased private sector investment in the establishment of export oriented cassava industries. It was, therefore, expected that cooperatives that will borrow from the N50 billion intervention fund would be involved in one aspect or the other of the cassava production initiative. The credit guidelines issued by the NACRDB Ltd for cooperatives expecting to borrow from the intervention fund included (1) opening an account with NACRDB Ltd, (2) a minimum deposit in this account of at least one-third of the amount to be borrowed, (3) an interest rate of 15%, (4) group formation and (5) an insurance cover for the business of the cooperative group. To ascertain how these operational guidelines of the NACRDB Ltd affected the access of cooperative societies to the credit services of the bank a Likert scale rating of members perception was conducted using the presidents and the general secretaries of the affected cooperative societies as respondents. Likert scale of 5-point was adopted. The 5-point scale was graded as Very serious effect = 5, Serious effect = 4, Undecided = 3, Not serious effect = 2, Not very serious effect = 1. The mean score of the respondents based on the 5-point scale was 5 + 4 + 3 + 2 + 1 = 15/5 = 3.0. Using the interval scale of 0.05, the upper limit cut-off point was 3 + 0.05 = 3.05, the lower limit was 3 0.05 = 2.95. On the basis of the limit, any mean score below 2.95 (i.e. MS < 2.95) was taken as Not serious effect, those between 2.95 and 3.05 were considered of Serious effect (i.e. 2.95 MS 3.05), while any mean score that is greater than or equal to 3.05 (i.e. 3.05) was considered of Very serious effect. Table 3 presents a summary of the mean distribution of the perception of how the operational guidelines of NACRDB Ltd affected cooperative societies access to the N50 billion intervention fund. The minimum deposit requirement was meant to serve as collateral offered by the cooperative groups for the amount of loan requested. The loan beneficiaries perceived this requirement as of no serious effect on their access. However, the non-beneficiaries perceived this requirement as a very serious impediment to their access. This requirement may have been informed by the reported high rate of default in loan refund by cooperative societies in previous programmes. Both beneficiaries and non-beneficiaries perceived interest rate as of not serious effect on their access to this fund. This may be because the interest rate

charged was much lower than the going commercial rates of between 25% and 30%. Government subsidized the credit from this intervention fund to ensure access by cooperative societies. Time of loan release was not part of the guidelines but both beneficiaries and non-beneficiaries agreed that it affected their access. It was observed that bureaucracy that ensued in the process of loan application led to late release of loans beyond the planting season for the main crop of the intervention programme. Both beneficiaries and non-beneficiaries perceived loan size which was dependent on the deposit the cooperative was able to make as a constraint. For the beneficiaries it was a constraint to the extent that they would have wanted to borrow a higher sum if they could afford a higher deposit. For the nonbeneficiaries this requirement was one single reason that barred them from access. In addition an official ceiling was placed beyond which no cooperative would borrow from the fund irrespective of ability to raise higher initial deposit. Group formation was not perceived as a constraint by either of the groups. This may be because they were already in groups before application. To the beneficiaries the type of crop grown was not a constraint probably because they were already involved in cassava production but may have needed more money to expand operations. Cassava growing belts of Nigeria do not extend to the northernmost parts of the country. For this group of farmers the initiative did not take their interests into consideration and to that extent limited their access to cassava production. The particular enterprise in cassava production the beneficiaries were involved was important. Those groups that had facilities to produce cassava and its derivatives for export were more favoured. The non-beneficiaries perceived this as a constraint because most of them could not produce cassava in the first instance. Cooperative societies that wanted to benefit from the scheme were required to take an insurance cover for their operations. Because of the difficulty of obtaining insurance services for agricultural activities in Nigeria, both groups perceived this requirement as a constraint on their access. Table 3: Mean distribution of effects of NACRDB Ltd operational guidelines on cooperative societies access to credit services of the bank.

CHAPTER 5 CONCLUSION,FINDINGS RECOMMENDATIONS

CONCLUSIONS Neelachal Gramya Bank earlier called puri Gramya bank sponsor by Indian overseas bank established on 25th Feb, 1976 under sub-section (1) of section 3 of regional rural bank, 1976 vide Govt. Of India notification No.90 dates. 25.02.1976, with aims and objectives of catering to the banking needs of the people or erstwhile undivided puri district. Later both the puri gramya bank and Dhenkanal Gramya Bank merged and the amalgamated bank Neelachal Gramya Bank was born on 31st Aug, 2007. The purpose of integration was to achieve economy of scale, operational efficiency, wide network and speeder growth. The scope of study is restricted to some of the aspects related to Regional rural Banking limited in uses relating to promotion of the economic development, employment generations and financing aspects have been dealt with. The concern has been studied for the periods of 4 years deposit or lending facilities. SUMMERY AND FINDING 1. During these four year, the growths of deposit have increased the percentage of current deposit is increasing like

AND

2005 1.4%

2006 1.9%

2007 2.2%

2008 2.9%

The percentage of saving deposit is increasing like

2005 28.9%

2006 31.6%

2007 37.6%

2008 38.1%

But the percentage of term deposit is decreasing like 2005 69.5% 2006 66.4% 2007 60.1% 2008 58.9%

During these four years the maximum advances made under the head other priority sector amounting to 6,51,98,97,000 followed by non-priority sector Rs. 2,78,29,00,000 and the lowest under the head agriculture allied act amounting to Rs. 23,39,86,000. During these 3 years the recovery of loan in 2005 was 61.4% in 2006 was 57% in 2007 was 51.2% of the demands were collected of the demanded amount. The performances of bank during these four years were good. The bank made profit during these years. It was increased from 2004-05 to 2007-08. During these four years assets of the banks were increasing from 2004-05 to 2007-08. In the year 2007 the bank suffered more than other three tears because liability side of the bank was increased in this year. From the above findings researchers can have some ideas the deposits advances and the financial position of the Neelachal Gramya Bank for the last 4 years. So researchers can conclude that performances of bank are

good in these years, but in 2007 this bank has suffered due to increase liability. The profit of the bank has been increased from 2004-05 to 200708. RECOMMENDATIONS
This study showed that socioeconomic characteristics of cooperative societies affected their access to the services of the Nigerian Agricultural Cooperative And Rural Development Bank Ltd. The study raised a fundamental issue in cooperative formation requiring promoters of cooperative societies to pay particular attention to socioeconomic characteristics such as membership size, size of share capital holding, assets holding, level of education of members and others, because these have fundamental effects on the performance of cooperative societies. NACRDB Ltd used operational guidelines that were perceived to have contributed to lack of access by cooperative societies. Based on the findings of the research the following recommendations have been made:
There

is need for a nationwide cooperative awareness campaign emphasizing the importance of forming cooperatives with appropriate socioeconomic characteristics to ensure that such cooperatives benefit from services of development agencies created to serve them. Cooperative development agencies should be sited close enough to cooperative societies they serve since distance was found to have affected the access of cooperative societies in this study. In this study younger cooperatives were found to have more access to services of the bank than older ones. Cooperative development agencies therefore need to pay enough attention to older and successful cooperative societies in their dissemination of assistance to cooperative societies. This will tackle the problem of forming emergency cooperative societies designed to cash in on new government schemes. Such emergency cooperative societies have been found to fizzle out as soon as they fail to get the assistance desired. The Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) Ltd needs to tinker with her credit guidelines to ensure a wider access by a wider range of cooperative societies no matter what part of the country they are located.

BIBIOGRAPHY 28th annual report of Neelachal Gramya Bank 29th annual report of Neelachal Gramya Bank 30th annual report of Neelachal Gramya Bank www.google.com

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