EXECUTIVE SUMMARY

The present study at Karnataka Vikas Grameen vikas Bank,

Dharwad is conducted for the study of disbursement and recovery
procedure of loans.

The Karnataka Vikas Grameen Bank that emerged after the

amalgamation of the four erstwhile Grameen Banks with its area of
operation spread over nine districts, now caters to 1/3 of the
geographical area of the State and therby has earned the
opportunity of serving a large section of rural populace.

The basic objective of any financial institution is to maximize

wealth. In order to achieve this objective the bank must earn
sufficient amount of profit. The amount of such profits largely
depends upon the magnitude of loans assisted and the recovery of
those loans. Each component of recovery has two dimensions, time
and money. When it comes to recovery of loans “Time is Money”.

A study of recovery procedure which I have chosen as the

topic of my project in KVG Bank, Dharwad is the main and the
key recovery department, which plays an important role in the
collection of the sources of funds for the bank which in turn will be
used for refinancing for the industrial and agricultural concern.

1 KLES’s IMSR
TITLE OF THE STUDY

“Recovery and disbursement Procedure of Credit”,

with reference to Karnataka Vikas Grameen Bank,
Head office, Dharwad.

OBJECTIVES OF THE STUDY

 To appreciate the concept of recovery.

 To highlight the different procedures of recovery of loan.

 To study the various schemes of the bank.

 To offer the solution for arriving at an appropriate method

of recovery of loan.

 To study the present system of disbursement and recovery

of the bank.

FINDINGS

 It was found that almost all Borrowers of KVG Bank

preferred KVG Bank because of low rates of interest
and various schemes provided by the bank.

 It was found that many of the clients or borrowers are

satisfied with the services provided by KVG Bank.

2 KLES’s IMSR
  It was also found that KVG Bank has provided
financial assistance almost all only to those who have
good experience in their project.

SUGGESTIONS

o The Bank should take measures to sanction financial

assistance by taking less processing time so as to
eliminate delay in implementing the project.

o The bank has to conduct meetings with the borrowers

and should try to solve the problems faced by the bank.

LIMITATIONS OF THE STUDY

 Since the Project was undertaken in Hubli-Dharwad

area only the limited industrial concerns were interviewed
and interacted for the purpose of collection of data.

 The industrial concern people or the proprietors of the

unit were very busy so was very difficult to get
appointment from them.

CONCLUSION

The basic objective of any Bank is to maximize the wealth.

The amount of such profits largely depends upon the magnitude
of loans assisted and the recovery of those loans. Each component
of recovery has two dimensions Time and Money when it comes
to recovery of loans “Time is Money”.

3 KLES’s IMSR
INDUSTRY OVERVIEW:

BANKING INDUSTRY IN INDIA

Banking in India originated in the first decade of 18th
century with The General Bank of India coming into existence in
1786. This was followed by Bank of Hindustan. Both these banks
are now defunct. The oldest bank in existence in India is the State
Bank of India being established as "The Bank of Bengal" in
Calcutta in June 1806. A couple of decades later, foreign banks
like Credit Lyonnais started their Calcutta operations in the 1850s.
At that point of time, Calcutta was the most active trading port,
mainly due to the trade of the British Empire, and due to which
banking activity took roots there and prospered. The first fully
Indian owned bank was the Allahabad Bank, which was
established in 1865.

By the 1900s, the market expanded with the establishment of

banks such as Punjab National Bank, in 1895 in Lahore and Bank
of India, in 1906, in Mumbai - both of which were founded under
private ownership. The Reserve Bank of India formally took on the
responsibility of regulating the Indian banking sector from 1935.
After India's independence in 1947, the Reserve Bank was
nationalized and given broader powers.

Early history
At the end of late-18th century, there were hardly any bank in
India in the modern sense of the term. At the time of the
American Civil War, a void was created as the supply of
cotton to Lancashire stopped from the Americas. Some banks
were opened at that time which functioned as entities to
finance industry, including speculative trades in cotton. With
large exposure to speculative ventures, most of the banks

4 KLES’s IMSR
 opened in India during that period could not survive and
failed. The depositors lost money and lost interest in keeping
deposits with banks. Subsequently, banking in India remained
the exclusive domain of Europeans for next several decades
until the beginning of the 20th century.

At the beginning of the 20th century, Indian economy was

passing through a relative period of stability. Around five decades
have elapsed since the India's First war of Independence, and the
social, industrial and other infrastructure have developed. At that
time there were very small banks operated by Indians, and most of
them were owned and operated by particular communities. The
banking in India was controlled and dominated by the presidency
banks, namely, the Bank of Bombay, the Bank of Bengal, and the
Bank of Madras - which later on merged to form the Imperial Bank
of India, and Imperial Bank of India, upon India's independence,
was renamed the State Bank of India. There were also some
exchange banks, as also a number of Indian joint stock banks. All
these banks operated in different segments of the economy. The
presidency banks were like the central banks and discharged most
of the functions of central banks. They were established under
charters from the British East India Company. The exchange
banks, mostly owned by the Europeans, concentrated on financing
of foreign trade. Indian joint stock banks were generally under
capitalized and lacked the experience and maturity to compete with
the presidency banks, and the exchange banks. There was potential
for many new banks as the economy was growing. Lord Curzon
had observed then in the context of Indian banking: "In respect of
banking it seems we are behind the times. We are like some old
fashioned sailing ship, divided by solid wooden bulkheads into
separate and cumbersome compartments."

5 KLES’s IMSR
Under these circumstances, many Indians came forward to set up
banks, and many banks were set up at that time, and a number of
them set up around that time continued to survive and prosper even
now like Bank of India and Corporation Bank, Indian Bank, Bank
of Baroda, and Canara Bank.

During the Wars

The period during the First World War (1914-1918) through the
end of the Second World War (1939-1945), and two years
thereafter until the independence of India were challenging for
the Indian banking. The years of the First World War were
turbulent, and it took toll of many banks which simply
collapsed despite the Indian economy gaining indirect boost
due to war-related economic activities. At least 94 banks in
India failed during the years 1913 to 1918 as indicated in the
following table:

Number of banks Authorised capital Paid-up Capital

Years
that failed (Rs. Lakhs) (Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

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1918 7 209 1

Post-independence
The partition of India in 1947 had adversely impacted the
economies of Punjab and West Bengal, and banking activities had
remained paralyzed for months. India's independence marked the
end of a regime of the Laissez-faire for the Indian banking. The
Government of India initiated measures to play an active role in
the economic life of the nation, and the Industrial Policy
Resolution adopted by the government in 1948 envisaged a mixed
economy. This resulted into greater involvement of the state in
different segments of the economy including banking and finance.
The major steps to regulate banking included:

 In 1948, the Reserve Bank of India, India's central

banking authority, was nationalized, and it became an
institution owned by the Government of India.
 In 1949, the Banking Regulation Act was enacted which
empowered the Reserve Bank of India (RBI) "to
regulate, control, and inspect the banks in India."
 The Banking Regulation Act also provided that no new
bank or branch of an existing bank may be opened
without a license from the RBI, and no two banks could
have common directors.

However, despite these provisions, control and regulations,

banks in India except the State Bank of India, continued to be
owned and operated by private persons. This changed with the
nationalization of major banks in India on 19th July, 1969.

7 KLES’s IMSR
Nationalisation
By the 1960s, the Indian banking industry has become an
important tool to facilitate the development of the Indian economy.
At the same time, it has emerged as a large employer, and a debate
has ensued about the possibility to nationalize the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed
the intention of the GOI in the annual conference of the All India
Congress Meeting in a paper entitled "Stray thoughts on Bank
Nationalisation." The paper was received with positive
enthusiasm. Thereafter, her move was swift and sudden, and the
GOI issued an ordinance and nationalized the 14 largest
commercial banks with effect from the midnight of July 19, 1969.
Jayaprakash Narayan, a national leader of India, described the step
as a "masterstroke of political sagacity." Within two weeks of the
issue of the ordinance, the Parliament passed the Banking
Companies (Acquisition and Transfer of Undertaking) Bill, and it
received the presidential approval on 9th August, 1969.

A second dose of nationalisation of 6 more commercial banks

followed in 1980. The stated reason for the nationalisation was to
give the government more control of credit delivery. With the
second dose of nationalisation, the GOI controlled around 91% of
the banking business of India.

After this, until the 1990s, the nationalised banks grew at a

pace of around 4%, closer to the average growth rate of the Indian
economy.

8 KLES’s IMSR
Liberalisation
In the early 1990s the then Narasimha Rao government
embarked on a policy of liberalization and gave licences to a small
number of private banks, which came to be known as New
Generation tech-savvy banks, which included banks such as UTI
Bank (the first of such new generation banks to be set up), ICICI
Bank and HDFC Bank. This move, along with the rapid growth in
the economy of India, kick started the banking sector in India,
which has seen rapid growth with strong contribution from all the
three sectors of banks, namely, government banks, private banks
and foreign banks.

The next stage for the Indian banking has been setup with the
proposed relaxation in the norms for Foreign Direct Investment,
where all Foreign Investors in banks may be given voting rights
which could exceed the present cap of 10%,at present it has gone
up to 49% with some restrictions.

The new policy shook the Banking sector in India

completely. Bankers, till this time, were used to the 4-6-4 method
(Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new
wave ushered in a modern outlook and tech-savvy methods of
working for traditional banks. All this led to the retail boom in
India. People not just demanded more from their banks but also
received more.

9 KLES’s IMSR
Current scenario
Currently (2007), overall, banking in India is considered as
fairly mature in terms of supply, product range and reach-even
though reach in rural India still remains a challenge for the private
sector and foreign banks. Even in terms of quality of assets and
capital adequacy, Indian banks are considered to have clean, strong
and transparent balance sheets-as compared to other banks in
comparable economies in its region. The Reserve Bank of India is
an autonomous body, with minimal pressure from the government.
The stated policy of the Bank on the Indian Rupee is to manage
volatility-without any stated exchange rate-and this has mostly
been true.

With the growth in the Indian economy expected to be strong

for quite some time-especially in its services sector, the demand
for banking services-especially retail banking, mortgages and
investment services are expected to be strong. M&As, takeovers,
asset sales and much more action (as it is unraveling in China) will
happen on this front in India.

In March 2006, the Reserve Bank of India allowed Warburg

Pincus to increase its stake in Kotak Mahindra Bank (a private
sector bank) to 10%. This is the first time an investor has been
allowed to hold more than 5% in a private sector bank since the
RBI announced norms in 2005 that any stake exceeding 5% in the
private sector banks would need to be vetted by them.

10 KLES’s IMSR
 Currently, India has 88 scheduled commercial banks (SCBs)
- 28 public sector banks (that is with the Government of India
holding a stake), 29 private banks (these do not have government
stake; they may be publicly listed and traded on stock exchanges)
and 31 foreign banks. They have a combined network of over
53,000 branches and 17,000 ATMs. According to a report by
ICRA Limited, a rating agency, the public sector banks hold over
75 percent of total assets of the banking industry, with the private
and foreign banks holding 18.2% and 6.5% respectively.

STRUCTURE OF THE ORGANISED BANKING SECTOR

IN INDIA

11 KLES’s IMSR
FINANCIAL SYSTEM

The growth of output in the economy depends upon the

increase in the proportion of savings\investment to a nation’s

12 KLES’s IMSR
output of goods and services. The financial institutions help in the
diversion of rising current income into savings\investment.

A financial system may be defined as a set of institutions,

instruments and markets which faster savings and channels them to
their most efficient use. The system consists of individuals
(savers), intermediaries, marketers and users of savings. Economic
activity and growth are greatly facilitated by the existence of a
financial system developed in terms of the efficiency of the market
in mobilization savings and allocating them among competing
users.

The financial system performs the following inter-related

functions that are essential to a modern economy.

 It provides a payment system for the exchange of

goods and services.

 It enables the pooling of funds for undertaking large-

scale enterprises.

 It provides a way for managing uncertainty and

controlling risk.

 It provides a mechanism for spatial and temporal

transfer of resources.

 It generates information that helps in coordinating

decentralized decision making.

 It helps in dealing with the problem of informational

asymmetry

13 KLES’s IMSR
FINANCIAL MARKETS

Financial markets are those places where the financial

transactions take place. A financial transaction involves creation or
transfer of financial instruments, claims and services.

The financial market in India is broadly classified into

a. Unorganized market

b. Organized marked

UNORGANISED MARKET

Moneylenders, indigenous bankers, chit funds etc constitute

unorganized market. The RBI does not directly control the
activities of these markets. The financial instruments, which
operate in these markets, are not standardized.

ORGANISED MARKET

These markets will operate wit6hin the rules and regulation

set by the RBI or other regulatory bodies. Financial instruments in
these markets are also standardized.

14 KLES’s IMSR
The organized market can be further classified into two types.

a. Capital market.

b. Money market.

CAPITAL MARKET

The capital market is the market for financial assets that have
long or indefinite maturity. It deals with long-term securities.
Which have a period of the above one-year.

Capital markets can be further divides into:

1. Industrial securities market.

2. Government securities market and

3. Long term loans market.

INDUSTRIAL SECURITIES MARKET

Industrial securities market is a market where

industrial\Corporate securities such as equity shares, preference

15 KLES’s IMSR
shares, debentures and bonds are traded. An industrial concern
may raise capital or debt by issuing appropriate instruments.

GOVERNMENT SECURITIES MARKET

Debt securities issued by the central government, semi-

government authorities, autonomous institutions like port trusts,
electricity boards, all India and state level financial institution and
public sector enterprises are broadly referred to as guilt-edge or
government securities. There are long term and short term
securities. Long-term securities are traded in capital market while
short-term securities are traded in the money market.

LONG TERM LOANS MARKET

Long-term loan market can be further classified into term

loans market, mortgages market and financial guarantees market.
In India the government both at the national level and regional
levels to supply long term and medium term loans and other
services to industrial concerns has created many industrial-
financing institutions.

MONEY MARKET

16 KLES’s IMSR
 Money market deals in short term financial assets
instruments, which have a maturity period of up to one year. The
money market may be further classified into 4 types. They are:
• Call money market
• Commercial bill market
• Treasury bills market
• Short-term loan market

CALL MONEY MARKET:

The call money market is a market for extremely short-term

loans that is 1 to 14 days. The loans are repayable on demand at
the option of either the lender or the borrower. So, it is highly
liquid. The call money markets characterized by the fluctuations
of interest rates which are a result of demand and supply
function.

COMMERCIAL BILL MARKET:

The commercial bill market is a marked where bill of
exchange arising out of trade is traded. In the case of credit

TREASURY BILL MARKET:

A treasury bill is a promissory note issued by the
government. It is highly liquid because government guarantees
its repayment. It is an important instrument of short term
borrowing for the government. It is man important instrument of
short term harrowing for the government. There are two type of
treasury bills namely, ordinary\regular and adhoc treasury bills.
Treasury bills have a maturity period of 91\82\364 days only.

17 KLES’s IMSR
 SHORT-TERM LOANS MARKET:
It is a market where short-term loans are given to
corporate customers for meeting their working capital
requirements. Commercial Bank provide short-term loans in the
form of cash credit, overdraft etc.

DEVELOPMENT BANKING:

India, when it got its independence in the year 1947, was

characterized by low industrialization, unemployment, poverty and
low per capita income.

There were only few industries and the only way to bring down
high unemployment rate and poverty was through industrialization.
At that time, there was a good network of commercial banking in
the country and these were providing only short-term loans. They
were not providing long-term financial assistance to the
entrepreneurs who were willing to set up new industries.

The long – term investment was mainly need by the existing

industries to meet their reconstruction program. Modernization and
expansion\diversification program. The long-term financial
assistance was also need to set up new industries. Sop, the need
from such financial institutions felt which would provide long term
financial assistance and relatively more additional functions to
bring a planned economic development in India, a chain of
development banks\ financial institutions came into being.

OBJECTIVES OF DEVELOPMENT BANKS IN

INDIA:

18 KLES’s IMSR
The objectives of development banks include-
• Support industry
• Rural development
• Support to agriculture
• Development of back ward areas
• Speeding up of economic growth
• Entrepreneurial development
• Project finance
• Infrastructure development
• Infrastructure development
• Refinance etc.

Since independence a number of financial institutions some

operating on all India basis others functioning within their
respective states have been established to render financial
assistance and other related services to Indian industries large,
medium and also those in small scale sector.
A brief introduction to some of the financial institutions
is given below.

Industrial Finance Corporation of India (IFCI)\

The IFCI is the first, all India term lending institution,

which was set up in the year 1049 with the primary objective
of providing medium and long-term credit to industry this
was set up under the industrial finance corporation Act of
1948. The sources of funds for IFCI are paid-up capital,
reserves, repayment of loans, market borrowings, loans from
the government of India, advances from IDBI and Foreign
lines of credit and others.

19 KLES’s IMSR
PROMOTIONAL ASSISTANCE:

Promotional assistance in the form of technical consultancy

services risk capital assistance entrepreneurial development,
management development, development of technology.

INDUSTRIAL DEVELOPMENT BANK OF INDIA

(IDBI)
The IDBI was established in 1964 as a Subsidiary of RBI. It
has been designated as the principal financial institution of the
country for coordinating in conformity with national priorities the
working of institutions engaged in financing, promoting and
developing industry. The resources of IDBI consist of paid-up
capital, reserves, repayment of loans, market borrowings within
and outside the country, temporary credit from the RBI, foreign
lines of credit and others.

Objectives And Functions:

The main objective of IDBI is to serve as apex institution for

term, finance for industry in India. The bank has been assigned
special role in

 Planning, promoting and developing industries to fill gaps

in industrial structure

 Coordinating the work of institutions engaged in

financing, promoting and developing industry and
assisting in the development of such institutions.

20 KLES’s IMSR
  Providing technical and administrative assistance for
promotion, management or expansion of industry and,

 Undertaking market and investment research and survey

as also techno economic studies in connection with
development of industry.

INDUSTRIAL CREDIT AND INVESTMENT

CORPORATION OF INDIA (ICICI)

The ICICI was founded in 1995. It mainly provides

assistance to units in the private sector mainly in the form of rupee
and foreign exchange loans. The resources of ICICI consist of
paid-up capital, reserves repayment of loans, borrowings from
government of India, advances from IDBI, market borrowing and
foreign lines of credit and others ICICI has made important
contributions to capital markets and industrial development by
setting up institutions lime CRISH., SCICI, TDICE and ICICI
bank.

Objectives:

 To assist in the creation, expansion and modernization of

industrial enterprises in the private sector.
 To encourage and promote the participation of private
capital both internal and external in such enterprises.

 To encourage and promote industrial investment and

expansion of the investment market.

21 KLES’s IMSR
 Functions:

In order to achieve above objectives, it performs the

following functions:

 Providing finance in the form of loans

 Underwriting \ subscription to shares and

debentures of public and private issues of
industrial establishments

 Providing loan assistance in the foreign currencies

for repayment of imported capital equipment and
technical services

 Furnishing managerial, technical and

administrative services to Indian, industry

 Providing lease financing merchant banking

services, trustee services etc.,

INDUSTRIALRECONSTRUCTION BANK
OF INDIA (IRBI)

The IRBI was set up mainly to provide reconstruction and

rehabilitation assistance to seek industrial units, which have
potential to come out of sickness and earn profit, IRBI assumes the
role of reconstructing\restructuring the management of industrial

22 KLES’s IMSR
unit by providing managerial and technical guidance. It also
provides rehabilitation package to sick industries units through
financial assistance for the modernization, diversification
expansion etc.

The IRBI grants financial assistance by way of loans land

advances, underwriting stocks, shares, bonds and debentures and
guaranteeing loans\deferred payments.

In addition to providing financial assistance IRBI also

performs development activities, including provision of
infrastructure facilities, raw materials etc, renders consultancy,
managerial and merchant banking services and provides equipment
leasing and hire purchasing facilities for the purpose of
reconstruction and development of industrial concerns.

Other All India Institutions:

In addition to the above, there are several other all India level
institutions like Export-Import bank of India (an agency to provide
and import finance), the Shipping Credit and Investment
Corporation of India (a shipping finance corporation) and
technology development and information corporation of India (a
venture capital organization) and two insurance corporations. Life
Insurance Corporation of India and General Corporation and Unit
Trust of India etc.
STATE FINANCIAL CORPORATION (SFC)

State financial corporation is a statutory body duly

established under the state financial corporations Act. 1951
(Central Act LXIII of 1951) in order to provide medium and long
term credit to industrial under takings which fall outside the
normal activities of commercial bank with special powers for the

23 KLES’s IMSR
enforcement of its claims and recovery of the dues. Karnataka
State Financial Corporation (hereinafter referred to as “The
Corporation”) was established under the said act by the
Government of Karnataka in the year 1959. This corporation has to
follow the provisions of law, rules and regulations, which are in
force form time to time relating to its functions. The main
functions of the Corporation are as authorized under section 25(1)
of the SFC’s Act.

The corporation’s business activities are guided and governed

by the provisions of the SFC Act. 1951. The permitted business of
the corporation is controlled by Sec.25 of the SFC Act.

The corporation has extended its operations not only to the

direct advance or loans beings granted to the industrial concern.

Functions Of SFC’S:

1. Granting loans and advances

2. Subscribing to debentures\shares

3. Guaranteeing loans\deferred payments of industrial concerns

4. Undertaking the issue of stocks, shares, debentures or bonds

BANK PROFILE

The Karnataka Vikas Grameen Bank that emerged after the

amalgamation of the four erstwhile Grameen Banks, with its area
of operation spread over nine districts,now caters to 1/3 of the

24 KLES’s IMSR
geographical area of the state, and thereby has earned the
opportunity of serving a large section of rural populace.

One of the successful experiments of the banking sector in

India has been the formation of the Regional Rural Banks (RRBs).
Experts in the field have acknowledged the fact taking into account
the recent enormous progress achieved by the RRBs, which have
traveled a long way in the last 30 years, on a journey that can best
be described as arduos. Close on the heels of nationalization, when
the focus shifted form Class Banking to MassBanking, the RRBs
emerged as a low cost Bank designed to cater to the needs of Small
Marginal Farmers, Rural Artisans, Petty Traders etc, who operate
in Rural Areas.

The initial period was marked with innumerable challenges

as the RRBs had to deal with illiterate, superstitious people, not
exposed to the changing world scene. It was indeed an uphill task,
as they were expected to play the role of not just a Banker, but also
that of a friend, philosopher and guide, leading them on the path of
development.

Malaprabha Grameen Bank, Bijapur Grameen Bank, Varada

Grameen Bank and Nethravati Grameen Banks were the four
RRBs, Sponsored by Syndicate Bank, in the State of Karnataka.
When the above RRBs were established without much ado way
back in the 1970/80s, people may not have had the slightest idea
about the ripple that these RRBs would create in the banking

25 KLES’s IMSR
industry and the impact that they would have on the rural scene. In
the formative years, the main concern was to reach out to the rural
poor through its strong network of branches. The banks were
playing a pivotal role in bringing about a metamorphosis in their
respective areas of operation through its implementation of the
various schemes and programmes tailored to suit the requirements
of their customers.

As part of the measures which will lead to strong, efficient

and vibrant Banking System, the mergers and reconstruction phase
of the recommendations of the Narsimhan Committee is now being
implemented and thus the four RRBs sponsored by Syndicate Bank
in the State of Karnataka were amalgamated to form the
KARNATAKA VIKAS GRAMEEN BANK by a Government of
India notification dated 12/09/2005. The combined business level
of this Bank was Rs 3263.73 crores with Deposits of Rs.1620.46
crores and advances of Rs 1643.27 crores as on 12/09/2005.

The Banks have come a long way from those initial years and
after amalgamation the Bank has a network of 403 branches
cutting across the length and breadth of the nine districts forming
its area of operation. Surmounting the initial problems of bringing
about uniformity in the working of these Branches after
amalgamation, the Bank was able to record a growth of 22.24% as

26 KLES’s IMSR
on 31/03/2006 in comparison to the combined figures of the four
RRBs put together as on 31/03/2005. The Bank plans to achieve
business level of Rs 4500 crores by the end of March 2007. As at
the close of December 2006 the total business is Rs 4050 crores
comprising Deposits of Rs1957 and advances of Rs 2093 crores
recpectively.

Apart from conducting the Banking business, the Bank is

intricately involved in the social fabric of the people it serves. The
activities undertaken are –

 Recognising that health is a neglected sector among the

rural people, the Bank has been organizing various health
camps free of cost. Also in association with the District
Blindness Eradication Centre, it has conducted free Eye
Check-up Camps followed by cataract surgery and
implantation of IOL. Bank also runs a free clinic at one of the
villages in its area of operation.

 When the river Krishna was in spate, thousands of

families were rendered homeless. Bank was quick to respond
by distributing rugs at a relief camp and donating a day’s
salary of the Staff to the Chief Minister’s Relief Fund.

27 KLES’s IMSR
  Responding positively to a news item in the local daily,
a village situated close to the Dharwad town was gifted solar
light. This village had no electricity till the Bank took it upon
itself to provide it.

 Bank has adopted several balawadies run by the

Akshara Foundation in the slum areas, adopted a rural school
for overall development, donated steel plates to the children
of Government Schools at many places, recognises
meritorious rural students by awarding cash prizes etc., etc.

KEY PERSONS
KARNATAKA VIKAS GRAMEEN BANK: Board of Director
Mr. Dhananjaya Chairman
Mr. K. Raghuram Bhandari Special officer, Institutional
Finance Govt. of Karnataka
Mr. R. Sekar AGM, RBI, Bangalore
Mr. P. S. Mohanan DGM, NABARD,
Bangalore

Mr. Murali Mohan Regional Manager,

Syndicate Bank,
Belgaum

28 KLES’s IMSR
 Mr. Abhayu Singh CEO, Zilla Panchayat,
Dharwad
Mr. N. R. Sadananda Regional Manager,
Syndicate Bank,
Hubli
BRANCH NETWORK :
In its pursuit to make available Banking facility in
unbanked places within the Bank’s command area, 5 new
Branches were opened during the financial year, taking the
total tally of Branches to 392. Two branches Kannada
District and one each in the districts of Dharwad, Haveri,
Belgaum during the financial year. The details of the
districtwise branch network as at the end of the reporting
year is as under.

Spread of Branch Network

Sl District Region Rura Semi Urban Total
No l Urban
1 Dharwad Dharwad 31 4 18 53
2 Haveri Haveri 41 6 2 49
3 Gadag Haveri 25 7 3 35
4 Belgaum Belgaum 90 13 6 109
5 Bijapur Bijapur 38 4 2 44
6 Bagalkot Bijapur 39 8 - 47
7 Uttara Kumta 20 11 - 31
Kannada
8 Dakshina Kumta 8 4 1 11

29 KLES’s IMSR
 Kannada
9 Udupi Kumta 6 4 1 11
Total 298 61 33 392

SHARE CAPITAL RESERVES AND SURPLLUS:

After amalgamation, the Bank started functioning with
a Capital base of RS.400.00 Lakh by absorbing the paid up
Capital of the amalgamated four RRBs subscribed by the
Government of India,Government of Karnatak and Syndicate
Bank in the Ratio of 50:15:35. Apart from the above the
Bank also has an additional equity base of Rs.1997.32
lakh in the form of Share Capital Deposit, being the
additional Share Capital infused by Government of India,
Government of Karnataka and Syndicate Bank in the same
Ratio of 50:15:35 to strengthen Regional Rural Banks. Thus
the equity base of the Bank, which stood at Rs.2397.32 lakh
at the end of March 2006, remains uncharged.

Apart from the statutory requirements, a sound floating

provision is held, by which the Bank has shown its strength
by accumulating the Reserves to the tune of Rs.42857.37
lakh.

DEPOSITS :

There was a moderate increase in deposits till the end of

rd
the 3 quarter. However, with momentum picking up in the
4th quarter, higher growth was witnessed. The total deposits
reached a level of Rs.2230.38 Crores on 31-03-2007,

30 KLES’s IMSR
 registering a net increase of Rs.313.24 Crores over
Rs.1917.14 Crores attained as at 31-03-2007 vis-a-vis
previous year is as under:
(Rs. In Crores)
Sl. Category of March = March = % of
No Deposits 2006 2007 Growth
Amount Amount
1 Savings Bank 884,1 1075. 21,58
Deposits 9 05
2 Other Demand 114.1 148. 30.28
Deposits 7 74
3 Term Deposits 918.7 1006. 9.56
8 59
Total 1917.14 2230.38 16.34

Special attention was given to mobilize more Low Cost

Deposits so as to contain the cost of deposits. The percentage
of Demand Deposits to Total Deposits is 54.86%. This
resulted in reduction of Average Cost of Deposits to 4.40%
from 4.69% of previous year. Per Branch and Per Employee
Deposits increased to a level of Rs.5.69 Crores and Rs.1.02
Crores respectively over the corresponding figures of
previous year at Rs. 4.95 Crores and Rs.0.09 Crores
respectively.

Families destabilize on the sudden demise of the

principal bread earner-keeping such untoward incidents in
sight so as to extend a helping hand. Bank had introduced an

31 KLES’s IMSR
 insurance linked Savings Bank scheme called Jeevan Prabha
SB a\c, during November 2005. This novel scheme
conceived by the Bank brought succour at the hour of need,
to 25 families during 2007-07. Attracted by this scheme,
about 44,000 customers have joined the Jeevan Prabha SB
scheme during the financial year 2006-07.

Bank had introduced a deposit product called ‘Vikas

Tax Ulitaya’, during the year, in tune with Reserve Bank of
India guidelines, for the benefit of custome4rs who keep upto
Rs.1 lakh deposits for five years to avail of Tax exemption
under Sec 80c of the Income Tax Act.

FINANCIAL INCLUSION:
Even after many decades of social banking, the
need to outreach banking services is still felt. Keeping this in
view, coupled with Reserve Bank of India guidelines, Bank
had launched a ‘No Frill SB Account’ in January 2006 under
the brand name vikas Janata SB a\c, thus adding another
product to its’ repository of deposit products. Maintenance of
‘Zero’ balance and unrestricted accessibility has induced new
customers to enter the banking fold. As at 31-03-2007, Bank
had 360436 ‘No Frills SB Accounts” with an outstanding
balance of Rs. 16.92 Crores, thus taking the Bank to the
hidden fortune at the bottom of the CUSTOMER’S
PYRAMID. Bank had also successfully achieved percent
financial inclusion of 213578 household in 600 villages
falling under the command area of 106 branches in the
districts of Bagalkot, Haveri and Udupi and family survey
was also undertaken in the above villages.
BORROWINGS AND REFINANCE:

32 KLES’s IMSR
 Borrowing and Refinance are usually planned
according to the leading programme under the Credit Plan,
keeping in mind the demand for credit. Bank availed of the
refinance facility made available by NABARD and Sponsor
Bank under the various types of Refinance Schemes. These
refinance facilities are monitored as per NABARD\Sponsor
Bank guidelines. The repayments were made as per time
schedule. The details of refinance sanctioned are furnished in
the following table:
(Rs. In Crores)
Sl. Institution and Limits Limits Outstanding
No. Times of Sanctioned Availed
Refinance
I NABARD:
1 ST-SAO 108.40 108.40 216.60
2 ST-OPP 0.00 0.00 2.70
3 ST-OSAO 0.00 0.00 0.00
4 MT-Convt. 0.00 0.00 90.50
(ARTL)
5 MT- 0.00 12.97 59.47
SCHEMATIC
TOTAL 108.40 121.37 369.47
II SYNDICATGE
BANK
1 ST-SAO 100.00 100-00 0.17
2 ST-OSAO 0.00 0.00 0.00
TOTAL 100.00 100.00 0.17
GRAND TOTAL 208.40 221.37 369.64

INVESTMENTS:

33 KLES’s IMSR
 Management of funds of the Bank was of prime
importance amongst its other key areas of performance
obligations ever since the RRBs were permitted to invest
their Surplus funds in Securities, Bonds and Debentures
within the parameters of directive guidelines issued by
RBI\NABARD, FROM TIME TO TIME, With a system of
monitoring the inflow and out flow of funds on day-to-day
basis, the Bank has been able to gauge the availability of
surplus funds for the purpose of short term as well as long
term investments or even for pre-payment of refinances.
Looking to downward movements in interest rates (coupon)
of rated non SLR papers and also keeping in view the advice
of Sponsor Bank, not to go in for investment beyond 40% of
Deposit base, a conscious decision was taken to restrict and
reduce the investment port folio.

The total investments increased to Rs. 62213.13 lakh as

on 31-03-2007 from Rs.53315.55 lakh as on 31-0302006
with a marginal increase in I.D. Ration from 27.81% to
27.89%:

THE DETAILS OF THE OUTSTANDING SLR AND NON SLR

INVESTMENTS ARE AS UNDER:

Rs. In Crores)

34 KLES’s IMSR
 Sl. No. Particulars As on As on
31-03- 31-03-2007
2006
I. SLR Funds 472.03 544.79
II Non SLR Funds 61.13 77.34
TOTAL 533.16 622.13

REGIONAL RURAL BANKS

The institution of Regional Rural banks (RRBs) was created

to meet the excess demand for institutional credit in the rural
areas, particularly among the economically and socially
marginalized sections. Although the co-operative banks and the
commercial banks had reasonable records in terms of
geographical coverage and disbursement of credit, in terms of
population groups the co-operative banks were dominated by
the rural rich, while the commercial banks had a clear urban
bias. In order to provide access to low –cost banking facilities to
the poor, the Narasimhan Working Group (1975) proposed the
establishment of a new set of banks, as institutions which
“combine the local feel and the familiarity with rural problems
which the co-operatives possess and the degree of business
organization, ability to mobilize deposits, access to central
money markets and modernized outlook which the commercial
banks have”. The multi-agency approach to rural credit was also
to subserve the needs of input intensive –intensive agricultural
strategy (Green Revolution) which had initially focused on
betting on the strong but by the mid-seventies was ready to
spread more widely through Indian countryside. In addition, the
potential and the need for diversification of economic activities
in the rural areas had begun to be recognized, and this was a
sector where the RRBs could play a meaningful role. The RRBs

35 KLES’s IMSR
 Act, 1976 succintly sums up this overall vision to sub-serve
both the developmental and the redistributive objectives:
The RRBs were established “with a view to developing the
Dec.1975 Dec.1980 Dec.1985 Mar.1990
Banks 6 85 188 196
Branches 17 3,279 12,606 14,443
rural economy by providing, for the purpose of development of
agricultural, trade, commerce, industry, and other productive
activities in the rural areas, credit and other facilities,
particularly to small and marginal farmers, agricultural
labourers, artisans and small entrepreneurs, and for matters
connected therewith and incidental thereto.”

Source : NABARD Reports

The following one-and-a-half decades saw large-scale efforts to

the number of banks, bank branches, and disbursements
nationwide. By 1991, there were 196 RRBs with over 14,000
predominantly rural branches in 476 districts with an average
coverage of three villages per branch. These banks had
disbursed over Rs. 3,500 crore in credit and mobilized over Rs.
4,100 crore in deposits. The bulk of the loans from RRBs were
to the priority sectors, which accounted for over 70% of the
total. Agriculture and allied activities took up more than 50% of
the total advances. In addition, the RRBs were instrumental in
extending credit for poverty alleviation schemes

_______________________
The year 1990 marks the end of the expansion phase of regional banking,
beyond which there has been no growth in the number of Regional Rural
Banks (including branches).

36 KLES’s IMSR
 (e.g., IRDP) and disadvantaged area (drought-pronr regions and
deserts) development programmes.

The expansion phase of the late seventies and the eighties while
focused on outreach was not devoid of a blueprint for viability
of the RRBs, unlike what the mainstream academia and press
claim to be the case. It was understood that the RRBs to survive
as credit institutions could not remain unviable for a long time,

though the RRB might not remain unviable in the initial years.
This expectation was, however, tempered by the prevalent
situation on the field and the ultimate objectives for which these
specialized institutions were created. It was realized early that
the question of viability of the RRBs could not be the same as
other business ventures. A business unit has all the freedom to
take decisions on many matters such as opening branches,
deploying its resources, staff recruitment, its purchases,
methods of rending services etc. But the RRBs could not be
flexible in many of their affairs; even their clientele was
specific, scattered , remote and not assisted by anyone. Keeping
in view the objectives of the RRBs, these institutions could
certainly not be evaluated on the basis of mere financial
viability. There was a general agreement that the viability of the
RRBs had to be assessed in terms of a composite criteria
including increase in business per branch recovery rate,
productivity of staff, cost effectiveness of operations, closer
monitoring, socio-economic upliftment and improvements in the
standards of living of the clientele. Again in respect to the time
dimention. It was estimated that the RRBs would need about
seven years to become viable, though for the RRBs with a large
number of infant branches even this period might not be
adequate. Between 1980 and 1987, while the number of RRBs
increased more than four-fold. It was not totally unexpected

37 KLES’s IMSR
 therefore that by the end of the 1980s several of these banks
were showing losses on their books.
Purposewise Advances of RRbs, Outstanding(end of sept,1990)

Rs in Crores

1 Short term (Crop Loan) 615

2 Term Loan and Agriculture Activities 669
3 Allied Activities 555
4 Rural Artisans, Village And Cottage 277

Industries
5 Retail Trade And Self Employment 1052
6 Consumption Loan 54
7 Other Purposes 290
8 Indirect Advances 43

TOTAL 3555

SCHEMES OF THE KVG BANK

a) Credit Policy :
The Bank continued to accord prime importance to the
Loans and Advances portfolio with it’s multi dimensional
utilitarian aspects. Considering the vast area of operation of
the Bank covering Nine potential Districts in the State Bank
has adopted a Credit Policy as per the guidelines issued by
RBI\NABARD and sponsor Bank. The Credit Policy is

38 KLES’s IMSR
 aimed at increasing high quality and high yielding advances
with special thrust on advances to investment credit in
agriculture sector, credit linkage to SHGs\JLGs and also to
augment credit flow to SME Sector.

b) Policy for extending Relief measures:

Occurrence of drought, flood pest attack and other
natural calamities caused wide spread damage to economic
pursuits of our borrowers. It is felt necessary to have a set of
guidelines to provide relief by the Branches to calamity
affected persons without delay.
Hence, Bank adopted a Policy for extending relief
measures to the borrowers affected by natural calamities, in
tune with NABARD directives.

c) Crop loans at reduced rate of interest:

As envisaged in the Union budget 2006-07, during the
year 2006-07, Crop loans up to Rs. 3 lakhs were sanctioned
with interest @ 2% provided by NABARD. With this, total
crop loans disbursed during the year 2006-07 was at Rs.
540.10 Crores.

d) Tie up arrangements:
During the previous years, the Bank had entered into
Tie-up arrangements with 6 Tractor\vehicle manufacturing
Companies for supplying Tractors\Two\Three\Four wheelers
to our customers, providing free Registration\Insurance of
Vehicle at dealers cost, additional free servicing of the
vehicles etc. This year the Bank had executed fresh MOU
with Eicher Tractors & Sonalika Tractors, hence, now our

39 KLES’s IMSR
 customers will have choice of 8 Tractor\vehicle
manufacturing Companies, providing additional benefits.

e) Coverage of collateral free loans under Credit

Guarantee scheme of CGTSI:
To have a better coverage of risk on the collateral free
loans sanctioned to SMEs, Bank has proposed to cover such
collateral free loans up to Rs. 25 lakhs sanctioned to
SMEs, under the Credit Guarantee scheme of CGTSI.
Bank has been already enrolled as MLI with CGTSI for
the purpose.

f) Provision for ;inclusion of Education expenses

in KCC:
As suggested by Sponsor Bank to encourage education
among the family members of the farmers, Branches are
permitted to include expenses for Education up to Rs.1,000\-
in the KCC limits sanctioned to the farmers.

g) Enhancement in project cost under KVIB MMS

loans:
Till last year KVIB was considering projects with cost
up to Rs.10 lakhs for grant of Margin Money Subsidy
(MMS). However, the KVIB has enhanced the maximum
permissible cost of the project up to Rs. 25 lakhs for grant of

40 KLES’s IMSR
 MMS, hence the Branches are permitted to consider Project
with total cost up to Rs. 25 lakhs, under KVIBMM scheme.

h) Introduction of PAIS for Swarojgar Credit

Card holders:
As suggested by NABARD, Swarojgar Credit Card
holders were brought under coverage of Personal Accident
Insurance Scheme (PAIS) for a sum assured up to Rs.
50,000\- with United India Insurance Company Ltd.

i)Credit Rating of ;high value NFS loan a\cs:

In order to ensure healthy credit portfolio and also to
assess the creditworthiness of the applications \ borrowers.
Credit Rating System was introduced for Borrowers having \
proposed cumulative credit limits of Rs.20.00 lakhs & above.
Credit Rating charts as adopted by the Sponsor Bank were
prescribed for the purpose.

j) Package of Relief measures in Distgress district:

Govt. of India has identified Belgaum district in our
Area of operation and extended Package of Relief measures
to be implemented in the Distress districts. Under the
scheme, interest on the eligible lover due loans of Farmers as
on 01-07-2006 was waived, the loan a\cs were to be
restructured and fresh finance made available to such

41 KLES’s IMSR
 borrowers. Bank waived eligible overdue interest, for which,
claim was submitted to NABARD. Restructuring of the loan
a\cs is being done and fresh finance is being made available
to the needy farmers.

k) Interest subvention of Poultry loan a\cs:

Considering the loss of income to the poultry units due
to out break of Avian Flu during February 2006. Govt. of
India had announced one time interest subvention of 4% to
the poultry units affected by avian Flu. Accordingly Bank
had passed on the eligible interest subvention to 75 eligible
loan a\cs and reimbursement of the same was received.

l) Loan Schemes Launched during the year:

In terms of the directives issued by RBI\NABARD \
Sponsor Bank, land also considering the genuine needs
of our customers, the following new loan schemes were
launched during the year:

42 KLES’s IMSR
Sl. Name of the Features
No. Scheme
01 Loans for Cold A scheme for financing construction
Storage Units of Cold Storage units under Capital
Investment Subsidy Scheme, which
provides subsidy up to 25% of the
fixed investments was formulated.

02 Loans for A scheme for development of

Developments of Commercial Horticulture under
Commercial Capital investment subsidy Scheme
Horticultre of National Horticulture Board
9NHB) which provides Bank ended
subsidy up to 20% of the Capital
Investment made was formulated.

03 Loans for A scheme for establishment of

Commercial Commercial production units of
production of Organic Inputs, under National
Organic Inputs Project on Organic farming was
formulated. The scheme provides
subsidy up to 25% of the capital
Investments made.

04 Loans for A scheme for

Technology up
Technology up – gradation of
gradation of SSI
units SSI units under Credit Linked
Capital subsidy scheme, which
provides subsidy up to 15 %
of the Capital Investments
made, with a ceiling of
maximum cost of Rs.1.00
Crore for Technology up-
gradation was formulated.

05
43 Loans
KLES’s IMSRforAgri A scheme for establishment of Agri
Clinics \ Agri clinics\agri business Centres under
business Centres: Credit linked Capital subsidy
m) Brand Equity Names:
During the year, Bank had launched following new loan
schemes with “Brrand Equity” names for an easy
identification of products by the customers. Salient features
of the schemes are as folows.

i)VIKAS UDYAM – Loan to SMEs: scheme for

financing Small & Medium Enterprises (SMEs) to
double the flow of credit to the SME Sector within 5
years. The scheme provides Collateral free loans for
fixed investments as well as working capital
requirements of SMEs repayable in 7 years.

ii) VIKAS BAHUMUKHA –

Multipurpose\Composite Credit to Farmers:

A scheme for financing Multipurpose\Composite

credit needs of Farmers, including investment credit
requirements, contingencies, consumption needs, etc.,
with hassle free credit assessment based on the genuine
credit needs and repayment capacity of the Farmers, up
to 50% of the value of the Agricultural land given as
security or Rs. 5.00 lakhs which ever is less, repayable
in 7 years.

n) Doubling of Agricultural Credit:

In order to double disbursement of Agriculture Credit,
the Bank had taken steps to increase leading to farmers under
production as well as investment credit by conducting special
campaigns and credit camps, in the operational area.

44 KLES’s IMSR
 The Bank had provided relief to the farmers in distress,
by extending fresh loans and restructuring their earlier loans.
In all, the Bank had disbursed Rs. 645.70 Crores towards
Agricultural Activities during the Financial Year showing a
growth of 48 % over the previous year.

o) Kisan Credit Card (KCC):

In addition to the existing kisan Credit Card Scheme,

Bank had introduced KISAN SAMRUDHI CREDIT CARD
Scheme as per the guideline issued by NABARD, to provide
investment credit to the Farmers, apart from the production
credit,

During the year, the Bank had issued 86851 Kisan

Credit Cards by disbursing Rs. 540.10 Crores. Apart from
this 1427 Kisan Samrudhi Credit Cards issued by disbursing
Term Loans of Rs. 9.54 Crores.

All eligible lfarmers are covered under KCC Scheme.

The Bank has also implemented PERSONAL ACCIDENT
INSURANCE SCHEME (PAIS) for KCC\KSCC holders,
and covered 100% of the KCC\KSCC holders under the
PAIS with United India Insurance Company Ltd.

By virtue of the above measures, the outstanding level

of Loans and Advances reached a level of Rs. 2168.40 Crores

45 KLES’s IMSR
 as at the end of March 2007 as against Rs. 1749.96 Crores as
on 31-03-2006. Of the total loans outstanding, the share of
Target Group stood at Rs. 882.71 Crores constituting 40.70%
as on 31-03-2007 as against Rs. 785.39 Crores constituting
44.88 % as on 312-03-2006.

The CD ratio stood at 97.22 % as on 31-03-2007 as

against MOU target of l95.13%

p) Participation in Poverty Alleviation

Particulars Physical Achievement % of

Target during 2006- Achievement
2006-07 07
01 SGSY 688 663 96.36
02 SC\ST Schemes 175 147 84.00
03 Minorities 382 194 50.78
04OtherGovt.Sponsored,Schemes 442 170 38.46
Programmes from 01-04-2006 to 31-03-2007:

While the Bank had continued to maintain a certain

level of Non-Priority Sector Advances from the profitability
point of view, the Bank’s concern\\commitment under
various social obligations and Agricultural Finance\Poverty
Alleviation Programmes of the Government could be evident
from the facts and figures given below:

46 KLES’s IMSR
METHODOLOGY

KVG Bank bases the methodolgy adopted in the present

study on the disbursement and recovery procedure of SSI,
MSI and other units.

Tools for the data collection

The primary data is obtained by visiting various industrial

concerns in both Hubli and Dharawad by interviewing and
interacting with them. The secondary data was collected
from various journals, brochures and annual report
obtained from Karnataka Vikas Grameen Bank,
Dharwad.

47 KLES’s IMSR
SCOPE OF STUDY

The study is confined to various method of recovery of loans from the

borrowers of KVG Bank.

DISBURSEMENT OF CREDIT

Release of funds or loans

The loan can be released only after the borrower fulfills or

complies with all the terms and conditions stipulated in the loan
sanction sanction letter. In the event of loan to be released
deferring some conditions of loan sanctioned. The competent
authority has to approve such relaxation in the compliance of
conditions.

DISBURSEMENT FUNCTION

Effect disburse of funds depends basically on taking the right

steps at various stages of project implementation. Any delay either
by the corporation or by the enterprises will delay the overall
project implementation, which can eventually results in both
opportunity losses as well as financial losses to the project.

48 KLES’s IMSR
Methodology

The activities involved in the loan disbursement function are

classified into two broad categories.

1) Actions to be taken by the bank independently.

2) Action to be taken in response to specify requests by the

borrower. The first step of functions is very critical to take
appropriate timely actions for loans disbursements without
losing sight of any critical steps or causing any delay.

GENERAL POINTS

a) Whether legal clearance and documentation has been

completed as per norms of the Bank.

b) To check whether the project has obtained

appropriate license or permission from various
authorities.

c) To take up inspection of the project or site to assess

the present status of implementation.

49 KLES’s IMSR
 d) To verify whether the borrower has brought in his
contribution as per first investment clause (FIC)

LOANS AND ADVANCES; OUTSTANDING &

DISBURSEMENT
Credit is the major item on the assets side of balance
sheet and its contribution to aggregate revenue was
significant in the form of interest income. The Bank
continued to maintain its dominance in the field of advances
by increased djeployment of fund in the form of Loans and
Advances and the growth of advances as at 31-032007 was as
under:

PURPOSE WISE CLASSIFICATION OF ADVANCES AS ON 31-03-2007

VIS-A-VIS THE PREVIOUS YEAR

(Rs in Cores)
Sl. 31-03- 31-03- % of % to
N 2006 2007 Gro total
o wth Advan
ces
1. Agriculture Sector 1015.49 1343.59 32.30 61.96
2 Small scale Industries 38.57 48.19 24.94 2.22
3 Tertiary Sector 341.32 368.99 14.96 18.80
4 Others 354.58 407.63 14.96 18.80
TOTAL 1749.96 2168.40 23.91

50 KLES’s IMSR
 BENEFICIARY-WISE CLASSIFICATION OF ADVANCES AS ON31-03-2007
VIS-A-VIS THE PREVIOUS YEAR
(Rs. In Crores)
Sl. Particulars 31-03- 31-03- % of % to
No 2006 2007 Growth total
Advances
1 Target 785.39 882.71 12.39 40.71
group
2 Non-Target 964.57 128569 33.29 59.29
group
TOTAL 1749.96 2168.40 23.91
3 SC\ST 73.69 86.96 18.01 4.00
Beneficiaries
4 Minority 130.47 144.32 10.62 6.65
beneficiaries
5 SF\MF\AL 692.67 749.68 8.23 34.57
Beneficiaries
6 SGSY 26.05 27.42 5.26 1.26
beneficiaries
7 Other Govt. 24.17 24.91 3.06 1.14
Spon. Scheme.
8 Women 152.64 218.90 43.41 10.10

51 KLES’s IMSR
 Beneficiaries

During the year under report the Bank had disbursed

credit of Rs.1100.19 Crores under all sectors as against
Rs.845.22 Crores disbursed during the previous year, with a
growth of 30% Bank had also satisfactorily paln target by
achieving 108.92% of its allotted targets. Of the total loans
disbursed, the Bank had deployed Rs. 859.10 Crores to
priority sector and Rs. 241.09 Crores to Non-priority sector
during the year under report as against Rs. 647.82 Crores and
Rs. 197.40 Crores respectively during the previous year.

The following table shows the Sector-wise Disbursements of Credit for

the Year 2006-07 vis-a-vis the Previous Year
(Rs. In Crores)
Sl. Sector Actuals SAP Actuals
No. 2005-06 Target 2006-07
For 2006-
07
A Priority Sector
i) Agriculture 428.40 560.77 632.19
ii) Allied Activities 7.31 20.58 13.51
iii) SSI\RA 24.73 32.33 26.31
iv) Trade & Service 187.38 222.49 187.09
Total of Priority Sector 647.82 836.17 859.19
B Non Priority Sector 197.40 173.96 241.09
Total Disbursement 845.22 1010.13 1100.19

52 KLES’s IMSR
 RECOVERY

Introduction:

Collection of amount due is termed as recovery. The Bank

lends money to industrial concerns for establishment or expansion
of projects. While sanctioning the loans based on certain
assumptions, the profitability will be worked out and the
moratorium period and repayment period are fixed. The repayment
period generally caused to 5-7 years with a moratorium period of
six months to one year for sound viable projects.

Interest earned is the income for the Bank. This should

meet interest, payments all the expenses and plough back
requirements. Therefore recovery of money is one of the major
sources of funds for the Bank. The health of the bank is judged by
the extent or recovery that it can affect.

The other sources of funds to the Bank are:

The sources of funds for RRBs comprise of:

1) Owned Funds
2) Fixed Deposits from Public
3) Borrowings:

53 KLES’s IMSR
 From NABARD
From sponsor banks
4) Other sources including SIDBI and National Housing Bank.

1) Owned Funds

The owned funds of RRBs comprising share capital,

share capital deposits received from the stake holders toward
recapitalization support and the reserves appropriated by the
profit making RRBs stood at Rs.7291.99 crore as on 31
March 2007 as against Rs.6646.59 crore as on 31 March 2006
and Rs.6181.26 crore as on March 2004-05. The increase in
owned funds to the tune of Rs.645 crore during 2006-07 was
mainly due to accretion to the reserves out of profits made by
56 RRBs having no accumulated losses.

2) Fixed Deposits form Public

Deposits of RRBs increased by Rs.11556.52 crore and

reached to the level of Rs.82885.35 crore as on 31 March
2007 as against Rs.71328.83 crore as on 31 March 2006. The
deposit growth was found to have increased to 16.20% in
2006-07 from 14.78% in 2005-06 and 10.28% in 2004-05.
Deposit mobilisation of RRBs has been growing steadily.

3) Borrowings

The RRBs borrowed Rs.9652.35 crore as on 31 March

2007 as against Rs.7302.59 crore as on 31 March 2006.
NABARD remained to be the primary organization from
whom RRBs borrowed maximum as refinance to the extent of

54 KLES’s IMSR
 78% of total borrowing. The borrowing from the Sponsor
Banks and others accounted for about 19.7% and 2.3%
respectively of total borrowing of RRBs.

Plough back of funds in to the system is emerging as one of

the very important sources of funds in the total resources mix.

Therefore, systematic follow-up and recovery of loans play a

significant role in bank’s operations.

Essential good recovery depends on good portfolio of loans.

Good loans portfolio means, low default ratio, higher % of
recoveries to recoverable amount, lesser rescheduling, lower
waivers\write offs, and this leads to less number of cases taken
over. This means shift has to be made towards viable and quality
lending by shedding to some extent the development role.

ROLE OF THE FIELD OFFICERS

Then role of Field Officers is to render full complained of

services to the loans through out the period of recovery. He acts as
an intermediary between the loanee and the Bank and keep the
pulse of the venture and protects interest of the Bank.

He is supposed to extend a helping and in sorting out the

various problems faced by the industrial units and suggest proper
residual measures to come out of the problems he would also help
the loaners in getting other facilities available from various
government organization, corporate bodies, bank etc, he also keeps
a close watch of the venture throughout the period of recovery.

55 KLES’s IMSR
 Over the years, the bank has developed procedures for follow
up and recovery of loans and close monitoring of, assisted units. It
has evolved strategies for tackling chronic default units etc.

RECOVERY OF LOANS

The recovery of loans is done by the personal contacts of a

banker and the loanee. When the loans are advanced to the
customers of the bank certain moratorium period is fixed for the
purpose of recovering the loans. If the said loans are not recovered
within the due date or within the moratorium period then certain
procedure is followed by the bank for the recovery of those loans.
That procedure may be termed as loan recovery procedure.

In case the customer to whom the bank has advanced the

loans, defaults to pay the interest as well as the principal within the
due date then the bank will take certain actions on such defaulting
customers.

In case of general loans other than agricultural loans, the

provisions laid down in the Securitisation and Reconstrution of
Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act, 2002) is followed.

In case of agricultural loans, the Karnataka Agricultural

Credit Operations and Miscellaneous Provisions Act, 1974.
(KACO MP Act, 1974) is followed.

SARFAESI Act, 2002

56 KLES’s IMSR
 For the purposes of recovery of loans by the Banks or the
Banking Companies or financial institutions, the Parliament has
passed plethora of laws. The Government has established a legal
mechanism. Accordingly the banking companies and financial
institutions have to follow the provisions of various laws, rules and
regulations. The most important of those laws are the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002, The Security Interest
Enforcement Rules 2002, The Recovery of Debts Due to Banks
and Financial Institutions Act, 1993, etc.

Among the laws mentioned above, the most important and

the most recent law is the SARFAESI Act 2002. This Act
incorporates the recommendations of Narasimhan committee 1 and
2 and Andhyarujina Committee, acting on their recommendations
the said Act was promulgated to regulate Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Ordinance 2002, was promulgated on 21st June, 2002 to regulate
securitization and reconstruction of financial assets and
enforcement of security interest and for matter connected thereto
or incidental thereto. The provisions of the ordinance would enable
banks and financial institutions to realize long-term assets, manage
problem of Liquidity, asset liability mismatches and improves
recovery or reconstruction. And above all the banks can take
possession of the securities and sell them without the
intervention of the court.

LOAN RECOVERY PROCEDURE

Any security interest created in favor of any secured credit

may be enforced without the intervention of the Court by such
creditor.

NOTICE

57 KLES’s IMSR
 A secured creditor can issue notice to the borrower u/s 13(2)
of SARFAESI Act demanding the discharge of the full liabilities of
the secured creditor within 60 days from the date of notice. There
must be a security agreement under which the liability has to arise;
Further the secured creditor must make default in repayment of
either secured debt or any intelligent. The final condition is that
the account of the borrower must have been classified as non-
perforating assets.

The notice should give details of the amount payable by the

borrower and the second assets intended to be enforced by the
secured creditor if the secured debts are not paid by the borrower.

If and when the borrower receives the notice he gets a final

chance. He gets a final chance to repay his debt. Therefore the
borrower can make any representation objection and that
representation or objection will be considered by the secured
creditor. If the secured creditor considers those objectives as not
acceptable or tenable he will have to communicate within a week
the reasons for such non acceptance of his objections to the
borrower.

Even at this stage the borrower will not get any right to file
an application before the DRT or District Judge.

The Secured creditor can take any of the following measures

if the borrower fails to repay the loan.

Take possession of the secured assets and object of the

borrower. Along with the possession the borrower will also get the
right to transfer by way of lease, assignment or sale for realizing
the secured assets.

58 KLES’s IMSR
 Take over the management of the business of the borrower.
This will again include the right of transfer by way of lease,
assignment or sale for realizing the secured assets.

But the above said right of transfer should be exercised only

when the substantial part of the business of the borrower is held as
a security for the debt. If the business of the borrower is severable,
the secured creditor has to take over the management of such
business which is relatable to the security for the debt.

Appoint any person to manage the secured assets; the

possession of which has been taken over by the secured creditor
such person is called manager.

If any particular person has borrowed from the borrower and

from whom any money is due then the secured creditor may issue
notice to that person and ask him to pay. So much of the money as
is sufficient to pay the secured debt.

If the person above mentioned pay any amount to the secured

creditor then a valid discharge will be given to him as if he has
paid to the borrower.

The management of a business of a borrower is taken over by

a securitisation company or reconstruction company; the secured
creditor may appoint its agents to look after the business. If the
borrower is a company then the secured creditor can appoint as
many persons as it wishes to be the directors of that borrower. If
the borrower is entity other than the company then the secured

59 KLES’s IMSR
creditor can appoint any person to be the administrator of the
business of the borrower. The appointment of the persons above
mentioned can be announced through the publication of the notice
in English newspaper as well as in a newspaper published in an
Indian language in circulation in the place where the principal
office of the borrower is situated.

The directors or the administrator appointed as mentioned

above or entitled to take such steps as may be necessary to take
into there custody or under their control or the property effects and
actionable claims to which the business of the borrower is entitled.

The direction of appointed are deemed to be the directors of

the company of the borrower. And such director or the
administrators are alone entitled to exercise all the power of the
directors such as superintendence, direction and control of the
business of the borrower.

PROCEDURE AFTER ISSUE OF NOTICE

If the amount mentioned in the demand notice is not paid

within the specified time. The authorized officer can adepts any
one or more of the measures which are as follows:

Where the possession of the secured assets to be taken by the secured

creditor are movable property in possession of the borrower, the authorized
officer shall take possession of such movable property in the presence of two
witnesses after Panchnama.

After taking possession as mentioned above, the authorized

officer shall make or cause to be made an inventory of the property

60 KLES’s IMSR
and deliver or cause to be delivered, a copy of such inventory to
the borrower or to any person entitled to receive on behalf of the
borrower.

The authorized officer shall keep the property taken

possession as mentioned above either in his own custody or in
the custody of any person authorized or appointed by him, who
shall take as much as of the property in his custody as owner of
ordinary prudence would, under the similar circumstance take of
such property.

If such property is subject to speedy or natural delay, or the

expense of keeping such property in custody is liable to exceed its
value, the authorized officer may sell it at once.

The authorized officer shall take steps for preservation and

protection of secured assets and insure them, if necessary till they
are sold or otherwise disposed off.

In case any secured asset is:-

A share, in a body corporate;

other movable property not in the possession of the borrower

except the property deposited in or in the custody of any
court or any like authority; the authorized officer shall obtain
possession or recover the debt by service of notice as under:-

If it is a debt the borrower will be prohibited from recovering

the debt and making the debtor to pay the debt to the authorized
officer.

61 KLES’s IMSR
 If the secured asset is shares in a company, then borrower
will be directed to transfer them to the secured creditor.

If secured asset is movable property then the borrower and

the person in possession will be called upon to hand over the
property to the authorized officer.

After taking possession the authorized officer should obtain

the estimated value of the movable secured assets and in
consultation with secured creditor fix the reserve price of the
assets.

The authorized officer may sell the movable secured assets or

more lots by adopting any of the following methods to secured
maximum sale price for the assets, to be sold.

i. obtaining quotations from parties dealing in the

secured assets or otherwise interested in buying
such assets; or

ii. inviting tenders from the public; or

iii. holding public auction; or

iv. by private treaty.

The authorized officer shall serve to the borrower a notice of

thirty days for sale of the movable secured assets, if the sale of
such secured assets is being, effected by either inviting tenders
from the public or by holding public auction, then the secured
creditor shall cause a public notice in two leading newspapers, one

62 KLES’s IMSR
in vernacular language, having sufficient circulation in that locality
by setting out the terms of sale, which may include:

a) details about the borrower and the secured creditor;

b) reserve price and the time and manner of payment;

c) description of movable secured assets to be sold with

identification marks or numbers;

d) time and place of public auction

e) depositing earnest money as may be stipulated by the

secured creditor;

RECOVERY OF DEBT DETERMINED BY TRIBUNAL

MODES OF RECOVERY OF DEBTS:-

The Recover officer will, on receipt of the copy of the

certificate, proceed to recover the amount of debt specified in the
certificate by me or more of the following makes namely:-

a) attachment and sale of the movable or immovable

property of the defendant;

b) arrest of the defendant and his detention is prison;

c) appointing a receiver for the management of the

movable or immovable properties of the defendant.

63 KLES’s IMSR
Other modes of Recovery:-

Where a certificate has been issued to the Recovery officer,

the recovery officer can recover the amount of debt by any one or
more of the modes provided.

If any amount is due from any person to the defendant, the

Recovery Officer may require such person to deduct from the said
amount, the amount of debt due from the borrower and such person
shall comply with any such requisition and shall pay the sum so
deducted to the credit of the Recovery Officer.

KACO MP Act, 1974

THE KARNATAKA AGRICULTURAL CREDIT
OPERATIONS AND MISCELLANEOUS PROVISIONS
ACT, 1974.
(Received the assent of the President on the Thirteenth day of
February 1975)
(As amended by Karnataka Acts 34 of 1978, 26 of 1984)
An Act to make provisions to facilitate flow of credit for purposes
of agricultural production and development through
credit agencies.
WHEREAS it is expedient to make provisions to facilitate flow of
credit for purposes of agricultural production and
development through credit agencies and for matters connected
therewith or incidental thereto ;
BE it enacted by the Karnataka State Legislature in the Twenty-
fifth Year of the Republic of India as follows :-

64 KLES’s IMSR
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement.- (1) This Act may be
called the Karnataka Agricultural Credit Operations and
Miscellaneous Provisions Act, 1974.
(2) It extends to the whole of the State of Karnataka.
(3) It shall come into force in such areas on such 1[date]1 as the
State Government may, by notification, appoint, and different
dates may be appointed for different provisions of the Act and for
different areas.

2. Definitions.- In this Act, unless the context otherwise requires,-

1[(a) 'agriculture' or 'agricultural purposes' includes making land fit
for cultivation, cultivation of land, improvement of land including
development of sources of irrigation, raising and harvesting of
crops, horticulture, forestry plantation(including tree crops), cattle
breeding, animal husbandry, dairy farming, seed farming,
pisciculture including 2[the development of fisheries both inland
and marine and]2 catching fish and all activities connected
therewith or incidental thereto, apiculture, sericulture, piggery,
poultry, farming and such other activities as are generally carried
on by agriculturists, dairy farmers, cattle breeders, poultry farmers
and other categories of persons engaged in similar activities,
including processing, marketing, storage and transport of
agricultural produce and the acquisition of drought animals,
implements and machinery in connection with such activities and
such other purposes as the State Government may specify in this
behalf.
(b) ''agriculturist'' means a person who is engaged in agriculture;

65 KLES’s IMSR
(c) ''Agro-Industries Corporation'' means the Karnataka State
Agro-Industries Corporation, a company registered
under the Companies Act, 1956;
(d) ''co-operative society'' means a co-operative society registered
or deemed to be registered under the Karnataka Co-operative
Societies Act, 1959, the object of which is to provide financial
assistance as defined in clause (f) of this section to its members
and 6 includes a Co-operative Land Development Bank;
(e) ''Credit Agency'' means,-
(i) a banking company as defined in the Banking Regulation Act,
1949;
(ii) the State Bank of India constituted under the State Bank of
India Act, 1955;
(iii) Subsidiary Bank as defined in the State Bank of India
(Subsidiary Banks)Act, 1959;
(iv) a corresponding new bank constituted under the Banking
Companies(Acquisition and Transfer of Undertakings) Act, 1970;
(v) the Agricultural Refinance Corporation constituted under the
Agricultural Refinance Corporation Act, 1963;
(vi) Agro-Industries Corporation as defined in clause (c);
(vii) the Agricultural Finance Corporation Limited, a company
incorporated under the Companies Act, 1956; and
1[(vii-a) the regional rural banks constituted under the Regional
Rural Banks Act,1976
(viii) any other financial institution notified by the State-
Government as a credit agency for the purpose of this Act;
(f) "financial assistance'' for the purpose of this Act means,
assistance granted 1[whether before or after the commencement of
this Act]1 by way of 2[loan, advance, guarantee]2 or otherwise for
agricultural purposes.

CHAPTER II

66 KLES’s IMSR
ALIENATION OF LAND OR INTEREST THEREIN BY
AGRICULTURISTS
3. Removal of restrictions on alienation.- Notwithstanding
anything contained in any law for the time being in force or any
custom or usage having the force of law, it shall be lawful for an
agriculturist to alienate the land or his interest therein whether or
not a charge or mortgage is subsisting on such land or such
interest, by creation of charge or mortgage of such land or interest
therein in favour of a credit agency as security for the financial
assistance given to him by such credit agency.
4. Vesting agriculturists not having alienable rights with rights
of alienation.-
Notwithstanding anything contained in the Karnataka Bhoodan
Yagna Act, 1963(Karnataka Act 34 of 1963) the State Government
may, by notification, vest Bhoodan tenants with rights of
alienation, including the right to create a charge or mortgage in
such land or interest in favour of a credit agency for the purpose of
obtaining financial assistance from the credit agency subject to
such restrictions as may be specified in such notification.
5. Charge on crops and other movable property.- (1) It shall be
lawful for an agriculturist to 1[create, by way hypothecation or
otherwise, a mortgage]1 of or a charge on,-
(a) movable property, owned by him; or
(b) crops standing or otherwise, raised by him on his own land or
land held by him as a tenant including other produce raised by him
on such land to the extent of his interest in such crops or produce,
in favour of a credit agency as security for the financial assistance
given to him.
(2) Notwithstanding anything contained in the Karnataka Co-
operative Societies Act, 1959 or any other law for the time being in
force, no charge in respect of financial assistance given by a co-
operative society to an agriculturist shall have priority over charge
on the crop raised by him, standing or otherwise, or any other

67 KLES’s IMSR
movable property in respect of any financial assistance given to
him by a credit agency:
Provided that the financial assistance given by the credit agency is
prior in point oftime to that of any loan advanced to him by the co-
operative society.
(3) A credit agency may distrain and sell through an official
designated in this behalf by the State Government the crops or
other produce or other movables charged to that credit agency to
the extent of the agriculturists interest therein and appropriate the
proceeds of such sale towards all moneys due to the credit agency
from that agriculturist.
6. Creation of charge on land or interest therein in favour of a
credit agency by a declaration.- Notwithstanding anything
contained in any law for the time being in force,-
(i) any agriculturist given financial assistance by a credit agency
may by a declaration in the prescribed form charge the land or any
other immovable property owned by him or where he is a tenant of
any land, his interest in such land, as security for the amount of
such financial assistance and interest payable thereon. Such
declaration shall be filed along with the application seeking
financial assistance and shall state that the charge created
thereunder shall be for the amount of financial assistance then
sought for and also for all future financial assistance which the
credit agency may give him,
(ii) a declaration made under clause (i) may, with the consent of
the credit agency concerned, be varied by the agriculturist at any
time.
7. Priority of charges and mortgages over certain claims.- 1[(1)
Notwithstanding anything contained in any law for the time being
in force, but subject always to the paramount charge in respect of
arrears of land revenue,-
(a) no charge or mortgage created on any land or interest therein
after the commencement of this Act in favour of the State

68 KLES’s IMSR
Government or a co-operative society shall have priority over a
charge or mortgage created on such land or interest by an
agriculturist in favour of a credit agency as security for financial
assistance given to him by such agency after the commencement of
this Act and prior to the creation of the charge or mortgage in
favour of the State Government or the co-operative society; and
(b) any charge or mortgage created on any land or interest therein
in favour of a credit agency as security for financial assistance
given to an agriculturist by that credit agency shall have priority
over any other charge or mortgage that may have been created over
such land or interest in favour of any person other than the State
Government, a co-operative society or any other financial
institution prior to the date on which the charge or mortgage was
created in favour of the credit agency.
(2) Where different charges or mortgages over the same land or
any interest therein have been created or executed by an
agriculturist in favour of,-
(i) the State Government; or
(ii) a co-operative society; or
(iii) one or more credit agency,
such charges or mortgage out of them as is created or executed as
security for the financial assistance given as term loan for
development purposes shall have priority over the other charges or
mortgages:
Provided that prior notice thereof had been given to, and
concurrence had been obtained of the State Government or the co-
operative society or the credit agency, as the case may be.
(3) Where more than one charge or mortgage had been created or
executed as security for the financial assistance given as term loan
for development purposes, the charges or mortgages shall have
priority in accordance with the dates of their creation or execution.
Explanation.- For the purposes of this section, ''term loan for
development purposes'' means financial assistance which would

69 KLES’s IMSR
 generally lead to improvement of agricultureand or building up of
assets in agriculture but shall not include financial assistance for
meeting working capital expenses, seasonal agricultural operations
and marketing of crops.
KVG Bank’s Recovery of Loans
During the DCB year 2005-2006 i.e. end of June 2006
the Bank had achieved a recovery rate of 73.52% to Demand
as against the corresponding ratio was Rs. 758.68 Crores.
This achievement was possible due to various recovery
strategies adopted by the Bank as well as the involvement of
staff at all levels. The recovery steps adopted include visits of
recovery squad from Head Office, Regional Office, Group
Approach for recovery involving staff of neighboring
Branches, seizing of hypothecated assets, seeking co-
operation of the Government Officials and “Spandana”
Programme to create awareness among borrowers and fixed
day visits of Officers to villages to enable the officials to
contact the rural clients etc.
SECTORWISE DCB POSITION AS ON 30-06-2006 (Amount in Crores)
Demand
Outstanding

Collection

Balance
Less 1 to 3 3 to 5 5 to 8 Above Total
than 1 years years years 8 years over
Sector year Dues % of
OD

Amt Amt Amt Amt Amt Amt Amt Amt Amt

Crop Loans 708.64 453.75 320.33 74.27 36.56 3.49 1644.33 2.67 133.42 29.40
Agri Term 267.95 75.30 51.75 8.64 8.27 1.45 273.82 2.44 23.55 31.27
Loans
Allied Activity 47.89 12.52 7.93 1.19 1.65 0.70 75.80 0.28 4.58 36.60
General Loans 415.74 250.10 185.26 23.74 25.06 8.03 489.74 3.10 64.84 25.92
Others 337.18 240.20 193.40 14.52 19.57 6.88 310.18 2.74 46.80 19.48
(JL\LD\ODD\
NNPS loans to
public, CDLF,
Staff loans
etc.)
Total 1777.40 1031.87 758.68 122.36 91.11 20.55 2793.87 11.23 273.19 26.48

70 KLES’s IMSR
 FINDINGS

 It was found that almost all Borrowers of KVG Bank

preferred KVG Bank because of low rates of interest and
various schemes provided by the bank.

 It was found that many of the clients or borrowers are

satisfied with the services provided by KVG Bank.

 It was also found that KVG Bank has provided financial

assistance almost all only to those who have good experience
in their project.

 It was found that the documentation procedure in KVG Bank

is very long and difficult to follow and some times too risky
also.

 The recovery period for the loan taken from the KVG Bank
was very short and due to this some of the proprietors are
finding difficulty in proper repayment of the loan amount to
the proprietors or the borrowers of the bank.

71 KLES’s IMSR
 RECOMMENDATIONS

1. KVG Bank has to maintain quality

2. The Bank should take measures to sanction financial

assistance by taking less processing time so as to
eliminate delay in implementing the project.

3. The bank has to keep continuos contact with the

borrowers, which will help the bank in quick
disbursement and improves customer relationship.

4. The bank has to conduct meetings with the borrowers

and should try to solve the problems faced by the bank.

5. The recovery policy adopted by the KVG Bank should

be improved, continuos interaction and follow-up
definitely helps the bank to increase the ratio of
recovery.

6. KVG Bank should implement computerization to a

large extent and surplus staff should be removed by
modifying the Organization Structure.

7. Targets should be set to the recovery officers and

special incentives should be provided to those officers
who achieve their objectives.

72 KLES’s IMSR
 CONCLUSION

The basic objective of any Bank is to maximize the wealth.

The amount of such profits largely depends upon the magnitude of
loans assisted and the recovery of those loans. Each component of
recovery has two dimensions Time and Money when it comes to
recovery of loans “Time is Money”.

A study of Recovery Procedure, which I have chosen as the

topic of my project in Karnataka Vikas Grameen Bank, Head
office Dharwad, is the main and the key department, which plays a
vital role in collection of the sources of funds for the Bank which
in turn will be used for refinancing for the industrial concern. Thus
in the bank this department should work at its best level to make
the bank a profitable one. A good recovery depends on good
portfolio of loans and good loan portfolio means, low default ratio,
higher percentage of recoveries to recoverable amount, lesser
rescheduling, lower waivers\write offs.

73 KLES’s IMSR
 BIBLIOGRAPHY

www.kvgbank.com
www.NABARD.com
www.syndicatebank.com
www.rbi.org.in
www.google.com

74 KLES’s IMSR