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all that information .it gave me outlook to understanding the problem but most
respondents were unable to give exact dates, documents and specific of their exp
eriences so I couldnt include that in some cases, My data collection was strict
ly confined to secondary source thus is subject to slight variation than what th
e study includes in reality.
Chapter no 1: INTRODUCTION
Introduction:
A branch of accountancy that classifies ,records, determi
nes, profit and loss and arranges data for farm accounting decisions through ana
lysis of farm transaction .in any organization economic activities are the sourc
e of their transaction .the nature of any organization economic activities are
the source of their transaction.the nature of transaction depends on such econom
ic activities .in an agricultural farm the nature of transaction on the characte
ristics of their economic activities ,production process,nature of input and out
put ,warehousing and marketing system .the nature of transaction of an agricultu
ral farm is not the same as in other types of trade ,industry or commerce.the pr
inciples and techniques of accounting farm transaction in accordance with their
typicalitys.
Scope of the project:
Bank and Pathsanstha has given various guidelines ,advice and projection
for obtaining the finance from the banks and other financial services. And deve
loping of the Bank and Pathsanstha keeping in the view economic of the country.
I have under taken the study of fast developing Bank and Pathsanstha with refere
nce to this financial position .it is necessary to under taken the impact of any
other Bank and Pathsanstha and various services provide to their clients.
Objective of the project
a)To analyze the market stages and adopted by the bank ,
b) To know & understanding how the bank sanction the loan
c) To examine whether part of the produce and products of the farm are consumed
by the family, such consumption is treated as income of the farm and drawing of
the farm owner
e) In farming activity the output of one farming activity may become the input o
f another farming activity .e.g. part of the crop produced may be used in cattle
rearing ,pig production and poultry farming
f) To what extent isfarm accounting useful in typical management decision on a f
arm.Every farmer is a manager because she has to make decision regarding the org
anization of his farm in the immediate future.
2.1) Bank
A K.S.P. NagariPathswatha was established by the 2000 .The K.S.P. NagariPathswat
ha is branch of the bank of India. thisPathswath purchases 50% share of the bank
of India.thispathswatha follow the rule and regulation act of Reserve bank of I
ndia.its primary activity is to lead money.many financial activities were allowe
d over time .for example banks are important players in financial markets and of
fer financial services such as investment funds. An efficient banking system is
recognized as basic requirement for the economic development of any economy. Ban
ks have economies and politics for centuries .Historically,the primary purpose o
f a bank was to provide loans to trading companies. Banks provided funds to allo
w business to purchase inventory , and collected those funds back with interest
when the goods were sold. For centuries,the banking industry only dealt with bus
iness ,not consumers .banking services have expanded to included services direct
ed at individuals, and risks in these much smaller transaction are pools.
2.2) Economic Functions:
The economic functions of bankinclude:
Issue of money,in the form of banknotes and current accounts subject to cheques
or payment at the customers order. These claims on banks can act as money because
they are negotiable and / or repayable on demand,and hence valued at par.They a
re effectively transferable by mere delivery,in the case of banknotes or by draw
ing a cheques that the payee may bank or cash.
Credit intermediation-banks borrow and lead back to back on their own account as
middle me
Credit quality improvement: banks lend money to ordinary commercial and personal
borrows,but are high quality borrowers.
2.3) Entry regulation:
Currently in most jurisdictions commercial banks are regulated by Private entiti
es and require a special bank license to operate. Usually the definition of the
business of banking for the purposes of regulation is extended to include accept
ance of deposits, even if they are not repayable to the customer s orderalthough
money lending, by itself, is generally not included in the definition. Unlike mo
st other regulated industries, the regulator is typically also a participant in
the market, Central banks also typically have a monopoly on the business of issu
ing banknotes. However, in some countries this is not the case. In the UK, for e
xample, the Financial Services Authority licenses banks, and some commercial ban
ks (such as the Bank of Scotland) issue their own banknotes in addition to those
issued by the Bank of England. Issue of money, in the form of banknotes and cur
rent accounts subject to chequeor payment at the customer s order. These claims
on banks can act as money because they are negotiable and/or repayable on demand
, and hence valued at par. They are effectively transferable by mere delivery, i
n the case of banknotes, or by drawing a cheque that the payee may bank or cash.
Netting and settlement of payments banks act as both collection and paying agen
ts for customers, participating in interbank clearing and settlement systems to
collect, present, be presented with, and pay payment instruments. This enables b
anks to economies on reserves held for settlement of payments, since inward and
outward payments offset each other. It also enables the offsetting of payment fl
ows between geographical areas, reducing the cost of settlement between them.
. Credit intermediation banks borrow and lend back-to-back on their own account
as middle men.
. Credit quality improvement banks lend money to ordinary commercial and persona
l borrowers (ordinary credit quality), but are high quality borrowers. The impro
vement comes from diversification of the bank s assets and capital which provide
s a buffer to absorb losses without defaulting on its obligations. However, bank
notes and deposits are generally unsecured; if the bank gets into difficulty and
pledges assets as security, to raise the funding continue to operate, this puts
the note holders and depositors in
an economically subordinated position
CHAPTER NO:2
Literature review
ment and agricultural output. Among earlier studies, Binswanger and Khandker (19
92) found that the output and employment effect of expanded rural finance has be
en much smaller than in the nonfarm sector. The effect on crop output is not lar
ge, despiIndia has systematically pursued a supply leading approach to increase
agricultural credit. The objectives have been to replace moneylenders, relieve f
armers of indebtedness and to achieve higher levels of agricultural credit, inve
stte the fact that credit to agriculture has strongly increased fertilizer use a
nd private investment in machines and livestock. High impact on inputs and modes
t impact on output clearly mean that the additional capital investment has been
more important in substituting for agricultural labor than in increasing crop ou
tput.
Between bank nationalization in 1969 and the onset of financial liberalization i
n 1990 bank branches were opened in over 30,000 rural locations which had no pri
impressive growth. The Bank registered highest ever Net Profit of Rs. 615.20 Cro
res for the financial year 2010-2012 compared to Rs.512.38 Crores for the financ
ial year 2009-10,registering 20.07% surge.The Return on Average Net Worth, Earni
ngs per Share and Book Value per Share for the financial year 2010-11 stood at 1
8.96%, Rs. 126.9/- and Rs. 717.58/- , against 18.19%, ` 105.69 and ` 621/- respe
ctively for the previous year.
3.3) Products and Services
3.3.1) Products
Bank of Indiabank renders varieties of services to customers through the followi
ng products:
Personal Loan Product:
K.S.P Term Deposits
K.S.P Recurring Deposits
K.S.P Housing Loan
K.S.P Car Loan
K.S.P Educational Loan
K.S.P Personal Loan
K.S.P Loan For Pensioners
3.3.2) Services:
Domestic Treasury ,Broking services, Revised Services Charges.
CHAPTER NO:4
Research methodology
RESEARCH
Research in common preference refers to a search for knowledge. Onevcan also def
ine
Research as scientific and systematic search for pertinent information on specif
ic Topic.
In fact research is an art of scientific investigation .Research is an academic
activity and
As such the term should be used in a technical sense.According to Clifford Woody
Research comprise defining and redefining problems,formulating hypothesis or
Suggested solution;collecting ,organizing and evaluating data; making deduction
and
Reaching conclusion;and at last carefully testing the conclusion to determine wh
ether
They fit the formulating hypothesis.
METHOLOGY
Finance,Human resource,Marketing research is systematic gathering ,recording and
analysis of data
Collected by various techniques to assess the response to different parameters
Related to a given project and accordingly prepare a report based on which the
Bank and Pathsanstha can have a view of the market and problem areas and opportu
nities.These help the Bank and Pathsanstha to formulate various alternates for t
he solutions and Take correct decision.
These decision are highly crucial in determining the marketing strategy to be ad
opted.
There are number of objective of research which are as follow:
To test a hypothesis of causal relationship between variables (such studies are
Known as hypothesis-testing research studies);
To gain familiarity with a phenomenon or to achieve new insight into it (studies
with
This objective in view is termed as exploratory);
To portray accurately the characteristics of a particular individual,situation o
r a
Group (studies with those object in view are descriptive research studies);
Loan amount Maximum of Rs 50000/ .out of which maximum consumption credit will b
e Rs 10000/
What documents you need to provide
(1) Proof of residence
(2) Proof of identity
(3) Affidavit in the prescribed format, duly notarized
5.2.2] Investment Credit
a] kisan cold loan: To sanction hassle free term loans to farmers having excelle
nt repayment record. Investment credit for which term loans are ordinarily sanct
ioned are covered. Consumption loan to meet domestic expenses like childrens educ
ation, marriage, medical expenses etc.are also be included to the extent of 20 %
of limitFarmers with excellent repayment record for at least past 2 years. New
farmers with sizeable deposits with our branches for 3 to 4 years. Good borrower
s with other Banks. Farmers who have defaulted in repayment but have liquidated
the out standings. Farmers who have closed accounts without any default in the l
ast three years but are not our current borrowers
b]GraminBhandaran Credit:
This scheme is for creating scientific storage capacity in the rural areas for s
toring farm produce ,thereby prevent distress sale of produce by the farmers aft
er harvest ,by promoting pledge financing and marketing credit. Depending on the
project cost. Maximum Project cost will be Rs 1500/ to 2000/ per tonne capacity
for construction and Rs 500/ per tonne for renovation NABARD is providing back
end subsidy for the projects financed by the Banks ,depending on the location an
d capacity of the godowns
c] Minor Irrigation Schemes: Credit for creating irrigation facilities from und
erground / surface water sources all structures and equipments connected with it
are also financed. Loans cover various activities like digging of new wells (ope
n/bore wells), deepening of existing wells (traditional/in well bore), energisat
ion of wells (oil engine/electrical pump set), laying of pipe lines, installing
drip/sprinkler irrigation system and lift irrigation.
d] Finance to Horticulture: Loans for development of fruit orchards like mango,
chikoo, Guava, Grapes, pomegranate, apple, lechee etc., as well as short term fr
uit crops (banana, pineapple etc.), flowers in open and green houses (roses, car
nation, chrysanthemums, jasmine etc.) and vegetable crops (potato, tomato, brinj
al, gourds, peas etc.) are financed.
5.2.3]PRE SANCTION ASSEMENT
a) Assessment Indicative List of Activities
Once the appraisal of a proposal is done, the proposal is sent for assessment. F
ollowing is
a list of activities to be carried out while assessing a proposal:
Review the draft proposal together with the back-up details/ notes, and the
Borrowers application, financial statements and other reports/ documents
Examined by the Appraiser.
Interact with the Borrower and the Appraiser.
Carry out the pre-sanction visit to the applicant Bank and Pathsanstha and their
project/ factory.
Peruse the financial analysis (Balance Sheet/ Operating Statement/ Ratio Analysi
s.
Funds Flow Statement/ Working Capital Assessment/ Project Cost and Sources.
b )Recommendation for sanction:
Recapitulate briefly the conclusion of the appraisal and state the proposal is e
conomically viable.
Recount briefly the value of the Bank and Pathsansthas/ Groups connections
State whether, all considered, the proposal is a fair banking risk.
Finally, give
recommendations for grant of the requisite FB and NFB creditfacilities.
c)Sanction Indicative List of Activities
If any critical information is not provided in the proposal, remit it back to th
e
Assessor for supply of the required data/ clarifications.
Examine critically the following aspects of the proposed exposure in the light o
f the
corresponding instructions in force:
d)Sanction
Accord sanction of the proposal on the terms proposed or by stipulating modified
or
additional conditions/ safeguards
Defer decision on the proposal and return it for additional data/ clarifications
OR
Reject the proposal, if it is not acceptable, setting out the reasons for that.
e)General Guidelines for Pre-Sanction Process
Functional Responsibilities
Wherever two functionaries are assigned, the functions relating to a single stag
e (for
example Appraisal), they will carry out all the functions relating to this stage
either
Individually or jointly. Following are the functional responsibilities: The seni
or functionary will decide the requirement in this regard.
Each of them will carry the responsibility for discharging the functions with d
ue diligence.
Wherever a functionary or an Officer at a Controlling Office is assigned the ta
sk of additional assessment, such functionary/ Officer will carry out all the fun
ctions required for assessment, either individually or jointly with the function
aries at the Branch as required. o The functionary/ Officer at the Controlling O
ffice will decide the requirement in this regard.
The additional assessment functions will not ordinarily require for each case a
presanction visit and/ or interaction with the Appraiser/ Borrower.
However, if they are considered necessary, they will also be performed as part
of additional assessment.
f) At the appraisal stage, the Appraiser will then review the proposal (includin
g background papers) in full form, i.e. complete in all respects as a draft.
g]
Administrative Clearance
While exercising financial powers vested in them, the Banks officials may have to
seek prior administrative clearance (AC) from higher authorities as laid down b
y Credit Policy and Planning Department (CPPD) from time to time. The system of
AC affords an opportunity for prioritization of the banking business from a macr
o perspective. However, a credit decision on any proposal has to be viewed from
the overall merits of each case and not merely on the basis of the AC. The AC ac
corded by Circle Credit Committee (CCC)/ Central Office Credit Committee (COCC)
is valid for 8 weeks. In case the credit proposal is not submitted to the approp
riate Sanctioning Authority (SA) within this period, a fresh AC will have to be
obtained.
h)Concurrent Borrowing
Before sanctioning any credit limit, the Branch should ensure that the applicant
is not enjoying similar or other credit facilities with other banks. Normally,
multiple borrowing/ multiple facilities to the same Borrower from two or more ba
nks should not be allowed. In case the applicant is found to have any credit fac
ility from any other bank or financial institution (FI), detailed information sh
ould be called from the concerned bank/ FI. Along with the loan application, the
applicant should submit a declaration regarding the existing credit arrangement
s. He should also furnish an undertaking that stocks will not be hypothecated to
any other bank without prior approval of the Bank. Such multiple borrowings by
persons, without the Banks written consent, should be viewed as financial in disc
ipline.In case it is subsequently found that the Borrower had made a false state
ment in regard to concurrent borrowings, the advances will be recalled forthwith
DOCUMENTATION
Following are the documents used under agriculture credit:
Hypothecation agreement
Deed of guarantee
Deed of mortgage
Letter to the borrower demanding repayment of crop loans
Supplemental hypothecation agreement
Supplemental deed of guarantee
Deed of extension of mortgage to cover the aggregate limit
Deed of mortgage by the guarantor
CONTROL REPORTS
Control report to be submitted in duplicate
One copy shall be received by bank with comments of controlling authority.
Attend the observation and submit reply to controlling authority.
POWER EXERCISED BY FO/ MOD
Control report to their controlling authority i.e. branch manager.
Simple listing to controller at month end
INSPECTIONS
Before making field visits to villages, field officials should jot down the acco
unt-wise particulars e.g. ,total outstanding, over dues, last date of credit and
amount credited, interest applied in respect of each borrower in relative folio
of the village-wise inspection register.
Bank is offering are: Retail Banking Business Banking Merchant Establishment Ser
vices (EDC Machine) Personal loans & Car loans Insurance Housing Loans
Weakness
Lack of proper technology driven services when compared to private banks.
Employees show reluctance to solve issues quickly due to higher job security and
customers waiting period is long when compared to private banks.
The bank spends a huge amount on its rented buildings.
SBI has the largest number of employees in banking sector; hence the bank spends
a considerable amount of its income in employees salary compensation.
In spite of modernization, the bank still carries the perception of traditional
bank to new age customers.
Opportunities
SBIs merger with five more banks namely State Bank of Hyderabad, State bank of Pa
tiala, State bank of Bikaner and Jaipur, State of bank ofTravancore and State ban
k of Mysore are in approval stage
CHAPTER NO:6
LEARNING OUTCOMES
In this duration for summer internship project period I have learnt the followin
g things:
Cash book entry
Passbook entry
Account opening system
Net banking
Cheques book entry
Handling customer
Distribution the payment slip
Employees salary payment
Allowance paid
Tax rate
Saving account process
Agricultural loan scheme system
Loan requirement should be learn
Export import
Rule follow up
CHAPTER NO:7
FINDINGS AND OBSERVATION
Some people are in confusion over the interest rates of the credit provided to t
hem by the different bank
State bank of India is strictly following the guidelines of RBI on Project Finan
cing.
Sanctioning for the projects is approved by RASMECC (Retailed Assets Small and M
edium Enterprises Credit Cell).
The bank finances the projects only through term loans.
Interest rates are fixed depending upon the projects which is known as State Ban
k advance rate.
When the clients fail to pay the interest, 3 months from the due date the term l
oan granted will be treated as Non-Performing Assets.
If the interest is due further 3 more months then it will be treated as doubtful
assets and interest rates becomes zero.
Again for further 3 months it goes as loss assets and the bank write off the acc
ount.
CHAPTER NO :8
Suggestions, Conclusions and Limitations
Education should be given prompt attention and new schemes should be developed f
or this purpose
People should be informed about the new schemes of the K.S.P bank so that maximu
m profit can be generated by using these schemes by a customer.
Banks has to grant the loans for the establishment of business at a moderate rat
e of interest. Because of this, the people can repay the loan amount to bank reg
ularly and promptly.
Bank should not issue entire amount of loan to agriculture sector at a time, it
should release the loan in installments. If the climatic conditions are good the
n they have to release remaining amount.
K.s.p .has to reduce the Interest Rate.
K.s.p has to entertain indirect sectors of agriculture so that it can have more
number of borrowers for the Bank.
Give the opportunities of the employee and the student
To maintain proper accounting recorded
Help the owner the obtain loan from the bank.
Collect the right information other employee
Changes the furniture of the bank
Use the technology
It will help the farmer in obtaining loans from banks and other financial instit
utions because they give loans on the basis of proper accounting records.
It will not only make the farmers free from clutches of the village money lenders
but will also reduce their indebtedness.
LIMITATIONS
Data collection was strictly confined to secondary source thus is subject to sli
ght variation than what the study includes in reality.
There were various technical terms used in the project, which were difficult to
understand
Persons are defined under payment limitation regulations, established by USDA, t
o be individuals, members of joint operations, or entities such as limited partn
erships, corporations, associations, trusts, and estates that are actively engag
ed in farming.
CONCLUSION:
The project undertaken has helped a lot in gaining knowledge of the PRE-SANCTION
& POST SANCTION AGRICULTURE LAND in Nationalized Bank with special reference to
State Bank Of India. Pre-sanction and Post sanction in the agriculture land of t
he Bank has become very vital in the smooth operation of the banking activities.
Agriculture credit scheme of the Bank provides the growth of agriculture sector
(a) whether to provide by the agricultural loan (b) how much credit to extend.
The Project work has certainly enriched the knowledge about the effective manage
ment of Agriculture loan and Different agriculture credit schemes in banking sector.
Pre & post sanction of land and agri. Credit schemes is a vast subject and it is ver
y difficult to cover all the aspects within a short period. However, every effor
t has been made to cover most of the important aspects, which have a direct bear
ing on improving the financial performance of Banking Industry
To sum up, it would not be out of way to mention here that the State Bank Of Ind
ia has given special inputs on Agriculture loan and Credit Risk Management. In pursu
ance of the instructions and guidelines issued by the Reserve Bank of India, the
State bank Of India is granting and expanding credit to all sectors.
The concerted efforts put in by the Management and Staff of State Bank of India
has helped the Bank in achieving remarkable progress in almost all the important
parameters. The Bank is marching ahead in the direction of achieving the Number
-1 position in the Banking Industry.
BIBLIOGRAPHY
NAME OF THE BOOKS REFER
PANDEY, I.M,(2010).Financial Management.Vikas Publishing House Ltd.
Khan ,M.Y. & Jain ,B.K.(2009).Financial Management Tata Mcgraw hill
Co.Ltd.
Web source retrieved from
http://www.mcmullan.net/eclj/BOT.html
http://www.worldbank.org
http://www.google.com