INTRODUCTION

1) Agriculture

Agriculture is most important enterprise in India. It is a very broad term comprising all
aspect of production .It provides food for population ,fodder for livestock & fulfills needs like
fiber, Fuel, timbre, wood & Raw Material to various industries.

Agril : Soil.
Culture: Cultivation.

2) Agricultural Finance

The funds are required for the agriculture & for its allied activities. It provides financial
assistance to various purposes or agriculture operation for short & medium periods like minor
Irrigation, Land Development, soil conservation, Farm mechanization, Plantation &
Horticulture , cold Storage & other Allied activities.

3) Direct Agriculture loans

It means short term production & investment loans provided directly to farmers for
agriculture purposes. This would also include such loans provided directly to farmers for
agriculture Purposes.

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4) Need of agriculture finance

2/3rd population depends on agriculture. Low growth in agriculture output results in rise in
food prices. Majority of the poor are farmers, a labour & casual labour therefore for reduction
ultimately & elimination of poverty. Agriculture has a significant share in GDP . If GDP is low
then overall GDP is fall down.

5) AGRICULTURAL FINANCE

Since independence India has made substantial progress in respect of agricultural finance.
The reports of all India Rural Credit Survey Committee and All India Rural Credit Review Show
That farmers were entirely dependent sources of credit. Money Enders is main sources of credit.
They were most convenient and easiest source. His administration as simple and flexible. The
Indian government launched the three-tier banking structure in India. At the apex is NABARD at
the middle level are the urban co-operative banks (UCBS) and a few public sector banks (PSBS);
and at the base are Primary Agriculture credit societies (PACS).

NABARD

UCBS, PSBS

PACS

~2~

Finance in villages is of two types

1. Agricultural finance (credit)
2. Non Agricultural finance

Agricultural credit is of two types

1. Production credit
2. Consumption credit

Agriculture
Agriculture is the backbone of the indian economy. It is the largest industry of the contry.in
India 70% of workforce still engaged in Agriculture & allied activities. At present (1990-91)
Agriculture is the main source of supply & support for Indian transport.
The Agriculture is the main source of raw material for leading industries. it is largely standes
for prosperity of our country. the agriculture gone through the various stages like Green, White,
and Yellow Revolution to floriculture. The drastic change take place from independence to today.
Role of Agriculture in India

A Flourishing Agriculture sector is far more important for the development of the Indian
economy.

Since farming is less a business than a tradition in India. Even at this stage about 80%
population lives in rural areas & directly or indirectly depends on Agriculture for its live
hood

About 85 crores of persons which are further multiplying at the rate of 2.5% per annum
depends on Agriculture sector.

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Most of our traditional industries depends on the our bulk or foreign earnings draw their
raw material from this sector.

The surplus generated by this sector would help Indian economy to reach the Golden
Stage

The share of Agriculture in national income plays crucial indicator in the economic
development of country.

It supplies the necessities of life today Agriculture is feeding about 100 million people.
Food production crossed mark of 200 millions tones in 1999-2000.

Agriculture has a greater role in economic development in the less developed countries as
it provides livelihood to a vast majority of people living in the country.

It provides offers enormous scope of alternative employment.

Agriculture exports constitute a major portion of Indias exports & accounted for 50% of
the export at present.

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INDUSTRY PROFILE

EVOLUTION OF BANKING IN INDIA

Modern banking as evolved in England was introduced by the English during their rule in India.
Naturally, todays Indian banking is similar to the British banking. It is not mean that it is
unknown for the India. The Essence of banking is lending for productive purposes. in fact India
was a major partner in the international trading and was a big producer of steel,cloths,rices and
luxurious articles .
There are references to rate of interest security of loans in the Manusmrity.kautilya inthe ARTHA
SHASTRA mentions rate of interest, security deposits and discounting of bills. they were called
Hundises . The y were called Hundies. The big merchants ,traders and moneylenders called
nagarseths occupied important position in Mughal and maratha courts. They had efficient courier
system, extensive branches all over India.
.However, the British introduced modern banking with its double entry principle and
mobilization. Banking business is mainly linked with to lending.

STAGES

Agency houses.

Presidency Banks.

Joint stock Banks.

Imperial banks.

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Establishment of the RBI.

Nationalization of the RBI and the Banking Regulation Act.

Nationalization of Banks in 1969 and 1980.

The Indian banking sector has emerged as one of the strongest drivers of Indias economic
growth. The Indian banking industry (US$ 1.22 trillion) has made outstanding advancement in
last few years, even during the times when the rest of the world was struggling with financial
meltdown. India's economic development and financial sector liberalization have led to a
transformation of the Indian banking sector over the past two decades. Today Indian Banking is
at the crossroads of an invisible revolution. The sector has undergone significant developments
and investments in the recent past. Most of banks provide various services such as Mobile
banking, SMS Banking, Net banking and ATMs to their clients.
Indian banks, the dominant financial intermediaries in India, have made high-quality progress
over the last five years, as is evident from several factors, including annual credit growth,
profitability, and trend in gross non-performing assets (NPAs). While annual rate of credit
growth clocked 23% during the last five years, profitability (average Return on Net Worth) was
maintained at around 15% during the same period, while gross NPAs fell from 3.3% as on March
31, 2006 to 2.3% as on March 31, 2011.
The Indian banking sector is a mixture of public, private and foreign ownerships. The below
table highlights top 10 banks which contributed 58% share of the total credit as on March 31,
2011. The State bank of India has recorded highest market share. The Net Interest Margin of
HDFC Banks is 4.2% which is highest among others.
The Credit off-take has increased at a CAGR of 19.9 % over FY 06- 11. The Deposits have
grown at a CAGR of 18.2% over FY 06-11 on account of strong growth in saving account. The
net NPA has increased from 1% in FY 2008 to 1.12% in FY 10. The High interest rates and lower
economic growth has impacted the repayment capacities of borrowers and hence pushing up the
NPAs of banks. The net NPA decelerated from 1.12% in FY 10 to 0.97% in FY 11.

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Indian banks enjoyed higher levels of money supply, credit and deposits as a percentage of GDP
in FY11 as compared to that in FY10 showing improved maturity in the financial sector. Credit
growth remained high in the first half of FY11 on account of increased demand from industry
and the service sector. Personal loans grew significantly by 17% during 2010-11 as compared
with 4.1% during the previous year.

HISTORY
Although some form of banking, mainly of the money-lending type, has been in existence in
India since ancient times, it was only over a century ago that proper banking began. The first
bank in India, though conservative, was established in 1786. From 1786 till today, the journey of
Indian Banking System can be segregated into three distinct phases. They are as mentioned
below:

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 Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms
New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991
The banking industry has moved gradually from a regulated environment to a deregulated market
economy. The market developments kindled by liberalization and globalization have resulted in
changes in the intermediation role of banks.
The pace of transformation has been more significant in recent times with technology acting as a
catalyst. While the banking system has done fairly well in adjusting to the new market dynamics,
greater challenges lie ahead.

BUSINESS DIVISION
Retail banking - Loans to Individuals (Auto loan, Housing Loan, Education Loan and other
personal loan) or small businesses.
Wholesale banking Loans to Mid and Large corporate (Working Capital loans, Project
finance, Term loans, Lease Finance)
Treasury Operations Investment in Equity, Derivates, Commodities, Mutual Funds, Bonds,
Trading and Forex operations
Other Banking Businesses Merchant Banking, Leasing business, Hire purchase, Syndication
services etc.

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COMPANY PROFILE
THE ORGANISATION SET UP OF SBI

Type of the Bank

Number of SBI Branches all over India
Number of Associate Banks
The Corporate Centre
Local Head Offices
Zonal Offices
Number of ATM centres all over India
Number of Foreign Branches
Chairman of SBI
MD of SBI

Public Sector Bank

13,533
7
Mumbai
14
57
8500
67 in 29 countries
Mr. O. P. Bhatt
Mr. S. K. Bhattacharyya

7 ASSOCIATE BANKS OF SBI

State Bank of Bikaner & Jaipur

State Bank of Hyderabad
State Bank of Mysore
State Bank of Indore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Tranvancore

IMPORTANCE OF SBI IN BANKING BUSINESS

~9~

Though the SBI was established as a commercial bank, but with its efforts a new era
of mixed banking system ushered in the country.

The operations of SBI are not only confined to the urban sector but also to the rural
areas.

Financing to agriculture & other priority sectors could also be a viable commercial
activity was proved by the experience of SBI.

SBI has accounted for 29% of total banking business.

OUTSTANDING ACHIEVEMENTS OF SBI

SBI Chairman Mr. O. P. Bhatt has been declared CNN-IBNs Businessman of the year
2007.

SBI Chairman Mr. O. P. Bhatt has been awarded the Transformational Leader Award
2007.

SBI has bagged the awards for Most Preferred Bank & Most Preferred Branch for
Home Loans in CNBC Awaaz Consumer Awards of August 2007.

SBI is the only Indian bank to find place in the Fortune Global 500 list.

THE VISION OF SBI

~ 10 ~

With 4 National level Apex Training Colleges & 54 Learning Centres spread all over the
country, the bank is continuously engaged in skill enhancement of its employees.
SBI is entering into many new businesses with strategic tie-ups Pension Funds, General
Insurance, Custodial Services, Private Equity, Mobile Banking, Advisory Services, Structured
Products, etc.

It's a vision to make SBI a truly global bank.

PRODUCT & SERVICES OF THE BANK

Depository Products:SBI is now offering following types of depository products for mobilizing the savings of
the general people:

Current Account

Savings Account

Fixed Deposit

SBI Recurring Deposits

Foreign Currency Deposit Account

Loan Products:-

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SBI is offering the following loan & advance products to the client that provide good
return to the investment as well as to satisfy the client:

SBI Housing Loan

SBI Personal Loan

SBI Education Loan

SBI Car Loan

SBI Loan for Pensioners

Loan Against Mortgage of Property

Loan Against Shares & Debentures

Loan Schemes like Rent plus Scheme, Modi-Plus Scheme.

Corporate Banking:

Assistance extended both as Fund based and Non-Fund based facilities to Corporates,
Partnership firms, Proprietary concerns.

Working Capital financing to all segments of industries and services sector such as IT.

Personal Banking Products:

ATM Card Service

Credit Card Services

Demat Account Statement

Bill Payment

~ 12 ~

Demand Draft

Transaction Enquiry

Government Business:

Centralised Pension Processing Centre (CPPC).

Government Accounts.

Public Provident Fund.

Senior citizens savings scheme.

INTERNET BANKING FACILITIES PROVIDED BY SBI

The Internet banking portal of SBI, enables its retail banking customers to operate their
accounts all across India, removing the restrictions imposed by geography and time. It's a
platform that enables the customers to carry out their banking activities from their desktop, aided
by

the

power

and

convenience

of

the

Internet.

Availing the Internet banking services, the following normal banking transactions can be
done online:

Self-account funds transfer across India.

Third party transfers in the same branch

New account opening

Demand Draft requests

~ 13 ~

New Cheque-book request and much more.

Apart from these, the other salient value-added features available are:

Railway tickets booking

Utility bill payments

LIC and other insurance premium payments

SBI Mutual funds Investments

Credit card dues payments

Depositing taxes

Donations to Red Cross and such other organisations

All this is at no cost - It's free! And most important - the site www.onlinesbi.com is
'VeriSign' certified, indicating that it's absolutely safe and secure to transact online.

~ 14 ~

Bank of India

Bank of India (BoI) is an Indian state-owned commercial bank with headquarters in Mumbai,
Maharashtra, India. Government-owned since nationalisation in 1969, Bank of India has 4545
branches as on 31 December 2013, including 54 branches outside India, and about ATMs. [citation
needed]

BoI is a founder member of SWIFT (Society for Worldwide Inter Bank Financial

Telecommunications), which facilitates provision of cost-effective financial processing and

communication services. The Bank completed its first one hundred years of operations on 7
September 2006.

History
Previous banks that used the name Bank of India
At least three banks having the name Bank of India had preceded the setting up of the present
Bank of India.
1. A person named Sagar Rajani set up the first Bank of India in Delhi (Kolkata) in 1828,
but nothing more is known about this bank.
2. The second Bank of India was incorporated in London in the year 1836 as an AngloIndian bank; it is not clear that it ever actually functioned.
3. The third bank named Bank of India was registered in Bombay (Mumbai) in the year
1906.

~ 15 ~

The current bank

The earlier holders of the Bank of India name had failed and were no longer in existence by
the time a diverse group of Hindus, Muslims, Parsees, and Jews helped establish the present
Bank of India in 1906. It was the first in India promoted by Indian interests to serve all the
communities of India. At the time, banks in India were either owned by Europeans and
served mainly the interests of the European merchant houses, or by different communities
and served the banking needs of their own community.
The promoters incorporated the Bank of India on 7 September 1906 under Act VI of 1882,
with an authorised capital of Rs. 10 million divided into 100,000 shares each of Rs. 100. The
promoters placed 55,000 shares privately, and issued 45,000 to the public by way of IPO on 3
October 1906; the bank commenced operations on 1 November 1906.
The lead promoter of the Bank of India was Sir Sassoon J. David (18491926). He was a
member of the Sassoons, who in turn were part of a Bombay community of Baghdadi Jews,
which was notable for its history of social service. Sir David was a prudent banker and
remained the chief executive of the bank from its founding in 1906 until his death in 1926.
The first board of directors of the bank consisted of Sir Sassoon David, Sir Cowasjee
Jehangir, J. Cowasjee Jehangir, Sir Frederick Leigh Croft, Ratanjee Dadabhoy Tata,
Gordhandas Khattau, Lalubhai Samaldas, Khetsety Khiasey, Ramnarain Hurnundrai,
Jenarrayen Hindoomull Dani, Noordin Ebrahim Noordin.

~ 16 ~

1906: BoI founded with Head Office in Bombay.

1921: BoI entered into an agreement with the Bombay Stock Exchange to manage its
clearing house.

1946: BoI opened a branch in London, the first Indian bank to do so. This was also the
first post-WWII overseas branch of any Indian bank.

1950: BoI opened branches in Tokyo and Osaka.

1951: BoI opened a branch in Singapore.

1953: BoI opened a branch in Kenya and another in Uganda.

1953 or 54: BoI opened a branch in Aden.

1955: BoI opened a branch in Tanganyika.

1960: BoI opened a branch in Hong Kong.

1962: BoI opened a branch in Nigeria.

1967: The Government of Tanzania nationalised BoI's operations in Tanzania and folded
them into the government-owned National Commercial Bank, together with those of
Bank of Baroda and several other foreign banks.

1969: The Government of India nationalised the 14 top banks, including Bank of India. In
the same year, the People's Democratic Republic of Yemen nationalised BoI's branch in
Aden, and the Nigerian and Ugandan governments forced BoI to incorporate its branches
in those countries.

1970: National Bank of Southern Yemen incorporated BoI's branch in Yemen, together
with those of all the other banks in the country; this is now National Bank of Yemen. BoI
was the only Indian bank in the country.

~ 17 ~

1972: BoI sold its Uganda operation to Bank of Baroda.

1973: BoI opened a rep in Jakarta.

1974: BoI opened a branch in Paris. This was the first branch of an Indian bank in
Europe.

1976: The Nigerian government acquired 60% of the shares in Bank of India (Nigeria).

1978: BoI opened a branch in New York.

1970s: BoI opened an agency in San Francisco.

1980: Bank of India (Nigeria) Ltd, changed its name to Allied Bank of Nigeria.

1986: BoI acquired Paravur Central Bank (Ernakulam District Kerala State) in a rescue.

1987: BoI took over the three UK branches of Central Bank of India (CBI). CBI had been
caught up in the Sethia fraud and default and the Reserve Bank of India required it to
transfer its branches.

2003: BoI opened a representative office in Shenzhen.

2005: BoI opened a representative office in Vietnam.

2006: BoI plans to upgrade the Shenzen and Vietnam representative offices to branches,
and to open representative offices in Beijing, Doha, and Johannesburg. In addition, BoI
plans to establish a branch in Antwerp and a subsidiary in Dar-es-Salaam, marking its
return to Tanzania after 37 years.

2007: BoI acquired 76 percent of Indonesia-based PT Bank Swadesi.

2011: BoI opened a fully owned Subsidiary in Auckland, New Zealand on 6 October
2011 (Bank of India (New Zealand) Ltd.)

2012: BoI opened a fully owned subsidiary in Uganda on 18 June 2012 (Bank of India
(Uganda) Ltd.).

~ 18 ~

2013: BoI opened a fully owned subsidiary in Botswana on 9 August 2013 (Bank of India
(Botswana) Ltd.).

CMD since nationalization

19691970 : Tribhovandas Damodardas Kansara

19701975 : J.N.Saxena

19751977 : Suparn Rana

19771980 : H C Sarkar

19811984 : N Vaghul

19841986 : T. Tiwari

19871991 : R. Srinivasan

19921995 : G. S. Dahotre

19951997 : G. Kathuria

19971998 : M G Bhide

19982000 : S Rajagopal

20002003 : K V Krishanamurthy

20032005 : M Venugopal

20052007 : M.Balachandran

20072009 : T.S.Narayanasami

20092012 : Alok Kumar Mishra (Former chairman of Indian Bank's Association)

2012present : Vijayalakshmi R Iyer

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THEORETICAL BACKGROUND

Agriculture

Agriculture is most important enterprise in India. It is a very broad term comprising all
aspect of production .It provides food for population ,fodder for livestock & fulfills needs like
fibre, Fuel, timbre, wood & Raw Material to various industries.

Agril : Soil.
Culture: Cultivation.

Agricultural Finance
The funds are required for the agriculture & for its allied activities.it provides financial
assistance to various perposes or agriculture operation for short & medium periods like minor
Irrigation, Land Development, soil conservation, Farm mechanization, Plantation &
Horticulture , cold Storage & other Allied activities.

~ 20 ~

Direct Agriculture loans

It means short term production & investment loans provided directly to farmers for
agriculture purposes. This would also include such loans provided directly to farmers for
agriculture Purposes.

Need of agriculture finance

2/3rd population depends on agriculture. Low growth in agriculture output results in rise in
food prices. Majority of the poor are farmers, a labour & casual labour therefore for reduction
ultimately & elimination of poverty. Agriculture has a significant share in GDP. If GDP is low
then overall GDP is fall down.

AGRICULTURAL FINANCE

Since independence India has made substantial progress in respect of agricultural finance.
The reports of all India Rural Credit Survey Committee and All India Rural Credit Review Show
That farmers were entirely dependent sources of credit. Money Enders are main sources of
credit. They were most convenient and easiest source . his administration as simple and flexible.
The Indian government launched the three-tier banking structure in India. At the apex is
NABARD at the middle level are the urban co-operative banks (UCBS) and a few public sector
banks (PSBS); and at the base are Primary Agriculture credit societies (PACS).

NABARD

~ 21 ~

UCBS, PSBS

PACS

Finance in villages is of two types

1. Agricultural finance (credit)
2. Non Agricultural finance

Agricultural credit is of two types

1. Production credit
2. Consumption credit

1) PRODUCTION CREDIT
a. Short term:
Loans for 15to 18 months.
Loans for meet daily working requirements

cash components

kind component: co-operative marketing societies.

b. Medium term

Loans for 15months to 5 years.

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NABARD gives loan for 18 to 7 years.

Creating capital asset

Purchase livestock,machinery, equipement

c. LONG TERM

5-7 YEARS

Landfencing mechanization construction of farm house, storage facilities

2) CONSUMPTION CREDIT
It is basically for survival of farm familes

Sources of agricultural credit

A) Co-operative credit

Primery co-operative credit :short term

Co-operative land development bank : medium term

B) RBI

THE National agri credit fund(long term & stabilization RBI guidelines

~ 23 ~

Margin and Security

Credit norms finance: cash to kind proportion.

Recovery r default

C) SBI

IT provides financial assistance to marketing.

D) Commercial Banks

Direct finance is granted for agricultural operation for short period.

E) Agricultural refinance

Co-ordinate , guide and assist long term finance.

Help in reduction of regional imbalances.

Reduce regional disparities.

F) RRB

Rural based

~ 24 ~

Cater to need back word areas

Authorized capital structure: Rs. 1 crore

G) NABARD
(National bank for Agriculture and Rural development)

Serve as a an apex refinancing agency.

Co-ordinating the rural financing activity.

Monitoring and evaluation of projects refinanced by it.

H) Government finance

To assist farmers overcome emergencies.

Land Improvement loans Act 1883- Long term

Agriculturist loans Act 1884- short term.

Current Situation *****

~ 25 ~

Agriculture Debt Waiver & debt relief scheme 2008

Hon`ble Union Finance minister during his budget speech for 2008-09 announced above
scheme for farmers. It covers direct agriculture loan extended to marginal & small farmers &
Other farmers. It includes short term production loan & investment loans to farmers for
agriculture purpose.

Short term production loan:

A loan gives in connection with rising of crops which is to be repaid within 18 months.
It includes working capital loans not exceeding rs. 1.00 lacs.

Investment loan:

It related to the replacement & maintenance of wasting asset

E.g Tractor Dug well, installation of pump sets

It divides farmers into 3 types

Marginal farmer

It means farmer cultivating agriculture land up to 1 hectare (2.5 Acres).

Small farmer

Farmer cultivating agriculture land of more 1 hectare up to 2 hectare (5 Acres).

Other farmers

~ 26 ~

Farmer cultivating agriculture land more than 2 hectar (more than 5 Acres).

Salient features

Direct agriculture loans disbursed between mar.31,1997& mar.31.2007 & remaining

unpaid until Feb 29.2008 will be eligible for debt waiver.

Production loan for plantation & horticulture crops to be covered the scheme a ceiling
of Rs. 1.00 Lakh has been prescribed.

Term loans overdue portion as on 31st Dec. 2007 7 which is not repaid up to
29.02.2008 will eligible for waiver in case of small & marginal farmers.

Loans availed by the farmers in for agriculture activities upto 50000 will be eligible
for loan waiver for all farmers.

In case of other farmers there will be one time settlement under which the farmer will
give 25% is rebate & eligible amount pays the balance of 75% eligible amount.

SECURITIES

Securities against which banks lends money can be of two types.

~ 27 ~

Primary Security

Whenever any loan is sanctioned some goods or assets are brought with the help of funds. These
are called Primary Security.

Collateral security

On Primary Security bank don`t have control on goods. The goods are under lock & Key of the
bank. In such cases, bank prefers to insist some additional security which is called as collateral
securities.

Bank of India gives revised margin & security norms for Agriculture Advances.

Sr.No.
1
a.

b.

Type of credit
Margin money
Crop loans & other short
Term loans.

Term Loans

Loan amount
i.
ii.

i.
ii.

Up to Rs. 50000/Over Rs. 50000/-

Up to Rs. 50000/Over Rs. 50000/-

Margin
No Margin.
15to 20%(depend on
quntum of finance).
No Margin.
15to20%.

c.

Security norms
Crop loans & other short
Term loans.

d.

Term loans

i.
ii.

Up to Rs. 50000/Over Rs. 50000

i.
ii.

Up to Rs. 50000/Over Rs. 50000/-

~ 28 ~

Hypothecation of
crops.
Mortgage of land&
third party
guarantee.
Hypothecation of
Asset.
Hypothecation of
Asset. Mortgage of
land.

AGRICULTURE LOAN SCHEMES

AGRICULTURE
Direct finance to farmers for agriculture Purposes

1. Short term loans for raising crops i.e Crop Loan.

2. Medium and long loans

Purchase of agricultural implements and machinery

Purchase of Farm nursery

Development of irrigation potential

Reclamation and land Development schemes

Construction of farm buildings and structures

Construction and running of storage facilities

~ 29 ~

Minor Irrigation for Agriculturists

Purpose

Digging of new wells, revitalization of existing well, purchase of

oil engine, electric motor, pump set installation of pipe line,
sprinkler, irrigation, drip irrigation, tube well, bore well, etc.

Eligibility

Agriculturist who owns agricultural land.

Amount

For new dug wells as per the NABARD Unit costs for
equipments/estimates.

Repayment

Depending upon the repaying capacity 7 to 11 years.

Security

Mortgage of land,
Hypothecation of movable assets and guarantors.

Other Terms & Conditions Proposed well should be located in white watershed area. It
should not be in dark watershed area.

~ 30 ~

Farm Mechanization for Agriculturists

Purpose

Purchase of Tractors/Power tillers

Purchase of Harvesters
Purchase of Threshers & other farm implements

Eligibility

Agriculturist who owns at least 8 acres of Irrigated land. The

Tractor should get at least 1500 hrs of work in a year.

Amount

As per cost of machinery

Repayment

7 to 9 years.

Security

Hypothecation of Tractor/trolley and accessories,

Mortgage of land.

Other Terms & Conditions Comprehensive insurance of machinery with bank clause.

~ 31 ~

Other types ofdirect finance to farmers

Short term loans

Dairy, Fishery, Piggery, Poultry, Bee-keeping.

Medium and long term loans

Plantation, Horticulture, forestry, bio-gas plants.

Indirect finance to agriculture

Credit for for financing to the distribution of fertilizers, pesticides& seeds etc.

Other types of in direct finance

Finance for hire purchase for distribution of machinery and implements.

Cold storage (storage facility) Market yards, godowns

~ 32 ~

LOAN FOR PURCHASE OF AGRICULTURE LAND

Eligibility- small and marginal farmers who would own maximum of non irrigated and
irrigated land, share croppers/ Tenant farmers.

Purpose- purchase, develop and cultivate agrictural land

Margin- upto Rs.50000/- Nil , above Rs.50000/- min. 10% margin

Security- Mortgage of land

Interest Rate-Applicable under scheme.

Repayment period- Loan may be repaid in 7-12 years

Repaying capacity- The financing branch satisfies itself that borrowers have a adequate
surplus.

EXPORT FINANCE

A) Types of pre- shipments finance.

B) Liquidation of packing credit advance.
C) Post shipment finance the advance is against receivables Bank Guarantees in foreign
exchange

Bid bond Guarantees.

Performance Guarantees.

~ 33 ~

Guarantees for advance payment made by foreign buyer to Indian exporter.

KISAN CREDIT CARD (MKCC)

Purpose

Cultivation of crops
Meeting the short-term credit needs of farmers for crop
production and allied activities etc.
Maintenance of farm equipments etc.

Eligibility

Agriculturist who owns agricultural land

Amount

As decided by District Technical committee & limit worked out

for the purpose.

Security

Mortgage of land.
Hypothecation of crop/Assets.

Repayment

Revolving credit facility for 3 years.

Coinciding with harvesting of crops-season/marketing of produce.

Other Terms & Conditions Assured and timely availability of working capital for crop
cultivation.
Borrowers are covered under personal accident insurance scheme.
Insurance for notified crops is available.

~ 34 ~

DEVELOPMENT

OF

COMMERCIL

HORTICULTURE

THOUGH

PRODUCTION AND POST HARVEST MANAGEMENT (N..H.B)

To improve linkage between horticultural producers and marketers To create

integrated network for marketing of horticultural product.

High density plantation, Micro-Propagations.

Horticulture

Purpose

Cultivation of fruit crops-mango, Pomegranate, Grapes etc.

Eligibility

Agriculturist with adequate provision of irrigation

Amount

As per NABARD Unit costs/ Project

Security

Mortgage of land.
Hypothecation of crops.

Repayment

Within 15 years.

~ 35 ~

LITERATURE REVIEW

Mohanlal Sharma (1979) "Structural changes in Indian commercial banking system since
1969: A study of portfolio profits and policy" analyzed the effects of nationalization on
the banking industry in India

T. Radha (2003), impact of Banking sector reforms on the Performance of commercial

banks in India 1989-90 to 1998-99-studied the effects of the Narasimham committee
recommendation on the Agriculture loan.

Dr. N. Bharathi (2007) in her article Indian Banking and Finance - A Paradigm Shiftwrote that the banking industry is currently in a transition phase.

Dun & Bradstreet (2008) (an international research body)" India's Top Banks 2008"-there
has been a significant growth in the banking infrastructure of India. Taking into account
all 82 banks in India, there are overall 56,640 branches or offices, The total assets of all
scheduled commercial banks by end-March 2010 is approximately Rs 40, 90,000 crore.

VM Kumbhar (2009) "Alternative banking: A modern practice in India" the Indian

banking sector has witnessed major transformation during the last 40 year.

It has passed through various phases. In the process, it has embraced superior technology,
new products and services that are customer centric.

~ 36 ~

Indian Bankers Association & McKinsey ( 2010)- Indian Banking 2010- Towards High
Performing Sector- Analysis the state of Indian Banking Industry in the Financial year
2010.

ICRA (2011) Indian Banking Sector: Challenges Unlikely to Derail the Progress MadeAnalysysis the various challenges & opportunities that stand in front of the Agriculture
loan.

~ 37 ~

SCOPE OF THE STUDY

The scope of the study lies in three dimensions.

(a) Scope for the Student
The student studying the topic will get an exposure to the Agriculture Sector,
financial procedure to agriculture credit finance procedure.

(b) Scope for Bank

The BOI and SBI as an organizational study, will come to know the exact feedback
of customers for the schemes & offer they are making towards them it some derivation
will found then definitely it will useful for the Bank itself to improve their functioning.

Scope for the society in general

As the agriculture sector and the farmers are the part and parcel of the society, the
study itself and the findings as such will be definitely useful for the society. The society
in general and farmers in particular can be well understood in terms of the agriculture
Finance procedures.

~ 38 ~

AIMS AND OBJECTIVES OF THE STUDY

Study is undertaken by keeping in the view the following objective.

To know the history and growth of agriculture Sector in India.

To know about the banking & financial institutes in the market, offering agriculture loan.

To study the organizational profile of Bank of India and State Bank of India.

To study the various products & services offered by the Bank.

To know the various aspects of agricultural finance.

To find out the feedback from the farmers who have borrowed loan from SBI and BOI.

To analyse & interpret the data collected.

To give recommendation & suggestion if necessary.

~ 39 ~

HYPOTHESIS

Related to the study undertaken, following statements can be the statements for hypothesis,
1) Agriculture credit/ finance has its impact on the farmers progress
2) Agriculture credit/ finance has no impact on the farmers progress
3) The farmers borrowed loan from SBI and BOI are satisfied

4) The farmers borrowed loans from SBI and BOI are not satisfied.

~ 40 ~

RESEARCH METHODOLOGY

Research Definition:Research is a scientific activity in which decision is made & problem is solved.
Research Methodology
The method or formwork within which the research is to be done is called Research
Methodology.
Type of Research of my study is

Exploratory

Descriptive procedure of BOI & SBI.

Data Collection
(1) Primary Data:In the form of feedback of the farmers collected through questionnaire.
(2) Secondary Data: All the data is collected from the books, publication, Records by the bank. Websites.
Sample Size:The determined sample size for the study is 100 farmers.

~ 41 ~

ANALYSIS & INTERPRETATION OF DATA

A) Age Group

Sr. No.

Age Group

No.of Farmers

Percentage

20-30

4%

30-40

26

26%

40-50

40

40%

50-60

12

12%

60-70

10

10%

70-80

16

16%

100

100%

Total

~ 42 ~

Age of Farmers
40
40
35
30

26

25

No.of Farmers

20

16
12

15
10

10

5
0
20-30

30-40

40-50

50-60

60-70

70-80

EXPLANATION

The above graph indicates classification of number of farmers in terms of age group.
Maximum number of farmer belongs to the age group 40-50 i.e 40 in numbers 40%.Minimum
number of farmer in the age group 20-30 i.e. 4 in number & 4%.

~ 43 ~

B) Land holdings of farmers

Sr. No.

Land in Acres

No. of farmers

percentage

0-5

44

44%

5-10

20

20%

10-15

16

16%

15-20

10

10%

20-25

4%

25-30

6%

100

100%

4
5

Total

~ 44 ~

Land holdings in Acres

44
45
40
35
30
No. of farmers

25

20
16

20
15

10

10

5
0
0-5

41769

41927

15-20

20-25

25-30

EXPLANATION
The above graph indicates that classification of number of farmers in terms of Land
holdings in Acres The maximum number of farmers having in age group of 0-5 land in
acres i.e 44 farmers & 44 %The minimum number belongs to group of 20-25 lands in
Acres have 4 Farmers are 4%.

~ 45 ~

C) Gender of Farmers

Sr.no.

GENDER

No. of Farmers

Percentage

Male

82

82%

Female

18

18%

Total

100

100%

Gender of the Farmer

18
Male
Female
82

~ 46 ~

EXPLANATION

The above chart indicates the distribution of Farmers according to Gender. In which male
farmers have a majority.82 in number. & 82%.The minimum number of female 18 in
number &18%.

~ 47 ~

D) Purpose of borrowing loan

Sr.No.

Purpose

Number of
farmers

Farming purchase

4%

Equipment

14

14%

Irrigation

52

52%

Development

10

10%

Other(Plantation, Angle)

20

20%

Total

100

100%

~ 48 ~

Purpose of Borrowing Loan

60

52

50
40
30

20
14

20
10

Number of farmers

10

EXPLANATION
Above chart shows the Farmers taking loan from the bank for various purposes like
farming purchase, Equipment, Irrigation, Development & Other activities like
(Plantation, Angle).
In which maximum number of farmer taking more credit for Drip Irrigation is 52% &
20% for the other agriculture activities.

~ 49 ~

D) Media / Sources of information

Sr.No.

Sources of
Information

No. of Farmers

Newspaper

8%

T.V

Bank Officers

32

32%

Friends & Relatives

60

60%

Total

100

100%

Sources of Information
60
60
50
32

40
30
20

No. of Farmers
8

10
0

~ 50 ~

EXPLANATION
The above chart shows that bank creates awareness in the people through different
sources of information like Newspaper, Bank officers, T.V & Friend & Relatives.
The maximum number of people comes to know about agriculture loan schemes of Bank
of India and State Bank of India through Friends & Relatives i.e. 60% & from Bank
officers is 32%.

~ 51 ~

E) Satisfaction about Loan Procedure

Sr.No.

Satisfaction Level

No. of Farmers

Yes

96

96%

No

4%

Total

100

100%

Satisfaction Level
4
YES
No

96

EXPLANATION
The above chart shows the satisfaction level of farmers about the loan procedure of Bank
of India and State Bank of India In which 96% of the farmers are satisfied about the loan
procedure. & 4% of the farmers are not satisfied.

~ 52 ~

F) Approach of Bank Officers towards farmers

Sr. No.

Heads

No. of Farmers

Co- operative

84

84%

Friendly

16

16%

Non co-operative

Total

100

100%

Approach of bank officers

90

84

80
70
60

No of farmers

50
40
30

16

20
0

10
0
Co- operative

Friendly

Non co-operative

~ 53 ~

EXPLANATION

The above table shows the approach of bank officers towards Farmers. Like Cooperative, friendly & Non co-operative. 84% of farmer said that Approach of bank officers
towards the farmers is co-operative, & 16% are said that Approach of bank officers towards the
farmers Friendly in nature.

~ 54 ~

G) Feedback about Interest Rate

Sr. No.

Feedback about
Interest Rate

No. of Farmers

High

4%

Medium

84

84%

Less

12

12%

Total

100

100%

Feedback about Interest Rate

84

90
80
70

Feedback about Interest

Rate

60
50
40
30
20
10

12
4

0
High

Medium

Less

~ 55 ~

EXPLANATION

Above chart shows feedback about interest rates on the Agriculture Loan. The
majority of the Farmers means 84% said that interest Rate is Medium.12% said that the rate is
Less & 4% said that Rate is High.

~ 56 ~

I) Feedback about waiting period for Sanctioning & Disbursement of loan

Sr. No.

Opinion

No. of Farmers

Long

22

22%

Short

78

78%

Total

100

100%

Waiting period for Sanctioning & Disbursement

22
Long
Short
78

EXPLANATION
Above chart shows feedback about Waiting Period for Sanctioning & Disbursement of loan.78%
farmers think that Waiting Period for Sanctioning & Disbursement of loan is short & 22%
farmers think that it is long period.

~ 57 ~

J) Opinion about Repayment option

Sr. No.

Opinion

No. of Farmers

Hard

8%

Easy

92

92%

Total

100

100%

Repayment option
92
100
90
80
70
60
50
40
30
20
10
0

Repayment option

Hard

Easy

EXPLANATION
Above chart shows Opinion about Repayment option of the Loan In which 92% of farmers said
that Repayment loan option are easy& 8% people said that Repayment loan option is Hard.

~ 58 ~

K) Awareness about the Financial Product

Sr. No.

Financial Products

No. of Farmers

N.H.B ( National
Horticulture Board)

10

10%

Kisan Credit Card

5%

Drip Irrigation

35

35%

Vehicle Loan

12

12%

Cold Storage

10

10%

Allied activity

15

15%

Agri clinic & Agri

business

5%

Not known

8%

Total

100

100%

~ 59 ~

Financial Product
35

35
30
25
20
15
10
5
0

12

10

15
10

8
Financial Product

EXPLANATION
Above chart shows the awareness in the people related to Financial Product of the agriculture
loan schemes of the Bank of India and State Bank of India.

~ 60 ~

L) Farmers wants to Recommend the BOI and SBI TO Others

Sr. No.

Opinion

No. of Farmers

Yes

92

92%

No

8%

Total

100

100%

Recommend to Others

8
Yes
No

92

~ 61 ~

EXPLANATION

Above chart shows the farmers want to recommend the Bank of India and State Bank of India to
others in which 92% people wants to recommend & 8% people dont have any interest to
recommend Bank of India and State Bank of India to others.

~ 62 ~

CONCLUSION

After analyzing & interpreting Data it was found that Bank of India and State Bank of India is
very good Various facilities are provided to farmers relation between the branch officers & the
farmers are very good.

Related to Study

Maximum no. of farmers belong to age group 40 50 i.e. 40%. In India have a Hindu
undivided family system in which only one person is head of the family. They have
knowledge about farming activities. He can handle the all responsibilities related to
family. He also have handholding as a security.

In which the 82% of land belongs to the male farmers according to HUF. Head of the
family is a male farmer so the male farmer is more than female farmer.

Maximum number of farmers belongs to age Landholding 0 5 Acres i.e. the 44%. It
because of division of family. They also think that when small farm is available we
can develop the land by using the different techniques like farm mechanization,
fertilizers & effective utilization of resources.

60% farmers come to know through friends & relatives penetration of banking sector
reach to the remote consumers & create awareness among farmers about the different
loan scheme so the information is spread more through friends & relatives.

~ 63 ~

Farmers said that approach of Bank officers towards farmers is co operative Bank
officers aim to bridging the gap between their co operative approach to friendly
approach and provide continuously inform about the different Scheme.

In the loan schemes many farmers take loan for irrigation i.e. Drip irrigation for
horticulture plantation (Grapes, pomegranate) farmers also get subsidy for plantation.
50% of the total cost for Drip irrigation.

Bank officers are co operative & provide every information to farmers, which are
needed & provide knowledge about different schemes. They have full involvement of
Branch manager. Successful marketing of Agriculture loan with zeal and mission.

Bank of India and State Bank of India has a medium rate of interest said by farmers.
The rate of interest is only levied on whatever amount is withdrawn from sanctioned
amount. So interest only paid on that amount.

The gap between sanctioned and disbursement is keep at minimum level cheap,
timely and adequate, provision of loans. It helps agriculture diversification. The very
short period for sanctioning disbursement of loan said by 78% of farmers.

92% farmers said that repayment of loan is easy because they give some time to
repayment of loan. They encourage people by providing extensive credit and smooth
recovery. Adjustment in Borrowers Account in which the repayment schedule will be
drawn on the loan amount in such way that subsidy amount is adjusted after the bank
loan portion (excluding subsidy) is liquidated.

96% farmers are satisfied about loan procedure because fewer documents are
required. It takes less five for sanctioning and disbursement. They consider
agriculture land as a security and sanctioned the loan otherwise it is very difficult to

~ 64 ~

get financial support because land is not easily converted into money. It produces
productive lending to farmer.

Bank provides many agriculture financial products. Other than agriculture loan like
consumer loan, vehicle loan, housing loan, cold storage, Import export finance.
Which are useful for growth and development of agriculture and it helps to
flourishing agriculture sector and its allied activities.

92% farmers are like to recommend the Bank of India and State Bank of India to
others because it is a Nationalize bank. It provides extensive credit and smooth
recovery. Bank have large network with core banking system (Rural, semi urban
and urban areas). Bank acts as a financial support by giving productive lending for
increase productivity and income level of the rural families.

~ 65 ~

LIMITATION OF THE STUDY

The study is completed with following probable limitations.

Only one is bank is selected to study so there is no comparative analysis.

The scope is limited for Nagpur district & specifically two banks State bank of India &
Bank of India Katol branch

The time available for the purpose of study is very less i.e. two months only. Mostly
secondary data is referred than the primary data for the study is limited.

~ 66 ~

RECOMMENDATION

Looking at the level of awareness it is recommends that promotion of agriculture loan different
can be done in different ways.

A) Observation: I observed that the awareness about the agriculture loan through friends &
relatives.
Recommendation: Bank officers also have to increase the contacts with farmers. Encourage the
people by conducting seminars; some programmes related to the agricultural schemes how it is
useful in remote areas. So it creates awareness in the farmers.

B) Observation: Many farmers are borrowing loan for agriculture loan for Irrigation i.e. Drip
Irrigation.
Recommendation: Bank have to focus on enhancing the quality of the some new schemes
related to the farm development, equipment, plantation and farm mechanization which are
helpful to fostering the agriculture production which are more important for the development of
Indian economy.

C) Observation: Farmers are less aware about the other financial product related to the to
agriculture loan. The Awareness about the different financial product related to agriculture loan is
very less like N.H.B. (National Horticulture Board), Kisan credit card and for Agri business
and Agri clinic.

~ 67 ~

Recommendation: So the, Bank have so take some efforts to create awareness about different
financial product by taking some programmes and bank officers have play a proactive role in
aggressive marketing of short term and investment credit to potential barrowers.

D) Observation: no one farmer came to know through the T.V so the very less awareness
through the T.V.
Recommendation: Bank will have to some promotional activities through T.V.

E) Observation: Age group of 40-50 borrowing loan from the bank.

Recommendation: People of young age group who are risk takes by nature may be targeted
separately. At present era they are taking the decision related each and activity in the family. So
the bank officers have to target the youngsters age group.

F) Observation: In general observation found that many farmers are intentionally avoid
repayment of loan.
Recommendation: some farmers are capable to repay the loan but they intentionally avoid to
repay the loan. In which the government & bank recovery policy should tighten-up. after
recovery of the funds can utilized for various purposes.

G) Observation: If more than one agency lends money for the same purpose at the same time
there is an overlapping of credit to borrower.
Recommendation: Because of overlapping of credit result in financial indiscipline both parts of
lenders & borrowers. There is strictly restrict to farmers to borrowing loan from more than one
agency.

~ 68 ~

BIBLIOGRPHY

Books:-

1. Banking Law & Practices by P. N. Varshney. (Published by Sultan Chand & Sons,
Delhi)

2. Credit Management. (Book for Internal Circulation, in SBI and BOI)

3. Agricultural Banking.(Book for Internal Circulation, in SBI and BOI )

Internet Websites:-

1. www.statebankofindia.com
2. www.bankofindia.com
3. www.google.com

~ 69 ~

QUESTIONNAIRE (FARMERS)

Name

:-

Address

:-

Age

:-

Sex :- M/ F

Marital Status:- Single / Married

Landholding(Acre) :-

Q.1.

Contact No.

Have you borrowed Agriculture Loan from Bank of India and State Bank of

India ?
Yes

No

Q.2.

If yes from which branch and why ?

Q.3

Give reasons, why do you have selected SBI & BOI?

i)

~ 70 ~

ii)

Q.4.

How did you come to know about Agriculture Loan of SBI & BOI?
(i) Newspaper (ii) T.V. (iii) Bank officers (iv) Friends and Relatives

Q.5.

What is the purpose of borrowing the loan?

(i) Farming purchase (ii) Equipment (iii) Irrigation (iv) Development (v) Other

Q.6.

Are you satisfied with the Loan procedure of SBI & BOI?
Yes

Q.7.

No

If Yes, Why ? and If No, Why ? specify reasons?

i)

ii)

Q.8.

Give your Comment on :i) Approach of Bank officers :- co-operative / friendly / Non co- operative.

ii) Interest Rates :- High / medium / less.

iii)Repayment option :- Hard / Easy
iv) Waiting period for sanctioning and disbursement of loans: - Long / Short

~ 71 ~

Q.9.

Are you aware about other financial products related to agriculture loan SBI

& BOI?
If yes, enlist some of them.
i)

ii)

Q. 10. Do you want to recommend SBI & BOI agriculture loan to the others?
Yes

No

If any Suggestion..

Name of the Farmer & Signature

~ 72 ~