INTRODUCTION

A bank is an institution that deals in money and its substitutes andprovides other financial services. Banks accept deposits and make loansor make an investment to derive a profit from the difference in theinterest rates paid and charged, respectively.In India the banks are being segregated in different groups. Eachgroup has their own benefits and limitations in operating in India. Eachhas their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players.Indias economy has been one of the stars of global economics in recent years. It has grown by more than 9% for three years running. The economy of India is as diverse as it is large, with a number of major sectors including manufacturing industries, agriculture, textiles and handicrafts, and services. Agriculture is a major component of the Indian economy, as over 66% of the Indian population earns its livelihood from this area. Banking sector is considered as a booming sector in Indian economy recently. Banking is a vital system for developing economy for the nation.

INDIAN BANKING SYSTEM

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India.

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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 arly phase from 1786 to 1969 of Indian Banks E 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. After 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. This resulted that Indian banking is growing at an astonishing rate, with Assets expected to reach US$1 trillion by 2010.

KINDS OF BANKS
Financial requirements in a modern economy are of a diverse nature, distinctive variety and large magnitude. Hence, different types of banks have been instituted to cater to the varying needs of the community. Banks in the organized sector may, however, be classified in to the following major forms: o Commercial banks o Co-operative banks o Specialized banks o Central bank

COMMERCIAL BANKS
Commercial banks are joint stock companies dealing in money and credit. In India, however there is a mixed banking system, prior to July 1969, all the commercial banks-73 scheduled and 26 non-scheduled banks, except the state bank of India and its subsidiaries-were under the control of private sector. On July 19, 1969, however, 14 major commercial banks with deposits of over 50 Corers were nationalized. In April 1980, another six commercial banks of high standing were takenover by the government. At present, there are 20 nationalized banks plus the state bank of India and its 7 subsidiaries constituting public sector banking which controls over 90 per cent of the banking business in the country.

CO-OPERATIVE BANKS
Co-operative banks are a group of financial institutions organized under the provisions of the Co-operative societies Act of the states. The main objective of co-operative banks is to provide cheap credits to their members. They are based on the principle of self-reliance and mutual cooperation. Co-operative banking system in India has the shape of a pyramid a three tier structure, constituted by:
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SPECIALIZED BANKS
There are specialized forms of banks catering to some specialneeds with this unique nature of activities. There are thus, o Foreign exchange banks, o Industrial banks, o Development banks, o Land development banks, o Exim bank.

CENTRAL BANK
A central bank is the apex financial institution in the banking and financial system of a country. It is regarded as the highest monetary authority in the country. It acts as the leader of the money market. It supervises, control and regulates the activities of the commercial banks. It is a service oriented financial institution. Indias central bank is the Reserve Bank of India established in 1935. A central bank is usually state owned but it may also be a private organization. For instance, the Reserve Bank of India (RBI), was started as a shareholders organization in 1935, however, it was nationalized after independence, in 1949. It is free from parliamentary control.

CHALLENGES FACED BY INDIAN BANKING INDUSTRY

The banking industry in India is undergoing a major transformation due to changes in economic conditions and continuous deregulation. These multiple changes happening one after other has a ripple effect on a bank trying to graduate from completely regulated sellers market to completed deregulated customers market.

STRATEGIES OPTIONS WITH BANKS TO COPE WITH THOSE CHALLENGES

Leading players in the industry have embarked on a series of strategic and tactical initiatives to sustain leadership. The major initiatives include: o Making aggressive forays in the retail advances segment of home and personal loans. o Implementing organization wide initiatives involving people, process and technology to reduce the fixed costs and the cost per transaction. o Innovating Products to capture customer mind share to begin with and later the wallet share.

Co-operative Bank
A cooperative is generally viewed as a social economic organization that can fulfil both social and economic objectives of its members, and that has its members' interests truly at heart. A cooperative is based on certain values and principles of its own, which distinguish it from other forms of organizations. Cooperation has three dimensions, that is, economic, social and moral, which are equally crucial for its success. The very motto of cooperation, 'each for all and all for each', signifies loyalty, trust, faith and fellowship. A cooperative is a perfect democratic institution of the members, for the members, and by the members, and is based on the 'one member, one vote' system of decision making. Indian economy is rural in character. This is evident from the fact that a very high proportion of the population is living in rural areas. Further two-thirds of its workforce is engaged in agricultural and allied activities, which contribute about 27% of Indias gross domestic product. Cooperatives as formal associations came to be set up in India from 1904 mainly as credit societies, followed by non-credit societies from 1912. The Royal Commission on Agriculture in 1928 underlined the importance of cooperatives: " If cooperation fails, there will fail the best hope of rural India". With three-fourths of the population in rural areas, cooperatives were considered necessary instruments of agro-socio-economic change. The AllIndia Rural Credit Survey in 1954 advocated equity participation by government in cooperatives. It proposed measures to promote rural cooperatives. To develop post-harvest and income generation in poultry, dairy, handlooming, horticulture, fisheries, and sericulture through cooperatives, a national level institution, the National Cooperative Development Corporation (NCDC) was formed in 1962. Subsequently, disbursement of agro-rural production credit was institutionalized by creation of National Bank for Agricultural and Rural Development (NABARD) in 1981. Such measures marked the transfer of development functions from government departments to statutory and autonomous institutions. Coupled with local initiatives, these steps had a tremendous impact on organisation of cooperatives. The result was horizontal and vertical growth of cooperatives such as in banking, agromarketing, agro-processing, dairy, fisheries, poultry, consumer, labour, industrial, housing, irrigation, electricity, and fertilizer production. Cooperatives occupy an important place in India's rural economy, in terms of their coverage and population and their share in the total supply of agricultural inputs, including credit. India can rightly claim to have the largest network of
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cooperatives in the world. In India, as of 31st March 1994, there were 3.95 lakh cooperatives, having a total membership of some 1,896 lakh and working capital of Rs. 118,699 crore (NIRD 1996 : 105). Cooperatives now account for 62% of the total credit supplied in rural areas, and 34% of the total quantity of fertilisers distributed in the country. The two giant fertilizer cooperatives fertiliser plants, Indian Farmers' Fertiliser Cooperative (IFFCO) and Krishak Bharati Cooperative (KRIBHCO), manufacture 21.1 % of the fertilisers produced in the country. From a small beginning, the Cooperative movement in Tamil Nadu has grown in strength over the years. Opening of a village cooperative credit society in Thiroor in Thiruvallore District in 1904 marked the advent of the Cooperative movement in Tamil Nadu ushering in a new era of services for the people of the state particularly the agriculturist families. From Agricultural Banks to Marketing Societies and Consumer Co-operative Stores, Cooperatives provide services to the people in various economic activities. Cooperatives also run the Public Distribution System which provides relief to each and every family in the State, covering about 1.47 crores card-holders. The Cooperative Institutions as effective channels of credit for farm sector and non-farm sector and urban co-operative credit have played a significant role in the development of rural and urban economy. In Tamil Nadu, the short-term cooperative credit structure operates under a three-tier system with State Cooperative Bank (SCB) at the apex level, 23 District Central Cooperative Banks (DCCBs) at district level and 4589 Primary Agricultural Credit Societies (PACS) at village level. The long term cooperative credit structure operates under two tier system with a State Cooperative Agriculture and Rural Development Bank (SCARDB) a181 Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) at taluk level affiliated to it. The funds required for lending are met from their own funds of the Cooperative Institutions, deposits mobilised from the public and borrowings from NABARD by way of refinance.

Punjab Co-operative Bank

The Punjab State Cooperative Bank Chandigarh was established on 31st August 1949 at shimla vides Registration No.720 as a principal financing institution of the cooperative movement in the state. It has 19 branches and 3 extension counters in the city of Chandigarh. 20 Central Cooperative Banks having 788 branches and 19 Extension Counters in the State of Punjab are affiliated with the bank. In the Cooperative banking structure the position of the Punjab State Coop Bank is extremely important as a the whole short term credit system revolves around it. This bank ensures that its member central cooperative banks follow sound banking practices and observe strict financial discipline. The Central Cooperative Banks are financing the farmers through PACS at the village Level. There is no arena of life where this premier institution has not played its part. From a farmer, artisan to traders/businessman, everybody has been covered in the fold of this institution. The green, white and sweet revolutions in the state of Punjab are some of the major achievement in which this institution has plays a vital role. The Punjab State Cooperative Bank has already been awarded "BEST PERFORMANCE AWARD" fromNABARD and NAFSCOB. For the year 200304, Punjab Cooperative Bank has been selected for NABARDs Best Performance Award which is based on performance of all the SCBs in the country. Similarly our Jalandhar DCCB has also been selected for NABARDs Best Performance Award out of all the DCCBs in the country for the year 2003-04.

OBJECTIVES OF PUNJAB CO-OPERATIVE BANK

To serve as a Balancing Centre for Cooperative Societies in the State for Cooperative Societies in the State of Punjab registered under the Punjab Cooperative Societies Ac, 1961 for the time being in force.

To promote the economic interest of the member banks and cooperative societies in the state in accordance with cooperative principles and to facilitate the development and funding of any cooperative society registered under the said act. To carry on banking and credit business.
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MANAGEMENT

11

DCCBs of PSCB (District Central Cooperative Banks)

S.No.
1. 2. 3. 4. 5.

NAME OF THE CENTRAL COOPERATIVE BANK

AMRITSAR CENTRAL COOPERATIVE BANK BHATINDA CENTRAL COOPERATIVE BANK FARIDKOT CENTRAL COOPEATIVE BANK FAZILKA CENTRAL COOPERATIVE BANK

LOCATION
AMRITSAR BHATINDA FARIDKOT FAZILKA

PHONE NO.
0183-543351,543076 0164-212104 01639-50144,50225 01634-22245,25245 01632-46680,46082

FEROZEPUR CENTRAL COOPERATIVE BANK FEROZEPUR

6.

GURDASPUR CENTRAL COOPERATIVE BANK GURDASPUR HOSHIARPUR CENTRAL COOPERATIVE BANK

01874-30355

7.

HOSHIARPUR

01882-24100,20771

8.

JALANDHAR CENTRAL COOPERATIVE BANK JALANDHAR KAPURTHALA CENTRAL COOPERATIVE BANK LUDHIANA CENTRAL COOPERATIVE BANK MANSA CENTRAL COOPERATIVE BANK MOGA CENTRAL COOPERATIVE BANK MUKTSAR CENTRAL COOPERATIVE BANK NAWANSHAR CENTRAL COOPERATIVE BANK PATIALA CENTRAL COOPERATIVE BANK ROPAR CENTRAL COOPERATIVE BANK SANGRUR CENTRAL COOPERATIVE BANK TARANTARAN CENTRAL COOPERATIVE BANK

0181-224571,224298

9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

KAPURTHALA 01822-33469,33223 LUDHIANA MANSA MOGA MUKTSAR NAWANSHAR PATIALA ROPAR SANGRUR 0161-411966,441281 01652-25381,25078 01636-23629,29520 01633-62078,64457 01823-23977,20034 0175-224758,217053 01881-20412,20481 01672-37114,34336

TARANTARAN 01852-22339,23439

AWARDS

The Punjab State Cooperative Bank has already been awarded BEST PERFORMANCE AWARD from NABARD andNAFSCOB. For the year 200312

04, Punjab Cooperative Bank has been selected for NABARD's Best Performance Award " which is based on performance of all the SCBs in the country. Similarly our Jalandhar DCCB has also been selected for NABARDs Best Performance Award out of all the DCCBs in the country for the year 2003-04.

ACHIEVEMENTS

1.

S.T. AGRI. LOAN

The Cooperative Banks in the State have advanced Rs.5894.28 Crores as ST Agri. Loan during the year 2008-09 as compared to Rs.5828.28 crore during 2007-08. Similarly during 2009-10, Rs 7147.26 crores stand disbursed till 26.02.10 against the target of Rs.6800.00 Crores. 2. R.C.C. LIMIT

During 2008-09 the Central Coop. Banks in Punjab have sanctioned R.C.C limits worth Rs.2091.75 crores as compared to Rs.1919.55 crore of 2007-08. During the year 2009-10 the bank has sanctioned RCC limits worth Rs.2207.94 crore against the target of Rs.2265.78 crores (up to January , 2010). 3. TWO WHEELER LOANS TO AGRICULTURISTS

Under Two Wheeler Loan Scheme the farmers can take loan up to 75% of twowheelers cost or Rs.50,000/- whichever is lower from the Central Cooperative Banks. During the year 2008-09, the Bank has advanced a sum of Rs.34.42 crore. Similarly, during 2009-10, Rs.26.05 crore has been advanced against the target of Rs.40.00 crore uup to January ,2010.

4.

HOUSING LOANS

During the year 2007-08 Central Cooperative Banks in the State have advanced Rs.101.38 Crores against the target of Rs.80.00 crores. During 2008-09, Rs.88.32 crores has been disbursed against the target of Rs.100.00 crore. During 2009-10 Rs.70.69 crore has been disbursed up to January ,2010.
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5.

NON FARM SECTOR LOANS

During 2007-08 Rs 49.50 crores were advanced under the scheme by DCCBs in the State of Punjab. During the year 2008-09, Rs.42.32 crores has been advanced. Similarly during 2009-10, Rs.31.68 crore has been advanced against the target of Rs.50.00 crore up to January ,2010. 6. LOAN FOR CONSUMER DURABLES

Under Consumer Durables Loan Scheme, Rs.68.58 crores has been advanced during 2008-09 against the target of Rs.72.00 crore. Similarly, during 2009-10, Rs.59.25 crore has been advanced up to January ,2010. 7. PERSONAL LOAN SCHEME

Under Personal Loan Scheme, the Bank has advanced Rs.133.89 crore during the year 2008-09 against the target of Rs.120.00 crore. During 2009-10, Rs.107.91 crore have been disbursed up to January ,2010 against the target of Rs.125.00 crore. 8. DEPOSIT MOBILIZATION

The deposit of Punjab State Coop. Bank and Central Cooperative Banks were Rs.7343.49 crores during the year 2007-08 whereas during 2008-09, the deposits were Rs. 8668.59 crores. During the year 2009-10 the deposits are Rs.8864.21 crore.During the year 2009-2010 the deposit of PSCB+CCBS ARE rS 9475.71 crore 9. PROFITS

During 2008-09, there was a profit Rs.44.42 crore whereas 1 DCCB, namely; Amritsar was in loss.

Future Perspective

14

Cooperatives are not unaffected by structural adjustments and globalisation of commodity market. As a result, Cooperative Banks are required to redesign their strategies for sustainability and growth. The economic reforms initiated by the government of India in 1991 have affected the Financial Institutions including the Cooperative Financial Institutions. These reforms aim at liberalisation and deregulation of Indian economy. The Cooperative Banks of Punjab have accepted the reforms in Indian economy, especially, the financial reforms in right spirit. Since these Banks have mainly been providing credit to agriculture sector, changes in agricultural economy affect them more closely. The Banks envisage following scenario as a result of liberalized agricultural policy Liberalisation of agricultural policy would result in greater capital intensity and borrowed capital requirements of agriculturists. In order to induce diversification and produce quality products for international market. For this purpose, Punjab farmers would need greater credit support for improved technology, seeds and agro-inputs. Liberalised agricultural economy would lead to a greater role of private research and development institutions in improving the productivity and quality of agricultural operations.

Sources of Funds
15

The main sources of Funds of the SADB consists of the following : SHARES / FEES DEBENTURES DEPOSITS

The main source of raising fund with the Bank is by way of floatation of debentures under the refinance support of NABARD. The PADBs advance loans to their members against the security of simple mortgage of Agricultural Land. The Loans so advanced by the PADBs are reimbursed by the SADB against the security of these Mortgage Deeds. The SADB in turn floats debentures against these mortgages and get refinance from NABARD etc. As such, the cycle of collecting funds and making advancement, continues. These debentures are floated under the provisions of Punjab Cooperative Agricultural Development Bank's Act, 1957. To decrease its dependence on NABARD for its financial resources, now the Bank with the approval of the Registrar has introduced Deposit Mobilisation Scheme for collecting deposits from individuals and institutions according to revised guidelines of NABARD.

FINANCIAL HIGHLIGHTS

16

The Financial Position of the Bank is quite sound which is evident from the following figures below (Rs. in lacs)

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009- 10 Paid-up Shar e 1434.41 1592.19 1965.32 2397.41 3081.98 3869.40 4959.62 Capi tal Reserves & Othe r 3914.38 3906.64 6036.16 6730.58 8970.49 12467.80 14117.07 Fun ds Owned Fun 5348.79 5498.83 8001.48 9127.99 12052.47 6336.92 19076.69 ds Debentures Float 7943.07 9124.09 13811.01 16476.23 23674.70 30208.19 38705.50 ed

Debentures Outs 40125.29 43623.90 51445.33 61067.93 77149.81 98295.67 125636.12 tandi ng Total Inve 832.39 stme nt 9831.08 10517.05 11113.22 12203.64 14269.15 17611.44

Debenture 7044.71 7735.77 8033.77 8316.24 8475.33 10134.13 9933.21 Red empt ion Fun
17

d Loan Adv 7829.26 10233.00 15193.97 19662.41 25305.03 31135.52 38947.40 ance d Loan

Outs 35496.47 36778.48 44700.18 56228.11 72244.94 92210.37 118396.47 tandi ng Profit 698.91 927.34 1131.81 1619.91 1847.18 2040.21 2125.37

Deposit Moblisation

The ARDBs (Agricultural Development Banks) in the country were established about 6 decades ago as Cooperative Land Mortgage Banks for providing long term credit to the farmers for redemption of debts against mortgage of landed property. Then there was a shift in disbursement of credit for granting loans for meeting the credit requirements of the farmers for investment purposes. Thereafter the Land Development Banks (LDBs) started extending credit for agricultural purposes such as Minor Irrigation, Farm Mechanisation, Plantation and Horticulture, Land Reclamation, Land Development etc. When NABARD was established in the year 1982, the LDBs came to be known as Agriculture & Rural Development Banks and have emerged as an important channel for credit delivery system for Agriculture & Rural Development Banks in the country. Inspite of the progress achieved by the LDBs, they had remained as non resource based institutions right from their inception. Until 1971 the ARDBs were not expected to raise their own resources from members and public. Moreover the regulated low lending rates were uneconomical and therefore the ARDBs had no incentive to mobilise deposits from the market. There were certain legal constraints in the matter of issuing loans for certain purposes either in the Cooperative Societies Act or the Bye Laws of the Bank. The RBI scheme which was introduced in the year 1971 permitted the ARDBs to accept deposits only from non borrowing members of the public, repayable
18

between a period of 1-2 years. As the loans issued by the ARDBs were normally for 5 to 15 years, there was a mismatch between the maturity pattern of deposits accepted by the ARDBs and the loan issued by them. There were a number of other factors also which prohibited the ARDBs from mobilisation of deposits. As the interest rates both for lending and borrowing were regulated by RBI till 1994, it was illogical to raise deposits at a higher rate and then lend them at a lower rate.

Potential for Mobilisation of Deposits in Rural Areas :

MEMBERSHIP OF THE BANK As on As on As on As on As on As on As on As on As 31/03/02 31/03/03 31/03/04 31/03/05 31/03/06 31/03/07 31/03/08 31/03/09 31 PADBs 62 64 68 70 71 74 79 79 Others 02 02 02 02 02 02 02 02 Total 64 66 70 72 73 76 81 81

SHARE CAPITAL (Amount in Rs.) As on As on As on As on As on As on As on As on A 31/03/02 31/03/03 31/03/04 31/03/05 31/03/06 31/03/07 31/03/08 31/03/09 31 PADBs 1332.90 1432.61 1565.39 1915.28 2347.41 3031.98 3819.40 4959.62 5 State 21.14 1.80 26.80 50.04 50.00 50.00 50.00 60.00 Govt. Total 1354.04 1434.41 1592.19 1965.32 2397.41 3081.98 3569.40 5019.62 5

19

Schemes & Loans

Tractor In order to mechanize farming and improve the output of the farmers, the Bank has been giving loans for the Purchase of Tractors.

Terms & Conditions:

The tractor should be registered by the Transport Authority. The insurance of the tractor is must. The repayment period for Tractor Loan is 9 years.

Tubewell: To bring the Barani unirrigated agricultural lands under irrigation, the bank has been giving loans for installation of shallow Tubewells to the farmers in the State. For the purpose of exploitation of underground water, the State has been divided into 138 blocks which are further earmarked as White, Grey and Dark. Presently, 84 blocks are Dark, where tubewells to the full capacity have since been installed; 16 blocks are Grey where there is some more scope for installation of new tubewells; and 38 blocks are White, where there is greater scope for installing new tubewells. The Bank is a major financier in the installation of tubewells in the Punjab State. Every 3rd Tubewell running in the field in the State is installed with the Credit help of this Bank.

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Terms & Conditions:

Area should not be Dark, but should be White or Grey for installation of new tubewell. Unit cost vary from area to area according to the depth of underground water and credit is given upto the actual cost of tubewell installation. Repayment period is 9 years, with Grace period of 1 year. Diesel Engine / Electric Motor should be ISI marked Insurance of Tubewell is necessary.

Poultry:

Under this scheme loans are given for the development of unit of 500, 1000 or above poultry birds.

Units Farm for 500 Poultry Birds Farm for 1000 Poultry Birds For 1000 (Broilers)

Loan (Amount) 1,15,000 2,30,000 84,000

21

Terms & Conditions:

The applicant or the loanee should have appropriate Training in Poultry Farming. The course can be done from the Punjab Agricultural University [Ludhiana(India)] or under the arrangement made by the Department of Animal Husbandary, Punjab.

The loan is given in three installments. The second installment is issued only after the first has been utilised.

The loanee has to pay back the loan in 6 years. Grace of one year can be given. The loan is returned in 5 years through 10 equal installments per year. Insurance of the shed is compulsory.

Dairy Development:

Dairy business has been very successful in Punjab.The bank also has a greater role in the success of Dairy Farming in Punjab.The bank's schemes have proved very beneficial for the rural areas of Punjab. Under the Dairy Development Scheme, loans are provided to Individual/Milk Unions for the establishment of two, three, five and ten milch animals units.

22

Terms & Conditions: Insurance of the animals is compulsory. A Dairy unit may consist of either cross-bred Cows or Good quality Buffaloes or a mixed unit consisting of both Cross-bred Cows & Buffaloes. Loan is returnable in 5 years through 10 equal yearly instalments or 60 monthly installments.

Non Farm Sector Sehemes:

Besides playing its role in Farm Sector for increasing the Agricultural production and improving the economic conditions of farmers in the State, the Bank has also played a significant role in providing financial help to the unemployed persons to have self-employment opportunities for themselves in the State, by switching over loaning portfolio from Farm Sector to Non-Farm Sector loaning activities in the year 1993-94. In the Non-Farm Sector also, the Bank has advanced loans of Rs. 216.00 Crores to more than 12,000 persons for setting up of selfemployment ventures for themselves. Terms & Conditions :

23

The loanee is advanced 85% of the total loan. The loan is to be returned within 9 yearly equal instalments which includes 1 Grace year. Only ISI marked pipes and other material should be used.

Sehkari Bima Yojna:

A new scheme namely Kisan Credit Card Scheme has been implemented by the bank for the benefit of farmers. The Scheme improves upon existing scheme of Crop Loans by allowing the farmers flexibility and freedom of choice to avail and repay loans as per their requirements. Under the scheme, 1,87,000 cards have been issued to the farmers upto 31.3.2001. Maximum Credit Limit of the farmers has been raised from Rs. 70,000 per crop to Rs. 85,000 per crop.

Jeevan Raksha Pension-cum-Gratuity Scheme:

A new scheme namely, Jeevan Raksha Pension-cum-Gratuity Scheme has been started by the bank particularly for the benefit of rural old farmers who can enjoy pension facility in their old age by depositing Rs. 500/per month for 10 years and will get pension Rs. 650/- per month. If the depositor dies before 10 years, the nominee of the deceased is allowed to continue to deposit the money in the scheme and for the pension after 10 years.

LIC-Linked Employees Pension Scheme:

The Board of Directors of the Punjab State Cooperative Bank in its meeting held on 9.2.2001 has decided to implement a LIC-Linked Pension Scheme for all employees of the Bank.

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Objectives of the study

The following are various objectives of this study:

1.

Deeply study about the kisan Credit Card Scheme(kcc).

2. To know about all the term & conditions of the kcc scheme. 3. To find out the nature of the borrowers. 4. To know about the minimum and upper limit of the kcc scheme.
5.

To know the recovery and remaining portion of the kcc.

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Research Methodology
Research Methodology can be defined as the search for knowledge, or as any systematic investigation, to establish novel facts, solve new or existing problems, prove new ideas, or develop new theories, usually using a scientific method. The primary purpose for basic research (as opposed toapplied research) is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. For the purpose of present project study the secondary data as a source of data collection have been used.

The following are the sources of secondary data:

1. Websites of the bank 2. Magazines

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Kisan credit card scheme

Honorable Union Finance Minister announced in his budget speech for 199899 that NABARD would formulate a Model scheme for issue of Kisan Credit Cards to farmers, on the basis of their land holdings, for uniform adoption by banks, so that the farmers may use them to readily purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and also draw cash for their production needs'. Model Scheme circulated by RBI to commercial banks and by NABARD to Cooperative. Given the enormity of the credit requirements on one hand and the vagaries of the nature on the other, financing agriculture has been a gigantic task for banks in India. Ensuring timeliness and adequacy of credit to farmers have posed the most serious challenges to banks engaged in financing agriculture. Financial sector reforms, ushered in as a part of the liberalization of the Indian economy in the beginning of nineties, has infused a spirit of competitiveness and enterprise among the banks in their endeavor for serving their customers in the best possible manner. NABARD has been playing a proactive and catalytic role in guiding the banks to meet the emerging challenges. Towards this end, several innovative strategies have been evolved by NABARD. The instrument of Kishan Credit Card (KCC) is one of the key products developed to improve the farmers accessibility to bank credit, simplify credit delivery mechanism and provide more flexibility in use of credit. Model scheme of Kishan Credit Card formulated by NABARD in 1998-99 is being implemented in all the States and Union territories. About 1.94 crore Kishan Credit Cards have been issued upto 31 October 2001 by the banks throughout the country. It is envisaged that every eligible agricultural farmer would be provided with a Kishan Credit Card by 31st March, 2004. In accordance with the announcement in the GOI budget 2001-02, Personal Accident Insurance Scheme (PAIS) has been introduced as a add-on benefit and all the Kishan Credit Card holders would be insured for Rs. 50,000 at a nominal premium of Rs. 15/- per annum as agreed to by General Insurance (Public Sector) Association.

27

Growth in refinance support for SAO sanctioned by NABARD Agency 2002-03 2004-05 2006-07 2008-09 (Rs. Crore) 2010-11

SCBs/ DCCBs

1120

2000

3316

5210

6508

RRBs

227

308

385

881

1116

Total

1347

2308

3701

6091

7624

SCBs : State Cooperative Banks DCCBs : District Central Cooperative Banks RRBs : Regional Rural Banks SAO : Seasonal Agricultural Operations

28

Objectives
As a pioneering credit delivery innovation, Kishan Credit Card Scheme aims at providing adequate and timely credit support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible, hassle free and cost effective manner.

Contents of Credit Card

Beneficiaries covered under the Scheme are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc., which may serve both as an identity card and facilitate recording of transactions on an ongoing basis. Borrower is required to produce the card cum pass book whenever he/she operates the account.

Kishan Credit Card Scheme Salient features

Eligible farmer will be provided a Kishan Credit Card and a Pass Book or a Cardcum-Passbook. Revolving cash credit facility allowing any number of drawals and repayments within the limit.

Limit to be fixed on the basis of operational land holding, cropping scales of finance. Limit of valid for 3 years subject to annual review. Security, margin and rate of interest as per RBI norms.
29

pattern and

 Withdrawals through slips /cheques accompanies by card and passbook.

Advantages of the Kisan Credit Card Scheme

Advantages to farmers:

Access to adequate and timely credit to farmers Full year's credit requirement of the borrower taken care of. Minimum paper work and simplification of documentation for drawal of funds from the bank. Flexibility to draw cash and buy inputs.

Assured availability of credit at any time enabling reduced interest burden for the farmer.

Advantages to the Banks:

Minimum paper work and simplification of documentation for drawal of funds from the bank. Improvement in recycling of funds and better recovery of loans. Reduction in transaction cost to the banks.

Better Banker - Client relationships.

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Progress of Kishan Credit Card Scheme upto 31st March, 2011

Years 2007-08 2008-09 2009-10 2010-11 Total

No. of cards issued by bank 50 35 27 29 141

Cooperative bank kisan credit card scheme

Co-operative Banks had launched the Kisan Credit Scheme based on the model scheme circulated by NABARD in August 1998. While some State Cooperative Banks (SCBs) launched the scheme in 1998-99, SCBs in UP and Punjab introduced the scheme only in 2000-01. Based on the instructions of SCBs, District Central Cooperative Banks introduced the scheme in their area of operation.

Eligibility of farmer for issue of Kisan Card

The cooperative banks had stipulated that Kisan Cards would be issued to members who were not defaulters. In conformity with the scheme of NABARD, the SCBs has stipulated that KCCs would be issued to farmers availing limit of Rs.5000 or above.

Minimum Credit Limit

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The model scheme on Kisan Credit Card had recommended Kisan Cards for the farmers where requirement of crop loan was Rs.5,000/- and above. However, this ceiling was subsequently waived and all the banks were advised that they could work out their own loan limits/ceiling. On a review of the schemes of Cooperative, it is observed that most of the banks have brought down the ceiling from Rs.5,000/-to Rs.3,000/-. Some of banks did not stipulate any lower ceiling in monetary terms.

Basis of fixation of credit limit

The model scheme had stipulated that credit limit under Kisan cards may be fixed on the basis of operational land-holding, cropping pattern and scales of finance as recommended by District Level Technical Committee (DLTC)/State Level Technical Committee (SLTC). Wherever the DLTC/SLTC have not recommended scale of finance for crops or in the opinion of the bank, recommended lower scales than the required amount, banks were allowed to fix appropriate scales of finance of the crop. It was also stipulated that for fixation of card limit, operational landholding may include the leased in land and exclude leased out land. Co-operative Banks had stipulated that limit may be fixed based on scale of finance, cropping pattern and land holding.

Restriction on maximum amount

Cooperative Banks restricted the maximum amount under KCC based on the Individual Maximum Borrowing Power (IMBP) as per state Acts/Rules and banks bye laws. There were some variations depending upon prevalence of high value cash crops in the area. In some states, the IMBP was a meagre Rs.30,000/- to Rs.40,000/irrespective of land holding, cropping pattern.

Fixation of Seasonal Limit

The model scheme had recommended that while fixing the limit, banks may take into account entire production credit requirement of the farmers for full year including the credit requirement of the farmer for ancillary activities related to cost production such as maintenance of agricultural machinery/implements, electricity charges, etc. and also allied activities and non-farm activities. Banks were also advised to fix appropriate sublimits within the overall limit sanctioned, taking into account the seasonality in the credit requirement. However, Cooperative banks had restricted the limit to crop production only based on seasonality.
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Type of Card
Cooperative Banks had uniformly devised a Pass Book which served the purpose of a card - cum - pass book. It contained all the details about the farmer and his borrowings.

Margin and Security Norms

All the members were required to contribute share capital (mostly 10%) as a percentage to limit sanctioned keeping in view the provisions in the State Acts/Bye laws. Accordingly, share capital was collected as per provisions of State Acts. Security norms were in conformity with State Acts/ RBI/ NABARD instructions.

Facilities of drawal at other branches

In case of co-operative banks, drawals were allowed either at the branch of DCCB or at the society having cash counters. In some states, cash withdrawal was permitted at branch and the society simultaneously whereas in many other states cash withdrawal was allowed at branch only.

Maintenance of Shadow Register/Mirror Accounts

Because of the practice of allowing drawals either at the branch and/or at the society, the co-operative banks had introduced a system of maintenance of Shadow Registers/Mirror Accounts at the branch level. This was a replica of the loan ledger at the society. These banks had put in place a system of regular exchange of information between the branch and the society.

Repayment instructions
Although the limit sanctioned under the kisan card is in the nature of revolving cash credit and each drawal is repayable within 12 months yet all the banks had fixed specific repayment norms while sanctioning credit limit under kisan card. Mostly, due dates were fixed based on harvesting/marketing season as was the case prior to introduction of KCC scheme.

Insurance of the card holder

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In the model scheme circulated by RBI/NABARD, insurance of the card holder by the issuing banks was not recommended. But Andhra Pradesh State Coop. Bank in its scheme had provided for an accident insurance cover for Rs.1,00,000/-. This is a good feature introduced by the SCB with a view to not only add to the marketing component of the Kisan card product but also to provide good security to the borrower and also to the bank for the amount borrowed under the card. With effect from the year 2001-02, Honble Union Finance Minister has proposed to make the insurance compulsory for all Kisan card holders and the premium would be shared by the card issuing institutions.

Issue of Cheque book

One of the basic idea behind introducing Kisan card was to provide flexibility and convenience to the farmer in borrowing and repayment of money. In order to facilitate the drawal of cash at the issuing branches, some of the banks have issued cheque book, to the card holders.

Service Charges
Cooperative Banks levied very nominal charges to cover the cost of stationery.

NUMBERING THE KCC

The account number of KCC borrower is given in eight digits. The first four digits depict the branch code number while the next four digits indicate the account number of borrower e.g. if branch of zira has to issue a card, the serial number of the branch is z277 and the borrowers credit card account No. in the branch are 168. then the card number shall be written as: 0277 0168. numbering and lamination of cards should be got done at card issuing branch level only.

RENEWAL OF THE KCC

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The card will be renewed at least one month before expiry of the current card on the basis of simple written request from the card holder. If there are no changes in the existing limit, the renewal of the card may be done for the period of next five years and the fresh card along with a sanction letter may be issuer to the card holder. In case of any enhancement in the existing limit, fresh set of revenue as well as security documents are to be obtained.

ACTIONS TO BE TAKEN FOR LOSS / STOLEN CARDS AND / OR PASS BOOKS

a) In case of card and / or passbook being lost or stolen, the cardholder shall notify / inform by quickest means to the card-issuing branch. b) Immediately on receipt of the information, the issuing should mark caution on the branch records. c) The issuing branch shall replace / re-issue a new card, writing a duplicate on it and card issuing charge shall be charged.

REPORTING SYSTEM OF KCC

In the existing system of reporting transactions under KCC amounts actually debited in the KCC accounts were reported for the purpose of credit flow. NABARD has observed that the actual amount disbursed could be a problem as the cash credit system under KCC allows for multiple drawls and repayments.

Data Analysis

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INTERPRETATION -> In year 2007-08 the loan is 488.12 which increase to 506.56 in 2008-2009, 655.95 in 2009-10 and 769.60 in 2010-11 .The bank charge is low rate of interest as compare to the money lenders

Data Analysis
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Interpertation: In year 2010-11 the no. of borrowers of kcc scheme are being divided into two portion 52% & 48%. From which 52% are the existing borrowers and 48% are the new borrowers. The reason is that the new borrowers performed large no. of formalities i.e why the existing borrowers is more as compare to new borrowers.

Data Analysis
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Interpretation: In year 2010-11 the percentage of lower class borrowers is 10%, middle class is 70% and upper class is 20%. The reason for high percentage of middle class is that the people have more educated and now they are fully aware about it.

Data Anaylsis
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Interpertation: In year 2010-11 the inadequacy is near about 34% and adequacy is 66%. The reason for inadequacy is that there are some NPA in the bank due to less agriculture production and some borrowers have gone to abroad.

Data Analysis
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Interpertation: In year 2010-11, the 27% withdrawl of the kcc is doing through the cheque book and 73% is doing through the bank slips. The reason for low cheque book is that most of th farmers are illterate. They are not able to fill the cheque book, therefore they preferred to the bank slips.

Findings
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The following are some the findings of this study: 1. Lots of manual pepar work. 2. Formalities required for getting the kcc sechme are very large. 3. The bank is not computerized and not having ATM facilities so borrowers face lots problems. 4. The farmers can withdraw cash at any time up to their kcc limit. 5. Mostly the farmers are illiterate so they prefer bank slip instead of cheque book for withdraw cash. 6. The working of bank is very slow. 7. The rate of interest is high.

Suggestions
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The following are some the sugesstions: 1. The mannul work should be replaced by computer. 2. The formalities regarding kcc scheme should be reduced as far as possible. 3. The rate of interest should be low in order to attract more borrowers. 4. The farmers should be aware about this scheme by having seminars in the rural areas.

Bibliography
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Websites:

www.pscb.in www.co-operativebank.co

www.nabard .com Books: co-operative bank lead book Nabard Guidelines

Annexures
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