DDs under IMAS The Inland Mutual Arrangement Scheme (IMAS) was formulated in the year 1958 by K.S.C.

Apex Bank Ltd. Objectives Issue of demand drafts. Issue of mail transfers and telegraphic transfers. Collections of Cheques/Bills etc. by member banks in Karnataka on other member banks such as State, Central and Urban co operative banks and on their Branches in Karnataka. K.S.C. Apex Bank Ltd. is administering the Scheme and the advisory committee is being constituted for monitoring/reviewing the activities of the scheme. The members of the advisory committee include: 1)Managing Director of K.S.C.Apex Bank Ltd., as Chairman and representative of Apex Bank 2)3 members from D.C.C. banks 3)3 members from Urban Co-operative Banks and from Karnataka State Co-operative Banks Federation -1 member. The advisory committee members shall meet once in a quarter. All D.C.C. Banks and Urban Co-operative Banks and their branches, seeking admission to become members of IMAS should apply with K.S.C. Apex Bank Ltd. K.S.C. Apex Bank Ltd., as the sponsored Bank of the said scheme, has laid down certain rules and regulations for the working of the IMAS and modifications of the scheme. It communicates to the member banks and its branches regarding admission/withdrawal of the scheme and circulates the specimen signature of the authorized officials to all the member banks to sign the DDs. It gives the decision over any dispute that may arise under the said scheme. It makes arrangements to convene reconciliation meetings of all the member banks for speedy elimination of pending entries. Apex Bank gives guidance, education, and training programmes to all the member banks about the working of the IMAS. All the member banks under IMAS should maintain their Current Account with the head office of K.S.C. Apex Bank Ltd. They should also maintain books of records and registers and they must reconcile their accounts from time to time with their account at Apex Bank level. Admission of the Banks The membership of the scheme is open to all Co-Operative Banks registered under The Karnataka Co-operative Societies Act and coming under the Purview of Banking Regulation Act 1949. The bank should have been functioning for a period of at least three years and should be a

member of the local clearinghouse and in deserving cases, the Apex Bank may even consider enrolling banks that have been functioning for one year as members. The bank should have maintained a Current Account with the head office branch of K.S.C. Apex Bank Ltd. All DCC banks, Urban co-operative banks and their branches are eligible to become members of the IMAS Scheme, in which case the minimum working capital of the banks should be Rs. 150 Lakh. There should not be continuous defaults in the maintenance of the cash reserves ratio and liquid assets as required under section of Banking Regulation Act 1949. The Audit Classification of the bank should be A. An Urban Co-operative bank having working capital of Rs. 500 Lakh can admit 5 members and a bank with more than Rs. 500 Lakh can admit 8 members. Application enclosures include Form No. 1 and Form No. 2 for admission of banks and its branches respectively. Resolution of Board of Directors, along with competent authority empowering their officials to sign DD, advices on behalf of the banks should be included in the enclosures. Specimen signatures of the authorized officials should be enclosed. Latest audited balance sheet/profit and loss account/RBI/NABARD/ inspection reports should be enclosed. A copy of the byelaws, latest annual reports and copy of RBI License should be included. The admitted members are grouped into 3 categories and they should maintain fixed deposit and security deposit depending upon their group. Please Click Here to download a PDF document of the group details. There are no admission/annual membership fees. The DDs, Cheques Books will be supplied by The Apex Bank Ltd. The concerned banks will meet the cost of the printing of DD books, advices. The admitted member banks/branches of the IMAS will be allocated code numbers by K.S.C. Apex Bank Ltd., for easy identification and transactions. Withdrawal/Removal from Membership Member banks should submit a letter (Form No. 3) 2 months in advance of the proposed date of withdrawal. A copy of the resolution of the Board of Directors for withdrawal quoting the reason and also a letter of understanding to honour the DDs drawn on them by the member banks prior to the actual date of withdrawal. The Board of Directors of K.S.C. Apex bank Ltd. is the competent authority to remove any bank from membership of IMAS and the Managing Director of Apex Bank Ltd., is the competent authority to remove any branch of the member bank. K.S.C. Apex bank Ltd. shall have the right to suspend/dismember any member of IMAS by giving 30 days prior notice indicating the reasons thereof if the bank is persistently defaulting in the maintenance of the funds or not adhering to the directives of the IMAS. Issue and Honouring of DD All member banks shall draw MICR DDs/cheques on K.S.C. Apex Bank Ltd., Head Office

Branch only. In other centers, as far as possible, DDs should be drawn on a member of the local clearing house. DDs should be written neatly in English with carbon sheet kept below the DDs and signed by 2 signatories. Alteration, if there is any, should be tested with full signatures with there code number allotted. Punching of the cages should be done to prevent fraudulent alteration of the amount of the DDs. The issuing bank should punch the number of the amount in figures on the exact cadge. Safety stickers may be pasted on the DD amount in figure to avoid any alterations. Limit for issue for Group A is Rs. 5 Lakh, for Group B it is Rs. 3 Lakh, and for Group C it is Rs. 1 Lakh. The limits indicated are for aggregate of the DDs to be issued in a day by one member on the other bank. The drawing power of a bank under Group A shall be Rs. 5 Lakh per day, under Group B Rs 3 Lakh per day and under Group C Rs. 1 lakh per day. Cancellation of DD The issuing bank should obtain a letter from the purchaser of the DD and intimate the paying bank and the paying bank on receipt of the letter (Form 5) must verify if the DD has already been paid, if not, stop payment should be noted and intimation should be sent to the issuing bank.

Mail Transfer and Telegraphic Transfers A member bank can issue a mail transfer for crediting to the account of a customer at another member bank. Telegraphic transfer includes transfer of funds by TT through SBI/SBM/SBH/ HDFC. The bank sending the TT should record the details of the TT sent in a TT register. The pending items of the TT should be followed up promptly by the concerned bank. Collection of Cheques and Bills The Cheques and Biills drawn on different centers can be collected through a member bank at par. The proceeds of the Cheques tendered by the customers are to be credited to their accounts and unpaid instruments should be returned immediately. The collecting bank/branch on realization of Cheques/Bills shall send the realization advice (Form No. 9) to the K.S.C Apex Bank Ltd. for credit to the account. Maintenance of Current Account Each member bank should maintain a current account with the head office branch of K.S.C. Apex Bank Ltd. and all transactions under IMAS should be done through this account. The member banks should maintain sufficient balance in order to meet the daily transaction under the scheme and Overdraft facility of not less than Rs. 20 Lakh on the security of fixed deposits with the head office branch of K.S.C. Apex Bank Ltd. The interest applicable to clean OD shall be charged at the prescribed rate. If any member bank avails OD without sanction limit continuously or exceeds the limit sanctioned for long periods, K.S.C. Apex Bank Ltd. has the right to remove such members from IMAS after giving prior notice.

Each member bank should maintain DD issue registers, DD cancellation registers, stop payment registers, Bills for collection registers and TT issue registers. K.S.C. Apex Bank Ltd. shall conduct reconciliation meetings of all the member banks every quarter to eliminate the pending entries.

FAQs Who can operate the SB Account? By a person in his name/her name. By two or more persons in their joint names payable to (1) Both (2) All of them (3) Either or Survivor where in case of death of one of the account holders All Co-operative institutions can open SB Accounts. Certain non-profit welfare organizations can also open SB Accounts. Who cannot open an SB account? Proprietorship Concern, Partnership Firm, Joint Stock Company for conducting trade; certain institutions, Government departments depending on budgetary allocations, Municipal Corporations, Panchayat Samitis, State Electricity Board, State Housing Board, Trading and Business concerns and Water/Sewerage/Drainage Boards. What does the customer need to know while opening of SB Account? The objective of the Savings Bank is to encourage private individuals to deposit their savings with the bank by allowing interest on the account. Normally, a bank may not allow opening of more than one SB account in the name of the customer or jointly with others. Every customer has to maintain prescribed minimum balance in the account and if the balance goes below the minimum required, then the bank will collect Bank charges and Service Tax for the same. Bank charges and service tax are applicable for issue of chequebooks, duplicate passbook, cheque return and for standing instructions. Nomination facility is there in SB account where the account holder can nominate a person. DDs under IMAS The Inland Mutual Arrangement Scheme (IMAS) was formulated in the year 1958 by K.S.C. Apex Bank Ltd. Objectives Issue of demand drafts. Issue of mail transfers and telegraphic transfers. Collections of Cheques/Bills etc. by member banks in Karnataka on other member banks such as

State, Central and Urban co operative banks and on their Branches in Karnataka. K.S.C. Apex Bank Ltd. is administering the Scheme and the advisory committee is being constituted for monitoring/reviewing the activities of the scheme. The members of the advisory committee include: 1)Managing Director of K.S.C.Apex Bank Ltd., as Chairman and representative of Apex Bank 2)3 members from D.C.C. banks 3)3 members from Urban Co-operative Banks and from Karnataka State Co-operative Banks Federation -1 member. The advisory committee members shall meet once in a quarter. All D.C.C. Banks and Urban Co-operative Banks and their branches, seeking admission to become members of IMAS should apply with K.S.C. Apex Bank Ltd. K.S.C. Apex Bank Ltd., as the sponsored Bank of the said scheme, has laid down certain rules and regulations for the working of the IMAS and modifications of the scheme. It communicates to the member banks and its branches regarding admission/withdrawal of the scheme and circulates the specimen signature of the authorized officials to all the member banks to sign the DDs. It gives the decision over any dispute that may arise under the said scheme. It makes arrangements to convene reconciliation meetings of all the member banks for speedy elimination of pending entries. Apex Bank gives guidance, education, and training programmes to all the member banks about the working of the IMAS. All the member banks under IMAS should maintain their Current Account with the head office of K.S.C. Apex Bank Ltd. They should also maintain books of records and registers and they must reconcile their accounts from time to time with their account at Apex Bank level. Admission of the Banks The membership of the scheme is open to all Co-Operative Banks registered under The Karnataka Co-operative Societies Act and coming under the Purview of Banking Regulation Act 1949. The bank should have been functioning for a period of at least three years and should be a member of the local clearinghouse and in deserving cases, the Apex Bank may even consider enrolling banks that have been functioning for one year as members. The bank should have maintained a Current Account with the head office branch of K.S.C. Apex Bank Ltd. All DCC banks, Urban co-operative banks and their branches are eligible to become members of the IMAS Scheme, in which case the minimum working capital of the banks should be Rs. 150 Lakh. There should not be continuous defaults in the maintenance of the cash reserves ratio and liquid assets as required under section of Banking Regulation Act 1949. The Audit Classification of the bank should be A. An Urban Co-operative bank having working capital of Rs. 500 Lakh can admit 5 members and

a bank with more than Rs. 500 Lakh can admit 8 members. Application enclosures include Form No. 1 and Form No. 2 for admission of banks and its branches respectively. Resolution of Board of Directors, along with competent authority empowering their officials to sign DD, advices on behalf of the banks should be included in the enclosures. Specimen signatures of the authorized officials should be enclosed. Latest audited balance sheet/profit and loss account/RBI/NABARD/ inspection reports should be enclosed. A copy of the byelaws, latest annual reports and copy of RBI License should be included. The admitted members are grouped into 3 categories and they should maintain fixed deposit and security deposit depending upon their group. Please Click Here to download a PDF document of the group details. There are no admission/annual membership fees. The DDs, Cheques Books will be supplied by The Apex Bank Ltd. The concerned banks will meet the cost of the printing of DD books, advices. The admitted member banks/branches of the IMAS will be allocated code numbers by K.S.C. Apex Bank Ltd., for easy identification and transactions. Withdrawal/Removal from Membership Member banks should submit a letter (Form No. 3) 2 months in advance of the proposed date of withdrawal. A copy of the resolution of the Board of Directors for withdrawal quoting the reason and also a letter of understanding to honour the DDs drawn on them by the member banks prior to the actual date of withdrawal. The Board of Directors of K.S.C. Apex bank Ltd. is the competent authority to remove any bank from membership of IMAS and the Managing Director of Apex Bank Ltd., is the competent authority to remove any branch of the member bank. K.S.C. Apex bank Ltd. shall have the right to suspend/dismember any member of IMAS by giving 30 days prior notice indicating the reasons thereof if the bank is persistently defaulting in the maintenance of the funds or not adhering to the directives of the IMAS. Issue and Honouring of DD All member banks shall draw MICR DDs/cheques on K.S.C. Apex Bank Ltd., Head Office Branch only. In other centers, as far as possible, DDs should be drawn on a member of the local clearing house. DDs should be written neatly in English with carbon sheet kept below the DDs and signed by 2 signatories. Alteration, if there is any, should be tested with full signatures with there code number allotted. Punching of the cages should be done to prevent fraudulent alteration of the amount of the DDs. The issuing bank should punch the number of the amount in figures on the exact cadge. Safety stickers may be pasted on the DD amount in figure to avoid any alterations. Limit for issue for Group A is Rs. 5 Lakh, for Group B it is Rs. 3 Lakh, and for Group C it is Rs. 1 Lakh. The limits indicated are for aggregate of the DDs to be issued in a day by one member on the other bank. The drawing power of a bank under Group A shall be Rs. 5 Lakh per day, under Group B Rs 3 Lakh per day and under Group C Rs. 1 lakh per day.

Cancellation of DD The issuing bank should obtain a letter from the purchaser of the DD and intimate the paying bank and the paying bank on receipt of the letter (Form 5) must verify if the DD has already been paid, if not, stop payment should be noted and intimation should be sent to the issuing bank.

Mail Transfer and Telegraphic Transfers A member bank can issue a mail transfer for crediting to the account of a customer at another member bank. Telegraphic transfer includes transfer of funds by TT through SBI/SBM/SBH/ HDFC. The bank sending the TT should record the details of the TT sent in a TT register. The pending items of the TT should be followed up promptly by the concerned bank. Collection of Cheques and Bills The Cheques and Biills drawn on different centers can be collected through a member bank at par. The proceeds of the Cheques tendered by the customers are to be credited to their accounts and unpaid instruments should be returned immediately. The collecting bank/branch on realization of Cheques/Bills shall send the realization advice (Form No. 9) to the K.S.C Apex Bank Ltd. for credit to the account. Maintenance of Current Account Each member bank should maintain a current account with the head office branch of K.S.C. Apex Bank Ltd. and all transactions under IMAS should be done through this account. The member banks should maintain sufficient balance in order to meet the daily transaction under the scheme and Overdraft facility of not less than Rs. 20 Lakh on the security of fixed deposits with the head office branch of K.S.C. Apex Bank Ltd. The interest applicable to clean OD shall be charged at the prescribed rate. If any member bank avails OD without sanction limit continuously or exceeds the limit sanctioned for long periods, K.S.C. Apex Bank Ltd. has the right to remove such members from IMAS after giving prior notice. Each member bank should maintain DD issue registers, DD cancellation registers, stop payment registers, Bills for collection registers and TT issue registers. K.S.C. Apex Bank Ltd. shall conduct reconciliation meetings of all the member banks every quarter to eliminate the pending entries.

DDs under AIMAS All India Mutual Arrangement Scheme (AIMAS)

Genesis National Federation of State Cooperative Banks Ltd., (NAFSCOB) launched `All India Mutual Arrangement Scheme (AIMAS) on August 21, 1965. Scope and Coverage The State Cooperative Banks (SCBs), their branches; The District Central Cooperative Banks (DCCBs), their branches and Cooperative Urban Banks (CUBs) and their branches in the country are eligible to become members of AIMAS. Under AIMAS, any participant cooperative bank can issue a Demand Draft payable at any other SCB or its branches or any DCCB or its branches or any CUB or its branches, provided they are members of AIMAS. At present 1156 bank offices in 26 States are members of AIMAS. The following banking and non-banking business is permissible under AIMAS. a.Issuing and honouring of MICR & Non-MICR Demand drafts b.Issuing and honouring of Mail transfers c.Collection and payment of Bills, Cheques, Dividend Warrants etc. Role of NAFSCOB in AIMAS a.NAFSCOB lays down the rules and regulations regarding working of AIMAS and takes all decisions related to the functioning of AIMAS, in consultation with the `Advisory Committee on AIMAS constituted by NAFSCOB and member participant SCBs under AIMAS. b.NAFSCOB provides necessary direction and guidance to the member participant banks under AIMAS. c.NAFSCOB takes final decision regarding admission and cancellation of membership of AIMAS, in consultation with the respective SCBs. d.NAFSCOB arranges printing and supply of MICR and Non-MICR DDs and makes them available to member participant banks on their specific indent, under intimation to the respective SCB. e.NAFSCOB arranges to circulate the Specimen Signature of the Authorized Officers of the participant banks among all participant banks under AIMAS. f.NAFSCOB assumes the responsibility to govern and monitor the functioning of AIMAS.

Role of State Co-operative Banks SCBs play in important role in the functioning of AIMAS though the participant member bank offices operate AIMAS. When a DD is issued or paid by a DCCB/CUB, the SCBs will have to pass necessary entries at their level. The SCBs are also required to maintain Books/Registers with regard to DDs issued/honoured etc. The SCB shall forward the copies of circulars, Specimen Signature Sheets/CDs and other information/instructions etc., on AIMAS received from NAFSCOB to all the participant member banks under AIMAS in the respective States. The SCB shall print and supply relevant `Advice forms under AIMAS.

Admission Criteria a.All SCBs and their branches are eligible to become members of AIMAS. b.A DCCB having a minimum working capital of Rs.5 crore can become a member of AIMAS. c.A DCCB having working capital of Rs.5 crore and up to Rs.10 crore can admit a maximum number of its 5 branches. d.A DCCB having working capital of Rs.10 crore and above can admit a maximum number of 10 branches. e.A CUB having working capital of Rs.5 crore can become a member of AIMAS. f.A CUB having working capital of Rs.5 crore and up to 10 crore can admit maximum number of its 5 branches. g.A CUB having working capital of Rs.10 crore and above can admit a maximum number of 10 branches. h.The branch to be admitted to AIMAS should be a member/sub member of the local Clearing House. Admission Procedure Any SCB seeking admission to AIMAS should apply directly to NAFSCOB in the prescribed Application Form (Form No.1 as given in the Operational Manual on AIMAS), along with a certified copy of the resolution adopted by the competent authority indicating the names of the Authorized Officers to operate/sign under AIMAS, along with their specimen signatures and the `Group under which it would like to participate for the purpose of issuing and honouring of DDs. DCCBs/CUBs seeking admission to AIMAS should apply to NAFSCOB through the SCB of the state concerned in the prescribed Application Form (Form No.2 as given in the Operational Manual on AIMAS), along with the resolution of the competent authority indicating the names of Authorised Officers to operate/sign under AIMAS, along with their specimen signatures and the `Group in which it would like to participate for the purpose of issuing and Honouring the DDs. Groups for issuing and honouring DDs The participant member banks can participate in any of the following `Groups for `Issuing and `Honouring DDs under AIMAS. Please Click Here to download a PDF document of details of groups under AIMAS. Autorized Signatories Member participant SCBs under AIMS can authorize up to 10 Officers per SCB and up to 5 Officers per branch office for admission to AIMAS, as Authorised Signatories. Member participant DCCBs and CUBs under AIMAS can authorize up to 10 officers per Head Office and up to 5 officers per branch office for admission to AIMAS, as Authorised Signatories.

Admission Fees a.DCCBs and CUBs are required to pay non-refundable Admission Fees of Rs.2500/- per bank office, which is inclusive of `Annual Membership Fees for the first year. b.Annual Membership Fees per bank office of DCCB and CUB is Rs500/-. c.SCBs under AIMAS are exempted from payment of `Admission Fees and `Annual Membership Fees. Other costs a.The actual cost of DDs (MICR & Non-MICR) is recoverable from the member banks. b.The cost towards `Specimen Signatures sheets/CDs, Hand book on AIMAS Cypher Code System, AIMAS Directory of Member Banks and any other stationery is recoverable from the participant SCB/DCCB/CUB. AIMAS Operational Manual Operational Manual on AIMAS consisting functional guidelines for the benefit of participant member banks under AIMAS has been brought out by NAFSCOB. The Manual is made available to all participant member banks at cost. AIMAS Directory of Member Banks NAFSCOB publishes AIMAS Directory of Member Banks, consisting of member specific code numbers, name and address of all the participant member bank offices along with Telephone Numbers, Fax and Telex Numbers, E-Mail Addresses as well as the `Issuing Bank Key Numbers of participant banks under AIMAS. The directory is supplied to all participant member banks at cost. AIMAS Handbook on Cypher Code System In addition to measures adopted to ensure safety of Demand Drafts under AIMAS, an additional security feature such as Cypher Code has been introduced by NAFSCOB. In addition to the bank specific `Code Numbers, NAFSCOB also issues bank office specific four digit Issuing Bank Key Number for facilitating working out the Cypher Code. Under the Cypher Code System, certain numeric values have been allotted to features such as day, date, month as well as the range of amount for enabling the banks to workout day specific Cypher Code. NAFSCOB publishes `AIMAS Handbook on Cypher Code System and is supplied to all participant member banks at cost. Use of `Cypher Code has been made mandatory under AIMAS since January, 2005.

Progress in Membership AIMAS is a popular scheme among SCBs, DCCBs and CUBs in the country.

Please Click Here to download a PDF document of the list of members under AIMAS as on 31.03.2007.

Home Loans The housing finance services offered by the Bank include construction of House/Mortgage Loan, Site purchase/Mortgage Loan, purchase of Flats etc., to the public through its network of 31 branches in Bangalore City. Residents of Bangalore city are eligible for housing under certain rules. Persons applying for loans for construction of house, additional/repairs to the existing House/Flat, purchase of House/Flats, Site Mortgage/purchase Loan etc. within the limits of Bangalore City Corporation, BDA, BMRDA, Revenue Villages, BIAPA & Municipalities coming under the jurisdiction of BMRDA/BIAPA & Bangalore Rural District & Ramanagara District are eligible for loan. Terms Loan will be sanctioned even if the property is in the name of spouse, provided the spouse mortgages the property to the bank and also guarantees the repayment of loan along with interest. Loans will not be sanctioned for revenue property and purchase of sheet/tiled roof house. The applicant should have regular income by way of salary, business etc. and should produce Income Tax returns of three years. The applicant will have to give one surety acceptable to the Bank. The applicant will have to become a nominal member of the bank along with surety provider. Loans will not be given to persons above the age of 58 years. In case of non-salaried persons, the Bank will require that the loan is repaid before the applicant reaches the age of 70 years. And in case of salaried persons, the Bank will require that the loan is repaid before the applicant is retired from the services. In case of retired persons having sufficient repaying capacity, the repayment period "may" be extended for the applicant up to 70 years of age. House/Flats/Site financed shall be mortgaged to the bank by depositing all original title deeds of the property with the bank and registering the equitable mortgage deed at the concerned sub registrar office. Housing Loan (Construction/Purchase) Sl. No. Repayment Period Interest Upto 30 Lakhs 1 2 Upto 7 Years Above 7 Years & Upto 15 Years 10.50% 11.50%

Above 30 Lakhs 3 Above 7 Years & Upto 15 Years 12.50%

Construction/Mortgage Loan for Commercial Building Sl. No. 1 Repayment Period 120 Months Amount 60.00 Lakhs Interest 15.50%

Processing Charges:

1.00% of the loan amount.

Required Documents:

Original equitable mortgage deed Latest EC in Form No.15 after registration Loan agreement Acceptance letter Pro-note and letter of guarantee shall be executed by surety. The applicant should provide property insurance policy up to 150% of the loan amount.

Savings Bank Account Key Features

A common operating account for individuals for non-commercial transactions. Helps you manage day-to-day banking transactions with some returns for the savings made Minimum Balance to be maintained without Cheque Book facility is Rs. 250/-. Minimum Balance to be maintained with Cheque Book facility is Rs. 500/-. ECS facility Nomination facility No overdraft facility is allowed. There is also a ceiling on the total number of withdrawals permitted during a specific time period. . Pass Book is provided to the customers to see the details of the transactions. Interest on balances in saving bank accounts would be calculated on daily product basis with effect from April 01, 2010. Rate of Interest - 4.00% PA.

Requirements for opening of the SB Account

A person who wants to open an SB Account has to fulfill the following formalities Name and address of his residence - Documents like Voters list, Passport, Driving License, Electricity Bill, Telephone Bill etc., for address proof. An introduction of the person from an existing account holder with the Bank. Recent photograph of the person for identification for future needs/investigations. Permanent Account Number (PAN)/ (Form No.60/ Form No.61) Specimen signatures of the operators.

FAQs 1.Is the Apex Bank providing term loan for all types of Projects/establishment of Industries/ factories? Presently, the bank is providing term loan/block capital under consortium arrangement for establishment of sugar factories both under cooperative and private sector. 2. What are the securities, which need to be obtained for term loan? Creation of charge on pari passu basis on land & building and plant & machinery and other assets created/to be created. 3.What is the minimum share capital contribution prescribed for promoters & members? The prescribed minimum share capital contribution by promoters & members is 40% of the approved project cost. 4.What is the maximum term loan that could be sanctioned to a project by the banks/FIs? The maximum term loan that could be sanctioned to a project by all consortium bankers/FIs should not exceed 60% of the approved project cost. 5.Is the Apex Bank providing working capital loan to sugar factories/other institutions? The Bank is providing working capital loans to cooperatives as well as private sugar factories and other institutions like FCI, IFFCO, and KOF etc. under consortium arrangements against pledge of stock. 6.What is the margin prescribed for working capital to sugar factories? At present the margin prescribed by the Bank for working capital to sugar factories is 15% and the bank is at liberty to reduce/increase the margin. 7.What is the prescribed overall exposure limit to sugar industry?

The overall exposure by SCB/DCCB to the sugar sector should not exceed 40% of the Maximum Net Internal Lendable Resources (ILR) reached by the respective Bank during the previous financial year. 8.What is the prescribed unit-wise exposure limit? a) The total lending by SCB to a cooperative/an outside cooperative unit should not exceed 25% of the capital fund of SCB. b) The total lending by DCCB to a cooperative unit should not exceed 50% of the capital fund of DCCB. c) The total lending by DCCB to a outside cooperative unit should not exceed 25% of the capital fund of DCCB. 9.What is the prescribed exposure limit to units outside the cooperative fold? The total exposure by SCB/DCCB to the units outside the cooperative fold including individual loans should not exceed 25% of the maximum ILR reached during the previous financial year. 10.What is the rate of interest prescribed for term loam and working capital loan? The present rate of interest for term loan is 13.50% p.a. and for working capital is 13% p.a. and it is subject to change from time to time at the discretion of the Bank. 11.What are the documents/information required for sanction and release of term loam & working capital loan? The documents/information required for sanction and release of term loam & working capital loan is listed in the policy and operational guidelines prepared by Apex Bank. 12. Does the Bank provide loans to National / State level Institutions? Under consortium arrangements the bank is providing working capital loans to National/ State level institutions like IFFCO, FCI, CAMPCO, KSCARD Bank, KCCF, KOF etc. 13. Is the Bank providing loans to Employees Cooperative Societies? The Bank is directly providing working capital loans to Employees Cooperative Societies formed by Employees of CQAL Campus, KCCF, KSRP, and KSCARD Bank.

Activities of the Bank

a)Financing short-term (agriculture) loans for crop production and marketing of crops and advancing Medium Term Loans for development of agricultural infrastructure such as lift irrigation, dairy, poultry, plantation, gobar gas etc. b)Extending cash credit loans to processing, marketing and consumer co-operatives as well as sugar factories in Karnataka. c)Advancing term loans to new co-operative/Private sugar factories under consortium arrangement in Karnataka. d)Advancing working capital loans to sugar factories, state level cooperatives and to national level cooperatives such as IFFCO, KRIBHCO and to state level undertakings through consortium arrangements with commercial banks. e)Financing to non-farm sector for development of cottage industries, small scale industries and rural artisans and weavers. f)To carry on general business of Banking like remittances of funds by DD, Mail Transfer, Collection of Cheques and Drafts, issue of consumer loans, vehicle loans, housing loans, salary earners loans and gold loans and other banking activities to the members and customers. g)To monitor the Inland Mutual Arrangement Scheme under which money remittances and collection of bills and cheques are facilitated between member banks The Bank is a member of All India Mutual Arrangement Scheme, whereby money remittances could be made and DDs issued as well as Bills and Cheques sent for collection throughout India. Similarly, Mail Transfers and Bills Collection are facilitated from any part of the country to Apex Bank.

Interest Subsidy - Salient Features The salient feature of the Scheme are

The scheme covers all agricultural loans Short term (ST), Medium Term (MT), Long Term (LT) loans and is not applicable to Non farm sector loans. The lending rate to the farmer is 4%. This benefit is available to agricultural loans upto Rs.3.00 lakhs per farmer and any excess amount availed above this limit shall carry normal rate of interest. The Govt. of Karnataka would provide interest subsidy to the cooperative institutions on the agricultural (ST, MT, LT) loans sanctioned with effect from 1.4.2006 as follows:

ST(A) NABARD Refinance 3% Own Funds of DCCB/PACS Up to Rs 3 lakhs per borrower 5.50% Above Rs 3 lakhs per borrower 7.50%

MT(A) 7.50%

The liability of the Scheme starts from the date of sanction / release of loan and extends up to due date of repayment of loan. Defaulter shall be liable to repay the loan at normal rate of interest to the concerned society from the due date of repayment.

The scheme has been continued for the year 2007 08 also and the Government of Karnataka would provide interest subsidy to the cooperative institutions as follows:

ST(A) NABARD Refinance 4% Own Funds of DCCB/PACS Up to Rs 3 lakhs per borrower 6.50% Above Rs 3 lakhs per borrower 8.50% MT(A) 8.50%

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Interest Subsidy Copy - G.O Copy of Government order No CO 41 CLS 2006, Bangalore, 15.5.2006 I.SCHEME : Financial assistance to Agricultural Co-operative Credit Institutions (PACSs/DCC Banks/PCARDBs/KSCARD Bank and KSC Apex Bank) to enable them to lend agricultural Loans (ST, MT & LT Loans) to the farmers at 4%. II.OBJECTIVE : The main objective of the scheme is to extend substantial relief to the farmers by reducing the heavy interest burden on agricultural loans provided by Co-operative Credit Institutions. III.DEFINITIONS :

1)Primary Agriculture Credit Society (PACS) means Primary Agriculture Credit Co-operative Society by whatever name called namely Vyvasaya Seva Sahakari Sangha Niyamita, Vyvasaya Seva Sahakari Bank Niyamita, Prathamika Krushi Pathina Sahakara Sangha Niyamita, Prathamika Krushi Pathina Sahakara Bank Niyamita, Farmers Service Co-operative Society Niyamita, Raitha Seva Sahakara Sangha Niyamita etc. The PACS may be ceded to the DCC Bank or the Commercial Bank as the case may be. 2)District Co-operative Central Bank (DCC Bank) means District Cooperative Central Bank situated at District Headquarters providing Short and Medium Term Loans to the PACS. 3)The Primary Co-operative Agricultural and Rural Development Bank (PCARD Bank) means the Primary Co-operative Agricultural and Rural Development Bank normally situated at Taluk Headquarters providing agricultural loans to the farmers for various purposes. 4)Karnataka State Co-operative Agriculture and Rural Development Bank (KASCARD Bank) means Karnataka State Co-operative Agriculture and Rural Development Bank situated at Bangalore providing long term agricultural loans to the farmers through PCARD Banks. 5)Karnataka State Cooperative Apex Bank (Apex Bank) means Karnataka State Cooperative Apex Bank Ltd., situated at Bangalore providing Short Term and Medium Term loans to the farmers through DCC Banks for various purposes. IV. Beneficiaries : The Scheme would benefit around 12.00 lakh farmers availing short term, medium term and long term loans for various agricultural Operations from Cooperative Credit Institutions. V. Application of the Scheme : As per the scheme, agricultural loans i.e ST.MT loans advanced by PACSs/DCC Banks and PCARDBs and long term loans advanced by the PCARD Banks w.e.f 1.4.2006 are covered. This Scheme is not applicable to non-farm sector loans. This is also not applicable to loans given to the farmers earlier to 1.4.2006. VI. Present status of lending rates : Prior to 1.4.2004, agricultural loans were being provided by the Primary Lending institutions to the farmers at varying rates that are around 12.5% in respect of Short term/Medium Term Loans and 13.5% in respect of LT loans. With effect from 1.4.2004 agricultural loans are being provided at 6% to the farmers and the Government is reimbursing interest subsidy at 5.5% on the loans advanced to the farmers at the primary level. In order to provide these agricultural loans at 4% the Government has to meet the differential cost in the form of subsidy to be sanctioned to the PACSs/DCC Banks/PCARD Banks. VII Funding by the Government :

The novelty of the scheme is reduction in the rate of interest on agricultural loans to 4% and making a firm commitment by the Government to provide interest subsidy at 7.5% on the loans sanctioned by the cooperative credit institutions and to provide adequate provision in the budget for reimbursing the said interest subsidy to the cooperative credit institutions. The interest subsidy payable as per the scheme is limited to the period which is normally allowed for repayment of loans. The liability of Government under this scheme starts from the date of sanction/release of loan to the farmers and extends upto the due date of repayment during the loan period. However if the farmer fails to repay the amount on the due date and becomes a defaulter, he shall be liable to repay the loan with normal rate of interest and other charges if any to the concerned agricultural credit cooperative society/ bank from the date of sanction of loans. There is a gestation period of around two years for repayment of principal in respect of long term loans during which the farmer is required to pay only the interest. The benefit of the scheme is available during the gestation period also. VIII. Benefit The benefit under this scheme is available to agricultural loans upto a limit of Rs.3.00 lakhs per person and if any farmer avails a loan in excess of Rs.3.00 lakhs from the agricultural credit cooperative society/bank, he shall be liable to repay the said loan with normal rate of interest and other charges if any. IX. Mode of release : 1.The Government will immediately sanction the entire amount of Rs.76.50 crores earmarked for the purpose in the budget for 2006-07 and deposit the amount with the Karnataka State Cooperative Apex Bank in advance in the name of the Registrar of CS. 2.The Registrar shall release subsidy @ 7.5% to the DCCBs on the quantum of ST/MT loans advanced to the farmers by PACSs and PCARDBs every quarter based on the claims submitted by DCCBs and certified by the Deputy Director of Cooperative Audit. 3.The Registrar shall release subsidy @ 7.5% to KSCARD Bank on the quantum of loans sanctioned to the farmers by PCARDBs every quarter based on the actual claims submitted by KSCARDB and duly certified by Deputy Director of Cooperative Audit. 4.The claims shall be prepared quarterly by the DCCBs in respect of PACS including the advances made out of the own funds of PACS and KSCARD Bank in respect of PCARDBs including the advances made by PCARDBs out of their own funds. These claims shall be verified and certified by the respective Deputy Directors of Cooperative Audit and submitted to the Registrar within 15th of the month following the close of the quarter. The RCS shall after due verification, release the subsidy to the DCCBs/KSCARDB by the 25th of the month by drawing on the amount with KSC Apex Bank.

Evolution of cooperatives in India Highlights and Milestones 1.The Cooperatives were first started in Europe to serve the credit-starved people in Europe as a self-reliant, self-managed peoples movement with no role for the Government. 2.British India replicated the Raiffeisen-type cooperative movement in India to mitigate the miseries of the poor farmers, particularly harassment by moneylenders. 3.The first credit cooperative society was formed in Banking in the year 1903 with the support of Government of Bengal. It was registered under the Friendly Societies Act of the British Government. 4.Cooperative Credit Societies Act of India was enacted on 25th March 1904. 5.Cooperation became a State subject in 1919. In 1951, 501 Central Cooperative Unions were renamed as Central Cooperative Banks. 6.Land Mortgage Cooperative Banks were established in 1938 to provide loans initially for debt relief and land improvement. 7.Cooperatives have played an important role in the liberation and development of our country. 8.The word Cooperative has become synonymous for dedicated and efficient management of rural credit system. 9.Reserve Bank of India started refinancing cooperatives for Seasonal Agricultural Operations from 1939. 10.From 1948, Reserve Bank started refinancing State Cooperative Banks for meeting the credit needs of Central Cooperative Banks and through them the Primary Agricultural Cooperative Societies. 11.Only 3% of rural families availed farm credit in 1951. 12.In 1954, the All India Rural Credit Survey Committee recommended strengthening of DCC Banks and PACS with State partnership and patronage to solve the farmers woes. 13.Registrar of Cooperative Societies became the custodian of Cooperatives from 1962 with the enactment of respective State Acts. 14.Reserve Bank introduced Seasonality and Scale of Finance for crop loans and provided for conversion, rephasement and reschedulement to tide over crop loss due to calamities. 15.The Primary Agricultural Cooperative Societies became multi purpose. 16.Reorganization of PACS into viable units, FSCS, LAMPS started under action programme of RBI in 1964. 17.The finding of All India Rural Credit Review Committee that coverage of cooperatives is limited to hardly 30% of farmers led to nationalization of Banks. However, Cooperatives have played a key role in meeting the credit needs of weaker sections of farmers. 18.The establishment of Regional Rural Banks from 1975 has not reduced the problems of rural credit as they reached only 6% of the farmers. 19.Cooperatives have contributed their part in the implementation of 20-point programme and Integrated Rural Development Programme. 20.Though the Cooperatives were lagging behind in rural credit till 1991, they regained their prime place with 62% share in rural crop loans between 1991 and 2001.

Co-operatives in Karnataka Karnataka has been in the forefront of Co-operative endeavours and has produced several outstanding cooperatives. Sri Siddanagouda Sanna Ramanagouda Patil organized the first Agricultural Credit Coop.Society in 1905 in the village of Kanaginal in Gadag District. The Cooperatives in Karnataka have the following fundamental objectives and principles 1)To inculcate the spirit of cooperators among the people in the State 2)To encourage people to promote cooperatives on a voluntary basis 3)To ensure that the cooperatives are formed and function on democratic principles 4)To ensure that the cooperatives in the state enjoy maximum autonomy 5)To ensure that the cooperatives are accountable to members 6)To ensure that the cooperatives function as useful instruments to bring about sustained improvement in the quality of life of their members. 7)To ensure that the cooperatives function as instruments for poverty alleviation and for the uplift of weaker sections of the society in order to pave way for establishing an equalitarian society 8)To encourage cooperatives to emerge as self supporting, economic service- oriented business concerns 9)To encourage cooperatives serve as multifunctional units 10)To encourage efficient deposit mobilization 11)To encourage efficient deployment of human resources 12)To achieve financial gains and to put mutual aim ahead of private interest 13)To provide equal opportunities to all the members 14)To encourage cooperatives to emerge as peoples bank 15)To prevent misuse by cooperators 16) To ensure independent audit 17) To infuse professionalism in the management 18) To serve towards national objectives 19) To have Cooperators among the Cooperatives Initial Stages of Co-operative Movement The Co-operative Movement in the old Mysore area was first introduced in 1905 when the first Mysore Co-operative Societies Act was passed. The progress of the movement was slow up to 1910-11. However, in the course of the next few years, there was rapid development. There were 111 societies with a membership of 9,043 and a working capital of Rs.3.71 lakhs at the close of 1910-11. By the end of financial year 1914-15, there were 725 societies with a membership of 56,267 and their working capital went up to Rs.30.85 lakh. Need for a Separate Provincial Bank During the period when the Co-operative Movement was introduced, the need for an Apex Bank to finance the societies was not felt since most of the earlier societies, which were started, were non-agricultural societies and they were carrying on their activities out of the meager resources raised by them. But after the year 1910-11, the number of societies increased and at the end of the year 1914-15, there were 725 societies and out of which 661 were agricultural credit

societies. With the increase in the number of societies, the need for starting a special agency for financing the societies arose. As already indicated above, the Bangalore Central Co-operative Bank was already in the field and was financing some societies to a small extent. Subsequently, however, another institution more or less similar in nature with the jurisdiction of Mysore District called the Mysore District Co-operative Central Bank was registered. This was followed by another type of institution known as Unions, which was designed to work as a permanent link between the primary societies at the base and the central bank at the top. The jurisdiction of the unions extended over a taluk and their main functions were to mainly inspect and supervise the cooperative societies in the taluk and also to finance them partly by raising deposits and partly by borrowings from central banks. But since their utility to the movement as a whole was far from satisfactory on account of their limited area of operations and lack of resources, the Unions were wounded up in the next few years by an order of Government in December 1924. Starting of the Provincial Co-operative Bank Against this background, the Mysore Provincial Co-operative Bank came into existence. Though this Bank was registered on 10-11-1915, it actually commenced its work in 1916. The Bank was started with the objective of financing, inspecting and supervising the co-operative societies in the Mysore State. Subsequently, several district co-operative central banks with the jurisdiction of a district were registered. Five such district central banks were started. But their working was not satisfactory and they became defunct. As such, the provincial bank started financing the societies directly. Besides, granting of loans, the Bank served as an outlet for investment of the surplus funds of the co-operative societies in the State. The Bank thus began acting as the balancing centre of the Co-operative Movement in the State, safeguarding its interests. Reorganization of Provincial Co-operative into an Apex Bank As already stated above, there were two provincial co-operative organizations working on similar lines and with the same aims and objects, namely (1) The Mysore Provincial Cooperative Bank, (2) Bangalore Central Co-operative Bank. This was an anomaly, which led to mutual competition unnecessarily in the matter of financing of co-operative societies. In order to remove this anomaly and to have only one institution as an Apex institution exclusively for financing the co-operatives in the State, the Government appointed an Enquiry Committee known as the Mysore Co-operative Enquiry Committee, 1920-22 presided over by Mr Lallubhai Samaldas. The Committee after reviewing the position of these two banks, made the following three alternative recommendations to the Government. a)To amalgamate the Mysore Provincial Co-operative Bank and the Bangalore Central Cooperative Bank. b)To create a new Apex Bank. c)To convert the Central Co-operative Bank into an urban bank dealing only with the individuals and to reorganize the Provincial Co-operative Bank into a new Apex Bank. The Bangalore Central Co-operative Bank opposed the amalgamation with the Provincial Cooperative Bank. Thus, the creation of a new Apex Bank was out of question. The Government therefore accepted the third suggestions made by the Committee.

Accordingly, the Government passed orders on 14/15.9.1925 permitting the Mysore Provincial Cooperative Bank to get itself converted into an Apex Bank with the jurisdiction extending over the entire State for financing the co-operative societies exclusively and the Bank thereafter was named as the Mysore Provincial Co-operative Apex Bank Ltd., popularly known as Apex Bank.

FAQs 1) What are the agricultural finances provided by Apex Bank? Apex Bank is a premier Bank in Agriculture Refinancing and providing short-term credit limits for financing seasonal agricultural operations. The term Seasonal Agricultural Operations generally indicates activities, which are undertaken in the process of raising various crops and are seasonally recurring in nature. The credit is provided to meet the current expenditure of raising the crops on land till the crops are harvested.

2) What are the different types of credit limits sanctioned under Seasonal Agricultural operations? There are four types of credit limits sanctioned under Seasonal Agricultural operations. 1) Short term - Other crops = ST(OC) 2) Short term - Oil seeds production programme = ST(OPP) 3) Short term - National pulses Development Programme = ST(NPDP) 4) Short term - Development of Tribal population = ST(DTP)

3) Is agriculture finance provided directly by the Apex Bank to farmers? It is the refinance facility provided by the National Bank for Agriculture and Rural Development Bank (NABARD) to the Karnataka State Co-operative Apex Bank on behalf of the eligible DCC Bank. However, Apex Bank is also providing 30% of the NABARD limit to the eligible DCC Banks at NABARD rate of interest from its own resources. The Apex Bank is also providing additional ST (Credit) limit Over & above 30% at the rate of 6.5% to needy DCC Banks and @ 6.00% to Sec. 11 DCC Banks i.e. DCC Banks not eligible for NABARD refinance 4) How is the accommodation provided by NABARD? The accommodation is provided by NABARD through a three tier Co-operative credit structure viz. the State Co-operative Bank at the State level, the District Central Co-operative Banks at the District level and Primary Agriculture Co-operative Societies at the village level.

NABARD will sanction a consolidated ST (SAO) credit limit to the State Co-operative Bank on behalf of eligible DCC Banks against the DPN executed by the State Co-operative Bank. The credit limit so sanctioned by the NABARD can be drawn by the State Co-operative Banks only in respect of ST agricultural loans already advanced by the concerned DCCB and the SCB.

5) What is the nature of accommodation? The credit limits sanctioned for financing SAO are in the nature of cash credit accommodation for one year and operative from Ist April to 31st March. The drawals and repayments under the sanctioned credit limits can be made as many times as required, provided the outstanding in the Account does not exceed the sanctioned credit limits at any point of time. 6) What is rate of interest charged by NABARD, Apex Bank, DCC Bank and PACS and to ultimate Borrowers for the year 2007-08? NABARD to Apex Bank - 3.00% pa Apex Bank to DCC Bank - 3.65% pa DCC Bank to PACS - 2.00% pa PACS to Ultimate borrowers - 4.00% pa 7) What is the quantum of refinance provided? Quantum of refinance linked to gross level NPA of the Bank. Gross level of NPA Less than 20% Above 20% Quantum of refinance 40% of RLP of the Bank 35% of RLP of the Bank

RLP = Realistic Lendable Programme i.e. the crop loans expected to be issued during the year. Average growth in crop loans issued during the previous three years should be the basis for deciding the RLP.

8) What are the eligibility norms for SCB/DCCBS? 1)Audit for the previous two years should have been completed and relative audit report along with financial Statement should be submitted 2)Compliance with Sec. 11(i) of B.R. Act 1949(AACS). 3)RCS recommendation 4)Linking reform measures to release of flexible refinance component viz (a) Reorganisation of

PACS (b) Economy in expenditure (c) Plan to improve recovery performance (d) Review of Staff (e) Issue of crop loans through KCC mode only. 9) What are the operational norms? Release of refinance within non-overdue coverage of eligible DCCBs, extending 30% of crop loans to small and marginal farmers, disallowing operation to DCC Banks in case of continuous defaults to SCB, certificate of Reserve Borrowing power. 10) How can farmers avail crop loans? First of all, a farmer who wants to avail a crop loan should have his own land holdings. He should visit a nearby Primary Agricultural Co-operative Society along with a Registered Tenancy Certificate (RTC) of his/her land holdings and become a Savings Bank Account holder of that PACS/DCC Bank by producing Ration Card or Election Card having full details of the his/her name and address. He should deposit a minimum amount as prescribed by the Bank and then apply for credit facility. The total credit needs at the farmers level will be worked out with reference to the crop loan system according to the scale of finance for different crops as fixed by the Technical Group Committee each year in the months of December and January. Based on the Scale of finance, the ST credit limit (CLS) should be prepared by the PACS in respect of all its members and submitted to DCC Banks 12) What is the credit limit sanctioned to the State Co-operative Bank by NABARD on behalf of eligible DCC Bank other than SAO? 1.A consolidated ST (Others) credit limit will be sanctioned to State Co-operative Banks on behalf of eligible DCC Banks. 2.ST (Others) credit limit is applicable for agriculture, allied and marketing activities, Marketing of crops, Pisciculture, Industrial Co-operative Societies (Other than Weavers), Labour contract and forest labour Co-operative Societies including collection of Minor forest produce, Rural artisans including Weavers members of PACS/LAMPS/FSS, procurement of agricultural inputs (Fertilizer, seeds etc.). a)Consolidated ST (Others) limit will be sanctioned depending upon the DCCB-wise Realistic Lending Programme for respective purposes b)NABARD will provide refinance assistance to State Co-operative Banks at 9.50% per annum. c)Quantum of refinance will be 60% of RLP for various eligible purposes. 3.ST (Weavers) (a) A Scheme for financing master weavers. a)The loan limit for Master Weavers (MW) would depend upon the proposed project and other factors i.e. number of weavers engaged/to be engaged by him, number of looms employed/to be employed, type and quality of cloth produced, connected support services rendered by him

including marketing infrastructure etc. Rate of interest For working capital limit - 9.50 % For Term loan - 9.00% (For Co-operative Banks)

b)A Scheme for financing the working capital requirements of Primary/Apex/Regional Weavers Co-operative Societies. The important features of the policy are as follows: i)Eligibility of SCBs/DCCBs for ST-Weavers refinance during 2007-08 has been delinked from working result of the Banks. ii)During the year 2007-08, the quantum of ST Weavers credit limit to SCBs/DCCBs would be linked to the gross NPA level of SCB as on 31st March 2006/2007. A consolidated limit will be sanctioned to SCB in respect of eligible DCCBs to the extent of normal eligibility or maximum outstanding refinance availed during 2006-07, depending upon SCBs NPA percentage. iii)A relaxation in NPA norms by 5% will be given to banks in North Eastern Region, Sikkim, Jammu & Kashmir and Andaman & Nicobar Islands. iv)In case of Section 11 Banks, after sanction of credit limit drawals may be allowed, provided exemption application along with Action Plan submitted by the bank reaches NABARD within a period of one month from the date of receipt of NABARDs Inspection Report and is found acceptable for being forwarded to RBI for favorable consideration. v)In case of new units, SCB/DCCB may submit an undertaking at the time of drawals that it has not availed working capital refinance for such units under the composite/integrated scheme of NABARD. vi)In case of default in repayment of loans or any part thereof by SCB within the due dates, the SCB would be liable to pay to NABARD, interest at 1% over and above the maximum interest rate at which refinance is extended by NABARD under any of its activities, at the time of default for the period for which the default persists (Max. refinance rate at present is 9.50% p.a.) Similarly, in case of default in payment of interest by SCB on due dates, the SCB would be liable to pay to NABARD additional interest at maximum interest rate at which refinance is extended by NABARD under any of its activities, at the time of default, on the actual interest remaining unpaid to NABARD. vii)The rate of interest on refinance for 2007-08 has been fixed at 9.50% and it is subject to revision from time to time. 13) What is the provision of Medium Term Credit Limits for Conversions of ST Loans into MT Loans & Rephasement/Reschedulement of M.T. Conversion Loans?

Medium Term credit limits for conversion of outstanding short-term loans advanced for financing SAO are sanctioned by the NABARD to the State Co-operative Bank on behalf of DCC Bank. Rate of Interest will be the same as applicable to ST agricultural loans that are being converted. Marketing of Crops Provision of short term credit limits to State Co-operative Banks for financing Marketing of Crops Policy for the Year 2006-07 Eligibility and Rate of Interest Only SCBs/DCCBs, which are eligible for refinance assistance from NABARD for financing ST (SAO), will be eligible for refinance assistance for marketing of crops. Eligibility norms for SCBs/DCCBs for availing refinance under the above Scheme will be same as applicable in case of ST (SAO) refinance. The rate of interest on refinance will be at 9.50% p.a. or such other rates as may be fixed by NABARD from time to time. Objectives Helping growers afford reasonable opportunities to obtain remunerative price for their produce by enabling them to hold on to their produce for the time being. Facilitating recovery of production loans out of the loans provided for marketing of crops against pledge of agricultural produce and/or from purchase price payable for agricultural produce. Scope

Outright purchase of agricultural produce of cultivators (both members and non-members of PACS) by processing/processing-cum/marketing/marketing societies. Crops may include food grain crops, cash crops, plantation and horticultural crops. The benefit of the Scheme for financing marketing of crops with refinance support from NABARD is intended for only the bonafide cultivators, both members of PACS and nonmembers. Banks should ensure that traders/businessmen etc., are not financed under the Scheme.

Quantum of Credit Not exceeding 75% of value of actual produce pledged subject to a ceiling of Rupees ten lakh per cultivator members. Operative Period and Duration of Credit

Banks may ensure that the loans for marketing crops against pledge of agricultural produce are sanctioned before or during the marketing season. However, the credit limits sanctioned by NABARD shall be operative for a financial year (April-March) and the same will be repayable within a maximum period of 12 months.

Financing Sugar Mills Policy and Operational Guidelines For Financing Sugar Mills by the Karnataka State CoOperative Apex Bank Ltd. The Bank, in recent years, has been sanctioning term and working capital loans to sugar mills set up under co-operative model and as well as private sectors. However, the loan applications are being processed on ad-hoc basis in the absence of any policy guideline. In this light, the Bank has found it necessary frame policy and operational guidelines to govern the sanctioning of term/working capital loans to sugar mills. 1.Objective: The primary objective of the Bank is to provide short and medium term loans to farmers. However, even after meeting the short and medium financial requirement of the farmers, the bank is left with huge surplus funds, which unless invested prudently will lead to losses. It is therefore imperative to invest the surplus funds in agro-based industries to further help the farmers. Sugar industry is identified as one such sector. So, credit limit can be sanctioned or term loan can be provided to the sugar factories only after meeting crop loan obligations. 2.Clean cash credit limits for pre-seasonal expenses: As sanction of clean limits for pre-seasonal expenses or pre-operative expenses results in dilution of margin requirements on cash credit pledge limits, NABARD in its Circular No. NB.PCD.CMA/H-305/A-75/2001-02, dated 6-82001, has advised discontinuation of the same. So, clean limits for pre seasonal expenses or preoperative expenses shall not be sanctioned. 3.Exposure Norms: While processing the applications for loans, the bank should ensure that exposure norms as prescribed by NABARD in their Circular letters No. NB.PCD.CAS/1193/A75/1997-98, dated 19.09.97 and NB.PCD/AS/ 711A-75/1998-99 dated 16-05-1998 for sanction of Cash credit limit is adhered to and shall not be violated. As per NABARD Circulars, the prescribed limit is as follows: a)Unit-wise exposure: The total lending by the Bank to a Cooperative/Private sector sugar factory should not exceed 25% of the capital fund of the Bank. b)Exposure to Units outside the Co-operative fold: The total exposure by the Bank to Units outside Co-operative fold including individuals should not exceed 25% of the maximum ILR reached by the Bank during the previous year.

c)Overall exposure to sugar sector: The overall exposure by the Bank to the sugar sector should not exceed 40% of the maximum ILR reached by the Bank during the previous year. 4.a) Capital Fund: The Capital Fund of the Bank includes paid up capital, free reserves (Statutory reserves, ACS fund-Bank contribution, Building Fund, Dividend equalization fund & Provision for standard assets) plus undisbursed profits minus accumulated losses. b) ILR (Internal Lendable Resources) comprises paid up capital, free reserves, undisbursed profit plus deposits less commitments on internal resources, where commitments mean statutory reserves, advance on deposits, optimum liquid assets (35% of TDL), fixed assets, accumulated losses, investment in share of Co-operative Institutions and loans to staff for housing. 5.Fixation of Margin: a) As per RBI Circular No. RPCD.NB.Dir.436: D-2: 83-84, dated 7.2.1984, 10% for levy sugar, 15% for free sale sugar and NIL for buffer stock is prescribed for sanction of working capital loan against pledge of sugar. b) However, Bank may at its discretion prescribe appropriate margin keeping in view the volatility in market price of free sale sugar and other risks being associated with the financing of sugar industry. 6.Fixation of credit limits: Cash credit (Pledge) limits for working capital purpose shall be fixed on the basis of anticipated valuation, realistic peak level stocks likely to be reached by a factory during the relevant crushing season and valued on the basis of levy price fixed by Government of India for levy sugar and at average price realized in the preceding three months (moving average) or the current market price whichever is lower, for free sale sugar (including buffer stocks) in the prescribed proportion as indicated in Sl. No.5(a) above. 7.Co-operative Sugar Mills with negative net worth As the cooperative sugar mills with negative net worth will not be in a position to provide the stipulated margin out of their own resources on a pledged stock of sugar, sanction or renewal of the limits to such mills having negative net worth shall be considered only if unconditional, irrevocable default guarantee is given by the State Government. Calculation of net worth, net disposable resources and reserve borrowing power is as follows: a. Net Worth: Paid up capital + Free Reserves+ Undisbursed Profit (-) Accumulated losses. b. NDR (Net Disposable Resources): Paid up capital + Reserves & Provisions + Deposits + Accumulated Profit, Less: Cash & Bank balance, Investment in fixed assets out of own resources, Investment in shares and Accumulated losses. c. RBP (Reserve Borrowing power): As per the by -law of the sugar factory 8.Financing under consortium arrangements: Instead of direct financing, consortium finance may be considered so as to minimize the credit risk, easy facilitation of the operation of the account & its monitoring and also to contain over exposure to sugar sector.

9.Cash credit (Hypothecation) limits: Cash credit (Hypothecation) limits for stores and spares (including gunny bags) can be sanctioned or renewed up to 120% of average maximum utilization of the limits during preceding three years or Rs.200.00 lakhs whichever is less. Drawals under the limit would be permitted only against fresh stock of consumables and packaging materials purchased for the sugar season i.e. purchases made after Ist July of the year. 10.Financing of Private Sugar Mills: Private sugar mills, which are having negative net worth or unsound financial health will not be considered for financing. However, sanction of cash credit (Pledge/Hypothecation) limits to private sugar mills will be considered after proper appraisal subject to exposure norms as applicable to units outside the co-operative fold i.e. the aggregate finance to individuals and units outside co-operative fold should not exceed 25% of its maximum level of ILR reached during the previous financial year as advised in NABARD Circular No. NB.PCD (OPR) H-74/A.75/2000-01, dated 19.04.2000 and also subject to obtaining of personal guarantee of the promoters. a)Block Capital (Term loan): Term loans to sugar mills will be sanctioned within the levels prescribed in NABARD guidelines. In the case of new cooperative sugar mills, the project cost should be as per the normative cost, as may be approved from time to time by the Ministry of Consumer Affairs, Department of Food & Public distribution, Government of India, and debtequity ratio of 60:40 should be followed. The debt portion sharing by cooperative banks should not be more than 60% and the remaining by Term Lending Institutions/Commercial banks. The block capital facilities will be sanctioned only if the capacity of the borrower unit is not below the viable operational level of 2500 TCD, and that adequate sugarcane is available in the command area of the proposed unit and supported by the default guarantee of the State Government. b)Term loan for Co-generation/Distilleries: Term loan for co-generation/Distilleries shall not be sanctioned, unless it is specified in the policy prepared by the Bank and approved by the Board. c)Rephasement or extension of set aside proposals will be considered by the Bank on merits of each case within the exposure limit of the individual unit and with the approval of the competent authority. 11.Appraisal and sanction of working capital limit/Term loan a) For sanction/renewal of working capital pledge/hypothecation loan proposals, the Bank has to ensure the availability of the following information: 1.Proper application from the Sugar factory. 2.Copy of the Board Resolution by the Sugar Factory requesting the Bank for sanction of loan amount and authorizing the Managing Director/an officer of the Sugar factory to make such request and to sign the necessary documents. 3.Copy of the Audited Balance Sheet and Profit & Loss Account for the previous three years. If audit is not completed on the date of application, the bank at its discretion may accept the

tentative financial statements. 4.Cane availability certificate issued by the concerned Government Department. 5.Consortium meeting proceedings, if the loan is under consortium finance. 6.Previous years operational statement i.e. amount of loan sanctioned, drawals and repayments, present o/s, principal and interest overdue etc. 7.Last 3 years performance report indicating crushing details, sugar produced, recovery percentage, peak level stock etc. 8.Comparative financial position of the sugar factory for the last 3 years. 9.Projected cane crushing (in metric tonnes), Projected sugar production (in quintals), projected recovery % for the ensuing season and projected peak level sugar stocks by the sugar Mill. 10.Cane bill arrears, statutory liabilities, overdue to financing institutions, latest stock position of levy and free sale sugars with its value with insurance details. 11.Copy of the byelaw duly approved by the concerned authority. b)For scrutiny of term loan proposals, the Bank has to ensure the availability of the following information: 1.Proper application from the sugar factory 2.Copy of the Board Resolution of the Sugar factory requesting the Bank for sanction of loan amount and authorizing The Managing Director/an officer of the Sugar factory to make such request and to sign the necessary documents. 3.Certificate of Incorporation/Memorandum of Association and Articles of Association/Copy of the byelaw duly approved by the concerned authority. 4.Clearance from various Government agencies. 5.Promoters details and share collection details. 6.Cane availability certificate issued by the concerned Government Department. 7.Project report/appraisal report duly prepared by an approved appraisal agency. 8.Consortium Meeting Proceedings. 12.The operational guidelines The Accounts Section of the Bank shall ensure to obtain the following documents before allowing Operations in the loan A/c: a) Working capital pledge/Hypothecation loan: 1.Proper application from the Sugar factory for release of loan with Board Resolution for acceptance of terms and conditions stipulated in the credit limit loan sanction letter. 2. Demand Promissory Note 3.Continuity Agreement 4.Joint documents signed by all the Consortium members. 5.Deed of Hypothecation. 6.Government guarantee in respect of Co-operative Sugar factories having negative net worth.

7.Personal guarantee of all the Promoters/Directors in respect of private sector sugar mills having negative net worth. 8.Age-wise stock statement with its value. 9.Copy of Insurance polices made in the name of Consortium Banks and sugar factory covering all the risks against sugar stock 10.Copy of Income Tax assessment order/returns filed by the sugar mill for the previous year ended. 11.Search Report from a practicing Company Secretary from the Registrar of Companies. 12.Copy of Sanction letter issued by other consortium members. 13.Drawing power calculated by the Lead Bank. 14.Collection of matching share prescribed by the Bank from time to time. 15.Other terms and conditions stipulated in the sanction letter.

b) Term Loan 1.Proper application from the Sugar factory for release of loan with Board Resolution for acceptance of terms and conditions stipulated in the sanction letter. 2. Demand Promissory Note 3.Joint documents signed by all the Consortium members. 4.Government guarantee in respect of Co-operative Sugar factories having negative net worth. 5.Personal guarantee of all the Promoters/Directors in respect of private sector sugar mills having negative net worth. 6.Charge creation on the Assets of the sugar factory. 7.Copies of clearance certificate issued by various Departments for establishment of factory. 8.Copy of insurance polices made in the name of Consortium Banks and sugar factory covering all the risks against plant and machinery. 9.Copy of income tax assessment order/returns filed by the sugar mill for the previous year ended.

10.Search Report from a practicing Company Secretary from the Registrar of Companies. 11.Copy of Sanction letter issued by other consortium members. 12.Drawing power calculated by the Lead Bank. 13.Collection of matching share prescribed by the Bank before enrolling the factory as an associate member of the Bank. 14.Other terms and conditions stipulated in the sanction letter. C) The Accounts Section of the Bank shall obtain periodical stock statements, insurance copies, search report and periodical review of stock position of sugar pledged to the Bank, recovery of installment and interest, overdue position, filing of disputes in association with legal Cell, invoking of Government guarantee etc.