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SUMMER INTERNSHIP PROGRAM
A PROJECT REPORT ON
COMPARATIVE STUDY OF AGRICULTURAL
FINANCING BY RURAL FINANCIAL INSTITUTIONS
(RFIs) IN SAGAR DISTRICT.
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
CORPORATE GUIDE: FACULTY GUIDE:
Mr. KULDEEP SINGH Prof. R.C. MATHUR
SUBMITTED TO: SUBMITTED BY:
FMS-IRM GAURAV JAIN
Roll No-1769
PGDRM
FMS-IRM
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CERTIFICATE:-
Certified that this project report entitled Comparative study of Agriculture
Financing by Rural Financial Institutions (RFIs) in Sagar District is a record
of project work done independently by Mr. Gaurav Jain under my guidance and
supervision, and it has not previously formed the basis for the award of any degree,
fellowship or association with him.
Date: Prof. R.C. Mathur
Faculty Guide
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CERTIFICATE
This is to certify that MR. GAURAV JAI Nstudent of Post Graduate Diploma in
Rural Marketing, Faculty of Management Studies- Institute of Rural Management,
Jaipur (Rajasthan) was selected under Summer Placement Scheme 2011 of
NABARD and he has completed his project from NATIONAL BANK FOR
AGRICULTURE AND RURAL DEVELOPMENT (NABARD), MADHYA
PRADESH REGIONAL OFFICE, BHOPAL under the able guidance and
supervision of MR. KULDEEP SINGH, ASSISTANT GENERAL MANAGER
(ECONOMIC SERVICE) MADHYA PRADESH REGIONAL OFFICE,
BHOPAL from 05/05/2011 to 08/07/2011.
He has successfully completed his Summer Internship Report which has requisite
standard for the partial fulfillment of the Post Graduate Degree in Rural
Marketing. To the best of our knowledge no part of this report has been reproduced
from any other report and the contents are based on original research.
During the project period with this organization, we found him sincere and
dedicated. We wish him very best of his future endeavors.
(Kuldeep Singh)
Assistant General ManagerMP RO, NABARD, BHOPAL
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DECLARATION
I do hereby declare that this project Report entitled Comparative study of
Agriculture Financing by Rural Financial Institutions (RFIs) in Sagar
District is a bonafide work done by me with the financial support of NABARD
under Summer Placement Scheme 2011. I also declare that it has not previously
formed the basis for the award to me for any degree/diploma, associate ship,
fellowship, or other similar title of any other institute/society. The publication of
this work is the sole authority of NABARD and any publication by undersignedwill be done with the necessary approval of NABARD.
(Gaurav Jain)
Date: ________ Enroll. No.-RM/July/10/4/2269
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ACKNOWLEDGEMENT
I strongly believe that for the successful completion of any significant work, there
is immense support and guidance from various persons. I here take this opportunity
to express my deep gratitude towards some of these guiding souls.
First of all, I would like to express my heartful thanks to NABARD for providing
me an opportunity for undertaking a work related to Rural Banking. My sincere
thanks to Sh. S.Akbar, Chief General Manager and his team for reposing faith in
me for selection under the Summer Placement Scheme of NABARD. I am also
thankful to Sh. S. Selvaraj, General Manager, Sh. A.S. Bable, DGM, Dr. K.
Rabra, AGM, Sh. Poonabalam, Manager, Sh. Kabilan ,AM &Sh. Dhanesh, AM
for supporting me during the entire project period. I owe my gratitude to my
project guide Sh. Kuldeep Singh, AGM (Economic Service) who helped me to
bridge the gap between text book learning and practical realities.
I also wish to express my deep regards to my faculty guide, Prof. R.C. Mathur
(Faculty Coordinator), FMS-IRM, Jaipur, who at each and every step of my
project contributed with his valuable suggestions which proved extremely fruitful
for the successful completion of my summer project. I would also like to express
my regards to all the FACULTY MEMBERS ofFMS-IRM for inculcating me
knowledge, which helps in smooth conduct of my Research Project.
Lastly, I am highly thankful to all the branch managers of various banks and
sample farmers for sharing valuable time and information during the course of my
field visit. Last but not the least, I would like to thank my parents, friends and
relatives and all those, who directly and indirectly helped me during my project.
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TABLE OF CONTENTS:-
CHAPTER
NO.
TITLE PAGE
NO.
ACKNOWLEDGEMENT
LIST OF TABLES
LIST OF DIAGRAMS
ABBREVIATIONSEXECUTIVE SUMMARY
1. INTRODUCTION/DESIGN OF STUDY
1.1 Agriculture in Indian Economy
1.2 Agriculture Credit System
1.3 Types of Credit
1.4 Agencies for disbursing Agriculture Credit
1.5 Research Problem
1.6 Objective of the Study
1.7 Research Methodology
1.8 Practical utility of the Study
1.9 Limitations of the study
1-15
1
1
2
7
10
10
11
14
15
2. ORGANISATION AND AREA PROFILE
2.1 NABARD
2.2 Sagar District
16-18
16
17
3. ANALYSIS AND INTERPRETATION 19-29
4. SUMMARY OF FINDINGS AND 30
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OBSERVATIONS,SWOT
ANALYSIS,SUGGESTIONA AND
CONCLUSION
5. BIBLIOGRAPHY 43
6. APPENDIX 44
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LIST OF TABLES:-
S.No.
TITLE PAGENo.
1. Agriculture Credit Flow in 2009-10 & 2010-by various
Agencies (Rs. in crore)
9
2. Percentage Shares of Institutional & Non institutional Sources
in Borrowing of Cultivator Households
10
3. Details of Districts / Banks / Branches visited during the study 12
4. Branch wise details of Selected Farmers 13
5. Average age (in Years) and Literacy Rate of Selected Farmers 19
6 Average Size of Land Holdings of Selected Farmers 20
7. Details of Animals of Selected Farmers 20
8. Details of ATL 21
9. Average Ground level Credit Flow of Selected Branches in
2010-11
(Rs. in lakh)
22
10. Composition of Agri. Credit of Selected Branches during 2010-
2011
23
11. Details of Time taken in Sanction of KCC limit 25
12. Average limit per acre 26
13. Average limit per KCC 28
14. Comparative Findings Of All RFIs in respect of KCC and ATL 30
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LIST OF DIAGRAMS:-
Sr. No. Title Page No.
1. Average Ground Level Credit Flow through KCC by
RFIs (Rs. in lakhs)
22
2. Repayment performances of KCC by RFIs (in %) 24
3. Time taken by RFIs in sanction of KCC limit (in days) 25
4. Average limit by RFIs (in Rs. Per acre) 27
5. Average KCC limit by RFIs (in Rs.) 29
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ABBREVIATIONS:-
ATL Agricultural Term LoanCB Commercial Banks
CCB Central Cooperative Bank
DCC District Consultative Committee
DDM District Development Manager
DLTC District Level Technical Committee
GOI Government of India
GLC Ground Level Credit
KCC Kisan Credit Card
LSR Legal Search Report
MF Marginal Farmer
NABARD National Bank for Agriculture and Rural
Development
PACS Primary Agricultural Credit Society
RBI Reserve Bank of India
RFIs Rural Financial Institutions
ROI Rate of Interest
RRB Regional Rural Bank
SCB State Cooperative Bank
SF Small Farmer
SLBC State Level Bankers' Committee
SLTC State Level Technical Committee
ST Short Term
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EXECUTIVE SUMMARY:-
Agriculture and rural economy is the mainstay of Indian economy and this fact isstrengthened by the reason that about 60% of Indian population is depended on this
sector and about 17% of countrys GDP is contributed by agriculture and allied
sector. Managing and disbursing the credit requirement of this huge sector is really
a daunting task. In the union budget, the total plan outlay for this sector has been
increased by 19.79% to Rs.147.44 bn. Effective and Proper utilization of this huge
amount is in the hand of multi-agency system being followed in our country
constituting of Cooperative Banks, RRBs and Commercial Banks. The success of
these institutions in disbursing agricultural credit is guided and depended mainly
on ensuring adequate and timely availability of credit at reasonable rates through
the expansion of institutional framework, its outreach, scales of finance and direct
lending and most importantly by way of successful implementation and execution
of various govt. schemes.
The present study focuses on the comparative analysis of one such govt. schemes
i.e. KCC and disbursement of agricultural term loans by RFIS in Sagar district of
M.P. KCC had been implemented by all RFIS since its inception in Aug. 1998 all
over the country. Through this study I try to understand and compare the
performances of KCC and agricultural term loans schemes by various RFIs which
is also the objective of my study, practical difficulties faced by credit institutions,
problems with the scheme, feedback in the form of suggestions and
recommendations from both bankers and sample beneficiaries. The criteria for
comparison between institutions are adequacy of credit, timeliness in
disbursement, realistic scales of finance, appraisal criteria, repayment status, share
in ground level credit flow etc.
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The study was carried systematically in stages starting with review of literature to
know the general banking scenario of Sagar district, then selection of sample
branches of RFIS. Two branches, one rural and one semi-urban, had been studied
for better coverage of sample beneficiaries in case of Commercial banks and
RRBS. Lead Bank of district Central Bank of India was taken as a representative
for commercial bank, Madhya Bharat Kshetriya Gramin Bank for RRBS and
Sagar District Cooperative Bank for Cooperative Bank. Regarding sample
beneficiaries, 5 KCC holders and 5 agricultural Term loanee were studied from
each branch taking a proper mix of small, marginal and big farmers.
This study surely helped me a lot in understanding the practical aspects and ground
realities of rural banking sector in general and about KCC and agricultural term
loan scheme in particular. In findings and observation part I have discussed that
which RFIS is performing effective than others and in which area along with
reasons. A policy implication that comes from my study is discussed in suggestions
part.
I would be extremely happy if any policy implications, findings, recommendations
etc. suggested by me proves helpful to NABARD or any other credit institutions in
managing KCC and agricultural term loans scheme.