University of Mumbai

UNIVERSITY OF MUMBAI’S

GARWARE INSTITUTE OF CAREER EDUCATION AND

DEVELOPMENT

AGRICULTURAL FINANCE AND MICRO-FINANACE

Submitted By,

Mr. Rajesh Suresh RozatkarRoll no: 96.

Mr. Swapnil Kaluram Hadke.Roll no: 46.

PGDABM, 2009-11.

CERTIFICATE

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr.Swapnil Kaluram Hadke, student of Garware Institute Of Career Education and Development undergoing Post Graduation Diploma in Agri-Business Management, has completed 8 weeks training with our bank from 1 June 2010 to 31 July 2010 during which time he was placed at our Narayangaon Branch, Pune in Agriculture Finance Department The conduct and responsiveness of Mr.Swapnil Kaluram Hadke during the training period has been to be excellent. He has submitted his project report on the subject “Agriculture Finance and Microfinance” This certificate issued without any commitment on the part of the Bank for future employment of whatsoever nature.

This

ACKNOWLEDGEMENT In the process of preparing my chosen project on “Study of Agriculture finance and Microfinance Bank of India” I approach to Bank of India Regional office which located at Shivajinagar, Pune. I sincerely express my gratitude to MR. Pandit Rao. (H.R.Manager, Bank of India) who kindly accepted and permitted me to undertake the project “Study of Agriculture finance and Microfinance Bank of India” I am truly indebted to Mr.Uttam Vajpayee (Chief Manager Bank of India, Narayangaon) and Mr. Shirish Upadhay (Senior Manager Bank Of India, Narayangaon)who personally took pains in providing all necessary documents related to Agriculture Financing played the role of a mentor by explaining to me different concept of agriculture financing regulatory requirement legal requirement various agriculture schemes. I am also thankful to Mr. Rahul Bhujbal (Agriculture Officer Bank of India, Narayangaon) who assets me understand various process and various salient future of Agriculture credit. I am also thankful to Mr. Ulhas Hase (Credit Manager Bank of India, Narayangaon) who concerned for their valuable guidance and support which has helped me a lot towards the completion of project. I would like to thanks Mr. Arun Kshirsagar (Director, GICED), for providing necessary help during the course this summer project. It is pleasure to acknowledge my sincere thanks to Mr. Shirish. S.Patil (Course coordinator) and Shri.Ashok Gowande (Project Guide) for their encouragement and guidance throughout the project. Indeed words fail to express my profound sense of gratitude and heartfelt indebtedness to my beloved parents and friends.

I am also thankful to all of them who are directly or indirectly involved in driving this project to a success.Date:Place: Swapnil Kaluram Hadke.

INDEX

SR. NO CONTENT PAGE NO

1) Appendex-I Bank Profile - Reason to chosen Summer internship Program in Union bank of India.

4

2) Appendex-II Objective- study and Research methodology.

7

3) Chapter -I Introduction to agriculture finance. - 1.1.Definition scope and importance1.2.Concept and over view in agriculture 1.3. Challenge and outlook to agriculture.

10

4) Chapter-II Source of finance- classification of the credits . 14

5) Chapter -III Agriculture finance- Advances Direct Indirect finance

18

6) Chapter-IV Agriculture finance-various step in loan

disbursement.

27

7) Chapter-V Branch profile- Union bank of India Manchar

branch.

34

8) Chapter-VI Agriculture Finance-Salient Feature’s of

Various scheme’s for loan disbarment.

38

9) Chapter-VII Suggestions and Recommendations 50

10) Conclusion 53

11) Bibliography. and Abbreviations 54

Chapter 1

1.1 EXECUTIVE SUMMARY.

Project Title:-

STUDY OF AGRICULTURE FINANCE AND MICRO-FINANCE.

WHY THE PROJECT IS?:-1) Determine the share of agriculture finance in total finance.2) Understand the various types of financing in agriculture.3) Understand the method of financing in each type.4) Understand the meaning of microfinance.5) Understand how banks are linked to SHGs.6) Study functioning of SHGs.7) Determine problems of SHGs.

Objectives:-1) To study various types of loans.2) To study various types of credit available for agriculture in

BANK OF INDIA.3) To study bank contribution in microfinance.4) Determine the problems of SHGs.

MATERIALS AND METHODOLOGY:-1) Sources of data:-

Primary data:- Bank of Maharashtra, lead bank Pune.Secondary Data:- Annual Report of Bank of India,

Narayangaon branch.

Chapter 2

1.2 INTRODUCTION

AGRICULTURE FINANCE

Agriculture finance means “any of several credits used to finance agricultural transactions, including loans, notes, bills of exchange. These types of financing are adapted to the specific financial needs of farmers in the form of short term, medium term, and long term loans.” Finance in agriculture is as important as development of technologies. Technical inputs can be purchased and used by farmer only if he has money (funds). But his own money is always inadequate and he needs outside finance or credit. Professional money lenders were the only source of credit to agriculture till 1935. They use to charge unduly high rates of interest and follow serious practices while giving loans and recovering them. As a result, farmers were heavily burdened with debts and many of themperpetuated debts. There were widespread discontents among farmers against these practices and there were instances of riots also. With the passing of Reserve Bank of India Act 1934, District Central Co-op. Banks Act and Land Development Banks Act, agricultural credit received impetus and there were improvements in agricultural credit. A powerful alternative agency came into being.

Credit is also needed by the agencies for supply of inputs and services to the agriculturist and for the developments of storage and marketing facilities for the agricultural produce.

Objective of study

Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and logging accounted for 16.6% of the GDP in 2007, employed 52% of the total work force and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of India.

India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. It also has the world's largest cattle population (281 million). It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for 10% of the world fruit production with first rank in the production of banana and sapota.

The main sources of farmers to get the financial assistance are co-operative and commercial banks, institutions, Agriculturist money lenders, relatives etc., but bank is safe and convenient source of borrowing money for farmers. And for banks also agriculture lending is very safe and profitable in nature. For targeting the huge potential of the agriculture sector bank should be properly estimating the credit need of agriculture sector and prepares the credit plan for lending in well in advance. In recent time technology play an important role in various field. There for agriculture sector not escape from it moreover in India Population increases day by day and main challenge to scientist and farmers is to fulfill food requirement. Also give to knowledge of latest cropping pattern new variety to the farmers.

Here are the Highlights of Union Budget 2010:

Vision & Objective:

GDP Growth to be targeted at 9% Target of Rs 25,000 cr disinvestment this year Direct Tax Code and GST will be implemented from April 1, 2011 Fertilizer Subsidy to be reduced GDP to reach 10% in near future To consider Parikh Report on Fuel Price FDI Regime to be simplified Inflation Rate to be lowered in 2 Months 2% interest subvention for Exports extended for one year Committed to SEZ Growth

Banking:

More Private Banks to be encouraged

Additional Banking License to Private Players FY10 Capital for PSU Banks stand at Rs 16,500 crore Rs 1,200 crore to be allocated to PSU Banks Rural Banks to be supported Banks to get Rs 6,000 crore to improve fundamental structure Banks for all villages with a population of 2,000

Agriculture:

Four-pronged agricultural strategy to be adopted More help to Food Processing Sector Rs 400 crore to be allocated for Green Revolution in Eastern India Rs 300 crore for Rashtriya Krishi Vikash Yojna Extend Loan Repayment for drohught-hit Farmers Farmers, who repay loan on time, will get a waiver of 2% Farmers to get Loans at 5% To extend farm loan repayment by 6 months Agriculture Loan for Farmers increased to Rs 3,75,000 crore New Food Policy from April 1, 2010

Rs 300 crore to be allocated for Pulse Production

SCOPE AND IMPORTANCE Agriculture production in the country depends upon millions of small farmers. Intensity of their effort and the efficiency of their effort and efficiency of the technique that will help in raising the yield per acre. Because of inadequate financial resources and absence of timely credit facilities at reasonable rates, many of the farmers, even though otherwise willing, are unable to go in for

improved seeds and manures or to introduce better methods or techniques. Works on minor irrigation like wells owned by the cultivators either get into disuse or are not fully utilized due to want of capital. The major object is to develop local resource of seeds, manures and irrigation and to provide other accessories of production. To utilized man power and cattle resources more fully than it is as present. These aids to better and more intensive farming are essential. It is therefore of the almost important that the financial requirements of the procedures for this purposes should be adequately met. The achievement of target in the agricultural sector which cover the production of food and essential raw material like cotton, jute, and oil seeds. Provision of sufficient and timely credit at fab-rate of interest should be available. Assistance rendered by way of credit has, however, to be related to specific items of productive work or of essential cost of cultivation.

For providing this facilities all the existing agencies e.g. money lender, commercial banks, co-operatives and the state have to be integrated and harnessed to a common purpose. Such a comprehensive approach is essential for ensuring the best use of all the available resources of the nation.

Chapter 3

Profile

3.1 Bank of India Bank of India was founded on September 7, 1906. In July 1969 Bank of India was nationalized along with 13 other banks. In business volume, Bank of India occupies a premier position among the nationalized banks. Presently, Bank of India has 3021 branches in India as on 31 march 2009 spread over all states including 136 specialized branches. These branches are controlled through 48 Zonal Offices. The total number of shares holders as on 31 march 2009 is 235589 and total number of shares was 525175300

Our emblem

The bank of India emblem epitomizes the corporate personality and basic policy of Bank of India. Within the central circle lies the bank’s seal a symbolic and stylized representation of Mother of India. The five prongs of the star represent the bank pragmatic aspect banking

services extending over five continents. The single elongated point, yearning upward, conveys Bank of India’s unceasing endeavor to achieve ever ascending goals.

Our mission

To provide superior, pro-active banking service to niche markets globally, while providing cost effective, responsive service to other in our role as a development bank, and in so doing meet the requirement of our stakeholders.

3.2 FINANCIAL STATUS OF BANK OF INDIA

1) Business Mixtures – Rs. 342831 crores.

2) Net profit – Rs. 562 Crores to 584 Crores.

3) Operating profit – Rs. 1094 Crores

4) Net Interest income – Rs. 1301 Crores.

5) Net Interest margin – Rs. 2.42%

6) Non Interest income – Rs. 566 crores to Rs. 646 crores.

7) Gross NPA ratio – 1.89%

8) Cost to income ratio – 43.82 %

9) Total deposit - Rs. 1,95,021 crores.

10) Total advances – Rs. 1,47,809 crores.

11) Net worth of the bank – Rs. 11728 crores

3.3 TARGET FOR AGRICULTURAL FINANCE

1) The scheduled commercial bank are expected to enlarge credit to priority sector and ensure that priority sector advances constitute 40% of net bank credit and that a substantial portion is directed to weaker sections.

2) Within the overall main lending target of 40% of the net bank credit, it should be ensured that,

a) 18% of net bank credit goes to agriculture sector.b) 10% of net bank credit is given to weaker section.c) 1% of previous year’s total advances is given under the differential rate of interest scheme.

3) Taking into consideration the fact that ultimate objective of agricultural credit of whether ‘direct’ or ‘indirect’ is to help the agricultural production, the lending under the ‘direct’ and ‘indirect’ categories of agricultural advances will be clubbed for the purpose of competing performance of bank vice-versa the sub target of 18%.

4) Advances under the ‘Indirect ’category in excess of 4.5% of the net bank credit would not be reckoned in computing performance under

the sub target of 18%. However all agricultural advances under the categories ‘direct’ and ‘indirect’ will be reckoned in computing performance under the overall priority sector target of 40% of the net bank credit.

5) Domestic scheduled commercial banks having shortfall including topriority sector are allocated accounts for contribution to the rural Infrastructure Development Fund (RIDF) established with NABARD every year.

Agriculture finance in Pune Districts.

There are 741 commercial and cooperative bank branches in Pune districts out of which 481 are commercial and 260 are cooperative banks. Pune Districts Central Co-op. bank branches are 236. Under this service area approaches 407 branches of commercial and co-op. bank branches are participating in covering 1866 villages in 13 blocks in districts. Pimpri-Chinchawad municipal co-op. area is outside the purview of service area approach and also 42 urban co-op branches are operating in Pune districts.

According to lead bank the total crop finance in the districts in this financial year 2009-10 will be around 950 crore. In pune Districts, the pune districts central co-op. bank is leading amongst all banks and has offered 650 crores for this year, and national bank will offer 300 crores. As compared with last year the agricultural finance has increased by 200 crores, Means from 750 to 950 crores.

The farmers who are repaying the loan in time, will get loan this year by 4% of interest rate last year 64,699 farmer borrowed crop loan, this amount expected to rise this year. Last year approximately 50% of crop loan amount was distributed on sugar cane crop alone.

Agriculture finance- various steps in loan disbursement

The financing bank is vested with the powers either to accept or reject the farmer’s loan proposal. This is an equal to an objective appraisal of from credit proposal and procedure and formalities followed in the processing of loan. Following is the standard processing procedure explained.

1) Interview with farmers:- The bankers studies farmers-borrowers in the interview regarding his credit characteristics such as honesty integrity, frankness, progressive thinking, indebtedness, repayment capacity etc. The banker explains to the farmers the terms and condition under which loan is going to be sanctioned. Interview helps the bankers to understand the genuine need of farmers.

Interview with farmers.Submission of application.

Srutiny of records.Field visit.

Criteria for Eligibility.Sanction of loan.

Submission of Documents.Disbursement of Loans.

follow of measures.Recovery of Loans.

2) Submission of loan application by the farmers:- After getting satisfied with the credentials of the farmers, a banker gives the loan application form to him. Details regarding location of farm, purpose of loan, cost of the scheme, credit requirement, farm budget, financial statements etc. as required in form are filled by the farmers. Certificate such as 7/12 extracts, farm map, NOC, affidavit by farmers, hypothecation deed, D/P note, passport size photo is affixed to the loan application.

3) Scrutiny of records:- The ownership and extent of land as indicated in the relevant certificates are verified by the bank officials with village revenue office. Banker also appoints its advocates for finding out authenticity of information.

4) Visit to the farmer’s field before sanction of loan:- After verifying record, the field officer of the bank pays a visit to the farm to verify the particulars given by the Famers. A pre-sanction visit is expected to help the banker to identify the farmers, the guarantor, locate the boundaries of land as per the map and asses the managerial capacity of the farmers in farming and allied enterprises and the farmer’s attitude towards best technology. In this visit officer thoroughly scrutinize the proposal and submit report regarding feasibility of proposal which helps banker to sanction or reject the loan.

5) Criteria for Loan Eligibility:- The following aspects are considered in judging the eligibility of borrower to receive the loan.

1) He should have sound character and financial integrity.

2) His dealing with friends, neighbors, financial institution, etc. must be proper.

3) He must have progressive outlook and be respective to modern technology.

4) He should sincerely implement the proposed scheme and ensure proper use of credit.

5) The security provided by the farmers must be free from any legislation.

6) Sanction of Loan:- After examine the all aspects presented in pre-sanction farm inspection report, the branch manager takes decision as, to whether to sanction the loan or not. Before sanctioning the loan the bank manager considers the technical feasibility, economic viability, and bankability of propose project including the repayment capacity, risks bearing ability and sureties offered by borrower. If the loan amount is beyond the sanctioning power of branch manager, it is forwarded to regional manager or zonal manger, incorporating his recommendation. The authorities at the respective offices take the final decision on the proposed projects.

7) Submission of Requisites Documents:- Before sanctioning the stipulated amount to the borrower, the following documents are obtained by the banking institution.

a) Demand Promissory Note.

b) Hypothecation deed.

c) Guarantee letter.

d) Installment letter.

e) Authorization letter regarding payment of Loan.

f) Mortgage deed.

Title deeds are examines by the legal officer of the bank and his opinion with the regard to clear, marketable and unmitigated title is sought.

8) Disbursement of Loan:- As soon as the execution of the document is completed, the loan amount is credited to the borrower’s account. The loan amount is disbursed in phased manner, that too after ensuring that the loan is used by the borrower properly. A realistic payment plan is framed and given to the farmers keeping in view the income flow of the proposed project. Generally

bank makes disbursement to the supplier, in order to insure that the proceeds of the term loan are not diverted for unauthorized proposed.

9) Post credit follow up measures:- The bank manager or Agriculture officer pays a visit to the farmers to ascertain the proper use of credit. This also benefits the farmers, for they can get technical advice if any needed from the agriculture advice in the implementation of the scheme. These visit are also meant for the development for developing a close report between the farmers and banker.

10) Recovery of Loan:- The bank reminds the borrower in advances about the repayment of loan in time. If needed recovery camps, special drives, village meeting etc. are organized at an appropriate time. All appropriate measures are taken to persuade the borrower to repay the loan in time. In the case of default, the reason for the same are ascertained to find out whether the borrowers is a deliberate defaulter or not. If the reason is genuine, the borrower is further helped by extending finance accelerate farm production. In this way procedural formalities in sanction of farm loan takes place.

LEAD BANK:

Bank of Maharashtra is a lead bank in Pune District. Lead bank is one which is selected amongst all banks in districts and is work as a lead to all bank in district.

Lead bank prepares various plans for all banks about growth of total priority advances including agriculture. It also works as monitoring organization to achieve those plans.

Following is Total Priority advances plans and its achievement (including agriculture) prepared by Lead Bank.

(amt.in Lacks.)

Year Ended Target Achieved31/03/2007 52593 6057331/03/2008 73870 7884631/12/2009 139151 153107

Following is Agriculture Advances plans and its achievements.

(amt.in Lacks.)

Year Ended Agriculture Allied Activity.Target Achieved Target Achieved

31/03/2007 35564 40155 5055 652031/03/2008 51213 52864 7472 788431/12/2009 59113 69025 9410 8762

Agriculture:- It includes crop, pipeline, Tractor etc.Allied activity:- It includes dairy projects, Poultry project, etc.

Following is total priority advances plans and its achievements (including agriculture.)For Junner Taluka.

(Amt. in lacks.)Year ended Target Achieved 31/03/2009 72.39 69.0831/12/2009 76.54 74.55

DLTC :- Districts Level Technical Committee

This committee prepares a scale of finance for every crop in district. This scale is circulated to every bank branches in district and branch has to sanction the loan limit according to this scale. This committee has members from nationalized banks and other banks in district with authorities of govt. Agriculture department.

SCALE OF FINANCE FOR VARIOUS CROPS IN PUNE DISTRICT FOR 2009-2010

PUNE DISTRICT CENTRAL CO-OP. BANK, PUNE

2009-2010 CROP LOAN SCALE.

Sr.No. Name of Crop Scale Of Finance (Rs.)1 SUGARCANE Per ha. Per acre.

a) Aadsali 62500 25000b) Pre-Seasonal 55000 22000c) Suru 55000 22000d) Ratoon 50000 20000TISSUECULTURE SUGARCANE SETSa) Aadsali 65000 26000b) Suru 60000 24000GRAPESa) Simple/ Winery members 160000 64000b) Exporter members 220000 88000BANANAa) Banana 55000 22000b) Tissue culture banana 80000 32000ALUVERA 24000 9600SWEETCORN MAIZE 15000 6000

TOMATOa) Tomato Hybrid 45000 18000POTATOa) Kharif potato 40000 16000b) certified seeds 62500 25000COTTONa) Rainfed Hybrid 15000 6000b) Irrigated Hybrid 15000 6000JAWARIa) Hybrid 15000 6000b) rainfed 8000 3200BAJARAa) Hybrid 11250 4500b) Rainfed 10000 4000PADDYa) Simple variety 7500 3000b) certified variety(Ambemohar, Indrayani, Pawana)

22500 9000

c) Basmati 22500 9000d) Hybrid Rice 22500 9000MAIZE HYBRID – IRRIGATED 17500 7000OIL SEEDSa) Sesamum 7500 3000b) Sunflower 15000 6000c) Ground Nut 20000 8000d) Castor 5000 2000HORTICULTURAL CROPSa) Lemon 20000 8000b) Orange 27500 11000c) Guava 25000 11000d) Ber 20000 8000e) Cashew Nut 20000 8000f) Coconut 25000 10000g) Alphanso 45000 18000LEAFY VEGETABLES 10000 4000

SHORT TERM LOAN FOR GREENHOUSE PLANTATION (5 GUNTHA AREA)

Sr.no. Crop Amount 1 GERBERA 90000 360002 CARNESIUM 137000 548003 STROWBERY 45000 180004 CHERI TOMATO 35000 140005 ROSE 50000 200006 SIMLA CAPSIUM 40000 16000

BUSINESS OF OUR BANK OVER THE YEAR:- Amt.(Rs. In Crores)

Year Deposits

Advances Interest earned

Other income

Total income

Int. expended

Operating expenses

Total expenditure

Profit

2007 119881.7 86791 7096.51 566.42 7662.93 2367.55 1134.6 3502.15 1123.17

2008 150012 113476.3 12482.32 645.89 13128.21 3077.12 885.99 3963.11 2009.4

2009 189708.5 142909.4 15719.99 951.86 16671.85 10848.45 5031.38 15879.83 3007.35

Title:- Deposits and AdvancesAmt. in Crores

Graph1.1

2007 2008 2009

119881.74

150011.98

189708.48

86791

113476.33

142909.37

Deposits and Advances

Deposits Advances

With the above graph 1.1 and figures in the table it is clear that deposits and advances are growing rapidly, which shows the growth in the overall business of the Bank of India, and also its justify that deposits and advances are in increasing manner.

Title:- Total income.

Amt. in crores

Graph 1.2

2007 2008 2009

7096.51

12482.32

15719.99

566.42 645.89951.859999999

998

7662.93

13128.21

16671.8499999999

Total Income

Interest Earned Other Income Total Income

The total income is sum of two important earnings; one is interest earned on advances disbursed and second is the other income of bank. With the above graph 1.2 and figures above the graph it has been seen that interest earned and other income both are constantly growing per year.

Title:- ProfitAmt. in Crores

Graph 1.3

2007 2008 2009

1123.17

2009.4

3007.35

Profit

Profit

The profit graph 1.3 shows that there was growth in profit in year 2007,2008 and 2009 gradually increases. Profit of the Bank constantly increases shown by the graph.

Comments:-

The reason of continuous increase in the profit is due to continuous increases in the advances and interest earned on theadvances. The growth of advances in year 2oo7,08 & 09 was grow8.52%, 9.34% & 9.78% . And also increases in the investment rateIn year 07,08 & 09 was 6.59% ,6.83% & 7.14% only.

All the growth rate shown in above graph 1.1 ,1.2 & 1.3 .

g

Title:- Total Expenditure Amt. in Crores

Graph-1.4

2007 2008 2009

2367.55 3077.12

10848.45

1134.6 885.99

5031.383502.15 3963.11

15879.83

Total Expenditure

In.Expended opt. Expences Total Expaences

The total Expenditure graph 1.4 shows that rise in the expenditure of the Bank. In last year highly increases in the expenditure in order to previous years which is shown in the graph.

Balance sheet of Narayangaon Branch:

Sr.No. Capital & liabilities

31 March 2007 31 March 2008 31 March 2009

1 Capital2 Reserves &

Surplus3 Deposits 40,11,98,376.54 43,31,30,284.04 45,72,36,919.84

4 Borrowing

5 Other Liabilities 4540674.36 43,13,246.80 87,44,00,457.75

6 Total 40,57,39,050.90 43,74,43,530.84 1,33,16,37,377.57

7 Assets Cash Balance with RBI

84,32,246.41 2,04,64,343.16 73,76,359.50

8 Balance with Bank & Money at call & short

notice9 Investment

10 Advances 36,32,50,318.26 26,74,89,143.61 30,32,88,716.84

11 Fixed Assets 5,33,841.56 5,84,957.80 13,21,221.29

12 Other Assets 3,35,22,644.67 14,89,05,086.27 1,01,96,37,079.94

13 Total 40,57,39,050.90 43,74,43,530.84 1,33,16,37,577.57

14 Contingent liabilities

24,44,800 25,56,300 8,90,600.00

15 Bill For collection

29,30,974 9,11,633.00 9,36,633.00

PROFIT AND LOSS ACCOUNT

Sr.No.

March 2007 March 2008 March 2009

1 INCOMEINTREST EARNED 5,94,00,789.63 6,84,64,635.96 1,75,43,719OTHER INCOME 30,33,229.12 28,54,970.83 31,143.91TOTAL 6,24,54,018.75 7,13,19,606.79 1,75,12,575.09

2 EXPENDITUREINTEREST EXPENDED 3,55,56,075.32 4,23,93,487.44 1,10,27,513.52OPERATING EXPENCES 69,95,917.54 78,48,192.37 24,14,089.34

3 PROFIT TRANSFERD FULL

1,99,02,025.89 2,10,77,926.96 40,70,972.23

TOTAL 6,24,54,018.75 7,13,19,606.79 1,75,12,575

Types of Agriculture Finances in BOI

a) Crop Finance;a) Short Term Loneb) Composite cash Schemec) Kisan credit cardd) Finance against storage receipt

b) Land developmentc) Dairy developmentd) Farm machinery & Implementse) Poultry developmentf) Bio-gas plantg) Cold storageh) Finance to Hi-Tech Agriculture projectsi) Sericulture developmentj) Sheep and goat rearingk) Construction of Godownsl) Plantation of Horticulture cropsm) Gold lone schemen) Forest developmento) Piggery developmentp) Self help Groupsq) Integrated farm developmentr) NABARB Refinance

Crop Finance

Objectives To finance for the production of various crops with improved

Farm practices. Extension of crop lone within villagers To provides return on credit balance in customers Ac. During cash

Surplus time.

Eligibility Crop hypothecation deeds Land mortgage deeds Guarantors profile No dues certificates of all bank & societies

Quantum of finance & Margin Short term credit for consumption - 25% Finance against storage receipt - 50% For crop production - Nil

SecurityUp to 25000 /- hypothecation of crop/ other movable Assets.Above 25000/- Hypothecation of crop & mortgage Of land or collateral security.

INTEREST RATEUp to Rs. 2 lakh - 7%Above Rs. 2 lakh - according to bank

REPAYMENTMaximum period 12 months

CROP INSURANCECrop insurance for the notified crop in the specified by the GOVE.Declaration for that total area.

FARM MECHANISATION, IMPLEMENTS & EQUIPMENT

Objective To improve efficiency in farm operation and asset the farmers for adopting improve agronomic practices by providing needBased credit support for acquiring farm machineries

PURPOSE For purchase of new/second hand tractor , power tiller, power, Sprayer, power dusters, chaff cutter and transporting agricultural equipment / implements. Finance for major renovation of new/second hand jeep, pick up, van, truck etc.

ELIGIBILITY Farmers own land or registered leased land Productive use of that implement in that area Stat govt. Corporation engaged in providing hire services to the farmers. Mortgage of land deeds Agro service centers run by technically qualified entrepreneurs may be

financed

TECHNICAL FEASIBILITYSuitability of the machineries & equipments in that area.Needs & capability of machineries in that particular area.

QUANTUM OF FINANCE/MARGIN:-Upto Rs. 50,000/- NIL MarginAbove Rs. 50,000/-15% to 25% MarginPurchase of second hand tractor unit/transport vehicles.

Margin 33%Finance for repair/renovation of tractor unit, transport vehicles.Margin 25% (short term advance)

SECURITY: COMPOSITE DOCUMENTS Hypothecation of crop Land deeds or mortgage deeds. Guarantor letter. No dues certificate of all banks in that area. Comprehensive insurance policy. Registration of charges with RTA.

DISBURSEMENT:- The loan amount directly disbursed to supplier with instruction to supply the goods as per the offer letter.

REPAYMENT:- New tractor Maximum 9 years New power tiller Maximum 7 years Second hand tractor Maximum 4 years Other Machinery Maximum 3 to 5 years Repairs/ Renovation Maximum 3 to 5 years

SELF HELP GROUP

Concept:

It is the informal groups promoted by nongovernmental organization having the potential to bring together formal banking structure and the rural poor for mutual benefit and that mutual benefit and their working has been encouraging.

Objectives:

To encourage the people to do work in group To increase leadership qualities To increase the saving habit To increase proper utilization of money To increase social, educational and economical development

CHARACTERISTICS OF SHG:

Ideal size of SHG is 10 to 20 members. The group needs not be registered. From one family, only one member. The group consists of either only men or only women. Woman groups found generally better performance. The members having the same social and financial background. The group should meet regularly. Compulsory attendance.

ACTIVITIES: To collect prescribed funds. Formation of group. To hold monthly meeting, record and maintain account of transaction. To operate its dealings through the bank account.

ASSESSMENT OF SHG LINKAGE:

First it is the saving linkage and second is the credit linkage. The saving linkages can have immediately after the group starts internal savings. Once the group completed six month then it is eligible for bank loans. The performance of the SHG to be assessed by the bank and on that assessment bank gives the loan to the SHG.FACILITY PROVIDED BY THE BANK:

Long term loan short term loan and cash credit limit depending upon the requirement of group.

Bank gives loan on the basis of purpose, performance, requirement, production consumption etc.

Disbursement of credit to an SHG should be made in presence of their office bearers and selected members.

Refinance from NABARD at the rate of 100% of the lending to the SHG is available.

REPAYMENT SCHEDULE: It is depend upon the income generation of that SHG group. Generally repayment schedule within 3 to 5 year on monthly or quarterly intervals. SECURITY NORMS:

Intense Agreement to be signed by all the members. No requirement of Guarantor letter or collateral securities, But if

amount above 5 lacks then only it will be require.RATE OF INTEREST: Below 50,000 7% Above 50,000 10%

LAND DEVELOPMENT

Objective: Land degradation is the major problem in Indian agriculture .Most of the land area in our country shows the evidence of degradation, affecting thereby the productive resource baseIn India about 175 million ha.(53%) is suffering from degradation and7.61 million ha. Of salt affected soil in India as per the Ministry of Agriculture. Also 10.9 M ha. Land water logging affected area So there Is requirement of land development in India.Soil degradation takes place for various reasons like excessive use of chemical fertilizer, uncontrolled irrigation, excess use of ground water.

PURPOSE: For land leveling For reclamation of soil Bundling and soil conservation measures

ELIGIBILITY: Farmers own land Farmers cultivating registered leased land

QUANTUM / MARGIN: Quantum of loan will depend upon the estimate cost of the scheme which is depend upon branch level

SECURITY: Term loan agreement Mortgage of land or declaration as per the Agricultural credit act Collateral security of adequate worth Guarantor’s letter

MARGIN:

Loan up to Rs.50000/- Nil Loan over Rs.50000/- 15% to 25%

MODE OF DESBURSEMENT: The loan amount should be disbursed in stages depending upon the Progress as per project report. The hire charges for the machineries & implements should be paid directly to the executive agencies.

REPAYMENT:Repayment within 9-15 years depending upon the loan amount.

PURCHASE OF LAND FOR AGRICULTURE PURPOSE

OBJECTIVE:- To make the small and marginal holdings economically viable To bring fallow lands and waste lands under cultivation. To step up the agricultural production and productivity.

ELIGIBILITY:- Farmers having maximum 5 acres of non-irrigated land.

SECURITY:- Mortgage of lands deeds Collateral security of adequate worth Guarantor letter

MARGIN:- Upto Rs.50,000 Nill Above Rs.50,000 minimum margin 10%

VALUATION:- For the purpose of valuation of land for fixing the quantum of finance the price indicated by the farmer may be cross checked with the last 5 years average registration value available with the Registrar/ Sub-Registrar of the areas and a view taken by the bank.

REPAYMENT PERIOD:- Loan may be repaid 7-12 years in half-yearly/ yearly installments including a maximum moratorium period of 24 months. The moratorium period may be fixed taking into account the gestation period of the project and cash flow.

REPAYING CAPACITY:-

The financing Bank should itself that the borrower/s would have adequate income from their production activities and other income to repay the bank loan with interest and the repayment period may be fixed accordingly.

LOCATION OF LOAD HOLDING:- The farmers may be allowed to purchase land within the village boundary or in a radius of 3 to 5 Kms. Now the Existing land owned by them. The care also should be taken of the managerial aspects of such fragmented holdings.

NABARD REFINANCE:- NABARD would provide refinance to the banks for the loans disturbed by them for purchase of land under the scheme broadly on the same terms and conditions as applicable to the schematic finance.

Loan for Agriclinic And Agribusiness .

OBJECTIVES:-

To supply and efforts Government extension system To provide gainful employment to agricultural graduate in new emerging

area in agricultural sector.

DEFINITION:- 'Agriclinic' are envisage to provide export services and advices to farmers on cropping practices, technology, crop protection, market trends and health of animal etc. 'Agribusiness' is envisaged to provide input supply, farm equipments on hire and other services.

ELIGIBILITY:- The scheme is open to Agricultural graduates and allied to agricultural like Horticulture, Forestry, Dairy, Animal Husbandry, Poultry etc.

SELECTION OF BORROWER:- Selection of borrower and location of the projects could be done by the banks in consultation with the Agricultural University and also the customer completed training programmers.

PROJECT COST AND COVERAGE:- May take up the project either individually or joint. Outer ceiling for cost of project by individual would be Rs.10 lacs and for

group Rs.50 lacs. The project with outlay above Rs. 25 lacs may be submitted to NABARD

for prior sanction.

MARGIN MONEY:- Up to Rs.5 lacs NIL Above Rs. 5 lacs 15 to 20%

RATE OF INTEREST:- To be decided by the RBI guidelines.

SECURITY:- Up to Rs.5 lacs - Hypothecation of crop, land

assets, land deeds.

Above Rs. 5 lacs - Hypothecation of crop, land deeds, guarantor letter , mortgage of immovable properties, collateral securityREPAYMENT:- Repayment within 5 to 10 years depending upon the activities .

MODE OF REFINANCE:- Refinance will be extends under automatic refinance facilities as well as scheme with prior sanction depending upon the project outlay and amount of refinance.

LOAN FOR COLD STORAGE

INTRODUCTION

India is the largest production of fruit and second largest producer in vegetable in the world. In spite of that due to lacking of storage facilities post harvest losses are 25 to 30% of the production. So that there is requirement of storage facilities in India.

STORAGE OF FOODS AND STORAGE CONDITIONS:- Foods and other commodities preserved by storage at low temperature, which retards the activities of microbes. The low temperature necessary for preservation depends on the storage time required. So that short or long term storage facilities required.

ECONOMIC SIZE OF UNIT AND LAND REQUIREMENTS:- Cold storage can be using store either single commodities or multiple commodities. NABARD usually encourage cold storage where 70% of the capacities available to farmer for rental basis .considering 70:30 utilization of the capacitate for rental and own use, a 5000 MT capacity unit is considered.

EQUIPMENTS:- Vapour absorption system(VAS) Vapour compression system(VCS) Refrigeration system Cooling system

PHYSICAL AND FINANCIAL OUTLAY:- Land Leveling, fencing, road, drainage etc. Civil structure including main cold storage building, rack provision,

drying shed, machinery rooms , generator room, office, security cabin etc.

Standby electric supply arrangement Water supply arrangement Contingency Miscellaneous fixed assets

ELIGIBILITY OF BORROWER:- Pre-advance made by borrower Advanced made by partner or group of individual

Advances granted to individual for cold storage and allied purposes granted by SCARDBs are also eligible for refinance from NABARD.

MARGIN OR QUANTUM OF FINANCE:- Margin money about 15 to 25% of the project cost

SECURITY:- For limit upto Rs.50000/- Hypothecation of assets, land deeds

Above Rs. 50000/- Hypothecation of assets, Mortgage of property, Guarantor letter, land deeds etc.

RATE OF INTEREST:- It is applicable for cold storage limits, generally it is 13% governed by the NABARD.

REPAYMENT PERIOD:- Repayment period is fixed upon the financial analysis of the cash flow for each. Generally repayment period up to nine year is allowed including a grace period of one year.

INSURANCE:- Assets created fully insured with bank clause , if the storage structure breakdown, the borrower would be well advised to explore obtaining machinery breakdown policy also.

SWOT ANALYSIS

STRENGTHS:1. One of the largest banks in India, with total business (advances plus

deposits) exceeding Rs.4,00,000 crore2. Continuous track record of profitability since inception3. Vast domestic branch network spread across the country4. Wide-ranging portfolio of financial services provided through various

subsidiaries of the bank5. Technological edge with 100%of the banks business being

computerized.6. Technological backbone enables the Bank to undertake product

innovation and adopt a customer centric approach.7. Strong presence in credit cards with an ISO 9000 certification for the

operations.

WEAKNESSES:1. Sometimes reprisals of grievances of customers consume more than the

stipulated time2. ATMs of Bank of India or their associates are not set up at all places,

which make it difficult for people in remote areas to access ATMs.3. Since it is a government bank so they cannot take decisions on their

own.

OPPORTUNITIES:1. Bank of India can compete with large branch networks of the public

sector banks through its multiple branch banking & CBS distribution approach.

2. Bank of India has opportunity to large its distribution capability to expand Its customer base, as well as focus on cross- selling products to its existing

3. Customer base to expand its market share in various markets & product segments.

THREATS:1. Bank of India faces a threat from foreign banks which have

traditionally served trade finance, fee-based services and other short term financing products in retail liabilities.

2. Bank of India faces strong competition from private banks and mutual funds since Indian commercial banks attract the majority of retail bank deposits, historically the preferred retail savings product in India.

BIBLIOGRAPHY

Websites:-

www.bankofindia.com www.rbi.org.in www.google.com www.msme.gov.in www.sidbi.com www.nabard.org www.unionbankofindia.com www.sbi.com

BOOKS & PUBLICATIONS

M.Y.Khan & P.K.Jain, Financial Management Bank of India manuals and circulars Pratiyogita Darpan