CONTENTS

Introduction.
1

Thrust areas of the Haryana Khadi & Village Industries Board

History.
1
2

Achievement since inception

Review of concerned literature

Problem Area.
1

Terms of References

Objective of study.
1
2

Expected Contribution from study.

Direction for future research.

Methodology.
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Data collection.
Duration of study.
Area of study.
Identification & selection of districts.
Preparation of schedule.
Method of analysis.
Result and Discussion.
Calculation of Installments.
Accounting procedure.
Repayment procedure.
Rate of Interest
Defaulter defined.
Recovery efforts.
Repayment of loan.

Result and Discussions.

1
2
3

Extent of Advancement of loans.

District wise % distribution of advances.
Degree of utilization of loan amount.

4
5
6
7
8

*
*

Impact of various programmes.

Detail regarding income after getting loan.
Detail of recovery.
Position of income.
Sample survey of overdue.

Problem and Suggestion.

District wise recovery position of survey.
Suggestion and finding.
Conclusion.
Bibliography.

1 INTRODUCTION

The term rural development was understood in the part to mean only
agriculture development, and no attention was given to other sectors of rural economy.
Fortunately in the 7th plan this approach has been changed so as to accept the philosophy
of overall development of rural economy. Rural development is not merely agricultural
development but rural transformation, which includes development of all the facts of
human civilization. The new approach to rural development intends to cover all sectors in
rural areas to given new mould to the society through various measures. According to this
new approach rural development in concerned with modernization from traditional
solution to integration with the national economy.
More than three-forth of Indias population lives in the villages. This was the
reason, why Gandhiji laid the greatest emphasis on the development of villages in IndiaCulturally and said, If the villages perishes, India will perish too . Gandhiji gave life
long accent on rural development. Indias progress will remain marginal until the village
becomes the main repository of progress and power. Therefore, rural development has
been high on Indias agenda ever since the advent of independence.
As majority of population in India (about 73%) is living in rural areas. The
living condition of this rural people is very poor. Thus under such a situation, for the
development of rural areas, the All India Khadi with branches in all provinces had been
set up by Gandhiji in December, 1923. In 1925 with the formation of an autonomous
organization called All India Spinners Association (AISA) of Akhil Bharat Charkha
Sangh. AISA did commendable work in regards to propagation, production and sales of
khadi.
In the thirties, Gandhiji turned his attention to other village industries and the
result was the establishment in 1935 of mother organization with the name, All India

Village Industries Association (AIVIA). Khadi is the central sun around which the other
village industries revolve like so many planets. They have no independent existence nor
khadi can exist without other industries. AISA dealt with the revival of the extinct craft of
spinning and look upon itself the whole process of promotion, production, sales,
technological development and welfare of the rural artisans.
There is evidence to sow that Gandhiji was not entirely satisfied within the
progress of the organization and the manner in which the progress Khadi and Village
Industries were being developed, as if they were ends in themselves. Gandhiji wrote in
the Harijan dated June 20, 1946 as follow: Khadi (including Village Industries) in the
only economic proposition in terms of millions of villages until such time, if ever, when a
better system supplying work and adequate wages for every able bodied person above the
age of sixteen, male or female is found for his field, cottage or even factory in every one
of own villages or displace the villages so as to give the villagers the necessary comforts
and amenties that will regulated life demands and in entitled to.
Perhaps, the first move to make khadi a governmental programme was made in
1946 by the Government of Madras, which deputed a senior officer to obtain advice from
Gandhiji and setup a development of khadi soon thereafter. This was followed by the
Central Governments recognition of the importance of Rural Cottage Industries in the
Industrial Policy Resolution 1948. The Constituent Assembly also included development
of Cottage Industries in rural areas among the Directive Principles of the Constitution
Article 43 the ideas were elaborated in the First Five Year Plan, which began in 19511952.
According to the First Five Year Plan, Village Industries have a central place
in the rural development programme, and their development should be as much matter
of States concern as the increase in agriculture production.
During its short term, the All India Khadi & Village Industries Board Initiated
in 1954 some experiments in the integrated rural development on Servodya principles, in
respires to the call of the (Prime Minister), Nehru. The idea of the Prime Minister was to
try out a new approach through the Gandhian side by side with the Community
development approach to the village community.

It was soon found that the Board was suffering from several procedural
handicaps, particularly the lack of timely financial arrangement, it was, therefore decided
in1955 that the Board should be replaced by a statutory body. A bill was accordingly
introduced in parliaments proposing the established of a Commission with power
executive as well as administrative, for proper development of Khadi & Village
Industries. It also provided for All India Khadi & Village Industries Board functioning
as an advisory body, which advice the commission generally in the discharge of their
duties, with the passing of the above bill and the promulgation of Act No.LXI of 1956,
the Khadi & Village Industries Commission comes into being April 1957. Besides Khadi,
initially 10 village industries were in the schedule. Subsequently,16 industries were added
to the schedule, one in 1962, 10in 1965 and 1 each in 1978,1979 and 1984.

1.1 The thrust area of Haryana Khadi & Village Industries Board.

The social objective to provide employment.

To create self-reliance amongst the people and building up of a storing rural

community.

HISTORY

Haryana State Government established the Haryana Khadi & Village Industries
Board by issuing a notification on 01-02-1969 under section 3(1) of the Punjab Khadi &
Village Board. Haryana Khadi & Village Board is also a statutory body. Board is
operating through its direct office located at district Head Quarter. Their functions are to
establish and develop the industries covered under the preview of Khadi & Village
Industries Commission.
The main programme of Haryana Khadi & Village Industries Board is to
advance loan for the development of Khadi & Village Industries in the state. Since
inception to 1994-95 loan were granted on the basis of Khadi & Village Industries
Commission to Haryana Khadi & Village Industries Board at the rare of 4% per annum
for village industries and interest free loan was being granted to khadi. Since inception
of the board up to 1994-95, Rs. 4237 lakhs and Rs. 2222.22 lakhs grant have been
disbursed to 37510 units for setting units in the rural area in the state.

CONSORTIUM BANK CREDIT SCHEME.

The Government of India changes its financial policy in 1995-96. The funding
is dine on the project basis, and not on the basis of approved patter of financial
assistance, as was done up to 1995.
Interest Subsidy scheme: This scheme was introduced by the Khadi & Village
Industries Commission in 1987-88. This was applicable only for Khadi & Village
Industries in regard to capital expenditure and working capital requirement to raise loan
for financial institutions. The scheme envisages that the Commission will subsidize
interest payable to the banks and the quantum of the subsidy will be limited to the
difference between the actual rate of interest charged by the financing institutions and
the initial 4% interest to be borne by the borrower. The scheme was applicable to only
Co-operative Societies and registered institution.

Margin Money (Rural Employment Generation Programme).

Khadi & Village Industries Commission formulated REGP scheme in October
1996. The main aim of this scheme (REGP) is to provide employment opportunities to
the rural masses. As per recommendation of High Power Committee, a target of
providing two million jobs through this programme was projected by the terminal year
of 8th Five Year Plan.
2.1 Achievement since its inception.
The Board its inception in the year 1969 has covered 38229 beneficiaries up to
31-03-2002 and provided the following loan and grant/margin money.

Disbursement of funds

Grants/Margin Money

Loan

1. Under KVIC pattern funding

Since inception to 1994-95

2222.22

4237.00

2. Under CBC scheme from

1996-97 to31-03-2002

321.07

1055.045

3. Interest subsidy scheme

751.88

1865.30

4. Margin Money scheme

845.23

1976.20
(Through banks)

2.2

Review of literature concerned of the Board.

On review of different literature available in the Board, the following facts

are obtained.
The Board at present is implementing margin money schemes under REGP.
The KVIC has grouped village industries under the following severt for the
purpose of implementation of its programme.

Group-I

Mineral based industry.

Group-II

Forest based industry.

Group-III

Agro based industry.

Group-IV

Engineering & Non conventional

Group-VI

Textile industry.

Group-VII

Service industry.

Detail of the scheme is given in the following paragraph:

Providing more or more new avenues of employment for rural unemployed
people in the countryside has along been the prime concern of Government of India.
Keeping in mind the expectations of various sections of rural areas, the Ministry
of A & RI, Govt. India has lunched Rural Employment Generation Programme (REGP)
through Khadi & Village Industries Commission in a big way. Haryana Khadi & Village
Industries Board is implementing the schemes of the KVIC.
i)

Eligible Project.
The scheme is applicable to all new village industries projects set up in rural
area. Any extension or renovation of existing unit will not be eligible for the
facility.

ii)

Eligible Activities
All activities, which do not appear in the negative list circulated by KVIC, are
eligible for financing beneath the scheme.
[ Village Industry means any industry located in Rural Area, which produces
any goods or renders any service with or without the use of power and in which
fixed investment per head of artisan or a worker does not exceed Rs. 50,000/-]

iii)

Eligible Borrowers.
The eligible agencies under the scheme are:- Individual Co-operative Societies
and Trust and SHGs.
(Partnership firms, Private ltd., Companies, Joint Venture, Joint Borrowers, Coobligators or HUF are not eligible the scheme.)

iv)

Ceiling Limit of the Project.

For individual/institutions, the ceiling limit is Rs.25.00 Lakhs.

v)

Rural Area.
Rural Area means:
a)

Any area classified as village as per the revenue records of the state/U.T.,
irrespective of population.

b)

It also include an area even if classified as town, provided its population

does not exceed 20,000(as per 1991 cencus)

vi)

Banks.
a)

All public Sectors Banks.

b)

All regional Rural Banks.

c)

Co-operative Banks approved by the state/U.T. KVIBs.

d)

Private commercial Banks approved by the State & Central Govt.,

Approved By KVIC.

vii)

Sponsorship.
Sponsoring of projects by any agency is not mandatory. However, KVICs State
Regional Offices and State KVICs/DICs may sponsor the project, if approved.

viii)

Entrepreneur Development Programme Training.

Once the financing branch of the bank, sanctions the project before releasing the
second installment of loan, the beneficiary is to be imparted three days training
arranged by the State/Regional Director.

ix)

Margin Money.
Up to Rs. 10.00Lakhs, 25% of the project cost will be provided by KVIC as
Margin Money. For project above 10.00 Lakhs and 25.00 Lakhs, rate of Margin
Money will be 25% of the project cost up to Rs.10.00 Lakhs plus 10% of the
remaining cost of the project.
In case of weaker section beneficiary viz SC/ST/OBC/Women/Physically
Handicapped/ Ex-servicemen and Minority Community beneficiary/ Institution
and Hill, Boarder and Tribal Area, North Eastern Region, Sikkim, Andaman
&Nicobar Island. Lakshdeep, Margin Money grant will at the rate of 30% of the

project cost up to Rs. 10.00 lakhs and above this amount up to Rs25.00 lakhs, it
will be 10% of the remaining cost of the project.
x)

Borrowers Contribution.
Under this scheme, the borrower is required to invest his own Contribution of
10% of the project cost. In case of SC/ST/OBC/Women/Physically
Handicapped/Ex-servicemen and Minority Community and weaker section
borrowers, the contribution will be 5% of the project cost.

xi)

Quantum of loan.
Banks will sanction 90% of the project cost in case general category borrower
and 95% of the project cost in case of weaker section beneficiary/ insitution and
disburse full amount full amount of the loan. Cost of land should not be included
in the project cost.

xii)

Payment of Margin Money.

After the sanction of the credit facility by the Bank branch, eligible amount of
Margin Money will be kept in Term Deposit of 2 Years in the name of the
borrower at the landing bank branch, which will be credit to the borrowers loan
account after a period of two years from the date of first disbursement of loan.
Negative list.
Activities under Negative List (not eligible for Margin Money under REGP) are:
Meant processing, Canning and/or serving/and in toxicant items
(production/manufacturer/sale).
Cultivation of crops/Plantation, Animal Husbandry, Pig Gray, Poultry
etc.
Any project causing environment problems. Other then negative list any
Project can be established which fulfills the pre requisites as mentioned.
Bank Tie-up scheme
Under Rural Employment Generation Programme, the loans are arranged
through banks and Margin Money is provided by Board. The maximum loan
including Margin Money is Rs 25.00lakhs.

Repayment.
The repayment as per different banks schedule.
Sources of Funds.
Margin Money: - The Margin Money is proposed out of funds provided by
Govt. of India under SCA, through Khadi & Village Industries Commission.
Loan: - The entirely loan arrange from various banks against operating in the
state.
Rate of Interest: - The banks charge 12% on the loan advanced by them but it
may very from time to time as per prime lending rate and polices by RBI
announced.
Funding pattern: - Different amounts of loans are advanced depending upon
the requirement of the project cost.

PROBLEM
1. The Board is implementing various schemes for the welfare of the poorest people of
the rural area since its inception, but no significant steps were taken earlier to assess
the impact on the poor society and whether Board has been successful in achieving
its objects or not.
2. General information received about the Board and review of the literature received
from the Board initiated me to think over and go out the roots of doubts and certain
crucial question, which need to be investigated and answered in order to prove the
schemes of the context of its specific objects.
3. Whether the recorded beneficiaries are actually benefited and whether only
candidate are being selected based on the eligibility criteria laid down by the Board.
4. Whether the Board has been successful to providing the employment under the rural
industrialization.
5. Whether the schemes of the Board are able to leave the precipitating effected on the
beneficiaries.
6. These question are:

Whether the recorded beneficiaries are actually benefited and whether only right
candidate are being selected are being selected based on the eligibility criteria lay
down by the Board.

Whether the philosophy on which schemes of the Board was initiated is taken care
of in implementation?

Whether the Board has been successful in helping the poor of the rural areas.
Whether the schemes of the Board are able to leave the precipitating effect on the
beneficiaries?

In order to resolve the above question, the present study is conducted with the
following terms of reference:

3.1.1. TERMS OF REFERENCE

To what extent the criteria of the schemes are followed in identification of
the beneficiaries.
To ascertain socio-economic profile of the beneficiaries is getting loan.

 Changes in the occupation as in income level of beneficiaries after getting

the loan.
Problem faced by the beneficiaries in getting the loan.
To assess the recovery performance of the sanctioned loan.
To examine the financial position of the Board.
In view of the above mentioned problem areas it will, therefore, be of great
interest to study the schemes of the Board, their impact, problems faced by the
people in getting loan and problems faced by the Board in implementing its
schemes.

4.1.1.1

OBJECTIVE OF STUDY

In order to get remedies for the aforesaid questions, the present study was under
taken with the following specified objectives.
1) To estimate funding pattern in accordance with terms and conditions thereof
2) To find out whether the beneficiaries have properly utilized the loan amount
and to find out the reasons for miss utilization of loan amount and to examine
the nature of diversions of loans from stipulated purpose.
3) To study the impact of various programme on its beneficiaries in terms of
income and employment.
4) To examine the repayment performance of loan in respect of repayment
schedule and to examine the extent of over dues and causes of amount over
dues thereof.
5) To assess the financial position of board.
To find out bottlenecks in the implementation of schemes and the reasons behind
them and to give suggestions for the improvement of various schemes and health of
the board.
4.1.2

Expected Contribution from the study:

There were no such studies earlier taken by the Board, which might tell the

effectiveness and impact of the scheme of the Board. There fore, this study may be
very useful for the Board and also to took a view and improve its functioning by
implementing the remedies which would be suggested in the study. Further, the
results obtained from the study will be useful to policy makers of the Board in
making proper use/allocation of its limited financial recourses and recognizing the
structure of the Board for achieving the objectives and mission of the Board.

4.1.3

Direction for future Research.

This study may become a base for future research. This would be helpful to future
research scholar by giving them consolidated data about the Board at one place.

5 METHODOLOGY.
This chapter describes the analytical framework and the data employed in the
present study. The chapter id divided into two sections. The first section deals with
the type and nature of the data collected for the study, the second section deals with
the analytical framework used for the attainment of the objectives of the study.
5.1

DATA COLLECTION
This study is based on primary data and secondary data. The data were
obtained from the Head Office of the Board.
The data regarding individual beneficiaries were collected by personal
visits at the place of the loaners.

5.2

DURATION OF STUDY
The study is conducted on the beneficiaries of the loaning schemes
implemented since the inception of the Board i.e. 1969 to 2001-2002. the
main emphasis is given in the last decade.

5.3

AREA OF STUDY
The area of the study was the state of Harayana.

5.4

IDENTIICATION AND SELECTION OF DISTRICT

For the purpose, three districts are selected randomly from each region of
the states viz. Ambala, Karnal and Hisar. In each district, under every scheme
10 beneficiaries are selected randomly. The list of the beneficiaries is obtained
from Head Office. The detail of District wise / scheme wise beneficiaries
selected is given in the following table No. 5.4.

Table No. 5.4

Sr. No. Name of the scheme

Ambala Karnal Hisar Total

1.

Pattern Funding

10

10

10

30

2.

Consortium Bank Credit

10

10

10

30

3.

Rural Employment Generation 10

10

10

30

30

30

90

Programme
Total

5.5

30

PREPRATION OF SCHEME
Two sets of questionnaires are developed to collect required information.
Departmental schedule: To collect information from district level & H.O.level
officials.
Beneficiaries schedule: To elicit information from beneficiaries schedule was
devised.
For the purpose, three districts are selected of the state viz Ambala,
Karnal and Hisar. In each district under scheme to beneficiaries are selected
on the random basis.

5.6

METHOD OF ANALYSIS
To achieve the above said objective simple statistical measures like
average and percentage are used for amount advanced, degree of utilization
amount over due and also for comparative study.

5.7

RESULT AND DISCUSSION

This chapter is devoted to the presentation of discussion of finding of the
Study.
Extend of advancement of loan.
Details of extend of utilization.
Impact of various programs.
Details of recovery position.
The loan amount is to be repaid to the board 10 years in Installments in the
scheme of pattern finding and in seven years in 28 quarterly installments in
CBC scheme.

5.8

CALCULATION OF ISTALMENTS
Interest is calculation by reducing system of the principal amount over
number of installments.

5.9

REPAMENT PROCEDURE
The beneficiary is required to repay the calculated amount of principal and
interest is one installment by due date.

5.10

ACCOUTING PROCEDURE OF REPAYMENT

Since the principal and interest are considered to separate entities, any part
payment made by the beneficiary in first adjusted toward the interest and their
to the principal.

5.11

RATE OF INTEREST
The interest rates changed by the board are as under: o Under pattern finding scheme

5.12

b) V.I

4% P.A.

c) Khadi

Free of interest

Under CBC

(PLR) Prime Landing Rate

DEFAULTERS DEFINED
A beneficiary not paying three installments continuously is considered a
defaulter by the board. He is issued notice for lump sum recovery i.e. to
deposit back the amount with interest becoming due.

5.13

RECOVERY EFFORTS
Although the beneficiaries is required to deposit the full amount of
principal and interest by due date, it is seldom done. The board officials have
to make repeated visits to the beneficiary for recovery of loan and he is issued

a notice for loan cum recovery. Special recovery campaigns are launched after
every Kharif and Rabi harvesting seasons.
5.14

REPAYMENT OF LOAN
There are three categories as far as repayment is concerned
Non-payee defaulters: - This type of beneficiaries has no refunded
even a single rupee after availing the loan.
Regular payees: - This category of beneficiaries are not paying full
amount of loan and interest of loan interest due are lagging behind the
prescribed schedule of loan repayment.
Defaulting payees: -These beneficiaries are paying their due amount
regularly and in some cases have exceeded the due amount. District
wise details of recovery position are indicated scheme wise for the year
2001-2002 in the following paragraphs.

6.

RESULT AND DISCUSSIONS

This chapter is devoted to the presentation of discussion of finding of the
study. The flinging is presented in three sections. The first deals with the facts about
extent of advancement of loan provided by the Board. The second section describes
the utilization status of the scheme implemented in the selected districts. The third
section deals with the things, observed during the course of survey, regarding the
impact of various programme on the beneficiaries. The fourth section discusses the
recovery status of the Board. The fifth section analysis the financial position of the
Board. The last and sixth section describes the bottlenecks in the implementation of
the schemes and reasons behind them and suggestions to improve the
implementation of the various schemes and health of the Board.

6.1

Extent of Advancement of Loans.

The advancement of loans in selected districts since the inception of the
Board is given in the table 6.1

Sr.

Name

No.

of

Ambala

Karnal

Hisar

Total

No.

Amount

No.

Amount

No.

Amount

No.

Amount

Scheme
1.

Pattern

3570

378.15

4135

498.72

5160

597.58

12865

1474.45

2.

Funding
CBC

54

44.64

47

89.6865

68

150.34

16969

348.98

3.

REGP

58

140.58

46

127.35

63

158.79

167

429.72

The above table reveals that highest number of beneficiaries was

covered under pattern funding scheme, which shows that these schemes are
more popular among the entrepreneurs. On further analysis of records, it
appears that these both schemes were in operation since the inception of the
Board and remaining schemes were introduced in the subsequent years.

6.2 District wise percentage distribution of advances

District

Upto 0.50

Rs. 0.51 to

Above 5.00

Lacs

Rs.5.00

Lacs

Lacs
15(32.45%)
28(21.30%)
17(21.47%)
60(25.00%)

17(25.45%)
16(47.18%)
19(50.04%)
52(40.89%)

Ambala 28(42.10%)
Karnal
16(31.52%)
Hisar
24(28.49%)
68(34.04%)

Total

60
60
60
180

DISTRICTS
It is observed that 34.04% beneficiaries were advanced loan up to 0.50 lac which 25.07 %
beneficiaries got loan Rs. 5.00 lacs. It reveals that a significant no. of beneficiaries got
loan less than Rs. 0.50 lac. On analysis the scheme wise advancement, it was observed
that low advancement was because of the scheme was introduced by Central Govt. and

KVIC in 1996 and it was closed due to certain reasons on 31.3.2000. Although prescribed
limits are even quite higher side under these schemes, which didnt meet the financial
requirement of the projects initiated by the beneficiaries, which is quite insignificant no.
of beneficiaries.

6.3

Degree of utilization of loan amount is depicted in figure

District

Proper
Utilization

Total
Partial
Business
Misutilized Misutilized Failure Total

Ambala

50(83.33%) 5(8.33%)

2(3.33%)

3(5.00%)

60

Karnal

48(80.00%) 4(6.67%0

6(10.00%)

2(3.333%)

60

Hisar

51(85.00%) 4(6.67%)

3(3.33%0

2(3.333%)

60

149(82.77%) 13(6.99%)

11(16.66%0 7(3.88%)

180

60
50
PROPER
UTILIZATION
TOTAL
MISUTILIZED
PARTIAL
MISUTILIZED
BUSINESS
FAILURE
Series5

40
30
20
10

Series6
Series7

0
AMBALA KARNAL

DISTRICTS
Detail of Extent of Utilization.

HISAR

Series8
Series9
Series10
Series11
Series12
Series13
Series14

Extent of misutilization/disposal of assets in depicted above table shows 82.77%

beneficiaries utilized the loan amount properly and only 6.99% beneficiaries misutilized
the loan amount. In some cases, business failed in subsequent time due to some
unavoidable reasons like floods and terrorist activities etc. 16.67% beneficiaries have
misutilization the loan amount partially i.e. some amount was utilized for main purpose
and some loan amount was utilized to meet high family expenditure e.g. education of
children, marriage of daughter, to get relief from rural debt etc. Proper utilization of loan
amount is highest in Hisar (85.00%). Largest misutilization Ambala 98.33%) in
comparison to Karnal and Hisar (6.67%). Business failure was lowest in Karnal. Hisar
(3.33%) in comparison to Ambala (5.00%).
6.4

Impact of various Programme.

Since the loan schemes are meant for the poorest segment living in rural

areas,the Central Government defines the rural areas Rural Area means
Rural Area.
Any area classified as village as per the revenue records of the State/U.T.,
irrespective of population.
It also include an area even if classified as town, provided its population
does not exceed 20,000( as per 1991 census)
Income before getting loan

table

District

Rs. 6400

Rs. 6401 to
Rs. 7500

Above Rs.
10000

Ambala

45(75.00%)

10(16.67%)

5(8.33%)

60

42(70.00%)

12(20.00%)

6(10.00%)

60

of

47(78.33%)

8(13.33%)

5(8.33%)

60

beneficiaries

134(74.45%)

30(16.66%)

16(8.89%)

180

getting loan

income Karnal
Hisar

before

Total

The

above

reveals that
the

was nor more than (Rs.10000/-). Income up to Rs. 6400/- represents largest portion
(47.45%) and income above Rs. 7500/- represents lowest portion (8.89%). Income up to
Rs. 6400/- was highest in Hisar (78.33%) and lowest in Karnal (70.00%). Income
between Rs. 6400/- to Rs. 7500/- is highest in Ambala (33.33%). Income above Rs.

7500/- was highest in Hisar (71.67%) comartively Ambala and Karnal (53.00%),
(58.33%) resp.

6.5 Detail regarding income after getting loan

District

Rs. 6400

Rs. 6401 to
Rs. 7500

Above Rs.
10000

Ambala

45(75.00%)

10(16.67%)

5(8.33%)

60

Karnal

42(70.00%)

12(20.00%)

6(10.00%)

60

Hisar

47(78.33%)

8(13.33%)

5(8.33%)

60

134(74.45%)

30(16.66%)

16(8.89%)

180

Total

50
45
40
35

Rs. 6400

30

Rs. 6401 to
Rs. 7500
Above Rs.
10000
Series4

25
20
15
10

Series5

Series6

0
AMBALA

KARNAL
DISTRICTS

HISAR

Series7
Series8
Series9
Series10
Series11

6.6 The position of income exclusively from the created with the loan
amount.

District

Up to Rs.
5000

Nil

Above Rs.
5000

Total

Ambala

19(31.67%)

22.(36.67%) 19(31.67%)

60

Karnal

13(21.67%)

36(60.00%) 11(18.33%)

60

Hisar

15(25.00%)

27(45.00%) 18(30.00%)

60

47(26.11%)

85(47.20%) 48(26.67%)

180

40
35
30
25

Nil
Upto Rs. 5000
Above Rs. 5000
Series4
Series5
Series6
Series7
Series8
Series9
Series10
Series11

20
15
10
5
0
AMBALA

KARNAL

DISTRICTS

HISAR

6.7 Sample survey detail of amount of overdue

District

Nil

Rs. 2001 Rs. 5001 Above

Upto Rs. to Rs.
to Rs.
Rs.
2000
5000
10000
10000

Ambala

4(6.67)

27(45.00) 18(38.00) 5(8.33)

Karnal

3(5.00)

20(33.33) 15(25.00) 12(20.00) 10(12.67)

60

Hisar

2(3.33)

21(35.00) 13(21.66) 13(21.67) 11(18.33)

60

9(5.00)

68(37.78) 46(28.22) 30(16.67) 27(45.00)

180

Total

6(10.00)

60

30
25
Nil
20

Up to Rs. 2000

15

Rs. 2001 to Rs.

5000
Rs. 5001 to Rs.
10000
Above Rs. 10000

10
5

Series6

Series7
AMBALA

KARNAL
DISTRICTS

HISAR

Series8
Series9
Series10
Series11
Series12

6.B PROBLEM AND SUGGESTION

1) The first and fore most problem was that there were number of formalities which
were to be completed before taking a loans and there were number of
complications for their completion. So needy people hesitate to take loan. It is
suggested that formalities in taking loan should be minimum and it completed
before release of loan.
2) In many case the problem was that the loan amount was quite inadequate for
running a smooth business. It is suggested that the project of the beneficiaries
should be appraised properly so that they not face any problem.
3) Some scheme requires land for construction of building but mostly the problem
arises because beneficiaries were land less. So they could not apply for loan. It is
suggested that for certain schemes they should be allotted piece of land at
subsidized rate to establish their venture.
4) The problem was that the lists of occupations for which loan were given by the
board, was limited. It was not open to beneficiaries to select the trade. It is
suggested that the board should expand the list of schemes to include more
occupation.
5) Rate of interest charged on loan was high under the CBC Scheme and income
from the business created with the loan amount was not proportionally high which
create problem in the repayment of loan installments. It is suggested that rate of
interest should be low. Interest and principal amount should be charged
simultaneously. It may result in increased repayment.
6) Another problem was outstanding loan amount. Sometimes loan amount remains
overdue for long period. It is suggested that to improve the recovery of loan,
subsequently follow up visits must be made regularly besides issuing notices.
7) The next problem was total misutilization of loan amount by the beneficiaries. It
is suggested that to improve this aspect, quality of the cases should be improved.

There should be more emphasis on quality meaning there by the targets should be
realistic
In addition to the problems faced by the beneficiaries, the board is also facing some
problems, which are discussed below.
Rural employment generation programme (REGP) scheme is implemented
through banks. Banks provides loan portion under this scheme. The Board searches
the entrepreneurs and guides them to set up their units in rural are as under Rural
Employment Generation Programme. Board is providing Margin Money 25% or 30
% of the total project cost to Banks. After scrutinize the proposal the Board has issued
Entitlement Certificate to Banks regarding providing the Margin money under this
scheme. However, the some banks were not finalized the proposals during the
financial year. Some proposals were lying pending with them. Board calls the meeting
of the bankers to review the performance of the financial proposals time to time.
Less budget provision made by the State Government to meeting the actual
establishment expenditure of the Board. While finalizing annual planes by the Govt.
the budget provision made for Board are much less in comparison to the

actual

expenditure of the board. Board is facing a great financial problem now days. Board
for generating own source of income has stated consignment agencies work at
Faridabad, Hisar and Chandigarh.
Margin Money amount received from the khadi &village industries Commission. The
margin money amount has not received timely from the commission. Due to nonavailability of funds, the board is not in the position the to release margin money to
the beneficiaries due to this reason they are bearing loss. The bank will not pay
interest on the amount of the fixed deposit and not charge interest in the same amount
of the loan. If the margin money received late the beneficiaries liable to pay the
interest on it.

6C The district wise recovery position of survey.

Beneficiaries
District
Ambala
Karnal
Hisar

Demand
64.61
82.34
65.31

Recovery
26.66
55.69
27.38

Percentage
41.33
67.37
41.92

The above table indicates that recovery position of the entire scheme was
highest in Karnal 67.37 percentage in comparison to Hisar 41.92 percentage and
Ambala 41.33 percentage. Recovery position was lowest in Ambala 41.33 percentage
in comparison of sample beneficiary and actual recovery position of the board. It was
observed that overall position was not good. To improve the recovery position was
not good. To improve the recovery position has taken various steps, which are
explained, in the following steps. Steps taken by the board to improve the recovery
position as under:
1. All the beneficiaries are provided a recovery schedule at the time of disbursement
of loan. These facilities the beneficiaries to repay the loan amount in loan.
2. It has been decided to launch the two special recoveries. Comparison May, June
and during November and December every year. During the period, the new crops
arrive in the state and sufficient funds are available with the beneficiaries. They
are in position to repay the loan amount.
3. All the district officers have been asked to ensure the hypothecation of assets
(building & machinery), which was created from the loan of the board.
4. After disbursement of loan, the District Khadi & village Industries Officers are
asked to check the utilization of loan with in three months. In this way, the loaner
utilizes the loan amount properly and they earn handsome profit and repay the
installment.
5. List of defaulters with their over dues are required from the districts periodically.
6. Annual target old current recovery is fixed and progress in reviewed in each
month.

7. The district officer issues recovery notices to all defaulters beneficiaries with a
copy to Chief Executive of the Board.
8. If the loaner is not make the payment of the overdue amount including interest
after issuing final recovery notice, the district officer are referred the case to the
District Collector to recovered the dues under land revenue Act.
6.C.1. Recovery position from 1996-1997 to 2001-2002.
Pattern Funding Scheme.

Year

Total

Total

Percentage

1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
Total

dues
745.78
642.43
534.95
509.56
485.37
578.11
2918.09

Recovery
377.81
288.02
253.61
205.61
205.35
191.52
1390.39

32.96
48.96
47.40
40.35
42.23
33.12
45.59

The above table reveals that the recovery position 1996-97 to 2001-2002. In
1996-97, total overdue of loan amount was Rs. 2918.09 lacs and recovery was Rs.
1390.39. The overall position of the recovery was not satisfactory.

6.C.2 Recovery position from 1998-99 to 2001-02.

Consortium Bank Credit Scheme
Year
1997-98
1998-99
1999-2000
2000-01
2001-02
Total

Total dues
69.38
173.46
223.93
278.59
309.54
1054.90

Total Recovery
55.82
118.45
141.83
211.43
191.52
719.05

Percentage
8.44
68.29
63.33
75.89
61.87
68.16

The above table shown that the over all recovery position under CBC of the
Board was 68.16 %. As per the condition of the scheme the 100% repayment of the
due amount made by the Board to the Khadi & Village Industries Commission on due
date. However, Board recovered only 68016% from the Beneficiaries. Remaining
31.84% dues repayment was made by the Board to KVIC from own funds. Due to
this reason, this scheme was closed by the Central Government in 2000. Board is
trying to recover the over due amount from the Beneficiaries.
6.C.3. Financial position of the Board.
The detail of financial position is as under:
State Government is providing Grant-in-Aid for meeting the
establishment expenditure of Haryana Khadi & Village Industries Board, but during
the last six years adequate funds not provided by the state Government Board has
spent Rs. 592.07 Lakhs over and above the budget provided by the State Government
for meeting establishment expenditure up to 31.3.2002.

7. SUMMARY AND FINDINGS

The study pertains to evaluation of loan schemes of the Harayana Khadi &
Village Industries Board. It is manly intended to examine the overall impact of the
schemes on the beneficiaries.
1.

Terms of reference
To what extent the criteria of the scheme wee followed in identification
selection of the prospective benefi9ciaries.
To ascertain the socio-economic profile of the beneficiaries getting the
loans.
Changes in the occupation as well as income level of beneficiaries.
Problems faced by the beneficiaries in getting the loans.
To assess recovery performance of the sanctioned loan.
The Board was set up the State Government of Haryana in 1969.
The Central government started allocation of budget in 1956.

2.

Schemes being implemented by the Board.

Pattern Funding.
Bank Finance.
Interest subsidy scheme.
Consortium Bank credit scheme.
Rural Bank Generation Programme.

3.

Objective of study
To find out whether beneficiaries have properly utilized the loan the
amount or they have misutilized.
To find the impact of programme.

 To know the problems in repaying loan.

To know the launching pattern.
To find out causes of amount overdue.
To find out bottlenecks in the implementation of the scheme.
To give suggestions for the improvement of various schemes.
4.

Methodology
Type of data
The study was based on primary data and secondary data
Preparation of schedule

Two sets of questioners were developed to collect the required information.

Departmental schedule
It was meant to collect information from district level field officials
Beneficiaries schedule
It was meant to elicit information from the beneficiaries.
Time period of study
The studies were conducted on the beneficiaries of loan schemes since the
inception of the board.
Sampling Technique
An extensive survey of the beneficiaries in the three selected districts was
conducted 10 from each district were at random for an intensive survey.

5.

Findings
The main findings of the study are as follow:
34.04% beneficiaries were advanced loan up to Rs. .50 lakh while
25.07%beneficiaries got loan more than Rs. 5.00 lakhs.
82.77% beneficiaries utilized the loan properly and only 6.99%
beneficiaries misutilized the loan amount 16.66% beneficiaries misutilized
amount partially.
A) Income up to Rs. 6400/- before getting the loan represents lowest
portion 74.45% and income above Rs. 10000/- represent lowest portion
8.89%. 16.66% represents between Rs. 6401/- to 7500/-.
B) Income above Rs. 7500/- represents larges portion 61.11% after getting
loan. The lowest portion was of income up to Rs.6400/- 10%.

Highest recovery position was in Karnal 72.30 % and lowest recovery

position was in Ambala 30.07%. Overall, recovery position under pattern
funding was 33.12%

Total funds of the Board were Rs. 4217.57 lakhs and 2222.22 lakhs grant
received from the budgetary source since inception.
A)

Problem faced by beneficiaries:

There were number of formalities were to be completed before
taking loan.
Loan amount was inadequate to run a smooth business.
There was requirement of land for providing loan some schemes.
Rate of interest charged on loan high.
List of occupation under loan scheme was limited.

B)

Problem faced by the Board.

State Govt. and Central Govt. release funds at the end financial year.

 Lee budget provisions made by Govt. in comparison to the approved

targets.
Govt. release lesser funds against the provision.
No separate budget provision for administrative expenses.
Unnecessary delay in getting funds.

8. CONCLUSIONS:
Thus, on the bases if above findings following conclusion may be drawn from
the present study.
1) The board do not advances sufficient loan to beneficiaries. Therefore, they
go to private moneylender for meeting their requirement, which leads
them to in vicious cycle of debt trap.
2) Lack of proper verification of the beneficiaries before giving loan and
physical verification of assets after giving loan. To improve the success
rate, it should be made mandatory that district officer of the Board should
visit the beneficiaries frequently.
3) Due to lack of publicity, the mediators who exploit them therefore trap
beneficiaries; there should be more publicity of the schemes.
4) Political interference in the selection of beneficiaries deteriorate the
quality of the cases, which affect the recovery therefore, it should be
minimized.
5) Another reason for misutilization is high family expenditure that is why
beneficiaries utilize the loan amount for unproductive purpose, which
leads to non-repayment of loan amount.
6) Increase income is not only due to the benefits of loan but also due to
other factor like inflation, wages rate and employment of other member of
the family.
7) Recovery position of the board is not poor, but it should be improve.

8) State govt. should provide adequate funds to meet out the actual expenses
of the board.

BIBLIOGRAPHY

Annual Progress Report (2001-2002)

Preview Report

UDYOG YUG (August 2002)

Research Methodology (C.K.Kothari)

Activity Note of HKVIB (Haryana Khadi Village Industry Board)