STUDY ON ROLE OF BANK OF INDIA IN THE FIELD OF

AGRIBUSINESS FOR RURAL DEVELOPMENT IN RANCHI

DISTRICT

PROJECT SUBMITTED TO THE

CENTRE FOR AGRIBUSINESS MANAGEMENT

FACULTY OF AGRICULTURE

BIRSA AGRICULTURAL UNIVERSITY

KANKE, RANCHI-6 (JHARKHAND)

BY

VIVEK ANAND

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION IN
AGRIBUSINESS
Regd. no. - MBA/BAU/6960/2013

2015
 CENTRE FOR AGRIBUSINESS MANAGEMENT
FACULTY OF AGRICULTURE
BIRSA AGRICULTURAL UNIVERSITY
RANCHI – 834 006 (JHARKHAND)

CERTIFICATE

This is to certify that the work recorded in the project report entitled “STUDY ON
ROLE OF BANK OF INDIA IN THE FIELD OF AGRIBUSINESS FOR RURAL
DEVELOPMENT IN RANCHI DISTRICT” submitted in partial fulfillment of the
requirements for the degree of MASTER OF BUSINESS ADMINISTRATION IN
AGRIBUSINESS of the Faculty of Agriculture, Birsa Agricultural University, Ranchi
(Jharkhand) is the record of the bona fide project work carried out by Mr. VIVEK ANAND
under my guidance and supervision. No part of the report has been submitted for any other
Degree or Diploma.
It is further certified that help or information received during the course of this
investigation and preparation of the report have been duly acknowledged.

ENDORSED

Dr. Hari Haran Dr. C.S. Singh

Consultant Director Major Advisor
Centre for Agribusiness Management
 CENTRE FOR AGRIBUSINESS MANAGEMENT
FACULTY OF AGRICULTURE
BIRSA AGRICULTURAL UNIVERSITY
RANCHI – 834 006 (JHARKHAND)

(Certificate of the Advisory Committee Members and Endorsement of Dean, Agriculture)

CERTIFICATE

I, the undersigned, as Major Advisor of the student for the degree of MASTER OF
BUSINESS ADMINISTRATION IN AGRIBUSINESS have gone through the manuscript of the report
and agree that the project entitled “STUDY ON ROLE OF BANK OF INDIA IN THE FIELD
OF AGRIBUSINESS FOR RURAL DEVELOPMENT IN RANCHI DISTRICT” submitted
by Mr. VIVEK ANAND in partial fulfillment of the requirements for the degree.

Dr. C.S. Singh

Dr. R.R. Upasani Dr. Arvind Kumar Singh Dr. Sheela Barla

ENDORSED

Dr. Hari Haran

Dean Consultant Director
Faculty of Agriculture Centre for Agribusiness Management
Birsa Agricultural University
 CENTRE FOR AGRIBUSINESS MANAGEMENT
FACULTY OF AGRICULTURE
BIRSA AGRICULTURAL UNIVERSITY
RANCHI – 834 006 (JHARKHAND)

(Certificate of approval by the Chairman of the Advisory Committee and External Examiner)

CERTIFICATE

This is to certify that the work recorded in this report entitled “STUDY ON ROLE OF
BANK OF INDIA IN THE FIELD OF AGRIBUSINESS FOR RURAL DEVELOPMENT
IN RANCHI DISTRICT’’ Submitted by Mr. VIVEK ANAND in partial fulfillment of the
requirements for the Degree of MASTER OF BUSINESS ADMINISTRATION IN
AGRIBUSINESS of the Faculty of Agriculture, Birsa Agricultural University, Ranchi
(Jharkhand) was examined and approved on ………………2015.

Dr. C.S. Singh External Examiner

Major Advisor

Dr. R.R. Upasani Dr. Arvind Kumar Singh Dr. Sheela Barla

Dr. Hari Haran

Consultant Director
Centre for Agribusiness Management

Dr. Z.A. Haider

DRI-cum-Dean PG
Birsa Agricultural University
Ranchi
 ACKNOWLEDGEMENTS

I would like to thank DR. C.S SINGH (Junior Scientist cum Assistant Professor BAU)
for his valuable guidance, constructive ideas, suggestions and encouragement towards the
successful completion of this project work. I would like to thank DR. HARI HARAN
(Consultant Director, CABM, BAU, Ranchi) for their constructive criticism during project
evaluation, which helped me to make necessary improvements.
I am deeply indebted to DR. RAGHAV THAKUR (Dean, Faculty of Agriculture), DR.
R.R. UPASANI (Chief Scientist Department of Agronomy) DR. ARVIND KUMAR SINGH
(Jr. Scientist Department of Agronomy) DR. SHEELA BARLA (Jr.Scientist Department of
Agronomy) whose constant guidance helped me a lot in completing my project.
I feel privileged in expressing my heartfelt gratitude to Mr. SHUBHADEEP GHOSAL
(Chief Manager cum Lead District Manager, Ranchi) for his constant guidance and support
during the course of this project. I also thank him for his valuable suggestion and input that made
this project an even better work. His easy accessibility also helped me in reducing the formal
pressure of work. In addition I am thankful to all the staff of LDM office and Zonal Office for
their support and cooperation in completion of this project and for providing me a comfortable
and pleasant atmosphere during the assignment.
Thanks are due, to my friends who have made each day at CABM a new experience for
me. I would also want to thanks my seniors Mr. Gaurav Kumar Singh, Mr. Suraj Pandey, Mr.
Sunil Kumar Yadav, and Md. Islam (Technical Assistant, CABM, BAU) without whom I would
never been able to complete my project write-up.
Last but not the least, I would like to thank my family. The constant inspiration and
guidance kept me focused and motivated. I am grateful to my father for giving me the life I ever
dreamed. I can’t express my gratitude for my mother in words, whose unconditional love has
been my greatest strength. The constant love and support of my brother is sincerely
acknowledged.
Finally, my greatest regards to the almighty for bestowing upon me the courage to face
the complexities of life and complete this project successfully.

VIVEK ANAND
 Contents

Chapter No. Description Page No.

1. Introduction 1-7

2. Review or literature 8-9

3. Methodology 10-11

4. Results and Discussion 12-31

5 Findings 32-33

References I

Annexure i-ii
 Chapter-1

INTRODUCTION
agribusiness
Goldberg coins the term agribusiness together with co-author John H. Davis.
It is the business associated with the production, processing, preservation or
marketing of agricultural produces. It also includes business associated with inputs
to the agriculture, both of organic and inorganic nature, be it in the form of
fertilizer, or pesticides, used in the individual farming or cooperative farming or in
contract farming, It also includes the business associated with animal husbandry,
fishery, piggery, floriculture, bee keeping, or the like. It may be activities related to
the marketing or Retail sales of Agricultural produce.

The scope and spectrum of Agribusiness is so vast and so wide that it

touches almost every aspect of life and provides immense opportunities with the
entrepreneurs who deals with it. The only requirement to go fast and higher up the
ladder is through enthusiasm, dedication and an innovative orientation in the
psyche of the entrepreneur.

Agribusiness boundary expansion is driven by a variety of transaction costs

within the agriculture industry, "agribusiness" is used simply as a portmanteau of
agriculture and business, referring to the range of activities and disciplines
encompassed by modern food production and marketing. The UN Food and
Agriculture Organization (FAO) operates a section devoted to Agribusiness
Development which seeks to promote food industry growth in developing nations.
In the context of agribusiness management in academia, each individual element of
agriculture production and distribution may be described as agribusinesses.
However, the term "agribusiness" most often emphasizes the "interdependence" of
these various sectors within the production chain. Among critics of large-scale,
industrialized, vertically integrated food production, the term agribusiness is used
negatively, synonymous with corporate farming. Studies of agribusiness often
come from the academic fields of agricultural economics and management studies,
sometimes called agribusiness management.

To promote more development of food economies, many government

agencies support the research and publication of economic studies and reports
exploring agribusiness and agribusiness practices. Some of these studies are on
foods produced for export are derived from agencies focused on food exports. The
types of agribusiness can be categorized in the following sectors : Aquaculture,
Dairy farming, Grazing, Hydroponics, Livestock, Pig farming, Orchards, Poultry
farming, Sheep husbandry and the like.

rural development
Rural development generally refers to the process of improving the quality
of life and economic well-being of people living in relatively isolated and sparsely
populated areas.

Education, entrepreneurship, physical infrastructure, and social

infrastructure all play an important role in developing rural regions. In contrast to
urban regions, which have many similarities, rural areas are highly distinctive from
one another. For this reason there is a large variety of rural development
approaches used globally. Rural development actions are mainly and mostly to
development aim for the social and economic development of the rural areas. Rural
development programs are usually top-down from the local or regional authorities,
regional development agencies, NGOs, SHGs, national governments or
international development organizations. But then, local populations can also bring
about endogenous initiatives for development.
 Rural development aims at finding the ways to improve the rural lives with
participation of the rural people themselves so as to meet the required need of the
rural area. The outsider may not understand the setting, culture, language and other
things prevalent in the local area. As such, general people themselves have to
participate in their sustainable rural development.

Bank of India was founded on 7th September, 1906 by a group of

eminent businessmen from Mumbai. The Bank was under private ownership
and control till July 1969 when it was nationalized along with 13 other banks.
The Bank has 4545 branches in India spread over all states/ union territories
including specialized branches. These branches are controlled through 50 Zonal
Offices. There are 54 branches/ offices, five subsidiaries and one joint venture
abroad. The Bank came out with its maiden public issue in 1997 and follow on
Qualified Institutions Placement in February 2008. The Bank completed its first
one hundred years of operations on 7 September 2006.
While firmly adhering to a policy of prudence and caution, the Bank has been
in the forefront of introducing various innovative services and systems.
Business has been conducted with the successful blend of traditional values and
ethics and the most modern infrastructure.
The Bank has been the first among the nationalized banks to establish a
fully computerized branch and ATM facility at the Mahalaxmi Branch at
Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT
(Society for Worldwide Inter Bank Financial Telecommunications) in India,
which facilitates provision of cost-effective financial processing and
communication services. It pioneered the introduction of the Health Code
System in 1982, for evaluating/ rating its credit portfolio.
Presently Bank has overseas presence in 20 foreign countries spread over 5
continents – with 53 offices including 4 Subsidiaries, 4 Representative Offices and
1 Joint Venture, at key banking and financial centers viz., Tokyo, Singapore, Hong
Kong, London, Jersey, Paris and New York.

The quality policy followed at Bank of India has four pillars:-

Superior
Pro-Active
Innovative
State of the Art

Their vision is – “To become the bank of choice for corporate, medium
business and upmarket retail customers and developmental banking for small
business, mass market and rural market”
 Their mission statement is – “To provide superior, proactive banking service to
niche markets globally, while providing cost effective, responsive service to others
in our role as a development bank, and in doing so, meet the requirements of our
stakeholders”.

Their tagline is – “Relationships beyond banking” which shows their

inclination in creating ties with their customers that last long and remain strong.

The five main sectors served by the bank are:-

Corporate
Rural
MSME
Retail
NRI

slbc (state level bankers committee)

State Level Bankers' Committee is the highest body of bankers in the state as
per the Lead Bank Scheme of Reserve Bank of India, is the highest body of
bankers in the state. The committee meets once a quarter, to review the activities of
the institutional lending and to discuss various issues concerning the economic
development of the state, where banks play a pivotal role. The forum takes the lead
in initiating, streamlining and accelerating the process of development in close co-
ordination with various government departments, Reserve Bank of India,
NABARD and other developmental agencies. The quarterly meetings are attended
by members at top-level functionaries of SLBC, Government and Administration
for meaningful and purposeful discussions on various matters aimed at various
issues.
functions
1. To discuss issues, consider alternative solutions to the various problems in
the field of banking development and evolve consensus for coordinated
action by the member institutions.
2. To do the necessary spadework for formulation of Annual Credit Plans for
getting in time district-wise resource allocation by banks and
disaggregation’s of the various Government Programmes.
3. To undertake critical analysis of the progress of the implementation of
Annual Credit Plans & Government and other agencies sponsored credit
linked programmes/ schemes in the various districts.
4. To review the assistance required and provided by Government agencies.
5. To consider problems referred by the district level forums and take
necessary follow-up action.
6. To oversee the implementation of branch expansion programme.
7. To review the recovery performance.
8. To review the progress made in achieving the targets set under the various
schemes.
9. Confirming/ratifying the action initiated by the Steering Committee of
SLBC.

The report in the beginning gives a complete perspective of the role of Bank
of India in agribusiness and rural development sectors and details out its growth,
models and experimentation based on various studies being done. This helps the
reader to get a first-hand and complete understanding of the sector and its
prospects. It also helps the reader to be informed about various issues before it get
to the specifics related to Ranchi district.
A sizeable share of population in India continues to remain outside the
formal banking system despite considerable expansion in branch network.
 The various bank linked programmes are being launched by government to
bring the untouched sectors of society into this mainstream and few of them have
been widely acclaimed as a successful model.

Knowing the importance of bank in agribusiness and rural development the

present investigation has been undertaken with following objectives:-

1. To analyze the Funds released by the bank for agriculture sector in its
Annual Credit Plan (ACP).
2. To assess the Agribusiness sector and women SHGs funded by Bank of
India.
3. To study the Methodology adopted by Bank of India for selection of the
SHGs for credit linkage.
 Chapter-2

Review of
Literature
 Bhatt (1970) proposed that Lead Banks for providing finance and guidance
to farmers and small industrialists creates and support a set of approved dealers
who assist the bank to collect the required information, ensure recovery of loans
and interest, assist in obtaining after sales service and keep a watch on the working
of the assisted enterprise.

Joshi (1972) requested the RBI to give clear and specific definition of the
different components of priority sectors as some of the bankers are not clear about
the precise scope of agricultural lending and guidance from the RBI would help
them to increase their involvement in farm credit on right lines.

Dagli (1975) reported that the aim of the banking policy should be to uplift
the under privileged class of the society in rural India from subsistence existence to
surplus existence. Thus priority sector should include only the real poor of the
country and by providing them necessary financial assistance, they can be lifted
from the pitches of animal existence to the heights of human existence.

Hazari (1976) reported that Institutional financing should enable the

agriculturists to move on to a level of new technology that will increase
agricultural output and employment, and does not mean replacing individual
moneylenders with institutionalized moneylenders.

Angadi (1983) observed the reason for varying concentration of priority

sector advances in general and agricultural advances in particular in a few States
are number of bank offices, deposit mobilization, Total cropped area, land under
certain food and cash crops, extent of irrigated land In respective States, adoption
of high yielding varieties.
 Verma (1988) reported that Supervision of credit is the demand of the time
and is to be done by experts of rural credit with professional competence and
liberal attitude as supervised credit brings adequate income not only to repay the
loan but also to raise the economic standard of the rural poor.

Agarwal (1994) pointed out that what belongs to the priority Sector and
what does not is purely arbitrary. Ironically, exports have not been Included in the
priority sector, which is a glaring flaw in the credit system. So he suggested that it
is time for the priority sector to be redefined.

Sinha (2001) the Union Finance Minister, advised that banks should proceed
against large and willful defaulters and bank should proceed to increase their
lending to the agriculture and rural sectors so as to reach the stipulated target of 18
per cent of their total lending going to these sectors.

Agnivesh (2001) reported that the loans availed by top industrialists to the
tune of rupees one lakh crore as non-performing assets while the poor farmers’
house and properties are auctioned for recovering the loan amount by the banks
even though it would be a meagre amount.
 Chapter-3

METHODOLOGY
 The basic objective of this study is to find out SHG as a tool of financial
inclusion and microfinance and how the bank decides which SHG should be
funded and which shouldn’t. Through this study, various aspects of the Bank
Linkage Programme at Bank of India are intended to be studied and analyzed to
find out what Bank of India is doing to spread its reach and how.

selection of study location

The study will be confined only to Bank of India which is one of the
Leading Bank in Ranchi District. It has around 55 branches spreaded all around the
Ranchi district. These are located at Arsandey, Ashok Nagar, Barenda, Bariyatu,
Bero, Birda, Birsa Chowk, Bootymore, Bundu, Burmu, Church Road, Clubside, Dc
Office, Diankel, Getulsud, Harmu, Jharkhand High Court, Jharkhand Secretariat,
Kanke Road, Kanta Toli, Karra, Kathitand, Khelari, Khunti, Kokar, Kusai,
Mander, Morabadi, Murhu, Muri, Nagri, Namkum, Neori, Nusrl Campus,
Ormanjhi, Pandra, Piska More, Pithoria, Radish More, Ranchi Arb, Ranchi
Corporate, Ranchi Main, Ranchi Service, Ratu, Ratu Road, Shyamali, Sikidiri,
Silli, Singh More, Sonahatu, Tanger, Tatisilwai, Thakurgaon, Tupudana, Upper
Bazar, Vikash Bhawan with head office at Pradhan Tower near Over Bridge.

the study was conducted through analyzing the

following parameters:-

1. Growth in number of KCC accounts opened in year 2012-13 and 2013-2014.

2. Growth in number of KCC disbursement amount in the year 2013 and 2014.
3. Comparison of number of Women SHG bank-Linkage in the year 2012-13
and 2013-14.
 4. Comparison of Women SHG disbursement amount in year 2012-13 and
2013-14.
5. The criteria of selection and finance to SHGs by Bank of India.

sources of information

Primary Data would be collected from interaction with officials at Bank of

India and surveys conducted at different branches of Bank of India in Ranchi
district.

Secondary Data would be collected from the Bank’s journals and

documents and information in review of the literature as findings and observations
of studies on similar or related topics give a lot of help in deciding the direction of
the study.

limitations

1. Bank may not be willing to reveal entire data regarding the topic.
2. Lack of cooperation from the officials.
3. Since entire district of Ranchi is under the study, data collection might be a
cumbersome task.
4. Findings of the study may not reflect the clear picture of SHGs bank linked
programme of Bank of India for the entire country.
 Chapter-4

RESULTS AND
DISCUSSION
 Bank of India works in the area of Direct Agriculture (demand loan and term
loan), Indirect Agriculture, Medium and Small Enterprises etc. Under direct
agriculture, crop loan (KCC) is the major area of finance whereas in Indirect
Agriculture comes the allied sectors, irrigation, tractor or machineries, drip
irrigation, check dams etc.

progress made by boi in agribusiness sector

Year Agriculture

Target Achieved Percentage

2009 204374 205479 72.26%
2010 227860 282650 124.05%
2011 366900 392600 107.00%
2012 2218 533700 240.62%
2013 2995 9506 317.40%
Fig: - Annual Credit Plan (ACP) of BOI for last 5 years in Agriculture sector (amount in
lakhs)

Year MSME
Target Achieved Percentage

2009 109430 170864 55%

2010 213630 279626 131%
2011 275000 443500 161%
2012 4850 14701 303.11%
2013 5995 11250 187.66%
Fig: - Annual Credit Plan (ACP) of BOI for last 5 years in MSME. (Amount in lakhs)
progress made by boi in rural development

The SHG bank linkage programmes run by BOI in Ranchi District plays a
pivotal role in rural development rather than the role of NGOs and other rural
agencies because the role of SHG is more prominent in rural development than any
other sector.

shgs (self help group)

This pilot project was started in year 1992 when Yashwant Sinha was
Finance Minister of India. A self-help group is a village based financial
intermediary committee usually composed of 10 to15 local women and men.
Members have to make small regular savings contribution over a few months until
there is enough capital in a group to begin lending.

The Microfinance initiatives of Banks yielded remarkable success and the

SHG-Bank linkage programme has emerged as the largest microfinance
programme in the world. The notable feature of the programme is the active
participation of women (90%) and timely loan repayment (95%). The pilot project
was started in 1992 when Yashwant Sinha was Finance Minister of India and the
project has turned into national movement, linking more than 1 million SHGs with
bank credit which led to socio-economic empowerment of women. During the year
of 2010-11, around 11, 96,000 SHGs were credit linked with bank against 8,
32,103 during 2009-10 increasing the cumulative number of SHGs credit linked
with bank to 20, 28,103.
 The SHG Bank Linkage Model has made considerable progress since its
inception in the early 1990s and agency-wise outstanding number of credit linked
SHGs and amount of loans given by is presented in the table given below.

bank loans outstanding under shg-bank linkage

programme

2008-09 2009-10
Agency No. of SHGs Amount No. of SHGs Amount
(in’000) (Rs. In Crores) (in’000) (Rs. In Crores)
Commercial 2831 16149 3237 20165
Banks
Regional Rural 978 5224 1104 6144
Banks
Cooperative 415 1306 510 1729
Banks
Total 4224 22679 4851 28038
Source: Status of Microfinance in India 2009-10
 Banks have financed 15.87 lakh SHGs, including repeat loan to the existing
SHGs, with bank loans of Rs. 14,453 crores during 2009-10. Out of the total loans
disbursed during 2009-10, SHGs financed under SGSY accounted for 2.67 lakh
(16.9%) with bank loan of Rs. 2198.00 crore (15.2%). As on March 2010, the
average loan amounts outstanding per SHG and per member were Rs. 57795 and
Rs. 4128 respectively. The estimated number of households covered under the Self
Help Group (SHG)-Bank Linkage Programme was 9.7 crores up to 31st March
2010.

current position of shg-bank linkage programme

Though there are different models for surveying microfinance, the Self-Help
Group Bank Linkage Programme has emerged as the major programme in the
country. It is being implemented by commercial banks, regional rural banks
(RRBs), and cooperative banks. In 2009-10, 1.59 million new SHGs were credit-
linked with banks, and bank loan of Rs. 14,453 crore (including repeat loan) was
disbursed to these SHGs. Further, about 6.95 million SHGs maintained savings
accounts with banks at the end of March 2010. On an average, the amount of
savings per SHG was 8,915 as compared to the amount of credit outstanding of
57,795 in 2009-10. While there was a continuous increase in the amount of credit
outstanding per SHG, there was a fluctuating trend in the amount of saving per
SHG in the recent years. According to the Status of Micro Finance in India 2009-
2010 released by The National Bank for Agriculture and Rural Development
(NABARD) there are 69,53,000 SHGs in the country savings linked with banks
and 48,51,000 SHGs having loan outstanding as on 31 March, 2010. The estimated
number of households covered under this model is about 970 lakhs. The total
savings amount of all the SHGs with banks as on 31 March, 2010 amounts to Rs.
6198.71 crore and the total amount of loans outstanding against SHGs as on 31
March, 2010 is Rs. 28038.28 crore.
new shgs financed by banks

Year No. (Lakh) Amount (Rs. Crore) Growth %

2007-08 12.28 8,849.26 –
2008-09 16.09 12,256.51 38.50
2009-10 15.85 14,453.30 17.90
2010-11 11.96 14,547.73 0.65
Source: National Bank for Agriculture and Rural Development (NABARD)

Under the SHG-Bank Linkage Programme as on 31 March, 2011, Rs. 74.62

lakh SHGs have savings bank accounts with total savings of Rs. 7,016 crores as
against 69.53 lakh SHGs with savings of Rs. 6,199 crores as on 31 March, 2010.
By December 2011, another 2.98 lakh SHGs have come under the ambit of the
programme, taking the cumulative number of saving-linked groups to 77.60 lakh
SHGs. As on 31 March 2011, 47.87 lakh SHGs had outstanding bank loans of Rs.
31,221 crores, as against 48.5 lakh SHGs with bank loans of Rs. 28,038 crore as on
31 March, 2010. This represents a decline of 1.3 percent in the number of SHGs
and a growth of 11.4 percent in bank loans outstanding to SHGs as per table given
above. During 2011-12, (upto December 2011), 4.51 lakh SHGs have been
financed with an amount of Rs. 6,791.46 crore. Thus, the SHG-Bank Linkage
Programme is considered as the largest financial inclusion programme in the
world.
regional distribution of shg-bank linkage
programme

The above table shows that SHG linkage programme has been more popular
in southern region as compared to the rest of the country. Southern region
accounted for 71.2 percent of the total SHGs by March 2001followed by central,
eastern and western region. However, over the years, programme picked-up and
gained strength in non- southern regions also. A comparative analysis between
March 2001 and March 2010 shows a significant decline in the concentration of
the linkage programme in terms of number of SHGs. The relative share of southern
region declined from 71.2 percent to 46.3 percent and consequently, the share of
all other regions increased from 28.8 percent to 53.7 percent. This reflects that
programme is becoming increasingly popular among the non- southern regions
which have lagged behind till 2000-01. In fact, NABARD identified 13 priority
states from non-southern regions that account 70 percent of the country’s rural
population (viz. Assam, Bihar Chhattisgarh, Gujarat, Himachal Pradesh,
Jharkhand, Maharashtra, M.P., Orissa, Rajasthan, U.P., Uttaranchal and West
Bengal) and undertook special scaling-up efforts to expand the SHG linkage
programme in these priority states.
 This has resulted manifold increase in the number of credit linked SHGs
during 2002-10 in these 13 states. Proactive measures such as emphasis on priority
states, enlisting partnerships and capacity building of partner agencies has served
to expand the programme in non-southern states. But southern region still account
for more than three-fourth (76.4 percent) of total loans disbursed by banks under
this programme.

shg under three models

Over the years three distinct models have evolved under the SHG Bank-
linkage programme:-

model 1 – Bank SHG’S witH active Support of Self-

help promotion

Institutions (SHPIS): In this model SHGs are formed, nurtured and trained
by NGOs or government agencies called SHPI. The bank after observing their
operations and maturity to absorb credit provides credit directly. The SHPIs also
keep a watch and ensure satisfactory functioning of the SHGs even after the
linkage.

model 2 – shgs formed and financed by banks:

In this model, bank itself acts as SHPI by taking initiative to form these
groups, train and nurture them over a period of time. Then bank provides credit to
them when satisfied about their maturity to absorb credit.
model 3 – shgs financed by banks through ngos
and other agencies:

In this model NGOs promote the group, train and nurture them and then
approach banks for bulk loans for lending to SHGs. Thus NGOs act both as
facilitators and micro-finance intermediaries.
The table below shows that SHGs formed by SHPIs but directly financed by
banks is most popular accounting 72 percent of the total number of SHGs linked
under the programme by March 31, 2010. This is because NGOs can easily
outreach the poorer sections of the society as the people have greater acceptance
and confidence on them because of their participation in socio- economic activities
for development of poor.

process of shg bank-linkage

There are two types of SHGs financed by the bank:-

1. SHGs formed by the government and supported with the subsidy provided by
the government.

2. SHGs formed purely by the banks or NGOs nurtured and supported by the
banks.

The type 1 includes SHGs under SGSY scheme which are promoted and
sponsored by the government and then credit linked by the bank. In this case
approval of a particular project is done with 50% subsidy maximum provided by
the government. In normal cases no grooming on the SHGs is done for handling
the fund received by them, As a result it has been observed that the interest of
SHGs remain focused on the immediate benefit available in terms of sharing the
money amongst the group members and use it mostly for consumption purpose.
They do not normally think that they should circulate the money for generation of
adequate income on a recurring basis. As a result, in most of the cases the project
fails to generate adequate income for repayment of the bank loan due to lack of
proper orientation and counselling before the receipt of fund from the bank and the
government.

In type 2, certain NGOs are selected after proper screening to motivate the
women for formation of SHGs. They are apprised of the benefits and the mutual
support system they can create by coming together and forming an SHG group.
They are informed about the ways by which they can put the available funds from
their small but regular savings to use as well as utilize the credit support that they
may receive from the banks after attaining a certain efficiency level that can be
measured by the system of grading.
The grading may be self-grading, grading by the sponsor NGOs or grading
by the banks where they open their SHG accounts. (VO and cluster go for auditing)
The selected NGOs have been allocated funds by the sponsor bank, to be spent on
the formation of SHGs, for their capacity building in the form of training, on book-
keeping, holding of regular meetings, inter-lending amongst members. The
recovery of the funds lent to the members as per the repayment schedule have also
been fixed at the time of financing the advance.

The SHG groups are encouraged to handle the small funds raised from their
monthly savings and charge interest on the funds lent to individual members they
also charge penal interest in case of any delay in repayment. Thus they are trained
to treat their organization as a mini bank and follow the basic banking norms in a
very simple and miniature form. Once this banking orientation and culture gets
inculcated, the SHGs are found to work efficiently by appraising every request for
loan from the members and ensuring timely repayment through well management
of their funds. They normally charge interest @ 2% per month from their members
and pay back to the bank (or the Village organization) @1% per month on an
average. Thus they are having a cushion of around 1% per month on their loan
portfolio which acts as insurance for accidental default in repayment by a certain
member. It also contributes towards a modest growth of their corpus.

The NGOs like Mahila Jagriti Samiti, who have been nurturing the groups
from the very beginning have entered in to an agreement with Bank of India that
they’ll follow-up with the groups and ensure timely repayment of dues otherwise
the overdue amount of the SHGs, is liable to be deducted from the payment of the
NGOs. This agreement satisfies both the bank and the NGOs.

criteria checked before extending finance

Bank of India looks for 5 things in an SHG to decide if it is worthy of bank

finance. These criteria are also known as the SHG Panchasutra:-

1. Regular Meetings
2. Savings (Corpus)
3. Internal Lending’s
4. Recoveries
5. Proper maintenance of books and records
 The SHGs are given grading’s on the basis of above mentioned criteria.
These criteria have further sub-criteria on the basis of which they are given score.
The higher an SHG scores on a total of 150, the more funds are likely to be
received by the SHG.

The bank also ensures that the group is involved in some economic activity
so that the money lent to them can help in their upliftment. The profit generated by
them will also help in repaying the loan. After granting the loan the bank also
monitor the business activities of the SHG.

Earlier 20 members were required in an SHG to qualify for bank linkage

programme. Later on this number was reduced to 10-15 as chances of dispute
among member’s increases in a larger group.

The group can be extend a finance of upto 4 times of its corpus depending
upon the score obtained by it. The interest rate charged to them is 7% and if they
make timely monthly payment, they are given 3% subsidy which is borne by the
government.
analysis of the numbers of women shg bank-
linkage and amount disbursed to them (2012-13 &
2013-14)

No of bank-linked Women SHGs

700

600

500
Numbers of SHGs

400

300

200

100

0
YEAR 2012-13 YEAR 2013-14
No of bank-linked Women SHGs 347 665

Fig:-3

The above figure shows that total Women SHGs linked with Bank of India
in Ranchi District has increased from 347 on March 2013 to 665 on March 2014.
This means that the number of bank-linked Women SHGs has increased by 318
which is about 47.8% higher from the previous year.
 Amount Disbursed to Women SHGs (in lakhs)
350

300

250

200

150

100

50

0
YEAR 2012-13 YEAR 2013-14
Amount Disbursed to Women
187 318.6
SHGs (in lakhs)

Fig:-4

The above figure shows that total amount disbursed to the Women SHGs in
Ranchi District has increased from Rs. 1,87,00,000 on March 2013 to Rs.
3,18,60,000 on March 2014. This means that the number of bank-linked Women
SHGs who have taken loan from the bank has increased this year and the SHG
disbursement amount has increased by Rs. 1,31,60,000 which is about 41.3%
higher from previous year.
kcc (kisan credit card)

KCC is a credit card to provide affordable credit for farmers in India. It was
started by Government of India, Reserve bank of India and National bank for
agriculture and rural development in 1988 – 99 to help farmer’s access timely and
adequate credit. This card is valid for 3 years and subject to annual renewals.

process of kcc account finance

objective:-
1. Kisan Credit Card Scheme aims at providing need based and timely credit
support to the farmers for their cultivation needs as well as non-farm
activities in cost effective manner.
2. To bring flexibility and operational freedom in credit utilization.

eligibility:-
1. Under the scheme, Branches may issue Kisan Credit Cards to the farmers
who are eligible for sanction of short term credit for crop production, allied
activities and other non-farm activities.
2. The farmers should belong from the operational area of the Branch.
quantum of finance and margin:-
1. For production / short term purposes - Loan amount will depend upon the
type of crop, area under cultivation and scale of finance.
2. Short term working capital - For ancillary activities and minor investment
of medium term nature.
3. Short term credit for consumption / domestic needs To the extent of upto
25 percent of gross estimated income of the farmer and maximum upto
Rs.50,000/=.
4. Finance against storage receipts / produce marketing may be considered
maximum upto 50 percent of the price of the produce prevailing at the time
of storage / sanction of loan. Limits / advances upto Rs.10 lakhs per farmer
can be extended for a maximum period of 12 months.

note:
1. While fixing the limit, the Branch may take into account the entire
production credit requirements of the farmer for the full year, including the
credit requirements of the farmer for the ancillary activities related to crop
production such as maintenance of agricultural machinery / implements,
electricity charges, etc.
2. The credit limit could also be provided for allied activities and non-farm
credit needs for borrowers.
3. The credit limit under the card may be fixed on the basis of the operational
land holding, cropping pattern and scale of finance as recommended by the
District Level Technical Committee (DLTC) / State Level Technical
Committee (SLTC). Wherever the DLTC / SLTC have not recommended
scale of finance for any crop or recommended lower finance than the
 required amount, the Branches may fix appropriate scale of finance after due
approval by the Zonal Office.
4. For fixation of credit card limit, the operational land holding includes the
leased-in land and exclude leased out land.
5. Branches may at their discretion fix appropriate sub-limits within the overall
credit limit sanctioned, taking into account the seasonality in credit
requirements.

security:-
1. Upto Rs.50, 000/=: D. P. Note Hypothecation of standing crops.
2. Above Rs.50, 000/=: D. P. Note Hypothecation of standing crops Mortgage
of land / Collateral security.

note:
In case the value of land mortgaged is adequate, no other security should be
obtained.

For finance against Government warehouse receipts, mortgage may be

waived. Waiver of mortgage of land in deserving cases may be considered as per
security norms. The RBI norms on security should be strictly adhered to.
analysis of the numbers of kcc opened and
amount disbursed (2012-13 & 2013-14)

Number of KCC account

9500

9000

8500

8000

7500

7000
Number of KCC opened in year Number of KCC opened in year
2012-13 2013-14
Number of KCC account 7845 9379

The figure shows the number of KCC account which have been linked with
Bank of India in Ranchi District in year 2012-13 and 2013-14.
 Amount Disbursed to KCC Accounts (in lakhs)
3500

3000

2500

2000

1500

1000

500

0
YEAR 2012-13 YEAR 2013-14
Amount Disbursed to KCC
2166.24 2928.67
Accounts (in lakhs)
branch wise kcc account and women shgs bank
linkage opened in year 2012-13 & 2013-14

S.NO Name Of Branch KCC KCC SHGs SHGs

account account bank bank
opened in opened linkage linkage
2012-13 in 2013- in 2012- in 2013-
14 13 14
1. Arsandey 206 308 13 21
2. Ashok Nagar 20 30 7 11
3. Barenda 186 208 6 12
4. Bariyatu 19 38 7 9
5. Bero 278 356 13 18
6. Birda 201 232 15 19
7. Birsa Chowk 67 85 4 6
8. Bootymore 18 26 3 5
9. Bundu 352 408 17 31
10. Burmu 300 362 14 19
11. Church Road - - - -
12. Clubside - - - -
13. Dc Office - - - -
14. Diankel 323 329 14 22
15. Getulsud 620 702 22 41
16. Harmu 17 29 4 9
17. Jharkhand High - - - -
Court
18. Jharkhand - - - -
Secretariat
19. Kanke Road 67 87 2 5
20. Kanta Toli 47 57 3 6
21. Karra 201 286 9 14
22. Kathitand 347 362 11 16
23. Khelari 203 278 11 14
24. Khunti 303 347 12 15
25. Kokar 67 79 4 6
26. Kusai 19 29 1 3
27. Mander 287 302 10 15
28. Morabadi 68 77 3 7
29. Murhu 206 208 4 8
30. Muri 208 218 5 8
31. Nagri 340 347 9 12
32. Namkum 203 207 10 21
33. Neori 189 196 9 18
34. Nusrl Campus - - -
35. Ormanjhi 289 287 9 20
36. Pandra 69 77 5 9
37. Piska More 38 39 4 9
38. Pithoria 282 289 7 16
39. Radish More 18 23 1 3
40. Ranchi Arb - - - -
41. Ranchi Main - - - -
42. Ranchi Service - - - -
43. Ratu, 382 452 10 22
44. Ratu Road, 18 27 3 7
45. Shyamali, 19 29 1 3
46. Sikidiri, 270 302 9 16
47. Silli, 187 192 6 13
48. Singh More, 16 56 4 15
49. Sonahatu 189 289 9 21
50. Tanger, 201 301 10 26
51. Tatisilwai, 102 202 9 25
52. Thakurgaon, 203 309 7 28
53. Tupudana, 200 312 9 31
54. Upper Bazar, - - - -
55. Vikash Bhawan. - - - -
 Chapter-5

FINDINGS
1. There are altogether 55 branches of Bank of India operating in Ranchi
District.

2. The Getalsud branch of Bank of India is the leading branch and doing
impressive work in the field of agribusiness and rural development.

3. Out of the 55 branches of Bank of India 10 branches are not contributing

towards agribusiness and rural development because they are situated in
urban areas.

4. The scope of Agri Business at Ranchi District has increased manifold due to
the proactive actions taken by the Bankers”

5. Number of farmers who are given loans in the year 2012-13 was 7845 while
the no. of farmers who were given loans in the year 2013-14 was 9379.
Thus, there has been an increase of 16.3% number of farmers who have been
provided with bank assistance.

6. The amount of loan disbursed during the year 2012-13 was 2166.24 lakhs
while the amount of loan disbursed to the farmers during the year 2013-14
was 2928.67 lakhs. Thus there has been an increase of 26.03% in the amount
of finance that has been given to the farmers in 2013-14 over that given in
2012-13.

7. The proactive action taken by the bank resulted in increase in the financial
support to the farmers in Ranchi district both horizontally and vertically i.e.
both in coverage of farmers and in the exact quantum of assistance given.
8. Bank of India’s SHG-Bank linkage programme has increased the flow of
institutional credit to the poorer section.”

9. Number of women SHGs who were given loans in the year 2012-13 was 347
while the no. of women SHG who was given loans in the year 2013-14 was
665. Thus, there has been an increase of 47.8% Women SHGs who have
been provided with bank assistance.

10.The amount of loan disbursed during the year 2012-13 was 187 lakhs while
the amount of loan disbursed to the farmers during the year 2013-14 was
318.6 lakhs. Thus, there has been an increase of 41.3% in the amount of
finance that has been given to the Women SHGs in 2013-14 over that given
in 2012-13.

11.Bankers have been also instrumental in capacity building of the rural folks
by giving them residential vocational training in the RUDSETTI and
RSETTI free of cost in the fields of agarbatti making, bee keeping, mobile
repairing, computer training etc. and also developing entrepreneurial
capabilities of the rural people, thus playing instrumental role in rural
development.
references

BHATT, V. V (1970) “BANK FINANCE TO AGRICULTURE, SMALL

INDUSTRY PROPOSAL FOR A SCHEME OF APPROVED DEALERS.

JOSHI, P. N (1972) “FINANCING OF PRIORITY SECTORS BY

COMMERCIAL BANKS,”THE JOURNAL OF THE INDIAN INSTITUTE OF
BANKERS,”

VADILAL DAGLI, (1975) “SOCIAL RESPONSIBILITY OF

COMMERCIAL BANKS,” THE JOURNAL OF THE INDIAN INSTITUTE OF
BANKERS.

HAZARI, R.K., (1976) “FINANCING OF AGRICULTURE

DEVELOPMENT,”

ANGADI, V. B., (1983) “BANKS’ ADVANCES TO PRIORITY SECTORS

- AN ENQUIRY INTO THE CAUSES OF CONCENTRATION,”

VERMA, S. K., (1988) “SUPERVISED RURAL CREDIT,” NATIONAL

BANK NEWS REVIEW.

YESHWANT SINHA, (2001) “BANKS TO TAKE BIG DEFAULTERS TO

COURT,” THE HINDU.

AGARWALA, R. G., (1994) “EDITORIAL” BANKING FINANCE.

SWAMI AGNIVESH, (2001) “LIBERALISATION TAKING ACTION TO

DOOM,” THE HINDU.
annexure
shg grading form
Sl. Marks
Max.
No Criteria Obtaine
Marks
. d
1 Group
(a) Size (i) 15-20 10
(ii) 11-14 5

(b) Samrupta (i) Samrupta 10

(ii) Asamrupta 5

(c ) Age of the Group (i) 2 yrs. and above 10

(ii) 1-2 yrs. 7
(iii) 6mths. - 1 yr. 5
2 Meetings
Frequency of Meetings per
(a) (i) Weekly (4 times a month)
month (in the last 6mths.) 10
(ii) Fortnightly (twice a month) 7
(iii) Monthly (once a month) 5

(b) Attendance Rate (i) More than 90% 10

(ii) 70-90% 5
(iii) Less than 70% 2
3 Savings
Frequency of Savings per
(a) month (i) 4 times (weekly) 10
(ii) 3 times 8
(iii) 2 times 6
(iv) once (monthly) 4

(b) Regularity (i) Regular 10

(ii) Irregular 5

(c ) Savings Rate (i) Stable 5

(ii) Unstable 3

4 Internal Lending
(a) Utilisation of Savings Amount (i) More than 90% 5
(ii) 50-90% 3
(iii) Less than 50% 2
(b) Purpose (i) ≥90% for productive purpose 5
(ii) upto 70% for productive
purpose 3
(iii) upto 50% for productive
purpose 2

(c ) Return Rate (i) 95-100% 10

(ii) 80-94% 8
(iii) 50-79% 5
(iv) <50% 0

Percentage of Members
(d) Benefited (i) >50% 5
(ii) 25-49% 3
(iii) <25% 2
5 Maintenance of Documents
(a) Maintaining Books of Accounts (i) Personal Books of Accounts 1
(ii) Meeting's Collection 3
(iii) Savings 2
(iv) Loan Account 2
(v) Cash Book 2

(b) Quality Maintenance (i) Very Good 5

(ii) Good 3
(iii) Average 2
(iv) Below Average 0
6 Awareness
Purpose of the Group, Bank 10
Linkage, Govt. Policies and (i) All members are aware
(a) Limitless
(ii) >90% are aware 9
(iii) 80-90% are aware 8
(iv) 70-80% are aware 7
(v) 60-70% are aware 6
(vi) 50-60% are aware 5
(vii) 40-50% are aware 4
(viii) 30-40% are aware 3
(ix) 20-30% are aware 2
(x) <20% are aware 1

7 Literacy Level (i) 90-100% Literate 5

(ii) 80-90% Literate 4
(iii) 70-80% Literate 3
 (iv) 60-70% Literate 2
(v) 50-60% Literate 1
(vi) <50% Literate 0

8 Decision-Making (i) After Everyone's Consent 10

(ii) Only the Group President 0

9 Change in Leadership (i) Every Year 5

(ii) 1-2 yrs. 4
(iii) After 2 yrs. 3

10 Participation in Social Activities (i) Excellent 10

(ii) Good 5
(iii) Average 3
(iv) Below Average 0
TOTAL MARKS 150