Beruflich Dokumente
Kultur Dokumente
SUBMITTED BY
SANJAY SAMPAT AHIRE
REGD.NO.1308003386
In partial fulfillment of the requirement
For the award of the degree
Of MBA in Finance
SANJAY SAMPAT AHIRE
Regd.no
1308003386
Study center:
Ghatkopar
Center code:
03480
Place
Ulhasnagar
Date
08.03.2015
STUDENT DECLARATION
BONAFIDE CERTIFICATE
Certified that this project report titled Rural Banking in India,
SIGNATURE
(Faculty)
SIGNATURE
(Incharge)
the
REGD.NO
1308003386
Students name
Certified by :
PROJECT REPORT ON
ACKNOWLEDGEMENT
It gives me immense pleasure to express my deep sense of gratitude and
sincere thanks to my guide. Gratitude is one of the expressions difficult to express in
words. Amongst the wide panorama of people who provided me inspiring, guidance
and encouragement, I wish to take this opportunity to express my heartfelt thanks to
all those people who gave me indebted assistance and constant encouragement to
complete my project.
I would like to thanks Prof. Anil Bhatia, who was a great guiding force during
the course of the entire project and gave me such needed inspiration and motivation
and provided me with required information and help to complete this project.
I would like to thanks Porf. Nitin Shejwal for giving her valuable time and
knowledge which is a value addition to our project.
DECLARATION
I Sanjay Sampat Ahire, Student of Sikkim Manipal University, studying in
M.B.A. Finance (Semester III) here by declare that I have completed this project
report on RURAL BANKING IN INDIA and has not been submitted to any other
University of Institute for the award of any degree, diploma etc. The information is
submitted to me is true and original to the best of my knowledge.
Date:
Place: Ulhasnagar
______________________
Sanjay Sampat Ahire
EXECUTIVE SUMMARY
Rural financial services were defined in comprehensive terms and should
include provision of Credit, saving mobilization, and a payments system for transfer
of funds to and away from the rural sector. In view of low incomes and high risks in
rural areas, effective provision of these services serves important goals of accelerated
growth, poverty alleviation and reduced exposure to vulnerability. The diversity
within the rural sectors requires a variety of diversified formal and informal
institutions for the provision of each component of rural financial services to its
clients.
The major finding of the project is that rural sector has suffered from policy
neglect, poor design and weak implementation of delivery system. The services
provided have been inadequate as well as inconvenient, inappropriate, unsafe,
unaffordable and causing a great deal of inconvenience. In relative terms, most
attention has been paid to provision of agricultural credit to and mobilization of
deposits from the wealthy people in rural areas. Provisions of insurance, credit for
non-farm purposes and for the landless and small farmers and the mobilization of
savings of the poor and poorest in rural areas have not received much attention from
the policy makers.
The fact that there is no permanent institutional mechanism, which can
analyze the situation in the area of rural finance and come out with policy proposals
to rectify the policy mistakes, though many financial institutions are trying to enter in
rural banking.
Last but not the least, there is a need to create synergies and linkages between
different organizations involved in providing rural financial services i.e. savings,
credit, insurance and transfer of funds. The innovative financial products, based on
best practices in national and for international experience and suited to different kind
of clients are helpful in improved delivery of services.
Table of contents
Sr.No.
Page
Nos.
10
11
12
13
14
NABARD.
15
16
17
Important Trends.
18
19
Bibliography.
EMPLOYMENT
Agriculture is the major source of employment to the people in rural areas. In
1951, 72% of Indias work force was engaged in agriculture. In 1999-00about
57% of the work force is engaged in agriculture. Besides providing direct
employment in agriculture, it also affects employment indirectly in other
sectors.
2.
3.
CAPITAL FORMATION
Capital formation depends upon savings and investment. People in rural areas
tend to save money, however, small amount it may be. The savings of rural
people who largely depend upon agriculture facilitates investment and hence
generates capital formation in the country.
4.
FOREIGN EXCHANGE
Agriculture product like tea, tobacco, spices, etc. contribute a good share in
Indias exports in 1960-1961 the share of agriculture and allied product in the
total exports of India was about 44%. In 2002-2003 export earnings was about
13%.
5.
GOVERNMENT REVENUE
Direct revenue by way of land revenue to the state governments. Indirect
revenue by way of taxes and duties on consumer goods, and also on
agricultural inputs used by farmers.
affected as they continue to repay debts, and are not in position to undertake farm
development activity.
The small farmers continue to obtain loans from moneylenders at high interest
rates due to the difficulties in obtaining loans or credit from organized sector like
banks. Some of the farmers are also ignorant about bank facilities. It is said that
Indian farmers born in debt lives in debt and dies in debt.
PROBLEM OF MONEYLENDERS
The farmers depend upon the unorganized sector the money lenders for their
credit requirements. They borrow funds at high interest, ranging from 15% to 50%
per annum and even more. Again the moneylenders manipulate the loan records and
cheat the illiterate farmers.
PROBLEM OF INSTITUTIONAL CREDIT
Indian farmers find it difficult to obtain intuitional finance due to various
formalities in obtaining finance and also due to inadequacy of bank branches in rural
areas. Some of small farmers are not even aware of intuitional finance facilities.
However it is to be noted that over the years the share of intuitional finance in
agriculture credit has increased.
GOVERNMENTS RESPONSE TO
THE RURAL CREDIT SCENARIO
In the early 1970s the Central Government observed that despite a wide
banking network and development initiatives in the first 25 years since Independence,
a critical gap still existed in meeting the credit needs of the rural poor. To find a
solution, the Government appointed a working group on rural credit, the Narasimhan
Committee, in July 1975. The committee observed that the cost structure of
commercial banks, the attitude of bank employees and the lack of a professional
approach in the co-operative credit system were the main stumbling blocks to rural
credit. The committee also observed that the deposits collected by banks from rural
areas were not totally deployed there. The panel, therefore, recommended the creation
of a new set of regionally-oriented rural banks which would combine a co-operatives
local feel and a commercial banks business acumen.
Mobilize rural savings and canalize them for supporting productive activities
in rural areas.
cent), State governments (15 per cent) and commercial banks (35 per cent) (as
per the recommendations of Narshiham committee). The number of RRBs rose from
just six in 1975 to 196 by 1987, covering 476 districts. They financed only the weaker
sections of the rural community small and marginal farmers, agricultural labourers,
small traders, and so on. Along with commercial banks, RRBs participated
enthusiastically in poverty alleviation schemes (IRDP, for example) and
disadvantaged area (drought-prone regions and deserts) development programmes.
They quickly became an important and integral part of the rural credit system.
However, their financial viability was initially overstretched by policy rigidities
Provision for rationalization of branch network- relocation and merger of lossmaking branches.
INTRODUCTION
Regional Rural Banks were established under the provisions of an ordinance
promulgated on 26th September 1975 and the RRB Act, 1976 with an objective to
ensure sufficient institution credit for agriculture and other rural sectors. The RRBs
mobilize financial resources from rural / semi-urban areas and grant loans and
advances mostly to small and marginal farmers, agricultural labourers and rural
artisans. The area of operation of
other productive activities in the rural areas, credit and other facilities,
particularly to small and marginal farmers, agricultural laborers, artisans and small
entrepreneurs, and for matters connected therewith and incidental thereto
Table-1 Expansion of Regional Banking:-1975-1990
Dec.1975
Dec.1980
Dec.1985
Mar.1990
Banks
85
188
196
Branches
17
3279
12606
14443
loans from RRBs were to the priority sectors, which accounted for over 70 per cent of
the total. Agriculture and allied activities took up more than 50 percent of the total
advances.
The year 1990 marks the end of the expansion phase of regional banking,
beyond which there has been no growth in the number of Regional Rural Banks
(including branches).
In addition, the RRBs were instrumental in extending credit for poverty
alleviation schemes (e.g. IRDP) and disadvantaged area (drought-prone regions and
deserts) development programmes.
The expansionary phase of the late seventies and the eighties while more
focused on outreach was not devoid of blueprint for viability of the RRBs, unlike
what the mainstream academia and press claim to be the case. It was understood that
the RRBs to survive as credit institutions could not remain unviable for long time,
though the RRBs might not become viable in the initial years. This expectation was,
however, tempered by the prevalent situation on the field and the ultimate objectives
for which these specialized institutions were created. It was realized early that
question of viability of the RRBs could not be the same as other business ventures. A
business unit has all the freedom to take decisions on many matters such as opening
branches, deploying its
rendering services etc. But the RRBs could not be flexible in many of their affairs;
even their clientele was specific, scattered, remote and not assisted by anyone.
Keeping in view the objectives, structure and the nature of operations of the RRBs,
these institutions could certainly not be evaluated on the basis of mere financial
viability. There was a general agreement that the viability of the RRBs had to be
assessed in terms of composite criteria including increase in business per branch,
recovery rate, productivity of staff, cost effectiveness of operations, closer
monitoring, socioeconomic upliftment and improvements in the standards of living of
the clientele. Again in respect to the viability question, there was considerable
flexibility accorded to banks on the time dimension. It was estimated that the RRBs
would need about seven years to become viable, though for the RRBs with large
number of infant branches even this period might not be adequate. Between 1980 and
1987, while the number of RRBs increased a little more than two-fold the number of
branches of RRBs increased more than four-fold. It was not totally unexpected
therefore that by the end of the 1980s several of these banks were showing losses on
their books.
Table 2:- Purpose wise Advances of RRBs, Outstanding (end of Sept, 1990)
Rs. Crores
1
615
669
Allied Activities
555
277
1052
Consumption Loan
54
Other Purpose
290
Indirect Advances
43
Total
3555
Short term finance to meet working capital needs such as payment of wages,
purchase of seeds and fertilizers, transportation expenses, etc.
Medium term finance to meet medium term needs such as purchase of cattle,
digging of wells etc.
Long term finance to meet fixed capital needs such as purchase of land,
purchase of tractors, etc.
They provide finance at low interest rates. This has resulted in less
Not only the right quantity of long term institutional finance is available, but
also it is not available at the right time. Hence the farmers depend upon moneylenders
for their requirements.
PROBLEM OF SECURITY
Normally the banks insist on security to sanction loans to the farmers. The
security may be in form of land or other assets. The small and marginal farmers find it
difficult to obtain funds as they have limited amount of land to offer as security.
PROBLEM OF MAINTAINING BRANCHES
The commercial banks as well as the cooperative banks find it difficult to
maintain branches in rural areas. This is due to low banking business and high
overheads in form of staff salaries, offices rent, and other overheads. Hence the banks
do not give much importance to set up branches in certain rural areas. The
commercial banks also have face problems in sanctioning and monitoring of a large
no. of small advances in their rural branches, as it is time consuming and
unprofitable.
LACK OF TRAINED MANPOWER
The banks often face problem of untrained manpower in rural areas. The staff
and the officers often lack knowledge of the financial requirements of the farmers and
again they may have a negative attitude towards the farmers. In order to achieve
about the financial requirements of the farmers.
PROBLEM OF RECOVERY
There is the problem of recovery of credit provided to the farmers both the
rich farmers as well as the poor ones. The large and rich farmers deliberately avoid
repaying loans and the small farmers find it difficult to repay their loans. Also quite
often, there is political pressure on the banks to write off the loans. This result in
demotivation to the banks to provide credit in rural areas.
CORRUPT OFFICIALS
The officials of banks adopt corrupt practices. They often provide finance to
their friends and relatives. Small and marginal farmers face great difficulty in
obtaining finance. Hence they have to depend upon the money lenders for their
financial requirements. Not only the officials favour their friends and relatives to
obtain loans. But they are also corrupt in sanctioning loans. They do ask for the bribes
and adopt other corrupt practices at the time of sanctioning, and disbursement of
loans.
In the ensuing years, reforms of the RRBs largely followed the same format as
that of the commercial banks, irrespective of the fact that their very role in the society
required a special status and a different set of policies. Since the early 1990s, there
was a complete freeze on recruitment of new staff in the RRBs. As a part of
comprehensive restructuring programme, recapitalization of the RRBs was initiated in
the year 1994-45, a process which continued till 1999-2000 and covered 187 RRBs
with aggregate financial support of Rs.2188.44 crore from stakeholders.
Simultaneously, prudential norms on income-recognition, asset classification
and provisioning for loan-losses following customary banking benchmarks were
introduced. From 1996/1997, there has been a tendency to allow greater role and
larger operational responsibilities to sponsor banks in the management of RRBs. The
rest of the section discusses a few of the major policy changes and their observed
outcomes.
Areas
Distribution of Credit Outstanding
Number of offices
Rural
Semi-Urban
Urban
Metropolitan
All-India
(%)
1996
2003
1996
2003
12448
1844
373
7
14672
11989
2183
477
22
14671
77.45
17.72
4.78
0.06
100.00
71.51
21.76
6.50
0.24
100.00
Sources: RBI, Basic Statistical Returns, March 1996 and March 2003.
Banking in rural India is faced with the twin challenges of regulation and
distribution. Regulation with respect to banking has been designed for delivery in
urban India and distribution required more manpower to be deployed in rural areas.
Initiatives like cheque transaction where the electronic image and not the actual
cheque is sent have in mind the urban customer, about 500-600 million people in
India still do not have bank accounts. For the rural segment, one needs to design nofrills products and deliver hard core value. The other handicap was that while Rs 1crore business in microfinance required 30 people in terms of manpower, the same
volume of business in other portfolios required only one person. Also, contract
farming and supply chain integration has not gone the way they should have. Power,
telecommunications, banking and transportation had reduced the urban-rural divide.
Besides traditional banking services, people in the rural and semi-urban areas are
expressing interest in liability and investment products. Rural India is fast
transforming a nation of savers into a nation investor.
Among RRBs which are making absolute profit, the credit-deposit ratio
should not be lower than 75% and for those which are making profits but still
have accumulated losses, an increasing trend of the ratio should be ensured
and their investment portfolio should get reduced accordingly.
The priority sector lending by RRBs has been declining and as per latest
figures, priority sector lending to agriculture and other allied activities comes
to about 57 % of the total lending..There could be no rationale for fixing
the same norms for lending to priority/agricultural sector by the RRBs as in
the case of commercial banks. The RBI should apply proper checks to ensure
that the present level of 57% of lending by the RRBs to the priority sector is
not allowed to decline further. And it should look into the .desirability of
enhancing the percentage of lending to the priority sector.
The committee is constrained to note that the percentage of loans to small and
marginal farmers out of total loans disbursed by the RRBs has been declining
steadily. The RRBs do not maintain separate details of number of accounts of
small and marginal farmers. In the absence of such information it is difficult
to understand as to how RRBs ensure credit disbursement to small/marginal
farmers and other weaker sections of society as per the guidelines issued by
the Government/the RBI. The committee recommended that the RRBs should
take steps for compiling and maintaining data regarding credit facility
extended to small and marginal farmers and other weaker sections of the
society to monitor that credit facilities being provided by the RRBs reach the
targeted beneficiaries.
at the current levels. While the official statistics highlights the decline in NPAs from
34 percent in March 1996 to 3.99 percent in March 2006.Very few of the above
recommendations were, in fact, accepted by the RBI/Government of India. From the
year 2003-04, the RBI revised upwards the lending target for priority sector to 60
percent of the total advances for the RRBs. Ambitious overall credit targets were laid
down for the RRBs by the Union Government.
The farm credit target for the RRBs at Rs 11,900 crore for the fiscal year
2005-2006 is 40 percent higher than Rs 8,500 crore target set during the fiscal year
2004-2005. But little else happened. In reviewing the action taken by the RBI/GOI on
the proposals of the Estimates Committee (2002-2003), the committee in 2004-2005
finds that no specific action has been taken on most of the major recommendations.
COMPUTERIZATION
With a view to facilitate the seamless integration of RRBs with the main
payment system, there is a need to provide computerization support to them.
Banks will be eligible for support from the Financial Inclusion Funds on a
matching contribution of 50% in regard to districts other than tribal districts
and 75% in case of branches located in tribal districts under the Tribal Sub
plan.
large size
TAX INCENTIVES
From 2006-07, RRBs are liable to pay income tax. To further strengthen the
RRBs, profits transferred to reserves could be exempted from tax till they
achieve standard capital adequacy ratios. Alternatively, RRBs may be allowed
tax concessions to the extent of 40% of their profits, as per provisions under
sec.36 (1) (viii) of the Income Tax Act.
for
the
farm
and
nonfarm
sectors
respectively
including
NABARD TO SUPPORT HR DEVELOPMENT IN RRBS:RRBs should serve, with the support of NABARD, GoI, RBI and the sponsor
banks, as active financial inclusion players especially in areas with high levels
of financial exclusion. In order to build up the skills and expertise of the
personnel of RRBs, NABARD has played a crucial role since the inception of
RRBs. But for the efforts of NABARD and initiative of sponsor banks besides
RRB managements themselves in HR development and in implementation of
the reform package, the changes in business performance of RRBs would not
have been possible. The work could be accomplished by NABARD working
in close tandem with GoI and RBI besides the sponsor banks. NABARD
would continue to give special priority to RRBs to train their staff through the
training institutions like the bankers Institute of Rural Development (BIRD) at
Lucknow and the Regional Training Colleges at Mangalore and Bolpur,
PILOT TESTING OF BF/BC MODEL BY RRBS:RRBs should adopt the BF and BC models as a major strategy of financial
inclusion. NABARD should extend the required support including running
pilots in selected banks. The proposal for a technology based intervention
under the BF/BC model would be equally relevant for RRBs. However, RRBs
would require some handholding in implementing the proposal. NABARD
may identify 10 RRBs across the country giving greater weightage to regions
manifesting higher levels of financial exclusion and work in strategic alliance
with these RRBs and their sponsor banks in implementing the proposal. The
RRBs identified by NABARD for the project will require, developing a core
banking software for proper integration of the technology model proposed.
NABARD should enter into a MoU with identified sponsor banks and RRBs
and provide initial funding and technology support.
In part they have not been successful due to excessive political interference in
their management. It may be noted that the elected boards of 478 cooperative banks
out of 1186 were superseded for a variety of reasons including political interference.
RRBs on the other hand are the result of a Parliamentary Act and they are
managed by the sponsor bank (which has the experience of running a big bank) with
an equity stake of 35%.
The Central Government and the local State Government hold 50% and 15%
equity stake in RRBs. The board of RRBs constitutes the officials of NABARD and
RBI. Each RRB, like cooperatives is confined to a single or two districts of the
country. RRBs were sought to be a blend of cooperatives and commercial banks.
State governments have no/limited role in the management of the bank.
should monitor the activities of such RRBs. Opposing the demands of All-India RRB
officers Federation for amalgamation of RRBs with the sponsor banks as the only
route to sustainability, AIRRBEA has demanded de-linking of the RRBs from the
sponsor banks so as to ensure functional autonomy for the rural banks, and to relieve
the burden of sole commercial orientation so that the rural credit activities can be
pursued more freely. (Emphasis ours)
The AIRRBEA statement clearly takes the issue of ownership beyond the
current preoccupation with profitability, and asserts that not only can viability issues
be handled better by restructuring the RRBs along the lines suggested by them, but
more importantly it can enable improved performance vis--vis credit activities,
which is the urgent need today. The control of sponsor banks on RRBs needs to be
seriously revaluated. At a time when the sponsor banks are themselves constrained to
make cuts in the manpower and credit to agriculture or the SSI sector, they are unable
to extend the help to the RRBs on which their sponsorship was premised. In a view, it
is necessary that along with the Vyas Committee recommendations, which have
astutely defined the post-merger banking structure in terms of state-level banks, the
policymakers also take into consideration the legitimate demand for functional
autonomy and to rid the RRBs of the sole commercial orientation such that the
present decline of rural banking might be reversed.
large volume. RRBs have served this clientele in a more productive and efficient
manner vis--vis other Banks.
Per-employee, 885 accounts are handled by RRBs against the national average
of 464 accounts per employee in the banking industry.
RRBs have also taken a lead role in financing of Self Help Groups (SHGs)
mostly comprising of women leading to their economic and social empowerment. The
share of RRBs in SHG-Bank linkage programme is equally commendable as under:
BACKGROUND
NABARD was established on 12th July 1982 to implement the National Bank
for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit
Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of
India, and Agricultural Refinance and Development Corporation (ARDC).
MISSION
NABARD being an Apex Development Bank promotes agriculture and rural
development through refinance support to all banks for investment credit and to cooperatives and RRBs for production credit. The objective of providing refinance to
eligible institutions is to supplement their resources for delivering credit for
agriculture, cottage & village industries, SSIs, rural artisans, etc. thus influencing the
quantum of lending in consonance with the policy of Govt. of India. It directs the
policy, planning and operational aspects in the field of credit for agriculture and
integrated rural development.
STRUCTURE
NABARD operates throughout the country through its 28 Regional Offices
and one Sub-office, located in the capitals of all the states/union territories. It has 336
District Offices across the country, one Sub-office at Port Blair and one special Cell at
Srinagar. It also has 6 training establishments.
In order to reinforce the credit function and to make credit more productive,
NABARD has been undertaking a number of developmental and promotional
activities such as:
Enter into MoU with state governments and cooperative banks specifying
their respective obligations to improve the affairs of the banks in a stipulated
timeframe.
Help Regional Rural Banks and the sponsor banks to enter into MoUs
specifying their respective obligations to improve the affairs of the Regional
Rural Banks in a stipulated timeframe.
Provide training for senior and middle level executives of commercial banks,
Regional Rural Banks and cooperative banks.
CREDIT FUNCTIONS
REFINANCE AGAINST INVESTMENT CREDIT
This is a long-term refinance facility. It is intended to create income
generating assets in the following
Investment for artisans, small scale industries, tiny sector, village and cottage
industries, handicrafts, handlooms, power looms, etc.
Activities of voluntary agencies and self help groups working among the rural
poor.
Year
Amount (Rs.Lakhs)
1
2
3
4
1995-96
1996-97
1997-98
1998-99
83.000
128.484
261.364
467.486
ELIGIBLE INSTITUTIONS
NABARD provides refinance support to SCARDBs, SCBs, RRBs, CBs,
scheduled primary urban cooperative banks, North East Development Finance
Corporation Ltd. (NEDFI) etc. against their investment credit in the rural sector
PURPOSES
Some of the major purposes covered under investment credit are farm
mechanization, minor irrigation, plantation / horticulture, animal husbandry, storage /
market yards, fisheries, post harvest management, food / agro processing, non-farm
sector including rural industries, microfinance, purchase of land ( for small/marginal
farmers, share croppers etc.), rural housing and disbursements under poverty
alleviation programmes like SGSY and SC/ST Action plan etc. Hi-tech projects and
agri export zones are identified as thrust areas and NABARD helps in technofinancial appraisal of such projects besides providing refinance.
In recent years, refinance support has been extended to new activities like
financing of diesel generator sets in Madhya Pradesh and LPG kits to rural
households all over the country.
CRITERIA
The technical feasibility of the project, financial viability and generation of
incremental income to ultimate borrowers thereby, enabling them to have a
reasonable surplus after repayment of the lone installments are the necessary
conditions to be satisfied for sanctioning investment credit. The period of loan ranges
between 3 and 15 years depending on the purpose for which it is provided.
The refinance is provided to SCARDBs, SCBs, CBs and RRBs. However, the
beneficiaries of the programme are partnership concerns, companies, state-owned
corporations or cooperative societies. But, finally the assistance reaches the
individuals, who are members of the primary credit institutions.
The refinance is usually 50% to 95% of the project cost. The balance will be
met by the banks or the concerned state governments or the Government of India in
the case of SCARDBs.With a view to ensure credit flow to certain thrust areas, the
quantum of refinance is enhanced to 100% as in the case of special category
beneficiaries like SC/ST members and self help groups
SUPERVISORY FUNCTIONS
OVERVIEW
As an apex bank involved in refinancing credit needs of major financial
institutions in the country engaged in offering financial assistance to agriculture and
rural development operations and programmes, NABARD has been sharing with the
Reserve Bank of India certain supervisory functions in respect of cooperative banks
and Regional Rural Banks (RRBs)
As part of these functions, it:
Undertakes
inspection
of
state
Cooperative Agriculture
and
Rural
CORE FUNCTION
NABARD has been entrusted with the statutory responsibility of conducting
inspections of State Cooperative Banks (SCBs), District Central Cooperative Banks
(DCCBs) and Regional Rural Banks (RRBs) under the provision of the Banking
Regulation Act, 1949. In addition, NABARD has also been conducting periodic
inspections of state level cooperative institutions such as State Cooperative
Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies,
Marketing Federations, etc.on a voluntary basis.
OBJECTIVES OF INSPECTION
To ensure that the business conducted by this banks is in conformity with the
provisions of the relevant acts, rules, regulations bye-laws etc.
rural roads and bridges, etc. The RIDF fund has been continued in subsequent years.
The RIDF IX (last in the Series) was introduced in 2003-04.
The RIDF came to an end with the commencement of the Lok Nayak Jai
Prakash Narayan fund in February 2004.
MILESTONES OF NABARD
Some of the milestones in NABARDs activities are:
Farmers now enjoy financial access and security through 582.50 lakh Kisan
Credit Cards that have been issued through a vast rural banking network.
District Rural Industries Project (DRIP) has generated employment for 23.34
lakh persons with 10.95 lakh units in 105 districts.
NABARD TODAY
Prepares on annual basis rural credit plans for all the districts in the country.
These plans form the base for annual credit plans of all rural financial
institutions.
State Bank of India has sponsored 30 RRBs, which operate in 102 districts of
16 States viz. Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chattisgarh,
Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Madhya Pradesh,
Meghalaya, Mizoram, Nagaland, Orrissa, Uttaranchal and Uttar Pradesh, with a
network of 2336 branches.
PURPOSE
To provide financial assistance to meet cultivation expenses for various crops.
ELIGIBILITY FOR CROP LOAN
Agriculturists, Tenant farmers and share Croppers who actually cultivate the lands are
eligible for these loans. All categories of farmers Small/Marginal (SF/MF) and
others are included.
LOAN AMOUNT
Loan amount is worked based on the cost of cultivation incurred for each crop per
acre of crop cultivated and 90% of the cost of cultivation (Scale of Finance) is given
as loan.
PURPOSE
To extend adequate and timely support to farmers for their short term credit needs.
ELIGIBILITY FOR THE LOAN
Farmers with excellent repayment record for 2 years and new farmers with sizeable
deposits with branches for 3 to 4 years are eligible. Borrowers with good track record
in other Banks are also eligible. Farmers who have defaulted in repayment but have
liquidated the outstanding are also eligible.
LOAN AMOUNT
Loan amount is decided based on the cropping pattern, ancillary and contingency
needs of the farmer for the full year. 90% of the cost of cultivation (Scale of Finance)
is given as loan per acre. 100% of the cost is available as loan up to Rs. 50,000/- and
85% of the cost is available as loan above Rs. 1, 00,000/-
PURPOSE
To provide credit solution for land development projects in the form of direct finance
to cultivators for better productivity.
Loans under this head cover various activities like land clearance ( removal bushes,
trees, etc.), land leveling and shaping, contour/ graded bunding, bench terracing for
hilly areas, contour stone walls, staggered contour trenches, disposal drains,
reclamation of saline/ alkaline soils and fencing etc.
ELIGIBILITY FOR TERM LOANS
All farmers owning agricultural land are eligible.
LOAN AMOUNT
Up to Rs. 50,000/- 100% of the cost of the asset / project cost is provided as loan.
Above Rs. 50,000/- up to 85% of the cost of the asset / project is given as loan.
PURPOSE
To provide credit for creating irrigation facilities from underground / surface water
sources. All structures and equipments connected with it are also financed. Loans
cover various activities like digging of new wells (open/bore wells), deepening of
existing wells (traditional/in well bore), energisation of wells (oil engine/electrical
pump set), laying of pipe lines, installing drip/ sprinkler irrigation system and lift
irrigation system.
ELIGIBILITY FOR TERM LOANS
All farmers having a known source of water which can be exploited for irrigation
purpose.
LOAN AMOUNT
Up to Rs. 50,000/- 100% of the cost of the asset/ project cost is provided as loan.
Above Rs. 50,000/- up to 85% of the cost of the asset / project is provided as loan.
FINANCE TO HORTICULTURE
Indicators
Year
31.03.2004
31.03.2005
31.03.2006
1.
No. of RRBs
196
196
133
2.
No. of districts
518
523
525
3.
4.
5.
covered
No. of branches
No. of staff
Credit-deposit
14446
69249
46%
14484
68912
53%
14494
68629
56%
Indicators
Year
31.03.2004
31.03.2005
31.03.2006
1.
Owned Funds
5438
6181
6647
2.
Deposits
56350
62143
71329
3.
Borrowings
4595
5524
7303
4.
Investments
36135
36761
41182
5.
Loans
26114
32870
39713
outstanding
Indicators
Year
31.03.2004
31.03.2005
31.03.2006
1.
Loans issued
15579
21082
25427
2.
No. of RRBs
90
83
58
3.
losses
Accumulated
2725
2715
2637
4.
losses
No. of RRBs in
163
166
111
5.
profit
Net NPA (%)
8.55%
4.84%
3.99%
having
accumulated
1.
Indicators
Recovery (%)
Year
31.03.2004
31.03.2005
31.03.2006
73%
78%
80%
(as on 30 June)
2.
Per branch
5.71
6.56
7.66
3.
Productivity
Per staff
1.19
1.38
1.62
Productivity
IMPORTANT TRENDS
111 RRBs out of total 133 registered profit in the year 2005-06.
Recovery percentage has been improving from 73% during 2003-04 to 80%
during 2005-06.
Per branch productivity has increased from Rs. 5.71 crore on 31 March 2004
to Rs. 7.66 crore on 31 March 2006.
Per staff productivity has increased from Rs. 1.19 crore on 31 March 2004 to
Rs. 1.62 crore on 31 March 2006.
Yonus has won dozens of international awards, including the Simon Bolivar
Prize, the Indira Gandhi Peace Prize, the Seoul Peace Prize and the Freedom Award
of the International Rescue Committee.
He has also been appointed as an International Goodwill Ambassador for
UNAIDS by the United Nations and inducted as a member of Frances Legion
dHonneur.
From 1993 to 1995, Yunus was a member of the International Advisory Group
for the Fourth World Conference on Women, a post to which he was appointed by the
U.N. secretary general. He has served on the Global Commission of Womens Health,
the Advisory Council for Sustainable Economic Development and the U.N. Expert
Group on Women and Finance.
In addition to Grameen Bank, Yunus has created numerous other companies in
Bangladesh to address poverty and development issues. Those companies are
involved in a range of industries, including mobile telephony, Internet access, capital
management and renewable energy.
Grameen Bank was the first lender to hand out microcredit, giving very small
loans to poor Bangladeshis who did not quality for loans from conventional banks.
No collateral is needed and repayment is based on an honor system.
Grameen, which means rural in the Bengali language, says the method
encourages social responsibility.
OTHER INFORMATION
Earns Profit-Ever since Grameen Bank came into being, it has made profit
every year except in 1983, 1991 and 1992. It has published its audited balance-sheet
every year, audited by two internationally reputed audit firms of the country.
Revenue and Expenditure: Total revenue generated by Grameen Bank in 2006
was Tk 9.43 billion (US $134.90 million). Total expenditure was Tk 8.03 billion (US
$ 114.90 million). Interest payment on deposits of Tk 3.47 billion (US $ 35.35
million) was the largest component of expenditure (43 per cent). Expenditure on
salary, allowances, and pension benefits amounted to Tk 2.03 billion (US $ 28.97
million), which was the second largest component of the total expenditure (25 per
cent). Grameen Bank made a profit of Tk 1398 million (US $ 20.00 million) in 2006.
Entire profit is transferred to a Rehabilitation Fund created to cope with disaster
situations. This is done in fulfillment of a condition imposed by the government for
exempting Grameen Bank from paying corporate income tax.
Low Interest Rates: Government of Bangladesh has fixed interest rate for
government-run micro credit programmes at 11 per cent at flat rate. It amounts to
about 22 per cent at declining basis. Grameen Banks interest rate is lower than
government rate.
There are four interest rates for loans from Grameen Bank : 20% (declining
basis) for income generating loans, 8% for housing loans, 5% for student loans, and
0% (interest-free) loans for Struggling Members (beggars). All interests are simple
interest, calculated on declining balance method. This means, if a borrower takes an
income-generating loan of say, Tk 1,000, and pays back the entire amount within a
year in weekly installments, shell pay a total amount of Tk 1,100, i.e. Tk 1,000 as
principal, plus Tk 100 as interest for the year, equivalent to 10% flat rate.
Deposit Rates:
Grameen Bank offers very attractive rates for deposits. Minimum interest
offered is 8.5 per cent. Maximum rate is 12 per cent.
BEGGARS AS MEMBERS
Begging is the last resort for survival for a poor person, unless he/she turns
into crime or other forms of illegal activities. Among the beggars there are disabled,
blind, and retarded people, as well as old people with ill health. Grameen Bank has
taken up a special programme, called Struggling Members Programme, to reach out
to the beggars. About 100,505 beggars have already joined the programme. Total
amount disbursed stands at Tk. 107.16 million. Of that amount of Tk. 74.39 million
has already been paid off.
BIBLIOGRAPHY
BOOKS
Development Issues of INDIAN ECONOMY: - Mario Dias
NEWS PAPERS
The Economic Times.
WEBSITES
www.indiatogether.org
www.thehindubusinessline.com
www.nabard.org
www.sbi.co.in
ARTICLES REGARDING MUHAMMAD YUNUS & GRAMEEN BANK:The Grameen Bank & Associated Press.