Credit Assessment On Agricultural Loans

THE BELGAUM DISTRICT CENTRAL CO-OPERATIVE BANK LIMITED
ACKNOWLEDGEMENT
It is my privilege to extend words of thanks to the people who have helped and encouraged me in
completing this project successfully.
Primarily I would like to express my sincere gratitude and profound thanks to our beloved
Director Dr. A.B. Kalkundrikar, for his encouragement and for having instilled in me the much-
needed confidence.
My thanks also to Dr. Rajendra M. Inamdar (Internal Guide) for his constant guidance and
support in preparing this project report.
I also thank, Shri. Basavaraj Aralimatti, Manager (Planning and Development) and Shri.
Janagonda of, The Belgaum District Central Co-operative Bank Limited, Belgaum, for having
granted me permission to undertake my Major Concurrent Project and guiding me during my
project work.
I am also thankful to the staff, officials, and sub-ordinate workers of The Belgaum District
Central Co-operative Bank Limited, Belgaum, for providing me relevant information.
I owe a debt of gratitude to my grand parents, parents and my brother and sister who are the
silent guides in my life without whose never-ending support anything would have been possible.
Last but not the least, I would like to take this opportunity to thank all my friends and well
wishers who have directly or indirectly helped and supported me in undertaking this project.
PRASAD V. APPUGOL
KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 1

DECLARATION
I, undersigned Mr. Prasad V. Appugol of M.B.A IV Semester, studying in Institute of
Management Education and Research (IMER), Belgaum, hereby declare that the project titled as
CREDIT ASSESSMENT ON AGRICULTURAL LOANS is genuine and original work of
study prepared by me. It is based on the data and information collected by me and provided by
the Bank, to the best of my knowledge and belief, the matter presented in this report has not been
copied from any report submitted to the Karnatak University, Dharwad, to get the award of MBA
or any other courses offered by Karnatak University, Dharwad or any other University.
Signature:
(Prasad V. Appugol)

EXECUTIVE SUMMARY
The Project is a requirement as a part of curriculum of Masters of Business Administration
Degree. The project is undertaken at The Belgaum District Central Co-operative Bank Limited,
Belgaum.
TITLE OF THE PROJECT
CREDIT ASSESSMENT ON AGRICULTURAL LOANS

SCOPE OF THE STUDY
The bank is a co-operative bank. It is one of the largest co-operative in Karnataka state and all
co-operatives which are operating come under this bank further every district is having one main
branch/bank. The main objective of the study is to know the services provided by the District Co-
operative Banks Limited, Belgaum. Urban co-operative bank limited, to its customer for
satisfying their needs. The scope the study regarding Credit Assessment on Agricultural loans is
limited to the Belgaum District only.
.METHODOLOGY
o Primary Data:
Primary data are those data which are collected directly without the use of any secondary
media.
Such as:
Interaction with the Bank officials
Interaction with co-operative society officials.
Observation

o Secondary Data:
Secondary data are those which are obtained from sources such as follows:
Bank Publications
Circulars
Internal Financial reports
Annual report
Internet
OBJECTIVES OF THE STUDY
To study importance of agricultural loans
To study types of agricultural loans.
To study the process of agriculture advances.
To study the assessment of a loan proposal.
To find out the parameters those are important during a loan proposal assessment.
LIMITATIONS OF THE STUDY
1. The availability of data is limited
2. Time factor
3. Some of the information is of confidential in nature that could not be divulged for study.
4. The study regarding credit appraisal on agricultural loans is limited to the Belgaum
District only.

TABLE OF CONTENTS
SECTION A
INTRODUCTION
INDIAN BANKING INDUSTRY
THE STRUCTURE OF INDIAN BANKING SYSTEM
PROFILE OF THE BDCC BANK LTD
ORGANISATIONAL STRUCTURE OF THE BDCC BANK LTD
VISION AND MISSION STATEMENT
SCHEMES OF THE BDCC BANK LTD
BRANCHES OF THE BDCC BANK LTD
MANAGEMENT OF THE BDCC BANK LTD
VARIOUS DEPARTMENTS OF THE BDCC BANK LTD
SECTION B
SUMMARY OF ANNUAL REPORTS
SECTION C
GENERAL INTRODUCTION ABOUT AGRICULTURAL LOANS
BRIEF ABOUT AGRICULTURAL LOANS
CREDIT ASSESSMENT OF AGRICULTURAL LOANS
ANALYSIS AND INTERPRETATION OF DATA

PROCESS OF CREDIT ASSESSMENT IN THE BDCC BANK LTD\
FINDINGS
SUGGESTIONS
CONCLUSION
SECTION D
BALANCE SHEET AS ON 31-3-2009
BIBLIOGRAPHY
BIBILOGRAPHY
91st Annual report of BDCC Bank Belgaum
Journals and magazines related to agriculture
www.agribus.com

BALANCE SHEET AS ON 31ST MARCH 2009.
Capital and liabilities Amount Property and Assets Amount
Subscribed share capital 50,00,00,000 Cash 48,21,40,685
Paid up capital 46,26,17,855 Balance with other banks 4,56,31,48,698
Reserve fund and other Investments 30,30,63,000

reserves 1,24,85,56,621
Advances 6,09,98,99,656
Deposits 7,88,99,28,431
Medium term loans 1,57,99,10,602
Borrowings 3,00,21,66,200
Long term loans 11,46,41,295
Bills payables 75,94,545
Bills receivables 75,94,545
Documentary bills Payable 5,50,553
Documentary Bills
Branch adjustments 7,53,84,956 receivables 5,50,553
overdue Interest reserves 1,50,11,52,158 Library 46,841
Consortium borrowings 29,87,34,830 Building premises 2,05,54,900
Interest payable 44,54,539 Furniture 2,07,65,886

Other liabilities 52,62,18,033 Vehicles 14,57,559
Profit and loss a/c 6,33,42,065 Overdue interest 1,50,11,52,158

receivables
29,87,34,830
Consortium lending
8,70,39,576
Other assets
Total 15,08,07,00,788 15,08,07,00,788
LOAN RECOVERY STATISTICS

Following table shows the details of short term agricultural loans, medium term loans and
Other loans from 1st April 2008 to 31st March 2009
(Rs in Lakhs)
Sr. No Loans Demand Recovery Dues %
1 Short term agri loans 30889.06 27648.20 3240.86 89.51
2 Medium term agri 252.81 196.44 56.37 77.70

loans
3 Medium term 782.90 671.09 111.81 85.72
conversion loan
4 Other loans 4155.17 2978.46 1176.71 71.68
Total 36079.94 31494.19 4585.75 87.29

INTRODUCTION
The co-operation means working together for some common purpose. The basic principle of co-
operation is each for all and all for each. The meaning for co-operation is different from thinker
to thinker. A co-operative is an autonomous association of persons united voluntarily to meet
their common, economic, social, cultural needs. And aspiration through jointly owned and
democratically controlled enterprises, offices, functioning is based on decentralized decisions
making principles. In tradition its aim is economic, social and moral development of its members
Co-operatives are the voluntary and democratic associations of human beings organized on the
principles of equality for the attainment of the satisfaction of their common economic needs
concerned with economic welfare.
PRINCIPLES OF CO-OPERATIVES
The foundation of any co-operative activity is based on certain principles. These principles are
the guiding force behind the development of the cooperative movement throughout the world.
These principles are as follows
1. Voluntary and open membership Cooperatives are voluntary organisations open for all
persons to use their services and willing to accept the responsibilities of membership
without genders, social, political and religious discrimination. Universal character of
membership must be maintained, provided the member fulfill all the qualification and
always act in the interest of the bank and other co-members.
2. Democratic management and equality of voting rights A cooperative bank is democratic

in its management. All members are treated equal and exercised through the principle of
one man one vote. A principle of democracy representatives is accountable to the
membership.
3. Self help through mutual help The cooperative bank strives on the principle of mutual
fund help. It is an association of financially weaker sections of the society, the financially
weaker persons cannot achieve their aims single handedly, and they need mutual helps.

4. Concern for community Cooperative works for the sustainable development of the
community through policies which do the members approve, the cooperatives must quit
to the local needs and environment.
5. Autonomy and independence Cooperatives are autonomous and self help organisations
controlled by members. If they enter in to agreement with other organisations including
government or raise capital from external sources, they do so on terms that ensure
democratic control by their members and maintain their cooperative economy.
6. Education training and information to members Co-operative provides education,

training and information to their members, elected representatives, managers and
employees, so that they can contribute effectively to the development at their cooperative.

INDIAN BANKING SYSTEM

HISTORY
Banking in India has its origin as early as the Vedic period. It is believed that the transaction
from money leading to banking must have occurred even before Manu, the great Hindu Jurist,
who has devoted a section of his work to deposits and advances and laid down rules relating to
rates of interest. During the Mogul period, the indigenous bankers played a very important role
in leading money and financing foreign trade and commerce.
During the days of the East India Company, it was turn of the agency houses to carry on the
banking business. The General Bank of India was the first Joint Stock Bank to be established in
year 1786. The others, which followed, were the Bank of Hindustan and the Bengal Bank. The
Bank of Hindustan is reported to have continued till 1906 while the other two failed in meantime
.in the first half of 19th century the East India Company established three Banks; the Bank of
Bengal in 1809, the Bank of Bombay in 1840, the Bank of Madras in 1843. These three Banks
are also known as presidency Banks, were independent and functioned well. These three Banks
were amalgamated in 1920 and a new Bank, the imperial Bank of India was established on 27 th
January 1921. With the passing of the State Bank of India Act in 1955 the undertaking of
imperial Bank India was taken over by newly constituted State Bank of India.
The Reserve Bank, which is central Bank, was created in 1935 by passing Reserve Bank India an
Act 1934. In the wake of the Swadishi Movement, a number of Banks with Indian management
were established in the country namely, Punjab National Bank Ltd, Bank Of India Ltd, Canara
Bank Ltd, Indian Bank Ltd, the Bank Of Baroda Ltd, the Central Bank Of India Ltd. On July 19,
1969, fourteen major Banks of the country were nationalized and in 15th April 1980, six more
commercial private sector banks were also taken over by the government.

THE STRUCTURE OF INDIAN BANKING
The Indian banking industry has Reserve Bank of India as its regulatory authority. This is a mix
of the Public Sector, Private Sector, Co-operative banks and foreign banks. The Private sector
banks are again split into old and new banks.
Reserve Bank of India
(Central Bank)
Scheduled banks
Scheduled
Commercial Banks
Public Sector
Banks
Private Sector Banks
Banks
Foreign
Banks
Regional
Rural Banks
Scheduled
Co-operative Banks
Nationalized
Banks
SBI & its associates
Old Private Sector Banks

New Private Sector Banks
Scheduled State
Co-operative Banks
Scheduled Urban
Co-operative Banks

BACKGROUND OF CO-OPERATIVE MOVEMENT IN INDIA
The cooperative movement was started in India in the year 1904 by establishing cooperative
bank to encourage thrift, self help and cooperation, these finance for both agricultural, small
scale and cottage industries, after the independence the central government as well as the state
government encouraged the cooperative movement to improve the economic conditions of the
weaker section of the society particularly the rural population.
Cooperative banking as yet remains the best answer or most satisfactory in situations for
providing finance to borrowers in the rural areas and also occupy a significant role also. It seeks
the help of members and work for the benefit throughout them for larger good of the community
ENCOURAGEMENT MADE BY CO-OPERATIVE MOVEMENT
To improve the economic conditions of the weaker section of the society. Cooperative movement
encouraged by the central government as well as the state government after the country achieved
independence in 1947 for this purpose. Cooperative banks engaged in the business of providing
credit facilities to members, industries, agriculture etc. to aforesaid encouragement of the
cooperative movement, in various areas of economic activities through out the country for
reaching importance in the economic development of the nation. Cooperative banks have proved
effective tool for and redistribution of wealth and on that account they have gained lot of
importance in various avenues of commercial activities.
CO-OPERATIVE SECTOR -
The co-operative sector has been developed in the country to supplement the village
moneylender. The co-operative banking sector in India is divided as follows.
1. State Co-Operative Banks
2. Central Co-Operative Banks
3. Primary Agriculture Credit Societies

4. Land Development Banks
5. Urban Co-Operative Banks
6. Primary Agriculture Development Banks
7. Primary Land Development Banks
8. State Land Development Banks
DEVELOPMENT BANKS
1. Industrial Finance Corporation Of India (IFCI)
2. Industrial Development Bank Of India (IDBI)
3. Industrial Credit and Investment Corporation Of India (ICICI)
4. Industrial Investment Bank Of India (IIBI)
5. Small Industries development Bank Of India (SIDBI)
6. National Bank for Agriculture and Rural Development (NABARD)
7. Export Import Bank Of India (EXIM)
8. National Housing Bank


PROFILE OF THE BELGAUM DISTRICT CO-OPERATIVE BANK

LIMITED, BELGAUM
The B.D.C.C was established on 17th December, 1918. The Belgaum District Central Co-operative
Bank Ltd is registered as Co-operative Society under Central Act II of 1912. Its registration number
is 2163, dated 17-12-1918. It was later deemed to be registered under the Bombay Co-operative
societies Act 1925 and now it is deemed to be registered under Karnataka Co-operative societies
Act 1959. Its area of operation shall be the whole of the Belgaum District. It may be referred to as
the Central Bank.
AIMS AND OBJECTIVES OF THE DISTRICT CENTRAL COOPERATIVE BANK

LIMITED, BELGAUM
To encourage thrift help and cooperation among the members, associate members,
nominal members and depositors of the bank.
To provide required finance to priority sectors like agriculture, cottage industries and
small scale industries.
To borrow funds from members and non members and to be utilized for granting loans to
members and non members for useful purpose.
To act as an agent for the joint purposes of domestic and other requirement of the
members and non members.
To arrange for the safe custody of valuables and documents.
To carry out instructions for periodic or collections, remittance etc of the members and
non members.

To prepare finance projects and to improve the economic conditions of the members
particularly those belonging to weaker sections of the society.
To extend financial and technical assistance to the unemployed to start their industry.
DY. G.M ADMINISRATION
DY. G.M ACCOUNTS & BRANCHS
DY. G.M
PLANNING & DEVLOPMENT
DY. G.M BRANCH CONTROL
DY. G.M LOANS & OPERATION
GENRAL MANAGER
CHAIRMAN
BOARD OF DIRECTORS
SUPERINTENDENT
SECTION OFFICERS
Br. MANAGER /
BANK INESPECTORS
SUB ACCOUNTANT
SECOND DIVISION CLASS
SUB STAFF
SUPERINTENDENT
SUPERIDENTS

SECTION OFFICERS
Br. MANAGER /
BANK INESPECTORS
SUB ACCOUNTANT
SUB STAFF
SUPERINTENDENT
SUPERIDENTS
SECTION OFFICERS
Br. MANAGER /
BANK INESPECTORS
SUB ACCOUNTANT

SUB STAFF
SUPERINTENDENT
SUPERIDE SUPERINTENDENT
NTS
SECTION OFFICERS
Br. MANAGER /
BANK INESPECTORS
SUB ACCOUNTANT
SUB STAFF
SUPERINTENDENT
SUPERIDENTS
SECTION OFFICERS

Br. MANAGER /
BANK INESPECTORS
SUB ACCOUNTANT
SUB STAFF
ORGANISATIONAL STRUCTURE OF THE B.D.C.C.

VISION
To be the preferred bank for agricultural & non-agricultural financial and banking solutions
MISSION & GOALS OF BDCC BANK BELGAUM
To generate funds for the purpose of financing co-operative societies.

To operate the bank with Profit motive.
To arrange for the supervision inspection of societies.
To maintain high standard of recovery position.
To implement scheme sponsored by the Govt.
To control over branches.
To carry all works to promote Co-operative banking.

BANKING AT PRESENT
The Banking Industry was once a simple and reliable business that took deposits from investors
and lent it out to borrowers at a higher rate. However deregulation and technology led to a
revolution in the Banking Industry that saw it transformed. Banks have become global industrial
powerhouses that have created ever more complex products that use risk and securitization in
models. Through technology development, banking services have become available 24 hours a
day, 365 days a week, through ATMs, at online banking, and in electronically enabled exchanges
where everything from stocks to currency futures contracts can be traded.
The Banking Industry at its core provides access to credit. In the lenders case, this includes
access to their own savings and investments, and interest payments on those amounts. In the case
of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate.
Banking services include transactional services, such as verification of account details, account
balance details and the transfer of funds, as well as advisory services that help individuals and
institutions to properly plan and manage their finances. Online banking channels have become
the key in the last 10 years.

We analyze the banking sector on the Michael Porters Five-factor model, which is as follows:
PORTERS FIVE FORCE MODEL: BANKING INDUSTRY
THREAT OF NEW ENTRANCE
Regulation: Licensing requirements

Investment in technology
Branch network
SUPPLIER
High during tight liquidity

Trade unions can be anti- reformist
Depositors may invest elsewhere
Supplier Concentration
Differentiation of Input

Presence of substitute input
THREAT OF SUBSTITUTES
Investment in alternative asset classes

Indigenous Lenders / Chit
Funds/ NBFCs
Alternates sources of raising funds
COMPETITIVE RIVALRY BETWEEN FIRMS
Post - Liberalization
Low switch over cost
Low level of product
Differentiation
BARGAINING POWER OF CUSTOMER
Creditworthiness
Differentiation
Liquidity
Switching Cost
Buyer concentration
Impact on Quality /
Performance

SWOT ANALYSIS
Strengths of BDCC Bank Belgaum
Bank has an effective organisation structure.
Bank has maintained good relationship with the customers.
It has 85 branches in district.
661 primary agricultural co operative societies are associated with the BDCC bank.
Bank has created 7256 self help groups.
Bank is adherence to co-operative values and principles.
Weakness of BDCC Bank Belgaum
Bank doesnt make use of technology for its banking operation like computers etc. Field
work.
Staff of bank lacks the professionalism.
Bank has less resource as compare to nationalized bank.
No internet banking and mobile banking.

Gigantic field work.
Lack of time management
Lack of knowledge about many aspects of banking to the employees.
Opportunities for BDCC Bank Belgaum
Being the co-operative bank it has opportunity to finance the government projects.
DCC Bank becomes priority bank for co-operative societies.
Belgaum district is very near to Maharashtra and Goa states, so it can attract farmers of
respective states to expand its transactions.
In Belgaum district there are 706,476 cultivators and 587,476 agricultural laborers are
present.
Presence of many sugar factories in Belgaum district.
Bank can start ATM centers in all the Taluka places of the district.
Threats to BDCC Bank Belgaum
The main threat to bank is increasing steps/roots of public banks.
Easy policies of public banks.

Less documentation of the public banks for different types of loans.
Instant service by other banks.
In Belgaum district there are 241 commercial banks and 112 gramin banks these can be the
threats to BDCC Banks Belgaum.
OTHER SCHEMES OF BANK

Kisan credit card
Under this scheme farmers can use the loan amount as and when they required without much
pressure of interest. Bank has distributed Kisan credit cards to eligible candidates of all the
farmers credit co operative societies and it is planning distribute to all the farmer members in
future. Till the end of June 2009 bank has sanctioned Rs.52.965 lakhs under this scheme.
160,454 Kisan credit card members are included to accidental insurance plan by the bank.
Development action plan
As per the instruction of State Govt, NABARD and State Co operative Apex bank, DCC Bank
prepared five years development action plan for the period of 1994-95 to 1998-99 on scientific
basis which helped bank in its development. State co operative Apex bank has approved this
scheme and its in action.

Business development scheme
Bank is associated with 661 primary agricultural credit societies out of which 589 societies have
implemented business development scheme as on 31st march 2009.
Bank is providing training with regard to business development plan to secretaries and chairman
of co operative societies and to bank employees.
Loans to co operative sugar factories
As per rules and regulations of NABARD bank is providing key loans to 12 sugar factories in the
district. Apart from this bank has provided medium term loans for various projects of the sugar
factories.
Cash credit to societies for supplying fertilizers
Farmers need fertilizers in huge amount. Bank provides cash credits to agricultural Co operative
societies and Taluka Co operative societies for storing and selling fertilizers. This helps in
development of farming.
Loans to individuals
Bank is providing loans on fixed deposits and on recurring deposits to individuals. On National
Saving Certificate and Gold ornaments also individuals can get the loans. Nominal member of
the bank can get the housing loan and semi-Govt employees can get the personal loans by the
bank.
Self Help groups
In the present year bank has created 1004 self help groups out of which bank provided loans to
813 SHGs. Till now bank created 7256 SHGs. In which 1328 are of mens groups, 5787 are of
womens groups and 141 are mixed groups.
These groups have opened 1587 saving accounts in 84 bank branches and 5674 agricultural
credit societies.

Bank is providing financial support for the development of SHGs. For 2951 groups 958.54 lakhs
loan is provided and Rs. 681.35 lakhs is provided as repetitive loan. Recovery rate of these loans
are 99 %. The interest on such loans is 11.5% in which 4 % is recovered by SHGs and
remaining 7.5% interest is burned by the Govt.
Bank is providing training to secretaries of primary agricultural co operative societies, bank

branch managers, regional staff, bank employees, representatives of SHGs, for the purpose of
proper functioning, maintenance of records, growth aspects of self help groups.
National crop insurance scheme
Karnataka state is introduced this scheme from the year 2000. It is compulsory for all the farmers
who have taken agricultural loans to adopt insurance. And those who have not taken agro loans
can also make the use of crop insurance scheme through societies by paying the insurance
amount. Farmers get insurance against the heavy rains, dry etc.
Yashasvini insurance scheme
This is a scheme introduced by Karnataka State Government for safeguarding the farmers
health. in this scheme a farmer can pay a premium of Rs.150 per year and can get free treatment
in allotted health care centers for entire year.
Under this scheme 218,923 farmers have become the members through primary co operative
societies and SHGs of the district.
Janashree insurance scheme
DCC Bank, with the co operation of LIC started this scheme for insuring the life of poor and the
members of SHGs. Under this scheme participant members has to pay a premium of Rs.100 and
Govt of India will pay a premium of Rs.100 for them. If the member dies normal death his
family will get amount of Rs.30000, if dies in an accident then will get Rs.75000. Along with
this two of children of member can get scholarship for the class 9th to 12th.
Tie up with ING vysya insurance company
BDCC Bank is tied up as a referral agency with ING Vysya insurance company and 3582 polices
have been made till the July 2009 in the District.

Loans to other societies
Bank is also providing loans to societies other than primary co operative credit societies.
Following tables shows the details as on 31st march 2009.
(Rs in Lakhs)
Sr. no Co operative societies Loan amount Over dues
1 Farmers marketing societies 349.04 13.13
2 Milk producers co operative 0.88 0.66

societies
3 Urban co operative societies 95.94 75.94
4 Urban banks 107.63 89.00
5 Customers co operative societies 9.83 3.73
BRANCHES OF BDCC BANK LTD:
There are 85 branches in Belgaum district in different Talukas (10) namely As follows -
Name of Taluka No of Branches

Athani 09
Bailhongal 08
Belgaum 10
Chikkodi 11

Gokak 11
Hukkeri 12
Khanapur 06
Raibag 05
Ramdurg 06
Saundatti 07
TOTAL 85
TABLE SHOWING BANK DETAILS FROM 1968-69 TO 2008-09
Particulars 1968-69 1978-79 1988-89 1998-99 2008-09

No. of members
- Societies 972 1102 1342 1998 2098
- Personal 569 341 297 286 281
- Partnership 0 0 0 0 0
Share Capital 7729200 21150550 80478500 286040900 462617855
Reserves and 2382219 13251847 36908261 372562119 1248556621
Surplus
Savings/Deposits 4892462 149213250 702232753 369275317 7889928431
3 3
Working Capital 8010104 236500169 1126846422 577906808 1327266870
2 9 1

Loans
- Societies 4904373 175917824 715045621 417681895 6755346410
- Personal 1 6361105 68860052 3 507911278
- Others 736639 - - 232207844 531193866
- 12500000
Net Profit 7.46.223 21.84.206 38.10.637 2.93.27.693 6.33.42.065
Source From 1968-69 to 2008-09 mentioned by the bank annual report total number of
membership of the BDCC, Belgaum. These are all branches structure, deputy general manager,
accountants, branches, loans and operations, control inspections, planning and developments
shown in the above table.
The above table shows the total quantum of loan provided to its customer against the national
saving certificate and the rate of interest charged and such loan no doubt, that the amount of loan
granted is increasing from period to period. The interest rates charged against the loan are normal
or low as compared with other nationalized banks.
NOM INAL MEMBERSHIP

Not with standing anything contained in any other bye-laws any person who is above the age of
18 years and who is competent to contract residing in the jurisdiction of the bank who is not the
member of any other co-operative credit society or bank, my be admitted as a nominal subject to
the following circumstances

- He shall pay an admittance fee of Rs. 50
- He should be credit worthy
- He shall not have right to vote or to participate in the management of the bank or in the
distribution of its profits or liabilities, except the liability against him, as a borrower or
surety or both in the event of its winding up except that such member may attend the
general body meeting of the bank with prior permission of the board by its resolution.
- He shall be eligible for the following types of loans:
a) Personal loans
b) Mortgage loans
c) Loan against deposits and government securities
d) Loan against government and guarantee
e) Loan for house construction/purchase/mortgage/purchase of plots
f) Loan against pledge of goods or immovable property of his own
MANAGEMENT OF THE B.D.C.C.
NAME DESIGNATION
Shri. Ramesh V. Katti Chairman
Shri. Mahantesh B. Doddagoudar Vice Chairman
Shri. L. S. Savadhi Director
Shri. V. S. Sangannavar Director
Shri. G. N. Kwalli Director

Shri. N. B. Patil Director

Shri. D. T. Patil Director
Shri. Arvind C. Patil Director
Shri. Mahantesh S. Patil Director
Shri. A. M. Kuligude Director
Shri. S. G. Dhawaleshwar Director
Shri. S. S. Dhawani Director
Shri. G. P. Hukkeri Director
Shri. P. B. Dhyamangoudar Director
Shri. C. B. Patil Director
Shri. A. S. Navalgatti Director
Shri. S. B. Kamatgi Director
Shri. G. M. Patil Director
Dr. Akroop Kour C.E.O ZILLA PANCHAYAT, BELGAUM
Shri. S. B. Tubachi Chief Manager
Shri. M. F. Madvani Head (Loans)
Shri. B. S. Shettar Head (Administration)
Shri. N. A. Varimani Head (Accounts section)
Shri. G. A. Holeyachi Branch Controller
Shri. S. V. Hadimani Development Officer
POWERS OF THE BOARD OF MANAGEMENT

To raise funds for the purpose of the bank in the form of deposits, loans, debentures and
determine the terms on which they should be raised.
To grant loans and advances to members.
To make investments of funds of the bank in accordance with the rules.
To prepare and put up annual budget to the general body.
To prescribe or regular from time to time the strength of offices and field establishment
and their salaries and allowances.
To submit to the general body, annual report and the statement of account.
To make efficient supervision of affiliated societies.

To appoint, suspend, remove or dismiss or otherwise deal with employees of the bank in
accordance with the subsidiary rules as may be framed in this behalf.
To sanction extension of period loan which becomes due for repayment?
To convene the meeting of the general body.
To open branches and pay offices in suitable place and frame rules for the management.
To frame rules for receiving for safe custody ornaments and securities.
To admit new members.
To allot share to members.
To sanction transfer of shares.
To examine all cases of arrears and taking proper action for recovery.
To fix the nature of amount of security to be given by the several grade of employees in
the bank.
To transact all other business incidental to the administration of the bank.
To receive and distribute money though its manager in the manner directed by the board
of directors from time to time or any other officer authorized by the board.
To elect its own president and vice president for the ensuing year as required under bye-
law no.25.
OFFICERS OF THE BANK
Subject to such resolution as the board or the Executive Committee may from time to
time pass in this behalf, the several officers of the bank shall have the power mention
below.,
PRESIDENT

The president shall exercise general control and supervise over the affaires or the bank
and the work of its officers. He shall preside over the meeting of the general body, the
board and the executive committee.
The president shall exercise the powers delegated to him by the board or the executive
committee and may, subject to the approval of the executive committee except in any
emergency, delegate any of hi power and duties to the vice president or in his absent to
any director for a special period and may withdraw any power so delegated.
VICE-PRESIDENT
Whenever the president is obliged to absent himself from his office by reason of his
absence from hear quarters or illness or any other cause, the vice-president shall exercise
the power and perform the duties of the president.
CHIEF EXECUTIVE OFFICER
The chief executive officer of the bank shall be the general manager. Appointment or
removal of the manager or the secretary shall be made subject to the approval of the
registrar.
The manager or the secretary shall be responsible for the general administration of the
bank subject to the control of the president and the board of management.

VARIOUS DEPARTMENTS IN B.D.C.C

Following are the departments working in The Belgaum District Central Cooperative Bank
Limited
1. Administrative
2. Branch Controller
3. Banking Accounts
4. Loans and Operations
5. Planning and Development

Above are the 5 departments in the Head Office, they function accordingly with Assistant
General Manager (AGM)
1. ADMINISTRATIVE
The head of the administrative section is the manager, he has the responsibility of conducting the
activities of the bank i.e. conducting meetings of sub committee, sanctioning of loans, adhering
to RBI policies etc, the functions of this department are as followers:-
All types of meeting.
Staff appointment and training.
Computer and type writing control.
Writing material and printing.
Cases
Building and dead stock.
Guest house and library.
Discipline among workers.
2. BRANCH CONTROLLER - The main functions of this department are as followers:-
Branch office control and checking.
Tours and travels expenditure and controlling.
Taluka executive officers daily works, work analysis, tour permission.
Subordinating, Apex bank and co-operative society branches checking.
Working to open new branches.

3. BANKING ACCOUNTS
The head office account department consolidates all the branch account and different
reconciliation statement. This department forwards all the documents and statements issued by
RBI. The functions are as followers:-
Outside loans.
Financial managements.
Common banking.
Loans and deposits.
Banking details.
4. LOANS AND OPERATIONS: The main functions of this department are as followers:-
Analysis of loans forms.
Loan approval.
Official and legal operations.
Rules and regulations.
Controlling employees working at fields.

Support for weak Agricultural social co-operative societies.
Providing financial support to the village through local Agricultural

co-operative societies.
Creating new policies useful to customer and making them selves worth technically as
well as financially.
Working for growth in sales and market.
5. PLANNING AND DEVELOPMENT
The main functions of this department are as followers:-
SPDI and MFAL and financial supporting for the small farmers.
Financial support for the societies.
Financial support for sugar factories and analysis.
Collecting details on index number.
Other growth activities.
Working in unity with all boards/ fields like electricity board, telephone exchange, water
supply board and agricultural societies.
SUMMARY OF ANNUAL REPORT

Over view of the Bank deposits for the last five years (Rs. In lakhs)
Year Deposits Percentage increase
2004-05 45525.45 ----

2005-06 53841.11 18.27
2006-07 54924.41 2.01

2007-08 60596.78 10.33

2008-09 78899.28 30.20
From the above chart we can infer that the deposits of the bank have steadily increased from year
to year, this show the good growth prospects for the bank.
Over view of Bank working capital for the last five years (Rs. In lakhs)
Year Working capital

2004-05 71243.78
2005-06 78085.90
2006-07 100811.01
2007-08 104041.95
2008-09 132726.69
From the above chart we can infer that the Working Capital of the bank have steadily increased
from year to year.
Over view of the Bank Agricultural Loan details for the past five years (Rs. In lakhs)

1. Short Term Agricultural Loans
Year Loan Amount Given Debt Amt Doubtful Amt

2004- 13725.32 23993.51 13161.06
2005
2005- 34703.70 25667.46 4373.05
2006
2006- 22847.04 33730.28 14851.69
2007
2007- 29919.01 30818.46 5878.89
2008
2008- 44367.04 38087.96 3240.86
2009
From the above chart, we can observe that in the year 2004-2006, loans given were increasing,
but since 2006-07 it started decreasing and in the year 2008-09 it reached at the highest. We can
see that the recovery portion i.e. debt is decreasing from 2004-05 to 2005-06, it shows that many
borrowers have paid their respective agricultural loans in time, but in the year 2006-07 it
increased and in 2008-09 it was also highest. Doubtful debt, which are slow payers, as of current
year there is drastic reduction in these debts, and bank has made efforts to collect its debt fast and
thus the amount has drastically reduced in 2008-09.
2. Medium Term Agricultural Loans (Rs. In Lakhs)
Year Loan Amount Given Debt Amount Doubtful Amount

2004- 1.67 3023.45 2384.40
05
2005- 26.95 729.05 502.12
06
2006- 2511.48 2634.25 96.26
07
2007- 648.52 2360.86 278.19
08
2008- 856.55 2122.41 168.18
09

From the above graph we can observe that the loan amount given is increasing till 2006-07,
whereas in the year 2007-08 is decreased drastically and again picked up in 2008-09, but not the
fullest extent, this has happened due to decrease in demand for medium term loan from the
farmers, because of natural calamities that have taken place between these years. And the debt
recovery is also not taken place to the expected range, as compared with the year 2005-06, this is
because farmers are not having sufficient funds to clear there debts, and due to government
obligations also.
Development Activity Index as on date
S.NO PARTICULARS 31-3-2008 2008-2009 31-3-2009 PERCENTAGE

. (ACTUAL) (BUDGETED) (ACHIEVED) ACHIEVED
1 Share Capital 4259.91 4200.00 4626.18 8.60
2 Stocks 12236.21 12236.00 12485.57 2.04
3 Reserves 60596.78 66500.00 78899.28 30.20
4 Debt 15941.81 17000.00 30021.66 88.32
5 Working Capital 104041.95 103030.00 132726.69 27.57
6 Loan Given 58808.58 67704.00 77944.52 32.54
7 Employees 194.11 225.00 235.14 21.14
Transaction
8 Branch Business 1209.79 1350.00 1551.91 28.28
Business Development Index
S.NO PARTICULARS AMOUNT (LAKHS)

.
1 No. of Members 456489.00
2 Share Capital 15727.07
3 Deposits 11527.07
4 Working Capital 60363.08
5 Agricultural Loans 46128.06

6 Non Agricultural Loans 2233.96

7 Non Ration Business 920.08
8 Fertiliser Business 4077.40
GENERAL INTRODUCTION ABOUT AGRICULTURAL LOANS

Agriculture plays a vital role in the development of the Indian economy. It accounts for about 19
per cent of GDP and about two thirds of the population is dependent on the sector. The
importance of farm credit as a critical input to agriculture is reinforced by the unique role of
Indian agriculture in the macroeconomic framework and its role in poverty alleviation.
Recognizing the importance of agriculture sector in Indias development, the Government and
the Reserve Bank of India (RBI) have played a vital role in creating a broad-based institutional
framework for catering to the increasing credit requirements of the sector. Agricultural policies in
India have been reviewed from time to time to maintain pace with the changing requirements of
the agriculture sector, which forms an important segment of the priority sector lending of
scheduled commercial banks (SCBs) and target of 18 per cent of net bank credit has been
stipulated for the sector. The Approach Paper to the Eleventh Five Year Plan has set a target of 4
per cent for the agriculture sector within the overall GDP growth target of 9 per cent. In this
context, the need for affordable, sufficient and timely supply of institutional credit to agriculture
has assumed critical importance.
The evolution of institutional credit to agriculture could be broadly classified into four distinct
phases
1904-1969 predominance of co-operatives and setting up of RBI 1969-1975 nationalization of

commercial banks and setting up of Regional Rural Banks

1975-1990 setting up of NABARD and
1991 onwards financial sector reforms. The genesis of institutional involvement in the sphere of
agricultural credit could be traced back to the enactment of the Cooperative Societies Act in
1904. The establishment of the RBI in 1935 reinforced the process of institutional development
for agricultural credit. The RBI is perhaps the first central bank in the world to have taken
interest in the matters related to agriculture and agricultural credit.
The demand for agricultural credit arises due to
Lack of simultaneity between the realization of income and act of expenditure;
Lumpiness of investment in fixed capital formation; and
Stochastic surges in capital needs and saving that accompany technological

innovations.
Credit, as one of the critical non-land inputs, has two-dimensions from the viewpoint of its
contribution to the augmentation of agricultural growth viz., availability of credit
(the quantum) and the distribution of credit.

BREIF ABOUT AGRICULTURAL LOANS -

Current Issues in Agriculture Credit in India: An Assessment
The credit delivery to the agriculture sector continues to be inadequate. It appears that the
banking system is still hesitant on various grounds to purvey credit to small and marginal
farmers. The situation calls for concerted efforts to augment the flow of credit to agriculture,
alongside exploring new innovations in product design and methods of delivery, through better
use of technology and related processes. Facilitating credit through processors, input dealers,
NGOs, etc., that are vertically integrated with the farmers, including through contract farming,
for providing them critical inputs or processing their produce, could increase the credit flow to
agriculture significantly.
Agricultural microfinance
All farmers have access to credit. In fact, it is common for some farmers to have multiple sources
of loans. The problem is that some have limited access to formal credit due to high interest rates,
terms and conditions that cannot be fulfilled by the borrowers, among others. The 2005 ACPC
survey revealed that high interest rates were a common complaint among borrowers. And even
though informal lenders charged high interest rates, borrowers still patronized them because they
were easily accessible and documentation and collateral are not required. However, borrowers
from formal sources, specifically cooperatives and rural banks, have been increasing over time.
Microfinance institutions need to know their roles or positioning in addressing the problem of
limited access to credit. In addition, they need to determine the positioning of agricultural

microfinance loans vis--vis the other loan products. They might wish to design their products in
such a way that they will be different and/or complementary to the other loan products available
in the market. This can be done by determining the sources of loans and the needs that are not
met by other loan providers. For example, in addition to production loans, cooperative members
also like to avail of micro-insurance and micro-health services.
Loan Structure
Structure is especially important in agricultural loans and should be based on the purpose for
which the loan was made. When structure and purpose are not properly matched and enforced,
the effectiveness of bank managements loan supervision, including the ability to spot
performance problems, can be compromised. Poorly structured loans also increase the possibility
that proceeds will be used for unintended purposes. These problems might result, for example,
when short-term loans for crop production are diverted by the borrower into the purchase of
machinery.
(Source: www.aglend.com)
Second green revolution: a catalyst for rural uplift
Indian agriculture is at cross roads. The path of development is not smooth. About 72% of over
a billion total populations live in rural areas. The second Green revolution conceived should be
able to put agriculture as well as agriculture related industry on fast track to provide jobs with
higher wages. During the second Green Revolution, productivity improvements should come
from sources that are ecologically friendly. Government has to ensure that there is no income
loss to the farmers and it is compensated by the realization of appropriate market price to the
crops.
(Source: Yojana).
Financing agribusinesses

A significant void in this literature is the financing of large-scale farming and agribusiness
operations. Unlike the farm sector where thousands of commercial banks, Farm credit System,
life insurance, Farm Service Agency, and trade credit lenders exists to serve the needs of farmers,
agribusiness lending is highly concentrated and dominated by few major firms. Recent market
share data of the five largest agribusiness lenders indicates that this segment exceeds $ 10 billion.
(Source: www.agri.com)
CREDIT ASSESSMENT OF AGRICULTURAL LOANS

The project is undertaken at Belgaum District Central Cooperative Bank which highlights the
detail study of the credit appraisal on agriculture loans. The project describes the process of
appraising agriculture loan. There are various factors that are to be considered while evaluating
loan application.
Credit appraisal is a process to ascertain the risks associated with the extension of the credit
facility. It is generally carried by the financial institutions which are involved in providing
financial funding to its customers. Credit risk is a risk related to non repayment of the credit
obtained by the customer of a bank. Thus it is necessary to appraise the credibility of the
customer in order to mitigate the credit risk. Proper evaluation of the customer is performed this
measures the financial condition and the ability of the customer to repay back the loan in future.
Generally the credits facilities are extended against the security know as collateral.
But even though the loans are backed by the collateral, banks are normally interested in the
actual loan amount to be repaid along with the interest. Thus, the customer's cash flows are
ascertained to ensure the timely payment of the principal and the interest.
Agricultural Loans
Agriculture in India is the means of livelihood of almost two thirds of the work force in the
country. It has always been INDIA'S most important economic sector.
The monsoon however plays a critical role in Indian agriculture in determining whether the
harvest will be bountiful, average, or poor in any given year. One of the objectives of

government policy in the early 1990s was to find methods of reducing this dependence on the
monsoons.
The Department of Agriculture has a chief role to play in formulating policies based on crops,
seasonal growth and importing technology to enhance the fertility of soil.
There are special schemes for loans available for farmers. The government is backing the efforts
of many farmers and their families. Education and newspapers are reaching the rural lands and
todays farmer is recognized as an important player in providing the basic food for the entire
country.
Agriculture in India is improvising with collaboration in technology using tractors, fertilizers and
also new methods to aid farming. Barren lands are researched and guidelines for funding the
same are being allocated. Exhibitions on Rabi and Kharif crops and model schemes are allocated
to precisely boost sales and also promote export of local produce.
Rain fed farming, banking loans, education for the farmer are the chief initiatives by the
Government to develop the life of rural farming lands. Agriculture is also looked with the motive
of maintaining the ecological balance. Harvest preservation, marketing for agriculture products
and tertiary market up gradation are some of the plans followed by the agricultural department of
India.
It has to be understood that the life of a farmer goes beyond tilling and yielding crops. Their
standard of living has to be uplifted by small scale industries set up which will increase their
income. Other facilities like shelter, drainage system, education and alternative employment will
secure their future. The change is accepted well by farmers as India still believes in the phrase,
Jai Jawan Jai Kisan.
The main purpose of establishing co operative banks or societies is to provide financial support
to agricultural activities. However the bank also provides funds for different sector along with
agriculture.

LENDING OF LOAN TO FARMERS TAKES PLACE IN 2 DIFFERENT

STAGES
1. Bank advances to PACS PACS is Primary Agricultural Credit Society
2. PACS to Members
Here PACS is the member of the bank, and all those who are in need for credit, has to register
with this society, and according to their requirements the PACS sends proposal to the bank for
sanctioning for the required loan amount.
Here bank sends a Field Officer to the PACS, and studies the details about the farmers land, their
cultivation, crop and all other details, and accordingly submit the report to the Head Office,
In the next step Head Office scrutinizes, the details collected by Field Officer, and further it
sends to the Board for approval, the officer mentions all the norms such as loam amount, name of
the advancing person, his land, creditworthiness and all other details.
Further the board takes the application in to consideration and sanctions the loan amount to the
farmer. Here board studies the details about the crop he is going to cultivate, and the loan amount
he filed, the board has certain limits for sanctioning of the loan, beyond that it cannot sanction
the loan, so these analyses is carried out by the board.
Then the board sanctions the stated loan amount to the Saving Bank Account of farmer, direct
cash payment of loan is not carried out. Further collection of loan amount, interest is also done
through PACS, i.e. members pay to Society and society pays to bank. Every Taluka has a PACS.

The bank takes utmost care before sanctioning of the loan amount, the past performance is seen
and then advancement is made.
Every year PACS should limit application build up to the bank, here all the details of amount
recovered, name of the borrower, amount due, should be disclosed to the bank.
The loan is sanctioned on the basis of crop cultivated. Different crops have different limits and
procedures for advancement.
ANALYSIS AND INERTPRETATION OF DATA
Lending is very serious business. A decision to lend based on incomplete data will invariably
lead to losses and can result in the financial ruin of the banker.
This is where credit appraisal comes into its own. If properly prepared, it analyzes the borrower
and the environment within which he operates and recommends whether a loan should be
extended.
Credit analysis is therefore, required at all levels of corporate activity.
It must be acknowledged that a credit analysis does not make a loan safe? What it does do is that
it brings to the notice the strengths and weaknesses of a loan and thus affords a sound foundation
for a logical reason to be arrived at.
Lending Procedure
Most financial institutions provide credit and the success or failure of a financial institution will
depend heavily on its ability to manage lending well. Loan procedures must set out all the steps
to be followed in selecting customers, completing applications, loan appraisal and approval,
setting repayment schedules, loan contracts, disbursement, monitoring, loan collection, dealing
with delinquency and loan record-keeping. Procedures need to be simple enough to be easily
followed while meeting all the requirements of the institution.

Agricultural lenders face special challenges that are related to the specific nature of farm
production. High liquidity risks result from the seasonal nature of production and household
income. Other problems arise when many or all borrowers are affected by external factors at the
same time, known as covariant risk. Examples of this include the effects of drought, flood or
pests. Small scale farmers are rarely able to offer adequate collateral for loans. So agricultural
lenders must adopt lending practices that are preventive and avoid default rather than depend on
collateral based techniques
Cooperatives can be considered as operating in the semi-formal financial sector. They are not
chartered financial institutions but they are empowered or permitted to provide financial services
and products. These arrangements generally fall outside the regulation of the banking authorities
but operators are usually licensed and supervised by other government agencies, such as the
Cooperative Registrar. They regularly have written by-laws, statutes, constitutions or rules of
operation.
Credit unions and savings and credit cooperatives are voluntary financial organizations owned
and operated by members. Their purpose is to encourage savings by creating local deposit
facilities and then using the pooled funds to make loans for productive, consumer or social
purposes to their members. Primary level credit unions and savings and credit cooperatives are
often member-owners of vertically integrated secondary cooperatives which provide them with
central banking, trade association and business support services. In some developing countries
these secondary institutions are regulated as formal financial sector entities.
Multipurpose cooperatives may also provide financial services to their members but do this in
conjunction with other services such as input supply or marketing members crops. Governments
have often been keen to promote cooperatives but to be successful they have to remain private
business organizations owned and controlled by the people who use its products, supplies or
services.

PROCESS OF CREDIT ASSESSMENT IN BDCC BANK BELGAUM

Members approach co operative society
Societies accepts application forms and documents
Verification of documents by societies
Bank inspector verifies documents submitted by societies
Societies forward applications to DCC bank in its name

Bank Approves loans on the basis of scale of finance
Bank transfers amount to respective members account
Society distributes sanctioned amount to respective member
As shown in above diagram the process of credit appraisal and approval flows from one step to
another. First the person who wants loans approaches to the co operative society, he will get the
application if he is the member else he has to become the member.
Application is to be filled with the required documents. Then society verifies the documents and
sends the application to DCC Bank. After verifying the documents by bank, it credits the
approved loan amount in societies account but not to the individual applicant of the loan. Loan is
sanctioned on the bases of prescribed norms of the bank.
Banks appraisal for the loan remains for 3 years. I.e. bank will not appraise application for next 3
years for the same loan.
The repayment of loan also flows in the same direction as it granted. Applicant member has to
pay overdue payment to the society. Then society repays that amount to DCC Bank.
BDCC provides 2 types of Agricultural Loans:
Medium Term Loan.

Short Term Loan
Medium term loans -

These loans are subject to time duration of 3 to 5 years. Various MT agricultural loans provided
by BDCC bank are:
Purchase of tractor
Purchase of tractor trolley
Well repair, irrigation etc.

Pump set
Documents required for medium term agricultural loans

Record of the rights
Record of right of the hypothecated land.
Partners permission letter in case of presence of partners.
Valuation letter of the land.
Letter by local authority for availability of sufficient water, if loan is taken for water
machines.
In case of taking water from river, permission letter from the respective authority.
Quotation of the machinery from the supplier
Certificate from Electricity Board for distribution of electricity.
Blue print by engineer in case of fitting pipeline.
Member desire of such loans is required to fill the application form provided by the bank also
provide some of the following information required.
Complete name, address and photo of applicant.
Declaration stating size of the farm and availability of water facility in his farm.

Purpose of the loan applied and desired loan amount.
Applicant must provide the details about the income at present and the estimated income after
implementing the plan along with name of the crops cultivated and size of the farm.
Following tables shows the format.
Name of Area cultivated Income at Name of Area cultivated Income after

the crop present the crop implementing plan
It is said to be feasible if the income increases after implementing plan and it also proves the
proper use of the purpose of the loan.
Applicant has to give details of various loans in his name along with the purpose of loan,
amount and due date.
Statement of family members and relatives.
Society prepares individual files of members granted with loan. This file contains all the
documents submitted by the applicant member along with following reports.
Letter of proper utilization of loan: society, bank and bank inspector gives report about
proper utilization of loan. Member must use the loan amount only for the purpose
provided by him for taking loan.
Banks report about distribution of loan in the following format

Name Sanctioned Date Purpose of Documents about Signature

Loan amount loan utilization of loan of
(bills receipts) adviser
Society maintains the file which contains the following items in it.
Key of tractor
Receipt of vendor
Delivery note cum tax invoice by vendor
Form KMV 19
Temporary certificate of registration of tractor
Motor vehicle insurance
Invoice: for removal of excisable goods from a factory or warehouse.
DCC banks letter to vendor about sanction of loan to member along with name, amount
and details of accessories to be supplied.

Society also needs to maintain the details about installment of repayment of loans in the
following format
Purpose of loan Here main purpose of loan is to be written
Installment amount Interest Total amount Date of repayment
Loan amount is to be repaid into equal installments and this to be recorded as shown in the chart.
Rate of interest
The rate of interest on medium term agricultural loans for the year 2008-09 was 12.75%
Out of which 1% interest is paid by society and 11.75% interest is paid by state government to
the DCC Bank.
Co-operative society charges 3% of interest to the borrowers of medium term Agri loans.
Rate of interest for the year 2009-10 is reduced to 11.75%.
Short term loans -

Short term loans are subject to time duration of a one year.
Crop loans are the major short term agricultural loans.
Documents required for short term agricultural loans

Record of rights obtained from village accountant containing area of land, survey no. etc.,
Normal credit statement

Cultivation register
Estimation of income from crops
Promissory note
Agreement form
No due certificate etc.
For crop loan following securities are accepted:
Land
Crop
1 or 2 sureties
Scale of finance for loans
Scale of finance is a very important document for appraising the credit for agricultural loans. It
describes the limit of loan amount on particular crop and also states loan amount on different
conditions farming. After verifying the documents bank refers the scale of finance and approve
the loans on its bases.
The scale of Finance provides the details about short term loans provided to various types of
Crops:
FOLLOWING TABLE SHOWS THE SCALE OF FINANCE PER ACRE

FOR VARIOUS CROPS
Sl. No Types of the crops Finance scale
(In Rs)
1. a) Sugar cane fresh crop 17,000
b) Sugar cane second crop 12,000
2. a) Tobacco rainy 5500
b) Tobacco irrigation 5000
3. a) Cotton irrigation 7000

b) Cotton rainy 3500
c) Cotton D.C.H 8000
4. a) Jawar 2500
b) Jawar hybrid 3000
c) Jawar hybrid irrigation 7000
5. a) Potato 13500
b) Potato in rainy 9000
6. Turmeric 17000
7. Chilly 6000
8. Beetle Leif 11000
9. Banana 16500
10. Banana tissue culture 24000
11. Onion 7000
12. Tomato hybrid 9000
13. Grapes seedless 40000
14. Cabbage 7000
15. Cauliflower 7000
16. Promo grains 15000
17. Sapota 2500
18. Guava 3500
19. Pumpkin 16000
20. Lime 5500
21. Carrot 4500
22. Green peas 6000
23. Mango 3000

24. Jasmine 6500
25. Rose 11000
26. Marigold 5500
27. Austere flower 5500
28. Sun flower 5500
29. Egg plant 5500
30. Ladys finger 6500
31. Capsicum hybrid 18000
32. Coconut 4500
33. Cashew nut 1700
34. Patchouli 27500
35. Rose merry 15500
36. Water melon 8000
37. Sericulture 11000
38. Pam oil 5500
Rate of interest
The rate of interest on short term agricultural loans for the year 2008-09 was 10.50%
Out of which 1% interest is paid by society, 3% interest by Central Govt through NABARD and
remaining 6.50% interest is paid by state government to the DCC Bank.
Co-operative society charges 3% of interest to the borrowers of short term Agri loans.
Rate of interest for the year 2009-10 is reduced to 10.45%.

STATEMENT SHOWING TALUKA WISE SEASONAL AGRI LOAN

OUTSTANDING
SEASONAL AGRICULTURAL LOAN (YEARS)

TALUKA 2009 2010
ATHANI - -
BAILHONGAL 7608 7608
BELGAUM 289564 188613
CHIKODI 5433034 3173000
GOKAK 363610 325000
HUKKERI 562336 262216
KHANAPUR 5630600 3307000
RAIBAG
RAMDURG
SAUNDATTI 3309496 2818691

INTERPRETATION
From the above chart, it can be seen that, the outstanding loan amount has shown a declining
trend; from 2009 to 2010 it shows that seasonal agricultural loans taken by farmers are being
paid timely.
STATEMENT SHOWING TALUKA WISE SEASONAL AGRI LOAN

(DKCC) DECENT KISAN CREDIT CARD LOAN OUTSTANDING
SEASONAL AGRICULTURAL LOAN DKCC (YEARS)

TALUKA 2009 2010
ATHANI 808130428 978636653
BAILHONGAL 305589923 34049696
BELGAUM 32518463 46846889
CHIKODI 612101503 768997893
GOKAK 528518921 629801565
HUKKERI 512484875 605889786
KHANAPUR 151564996 200822721
RAIBAG 447659997 529925156
RAMDURG 215195854 300558626
SAUNDATTI 176971102 220349190

INTERPRETATION
From the above chart it can be seen that, in the year 2010, the outstanding loan were increased,
in all the Talukas. this is because Decent Kisan Credit Card loan scheme is a easily made
available loan through out India, recognised by government, and majority of the farmers avail
this loan, since its advancements are more year on year, its outstanding rate is also more.
STATEMENT SHOWING TALUKA WISE SCHEMATIC FINANCE

LOAN OUTSTANDING

SCHEMATIC FINANCE LOAN (YEARS)

TALUKA 2009 2010
ATHANI 5707394 4674362
BAILHONGAL
BELGAUM
CHIKODI 5649060 3900900
GOKAK 341200 170600
HUKKERI 4058900 3802850
KHANAPUR
RAIBAG 3218520 2565520
RAMDURG 6587209 6161339
SAUNDATTI 3058434 2866434
INTERPRETATION
From the above chart we can see that, the outstanding loan has decreased from the year 2009 to
2010 in all Talukas, the loan is meant for irrigation, pipeline, Pumpset purposes. Bailhongal,

Belgaum, Khanapur, has not availed loan under this head, as procurement of such equipments
has not done, due to non availability of irrigation facility.
STATEMENT SHOWING TALUKA WISE MEDIUM TERM

AGRICULTURAL PURPOSE LOAN OUTSTANDING
MEDIUM TERM AGRICULTURAL PURPOSE LOAN

(YEARS)
TALUKA 2009 2010
ATHANI 26744224 45886924
BAILHONGAL 7092200 14197000
BELGAUM 1162539 2044639
CHIKODI 26881785 36226214
GOKAK 16900565 54814295
HUKKERI 17609185 31984546
KHANAPUR 1509000 2908200
RAIBAG 18496400 37055526
RAMDURG 3969600 6613900
SAUNDATTI 4549686 14541886

INTERPRETATION
From the above chart, it can be seen that the outstanding loan on medium term agricultural
purpose has increased year on year, the loan is given to purchase tractor, purchase of milk cattle,
ploughs etc.
STATEMENT SHOWING TALUKA WISE MEDIUM TERM

CONVERSION REPHASEMENT LOAN OUTSTANDING
MEDIUM TERM CONVERSION REPHASEMENT LOAN

(YEARS)
TALUKA 2009 2010
ATHANI 21054451 6175254
BAILHONGAL 4531424
BELGAUM 1990240
CHIKODI 1314366
GOKAK 2679863 445000
HUKKERI 1587419

KHANAPUR 4894210
RAIBAG 14359045 7080648
RAMDURG 3033722 333843
SAUNDATTI 3260370 282173
INTERPRETATION
From the above chart, we can observe that, the outstanding loan amount was high in the year
2009, and very negligible in 2010. Basically this conversion is made to Term Loan form
Agricultural Loan, by government order.
TABLE SHOWING THE TOTAL AGRI LOAN OF ALL TYPES FOR

ALL THE TALUKAS FOR YEAR 30-3-2009

SAO
SAO SCHEMATIC MT AGRI MT CONV
TALUKA LOANS TOTAL
LOANS FINANCE PURPOSE REPHASEMENT
(DKCC)
8616364
ATHANI
808130428 5707394 26744224 21054451 97
3172211
BAILHONGAL
7608 305589923 7092200 4531424 55
3596080
BELGAUM
289564 32518463 1162539 1990240 6
543303 6513797
CHIKODI
4 612101503 5649060 26881785 1314366 48
5488041
GOKAK
363610 528518921 341200 16900565 2679863 59
5363027
HUKKERI
562336 512484875 4058900 17609185 1587419 15
563060 1635988
KHANAPUR
0 151564996 1509000 4894210 06
4837339
RAIBAG
447659997 3218520 18496400 14359045 62
2287863
RAMDURG
215195854 6587209 3969600 3033722 85
330949 1911490
SAUNDATTI
6 176971102 3058434 4549686 3260370 88

From the above chart, we can observe that the total agricultural loan outstanding in the year 2009
is highest in Athani, followed by Chikodi, Gokak, Hukkeri and Raibag. The advancement is also
large and subsequently the repayment is also highest in these areas, as these areas are irrigated
more crops are cultivated.
TABLE SHOWING THE TOTAL AGRI LOAN OF ALL TYPES FOR

ALL THE TALUKAS FOR YEAR 30-3-2010
SAO SAO
TALUKA LOANS LOANS SCHEMATIC MT AGRI MT CONV

(DKCC) FINANCE PURPOSE REPHASEMENT TOTAL
97863665
ATHANI 3 4674362 45886924 6175254 1035373193

BAILHONGAL 7608 34049696 14197000 48254304
BELGAUM 188613 46846889 2044639 49080141
76899789
CHIKODI 3173000 3 3900900 36226214 812298007

62980156
GOKAK 325000 5 170600 54814295 445000 685556460

60588978
HUKKERI 262216 6 3802850 31984546 641939398

KHANAPUR 3307000 20082272 2908200 207037921
1
52992515
RAIBAG 6 2565520 37055526 7080648 576626850

30055862
RAMDURG 6 6161339 6613900 333843 313667708

22034919
SAUNDATTI 2818691 0 2866434 14541886 282173 240858374
From the above chart, we can observe that the total agricultural loan outstanding in the year 2010
is highest in Athani, followed by Chikodi, Gokak, Hukkeri and Raibag. The advancement is also
large and subsequently the repayment is also highest in these areas, as these areas are irrigated
more crops are cultivated.
STATEMENT SHOWING PERCENTAGE OF LOAN RECOVERED
AND OVER DUE BALANCES IN ALL THE TALUKAS FOR
SEASONAL AGRICULTURAL LOANS (SAO) AS ON 31-3-2009
TALUKAS BALANCE O.D. PERCENTAGE RECD

BAILHONGA 7608 97.30
L
BELGAUM
CHIKODI 5433034 37.93
GOKAK
HUKKERI
KHANAPUR 5630600 28.64
SAUNDATTI 3309496 31.52
INTERPRETATION
From the above Pie chart, we can see that Khanapur Taluka has highest default rate i.e. 39%,
followed by Chikodi 38% and Saundatti 23%, from Khanapur only 28.64%, Chikodi 37.93% and
Saundatti 31.52% of the loan amount has been recovered. Where as Belgaum, Hukkeri and
Gokak farmers has paid 100%. This has happened because of multi crop cultivation process
followed by these 3 Talukas. Remaining Talukas performance was worst due to loss of crop.

SEASONAL AGRICULTURAL LOANS (DKCC) AS ON 31-3-2009

ATHANI 48723315 90.99
BAILHONGA 30013556 89.58
L
BELGAUM 2379363 93.97
CHIKODI 12226252 97.44
GOKAK 26193998 93.82
HUKKERI 8023414 97.85
KHANAPUR 26550244 78.46
SAUNDATTI 88577449 66.39
RAIBAG 15230304 95.22
RAMDURG 48108721 77.29
INTERPRETATION
Above pie chart reveils information about percentage of default in decent Kisan credit card loan
scheme as on 31-3-2009. Saundatti has highest default rate 29%, only 34% of the loan amount
has been received from Saundatti, followed by Ramdurg, Athani, Bailhongal and Khanapur.
Hukkeri and Chikodi have outstanding performance in paying their loans, because in last fiscal
year, the crops such as Sugarcane Fresh and onion crop gave a profitable return to farmers.

MEDIUM TERM AGRI LOANS AS ON 31-3-2009
ATHANI 690024 80.06
L
BELGAUM 6539 97.79
CHIKODI 3671 99.89
GOKAK 240295 85.19
HUKKERI 18100 98.94
KHANAPUR 100.00
RAIBAG 100.00
RAMDURG 4500 98.94
SAUNDATTI 262620 50.17
INTERPRETATION
From the above chart, it can be inferred that, Athani holds highest percentage 51% of default in
payment, it has paid only 20% of loan amount, and rest 80% is bad debt. Basically this loan is
given for the period of 3 to 5 years, where farmers purchase equipments and other tools which
are used for farm purpose. Here the asset purchased itself is a security for the bank. Remaining
Talukas has performed satisfactorily.

MEDIUM TERM SCHEMATIC LOANS AS ON 31-3-2009
TALUKASBALANCE O.D. PERCENTAGE RECD

ATHANI 1540000 52.36
CHIKODI 181260 89.39
GOKAK 100.00
HUKKERI 100.00
RAIBAG 2565520 12.56
RAMDURG 100.00
SAUNDATTI 100.00
INTERPRETATION From the above chart, we can see that Athani and Raibag has
highest default rate, as these two Talukas are fully irrigated, the equipments purchased by the
farmers are for irrigation purposes such as trolleys, Pumpset etc. here some farmers have
willfully defaulted with the intension that government will wave off the loan amount.
MEDIUM TERM REPHASEMENT LOANS AS ON 31-3-2009

ATHANI 5470131 76.25
L
BELGAUM 52798 98.24
CHIKODI 100.00
GOKAK 269160 96.95
HUKKERI 34109 98.87
KHANAPUR 100.00
RAIBAG 4381211 75.58
RAMDURG 423234 89.79
SAUNDATTI 264917 92.56
INTERPRETATION
From the above chart, we can see that, Athani and Raibag having highest default rate, the loan
which is primarily given for agricultural purpose, but then the government has passed order
stating that all cooperatives should convert Agri loan in to term loan for a period of 3 years.
Remaining all Talukas have benefited by paying loan and converting them in to term loans.
KISAN CREDIT CARD
Kisan Credit Card Scheme (KCC) aims at providing adequate and timely support from the
banking system to the farmers for their short-term credit needs for cultivation of crops. This
mainly helps farmer for purchase of inputs etc., during the cropping season. Credit card scheme
proposed to introduce flexibility to the system and improve cost efficiency.
Under this scheme farmers can use the loan amount as and when they required without much
pressure of interest. Bank has distributed Kisan credit cards to eligible candidates of all the
farmers credit co operative societies and it is planning distribute to all the farmer members in
future.
Till the end of June 2009 bank has sanctioned Rs. 52,965 lakhs under this scheme.
160,454 Kisan credit card members are included to accidental insurance plan by the bank.
BENEFITS OF KISAN CREDIT CARDS -
Simplifies disbursement procedures
Removes rigidity regarding cash and kind
No need to apply for a loan for every crop
Assured availability of credit at any time enabling reduced interest burden for the farmer.
Helps buy seeds, fertilizers at farmers convenience and choice

Helps buy on cash-avail discount from dealers
Credit facility for 3 years no need for seasonal appraisal
Maximum credit limit based on agriculture income
Any number of withdrawals subject to credit limit
Repayment only after harvest
Rate of interest as applicable to agriculture advance
Security, margin and documentation norms as applicable to agricultural advance
The following details provide us the details of short and medium term loans over the years. This
helps in understanding the banks soundness in lending and recovering the loan.
FINDINGS
Bank is following the principles of co operative and helping to improve the economy of the
country by providing financial support to weaker section of the society.
It has been found that loan is not sanctioned directly to the farmers, first the members
approaches to PACS Primary Agricultural Credit Society situated in every Taluka, and
then the proposal by PACS is forwarded to Bank.
The banks profit is showing an upward trend from the last several years. The recovery
statistics since 1st April 2008 to 31st March 2009 shows a significant growth in profits
resulting 89.51% in Short term, 77.70% in Medium Term, 85.72 in Medium Term
Conversion loan recovery.
The default rate in repayment of Agricultural Loan has reduced drastically. At present the
rate is 15%, compared to 18% in last fiscal year.
It has been found that, there is no collateral security taken from the farmers while
sanctioning loan. Except one or two sureties and the land or crop itself is a security
More farmers are availing conversion loan with an intension to convert it in to term loan,
as the interest and principal is payable only after 3 years, which is benefiting farmers.
Till date no society has defaulted or closed in any of the Taluka
It has been found that the bank lends agricultural loan in to 4 major schemes such as SAO
loan, SAO (DKCC) loan, Schematic Finance loan, MT Agricultural Purpose, MT
Conversion Rephasement loan.
By the study it has been found that, Farmers availing loan is increasing significantly, this
is because the interest rate is very low, though the rate is 10.50%, it has been subsidized
to the tune of 7.5%. (Karnataka State Govt pays subsidy of 5.5% and NABARD pays
2%). Thus the farmer is availing loan only at a negligible rate of 3%.
Bank is performing its operation throughout the district. It has become possible for the
rural people of the district to get very good banking facilities.
The study reveils that the default rate is highest for Rephasement loan in Athani (49%),
Schematic Loan in Raibag (60%), MT Agri Purpose in Athani (51%), and DKCC in
Saundatti (29%), SAO loan in Khanapur (39%)
With the interaction of bank officials it has been found that, Multi Bank Lending is taking
place on the same security. And which is not identifiable by the banks.
In the case if a farmer defaults in payment of loan, the case is filed by PACS to the JRCS
(JOINT REGISTRAR OF CO-OPERATIVE SOCIETY) BANGALORE, and the final
judgement vests with JRCS. The process of justice is as follows first ABN i.e. Arbitrage
case is filed, second step is Hearing, third step is Award i.e. Order is passed, Fourth is
Execution.
The bank or the PACS does not right to punish any member/farmer directly, in case of
default committed by farmer.
SUGGESTIONS
In the light of the study conducted at the BDCC bank and the specific issue of agricultural credit
that was examined during study period following suggestion are made.
In order to stop Multi Bank Lending, the bank should device a Mechanism where in it
can identify the farmer who has already procured loan from any other society or
nationalized bank with the same collateral security. This can be done by building a
New Form called as Security Form by PACS who are situated in Taluka places, in that
all the details regarding land, building, and crops and whether he procured any loan
from other bank or no is furnished.
Further a Field Officer should investigate the details therein furnished is true or false.
In this way this double lending system can be minimized.
Farmers are procuring Agricultural loan, with an objective for using wholly for that or
related purpose. But according to interaction with manager, it has been found that,
some of the farmers are using Agri loan for there personal usage. Regular inspection
at different interval should be carried out by PACS to see that the loan is used for the
purpose for which it is meant.

Processing of loans in this bank is entirely manual and time consuming, thus
automation process should be adopted for fast retrieval of application, scrutiny and
sanctioning of loan amount.
Few farmers are procuring Agri loan with an intention that the interest rate is very
less but not for using it for agricultural purpose. Unnecessary procurement of loan is
taking place, and further loan is taken at the rate of 3% and they are investing in
Fixed Deposit Avenues, and earning a return of 7 to 8% and making a profit of 4%.
According to bank official this should not happen, since the intention of the central
and state government is misused by this conduct. To stop this Bank in accordance
with PACS should study the fact that at this point in time whether it is necessary to
lend Agri Loan or no. and then only lending should take place.
To avoid human error residing with farmers, i.e. some of the farmer procure loan
saying a particular crop they are going to cultivate, but actually they will end up in
cultivate some different crop.
E.g. sugarcane is having highest loan amount, therefore farmers are procuring loan
saying they will cultivate sugarcane, but in reality they are cultivating different crop
and the remaining amount is being used for there personal purpose. The field officer
should investigate and if any difference is found in the cultivation of crop,
immediately the case should be filed against that particular farmer, and stop the
cultivation of that crop.
Field officers though trained, but not to the fullest extent, and the number of field
officer or inspectors is very less in the district, they cannot inspect all the Talukas in
an effective manner. Thus the number should be increased, and facilities like good
vehicle, staying, must be given.
Processing time by JRCS takes decision in lengthy manner, i.e. 3 to 4 years hearing,
till then the bank will not benefiting. Thus each district should be given apex
authority or tribunal to hear the case and solve it immediately.
Bank should setup a fixed and definite mechanism for revive of default by involving
senior executives, recovery officers along with the concerned borrowers where
problem should be received and solution should be formulated.
CONCLUSION
In this study, Credit appraisal of agricultural loans of the BDCC bank is undertaken. Along with
this, a study of different section of the bank has also been undertaken. Developments of
agriculture, up welfare of weaker section, rural development, and extension of banking services
are some of the important aims of the BDCC bank. This can be achieved only if bank operates
with highest efficiency and satisfactory service.
To generate income in rural area co-operative credit can contribute enormously. In this direction
the BDCC bank has undertaken several measures to achieve goal, they are opening the branches
in rural area , linking credit with marketing increasing savings and deposits, granting loans to
both agriculture and non-agriculture sector.
The bank with its various branch network is working with highest efficiency to ensure optimum
utilization of funds with available infrastructure. It has introduced innovative schemes in rural
areas to achieve development. Bank operates mostly with its own resources without depending
on Apex co-operative bank. This is the inherent strength of the bank. The recovery percentage in
BDCC Bank is highest. On the whole bank is capable in providing economic growth with social
justice.

Credit Assessment On Agricultural Loans

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THE BELGAUM DISTRICT CENTRAL CO-OPERATIVE BANK LIMITED

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 1

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 2

TITLE OF THE PROJECT

CREDIT ASSESSMENT ON AGRICULTURAL LOANS

Interaction with the Bank officials

Interaction with co-operative society officials.

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 3

OBJECTIVES OF THE STUDY

To study importance of agricultural loans

To study types of agricultural loans.

To study the process of agriculture advances.

To study the assessment of a loan proposal.

LIMITATIONS OF THE STUDY

1. The availability of data is limited

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 4

INDIAN BANKING INDUSTRY

THE STRUCTURE OF INDIAN BANKING SYSTEM

PROFILE OF THE BDCC BANK LTD

ORGANISATIONAL STRUCTURE OF THE BDCC BANK LTD

VISION AND MISSION STATEMENT

SCHEMES OF THE BDCC BANK LTD

BRANCHES OF THE BDCC BANK LTD

MANAGEMENT OF THE BDCC BANK LTD

VARIOUS DEPARTMENTS OF THE BDCC BANK LTD

SUMMARY OF ANNUAL REPORTS

GENERAL INTRODUCTION ABOUT AGRICULTURAL LOANS

BRIEF ABOUT AGRICULTURAL LOANS

CREDIT ASSESSMENT OF AGRICULTURAL LOANS

ANALYSIS AND INTERPRETATION OF DATA

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 5

PROCESS OF CREDIT ASSESSMENT IN THE BDCC BANK LTD\

BALANCE SHEET AS ON 31-3-2009

91st Annual report of BDCC Bank Belgaum

Journals and magazines related to agriculture

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 6

BALANCE SHEET AS ON 31ST MARCH 2009.

Capital and liabilities Amount Property and Assets Amount

Subscribed share capital 50,00,00,000 Cash 48,21,40,685

Paid up capital 46,26,17,855 Balance with other banks 4,56,31,48,698

Reserve fund and other Investments 30,30,63,000

overdue Interest reserves 1,50,11,52,158 Library 46,841

Consortium borrowings 29,87,34,830 Building premises 2,05,54,900

Interest payable 44,54,539 Furniture 2,07,65,886

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 7

Other liabilities 52,62,18,033 Vehicles 14,57,559

Profit and loss a/c 6,33,42,065 Overdue interest 1,50,11,52,158

Total 15,08,07,00,788 15,08,07,00,788

LOAN RECOVERY STATISTICS

Other loans from 1st April 2008 to 31st March 2009

Sr. No Loans Demand Recovery Dues %

1 Short term agri loans 30889.06 27648.20 3240.86 89.51

2 Medium term agri 252.81 196.44 56.37 77.70

Total 36079.94 31494.19 4585.75 87.29

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 8

2. Democratic management and equality of voting rights A cooperative bank is democratic

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 9

6. Education training and information to members Co-operative provides education,

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 10

INDIAN BANKING SYSTEM

KLSs INSTITUTE OF MANAGEMENT EDUCATION & RESEARCH, BELGAUM 11

THE STRUCTURE OF INDIAN BANKING