BBA 6011 BANKING CONCEPT AND

PRACTICE

TOPIC: Role of Commercial Bank in

Agricultural Development
 What do you mean by Commercial Banks?
 A commercial bank is a type of financial institution that
accepts deposits, offers checking account services,
makes various loans, and offers basic financial products
like certificates of deposit (CDs) and savings accounts to
individuals and small businesses.
 Commercial banks make money by providing loans and
earning interest income from those loans. The types of
loans a commercial bank can issue vary and may
include mortgages, auto loans, business loans, and
personal loans. A commercial bank may specialize in just
one or a few types of loans.
 Types of Agriculture Credit:
 Agriculture requires the following three types of credit:
(a) Short-Term: It refers to the loans required for meeting the short-term
requirements of the cultivators. These loans are generally for a period not
exceeding and repaid after the harvest. For example loans required for the
purchase of fertilizers, HYV seed, for meeting expense on religious or social
ceremonies etc.

(b) Medium-Term: These loans are for a period up to 5 years. These are the
financial requirements to make improvements on land, buying cattle or agricultural
equipments, digging up of canals etc.

(c) Long-Term: These loans are for a period of more than 5 years and are generally
required to buy additional land or tractor or making permanent improvements on
land.
 Role of Commercial Banks in Agriculture
Development:
Commercial banks are providing loans to the
farmers for meeting their short and medium
term requirements. The loans are advanced to
the farmers against the security of land, crop,
fixed assets and even on personal security.
 State Bank Of India(SBI)
 State Bank of India (SBI) is the pioneer and market leader in Agri financing. It has a vast network
of 16,000 branches all over India, which covers more than 1.01 crore farmers. Their services
include the whole range of agriculture and related activities with some of the exclusive features
like:
• Low-interest rates
• No intermediaries
• No hidden cost
• Quick loan sanction and disbursement
 The bank gives loans to other agricultural activities or allied activities like Poultry, Dairy, and
Fisheries etc.
 SBI also provides loans for purchase of machinery like Tractors, Power Tillers, and Combined
Harvesters, etc.
 It offers loans for crop production in the form of ACC / KCC. The loan covers crop production
costs, post-harvest expenses, emergencies etc.
 the Kisan Credit Card (KCC) is available in the form of electronic Rupay Card, through which the
farmer can withdraw money directly from ATMs, buy items like fertilizers through PoS
 ICICI Bank
 Through the ICICI Bank agriculture loan, the farmers can purchase farm animals or agricultural
equipment.
 The farmers can pay back these loans over a period of 3 to 4 years in -monthly/half-yearly/
yearly instalments as per his convenience.
 To avail this loan, the farmer needs to submit a general application form, KYC documents, land
documents, and post-dated cheques.
 ICICI Bank also provides a Kisan Credit Card/Kisan Card (KCC) to farmers. The farmers can use
this card at any ATM across the country. To avail the KCC, you just need a piece of farming
land and must be 18 to 70 years of age
 Punjab National Bank (PNB)
 Punjab National Bank has numerous financial products related to the farming sector.
 For instance, a person can take loans from the PNB to set-up biogas units or minor
irrigation apparatus, develop wastelands, etc.
 Moreover, those who are interested in pursuing a career in apiculture (beekeeping) can
also contact the bank for financial support.
 PNB also provides financing for warehouse receipt along with insurance coverage and
monetary support to growers in the event of crop failure, due to natural disasters, pests
and diseases. The scheme is known as Pradhan Mantri Faisal Bima Yojana.nancial support.
 Allahabad Bank

 Allahabad Bank is yet another nationalized bank in India that provides Kisan Credit Card (KCC)
under its Akshay Krishi scheme.
 Akshay Krishi scheme is an exclusive scheme to provide adequate and timely financial support
under a single window to the farmers. Facilities given under this scheme are:
• Crop loan Component - Cash Credit
• Allied activities component - Cash Credit - Working capital for activities allied to agriculture
• Term loan Component - To meet Capital requirements
 Its Potato Growers Credit Card Scheme is a unique scheme that provides adequate and timely
credit support under a single window to the farmers for their agriculture and other needs.
 Allahabad Bank also provides loan for machinery like Tractor /Power Tillers.
 NABARD

National Bank for

Agriculture and Rural
Development (NABARD)
was established on July 12,
1982 in Mumbai with the
paid up capital of Rs. 100
crores by 50: 50 contribution
of government of India and
Reserve bank of India.
 OBJECTIVES BEHIND ESTABLISHING NABARD

 To serve as an apex financing agency for the

institutions providing investment and production
credit for promoting various developmental
activities in rural areas.
 To take measures towards institution building for
improving absorptive capacity of the credit
delivery system, including monitoring, formulation of
rehabilitation schemes, restructuring of credit
institutions and training of personnel.
 To coordinate the rural financing activities of all
institutions engaged in developmental work at the field
level and liaison with the Government of India, the State
Governments, the Reserve Bank and other national level
institutions concerned with policy formulation;
 NABARD gives high priority to projects formed under
Integrated Rural Development Program (IRDP).
 NABARAD also recommends about licensing for RRBs
and Cooperative banks to RBI.
 Government of India & NABARD

i. Rural Infrastructure Development Fund: RIDF was established in 1995-96 with a

corpus of Rs. 2,000crores with the major objective of providing funds to state
governments and state owned corporations to develop rural infrastructure such as
rural roads, rural bridges, irrigation works, soil conservation, flood protection,
drinking water, infrastructure for rural education etc. The total corpus of RIDF till
2007-08 (RIDF-I to RIDF-XIII) amounted to Rs.72, 000 crores with 2008-09 budget
further adding the amount of RIDF XIV of Rs. 14,000 crores to this corpus. The total
sanctions and disbursements as on 30 June 2007 aggregated Rs. 61312.27 crores
and Rs.38581.82 crores respectively.

ii. Micro Finance Innovations: The credit accessibility for the poor from
conventional banking is limited due to lack of collaterals and information. Micro
finance has emerged as an alternative financial vehicle that provides micro credit
or small loans granted to the poor without any collateral. These loans are provided
through micro finance institutions (MFIs). NABARD plays a key role in developing
the MFIs by providing them refinance facility at low interest rates.
iii. Kisan Credit Card Schemes: The kisan credit cards (KCC) scheme was
introduced in 1998-99 to facilitate short-term credit to farmers. Each farmer is
given with a kisan credit card and a pass book for providing revolving cash
credit facilities. NABARD provide refinance facility to commercial banks and
cooperatives to provide credit under this scheme.

iv. Refinance under Swarnajayanti Gram Swarozgar Yojana (SGSY): NABARD

provides refinance facility to institutions that support SGSY.

v. Co-operative Development Fund: NABARD has set up the cooperative

development fund in 1993 with objective of strengthening the co-operative
credit institutions in the areas of resource mobilization, recovery position etc. the
assistance is provided to cooperatives by way of soft loans or grants
PRESENTATION BY :

 Shikhar Kundra (BBA/4543/2016)

 Rishabh (BBA/4553/2016)
 Pravika Srivastava (BBA/4555/2016)
 Sudhanshu(BBA/4599/2016)

Thank You