1.

INTRODUCTION
Microfinance refers to the provision of financial services to poor or low-income clients,
including consumers and the self-employed. The term also refers to the practice of
sustainable delivering those services.
More broadly, it refers to a movement that envisions a world in which as many poor and
near-poor households as possible have permanent access to an appropriate range of high
quality financial services, including not just credit but also savings, insurance, and fund
transfers.
It is recently developed loan scheme which was developed by the Bahaman bank of
Bangladesh in 1990.The main purpose of this scheme is to give the financial support to
the poor who are having there monthly income less than rs.7000.in our state Almora
Bank has the similar scheme which provide loan to poors. through which they can
expand there business and can increase there monthly income.

1.1 Need of the Study

The main need of the study was to identify the living condition of person associated with
farming and allied business. What is there monthly income? How many people are
dependent on them? How Uttaranchal Gramin Bank can help them financially to improve
there living standard. If Uttaranchal Gramin Bank provide them the money what will they
do with that money. Will they expand there business with that money or will they utilize
that money somewhere else.

1.2 CHAPTER ARRANGEMENT

CHAPTER 1
It contains all about need for study as well as objectives of the project and period of
study, which it take to complete.
It also contain about the fieldwork and its method of analysis along with limitations.

CHAPTER -2
It contain all about the industry and the profile of the company and the structure of the
organization. About microfinance and Introduction about Pesiculture

CHAPTER 3
It comprises of data analysis and its conclusion, which includes the survey method
though, percentage technique.

CHAPTER 4
In fourth chapter researcher gave the findings and the recommendation of the study.

1.3 RESEARCH OBJECTIVES

To know the economic condition of the Farmers and to get feedback from the
customers and make it more marketable
To know the economic condition of small retailers/ dealers.
To know whether they know about micro- finance and make strategy for further
development in the micro-finance areas.
To know whether people know about the services provided by Almora Urban
Bank.
To know about the other competitors in this field.
To know the time associated with this business.
How the demand fluctuates effect there business.
At what price they sell there product.

1.4 SAMPLE SIZE

The total sample size was 100 (Age ranging between 18 yrs to 65 yrs)
Sample Design:
As complete enumeration of all the members of the population (i.e. all the customer who
had taken housing loan), which is known, as census enquiry is not possible so I have used
sampling technique.
Sample Unit: Customers within Gopashwer and Chamoli district

Sample Type:
Area sampling
Sample Area:
Gopeshwar,

Mathana,

Bandwara,

Nijmula,

Piplkoti,

Mayasuar,

Chinka

Timing of survey:
9.00 am to 12.30 pm and 4.00 pm to 7.00 pm

1.5 PERIOD OF STUDY

The total time duration of this study was eight week (30 days) in between it I collect
primary data and observe secondary data. The time period of this study was 25th June to
24th July 09.

1.6 RESEARCH METHODOLOGY

RESEARCH INSTRUMENT USED
A questionnaire consists of list of questions to be asked from the respondents and the
space provided to record the answer / responses. Questionnaire can be used for the
personal interviews, focus groups, mails and telephonic interviews. The choice among
these alternatives is largely determined by the type of information to be obtained and by
the type of respondents from whom it is to be obtained.

The common factor in all varieties of the questionnaire method is this reliance on verbal
responses to question, written or oral.
Questionnaire in the project consists of:
v Multiple choice questions
v Dicthomus
MULTIPLE CHOICE QUESTIONS:
Questions of this type offer the respondents an alternative to choose the right answer
among others. It is faster, time saving and less biased. It also simplifies the tabulating
process.
DICTHOMUS:
These are the questions which are Boolean in nature. These answers are straightforward
and respondents have to answer them in a straight way. That means the answer can only
be either Yes or No.
NONDISGUISED, STRUCTURED TECHNIQUES
The non structured techniques for attitude measurement are primarily of value in
exploratory studies, where the researcher is looking for the salient attributes of given
products and the important factors surrounding purchase decisions as seen by the
consumer. Structured techniques can provide a more objective measurement system, one
which is more comparable to a scale or a yardstick. The term scaling has been applied to
the efforts to measure attitudes objectively, and a number of useful scales have been
developed.

FIELD WORK - SAMPLING TECHNIQUE USED & SAMPLING METHODS

Sample design is a definite plan of obtaining some items from the whole population. The
sample design used in this project is two state sampling i.e. Cluster and convenience. In
the probability sampling methods, each items in the sample is chosen one at a time from a
complete list of universe elements. In marketing research practice, it will sometimes be
more expedient to select clusters or groups of universe elements, rather than to choose
sample items individually.
Sampling methods in which universe elements are chosen in groups ---- rather than
individually -- are called cluster-sampling methods. They are widely used in the sampling
of human

populations. When no complete universe listing exists, a type of sampling

is called area sampling may be the only practically feasible form of probability sampling.
Sample design is a definite plan of obtaining some items from the whole population. The
sample design used in this project is two state sampling i.e. cluster sampling and
convenience sampling. The whole city was divided into some geographical areas and I
have chosen
SAMPLING
Sampling Technique : Non probability sampling
(A non probability sampling technique is that in which each element in the population
does not have an equal chance of getting selected)
Method

: Direct interview through questionnaire and Fact to face

interview

METHOD USED FOR DATA COLLECTION

Questionnaire was prepared keeping the objective of research in mind.

Questions were asked to respondents as regards to there intention to take loan.

The help of questionnaires conducted direct interviews, in order to get accurate

information.

In order to get correct information I had to approach consumers ranging from 15

yrs to 65 yrs.

I visited as many respondents as I can and asked them about schemes provided by
Uttaranchal Gramin Bank?

It is really a Herculean task to understand Consumer Behavior, as the definition

suggest, Consumer behavior is a physical activity as well as decision process
individual engaged in when evaluating, acquiring, using and disposing goods
and services.

In order to collect accurate information I visited to various market, farmers,

dealers of farm products and rural development department each and every
question was filled personally by the respondents and checked properly.

1.7 DATA ANALYSIS METHOD

I used percentile method to calculate the primary data and Graphical method were used to
show and analyze the information which gathered during the research period.

1.8 SCOPE OF THE STUDY

Increase the awareness level of micro finance scheme used by Uttaranchal
Gramin Bank.
Seek the general perception of consumer towards Uttaranchal Grami n Bank.
To find the performance of Uttaranchal Gramin Bank vis--vis other banks.

1.9 LIMITATIONS
v Limited time available for interviewing the respondents. As a result of this it was
not possible to gather full information about the respondents.
v When I interviewed children and teenagers, sometimes they use to give answers
under the influence of their parents or elders.
v As summer training is going under summer season so sometimes
people are less interested in filling up questionnaire.
v Sometimes the problem which I face is language problem for which I have to
make them understand.
v Non-cooperative approach and rude behavior of the respondents.
v If the respondents answer does not falls between amongst the options given then it
will turn up to be a biased answer.

INDIAN BANKING
Introduction
The Indian banking can be broadly categorized into nationalized (government owned),
private banks and specialized banking institutions.The Reserve Bank of India acts a
centralized body monitoring any discrepancies and shortcoming in the system. Since the
nationalization of banks in 1969, the public sector banks or the nationalized banks have
acquired a place of prominence and has since then seen tremendous progress. The need
to become highly customer focused has forced the slow- moving public sector banks to
adopt a fast track approach. The unleashing of products and services through the net has
galvanized players at all levels of the banking and financial institutions market grid to
look anew at their existing portfolio offering. Conservative banking practices allowed
Indian banks to be insulated partially from the Asian currency crisis.Indian banks are
now quoting al higher valuation when compared to banks in other Asian countries (viz.
Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non
Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed
in approach and armed with efficient branch networks focus primarily on the high
revenue niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the new
Indian market and is addressing the relevant issues to take on the multifarious challenges
of globalization. Banks that employ IT solutions are perceived to be futuristic and
proactive players capable of meeting the multifarious requirements of the large
customers base. Private banks have been fast on the uptake and are reorienting their
strategies using the internet as a medium The Internet has emerged as the new and
challenging frontier of marketing with the conventional physical world tenets being just
as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business institution
to a highly proactive and dynamic entity. This transformation has been largely brought
about by the large dose of liberalization and economic reforms that allowed banks to
explore new business opportunities rather than generating revenues from conventional
streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30

banking units contributing to almost 50% of deposits and 60% of advances. Indian
nationalized banks (banks owned by the government) continue to be the major lenders in
the economy due to their sheer size and penetrative networks which assures them high
deposit mobilization. The Indian banking can be broadly categorized into nationalized,
private banks and specialized banking institutions.
The Reserve Bank of India act as a centralized body monitoring any discrepancies and
shortcoming in the system. It is the foremost monitoring body in the Indian financial
sector. The nationalized banks (i.e. government-owned banks) continue to dominate the
Indian banking arena. Industry estimates indicate that out of 274 commercial banks
operating in India, 223 banks are in the public sector and 51 are in the private sector.
The private sector bank grid also includes 24 foreign banks that have started their
operations here. Under the ambit of the nationalized banks come the specialized
banking institutions. These co-operatives, rural banks focus on areas of agriculture,
rural development etc.,
unlike commercial banks these co-operative banks do not lend on the basis of a prime
lending rate. They also have various tax sops because of their holding pattern and
lending structure and hence have lower overheads. This enables them to give a
marginally higher percentage on savings deposits. Many of these cooperative banks
diversified into specialized areas (catering to the vast retail audience) like car finance,
housing loans, truck finance etc. in order to keep pace with their public sector and
private counterparts, the co-operative banks too have invested heavily in information
technology to offer high-end computerized banking services to its clients.

10

CATEGORIZATION OF INDIAN BANK

Types of Banks

Complementing the roles of the nationalized and private banks are the specialized
financial instit utions or Non Banking Financial Institutions (NBFCs). With their
focused portfolio of products and services, these Non Banking Financial Institutions act
as an important catalyst in contributing to the overall growth of the financial services
sector. NBFCs offer loans for working capital requirements, facilitate mergers and
acquisitions, IPO finance, etc. apart from financial consultancy services. Trends are
now changing as banks (both public and private) have now started focussing on NBFC
domains like long and medium- term finance, working cap requirements. IPO financing
to etc. to meet the multifarious needs of the business community.

1998-99
State Bank of India and Associates

08

Nationalized Banks

19

Domestic Private Sector Banks

25

New Domestic Private Sector Banks

09

Foreign Banks

29

The Private sector Bank which are marketed in Indian market are
1.

Current A/C

2.

Mutual Fund

3.

Insurance

4.

Sales and Trading

5.

Trust and security

6.

Trade finance

7.

Fixed deposit

11

Product and Services

1.

Global market

2.

Corporate market

3.

Cash mgt.

4.

Clearing

5.

Trust and Securities Services

Trade finance

COMMERCIAL FINANCING
The commercial financing model in Indian banking can be broadly categorized into
project finance and working capital finance. These two segments form the pivot around
which banks operate.
Project Finance
Banks offer long term and short terms loans to business houses, corporations to set up
their projects. These loans are disbursed after the approval from the banks core credit
validating committee. In India, there are 11 national level land 46 state level financial
and investment institutions that cater to long term funding requirements of the industry.
The project finance segment is highly competitive with various players offering
innovative schemes to entice corporate.
Working capital
In order to meet the diverse needs and requirements of the business community, banks
offer working capital funds to corporate. Working capital finance is specialized line of
business and is largely dominated by the commercial banks.
The Indian banking saw dramatic changes in the last decade or so ever since the advent
of liberalization and Indias integration with the world economy. These economic
reforms and the entry of private players saw nationalized banks revamp their service and
product portfolio to incorporate new, innovative customer-centric schemes. The Indian
banking finally woke up to the surging demands of the ever-discerning Indian
consumer. The need to become highly customer focused (generated by high competitive
levels) forced the slow- moving public sector banks to adopt a fast track approach.
Taking a leaf out of the private sector banks, the public sector banks too went for major

12

image changes (including corporate brand building exercises) and customer friendly
schemes. These customer friendly programs included revamping of the product and
service portfolio by introducing new product & service schemes (like credit cards,
hassle- free housing loan schemes, educational loans and flexi- deposit schemes)
integration of the branch network by using advance networking technology and
customer personalization programs (through ATMs and anytime banking etc.). Many
banks have started capitalizing on the recent stock market surge by adding (Initial Public
Offering) IPO financing options and schemes in their product mix. IPO finance has
received a positive response from the investors and is becoming popular amongst the
business community. The objective of all these strategies was very clear to bridge the
service & product gap that was inherent in the banking system. To cater to the
increasing customer demands and the surge in business volumes, many public sector
banks have ploughed back funds to invest heavily in technology upgrades and systems
like LANs, WANs, VSATs etc.
Marketing and brand building programs were also given a new thrust in the new
liberalized banking scenario. Promotional budgets were hiked to cater to the new and
large discerning target audience. Banks were now keen on marketing their products and
service though various mediums to reach their core customers. Direct marketing,
Internet marketing, hoarding, press ads, television sponsorships, image makeovers etc.
became an integral part of a banks marketing mix. To meet the personalized needs of
the customer and in order to differentiate its services, banks repositioned themselves in
specialized fields, like housing loans, car finance, educational loans etc. to optimally
service the customer. Permission marketing became the new strategy that banks began
to propound i.e. feeding the customer (with his or her consent) with product and service
information and thereby enticing him towards the banks product service portfolio.
NEW GENERATION BANKING
The liberalize policy of Governme nt of India permitted entry to private sector in the
banking, the industry has witnessed the entry of nine new generation private banks. The
major differentiating parameter that distinguishes these banks from all the other banks in
the Indian banking is the level of service that is offered to the customer. Verify the
focus has always been centered around the customer understanding his needs,

13

preempting him and consequently delighting him with various configuration of benefits
and a wide portfolio of products and services. These banks have generally been
established by promoters of repute or by high value domestic financial institutions.
The popularity of these banks can be gauged by the fact that in a short span of time,
these banks have gained considerable customer confidence and consequently have
shown impressive growth rates. Today, the private banks corner almost four per cent
share of the total share of deposits. Most of the banks in this category are concentrated
in the high- growth urban areas in metros (that account for approximately 70% of the
total banking business ). With efficiency being the major focus, these banks have
leveraged on their strengths and competencies viz. Management, operational efficiency
and flexibility, superior produc t positioning and higher employee productivity skills.
The private banks with their focused business and service portfolio have a reputation of
being niche players in the industry. A strategy that has allowed these banks to
concentrate on few reliable high net worth companies and individuals rather than cater
to the mass market. These well-chalked out integrates strategy plans have allowed most
of these banks to deliver superlative levels of personalized services. With the Reserve
Bank of India allowing these banks to operate 70% of their businesses in urban areas,
this statutory requirement has translated into lower deposit mobilization costs and higher
margins relative to public sector banks.
GLOBAL MARKET
Global Markets comprises all sales, trading, structuring and research in a wide range of
financial products, including bonds, commodities, equities, equity- linked products,
exchange traded and OTC derivatives, foreign exchange, money market instruments,
asset-and residential mortgage -backed securities and hybrid instruments. Global Markets
and Global Corporate finance are jointly responsible for our Leveraged Debt Capital
Markets (LDCM) and equity capital Markets (ECM) businesses.
CORPORATE BANKING & SECURITIES
Corporate Banking & Securities comprises two Business Divisions: Global Markets and
Corporate finance. 2006 was an outstanding year for Global Markets. In this
environment, the Division again generated record revenues, reaping rich rewards from
our unique strategic positioning and an exceptionally well-diversified platform across
different products, client segments and regions of the world. With a leadership position in

14

Europe and leading franchise in dynamic emerging capital markets, we profited from
good exposure to regional growth. Our emphasis on high- value, structures solutions also
enabled us to excel for our clients in complex, dynamic and demanding markets.
2006 was a highly successful year for Corporate Finance, with profitable growth and
market share gains in our core businesses. Business conditions were favorable, with
strong levels of corporate activity and growth momentum particularly in Europe and in
the Asia/Pacific region. Furthermore we saw dynamic growth in key market segments,
including financial sponsor and commercial realestate. With a broad array of products
and services, and a well-developed global presence, Corporate Finance was well
positioned to take good advantage of this environment during the year.

15

UTTARANCHAL GRAMIN BANK

the Uttaranchal Gramin Bank Threesh Kapoor. Uttaranchal Gramin Bank was formed
following the merger of Alaknanda Bank, Ganga-Yamuna Bank and Pithoragarh bank in
2006. The bank earned a profit of Rs 8.83 crore before tax this year. It has registered a
jump of 233 per cent as compared to the last year.The phenomenal rise in the profit is
mainly due to the merger of three banks. The bank has also set up an art gallery at its
head office here to promote local artists from the state.
Financial inclusion of rural India is a national challenge today. Established banks find
it prohibitive to enter into the rural area for it implies high establishment costs and
relatively low returns for them. Based on bio-metric technology, some banks have tried to
enter the rural market with Business Correspondent model in the recent past. The
impact has so far not been very impressionable perhaps because of lack of credibility that
the rural masses have with the Business Correspondent.
India Post on the other hand with a huge network rides high on the credibility factor in
the rural area. But its shrinking business in the traditional financial market because of
relatively lower rates of interest in the P.O. S.B. Schemes, make it compulsive for the
Department to seek for new business avenues around.

16

Keeping in view this business opportunity and compulsions, Uttarakhand Post has
entered into a business tie- up with Uttaranchal Gramin Bank with the following twin
objectives:(a) Collection of high-end deposits on behalf of the bank.
(b)

Disbursement of bank loans and collection of the re-payment

installments(EMI) through Savings Bank Passbook Account and with the help
of GDS (Gramin Dak Sevak) staff.

Both these services are rendered by Uttarakhand Post on reasonable charges. In short the
endeavor is to expand the role of an agency functionary, that India Post has being playing
on behalf of Ministry of Finance for long, to that of a Commercial Bank also for the
reasons of better profitability and future prospects. Besides, India Post also plays soc ially
challenging role of Financial Inclusion of the rural areas .

Organizational Structure
Bank has its Head Office which in turn Regional Offices under which the branches
function. The delegation of powers is decentralized up to the branch level to facilitate
quick decision making.

Head Office

Regional Offices

Branches

17

MANAGERIAL HEIRARCHY OF UGB

Chairman - Thris Kapoor

General Manager

Regional Manager

Branch Manager

18

Mission & Vision

Mission is to transform into a Bank with sound financials committed to overall

economic development of rural areas with care, competence and compassion
towards its customers
To stage a tur n around in profitability and NPA reduction, to double the flow of
credit to agriculture, to achieve a quantum jump in savings bank deposit
mobilisation, to ensure saturation of villages in our service area, to prepare a
committed and knowledgeable workforce with a view to transforming the Bank
into the most preferred banking outlet in rural areas.

19

BANKING
The bank has the following deposit schemes
Fixed Deposit (General)
Fixed Deposit (Re-investment)
Recurring Deposit
Mini Deposits
Saving Bank A/C
Current A/C
SERVICE & PRODUCT
v Nomination Facility Available
v Advances

For Agriculturist Short Term Credit Under Kishan Credit Card

Term Loans For Tractor, Land Development, Irrigation.
Purposes, Drip Irrigation,Farm Chanisation,
Rural Godown, Animal Husbandary, Agri.Clinics,

For Non Farm Sector: Cash Credit And Term Loans For Small And Retail Traders
Loan For Professional & Self Employed/Rural Artisans/ Ssi &
Other Industries / Transport Operators /Housing Loans / Car
Loan / Education Loan Etc.
Loans Against Bank' Own Deposit / Loan Against Nsc

20

 Loan Against Mortgage Of Property.

v Many Other Products To Suit Particuler Requirement
v Locker Facility At Selected Branches
v Draft Facility At Selected Centers
v Drop Box Facility For Cheques And Drafts
TIE UP with Post Office :The features of the Tie up scheme
(a) For collection of high-end deposits.
(i) Customer will be identified by joint marketing of Uttarakhand Gramin
Bank and the Post Office.
(ii) Customer will be asked to open a savings account in the Post Office
where he will deposit the money.
(iii) Subsequently the customer will be asked to fill up the deposit forms
and complete other formalities as required by the bank.
(iv) The Postmaster will send duly completed papers to the designated
branch of the Bank along with cheque in favour of the Manager of
that bank, corresponding to the amount of the deposit made by the
customer.
(v)

In case of more than one deposit on any day, the cheque with the
list of depositors and papers would be sent.

(vi)

After scrutiny of all papers the bank will open an account for the
customer and send the required Passbook/Fixed Deposit to the Post
Office for delivery to the customer.

(vii)

At the end of the term of deposit customer will apply for closure of
the account in the Post Office. The paper will be sent to the
designated bank where from final sanction of the payment will be

21

sent to the Postmaster who will make further the payment to the
customer through the Savings Bank account.
(b) For disbursement of loan and collection of repayment.
(i)

The customer will be identified by the Post Office.

(ii)

Application for loan and other formalities will be got completed

from the customer by the Post Office GDS staff.

(iii)

The Post Office will confirm the identity of the customer and send
the papers to the designated branch of the bank.

(iv)

The bank branch will process the papers and after satisfying
themselves, the bank will sanction loan and send the cheque of
loan sanctioned to the Postmaster. The Postmaster will open a
Savings Bank Account of the customer and deposit the loan
amount in that account. The customer can withdraw amount at his
ease.

(v)

Monthly re-payment EMI will be received by the Postmaster by

cheque for the Savings Bank Account and further transferred to the
designated bank on monthly basis alongwith required MIS.

(vi)

In case the re-payment is stopped, the Postmaster will provide the

service of soft recovery by inquiring the reasons for non-payment
and conveying it to the bank authorities.

(vii) Account will be closed after last EMI is received.

(D) Advantages of the scheme
(a)

For the rural public(i)

Rural public will get banking services that includes high-end

deposits, loans and repayment facility right at their doorstep
through vast network of around 2500 rural Post Office branches in
Uttarakhand.

22

(ii)

The banking services provided will be transparent and therefore

accountability will be maximum.

(b)

For the Bank (i)

The bank will be able to deliver banking services in the rural areas
at a relatively much lower establishment cost. Thus the objective
of Financial Inclusion of rural areas could be comfortably
achieved.

(ii)

An army of around 6000 strong GDS force that provides Postal

services in rural areas will assist the bank in regular recovery of the
loans.

(iii)

The bank can improve its business in the rural areas with the help
of the strong age old credibility that India Post wields in the rural
area.

Uttaranchal Gramin Bank opens branches for women

Uttaranchal Gramin Bank is to open three branches exclusively for women in the hill
state of Uttarakhand. The first such branch, managed only by women, has already started
functioning at Dehraduns Indira Nagar locality.Only women are allowed to open their
accounts in the branch. This is the 121st branch of the bank. Three more such branches
are proposed in Pauri and Pithoragarh districts.
With help from NABARD, a special women centre has also been opened at the head
office of the bank here. The main thrust of the women branch would be to attract SelfHelp Groups (SHGs) and Non-Government Organisations (NGOs), which are mostly
represented by women.By opening women branches, we want to salute the women of
the hill state who are known as matrishakti (mothers power) in Uttarakhand, said
Chairman of the Uttaranchal Gramin Bank Threesh Kapoor.

23

PRODUCT DISCRIPTION
Fixed Deposit (General)
In this scheme the money can be deposited for a fixed time period of 15 days or more. It
can be withdrawn before maturity date without any penalty in interest. If required the
interest on deposited money is payable either monthly/quarterly/half yearly/yearly. The
interest rates applicable are as under:
Term

Interest Rate

For Senior Citizen

15 days to 45 days

4.50%

5.00%

46 days to 90 days

6.00%

6.50%

91 days to 180 days

7.00%

7.50%

More than 180 days & less than one year

8.00%

8.50%

More than 1 year & less than one year

8.00%

8.50%

1 year to 2 year

8.50%

9.00%

More than 2 Years

8.25%

8.75%

No Interest Premature Payment before 45 Days

For senior citizen & their dependents(wife, husband, son and daughter un- married)
having joint account the rate of interest would be more than the normal rate of interest.
In the case of premature payment before 45 days no interest will be paid.
For armed forces retired personal and martyrs, the rate of interest would be 0.25%
more than above rates. This rate will applicable only for the deposits up to one (1) year
or more than one (1)year .
For charitable trusts(Temples, Mosques, Gurudwara and Church) & other registe red
charitable trusts which follows income tax rules the rate of interest would be 0 .25%
more than above rates. The interest rates for this scheme are same as for Fixed deposit
(general). In fixed deposit (Re-investment) scheme the intrest rate is compounded
quaterly
For FD of 15 Lakh or more have to contact the Head Office.

24

Mini Deposits
In this scheme the money can be deposited in the multiple of Rs.5/-. At a time the
maximum amount should not exceed Rs.500/-. The amount must be deposited in cash
only. The interest is 10% per annum. If the amount is withdrawn before a period of 5
years the intrest rates are as under:
1 year

2%

2 year

3%

3 year

5%

4 year

6%

5 year & Above

8%

LOAN
At Uttaranchal Gramin Bank . we offer varoius loan facilities. Details are given under
appropiate heads. The rates given below are applicable w.e.f 15.02.2007:
Transport Loan
Housing Loan
Salary Loan
Loan against Government Deposits
Mid Term Loan
Bank Guarantee
Cash Credit Limit
FD Loan
Self Employment Loan
Education Loan
Consumer Loan

25

Transport Loan
Transport loan is provided for the purchase of vehicles. Following are the interest rates:
Upto Rs. 2 Lakhs

12.25 %

Rs 2 To Rs 5 Lakh

12.75 %

Rs 5 Lakhs Above

13.00 %

For Old Vehicle

14.00 %

Against Old Vehicles Loan will be given to good & complete secure parties.
The insurance of the old vehicle will be in the name of bank .
Two Wheelers will not come against Transport Vehicles . It will come
under Cons umer Loan.

Housing Loan

Housing loan is provided by bank to it's customers for purchase or construction of

ouse.Follwoing are the interest rates:

Repayment ( 5 Year)

Repayment ( More than 5

year Upto 120 Months)

Up to Rs 5 Lakh

10.75%

11.00 %

More than 5 Lakh and upto 20 lakh

11.00%

11.50%

More than 20 Lakh

12.00%

12.50 %

In House Loans Interest will be taken against floating pattern.

House Loan will be paid in maximum 120 months EMI.
If Loan is paid before its schedule term then 2% more of the remaining loan will
be charged as Foreclosure Charges.
The Interest rate will be 12.50% for House Loan ( Commercial) such as School,
Banquet Hall, Hotel etc.

26

Loan Against Fixed Deposit

Against FDR of our bank

1% more

Against Third party FDR

2% more

Against FDR of other Bank

13.00%

Against Other bank FDR loan will be given if the FDR is in the custody of our bank.

Mid Term Loan

Bank charges 13.00% interest rates for Mid Term Loan.

Bank Guarantee
Bank Guarantee.(Fully Secure) only financial

2%

If secured against FDR

1%

This loan is given against stock of Items to Shopkeepers to promote the business. Following
are the interest rates:

Upto Rs. 2 lakhs

11.50%

Upto Rs. 5 lakhs

12.00%

Rs 5 lakhs to Rs 25 lakhs

12.50%

More than 25 Lakh

13.00%

INTRODUCTION TO MICRO-FINANCE
27

Microfinance refers to the provision of financial services to poor or low-income clients,

including consumers and the self-employed. The term also refers to the practice of
sustainable delivering those services.
More broadly, it refers to a movement that envisions a world in which as many poor and
near-poor households as possible have permanent access to an appropriate range of high
quality financial services, including not just credit but also savings, insurance, and fund
transfers.
THE CHALLENGE
Traditionally, banks have usually not provided financial services to clients with little or
no cash income. Banks must incur substantial costs to manage a client account, regardless
of how small the sums of money involved. For example, the total revenue from delivering
one hundred loans worth $1,000 each will not differ greatly from the revenue that results
from delivering one loan of $100,000. But it takes nearly a hundred times as much work
and cost to manage a hundred loans as it does to manage one. A similar equation exists
when delivering other financial services. There is a break-even point when providing
loans or deposits below which banks lose money on each transaction they make. Poor
people usually fall below it.
In addition, most poor people have few assets that can be secured by a bank as collateral.
As documented extensively by Hernando de Soto and others, even if they happen to own
land in the developing world, they may not have effective title to it. This means that the
bank will have little recourse against defaulting borrowers.
Seen from a broader perspective, it has long been accepted that the development of a
healthy na tional financial system is an important goal and catalyst for the broader goal of
national economic development (see for example Alexander Gerschenkron, Paul
Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger etc.). However, national planners
and experts focus their attention mainly on developing a commercial banking sector
dealing in high-value transactions, and often neglect the delivery of services to

28

househo lds of limited means, even when these households comprise the large majority of
their populations.
Because of these difficulties, when poor people borrow they often rely on relatives or a
local moneylender, whose interest rates can be very high. An analysis of 28 studies of
informal moneylending rates in fourteen countries in Asia, Latin America and Africa
concluded that 76% of moneylender rates exceed 10% per month, including 22% that
exceed 100% per month. Moneylenders usually charge higher rates to poorer borrowers
than to less poor ones. While moneylenders are often demonized and accused of usury,
their services are convenient and fast, and they can be very flexible when borrowers run
into problems. Hopes of quickly putting them out of business have proven unrealistic,
even in places where microfinance institutions are very active.
Over the past centuries practical visionaries from the Franciscan monks who founded the
community-oriented pawnshops of the fifteenth century, to the fo unders of the European
credit union movement in the nineteenth century (such as Friedrich Wilhelm Raiffeisen)
and the founders of the microcredit movement in the 1970s (such as Muhammad Yunus)
have tested practices and built institutions designed to bring the kinds of livelihood
opportunities and risk management tools that financial services provide to the doorsteps
of poor people. While the success of Grameen Bank (which now serves over seven
million poor Bangladeshi women) has inspired the world, it has proved difficult to
replicate this success in practice. In nations with lower population densities, meeting the
operating costs of a retail branch by serving nearby customers has proven considerably
more challenging.
Although much progress has been made, the problem has not been solved yet, and the
overwhelming majority of people who earn less than $1 a day, especially in the rural
areas, continue to have no practical access to formal sector finance.

29

BOUNDARIES AND PRINCIPLES

Theoretically, microfinance may encompass any efforts to increase access to, or improve
the quality of, financial services poor people currently use or could benefit from using.
For example, poor people borrow from informal moneylenders and save with informal
collectors. They receive loans and grants from charities. They buy insurance from stateowned companies. They receive funds transfers through remittance networks (like
Hawala). They bury jewellery in secret places near their homes, ask relatives to look after
their money, and save for family weddings by raising chickens.
There are not many bright lines that can sharply distinguish microfinance from similar
activities. Claims could be made that a government that orders state banks to open
deposit accounts for poor consumers, or a moneylender that engages in usury, or a charity
that runs a heifer pool are engaged in microfinance. However, it is generally agreed that
microfinance is about giving poor people a hand up, not a hand out by providing them
with expanded access to financial services. Furthermore, correcting the problem of access
is best done by expand ing the number of financial institutions available to them, as well
as the capacity of those institutions. In recent years there has been increasing emphasis on
expanding the diversity of those institutions as well, since different institutions serve
different needs.
Some principles that summarize a century and a half of development practice were
encapsulated in 2004 by Consultative Group to Assist the Poor (CGAP) and endorsed by
the Group of Eight leaders at the G8 Summit on June 10, 2004:
1. Poor people need not just loans but also savings, insurance and money transfer
services.
2. Microfinance must be useful to poor households: helping them raise income, build
up assets and/or cushion themselves against external shocks.
3. Microfinance can pay for itself. Subsidies from donors and government are
scarce and uncertain, and so to reach large numbers of poor people, microfinance
must pay for itself.
30

4. Microfinance means building permanent local institutions.

5. Microfinance also means integrating the financial needs of poor people into a
countrys mainstream financial system.
6. The job of government is to enable financial services, not to provide them.
7. Donor funds should complement private capital, not compete with it.
8. The key bottleneck is the shortage of strong institutions and managers.
9.

Donors should focus on capacity building.

10. Interest rate ceilings hurt poor people by preventing microfinance institutions
from covering their costs, which chokes off the supply of credit.
11. Microfinance institutions should measure and disclose their performance both
financially and socially.
Microfinance can also be distinguished from charity. It is better to provide grants to
families who are destitute, or so poor they are unlikely to be able to generate the cash
flow required to repay a loan. This situation can occur for example, in a war zone or after
a natural disaster.
DEBATES AT THE BOUNDARIES
There are several key debates at the boundaries of microfinance.
Practitioners and donors from the charitable side of microfinance frequently argue for
restricting microcredit to loans for productive purposes such as to start or expand a
microenterprise. Those from the private sector side respond that because money is
fungible, such a restriction is impossible to enforce, and that in any case it should not be
up to rich people to determine how poor people use their money.
Perhaps influenced by traditional Western views about usury, the role of the traditional
moneylender has been subject to much criticism, especially in the early stages of modern

31

microfinance. As more poor people gained access to loans from microcredit institutions
however, it became apparent that the services of moneylenders continued to be valued.
Borrowers were prepared to pay very high interest rates for services like quick loan
disbursement, confidentiality and flexible repayment schedules. They did not always see
lower interest rates as adequate compensation for the costs of attending meetings,
attending training courses to qualify for disbursements or making monthly collateral
contributions. They found also it distasteful to be forced to pretend they were borrowing
to start a business, when they were often borrowing for other reasons (such as paying for
school fees, dealing with health costs or securing the family food supply).[10] The more
recent focus on inclusive financial systems (see section below) affords moneylenders
more legitimacy, arguing in favour of regulation and efforts to increase competition
between them to expand the options available to poor people.
Modern microfinance emerged in the 1970s with a strong orientation towards private
sector solutions. This resulted from evidence that state-owned agricultural development
banks in developing countries had been a monumental failure, actually undermining the
development goals they were intended to serve (see the classic compilation edited by
Adams, Graham & Von Pischke). Nevertheless public officials in many countries hold a
different view, and continue to intervene in microfinance markets.
There has been a long-standing debate over the sharpness of the trade-off between
'outreach' (the ability of a microfinance institution to reach poorer and more remote
people) and its 'sustainability' (its ability to cover its operating costs -- and possibly also
its costs of serving new clients -- from its operating revenues). While it is generally
agreed that microfinance practitioners should seek to balance these goals to some extent,
there are a wide variety of strategies, ranging from the minimalist profit-orientation of
BancoSol in Bolivia to the highly integrated not-for-profit orientation of BRAC in
Bangladesh. This is true not only for individual institutions, but also for governments
engaged in developing national microfinance systems.
Micro financial services are needed everywhere, including the developed world.
However, in developed economies intense competition within the financial sector,

32

combined with a diverse mix of different types of financial institutions with different
missions, ensures that most people have access to some financial services. Efforts to
transfer microfinance innovations such as solidarity lending from developing countries to
developed ones have met with little success
FINANCIAL NEEDS OF POOR PEOPLE

In developing economies and particularly in the rural areas, many activities that would be
classified in the developed world as financial are not monetized: that is, money is not
used to carry them out. Almost by definition, poor people have very little money. But
circumstances often arise in their lives in which they need money or the things money
can buy.
In Stuart Rutherfords recent book The Poor and Their Money, he cites several types of
needs:

Lifecycle Needs: such as weddings, funerals, childbirth, education, homebuilding,

widowhood, old age.

33

Personal Emergencies : such as sickness, injury, unemployment, theft, harassment

or death.

Disasters: such as fires, floods, cyclones and man- made events like war or
bulldozing of dwellings.

Investment Opportunities: expanding a business, buying land or equipment,

improving housing, securing a job (which often requires paying a large bribe), etc.

Poor people find creative and often collaborative ways to meet these needs, primarily
through creating and exchanging different forms of non-cash value. Common substitutes
for cash vary from country to country but typically include livestock, grains, jewellery
and precious metals.
WAYS IN WHICH POOR PEOPLE MANAGE THEIR MONEY
Rutherford argues that the basic problem poor people as money managers face is to
gather a usefully large amount of money. Building a new home may involve saving and
protecting diverse building materials for years until enough are available to proceed with
construction. Childrens schooling may be funded by buying chickens and raising them
for sale as needed for expenses, uniforms, bribes, etc. Because all the value is
accumulated before it is needed, this money management strategy is referred to as saving
up.
Often people dont have enough money when they face a need, so they borrow. A poor
family might borrow from relatives to buy land, from a moneylender to buy rice, or from
a microfinance institution to buy a sewing machine. Since these loans must be repaid by
saving after the cost is incurred, Rutherford calls this saving down. Rutherford's point is
that microcredit is addressing only half the problem, and arguably the less important half:
poor people borrow to help them save and accumulate assets. Microcredit institutions
should fund their loans through savings accounts that help poor people manage their
myriad risks.

34

STUART RUTHERFORE. THE POOR AND THEIR MONEY

Most needs are met through mix of saving and credit. A benchmark impact assessment of
Grameen Bank and two other large microfinance institutions in Bangladesh found that for
every $1 they were lending to clients to finance rural non- farm micro-enterprise, about
$2.50 came from other sources, mostly their clients savings. This parallels the
experience in the West, in which family businesses are funded mostly from savings,
especially during start- up.
Recent studies have also shown that informal methods of saving are very unsafe. For
example a study by Wright and Mutesasira in Uganda concluded that those with no
option but to save in the informal sector are almost bound to lose some money probably
around one quarter of what they save there.
The work of Rutherford, Wright and others has caused practitioners to reconsider a key
aspect of the microcredit paradigm: that poor people get out of poverty by borrowing,
building microenterprises and increasing their income. The new paradigm places more
attention on the efforts of poor people to reduce their many vulnerabilities by keeping
more of what they earn and building up their assets. While they need loans, they may find
it as useful to borrow for consumption as for microenterprise. A safe, flexible place to
save money and withdraw it when needed is also essential for managing household and
family risk.
CURRENT SCALE OF MICROFINANCE OPERATION S
No systematic effort to map the distribution of microfinance has yet been undertaken. A
useful recent benchmark was established by an analysis of alternative financial
institutions in the developing world in 2004. The authors counted approximately 665
million client accounts at over 3,000 institutions that are serving people who are poorer
than those served by the commercial banks. Of these accounts, 120 million were with
institutions normally understood to practice microfinance. Reflecting the diverse
historical roots of the movement, however, they also included postal savings banks (318
million accounts), state agricultural and development banks (172 million accounts),

35

financial cooperatives and credit unions (35 million accounts) and specialized rural banks
(19 million accounts).
Regionally the highest concentration of these accounts was in India (188 million accounts
representing 18% of the total national population). The lowest concentrations were in
Latin American and the Caribbean (14 million accounts representing 3% of the total
population) and Africa (27 million accounts representing 4% of the total population).
Considering that most bank clients in the developed world need several active accounts to
keep their affairs in order, these figures indicate that the task the microfinance movement
has set for itself is still very far from finished.
By type of service savings accounts in alternative finance institutions outnumber loans
by about fo ur to one. This is a worldwide pattern that does not vary much by region.
An important source of detailed data on selected microfinance institutions is the Micro
Banking Bulletin. At the end of 2006 it was tracking 704 MFIs that were serving 52
million borrowers ($23.3 billion in outstanding loans) and 56 million savers ($15.4
billion in deposits). Of these clients, 70% were in Asia, 20% in Latin America and the
balance in the rest of the world.
As yet there are no studies that indicate the scale or distribution of informal
microfinance organizations like ROSCAs and informal associations that help people
manage costs like weddings, funerals and sickness. Numerous case studies have been
published however, indicating that these organizations, which are generally designed and
managed by poor people themselves with little outside help, operate in most countries in
the developing world
"Inclusive financial systems"
The microcredit era that began in the 1970s has lost its momentum, to be replaced by a
financial systems approach. While microcredit achieved a great deal, especially in
urban and near-urban areas and with entrepreneurial families, its progress in delivering
financial services in less densely populated rural areas has been slow. Another major goal
of the microcredit movement was to put the traditional moneylender, who typically

36

charges at least 10% a month and often much more, out of business. There is little
evidence of progress towards this goal.
The new financial systems approach pragmatically acknowledges the richness of
centuries of microfinance history and the immense diversity of institutions serving poor
people in developing world today. It is also rooted in an increasing awareness of diversity
of the financial service needs of the worlds poorest people, and the diverse settings in
which they live and work.
Brigit Helms in her book 'Access for All: Building Inclusive Financial Systems',
distinguishes between four general categories of microfinance providers, and argues for a
pro-active strategy of engagement with all of them to help them achieve the goals of the
microfinance movement.
Informal financial service providers
These include moneylenders, pawnbrokers, savings collectors, money- guards,
ROSCAs, ASCAs and input supply shops. Because they know each other well
and live in the same community, they understand each others financial
circumstances and can offer very flexible, convenient and fast services. These
services can also be costly and the choice of financial products limited and very
short-term. Informal services that involve savings are also risky; many people lose
their money.
Member-owned organizations
These include self-help groups, credit unions, and a variety of hybrid
organizations like financial service associations and CVECAs. Like their
informal cousins, they are generally small and local, which means they have
access to good knowledge about each others financial circumstances and can
offer convenience and flexibility. Since they are managed by poor people, their
costs of operation are low. However, these providers may have little financial skill
and can run into trouble when the economy turns down or their operations
become too complex. Unless they are effectively regulated and supervised, they

37

can be captured by one or two influential leaders, and the members can lose
their money.
NGOs
The Microcredit Summit Campaign counted 3,133 of these microcredit NGOs
lending to about 113 million clients by the end of 2005. Led by Grameen Bank
and BRAC in Bangladesh, Prodem in Bolivia, and FINCA International,
headquartered in Washington, DC, these NGOs have spread around the
developing world in the past three decades. They have proven very innovative,
pioneering banking techniques like solidarity lending, village banking and mobile
banking that have overcome barriers to serving poor populations. However, with
boards that dont necessarily represent either their capital or their customers, their
governance structures can be fragile, and they can become overly dependent on
external donors.
Formal financial institutions
In addition to commercial banks, these include state banks, agricultural
development banks, savings banks, rural banks and non-bank financial
institutions. They are regulated and supervised, offer a wider range of financial
services, and control a branch network that can extend across the country and
internationally. However, they have proved reluctant to adopt social missions, and
due to their high costs of operation, often cant deliver services to poor or remote
populations. The increasing use of alternative data in credit scoring, such as trade
credit is increasing commercial banks' interest in microfinance.
With appropriate regulation and supervision, each of these institutional types can bring
leverage to solving the microfinance problem. For example, efforts are being made to
link self-help groups to commercial banks, to network member-owned organizations
together to achieve economies of scale and scope, and to support efforts by commercial
banks to down-scale by integrating mobile banking and e-payment technologies into
their extensive branch networks.

38

CRITICISMS
Some proponents of microfinance have asserted, without offering credible evidence, that
microfinance has the power to single-handedly defeat poverty. This assertion has been
the source of considerable criticism. In addition, research on the actual effectiveness of
microfinance as a tool for economic development remains slim, in part owing to the
difficulty in monitoring and measuring this impact.
There has also been much criticism of the high interest rates charged to borrowers. The
real average portfolio yield cited by the a sample of 704 microfinance institutions that
voluntarily submitted reports to the MicroBanking Bulletin in 2006 was 22.3% annually.
However, annual rates charged to clients are higher, as they also include local inflation
and the bad debt expenses of the microfinance institution. Muhammad Yunus has
recently made much of this point, and in his latest book argues that microfinance
institutions that charge more than 15% above their long-term operating costs should face
penalties.
The role of donors has also been questioned. The Consultative Group to Assist the Poor
(CGAP) recently commented that "a large proportion of the money they spend is not
effective, either because it gets hung up in unsuccessful and often complicated funding
mechanisms (for example, a government apex facility), or it goes to partners that are not
held accountable for performance. In some cases, poorly conceived programs have
retarded the development of inclusive financial systems by distorting markets and
displacing domestic commercial initiatives with cheap or free money."
There has also been criticism of microlenders for not taking more responsibility for the
working conditions of poor households, particularly when borrowers become quasi-wage
labourers, selling crafts or agricultural produce through an organization controlled by the
MFI. The desire of MFIs to help their borrower diversify and increase their incomes has
sparked this type of relationship in several countries, most notably Bangladesh, where
hundreds of thousands of borrowers effectively work as wage labourers for the marketing
subsidiaries of Grameen Bank or BRAC. Critics maintain that there are few if any rules
or standards in these cases governing working hours, holidays, working conditions, safety
or child labour, and few inspection regimes to correct abuses. Some of these concerns
have been taken up by unions and socially responsible investment advocates.
39

Microfinance and Small Scale Farming Business(Laghu & Kutir Udyog )

Recognition of the importance of microfinance as a crucial development tool for poverty
reduction has increased during the last two decades. The United Nations, in its General
Assembly Resolution 52/194, passed on 18 December 1997, noted that in many
countries, microcredit programmes have succeeded in generating productive self
employment by providing access to small capital for people living in poverty as well as
increased participation in the mainstream economic and political process of society. This
publication provides orientation, basic considerations and general principles for those
institutions and organizations that provide credit and microfinance services to the farming
sector, particularly the small- scale farming allied products sector. The publication also
reaches out to the users of credit and microfinance services and to important stakeholders,
including inland farmers associations and cooperatives; seeds and other government
departments and institutions concerned with the management, conservation and use of
water bodies; local government authorities; and finally, individuals and groups of kutir
Udyog and women in village communities.
Micro finance is the provision of a wide range of financial services, such as deposits,
loans, Payment Service, Money Transfer and insurance.
The demand for financial services in the village sector is diverse and requires differential
financial products and services. Microfinance is just one means in the continuum of
providing financial services to cater for this demand. Characterized by small loans,
microfinance has inherent limitations in terms of financing the capital investment needs
of the fishing industry. It should therefore not replace traditional lending products from
mainstream financial institutions, since they are still required to finance large-scale
investment needs and priorities necessary for fisheries growth and development and, most
important, for the implementation of the responsible fisheries.
Inadequate supply of credit is an important constraint to enhancing production in many
developing countries. Making credit available, to rural households in general and fishers
in particular, is thus considered essential to alleviate poverty and promote economic
development. Although informal credit markets operate widely in rural areas,

40

moneylenders typically charge high interest rates and enter into exploitive relationships,
inhibiting the rural poor from investing in production and incomegenerating activities.
Governments have typically responded by establishing rural credit institutions or by
forcing commercial banks to provide cheap credit. These efforts have been aided by
agencies such as the World Bank, Asian Development Bank, African Development Bank
and the International Fund for Agricultural Development (IFAD). Evaluations of many
credit programmes sponsored by the World Bank and other agencies revealed that most
financing institutions were unable to break even and that most credit supplied did not
reach the intended beneficiaries (World Bank, 1975).
The past performance of rural credit programmes, including credit programmes for
fisheries, has fallen short of expectations. Many of the institutions established or
supported primarily for delivering credit have not developed into self-sustained rural
financial institutions. Programmes have reached a miniscule percentage of fishers. Most
state and donor projects worked on the assumption that poor fishers required loans at
lower interest rates to absorb technology. The benefits of the resultant negative interest
rate policy, which introduced a substantial grant element, were captured by the wealthy
and influential.
The maintenance and continued operation of these programmes turned into an extremely
costly drain on the governme nt exchequer. Two reasons contributed to this situation.
First, rural financial institutions were not able to cover the cost of funds and loan delivery
because of inadequate indexation against inflation. Second, loan collection rates have
been dismal, since loans were neither backed by securities nor by credit history of the
clients. In addition, small-scale producers such as fishers lack access to formal credit
because the transaction costs per unit of lending for small loans are much higher. The
patronage and corruption in the lending institution, fuelled by the negative interest rate on
loans, reduce the share of credit to small borrowers. Furthermore, when formal lending is
entirely dependent on collateral and as the lenders perceive credit risk to be inversely
related to asset ownership, the poor and women are left out of the formal credit system.
The combined effect of these failures is frustration within the donor community and
national planners on the efficacy of the methodologies used and piloting experimentation

41

for alternatives. Most of the financial institutions with waning donor support have moved
away from subsidized, no-collateral loans to commercial lending with requisite risk
coverage. The donor community has started promoting replication of successful
microfinance methodologies. In this context, an attempt is made in this paper to analyse
various financial service delivery methodologies, including microfinance methodologies
and their applicability to provide financial services to fishers.
Microfinance in agri culture and Allied Products: Basic considerations
Not much has been written about specific microfinance programmers for farming allied
products kutir Udyog because they are usually subsumed in the overall discussion of
microfinance for the rural poor. But while the concepts and principles of microfinance
have a general applicability, there are particular considerations that are unique to Kutir
Udyog communities that may require special attention. The guidelines try to address
these concerns while adhering to the generally acceptable best practices in the
microfinance industry. However, the guidelines are by no means comprehensive and
definitive since the microfinance field is still evolving and best practices change in
response to cha nging contexts and environments. As mentioned in the introduction, the
guidelines on microfinance in Kutir Udyog and aquaculture are complementary to the
management guidelines on revolving loan funds and credit programmes for communities
first published by FAO in 1989.
The guidelines provide general principles and basic considerations for those involved in
providing microfinance services to the village sector or for those who intend to include
Kutir Udyog and Samll farming communities as part of the client base of their
operation. The focus is on credit and savings since these are the areas where donor
support is concentrated. Because of the diversity of the demand for and suppliers of
microfinance services, the guidelines do not prescribe nor subscribe to a particular
methodology or an institutional mechanism but present options with the most relevance
to communities. The overall objective is for those concerned to tailor lending
methodologies and procedures appropriately so that they best serve the fina ncial needs of
the Kutir Udyog and Small farming communities concerned.

42

2 BACKGROUND AND PRINCIPLES OF MICROFINANCE

The emergence of microfinance as an alternative financial delivery mechanism was a
response to the failure of past efforts by government and international agencies
effectively to provide financial services to the poor. Subsidized and directed credit
programmes implemented in the 1980s were saddled by poor loan recoveries,
inefficiencies and high transaction costs, among others. This led to the piloting of bold
experiments and new approaches utilizing market-based solutions to reach the majority of
the poor who had been excluded from formal credit sources. From rapid disbursements of
subsidized loans to target sectors and populations, the focus was shifted towards setting
up and building local institutions that catered for the poor. This resulted in the emergence
of microfinance institutions (MFIs) that serve the poor. MFIs initially started out by
providing microcredit but have now broadened their services to include other financial
products.
CURRENT MARKET IN GOPSHWEAR & REMOTE AREA OF CHAMOLI
DISTRICT : The market in the District Chamoli is one of the largest ones in the Uttarakhand . In
Gopshwer and surrounding area government has licensed around 1956persons. Enormous
quantities are thereby produced in the district.
At the completion of the year 2007, 2643 tons of Milk were produced for sale.
The Goat was recorded up to 42,000 quintals.
There are mainly six streams in the dist. and the government distributing almost 60,000
seeds in the said streams.

BRIEF OVERVIEW OF THE BUSINESS

Following categories of persons are associated with the business:

Producer (Farmer or A unit of Kutir Udyog).

Distributors (Samit or collection center).

Vendors (sellers).

43

In case of Milk there are almost 30000-40000 people associated with Samati. The
monthly income is approximately 5000Rs. The daily milk ranges from 5-20kgs. The
milkmen either sell to the distributors or sell themselves in the market. They sell the
distributors depending upon production and products of the milk. The price ranges from
12-19Rs/kg. These persons need loans to buy the equipments and for constructing places.
The loans needed range from 30,000-90,000 Rs at low interest rate. The monthly mode of
payment is favored.
Distributors are mostly few in numbers around up to hundred. The monthly income is
more than Rs. 10,000 to 22,000/month. They mostly deal with the milk and allied
products and private dairy holders to maintain the supply in the market. These carry the
bulk to the sight of consumption.
The people concerned need small load carrier vehicles, concrete construction for storage.
Regular supply of raw material Chaara and money to buy more from the source
producers for these they need loans around Rs.1, 00,000-2,50,000 at minimum rate of
interest. Monthly pay back system is preferred. Margin here is Rs. 5-12/kg.
There are more than one thousand fifteen sellers at a particular market. They financially
week and poor. The monthly income is around Rs.5000. mostly dissatisfied with their
jobs due to interruption in market supply. These people need bank loans in order to
broaden the era of the business. The amount required is around Rs.30, 000 and mode of
payment preferred is monthly. These vendors either pay on prompt basis or after sale to
their distributors. The margin for them is around 14Rs./kg.

44

3.1 DATA ANALYSIS AND INTERPRETATION

Q No.1: i) Awareness about Uttaranchal Gramin Bank

S.No.

Response

Percent

Aware

90

Not Aware

10

10%

Awarw
Not Aware

90%

INTERPRETATION
v 90% of the parsons related to Kutir Udyog are completely aware of Uttaranchal
Gramin Bank .
v 10% of people are not aware or partially aware bout Uttaranchal Gramin Bank .

45

II) RATING UTTARANCHAL GRAMIN BANK

S.No.

Response

Percentage

Excellent

27%

Good

22%

Average

21%

Poor

31%

30%

27%

Excellent
Good
Average

21%

22%

Poor

INTERPRETATION
v 27% of the people concerned with Kutir Udyog rate the overall performance rate
the overall performance rate as excellent.
v 22% of the peoples concerned rate Uttaranchal Gramin Bank as good.
v 21% of the peoples rate Uttaranchal Gramin Bank as average performance bank.
v Rest 30% rate the performance as poor.

46

Q No.2: Knowledge about the scheme for general public.

S.No.

Response

Percent

Aware

30

Not Aware

70

30%
Awarw
Not Aware

70%

INTERPRETATION
v 30% of the people concerned with Kutir Udyog know about the scheme for
general public.
v 70% of the concerned people have no information about schemes for general
public.

47

Q No. 3: Awareness about products and services.

S.No.

Respons e

Percent

Aware

28%

Not Aware

72%

28%
Awarw
Not Aware

72%

INTERPRETATION
v 28% of the peoples are aware of the different products and services of Uttaranchal
Gramin Bank .
v 72% of the people are not aware of the products and services of the bank.

48

Q No.4: Problems in information collection.

S.No.

Response

Percent

Yes

34%

No

66%

34%
Yes
No

66%

INTERPRETATION
v 34% of the people have faced problems in collecting information about the bank.
v 66% of the people have collected the information with out any hindrance.

49

Q No.5: Other bank providing any facility

S.No.

Response

Percent

Yes

15%

No

85%

15%

Yes
No

85%

INTERPRETATION
v No other bank is providing any facility to the pesiculture sector.

50

Q No.6: Experience with Uttaranchal Gramin Bank

S. No.

Response

Percentage

delighted

16%

satisfied

70%

dissatisfied

13%

highly dissatisfied

1%

1%

13%

16%

delighted
satisfied
dissatisfied
highly dissatisfied

70%

INTERPRETATION
v 16% of the peoples concerned are delighted with services provided by Uttaranchal
Gramin Bank .
v 70% of the people concerned are satisfied with services provided by Uttaranchal
Gramin Bank .
v 13% of the peoples concerned are dissatisfied with services provided by
Uttaranchal Gramin Bank.
v 1% of the people concerned are highly dissatisfied with services provided by
Uttaranchal Gramin Bank.

51

Q No.7: Monthly Income

S.No.

Response

Percent

3000-5000

5%

5000-10,000

31%

10,000- above

64%

5%

3000-5000

31%
64%

5000-10,000
10,000- above

INTERPRETATION
v 5% of the people concerned (vendors and some catchers) have their monthly
income form 3000-5000.
v 31% of the people concerned have their monthly income from 5000-10000.
v 64% of the people concerned (dealers) have their monthly income from 10,000above.

52

Q No.8: Time associated with business.

S.No.

Response

Percentage

1-10 years

30%

10-20 years

20%

20 - 30 years

25%

30 - 50 years

25%

25%

30%

1-10 years
10-20 years
20 - 30 years

25%

20%

30 - 50 years

INTERPRETATION
v 30% of the peoples are concerned with pesiculture from 1-10 years.
v 20% of the peoples are associated with the business from 10-20 years.
v 25% of the peoples are associated from 20-30 years.
v 25% of the peoples are associated with the business form 30-40 years.

53

Q No.9: Kind of facility needed

S.No.

Response

Percent

Deposit Schemes

20%

Loans / Advances

80%

20%
Deposit Schems
Loans / Advances

80%

INTERPRETATION
v 20% of the people have concerned favored deposit schemes.
v Rest 80% of the peoples favored Loans/Advances.

54

Q No.10: Type of Loan

S.No.

Response

Percent

Consumer Durable Loans

5%

Loans for trade

31%

Personal consumption loans

64%

5%
Consumer Durable
Loans

31%
64%

Loans for trade

Personal
consumption
loans

INTERPRETATION
v 20% of people concerned need consumer durable loans.
v 80% of them need loans for Trade.
v Rest 5% needs personal loans.

Q No.11: Mode of payment

55

Response

Percentage

Monthly

70%

Quarterly

20%

Bi annually

8%

Annually

2%

8%

2%
Montehely

20%

Quarterly
Bi annually
Annually
70%

INTERPRETATION
v 70% of the concerned people (Vendors) favour Monthly pay-back system
v 20% of the concerned favor quarterly pay-back system.
v 8% of the people associated favor biannually pay-back system.
v 2% of the concerned people favour annually pay-back system.

56

4.1 FINDING
v During the survey it was found that the economic condition of the
associates of Kutir Udyog is below poverty line (about 85 %).and about
66% of the Samati including self help group live below poverty line.
v The y do not believe in these type of scheme (Microfinance).
v They want to expand there business for better living standard but they
dont know how to achieve that.
v For the expansion of there business they need economic support.
v They dont know much about scheme and dont know the exactly the
procedure which to follow to take the advantage of this scheme.
v The monthly income in this business varies i.e. in summer the sale is low
and hence the low profit while in winter the sale of fish increase and
hence the profit also increase.

57

4.2 RECOMMENDATIONS\SUGGESTIONS
v The comprehensive analysis of data and surveys conducted by me lead to the
conclusion that the farmers dealers, Samati, Self help group and other Kutir
Udyog

should be provided with the micro finance ranging from 50,000-to-

4,50,000 so that they can expand business and make better living.
v Majority of the respondents (90%) are aware about Uttaranchal Gramin Bank and
are satisfied with the performance of bank.
v Most of the respondents (64%) in pesiculture have monthly income above 10,000.
v More then (60%) of the people are concerned with Kutir Udyog from more than
10 years.
v The majority of the people (80%) associated with Kutir Udyog prefer loan for
trade.

58

4.3 CONCLUSION:We know that Uttaranchal Gramin Bank is one of the leading bank in the Uttarakhand
state. The economic condition of Kutir Uoydog, Farmers vendor, sellers & dealers are
very bad. There living standard of these people is very low Uttaranchal Gramin Bank
being the commercial bank should provide the economic support to these people.
Uttaranchal Gramin Bank is the only bank which provides the micro finance very
effectively. There are various people who are taking benefit from these schemes.
Micro finance is the financing of the people who are having the monthly income less than
10,000.

59

BIBLIOGRAPHY

Books
1. K G KARMAKAR

Microfinance In India

2004, SAGE India

2. Rajagopalan S

Microfinance: Challenges

2002, Paperback

And Opportunities
3 Lalitha N

Readings In Microfinance

4 Sharma Harsh

Managing Microfinance :

Bhargavarajeev

-A Corporate Approach

Magazine 1. Yojana
2. Financial Cronical
3. The Economic Times
Websites
http://www.bagchee.com/
http://www.flipkart.com
www.thehindubusinessline.com
http://www.almoraurbanbank.com
finance.indiamart.com
www.rupeetimes.com
indiaearnings.moneycontrol.com

60

Annexure
Questioner Q No.1: i) Awareness about Uttaranchal Gramin Bank
ii) Rating Uttaranchal Gramin Bank
Q No.2: Knowledge about the scheme for general public.
Q No. 3: Awareness about products and services.
Q No.4: Problems in information collection.
Q No.5: Other bank providing any facility
Q No.6: Experience with Uttaranchal Gramin Bank
Q No.7: Monthly Income
Q No.8: Time associated with business.
Q No.9: Kind of facility needed
Q No.10: Type of Loan
Q No.11: Mode of payment
Q No.12: Annual output

61