Retail Lending in Jammu & Kashmir:

Prospectus and Problems

Submitted in Partial Fulfillment of the course MS-100 of Masters Degree in
Business Administration (MBA) by
IMRAN ALI MIR
Enrolment No: 125190370
Management Program (MP)
Under the supervision of
Dr. Altaf Ahmad Dar

School of Management Studies

Indira Gandhi National Open University
New Delhi

CERTIFICATE OF ORIGINALITY

This is to certify that the project titled Retail Lending in Jammu & Kashmir:
Prospectus and Problems is an original work of the Student and is being submitted in
partial fulfillment for the award of the Masters Degree in Business Administration of
Indira Gandhi National Open University. This report has not been submitted earlier either
to this University or to any other University/Institution for the fulfillment of the
requirement of a course of study.

SIGNATURE OF SUPERVISOR
(Dr. Altaf Ahmad Dar)

SIGNATURE OF STUDENT
(Imran Ali Mir)

Place: Srinagar

Place: Srinagar

Date: 08/03/2016

Date: 08/03/2016

ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and assistance
from many people and I am extremely fortunate to have got this all along the completion of my
project work. Whatever I have done is only due to such guidance and assistance and I would not
forget to thank them. First of all I would like to express my profuse thanks to my supervisor Dr.
Altaf Ahmad Dar, presently posted at Islamic University of Science and Technology (IUST),
Awantipora as Assistant Professor who rendered expert guidance and assistance in the successful
completion of my dissertation.
I am also indebted to my mentors Prof. B.K. Koul, Mrs. Afreen, Dr. Imtiyaz Ali of
Kashmirr University, Prof. S.N. Gupta and Prof. Uma Kanjilal of IGNOU for their valuable
remarks and suggestions in carrying out this dissertation and for providing me some official
facilities. Besides, I am also extremely thankful to Mr. Farooq Ahmad Bhat, District
Commissionar Anantnag, Mr. Mehboob Hassan Beigh, Tehsildar Anantnag, Mr. Tanveer Ahmad
Bhat, Block Development Officer Pahalgam and many others for their kind cooperation and
support for data collection from their respective departments. They have given their valuable
feedbacks for the study. I wish to express profuse thanks to staff members and coordinator of my
study centre. I wish to express my heartily thanks to my friends Ishtiyaq Ahmad, Lateef Hussain,
Reyaz Ahmad, Sawlat Ahmad, Sajad Hussain, Farooq Ahmad, Mudasir Ali and many others who
helped me a lot and provided all sorts of assistance for the smooth completion of my
dissertation.
I am ever beholden to my family members and I wish to express my sincere thanks to my
parents, who have always been a source of inspiration and encouragement to me from the very
inception of my carrier. Their encouragement and good wishes have played a major role in the
completion of this work.

(Imran Ali Mir)

ABSTRACT
Present study deals with retail lending prospectus and problems in banking sector in
Jammu & Kashmir. This study highlights the present trends and common practices in public
lending for carrying out different activities. Banking sector is a thrust area of economic
development in developing economies, like in India. Banks have been playing a significant role
for the upliftment of poor, to raise the living standard of masses and also to mitigate their socioeconomic conditions to achieve balanced economic growth with social justice via its micro
finance services. In the past three years, even when RBI was increasingly forcing banks to
spread services to the unbanked rural markets, there has not been much progress in money flow
to rural customers. In fact, growth in lending to a significant chunk of the so-called priority
sector, which includes economically weaker sections, has come down. The original idea of
priority sector lending is making loans available to small and marginal farmers and landless
laborers, village artisans, etc at lower rate of interest. But most of the banks dont do direct
lending to these farmers and economically weaker sections. This never actually serves the
purpose of priority sector lending to the extent it is required. Traditionally banks have viewed
rural areas as a segment purely in need of upliftment. This was based on the underlying
philosophy of a social obligation. However, the future lies with those who see the poor as their
customers and enroll them under financial inclusion, the provision by the financial system of
financial products and services at an affordable price, to those who have been financially
excluded.
The study was conducted among the rural people of Pahalgam Block in Anantnag District
to analyze the policy, practices, and role of microfinance provided by different banks in terms of
how well they have achieved their own goals, to reach the poorest population, to ensure a
positive measurable impact on the lives of clients and their families, to build financially selfsufficient institutions, and to reach and empower women vis-a-vis the future challenges and
suggest the likely improvements. The main focus of the study is to assess the degree of problems

and issues which exist in the banking sector and put forward some preliminary suggestions as to
how they may be resolved to ensure that this sector lives up to expectations of common people.

CONTENTS
CHAPTER: 1

INTRODUCTION

1.1 OVERVIEW OF BANKING SECTOR IN INDIA

1.2 OVERVIEW OF BANKING SECTOR IN JAMMU & KASHMIR
CHAPTER: 2

REVIEW OF LITRARURE

CHAPTER: 3

SCOPE OF THE STUDY

CHAPTER: 4

OBJECTIVES OF THE STUDY

CHAPTER: 5

RESEARCH METHODOLOGIES

CHAPTER: 6

LIMITING FACTORS

CHAPTER: 7

ANALYSES AND INTERPRETATION OF DATA

CHAPTER: 8

FINDINGS

CHAPTER: 9

SUGGESTIONS

CHAPTER: 10

SUMMARY AND CONCLUSION

CHAPTER: 11

REFERERNCE/BIBLOGRAPHY

CHAPTER: 12

ANNEXURES

Annexure I: Dissertation Proposal Proforma and Synopsis

Annexure II: Dissertation Questionnaire

INTRODUCTION

India has a vibrant banking system mainly consisting of: commercial banks, regional rural
banks and cooperative banks. These banks play an important role in mobilizing and allocating
financial resources. Apart from performing conventional banking functions these institutions act
as medium of social and inclusive banking. Access to finance is being considered as one of the
major tools of development and poverty alleviation. Realising this causality of access to
financial services on inclusive growth, nations throughout the world have been trying hard to
achieve the objective of financial inclusion. Similarly financial sector reforms in India are driven
by the objective of inclusive growth and unrestrained access to finance. Various initiatives and
reforms have taken place in this direction since independence. Regional Rural Banks have been
established since 1975 as a new source of finance in the rural areas. The main objective of these
banks is to provide credit and other facilities to the small and marginal farmers, agricultural
labourers, artisans and small entrepreneurs. These banks are sponsored by the nationalised
commercial banks. So far as the area of operation is concerned, such a bank covers one or more
districts of a state. A network of cooperative banks to provide credit for agriculture was
developed immediately after independence which was followed by nationalisation of banks and
targeted priority sector lending in 1969 and thereafter. Since then special efforts have been made
to increase the involvement of public sector banks in the development of agriculture and other
associated activities in the rural areas. With the changing paradigm of the Indian economy from
agrarian to industrial and subsequently to services economy, the focus shifted from subsidized
credit and priority sector lending to enterprise driven. However, care was taken that the poor and
disadvantaged are not ignored in this journey to economic stability and excellence. At present,
the commercial banks are mandated to earmark 18% of their total annual lending to agricultural
sector as part of priority sector lending.

Since the beginning of independence, the importance of access to adequate credit has
been at the center piece of policy making in India. The country has been characterized by a large
agricultural sector as well as a large small-scale industrial sector, taken together which continue
to form the bulk of employment. Providing access to credit for these sectors has been a key
driver of banking sector policy and formed the intellectual basis for bank nationalization and
various priority sector lending schemes. Easy access to sources of finance is believed to be an
important tool to poverty alleviation and inclusive growth. Financial inclusion or inclusive
financing is the delivery of financial services at affordable costs to sections of disadvantaged and
low income segments of society. The economic development of an area depends upon the
number and performance of different financial institutions operating in the area. These financial
institutions fulfill the various capital requirements of people in that area and lead to the
economic development of the area. The capital is provided by the financial institutions in the
form of various types of loans like agricultural loan, home loans, education loans, car loans,
commercial loans, business loans, etc.
The growth and development of an economy depends on the smooth flow of rural credit.
Credit becomes crucial factor to production if not available at the right time, quantity needed and
in the required institutional forms. The success of credit oriented development project is
significantly dependent upon the soundness of the credit institution and the credit delivery
system. Despite major structural changes in credit institutions and forms of rural credit in the
post-independence period, the exploitation of the rural masses in the credit market is one of the
most pervasive and persistent features of rural life in India. There is a vast literature
documenting the imperfections of the rural credit market and its impact on access to credit for
productive purposes, both short term and long term, credit as insurance against risk, and credit
for meeting basic consumption needs including food, housing, health and education. While
growth is important, it is also imperative that growth becomes more inclusive because if certain
regions, sectors or groups of people are denied economic opportunities for long periods, the
spread and sustainability of growth itself is threatened. Hence, growth, to be inclusive, must take
into account the betterment of every section of society. Hence, it is imperative to ensure that
higher growth is also more inclusive. In the Draft Approach Paper to the Eleventh Five Year
Plan, the Planning Commission has emphasised the need for faster and greater inclusive growth
during the Eleventh Plan period. The banking sector, as the most important financial

intermediary to mobilise the savings leading to increased investments, facilitating growth would,
thus, play the most crucial role in attaining the stipulated economic objectives through expansion
of the coverage of banking services by reaching the vast unbanked and under banked population
of the country.
Following the recommendation of Khan Commission 2004, various reformative measures
have been taken by Reserve Bank of India and Government of India to promote the extent of
Financial Inclusion in India. To achieve maximum financial inclusion, banks throughout the
country scaled up their initiatives to achieve their targets for Financial Inclusion. Bankers have
been striving hard to achieve the objectives of Financial Inclusion and so is true with the state of
Jammu and Kashmir. The State of Jammu and Kashmir shows the worst performance in the
Northern Region with 68% of its people excluded from access to finance (Report of the
Committee on Financial Inclusion, 2008). The credit-deposit ratio is far below the national
benchmark. Jammu and Kashmir figures among the states where financial inclusion is below
average. It has a CRISIL Inclusix score of 36.9 compared to the national score of 42.8.

OVERVIEW OF BANKING SECTOR IN INDIA

The Indian banking system consists of 26 public sector banks, 20 private sector banks, 43
foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural
cooperative banks, in addition to cooperative credit institutions. Public-sector banks control
nearly 80 percent of the market, thereby leaving comparatively much smaller shares for its
private peers.
The Indian banking sector is broadly classified into scheduled banks and non-scheduled
banks. All banks which are included in the Second Schedule to the Reserve Bank of India Act,
1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled
Co-operative Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative
Banks and Scheduled Urban Cooperative Banks. Scheduled Commercial Banks in India are
categorized into five different groups according to their ownership and/or nature of operation:

State Bank of India and its Associates

Nationalized Banks
Private Sector Banks
Foreign Banks
Regional Rural Banks
Cooperative Banks

Total lending and deposits increased at a compound annual growth rate (CAGR) of 20.7 per
cent and 19.7 per cent, respectively, during FY07-14 and are further poised for growth, backed
by demand for housing and personal finance. Total asset size of banking sector assets is expected
to increase to US$ 28.5 trillion by FY25. Deposits have grown at a CAGR of 13.6 per cent
during FY0515 to an estimated US$ 1.48 trillion in FY15. Deposit growth has been mainly
driven by strong growth in savings amid rising disposable income levels.

Indian banking industry is expected to witness better growth prospects in 2015 as a sense
of optimism stems from the Governments measures towards revitalizing the industrial growth in
the country. In addition, RBIs new measures may go a long way in helping the restructuring of
the domestic banking industry.
Rising incomes are expected to enhance the need for banking services in rural areas and
therefore drive the growth of the sector. Programmes like MNREGA have helped in increasing
rural income aided by the recent Jan Dhan Yojana. The Reserve Bank of India (RBI) has relaxed
its branch licensing policy, thereby allowing banks (which meet certain financial parameters) to
set-up new branches in tier-2 to tier-6 centers, without prior approval from RBI. It has
emphasized the need to focus on spreading the reach of banking services to the un-banked
population of India.

Government Initiatives
The government and the regulator have undertaken several measures to strengthen the Indian
banking sector.

 The Government of India is looking to set up a special fund, as a part of National

Investment and Infrastructure Fund (NIIF), to deal with stressed assets of banks. The
special fund will potentially take over assets which are viable but dont have additional
fresh equity from promoters coming in to complete the project.
The Reserve Bank of India (RBI) plans to soon come out with guidelines, such as
common risk-based know-your-customer (KYC) norms, to reinforce protection for
consumers, especially since a large number of Indians have now been financially included
post the governments massive drive to open a bank account for each household.
To provide relief to the state electricity distribution companies, Government of India has
proposed to their lenders that 75 per cent of their loans be converted to state government
bonds in two phases by March 2017. This will help several banks, especially public sector
banks, to offload credit to state electricity distribution companies from their loan book,
thereby improving their asset quality.
The Reserve Bank of India (RBI), the Department of Industrial Policy & Promotion
(DIPP) and the Finance Ministry are planning to raise the Foreign Direct Investment
(FDI) limit in private banks sector to 100 per cent from 74 per cent.
Government of India aims to extend insurance, pension and credit facilities to those
excluded from these benefits under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
The Government of India announced a capital infusion of Rs 6,990 crore (US$ 1.05
billion) in nine state run banks, including State Bank of India (SBI) and Punjab National
Bank (PNB). However, the new efficiency parameters would include return on assets and
return on equity. According to the finance ministry, This year, the Government of India
has adopted new criteria in which the banks which are more efficient would only be
rewarded with extra capital for their equity so that they can further strengthen their
position."
To facilitate an easy access to finance by Micro and Small Enterprises (MSEs), the
Government/RBI has launched Credit Guarantee Fund Scheme to provide guarantee
cover for collateral free credit facilities extended to MSEs upto Rs 1 Crore (US$ 0.15
million). Moreover, Micro Units Development & Refinance Agency (MUDRA) Ltd. was

also established to refinance all Micro-finance Institutions (MFIs), which are in the
business of lending to micro / small business entities engaged in manufacturing, trading
and services activities upto Rs 10 lakh (US$ 0.015 million).
The central government has come out with draft proposals to encourage electronic
transactions, including income tax benefits for payments made through debit or credit
cards.
The Union cabinet has approved the establishment of the US$ 100 billion New
Development Bank (NDB) envisaged by the five-member BRICS group as well as the
BRICS contingent reserve arrangement (CRA).
The government has plans to set up a fund that will provide surety to banks against loans
given to students for higher education.

Automated teller machine growth

The total number of automated teller machines (ATMs) installed in India by various
banks as of end June 2012 was 99,218. The new private sector banks in India have the most
ATMs, followed by off-site ATMs belonging to SBI and its subsidiaries and then by nationalized
banks and foreign banks, while on-site is highest for the nationalized banks of India.

Branches and ATMs of Scheduled Commercial Banks as of end December, 2014

Bank type

Number of branches On-site ATMs Off-site ATMs Total ATMs

Nationalized banks

33,627

38,606

22,265

60,871

State Bank of India

13,661

28,926

22,827

51,753

Old private sector banks

4,511

4,761

4,624

9,385

New private sector banks 1,685

12,546

26,839

39,385

Foreign banks

242

295

854

1,149

TOTAL

53,726

85,134

77,409

1,62,543

Road Ahead
The Indian economy is on the brink of a major transformation, with several policy
initiatives set to be implemented shortly. Positive business sentiments, improved consumer
confidence and more controlled inflation are likely to prop-up the countrys the economic
growth. Enhanced spending on infrastructure, speedy implementation of projects and
continuation of reforms are expected to provide further impetus to growth. All these factors
suggest that Indias banking sector is also poised for robust growth as the rapidly growing
business would turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet banking
services to the fore. The banking sector is laying greater emphasis on providing improved
services to their clients and also upgrading their technology infrastructure, in order to enhance
the customers overall experience as well as give banks a competitive edge.
Many banks, including HDFC, ICICI and AXIS are exploring the option to launch
contact-less credit and debit cards in the market shortly. The cards, which use near field
communication (NFC) mechanism, will allow customers to transact without having to insert or
swipe.

OVERVIEW OF BANKING SECTOR IN JAMMU & KASHMIR

The banking and finance sector in the state of Jammu and Kashmir organize for the loans
for the small as well as large scale investors in the different industrial sectors of the state. The
basic aim of the finance department of the government of Jammu and Kashmir is to access and
create resources for the economic growth of the state.
In order to take care of the development here, the state government has taken the
responsibility of infusing financial discipline among the public functionaries. They have
implemented various policies and reform schemes for the fiscal development and stabilize the
economic structure of the state of Jammu and Kashmir.
The Jammu and Kashmir Bank provides banking services to the majority of people of the
state. There are branches of this bank in other states as well to facilitate the customers. This bank
offers loans at a very reasonable rate of interest that can help in the development of the industrial
sector.
Apart from the J&K Bank there are also other banks that provide financial assistance to
the people of the state. Financial services in the rural sectors of Jammu and Kashmir are
provided by the various rural banks. Jammu Rural Bank is one of them. This bank provides the
small industries and the farmers of Jammu and Kashmir with the necessary monetary help.
Ellaquai Dehati Bank and Jammu & Kashmir Grameen Bank are the two other regional rural
banks that are working for the development of banking and finance sector in Jammu and
Kashmir.
With the proper utilization of the measures that are being taken by the banking and
financial sector, the economic condition of the state is expected to develop fast.
If you were in Jammu & Kashmir (J&K) a decade ago, you might have had to walk miles
before you saw a branch of a new-age private sector bank. But today, you will locate one easily not only in the by lanes of Srinagar but even in the under-banked regions and rocky terrains of
Doda, Poonch and Kargil. It might be one of the less developed states but J&K is emerging as
the new business destination for new-generation private banks.

In 2013 calendar year, ICICI Bank, the country's largest private-sector lender, more than
doubled the number of its branches in the state to 25. HDFC Bank has 64 branches, the most in
the state among India's new-age private banks. Of these, 45 have been opened over the past five
quarters and almost 60 per cent are in semi-urban and rural areas. Since April 2013, Axis Bank's
branch count in the state has increased from six to 26. Of these, 14 were opened in un-banked
regions.

Industry analysts see the return of peace in the Valley in recent times as a key reason
prompting private banks to expand their reach in the state. However, bankers say the business
opportunity in J&K's under-penetrated regions is tempting enough for them to increase branch
strength there. That there is an opportunity for banks in the Valley is reflected in the financial
performance of Srinagar-based Jammu & Kashmir Bank. The old-generation private lender
reported its highest net profit - of Rs 1,055 crore - in 2012-13. The bank has now set the target of
taking its net profit to Rs 1,800 crore by 2015-16 and aims to have over the next three years a
distribution network of 1,000 branches -800 of those operating
out of J&K.
Buoyed by the success, most private banks plan to add
branches in coming months to strengthen their distribution
network in the state. ICICI Bank, for example, aims to open 10
new branches in the next couple of months, while Axis Bank
plans to have presence in all of the state's district headquarters by
2015. YES Bank, the country's youngest lender, will add three to
five branches to its existing network of five in J&K over the next
two years.
Apart from consumer credit, there is also a demand for
small and medium enterprise finance, working capital & business
loans and farm credit.

Banks (in J&K) offer the whole gamut of products and services that they offer in other
geographies. But since the economy is predominantly agrarian, there are good opportunities in
farm lending for products like apple, walnut, apricots, etc.
According to a report by the committee for evolving a composite development index,
chaired by Raghuram Rajan, governor of the Reserve Bank of India, J&K ranks 14th among the
country's 28 states in development.
While J&K may be lagging in majority of sectors than rest of the country but the banking
sector is one among the few areas which has made more progress in the state than the average
national level. From education to industrial sector and health to agriculture area, states progress
is far more below than the national level.
Interestingly, the banking sector has been flourishing in J&K as per the recent survey of
government where on an average 01 bank branch is available per 7 thousand people and for
India it is 10 thousand persons. Since 2006, the banking sector has witnessed an immense
growth with around 300 % increase in depositing cash and around 325 % in dispensing credits
among the people which is far ahead than average level of India.

The survey report says that 1893 branches of scheduled commercial banks, co-operative
banks and state financial corporation (SFC) are functioning in J&K. The number of branches has
risen by 15.57 % from March 2013 till September 2014. Jammu district tops the number of
banks with 405 branches followed by district Srinagar having 202 bank branches. The report
says that during 2014-2015 fiscal year till September, Rs 72767.21 crore were deposited in
banks by their customers against Rs 64479.70 crore during 2013-2014, Rs 19281 crore 20062007, Rs 21956 crore 2007 2008, Rs 25148 crore 2008-2009, Rs 29355 crore 2009-2010 during
2010-2011 Rs 34233, Rs 45695 crore 2011-2012 and Rs 55144 during 2012-2013. During 20142015 till September, Rs 34398.97 crore credits were dispensed by banks in the state against Rs
8658 crore during 2006-2007, Rs 10377 crore 2007-2008, Rs 12090 crore 2008-2009, Rs 13587
crore 2009-2010, Rs 16050 crore 2010-2011, Rs 16252 crore 2011-2012, Rs 18949 crore 20122013, Rs 23542 crore 2013-2014.

In the distribution of deposits of Rs. 72767.21 crore as on Sept 2014, the Jammu district
contributed the deposit share of 31.73 percent with Rs 23086.24 and Rs 7466.83 crore credits
were dispensed in the district which contribute 21.11 percent credit share of the state. The
deposit share of Srinagar was 25.42 percent with Rs 18495 crore and 24.18 percent credit share
with Rs 8314.84 crore. Individual share of the remaining 20 districts in deposits was less than
5% ranging between 4.37% the third higher district Kathua and 0.60% lowest in case of Shopian
district. The other six lower level districts in terms of percentage share in deposits are
Bandipora/Ramban (0.95%) each, Kulgam (0.98%), Ganderbal (1.00%) Kargil (1.01%) and
Kishtwar (1.09%).
In the bank credit-off share, the Srinagar district stood at 24.18% followed by Jammu
district 21.71%, the remaining 54.11% credit was shared jointly by 20 districts. In the
distribution of bank credit, Kishtwar district is placed at the bottom claiming only 0.55 % share.
The other 6 districts receiving less credit are Ramban, (0.57%), Kargil (0.69%), Poonch (0.94%),
Doda( 0.96%), Reasi(1.14%) and Leh (1.16%). The share of lower level 7 districts put together
is only 6.01%. In J&K, the share of scheduled commercial banks is 85.47% with 23.72% of
public sector banks, 43.32% of private sector banks and 18.43% of regional rural banks. 13.79%
share is held by central/state cooperative banks and only 0.74% is the share of state financial
corporation (SFC).

REVIEW OF LITERATURE

Ishtiyaq Mohiudin Sheikh (2013), in his research made an attempt to evaluate the
performance of Public Sector Commercial Banks in J&K with special emphasis on State Bank of
India. In this study, Ishtiyaq outlined the growth and progress of Commercial Banking in J&K
and analyzed the trends in deposits, advances and various components of profits of SBI and
compared the performance of SBI with other PSBs. A comparison of SBIs performance in
respect of resource mobilization with other banks showed that the disbursement of advances by
SBI is very less than any other bank in the region including the regional rural banks and
cooperative societies.

Golait Ramesh (2007) makes an assessment and attempts to analyze the issues in
agricultural credit in India. The analysis reveals that the credit delivery to the agriculture sector
continues to be inadequate. The banking system is still hesitant on various grounds to provide
credit to small and marginal farmers. Facilitating credit through processors, input dealers, NGOs,
etc. that are vertically integrated with the farmers and through contract farming for providing
them critical inputs or processing their produce, could increase the credit flow to agriculture
sector significantly.

Shahbaz, Baber and Ali Tanvir (2010) have underlined some of the factors hindering the
agricultural productivity and effective agricultural extension services in the mountainous areas.
Their study revealed that small land holding, lack of access to bank loans, lack of female
extension workers and subsistence farming are found to be some of the key challenges for
effective agricultural extension service in such areas. Most of the farmers were not satisfied with
the services of local banks and provincial Department of Agriculture.
A significant progress has been achieved in the State of Jammu and Kashmir to achieve
the wider objective of Inclusive growth through financial inclusion; even the bankers and the
government agencies have shown earnestness in implementing the Financial Inclusion Plan in a

coordinated manner. The bank credit has been sluggish as represented by the Credit-Deposit
Ratio of 35.71 against the benchmark of 60. A lot has been done but a lot is yet to be achieved,
bankers need to keep reforming their plans and ensure that the poor are not left to the clutches of
informal sources of finance. Audil Rashid Khaki, (2012)
According to Veeresh G Laddimath (2014) there are 185 million bankable adults in rural
India who are unbanked because of access and usage issues. To reach this market and
subsequently build an inclusive financial system, there must be a coordinated and concerted
effort by the three key stakeholders: the Government of India, the Reserve Bank of India and the
commercial banks. A partnership between banks and business correspondents, and collaboration
amongst banks is critical. Banks should tailor their product and service mix to meet rural needs.
The Handicraft sector known for its world famous products has a very vital significance
in the economic development of the J&K State. Shazia Hamid & Dr. Imtiyaz-ul-Haq (2014),
from their field study have revealed that handicraft sector of J&K is experiencing certain
difficulties in the way of its development. The main problems are non-availability of timely and
adequate raw-material as well as finance from banks at reasonable rates.
Large farmers somehow manage to get crop loans but the access of small farmers to
formal credit agencies or institutional sources is quite limited (Sarap 1991, Swain 1986). The
creditworthiness of small farmers is viewed with suspicion because of their inability and
unwillingness to provide acceptable collateral like owned land, houses, or buildings as mortgage.
In most cases they do not possess such assets, and some even lack valid documents to prove
ownership.

SCOPE OF THE STUDY

As there is no stipend from IGNOU in conducting this study, I have to draw all the
expenses from my own sources. Considering the shortage of funds and time, I have limited this
study to the Pahalgam block of District Anantnag in Jammu & Kashmir.

RATIONALITY OF THE STUDY

Block Pahalgam in Jammu &Kashmir is bestowed upon with a number of beautiful and
scenic places which attract thousands of domestic and foreign tourists annually. It has provided a
means of livelihood to the local people. There is a scope for earning large income from various
tourism related activities. Many people in this block run poultry farms which have a very good
scope in Kashmir because of its high demand but unfortunately they do not get the proper
financial help from the government and financial institutions to start or further extend this
business. Similarly people running other forms of businesses like handicrafts, handlooms, shops,
dairy, etc face the same kind of financial problems. There are very high opportunities for retail
lending which can further help in the economic development of this block.
Knowledge about financial position or households borrowing, such as how much
financial needs they face and from what sources they borrow money, would provide much
helpful insight to designing an effective credit delivery system. The future researchers may use
the technique and approach of the present study for updating information and to explore new
areas of study.

OBJECTIVES OF THE STUDY

1) To study the financial position of rural households, their indebtedness to different banks
and their financial needs.
2) To examine the role of banks in economic development of rural areas
3) To study the prospectus and opportunities available to the banking fraternity
4) To ascertain the challenges faced by banks and suggest the remedial measures

RESEARCH METHODOLOGY
Primary Data Collection
The collection of data in this study will be through the survey method. The primary data
will be collected by administering questionnaires to selected households in each village of the
block. As most of the people are illiterate so it would also include direct interview of the people
of concerned block.

Secondary research
Secondary data will be collected from the journals, newspaper reports, research articles,
market research agencies, internet and books.

Questionnaire Design
The questionnaire survey for the study will be designed by keeping in view the objectives
of the study and it will contain statements and questions related to the subject of the study.

Sampling Procedure and size

The sampling procedure followed will be a random sampling. However, due care will be
taken to distribute the sample evenly among various income groups and activity wise so that a
good amount of variation can be achieved. The target respondents will be 100 in each village of
the block.

DATA ANALYSIS & INTERPRETATION

An analysis is generated from the questionnaire to fulfill the objectives of the study. From
the responses of questionnaire, highly affecting responses were taken and efforts were made to
find out the prospectus and problems in retail lending. For the convenience of analysis the
percentage of responses was calculated. Several judgments are being made from the responses of
respondents to validate the objectives of the study. The results are presented below:
1. Number of bank account holders

A/c Holder's %
70
60
50

A/c Holder's %

40
30
20
10
0
Yes

No

As can be seen from the above graph, more than 50% people have opened their accounts
with different banks. There is a lot of scope to lend these existing account holders and open the
accounts of remaining population to mobilize their deposits. Government has been pushing for
DBT (Direct Bank Transfer) scheme through which all the government benefits like subsidies

will be directly transferred into beneficiary accounts. This can be achieved only with the help of
banks by opening 100% accounts.

1.2 Problems faced in opening of a bank account

Reasons for not having a bank account
Branches are not nearby
Shortage of minimum balance to be kept with banks
Not knowing anybody in the bank
Unable to fulfill the bank formalities
Other Reasons

% of Respondents
50
30
5
5
10

Among the non-account holders, more than 80% people feel that the bank branches
should be nearby to their households and there should be no minimum balance required to be
kept at the time of account opening. If more branches are opened in alternate villages, there is
more scope for opening of new accounts as it will increase public accessibility. Banks should
also go away with minimum balance requirement for opening of new accounts. Majority of the
accounts need to be opened under PMJDY scheme which can be opened with zero balance. This
will also help in coverage of poor people under the ambit of accidental insurance scheme
without paying any premium.

1.3 Lack of Awareness

Banking is for those who have money

80
70
60
50
40
30
20
10
0

% of Respondents

Yes

No

3/4th of the rural people think that banking services are only for those who have money.
They dont know that bank lending is meant for those who are short of working capital or long
term capital. Apart from lending, banks provide various other services like lockers, insurance,
social security schemes, etc. It shows the complete lack of awareness among them. Banks need
to analyze its reasons and conduct regular awareness camps to make people aware about the
banking services. This will help them to tap and lend to the majority of left over population.

1.4 Type of Bank Account

Type of Bank Account
Current Account
Savings Account
No Frill Account
Fixed Account
Others

% of Bank Account Holders

8
55
15
20
2

Among the account holders, only 8% have current accounts. This shows that the whole
business community is not covered under this category of bank accounts which is later used as
one of the criteria to lend them based on the quantum of their transactions. Opening of current

accounts will help in building confidence among the business fraternity as they will become used
to transacting with banks on daily basis. This will not only improve their financial awareness but
also help them in availing various banking facilities. On the other hand this will help banks to
increase their CASA base and eventually reduce their overall cost as no interest is paid on
current accounts.

1.5 Duration of dealing with Banks

Number of years dealing with Bank
0-5 years
5-10 years
10-15 years
More than 15 years

% of Respondents
45
29
14
12

Almost 50% of the population is dealing with their respective banks from the last 5 years.
This seems to be a result of financial inclusion program and various other schemes like PMJDY,
PMSBY, PMJJBY, APY, etc launched recently by the central government. These schemes have
been specially designed for the poor and rural population whose income is very less.
Government has played its part as a supporting agency and now it is the turn of banks to play
their main role. Banks need to make the best use of these schemes to maximize their customer
base by expanding their branch network and cover 100% households under the ambit of banking
services.

1.6 Facilities provided by the banks

Facilities provided by Banks
ATM/ Debit Card
Credit Card
Lockers

% of Beneficiaries
53
2
6

Advance Facilities
Others

34
5

It is surprising to see that less than a combined 10% of the population has availed the
credit card and locker facilities provided by the banks. There is a lot of scope to earn the noninterest income from this segment. As the e-commerce (online shopping) has grown significantly
from the last few years, there is a good potential in providing credit cards to the existing account
holders. Also, only 34% of the population has availed the loan facilities from banks. Bank loans
form a major chunk of their earnings in the form of interest. It is a win-win situation for both the
banks and the public if banks lend more to them. Banks will earn more income and the public
can establish their own businesses or meet their financial requirements during hard times. At the
same time, banks need to improve their CD ratio against the benchmark of 60% formulated by
the RBI.

1.7 Education qualification of Literate Respondents

Educational Qualification of Literate Population
Below Class V
Class VI- X
Class XI- XII
Graduate
Post Graduate

% of Respondents
8
15
21
38
18

Among the educated population surveyed more than 75% have passed secondary school
and are unemployed. Today young people are not given jobs that are considered to be socially
degrading. Our educational system has its own irreparable defects and its contribution to the
unemployment is an open truth. Our education system does not prepare the minds of young
generation to become self-employed on the contrary it makes them dependent on government
vacancies which are hard to come.
Owing to the less government and private job opportunities in the state, they need to be
financed by the banks to set up their own businesses with the help of central government and

state government sponsored schemes like PMEGP, JKSES, etc where interest subsidy and
margin money is given to the beneficiaries. Being literate, there are meager chances of their
business failures. Also, there is a less risk for banks in financing them as their cases will be
sponsored by the government. Establishment of more business units will eventually help in the
overall economic prosperity of rural state.

1.8 Annual Income and its source

Annual Income (in Rupees)
Below 1 Lakh
Between 1-2 Lakhs
Between 3-4 Lakhs
Above 4 Lakhs
No Income

% of Respondents
42
19
11
13
15

The annual income of 42% of the population is less than Rs. 1.0 Lakh. Their main source
of income is agriculture. They are in possession of their enough ancestral land but they lack the
technical know-how and timely financial support for improving their productivity. There is a
good potential of increasing their annual income if their agricultural produce lands are converted
into horticultural produce lands like apple, etc. Most of the agriculturists produce paddy, maize
and mustard from their lands. From the same, on an average an agriculturist earns Rs. 1.0 Lakh
annually from 10 Kanals of his land. If he produces apples from the same land, his annual
income can be improved from Rs. 1.0 Lakh to Rs. 3.0 Lakhs or more. But that needs an initial
investment which can be met with the help of banks only.

1.9 Type of loans availed from banks

Type of Loan Availed
Agriculture Loan
Business Loan
Transport Loan
Conveyance Loan

% of Respondents
57
16
9
2

Education Loan
Home Loan
Other Loan

2
4
10

Only 57% of the agriculturists have availed Agriculture loans from different banks. Rural
development projects tend to suffer if the banking policy makers do not adopt a bolder approach
to rural credit. The number of rural branches should be increased so as to give more credit to
farmers. Banks can cover them under the KCC scheme to meet their pre-harvest, post-harvest
and maintenance expenses. In this way, the banks will be able to achieve the target of 100%
household coverage set by the Government of India. As we have seen 24% of the population has
an annual income of more than Rs. 3.0 Lakhs but only 2% have availed the conveyance loans.
They can easily pay their EMIs if they are provided with car or motor cycle loans. There is a
scope of increasing this percentage from 2% to around 24%. Banks need to approach this section
of population and cover them under their conveyance loan schemes. Moreover, banks can help in
generating employment opportunities for the unemployed youth by providing them transport
loans. As can be seen from the above table, only 9% have availed transport loans. This has the
potential to be improved further.

1.10 Business Activities

Line of Business
Shop keeping
Poultry
Sericulture
Fisheries
Artisan
Others

% of Businessmen
14
4
8
16
36
22

A good number of 36% businessmen are artisans which is evident from the handicrafts
and handloom industry prevailing in the state. J&K state is known for its hand works all over the
world. This industry is not at its best yet as can be seen from the above table. Financial support
is crucial for the upliftment of this indutrsy. Government has come up with different schemes

like Artisan Credit Card, Weavers Credit Card, General Credit Card, etc where interest subsidy
to the tune of 10% is provided to artisans. Banks need to make the best use of these schemes and
cover all the artisans that come under handicrafts, handlooms, paper mashie, carpet weaving,
zari embroidery, etc. Shopkeepers too can be covered under cash credit schemes. Those who are
in poultry, sericulture and fisheries can be financed under JKSES and PMEGP schemes where
the government provides subsidy in the form of margin money and interest claim. The allied
segments of agriculture like sheep farming, cattle farming, poultry farming, floriculture,
aquaculture, etc should be promoted in rural areas by giving timely credit so that the economic
conditions of rural people can be improved.

1.11 Problems faced in carrying out own businesses

Problems faced in running own businesses
Inadequate supply and high price of raw materials
Financial Problem
Poor Infrastructure
Licensing Problem
Lack of technical skills

% of Respondents
6
56
4
11
23

As we have seen only 8% of the total population is running their own businesses, when
asked about the hesitation to start their own businesses it came as a shocker when more than
50% said, they are willing to set up their own businesses but they lack financial support from
banks. Banks are hesitant in assisting businessmen for establishing their new business units. On
the part of banks, it is risk which is holding them from financing new business units. There are
some people who lack the technical skills for carrying out their own businesses. J&K
government has recently come up with JKEDI (Jammu And Kashmir Entrepreneurship
Development Institute) which is catering to such people. After the completion of training they
are assisted to establish their own business units with the help of banks under PMEGP (Prime
Ministers Employment Generation Program) scheme in collaboration with KVIC, KVIB and
DIC where margin money to the tone of 35% and interest subsidy is given to the beneficiaries.
This scheme has reduced the risk of banks in lending to new business units. Accordingly, banks
should the best use of this scheme and improve their lending rate to this group.

1.12 Reasons for not having availed loans from banks

Reasons for not having availed bank loans
No need of loans
Need loans, but have never applied
Applied for loans but was denied
Had a loan but paid it off

% of Respondents
15
36
39
10

Over all, only 34% of the population has availed different loans from the banks. If 15%
dont need loans then what happened to the remaining population of 51%? Either they dont
know how to apply for a loan or their loan applications are rejected. As most bank managers
argued that the low CD ratio and rejection of loans were due to the non-viability of projects, the
banks should assist small entrepreneurs in rural areas in preparing feasible project reports. It is
easy for banks to lend those who have already availed some other loans by checking their
credibility. If their repayment history is satisfactory, there is no reason to reject the fresh loan
applications of 10% applicants. They can be given multiple loans till their repayment and
conduct of accounts is satisfactory for the banks.

1.13 Problems faced while applying for bank loans

Reasons of not applying for bank loans
Dont know how to apply
Dont have confidence the loan would be granted at all
The application process is too troublesome
Other reasons

% of Respondents
47
25
20
8

Most of the respondents feel that the application process is too troublesome while as the
others feel that they wont be granted any loan at all. This forces the people to approach money
lenders for meeting their financial requirements at higher costs. According to these people,
lending money from the banks and other financial institutions is a very complex process and

they face lot of difficulties in getting loans from them. If 41% of the population can pay back to
money lenders at higher interest rates, why cant they repay to the banks at lower interest rates?
This shows the lack of financial awareness among the people. To minimize this
misconception, banks can hire 3rd parties who can complete the bank formalities on behalf of
applicants. This will become convenient for less knowledgeable applicants in availing loans and
simultaneously help banks in increasing their business portfolio.
At the same time, bank managements need to simplify their eligibility criteria for loan
applications so that loan rejections are reduced. This will result in increasing their lending
percentage by about 34%. Also, regular financial literacy camps should be conducted by the
banks to generate awareness among people about the bank loans and their eligibility criteria.
This will help in building the confidence of prospective customers in approaching the banks for
availing their required loans.

1.14 Reasons of loan rejections

Reasons of loan rejection by the Bank
Still had debt to pay off
No guarantor
Not familiar with the loan officer
Income is low, loan officer is worried
No collateral
Project is too risky

% of Respondents
5
34
12
38
2
9

The most common reason for rejection of loan applications is hesitation of bankers to
provide loans to the low income segment. As we have seen that more than half of the rural
population has an annual income of less than Rs. 2.0 Lakhs, this makes less sense to leave half
of your prospective customers out of banking sector. Another major reason for loan rejection is
failure of customers to provide government employee guarantors to the banks. J&K Bank & SBI
are insisting their customers to provide state and central government employees as guarantors for
availing loans respectively. These two banks should go away with this practice as most of the
applicants are unable to win the confidence of government employees and bring them as

guarantors against their loans. Also these applicants dont have any other alternate banks for
availing loans as their presence is very minimal in the rural J&K. Other banks can utilize this
practice of J&K Bank and SBI for lending by expanding their branch network to rural areas.

1.15 Source of finance requirements

Source of Finance Requirements
Creditors
Self Financing
Money Lenders
Family and Friends
Others

% of Non-Loanees
22
14
41
13
10

As is evident from the above table majority of the non-loanees meet their financial
requirement through money lenders who charge them very high interest rates. About 36% of the
debt of farmers from informal sources had interest rates of 20-25%. Another 38% of loans had
been borrowed at an even higher rate of 30% and above. Besides, money lenders are not
regulated by any authorized agency. They resort to unfair means and take the advantage of
financial unawareness of poor people. They purchase the crops of farmers at very low price
when the latter approach them for selling their crops in order to repay their debts. Banks are to
be blamed for the plight of rural borrowers as their focus on profitable customers in urban areas,
big corporate houses and more reliable and short-term retail loans have reduced lending to rural
India.
Also, businessmen cant depend on creditors all the time as the credit period allowed is
always shorter. Sooner or later, they have to repay their creditors as a principle of business cycle.
They cant enhance their business till their financial requirements are met by the banks. Banks
provide loans for longer periods and that too at lower interest rates as compared to money
lenders. This will reduce the repayment burden of businessmen and will help them in putting
surplus money in their businesses for further growth.
1.16 Lending Banks

Bank which offered loan

State Bank of India
Punjab National Bank
Jammu And Kashmir Bank
Ellaquai Dehati Bank
J&K State Cooperative Bank
Other Banks

% of Loanees
7
6
52
31
3
1

In our survey, it was found that 52% of the loanees have availed loans from Jammu &
Kashmir Bank alone followed by EDB (Ellaquai Dehati Bank), a regional rural bank in the state.
The role of the private banks and nationalized banks like SBI and PNB in lending has been very
meager. J&K Bank has been playing a monopoly role in lending in J&K state because of its vast
branch network in the rural J&K. As a result, its customer service has not been satisfactory even
after building a good reputation in the state. There have been enormous complaints against the
J&K bank for violating different RBI guidelines while lending to the public. This could not have
been possible if there were competitors to J&K Bank in the market. Being a regional rural bank,
EDB needs to increase its branch network in the rural J&K for the benefit of common people.

1.17 Reasons for choosing the lending bank

Reason for choosing Lending Bank
Low interest rates
Easy to get approved
Low hidden charges
Flexible loan terms
Good reputation
Good service
Convenient hours and location
Other reason

% of Loanees
16
11
2
2
41
17
10
1

It is because of its good reputation that J&K Bank is chosen as a leading lender in the
J&K state. J&K Bank has been successful in building a good reputation in the state because of
its strong marketing strategies and various other CSR (Corporate Social Responsibility)

initiatives. It has won the confidence of J&K people with the help of right mix of administration
and marketing policies. It has not only confined its branches to the urban areas but also
expanded its branches to the extreme rural areas of the state. It has been successful in reaching to
the doorsteps of its customers. It has made it convenient for its customers to approach the bank.
Other banks need to take a lesson from J&K Bank and accordingly increase their customer base.
There are only 16% loanees who have chosen their bank because of lower interest rates. It
shows some banks are still charging higher interest rates on their loans. There may be some
prospective customers who are reluctant to approach banks because of higher interest rates.
Banks need to lower their interest rates at par with other banks in order to attract maximum
customers.

1.18 Source of bank loan information

Source of information about Bank Loans
Bank Branch
Friends and locals
Newspapers
Electronic Media
Internet
Others

% of Loanees
18
40
14
14
6
8

A major 40% of the loanees came to know about bank loans through locals and their
friends while as only 18 % came to know through bank branches. Banks should assign a special
team to assist their customers in finding them the requisite loan requirements in their branches
itself. Pictorial banners of different loan products described in local language should be
displayed on the branch premises. Bank customers meet should be convened periodically to
discuss bank matters, problems of customers, schemes of loans, etc for providing adequate
information to customers that helps to establish cordial relationship and result timely repayment
of loans.
In this era of internet and social networking banks are still lagging in efficient marketing.
Banks need to make the best use of internet and media like radio, television, newspapers, etc to

promote their loan products. This will help in generating awareness among the people and
encourage them to approach the banks for any financial assistance.

FINDINGS
A thorough study of various areas of the block has given a vast interpretation which can
be generalized in the form of following points given below:

1) In spite of expansion of rural credit structure in the country, the volume of rural credit in
J&K is still insufficient as compared to its growing requirement arising out of increase in
prices of agricultural inputs.

2) Banks are still adopting cumbersome rules and formalities for advancing loans which
ultimately force the farmers to depend more on costly non-institutional sources of credit.

3) Rural credit agencies and its schemes have failed to meet the needs of the small and
marginal farmers. Thus, lesser attention has been given on the credit needs of the needy
farmers whereas the comparatively well-to-do farmers are getting more attention from the
credit agencies for their better credit worthiness.

4) The problem of overdues in agricultural credit continues to be an area of concern for the
banks. The recovery of agricultural advances is not satisfactory. Such growing overdues
have resulted from poor repaying capacity of farmers. As a result, the banks are becoming
wary of granting loan to farmers.

5) Financial institutions are not present in the far flung areas of this block due to which most
of the people face problems in approaching them.
6) Most of the rural people are illiterate and unaware about the procedures and benefits of
retail lending.
7) The bank credit has been sluggish as represented by the Credit-Deposit
Ratio of 34% against the benchmark of 60%.
8) Even if the credit is available, either the interest rates are high or the financial procedures
are so cumbersome that an applicant finds it difficult to knock the doors of financial
institutions for help. As evident from the survey, a low percentage of businessmen rely on

financial institutions while as most of them rely on their self generated funds and
financial help from friends and relatives.
9) Although a number of financial institutions are prevailing in Jammu & Kashmir, yet most
of the market is covered by J&K bank alone because of its extensive spread of a huge
number of branches. However some people feel that J&K Bank is monopolistic in its
approach as it does not have any close competitor in the market.
10) Because of the terrorism and difficult topography of Jammu and Kashmir state, it is
difficult for the banks except J&K Bank to expand their branch network to rural areas.

SUGGESTIONS

The following suggestions, it is expected, would provide adequate background to the policy
makers for correcting the adverse trends found in the banking sector and help to ensure sufficient
funds for rural development.
1) In order to make adequate credit facilities available to the villagers, formal procedure for
the grant of loans in the banks should be made as simple as possible with flexible terms
and conditions.

2) Rate of interest on loans in rural areas should be kept marginally low as compared to the
urban areas. This will help in attracting the majority of small businessmen towards the
banking sector.
3) In order to lessen the burden of debtors, their debts obtained from money lenders should
be handled by banks. Banks should pay the amount to the money lenders on one hand and
recover the same from the debtors on easy terms and conditions.
4) The illiteracy and ignorance of the peasants stand in the way of improving the economic
conditions. They are not conscious about the utility of small family norms. They should
be made aware about the procedures and benefits of retail lending through financial
literacy camps, internet, media and bank branches.
5) The network of institutional credit structure comprising cooperatives, commercial banks
and regional rural banks should be rapidly expanded in rural areas to cater to the credit
needs of the small farmers, businessmen and artisans.
6) Interest subvention to businessmen like handicraft artisans, weavers, shopkeepers,
members of co-operative societies and craftsmen engaged in different handloom activities
should be considered to bring the rate of interest on business loans at par with that of
agricultural loans.
7) Banks should lay stress on deposit mobilization from the agricultural sector itself to
finance its own credit requirements. Such a move will entail two stepscurtailment of

unproductive expenditure and deposit of savings by the agriculturists in banks. Their

outlook needs to be changed with the help of banking staff and utilizing the services of
mass media. The services of officers and staff of the community development projects
may also be utilized for this purpose.
8) Instead of asking for collateral and third party guarantee of government employees, banks
should provide credit to the agriculturists on the basis of joint guarantee given by the
village panchayat or by a few well-known farmers of the village. The acceptance of such
a basis will greatly help the farmers, particularly small farmers, in securing loans from
commercial banks. This will also result in more purposeful advent of the commercial
banks in the rural sector and will bring them into relationship with cooperative
institutions.
9) Most private banks have been unable to meet the needs of farmers although they are
expanding their rural and semi-urban branch network. At least one-fourth of the branches
of the new banks that will be given a license must be located in rural India.
10) The vast potentials of mobilizing deposits in rural areas should be effectively utilized by
banks by designing suitable action plans.
11) Production, processing and marketing should be integrated with bank credit so that there
is value addition and ready market for farm products.
12) Along with economic goals of profitability, importance should be given to social goals
also for alleviating poverty and ensuring sustainable development in the society.
13)The reverse transmission of funds from rural to urban and metropolitan areas should be
arrested and steps should be taken to deploy the rural deposits in the rural area itself.

SUMMARY & CONCLUSION

As banking services are in the nature of a public utility service, it is essential that banking
and payment services are provided to the entire population without discrimination. The harsh
reality is that the spread of banking facilities in India is uneven, with a substantial portion of the
households, especially in the rural areas, still outside the coverage of the formal banking system.
As far as the Jammu and Kashmir state is concerned there are various key areas which can
emerge as a big source of income and employment if various government and private authorities
give proper attention towards them by providing proper financial help to the people who are
engaged in such activities directly or indirectly. The financial institutions working in the state
should provide easy loans to large and small scale businessmen. The government should
encourage people to establish their own business units. These activities will automatically lead to
the economic development of the whole state.
Various efforts by the RBI to promote Financial Inclusion aim at connecting people and
not just by opening bank accounts. No doubt, a significant progress has already been achieved in
the State of Jammu and Kashmir to achieve the wider objective of Inclusive growth through
financial inclusion; even the bankers and the government agencies have shown earnestness in
implementing the Financial Inclusion Plan in a coordinated manner. But it is also important to
keep in mind that the objective behind all such efforts doesnt get diluted and that Banks
operating in the State dont resort to camouflaging tactics. A lot has already been done but a lot
is yet to be achieved, so bankers need to keep reforming their plans and ensure that the poor are
not left to the clutches of informal sources of finance. There is a need to work in a coordinated
way to remove the constraints in order to achieve the objective of greater Financial Inclusion for
poverty alleviation.
Banks would need to adopt an innovative, customer-friendly approach to increase their
effective reach so that the share of organised finance increases. A participatory and partnershipbased model for financial inclusion, coupled with community-linked financial initiatives is the
need of the hour. In the near future customer-friendly products, delivery channels, relationship
banking, dependency on IT systems and competitive pricing would be the driving forces.

BIBLOGRAPHY

1) M.S. Bhat (2000), Financial Performance and Efficiency of Cooperative Banks in

Jammu & Kashmir
2) Government of India, Economic Survey, various issues
3) Government of India, (2008), Report on Trend and Progress of Banking in India,
Reserve Bank of India
4) Audil Rashid Khaki (2012) Financial Inclusion in Jammu & Kashmir: A Study on
Bankers Initiatives, Journal of Arts, Science & Commerce, Vol-III, Issue4(2), October
2012[115]
5) J & K Bank (2015), 87th State Level Bankers Committee, Jammu & Kashmir
6) Tariq Ahmad Bhat (2014), Economic of Apple Industry; A Primary Survey in District
Anantnag (Kashmir), Journal of Business Management & Social Sciences Research
(JBM&SSR) Volume 3, No.5
7) Bhatt S. 2012, Kisan Credit Card: An instrument for Financial Inclusion. International
Research & Review, 1 (1): 49-51
8) Chandra D.1993, Rural Credit: Role of Informal Sector, Segment Books, New Delhi
9) Kour, A. 2008, Self Help Group (SHG) and Rural Development Anantnag, Journal on
Rural Development, December.Vol-57, pp. 25-29
10)Veeresh G Laddimath (2014), A Study on Indian Rural Banking Industry: Issues and
Challenges
11)Zuhaib Mustafa (2014), Prospects and Challenges of Women Entrepreneurship: A Study
of the Women Entrepreneurs of Jammu and Kashmir

QUESTIONNARE

Subject: Economic Analysis of Pahalgam Block

Dear Respondent,
I am an MBA student studying at Indhira Gandhi National Open University (IGNOU). I am
working on a research paper entitled Retail Lending in Jammu & Kashmir: Prospectus &
Problems. India has witnessed a spell of reforms in the financial system from the last one
decade. It has mostly impacted all the sectors in our country. My research paper is looking for its
impact on the households in your block. This questionnaire is a part of that research. I request
you to fill this questionnaire as per the best of your knowledge. I assure you that the information
provided by you will be kept confidential and the result of this research will be conveyed to you.
Thank you for giving your valuable time.
Before proceeding to the questions, please provide the following details:

Your Age:

______________________

Your Gender:

________________________

Your Occupation:

____________________________

YOUR OPINION PLEASE

1) Do you have a bank account?

a) Yes (Skip to [4])
b) No
2) Do you envisage any of the following problems in opening of a bank account?
a) Branches are not nearby
b) Shortage of minimum balance to be kept with banks
c) Not knowing anybody in the bank
d) Unable to fulfill the bank formalities
e) Other Reasons (Please specify) ________________________
3) Do you think banking service is only for those who have money?
a) Yes
b) No
4) What type of account you have in a bank?
a) Current Account
b) Savings Account
c) No Frill Account
d) Fixed Account
e) Others

5) For how long are you dealing with your bank?

a) 0-5 years
b) 5-10 years
c) 10-15 years
d) More than 15 years

6) What are the other facilities provided to you by your bank?

(a) ATM/ Debit Card
(b) Credit Card
(c) Lockers
(d) Advance Facilities
(e) Others (please specify)

7) What is your Educational Qualification?

a) Below Class V
b) Class VI- X
c) Class XI- XII
d) Graduate
e) Post Graduate

8) What is your Annual Income?

a) Below 1 Lakh
b) Between 1-2 Lakhs
c) Between 3-4 Lakhs
d) Above 4 Lakhs
e) No Income
9) What is the source of your income?
a) Government Job
b) Private Job
c) Business
d) Agriculture
f) Others (Please specify) ___________________

10) If business, what is your activity?

a) Shop keeping
b) Poultry
c) Sericulture
d) Fisheries
e) Artisan
f) Others (Please specify) _____________________

11) What are the problems you face while carrying out your own business?

a) Inadequate supply and high price of raw materials

b) Financial Problem
c) Poor Infrastructure
d) Licensing Problem
e) Lack of technical skills

12) Do you use any credit card?

a) Yes (skip to [18])
b) No (skip to [14])

13) Do you currently have any bank loans?

a) Yes (skip to [18])
b) No
14) Why dont you have loans/credit cards?
a) No need
b) Need loans, but have never applied
c) Applied for loans but was denied (skip to [16])
d) Had a loan but paid it off

15) Why hasnt your family applied for a loan?

a) Dont know how to apply

b) Dont have confidence the loan would be granted at all
c) The application process is too troublesome
d) Other (Please Specify) ..
16) Why do you think your loan was rejected?
a) Still had debt to pay off
b) No guarantor
c) Not familiar with the loan officer
d) Income is low, loan officer is worried
e) No collateral
f) Project is too risky
17) What is the source of your finance requirements?
a) Creditors
b) Self Financing
c) Money Lenders
d) Family and Friends
e) Others

18) Which bank offered you the loan/credit card?

a) SBI
b) PNB
c) J&K Bank
d) EDB
e) State Cooperative Bank
f) Others
19) What is/are the main reason(s) for choosing this bank?
a) Low interest rates
b) Easy to get approved
c) Low hidden charges
d) Flexible loan terms
e) Good reputation
f) Good service
g) Convenient hours and location
h) Other (Please Specify)
20) What kind of loan have you availed?
a) Agriculture Loan
b) Business Loan
c) Transport Loan
d) Conveyance Loan
e) Education Loan
f) Home Loan
g) Other Loan

21) How did you come to know about the loans offered by your bank?
a) Bank Branch
b) Friends and locals
c) Newspapers
d) Electronic Media
e) Internet
f) Others (Please specify) ________________

22) Grade your satisfaction level with your bank?

(a) Excellent
(b) Good.
(c) Average.
(d) Unsatisfied.

23) Do you have any suggestions regarding to the banking service for the people like
you?
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