1.

Executive summary:

Nashik District Central Co-operative Bank Ltd. is the oldest bank in Nashik. In
day-to-day working of the agriculture, there is a considerable need of a
finance, both micro as well as macro finance. N.D.C.C is the central bank
connecting link between primary agricultural societies and apex bank. It acts
as the balancing center of finance for the primary societies in the district for
production, marketing, sales, operation, by providing them a regular flow
credit for the same.

NDCC Bank Head Office Building at Dwarka, Nashik.

It is a loan provider bank in Nashik for farmers and agricultural development.

There are other co-operative banks in Nashik to compete with the bank.
NDCC bank has been continuously growing and providing short term, medium
term and long term loan for agricultural sector. The bank is having various
types of policy like crop loan policy, short term loan policy, long term loan
policy and medium term loan policy. In 2008-09 the bank has provided the
debt waiver and debt relief scheme.

1
The economy of India is mostly depending on agriculture and its allied
businesses. Hence, to bring an improvement in economic development, the
countries due focus must be given to agricultural sector. To improve the
position of agricultural sector they need finance on various terms and bank
provides this loan and also plays a vital role in the agricultural finance.

2
 2. Introduction

2.1 Introduction of the Topic

Agriculture plays a vital role in India’s economy. Over 58 per cent of the rural
households depend on agriculture as their principal means of livelihood.
Agriculture, along with fisheries and forestry, is one of the largest contributors
to the Gross Domestic Product (GDP).Agriculture sector employs 54.6% of
the total workforce. The total Share of Agriculture & Allied Sectors (Including
Agriculture, Livestock, forestry and fishery sub sectors) in terms of percentage
of Gross Domestic Product is 13.9 percent during 2013-14 at 2004-05 prices
[As per the estimates released by Central Statistics Office] and 15.35 per cent
of the Gross Value Added (GVA) during 2015–16. Agriculture is the most
important sector of the Indian economy from the perspective of poverty
alleviation, and employment generation. When any change in the agriculture
sector-“Positive or Negative”- has multiplier effect on the entire economy. At
presently agriculture sector is facing much difficulties such as marketing of
agriculture products, advanced technique of farming, fertilizer, credit and other
capital equipment etc. Credit is the major factor in all of them that is affecting
the agricultural development. The low productivity of land, heavy dependence
on usurious money lender and high level of indebtedness were seen as the
main causes of rural poverty and distress. There are two source of agriculture
credit first is non-institutional i.e., Professional lenders, friends, relatives etc.
and second is institutional source i.e., Cooperative banks, Regional Rural
Banks and Commercial Banks. The institutional source of agriculture credit
aims at providing high quality loans with low cost. For the 12 th Plan (2012-17),
a growth target of 4 percent has been set for the Agriculture Sector.

3
Indian GDP From Agriculture

GDP from Agriculture in India decreased to 3743.90 IND Billion in the second
quarter of 2016 from 4235.42 IND Billion in the first quarter of 2016.
GDP from Agriculture in India averaged 3936.89 IND Billion from 2011
until 2016; reaching an all-time high of 5217.45 IND Billion in the fourth
quarter of 2013.GDP From Agriculture in India is reported by the Central
Statistical Organization, India.

4
2.2 Object Of The Project:

1. To understand the concept and working of Co-operative Bank.

2. To be able to apply the theoretical knowledge obtained at institute in
practical manner in the actual business environment.
3. To get the knowledge about organization problems, perceptions and
challenges.

2.3 Selection of the Topic for Study:

Topic selection is most important aspect of this Summer Internship Project, as

it decides the course of action to be followed. The topic selected should be
such that it helps in understanding the Basic concepts clearly.

Hence the topic “A STUDY OF AGRICULTURAL FINANCING” covers all the

things related to the Agricultural loans provided by the bank.

This topic involves collecting the financial information from the bank so as to
have insight in to Agricultural loan process of the bank.

5
2.4 Objectives of the Study:

6
 1. To study the concept & various types of Agriculture Loans.
2. To study the Agriculture loan appraisal procedure of N.D.C.C. Bank
3. To understand Credit management, Credit monitoring practices and
credit policies of NDCC Bank.
4. To analyse agriculture loans and advances at NDCC Bank Ltd.

2.5 Rationale Of The Study:

7
The summer training at “N.D.C.C.bank” was undertaken with a view to study
certain fundamentals as well as commercial and operational aspects of the
bank. While the usefulness of the summer training hardly needs to be
emphasized, “N.D.C.C.bank” also stands to benefit in many ways.

Various data and operational work results presented in this project can help
“N.D.C.C.bank” in fulfilling their immediate informational and other needs, thus
saving on valuable executive time and efforts.

The basic job of finance manager is to arrange for funds and apply them in
the most effective manner. While deciding upon the sources of funds it is
necessary to know about agricultural finance as a bank loans.

This study helps:-

 To know the various procedural aspects of granting Agricultural loans.

 To know the various documents required for granting the Agricultural
loans.
 Role of bank in growth of agricultural sector.

The bank could understand:-

 The various procedural changes needed to make while granting the

loans.
 The various steps needed to be taken to reduce NPAs.

This project normally include data collection , data sorting, data analysis and
making inferences from it, under the guidance of that organizational staff and
educational institution guide.

Such a project work thus becomes a live platform for the student to know the
current management issues, development and to apply the knowledge gained
through earlier class-room learning.

The project study also provides an opportunity to develop communication skill,

analytical skill and also expose to the organizations culture and the actual

8
working of the organization. In day to day working of the agriculture, there is
considerable need of finance.

N.D.C.C. bank is a central connecting link between primary agricultural

societies and the apex bank. It acts as a balancing center of finance for the
primary societies in the district for, production, marketing, sales, operations,
by providing them a regular flow of credit when they need the same.

It is necessary to have a view of performance of loans and advances as well

as NPA of the bank over the period and analyze whether the debt waiver and
debt relief scheme affected the NPA or not.

The project duration was 2 months. It involves collection of various types of

information related to loans from annual reports, budgets, credit policy
documents and internet.

2.6 Scope Of Project

9
 1. Study the concepts of banking with relation to Agricultural loans.

2. Study of different types of loans which will help the organization to get
a better and clear view about their loans and advances and policies for
the same.

3. This Project will bring the true picture of trends of loans, recovery
position.

4. This report provides important inputs for framing new policies by

studying existing as well as past services provided by organisation and
their implications on current agricultural conditions.

2.7 Limitation of the Study:

 Due to confidentiality some important information, which are important

for the project, could not be collected.

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 The project is based on theoretical guidelines and as per situations
prevalent at the time of practical training. Hence, it may not apply to
different situations.

3. Research Methodology

11
3.1 Meaning Of Research Methodology:

Research methodology is the method followed for preparing the project report.
It is the heart as well as brain through which any research work can be
completed. It acts as a guideline for any research for the collection of data. It
is a systematic way of solving any research problem.
Methodology means the actual set of methods, which are used for the
collection of relevant data for the study of project work.

Research Definition:
“Research is a careful investigation or inquiry especially through search for
new facts in any branch of knowledge.” - By Oxford Dictionary.

“Research may be defined as a method of studying, analysing &

conceptualizing, social life in order to extend modify correct or verify
knowledge aids in construction or theory in practice or an art.” -By P.V.Yong

3.2 Data Collection:

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The study necessitated both the primary & secondary data collection
methods. The questionnaires needs to be designed & interviews of managers
needs to be conducted in order to collect primary data & some deskwork
should be carried out to collect secondary data. The data collected for the
project is in the form of written as well as verbal information regarding the
Agricultural loans by bank The methodology followed for data collection
consists of following sources:-

1) Primary source:-

Primary data are those, which are fresh and thus happen to be original in
Character. The information about the bank is gathered from the discussion
with the employees/staff as well as its customers.

2) Secondary Source:-
Secondary data are those which have been collected through other sources.
This data is readily available to researcher. He/she only needs to extract
useful information from that data. For example: Balance sheet of last 5 years,
Annual general report.

3.3 Sources of Data:

1. The financial statements i.e. balance sheets Obtained from accounts

department.
2. Agricultural loan department supplied the agriculture loan procedures,
details, and credit policy document.
3. Information regarding organization structure and services provided by the
Bank was given by Branch Manager.
4. Experiences of Bank customers.

3.4 Sampling
13
Sampling involves selection of number of study units from a defined study
population.

Samples are the sub group of the elements of the population selections for
participations in the study. For extracting data from large population it is useful
method.

A] Collection of Primary Data:-

The primary data was collected though following sources:-

1. Designing the Questionnaire: -

Questionnaire was prepared to find out the opinion of the bank’s
customers.

2. Sources of information:
Primary information was collected on field in the form of surveys,
interview, and observations.

B] Collection of Secondary Data: -

This involved going through the files related with the topics & certain books
written by recommended authors.

General Library:-

From above methods researcher gets useful information about the study. It
also helps researcher to study introductory part, theory and conclusion part.

Internet:-

Researcher uses this facility for data collection of various technical data from
various recognized web sites. Also some of the complicated terms related with
banking are easily understandable with help of Internet.

Policy Documents:-

14
Organizations are having their own well maintained policy documents which
can be useful for researcher. Banks have its own various policies for internal
and external control. Such policies were referred for collection of secondary
data.

Type of research Exploratory Type

Sampling Size Agricultural

officer,Name- P.K.Mahale.
Collection Data Primary Data- Interviews
Secondary Data-Internet, magazines.
Analysis of Data Using Percentiles, Average.

4. Organization Profile

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4.1 Organization History:

Whenever one thinks about a bank, which is for the people, by the people, it is
none other than The N.D.C.C bank. In today’s highly competitive and market
driven economy, the farmer’s basic need is nothing but “Financial Need”. A
Farmer always finds it difficult to get loans. Taking into consideration, the
problem faced by farmer, the Mr. Bhausaheb Hire along with his associate
members established “N.D.C.C bank”.

The banks have 212 branches which in total of share capital of Rs.17032.26
lac deposits of 3358.43 crores (which is 20% more than last year)

Similarly, investments have increased up to 1383 cr. Bank had borrowed 610
cr. from NABARD & Maharashtra State co-operative bank for short term crop
loan and Medium term agricultural loan.

Picture depicting that NDCC acts as a hope for farmers.

4.2 Organizational Structure Chart

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 MANAGING DIRECTOR

GENERAL MANAGER

MANAGER

CHIEF OFFICER

AGRICULTURAL OFFICER

DIVISIONAL OFFICER
OFFICER

BRANCH MANAGER

INTERNAL AUDITER

4.3 Vision & Mission:

17
4.3.1 VISION:

To evolve and position the bank as world class progressive, cost effective,
customer friendly institution comprehensive financial and related service;
integrating frontiers of technology and serving various segments of society
especially weaker sections; committed to excellence in serving the public and
also excelling in corporate values.

4.3.2 MISSION:

1. The bank is intending to start core banking in following year for the
satisfaction of the customer. So that money can process from any branch of
the bank.

2. Open an ATM Centre at every branch maximum shareholder through high

sustained earning per share.

3. In institution with a culture of mutual care commitment a satisfying and

existing work environment and earning opportunities.

5. Related Theory

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5.1 Agricultural Finance:

“Agricultural finance is the study of financing and liquidity services of credit

providers to farm borrowers. It is also considered as the study of those
financial intermediaries who provide loan funds to agriculture and the financial
markets in which these intermediaries obtain their loan able funds.”- John B.
Penson, Jr. and David A. Lins (1980).

Banking Structure In India:

5.2 Role of agriculture in Indian economy:-

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India ranks second worldwide in farm output. Agriculture and allied sectors
like forestry, logging and fishing accounted for 16.6% of the GDP in 2007,
employed 60% of the total workforce and despite a steady decline of its share
in the GDP, is still the largest economic sector and plays a significant role in
the overall socio-economic development of India. Yields per unit area of all
crops have grown since 1950, due to the special emphasis placed on
agriculture in the five-year plans and steady improvements in irrigation,
technology, application of modern agricultural practices and provision of
agricultural credit and subsidies since Green revolution in India. However,
international comparisons reveal that the average yield in India is generally
30% to 50% of the highest average yield in the world.
Agriculture is the main sector of Indian economy which is amply powered by
the following points:

1) Share in National Income:

The contribution from agriculture has been continuously falling
from 55.1% in 1950-51 to 37.6% in 1981-82 & further to 18.5% in
2006-07. But agriculture still continues to be the main sector because it
provides livelihood to a majority of the people.

2) Largest Employment Providing Sector:

In 1951, 69.5% of the working population was engaged in
agriculture. This percentage fell to 66.9% in 1991 & to 56.7% in 2001.
However, with rapid increase in population the absolute number of
people engaged in agriculture has become exceedingly large.

3) Provision of Food Surplus to the Expanding Population:

Because of the heavy pressure of population in labour-surplus
economies like India & its rapid increase the demand for food
increases at a fast rate. Therefore, unless agriculture is able to
continuously increase its surplus of food-grains, a crisis is likely to
emerge. Experts foresee that by the end of 11 th five year plan (i.e.,
2011-2012), the demand for food-grains is expected to increase up to
280.6 million tons. Meeting this demand would require 2% growth per
annum. The challenge facing the country is clear as during the last 10
years the food-grains have been growing at a merger 0.48%.

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 4) Contribution to Capital formation:
There is a general agreement on the importance of Capital
Formation in economic development. Unless the rate of Capital
Formation increases to a sufficient high degree, economic
development cannot be achieved. Agriculture can play a big role in
Capital Formation in India. Rural sector can transfer labour &
capital to the industrial sector which can be effectively used to increase
the productivity in the latter.

5) Providing Raw Material to industries:

Agriculture provides raw materials to various industries of
national importance. Sugar industry, Jute industry, Cotton textile
industry, Vanaspati industry are examples of some such industries
which depend on agriculture for their development.

6) Market for Industrial Products:

Since more than two-thirds of the population of India lives in
rural areas, increased rural purchasing power is a valuable stimulus to
industrial development.

7) Importance in International Trade: Agriculture constitutes about 75%

of the total exports of the country. Such is the importance of agriculture
as far as earnings of foreign exchange are concerned.

An important aspect of its status can be seen in the large contribution to the
country Gross Domestic Product (GDP).Although this reflects inadequate
development of non-agriculture product which marks the profile of domestic
product by industrial origin. No doubt with the faster development of the non-
agricultural sectors in recent years, its share has fallen. Yet it continues to be
significant at about 30% at present. No other sector individually comes closer
to it. The nearest to it is the industrial sector comprising mining,
manufacturing, electricity, gas & water supply with its contribution at over 26%
to GDP.

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5.3 Classification of agricultural loans:

A) In order to fulfill the requirements of agriculture, a large amount of credit is

required. Ordinarily, the Indian farmers need three kinds of credit facilities:

i) Short-term

ii) Medium-term and

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iii) Long-term

 Short –Term :

The short term credit is repaid in 9 to 12 months. It is needed by the farmers

for such purposes as purchase of seeds, manure, plough, food grains,
ordinary implements and marketing of agriculture produce. It is also called
seasonal credit.

 Medium–Term :

The Mid-term credit is needed for purchasing costly implements, cattle and
repair of house. It is payable in 1 to 5 years.

 Long-Term :

The long term credit is needed for construction of wells, tanks, leveling of
land, construction of cemented detains for irrigation, purchase of new pieces
of land, construction of houses and paying off the present debts as also the
ancestral debts. It is repayable in 5 to 10 years.

B) There is again classification of finance provided on the basis of its

consumption.

Finance

Direct Finance Indirect Finance

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  DIRECT FINANCE :

The credit facility is extended to the farmers by the bank directly related to
production.

1. Production Finance :
a) Purchase of Agricultural Inputs, Manures, Seeds, Pesticides,
Insecticides, Weedicides etc.

b)Meeting other cultivating Expenses Including Irrigation charges.

c)Improving Irrigation Potential (Construction and Digging of Wells, tanks,

Irrigation schemes etc.)

2. Processing Finance :

For processing crops such as hybrid Seeds, tobacco, turmeric etc.

3. Construction Finance :

For Constructing of Bullock Sheds, Godowns, Cold Storage, Ware

Houses, Goober Gas Plants, and Tractor etc.

4. Transportation Finance :

For purchase Of Bullock Carts, Hand Trailers, Trucks etc.

5. Allied (Joint) Activities :

Diary, Piggery, Goat-Farming, Sericulture (raw silk), Pisciculture

(cultivation fish), Apiary, Duck Rearing Capiculture etc.

6. Plantation Finance :

For Planting Crops Like Tea, Coffee; Cocoa, Rubber, Spices, Bananas,
Cashew Nuts, GRAPES Etc.

 INDIRECT FINANCE :
24
 Credit facilities are provided by banks through intermediaries’ example co-
operatives. Co-operatives are the cheapest financing agencies at the
gross root level.

1. Financing of PACS.

2. Financing of farms implantation on Hire purchase basis.

3. Financing of agro services centers and custom service units for maintaining

Tractors, threshers, bulldozers etc.

4. Financing to sugar factories.

5. Financing to traders and manufacturers for trading or distribution of

Agricultural Inputs, machinery, equipment’s etc.

6. Financing to individuals, or organizations for spraying operations.

7. Finance to state electricity boards for energisation of wells under rural

electrification programs.

5.4 SOURCES OF FUNDS OF THE BANK:

Sources of funds-

The Nashik District Central Co-operative Bank Ltd Nashik has to raise
adequate resources to meet its different obligations. The soured of funds
are divided into two categories.
1. Internal sources
2. External sources

1. Internal sources of funds:

25
 The internal sources consist of share capital collected by District
Central co-operative bank from its affiliated members and reserve
funds which is created from out of the net profit.

2. External sources of funds:

The external sources consists of borrowings from other credit financial
i.e.Institutions like Apex Bank, Reserve Bank of India, National Bank
for Agriculture and Rural Development (NABARD) the Government
deposits from public co-operative institution and other sources of funds
of Nashik District Central Co-operative Bank may be shown in the
following diagram

Sources of Funds:

Sources of Funds

External Internal
Funds Funds

26
 Borrowing Deposits
Share Reserve
Capital

Short Medium Long Non

Term Term Term Agri.

Current Saving Recurring

Deposits Deposits Deposits

SYSTEM OF FINANCE:-

CHAIN SYSTEM OF FINANCE:

NABARD

MSCB

NDCC

PAC

27
FARMERS
5.5 Loans for various agricultural activities by NDCC bank:

To meet the various needs of the farmers, NDCC bank provides loans for
following agricultural activities:

A) Short term loan:

i. Crop loan:
a) Kharip crop-April to September.
b) Rabbi crop- October to January.
ii. Purchase of seeds, Manure, food grains, Ordinary implements.
iii. Marketing of agriculture produce.

28
B) Medium and long term loan:

i. Irrigation : Pipeline, Electric motor, diesel engine, Drip irrigation, well

reconstruction and deepening of wells, etc.
ii. Tractor loan
iii. Grape pandal
iv. Loan for Vehicle
v. Cattle and bird farms
vi. Farmhouse
vii. Others

29
D) Loan under Rural self-employment scheme for B.P.L. members:

Electric motor, diesel engine, Drip irrigation, well reconstruction, etc.

E) Nonagricultural loans:

 Loan to sugar factories

 Co-operative
30
  Private
 Sell-Purchase dept. and consumer society
 Employee society
 Primary service society
 Labour and industrial society
 Loan against security on gold, silver
 Loan to servants
 Loan to self-help groups
 Loan to milk co-operative federation.

F) Nonagricultural medium term loan for:

 Go down / building
 Self-help groups
 Others
 Small scale enterprises/ business/ industry.

5.6 Documents required for agricultural loans:

Various types of advances and loans are required various types of

documents-

31
For example- Gold loan require the gold appraiser certificate etc. But following
are the some common but necessary documents are required for the
agricultural loan proposal.

1) Loan application shall accompany 8A

2) 7/12 extract of talathi.
3) Nationality proof
4) Address proof
5) Photo ID proof
6) Mutation Entries record
For combination or collateral loan following documents can be
demanded in order to grant more amount and security.
1. Loan application form.
2. If the borrower is a salaried person then his salary slip or salary
statement is required.
3. If the borrower is a businessman then Income Tax returns are required.
4. Bank pass book or statement is required for considering the income or
credit worthiness of a borrower.
5. Statement of security is required.
6. The original statement of security which contains the full information
about the security like cost, ownership etc. is required.
7. Two guarantors letter of guarantee required.
8. Photo proof is required.

5.7 Loan policy:

5.7.1 Crop loan policy:

Due to updated technology, irrigation schemes and inflation in agro based

equipment, the financial needs of farmer members of the bank are increasing
continuously. NDCC bank is doing continuous endeavour to cater these
requirements and from 2009-10 bank is following a policy of credit on the
basis of productivity.

32
Maharashtra state co-operative bank and NABARD has organized a
committee of various knowledgeable persons to decide the policy sanctioning
agro loan per acre. The committee has formed a policy of deciding the
amount of credit/loan per acre.

A) Eligibility on credit/ loan availment for agricultural credit society-

Co-operative societies should not keep the cash in hand more than the
limit mention in their bylaws:
a) Society shall record loan transaction in the agro pass book
prescribed by state government.
b) Society shall submit all the financial statement to bank. The society
shall also submit the list of members’ who availed loan to such
recovery agency prescribed by the bank, giving all the particulars
regarding loan information.
c) Society shall send all loan sanction list to bank in due course. Bank
has a right to reject all loan sanction list if not sent in time. Society
should prepare two separate list of loan sanction for those who are
new members & old members who have changed their cultivation
pattern.
d) Society shall abide by the term & register prescribed by bank.
Similarly society shall complete all the papers as per by-laws from
the members like loan, agreement, bond, authority letters etc.
e) Society shall abide by terms & condition of the bank from time to
time changes. The bank has right to recover all dues before the
terms of loan.

B) Security to the loan:-

a) Every member, at the time of loan availment of the sanctioned limit,

shall execute an agreement in “E” format for the double amount of loan
and shall register in the village records of rights which are kept in the
Talathi office. The society shall confirm the registration of
hypothecation.
b) Other banks also giving personal short term & medium term and long
term loans to farmers considering this transaction of such loan without
any E agreement & confirmation of registration of such loan without
any negligence. As per the Maharashtra provisions of facilities for

33
 agricultural credit bureau Act 1974 & 1975, if bank and state
government society has given a loan against same security, then the
priority of loan recovery has been specified in this Act.
c) Member has no right to sell or transfer the land if he has availed a loan
against such land. In such transaction, the management committee of
the society shall be cautions and take care to recover all the dues
before they give a permission to sell of transfer the land.
d) Member shall not Sanctioned any loan against the security existing
outside the district.

C) Regarding uncultivable land owners:-

Before the disbursement of loan on the basis of uncultivable land, a

certificate from Talathi shall be taken about the type of crop and it shall be
noted.

D) Loan disbursement method:-

The crop loan will be given as per the loan amount per acre decided by the
Bank. But it will be the maximum limit. Bank may revise the amount of loan
after considering repayment capacity of the member, its land holding, type
of crop, need of the member, cultivation capacity of member, ability of
utilization of loan etc.
Whatever mention in the Normal credit limit statement about loan limit as
per type of crop, but Bank shall while disbursing the loan, consider land
under cultivation and ability of members to repay the loan etc. bank has
right to do so.

34
5.8 Loan appraisal procedure of bank:

Following is the loan appraisal procedure of bank-

First the banker checks all documents of the person who wants to borrow the
loan or advances. Then banker checks carefully that whether the form is filled
properly or not, if not banker should get fill the form properly from the

35
borrower. The banker checks the statement of security and the security
articles carefully. If everything is appropriate then bankers submits the loan
proposal of the borrower to the board of directors for the appraisal of the
same.

Every loan proposal is sent to the meeting of board of directors. Then the loan
proposal is re-checked by the board of directors and the managers, then they
check their documents and consider the need or necessity of the borrower
and decide to give loan or advances or not. They also decide amount to be
sanctioned and security for the same.

Points taken into consideration at the time of appraisal of any type of

loan:

The following are the points are taken into consideration at the time of
appraisal of any type of loan:

1. Reason of borrowing.
2. Completion of documents.
3. Completion of formalities.
4. Reputation of borrower.
5. Reality of documents.
6. Statement of security.
7. Borrowing limit of borrower.
8. Repayment capacity and period of proposal.
9. Availability of funds.
10. The proposal is profitable or not.
11. Credit worthiness of borrower etc.

5.9 Recovery:

Recovery of the outstanding loans out of the total loan disbursed every year is
a very crucial activity of banks. The short term, medium and long term loans
are disbursed for some fixed period of time, out of which certain installment
amount falls due in the particular year and not the whole loan amount.

Recovery officers are required to perform their task very carefully, because
the loan to be disbursed in the next season consists of, major portion out of

36
this recovered amount. So it affects whole performance of the bank. The
amount which is not recovered for three years and more than three years is
considered as non-performing asset.

Following efforts are being taken by the Bank for faster recovery.

1. PACS are asked and motivated to recover more loans as they are the
players at ground level and they have interpersonal relations with
borrowers.

2. Each PACS has to submit its own position statements with the loan
proposal of borrower.

3. PACS has its own Secretary, Director Body responsible for recovery
action.

4. Bank has also appointed Bank Inspector who visits societies after
certain interval and takes measures for recovery.

5. Each society should send the notice of section101 as per Maharashtra

State co-operative act to borrower if they are not repaying their loan in
specified time.

6. Even if after receiving notice Borrower is not repaying his loans he

needs to be sued. 3 hearings take place at office of Assistant Registrar.

7. Then again notice is sent.

8. Then movable properties of Borrower such as tractor, vehicles, are

sealed and its auction takes place. By bidding bank recovers amount of
loan.

9. If this amount is not sufficient bank has a right to acquire properties of

borrower (other than his home where he is living).

10. As per the G.R. of Government of Maharashtra Bank should by any

means should not acquire basic needs of farmers even if he is a
defaulter.

37
5.10 Credit Management and Monitoring:

5.10.1 Credit management:

It is concerned with the implementation of credit decisions as authorized
by the bank’s top management of credit and involves the day-to-day follow up
of the credit, including documentations, credit files, interest payments and
loan repayments, according to the terms of the approvals.
Credit management commences from the time an application is received from
a customer to the processing and approval, advice of facilities granted to the

38
customer (including terms and conditions of approval), opening of credit files,
perfection of securities, a follow up of the credit (including correspondence on
irregularities observed on the account) and finally, the repayment of the facility
granted. NDCC bank has their PACS at ground level who receives application
from borrower. Then that application is sent to NDCC bank. NDCC bank has
its own credit policy based on NABARD guidelines which is revised every
year. Then according to that policy NDCC bank sanctions Loan.
5.10.2 Credit control:
Credit control is concerned with the post approval and monitoring of
the credit facility, to ensure that each credit remains qualitatively satisfactory
during the tenure of the credit. It is very important to monitor (control) the
facility after it has been approved to ensure that:
(I) the borrower complies with the stipulated conditions
(II) The facilities are utilized with the purpose for which they were approved
(III) Any deterioration or negative trends in the customers’ business or
prospects is determined and corrective actions taken.
5.10.3 Credit Reviews:
Credit reviews could be said to be a periodic appraisal of the credit
portfolio of a bank to identify accounts which are operating in an
unsatisfactory manner with a view of taking necessary corrective measures.
Banks periodically review their credit portfolio to determine the performing and
nonperforming credits. Non Performing credits are investigated and reported
upon and prompt action is then taken to effect recovery through persuasion,
receivership, litigation measures etc. When such loans are not recovered
even after 18 months from due date then They are termed as Non-Performing
Assets (NPA) and separate provision needs to be done for the.
5.10.4 Credit monitoring

The machinery of credit monitoring entail constant and periodic

discussions with the borrower to better appreciate their problems and future
prospects, the level of activity and the potentials of the borrower. The
historical financial records are also closely reviewed to find out the

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 performances of the borrower and the causes of any deviations from the
earlier projections.

PACS are also responsible to maintain healthy credit recovery and

monitoring. The secretary and other staff of PACS visits the farm land
periodically to ensure that the loan provided has been used for the purpose
mentioned by borrower in application. Also PACS directors take follow up for
recovery of Loans.

While disbursing loan to any individual bank also look after the position
of PACS. Bank has appointed its Agricultural officer to monitor these
agricultural loans.

AREAS OF CREDIT MANAGEMENT:

CONTROL E OFF
LENDING
CREDIT PROVISIONS/WRIT

6. Data presentations & Data Analysis

6.1 Loan to Farm House (IN RUPEES)

Year No. of Borrowers Loan

2011-12 527 82,15,19,969
2012-13 654 36,57,53,776
2013-14 120 6,86,94,572

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 2014-15 400 69,19,24,245
2015-16 358 31,44,72,611
Table6.1: Year wise Loan to Farm house

Chart 6.1: Year wise loan to Farm House

Interpretation:-

Above table shows continuous fluctuation in this type of loan, .Bank has
provided highest farm house loan in year 2011-12. Then till 2013-14 it is in
decreasing order. It is lesser by 91 % as compared with 2011-12. Bank had
kept low target for 2013-14 because of its credit management policy so
amount for that year is least. Then in 2014-15 the amount has again
increased by 9 times. Also nationalized banks are now offering home loans at
competitive interest rate and its effect is seen in 2015-16.

6.2. Loan to Polyhouse. (IN RUPEES):

Year No. of Borrowers Loan

2011-12 32 1,94,32,632
2012-13 6 32,63,100
2013-14 1 2,59,800
2014-15 19 1,19,60,336

2015-16 2 4,50,500

Table6.2: Year wise Loan to poly house

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 Chart 6.2: Year wise loan to poly House

Interpretation:-

This table shows changes in total loan provided to polyhouse. In 2011-12 it is

highest. Again it is reducing in subsequent years till 2013-14.It has been
decreased by 98% till 2013-14. In 2014-15 we see increase in this type of
loan by 40 times. In 2014-15 bank’s position was better than previous year so
it has tried to disburse more loans. Bank has its maximum limit on basis of
area of polyhouse. This maximum limit set is lesser than that of other private
banks so its demand is decreasing in subsequent years.

6.3 Loan to poultry farm ( IN RUPEES):

Table6.3: Year wise Loan to poultry Farm

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Year No. of Borrowers Loan
2011-12 36 5,37,10,529
2012-13 24 2,93,14,183
2013-14 8 62,98,917
2014-15 30 4,42,91,020

2015-16 15 1,69,91,361

Chart 6.4: Year wise loan to poultry farm:

Interpretation:-

Poultry farm is considered as an allied agricultural business by farmers .Its

trend is also overall in decreasing. As people were shifting towards other
allied activities like goat farming. It has been decreased by 88% in 2013-14
as compared to year 2011-12 and by 62% in year 2015-16 as compared to
2014-15. On an average, Bank has given least loan in 2013-14 as it had kept
a credit management policy of reduction in medium term and long term loan.
Farmer demand poultry farm loan as side agriculture business as per their
requirement so fluctuation in this type of loan is seen.

6.4 Loan to Irrigation (Pipeline) ( IN RUPEES )

Table6.4 Year wise Loan to irrigation:

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 Chart 6.4: Year wise loan to irrigation:

Year No. of Borrowers Loan

2011-12 268 5,38,50,240
2012-13 195 2,83,65,272
2013-14 60 73,85,850
2014-15 291 4,52,75,130

2015-16 394 5,58,93,910

Interpretation:-

Above table explain that there is a continuous decrease in distribution of

pipeline loan till 2013-14. From 2014-15 it has again started increasing & it
has been increased by 8 times as that of 2013-14 till 2015-16. It shows that
Irrigated Farming is increasing in Nasik Dist. This shows that demand is
increasing for more pipe line loan in NDCC bank As farmers are becoming
more aware.

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6.5 Short Term, Medium Term and Long Term Loan to
Agriculture (Rs. In Lakhs):

Year Short Term Loan Medium Term Loan Long Term Loan

2011-12 109469.76 24760.83 2350.23

2012-13 179490.82 12099.18 1810.17
2013-14 132119.81 2683.37 551.53
2014-15 125483.93 26453.30 7127.92
2015-16 129439.10 14582.47 1604.20
Table6.5: Year wise ST .MT ,LT Loan

chart 6.5: Year wise ST .MT ,LT Loan

Interpretation:-

The above chart of comparison shows that there is less share of long term
loan in the distribution among all loans. Short term loan distribution is more
than that of medium term & long term loan. The short term loan has highest
percent in the year 2012-2013 due to increasing scale of finance of crop loan.

45
Medium term & long term loan distribution is less in the year 2013-2014 as
bank had reduced (stopped in second half) disbursement of this Loan due to
declaration of less aanewari (50 paisa) in previous year .

6.6Short Term Loan . ( Rs. In lakhs)

Year Short Term Loan

2011-12 109469.76
2012-13 179490.82
2013-14 132119.81
2014-15 125483.93
2015-16 129439.10
Table6.6: Year wise ST Loan

Chart 6.6: Year wise ST Loan

Interpretation:-

The above table shows that crop loan is increasing in the year 2012-2013 due
to increasing scale of finance of crop loan & then short term loan is gradually
decreasing from the year 2012-13 to 2014-15 because bank has reduced
scale of finance of crop loan and recovery of crop loan is also reduced . The

46
loan again increased in 2015-16. From 2013-14 Onwards fluctuations are not
much , as crop loan is getting subsidies from government and farmers are
making prompt repayment for this type of loans.

6.7 Medium Term Loan . ( RS IN RUPEES )

Year Medium Term Loan

2011-12 247,60,83,547.00

2012-13 120,99,18,599.00

2013-14 26,83,37,332.50

2014-15 264,53,30,055.29

2015-16 145,82,47,357.90

Table6.7: Year wise MT Loan

Chart 6.7: Year wise MT Loan

Interpretation:-

The above table shows that a medium term loan is gradually decreasing from
the year 2011-2012 to 2013-2014. as bank had stopped disbursement of M.T.
Loan in the year 2013-14. In 2014-15 the medium term is higher by 10 times

47
as that of previous years because bank again restarted to disburse M.T. Loan
but again it decreased in the year 2015-16 as per demand of farmer.

6.8 Long Term Loan ( RS IN RUPEES )

Year Long Term Loan

2011-12 23,50,23,189.00

2012-13 18,10,17,931.00

2013-14 5,51,53,096.00

2014-15 71,27,92,396.00

2015-16 16,04,20,536.00

Table 6.8: Year wise LT Loan

Chart 6.8: Year wise LT Loan

Interpretation:-

Above chart shows that long term loan started decreasing from the year
2011-2012 to 2013-2014 since bank had reduced disbursement of L.T. Loan
in the year 2013-14. The highest distribution of long term loan is in the year
2014-2015 because bank again restarted to disburse L.T. Loan. In the year
2015-2016 it again decreased. It shows that farmers had stopped their
activities and as bank started providing loan again demand was increased in
2014-15 by around 13 times as that of 2013-14.

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6.9Crop Loan Trend. ( Rs. In lakhs)

YEAR KHARIP CROP RABBI CROP TOTAL CROP LOAN

2011-12 99979.36 9490.40 109469.76
2012-13 170650.03 8840.79 179490.82
2013-14 125746.13 6376.68 132119.81
2014-15 118248.45 7235.48 125483.93
2015-16 121030.08 8409.02 129436.10
Table6.9: Year wise Crop Loan

Chart 6.9: Year wise Crop Loan

Interpretation:-

The above chart shows that the distribution of kharip loan is comparatively
more than that of Rabbi. In Nashik monsoon generally arrives in month of
June. Also major tasks of irrigation are being undertaken before arrival of
monsoon. From Graph it is clear that Rabbi crop constitute only around 5 to
10 % of total loan provided. Also after 2012-13 There are no more
fluctuations in its demand. It is nearly same.

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6.10 Recovery Statement : (Recovery In lakhs of rupees)

Year Total Recovery Percentage

Outstanding
2011-12 156514.43 122175.94 78.06%
2012-13 133811.01 146015.16 91.64%
2013-14 220162.55 134132.24 60.92%
2014-15 221848.86 121544.33 54.78%
2015-16 253087.33 156184.75 61.71%
Table 6.10: Year wise recovery %

Chart 6.10: Year wise recovery %

Interpretation:-
Recovery is highest in 2012-13and then it is decreased. It had decreased up
to 61% and 55% in year 2013-14 and 2014-15 respectively due to
Government declared aanewari(50paisa) & announcement of no recovery in
such villages which effect on recovery percentage and it’s not good to
maintain position because of such a less recovery. In the year 2015-16 the
recovery increased up to 62%.

6.11 N.P.A. TREND IN AGRICULTURE ( RS IN LAKHS )

50
 YEAR AMOUNT PERCENTAGE

2011-12 13704.72 5.76%

2012-13 15307.33 5.88%

2013-14 20382.53 8.16%

2014-15 38501.92 14.71%

2015-16 54248.64 19.59%

Table6.11: Year wise NPA

Chart 6.11: Year wise NPA

Interpretation:

NPAs of the bank are increasing continuously. It has been increased by

around 5% in year 2014-15 as well as in year 2015-16. In the year 2015-16 it
is higher i.e. 19.59 % which is not good for Banking as it affects on profit &
loss. From the Year 2012-13 to 2015-16 Government declared 50 paisa
anewari & announced no recovery in such villages which affects on recovery
percentage heavily. This factor is increasing N.P.A. percentage in agriculture
loan sector.

7. Observations & Findings

51
7.1 Findings:-

1. Continuous fluctuation in Farm house loan is seen. Bank has provided

maximum farm house loan in year 2011-12. Then till 2013-14 it is in
decreasing order. It is lesser by 91 % as compared with 2011-12.Then in
2014-15 the amount has again increased by 9 times.
2. NDCC Bank has provided maximum loan to Polyhouse in year 2011-12
within last 5 years. Again it is reducing in subsequent years till 2013-14.It
has been decreased by 98% till 2013-14. In 2014-15 we see drastic
increase in this type of loan.
3. Poultry farm is considered as an allied agricultural business by farmers.
Its trend is also overall in decreasing. As people is now shifting towards
other allied activities like goat farming. Poultry Farm loan has been
decreased by 88% in 2013-14 as compared to year 2011-12 and by 62%
in year 2015-16 as compared to 2014-15.
4. There is a continuous decrease in distribution of pipeline loan till 2013-
14.From 2014-15 it has again started increasing & it has been increased
by 8 times as that of 2013-14 till 2015-16.
5. There is less share of long term loan in the distribution among all loans.
Short term loan distribution is more than that of medium term & long term
loan. The short term loan has highest per cent in the year 2012-2013 due
to increasing scale of finance of crop loan.
6. Crop loan is increasing in the year 2012-2013 due to increasing scale of
finance of crop loan & then short term loan is gradually decreasing from
the year 2012-13 to 2014-15 because bank has reduced scale of finance
of crop loan and recovery of crop loan is also reduced . The loan again
increased in 2015-16. From 2013-14 Onwards fluctuations are not much,
as crop loan is getting subsidies from government and farmers are making
prompt repayment for this type of loans.
7. Medium term loan and long term loan is gradually decreasing from the
year 2011-2012 to 2013-2014. As bank had stopped disbursement of M.T
& L.T loan in the year 2013-14. In 2014-15 it is higher by 10 times as that
of previous years because bank again restarted to disburse M.T. Loan, but
again it decreased in the year 2015-16 as per demand of farmers.
8. The distribution of kharip loan is comparatively more than that of Rabbi.
In Nashik monsoon generally arrives in month of June. Also major tasks of

52
 irrigation are being undertaken before arrival of monsoon. From Graph it
is clear that Rabbi Crop loan constitute only around 5 to 10 % of total loan
provided. Also after 2012-13 there are no more fluctuations in its demand.
9. It can be said that Recovery trend is in decreasing manner. Bank has
recovered 78% in 2011-12 year. Whereas in subsequent years after 2012-
13 it is reducing. In year 2012-13 recovery has decreased by 31% from
previous year and it is 64%. It had decreased up to 61% and 55% in year
2013-14 and 2014-15 respectively.
10. NPAs of the bank are increasing gradually. It has been increased by 5% in
year 2014-15 as well as in year 2015-16. In the year 2015-16 it is higher
i.e. 19.59 %. From the Year 2012-13 to 2015-16 Government declared 50
paisa anewari & announced no recovery in such villages which effect on
recovery percentage heavily. This factor is increasing N.P.A. percentage in
agriculture loan sector.

7.2 Observations:

1. In case of Farm house loan it is observed that there was more

fluctuations in Demand. In year 2015-16 Home loan rates were

53
 reduced by nationalised banks so farmers are shifting towards them for
home loan.
2. The maximum limit set for polyhouse loan is lesser than that of other
private banks so its demand is decreasing in subsequent years.
3. Farmers are now shifting towards other allied agricultural activities
such as goat farming so demand for poultry farm loan is decreasing.
4. Demand is increasing for more pipe line loan in NDCC bank as farmers
are becoming more aware .It shows that Irrigated Farming is increasing
in Nasik District.
5. Medium term & long term loan distribution is less in the year 2013-
2014 as bank had reduced (stopped in second half) disbursement of
this Loan due to declaration of less aanewari (50 paisa) in previous
year and shortage of funds with the bank. So farmers had stopped their
activities demanding capital expenditure and as bank started providing
loan again demand was increased in 2014-15 by around 13 times as
that of 2013-14.
6. Due to declaration of less anewari (50 paisa) & no recovery declaration
in such villages by government, recovery percentage is reduced. It’s
not good to maintain position because of such a less recovery.
7. NPAs for Bank are increasing which is not a good indicator of bank’s
performance.
8. The natural factors like weather conditions, climate, and arrival of
monsoon and percentage of rain are heavily affecting financial
performance of the bank.

8. Conclusion and Recommendations

8.1 Conclusions:

N.D.C.C bank has played major role in all walks but particularly they
had concerned more on agriculture sector & become one of the

54
 entrusted bank for the farmers. It supports the farmers by satisfying
their financial needs.

From the data analysis & interpretation of the project we had

come to following conclusion:-

 There was more distribution and sanction of short term loan with
comparison to long term and medium term loan.
 Short term loan was decreased after 2012-13 and its requirement is
same in subsequent years. .
 Medium term loan was more fluctuating than any other loan.
 Long term loan was highest in year 2014-15 as in that year only bank
started distributing long term loan again.
 A distribution of Kharip loan was more than rabbi loan.
 Trend of recovery showing good recovery of loan by a bank but due to
odd timing of rain in 2013-14(March) & From the Year 2012-13 to 2015-
16 Government declared 50 Paisa anewari & announced no recovery
in such villages it has been less in this year.

8.2 Recommendations:
 Bank should strengthen its share capital and reserves to satisfy
increasing demands of agricultural credit in rural areas. This will help
the bank to provide credit even though the recovery is low due to
certain situations like debt waiver and debt relief schemes.

55
 The main function of the bank is to mobilize the deposits and provide
loans to members. To provide the loans with reasonable rate of
interest, bank should attract the local depositors.
 In order to improve recovery, bank should make the action plans and
try to implement the same.
 To speed up the recovery performance, management can even think
about putting rewards in the form of encouraging the members.
 For ensuring financial soundness and better recovery, bank can take
following measures such as,
 Timely and adequate finance
 Proper documentation of loans
 Provisions of recovery drives
 The recovery department should review the recovery performance
weekly instead of monthly.
 Computerization of all the branches will help to keep soundness in the
operations.

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