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(H. T. No- 124-08-103)








(Approved by A.I.C.T.E. New Delhi and Affiliated to Osmania


I hereby declare that this Project Report titled “LOANS AND ADVANCES,

Refering a Case Study on Layers Poultry Form” at INDIAN BANK - HYDERABAD


COLLEGE OF BUSINESS MANAGEMENT, Bodhan,Nizamabad. Dist., is a bonafide

work undertaken by me and it is not submitted to any other University or Institution for the

award of any degree diploma / certificate or published any time before.

Name and Address of the Student

(M.K. Srinivas)


I would like to take this opportunity to thank Mr. SHIVA KOTESHWAR RAO, General
Manager, INDIAN BANK - HYDERABAD for providing me this opportunity to work in
esteemed organization.

I would like to thank Mr. B. SRINIVAS REDDY, Assistant General Manger for helping me
in completing my project by providing the information.

I would like to thank Mr. S. PENTA REDDY, Director for helping me in getting me the

I would also take this opportunity to thanks guide CH.Swathi (HOD) faculty of finance,
Principal Dr.D. Madhan Mohan and also other who helped me in completing this project.














Companies financial requirement are financed either by internal or by external
sources. Internal source or Owners constribution towards the investment requirments is
known as capital and external source or outsiders contribution towards the investment
requirements of the business is known as loans and advances. In this integrated and
globalised economy no company can exist without taking loans from banks or financial
institutions or other sources.


The origin of commercial banking can be traceable in the early times of the human
history. The in ancient Rome and Greece the practice of storing precious metals and coins at
safe places and loaning out money for public and private purposes on interest was prevalent.
In England banking had its origin with the London goldsmiths who in the 17th century began
to accept deposits from merchants and others for safe keeping of money and other valuables.
As public enterprises, banking made its first appearance in Italy in 1157 when the bank of
Venice was founded.
According to Crowther, modern banking has three ancestors:
a) the merchant
b) the goldsmith
c) the money lender


Lending is an important strategy of banking activities. It is also a key input of its
operations. Lending portfolio is therefore, an important asset of banks. Lending sets in
motion a chair of economic activities, both direct and indirect, and foster new services which
conducive to accelerated socio-economic growth. Commercial banks through their lending
functions have contributed to mass production, mass distribution, export and mass
consumption, which interlay have increased employment revenues, higher income and
improved the living conditions of people. Besides, bank lending’s have given fillip to
infrastructural development in a big way and also involved in alleviation of poverty. Bank

lending also play an important part in the gross earnings and net profits of commercial banks
and promote the economic development of the country. It is the most profitable as well as the
most risky function performed by banks. Therefore, it must be done efficiently. Because of
the increasing scams in the banks, the sanction of loans has become a difficult and tough task.

The objectives of the studies are as under
 To study and analyse the loaning activities of the bank to different sectors in rural
 To study the procedure for acquiring short term and long term loans.
 To identify the emphasis of lending in rural areas (agricultural lending’s)
 To study the recovery of loans using a case study on Poultry Form
 To study the working and performance of the Proposed Poultry Form
 To study the procedure for the disbursement of loan


The study has been made on INDIAN BANK - HYDERABAD , where the main
emphasis is on the disbursement of loans and advances to various categories. The study
includes the sources of funds for the purpose of lending, utilization of loans, recovery of
loans using a Poultry Form as a case study. The study also includes information gathered
from nearly ten different poultry forms existing near by Nadergul. Mostly information
relating to the Poultry form was derived from Alivelumangamma Poultry form and its
Balance Sheets. The project report analyses the case study using sensitivity analysis of the
capital budgeting decisions.


The Study mainly depended on the secondary data for its analysis and preparation of
various statements. Data was collected from the bank’s annual reports and other financial
statements provided by the bank officials. With the help of secondary data the process of
loaning activity is studied to find out the defaulters if any. A detailed analysis of loans and
advances is done taking the time period of 5 years.

To evaluate the impact of these bank procedures, a case study was conducted taking
“Layer Poultry Forms” as a topic. For preparing the financial projections and statements,
information was mainly driven from personal enquiries and causal interviews with personals
relating to the layers poultry business such as Poultry Form Owners & Workers, Egg Traders,
Raw-Material Providers, Veterinary Doctors, etc. An analysis as a customer of the bank
having small-scale industry has been done and found, whether he qualifies for the
disbursement of loan or not.

Limitations of the Study

Following are few limitations of the study:
1. Basic limitation of the study was time constraint, where the study period was
merely 45 days.
2. Other draw back of the study being its reach, where information was collected
from one co-operative bank and few 15 poultry forms from Hayathnagar,
Upperguda and Nadargul.
3. The study was restricted to Hyderabad, and RR Dist only and thus the results
cannot be generalized to other regions.
4. The busy schedule of the official of the bank and poultry form personnel’s is
another limiting factor.
5. Non-availability of confidential and accurate financial data.


Though there is a slight decrease in lending during the period 2008-09, the bank has
increased the lending’s substantially. The total amount of loans and advances as on
31.03.2008 is 26796.70 lakhs.


Keeping in view, the increase in market prices of fertilizers, labour, seeds, pesticides and also
with a view to help farmers to the maximum extent of their input and requirements the IMBP
(Individual Maximum Borrowing Power) was increased from Rs.15000 to Rs.20000. The
progress under crop loans disbursed

a) Long term loans for tractors: to deploy internal resources in a profitable way,
the bank was taken a decision to lend long term loans purchase of tractors at a slight
higher rate of interest so that the needy agriculturists will be benefited from
mechanization of farm operations.

b) Chief Minister Empowerment of youth: the government of A.P has introduced

schemes to provide to self-employment for unemployed youth by sanctioning subsidy
and margin money to the maximum of Rs.70000 per group. Each group has to
contribute Rs.20000 as their own capital and bank will provide Rs.10000 loan. As the
area of operation of the bank extends to the revenue districts of Hyderabad and RR
District, probably this is the only bank in the state, which is implementing the scheme
of CMEY in two districts

c) LOANS TO OTHER SECTOR: To suit the changing circumstances and also

with the view to serve all the areas for the economic development of all communities,
the bank has formulated schemes for sanction of loans to house buildings, petty
traders, employees societies, village industries, artisans, higher education, road

transport vehicles etc. The bank is also sanctioning loans to the government of A.P.
The loans and advances under this scheme under this sector and their rate of interest

Loans and Advances during the year 2009-10 (Amt in lakhs) Ffb Particulars As on 31.3.08

1 S.T Loans 9805.02
2 R.M.G 45.66
3 M.T-non Agric 82.89
4 Gold Loans 993.52
5 Rajiv Gruhakalpa 119.23
6 L.T Argi. Loans 2004.25
7 Total 13050.57


 Size of loan account
 Composition of loan portfolio
 Acceptable security
 Lending criteria
 Maturity
 Compensating balance

The working of the cooperatives are being monitored by the Financing Agency i.e.,
DCCB&APCOB and the Governmental Agency i.e., Registrar of co-op societies (RCS) in the
form of supervision of lending, utilization of loans, recovery of loans, periodical inspections
development and audit, to arrest any sort of irregularity in the functioning of the societies.
As the major share of lending in the ru0ral areas is belonging to the cooperatives, but
the deposits tapped are not in the same proportion as of lending and to inculcate the habit of
savings in the rural areas through the societies, a financial aid is being provided to them to the
extent of Rs.80, 000 with the following constitution for acquiring the basic infrastructure
necessary for banking activities.


The origin of commercial banking can be traceable in the early times of the human
history. The in ancient Rome and Greece the practice of storing precious metals and coins at
safe places and loaning out money for public and private purposes on interest was prevalent.
In England banking had its origin with the London goldsmiths who in the 17th century began
to accept deposits from merchants and others for safe keeping of money and other valuables.
As public enterprises, banking made its first appearance in Italy in 1157 when the bank of
Venice was founded.
According to Crowther, modern banking has three ancestors:
• the merchant
• the goldsmith
• the money lender

A bank is an institution, which deals with money and credit. According to Crowther , a bank
“collects money from those who have it to spare or who are saving it out of their incomes,
and it lends this money to those who require it.” In the words of Kinley, “a bank is an
establishment which makes to individuals such advances as money as may be required and
safely made, and to which individuals entrusts money when not required by them for use.”
In short, the term bank in the modern times refers to an institution having the following
a) It deals with money; it accepts de[posits and advances loans.
b) It also deals with credit; it has the ability to create credit. i.e., the ability to expands its
liabilities as a multiple of its reserves.
c) It is a commercial institution and it aims at earning profit.
d) It is a unique financial institution that creates demand deposits which serve as a
medium of exchange and as a result, the banks manage the payment system of the country

According to the banking regulation act, 1949, the term banking is defined as “accepting for
the purpose of lending or investment of deposits of money from the public, repayable on
demand or otherwise and withdrawal by cheque, draft, order or otherwise”

Of all the functions of modern banking, the lending of funds, with or without security,
is by far the most important. A study of balance sheets of public sector reveals that about
85% of their revenue arises from interest and discount, income derived from advances,
including bills purchased and discounted. The share of advances in the total assets of the
banks is about 60% and is the backbone of the banking structure. The strength of the banking
system thus primarily depends upon on the soundness of the advances. Infact, advances
inspire confidence in the depositors and prospective customers of the banking sector.

Bank lending is very important to the economy, for it makes possible the financing of
the agricultural, industrial and commercial activities of the country. Bank loans are called
agents of indirect production. They also make possible production for inventory. It also
promotes distribution and boosts exports as well as imports. In addition to the financing of
the agricultural, commercial and industrial activities, banks through their consumer loans,
contribute to consumption activities- creating constant demand for consumer goods like
houses, furniture, appliances etc. what is more, banks have been financing all viable projects
that the economy has conceived and implemented and proposed to be a critical tool of the
development process.

A loan is a kind of advance made with or without security. In the case of a loan the
bank makes a lump sum payment to the borrower or credits his deposit account with the
money advanced. it is given for a fixed period at an agreed rate of interest. Repayments may
be made in installments or at the expiry of a certain period. The customer has to pay interest
on the total amounts advanced whether he withdraws the money from his account or not. A

loan once repaid in full or in part cannot be drawn again by the borrower unless the bank
sanctions a fresh loan.
The bank credit may be classified in a variety of ways, according to security,
maturity, method of repayment, origin and purpose. Generally speaking, the bank advances in
the country are as follows:

A cash credit is an arrangement by which a banker allows his customer to borrow money up
to a certain limit. Cash credit arrangements are usually made against the security of
commodities hypothecated or pledged with the bank.

In the case of hypothecation, possession of goods is not given to the bank. The goods remain
at the disposal and in the godowns of the borrower. The bank is given access to goods
whenever it so desires. The borrower furnishes periodical return of stock with him to the
bank. Such an advance is granted by the bank only to a person in whose integrity it has full
In the case of the pledge, the goods are replaced in custody of the bank with its name on the
godown where they are stored. The borrower has no right to deal with them.

Customers favour hypothecation to pledge because the latter to considered to lower his

The customer may be allowed to overdraw his current account, with or without
security if he requires temporary accommodation. This arrangement, like the credit, is
advantageous from the customers point of view as he is required to pay interest on the actual
amount used by him. A cash credit differs from an overdraft in the sense that the former is
used for the long term by commercial and industrial concerns doing regular business, while
the lattere is supposed to be a form of bank credit to be made use of occasionally and for
shorter durations.


It is one that has no stated maturity period and may be asked to be paid on demand. The
salient feature of this is that the entire amount of the loan sanctioned is paid to the debtor at
one time, either in cash or transfer to his current account. The security can either be personal
or in the form of shares, debentures, government papers, immovable property, fixed deposit
receipts, life insurance policies, goods etc. Interest is charged on the debit balance, unusually
with quarterly unless there is an arrangement to the contrary.


It is a loan whose final maturity period is longer than one year. A term loan provides the
borrower with intermediate or long term funds and has a full maturity period which is longer
than 1 year but less than 10 years which is dependent on the borrowers future earnings and/or
cash flow for its liquidation, and which has been custom designed to meet the borrowers need
for credit and satisfy the lending banks requirements for earning, liquidity and safety.


Bills, clean or documentary are sometimes purchased from approved customer in

Whose favour regular limits are sanctioned? The term seems to imply that the bank becomes
the purchaser/owners of such bills. It may be observed that in almost all cases, the bank holds
the bills only as security for the advance. In case of documentary bills, the drafts are
accompanied by document of title to goods such as railway receipts or bill OD lading.


Usance bills, maturity within 30, 60 or 90 days or so after date or sight, are discounted by a
bank for approved parties. Bills if exchanges which are discounted by a bank are debited to
bills discount a/c and credited to customer’s a/c less the discount, the discount being passed
to discount a/c.


It is essentially a short term advance granted by a bank to an exporter to assist him to buy,
process, pack and ship the goods. The period of packing credit advance does not normally
exceed 90 days and is to be liquidated by negotiation/purchase of export bill covering the
particular shipment for which the packing credit is granted. It is granted by way of pledge or
hypothecation of goods or may be against an export trust receipt.


It includes finance for import settlement, finance for taking delivery of imported goods and
import usance.


Consumer credit for limited accounts is given to customers for their personal needs including
the purchase of cars, refrigerators, TV sets, settlement of hospital bills, repairing of houses
etc. With the implementation of the first 20-point economic programme, the scope of
consumer credit was extended to cover marriages, funeral and associated religious
ceremonies etc. The amount is given in the lump sum and is repayable by installments with a
couple of years.


It is generally granted for a short period after taking into consideration the net liquid
resources of the borrower. Since there is no security to fall back upon, only such parties are
considered eligible as would, at short notice, be in a position to adjust the accounts. Credit,
capital and capacity have therefore to be adjusted before such facilities are allotted to any
borrower. Clean advances are spread over a number of parties and are sometimes reinforced
by suitable guarantees.


Formulating and implementing loan policies is amongst the most important responsibilities of
bank directors and management. Since formulating a definite loan policy for the bank calls
for expertise, knowledge and experience in various aspects of a bank credit, the Board Of
Directors enlist the services and cooperation of the banks credit officers, who are well-versed
in the techniques of lending and are familiar with external and internal forces that have their
bearing on the lending activities of the bank. The credit polices is the outcome of joint efforts
of Board Of Directors and Credit officers of the bank.

In deciding the loan policies, the policy formulators must be very cautions, for the lending
activity of the bank affects both the bank and the public at large. They should give serious
consideration to all factors that are likely to influence the loan policies and work out their
policies accordingly. The important factors which go into the determination of the loan
policies of a bank are

Capital position:
Capital serves as a protective factor against losses for depositors and guarantees funds for the
creditors. A bank with a strong capital position can assure more credit risks then one with a
weak capital position.

Earnings requirement:

Profit making is one of the principle objectives of a commercial bank. Where earnings
receive a greater emphasis in the loan policy of a bank, it may mean that the bank is able to
keep a larger amount of secondary reserve, or it may mean that it would include in its
investment account. Securities which carry shorter maturity periods and possess relatively
less risk

Deposit variability:

Banks that have experienced erratic movements in their deposits will have to follow a
conservative lending policy. Banks whose deposits have shown a rising tendency in the past,
and which expect the rising trend to persist in future, can be liberal in their loan policy.

State of local and national economy:

In formulating the lending policy, the banker should keep in mind the economic conditions
that prevail in the region served by the bank. A bank operating in an area which is subject to
seasonal and cyclical fluctuations ill afford to adopt a liberal policy


Granting of advances is the primary function of a bank. A major portion of its fund is used
for this purpose and this is also the major sources of bank’s income. However, lending money
is not without risk and, therefore, a banker must take proper precaution in this process. Some
of the important considerations to be kept in mind by a banker, in this respect, are discussed


While lending money the banker has take into account various considerations. These
considerations relate to the bank itself, the borrower, and the proposal.
Considerations about the bank itself:
The bank while advancing money should look to its position regarding liquidity, safety and
Since banks themselves heavily depend on borrowed funds, they spread their investments in
such a way that they are in a position to acquire cash within a short period of time. There
borrowings also come from deposits which are usually not for a very long period. The banks,
therefore prefer granting of short term loans to their customers
The capacity of the banker to repay money to its depositors depends upon its borrowers
repaying capacity. The banker has, therefore, to see the safety of the advances made by it.
This is why he always insists upon collaterals, margins and guarantees in addition to the
personal promise of the borrower.
The banker earns its profits namely through advances and, therefore it cannot ignore the
considerations of profitability while making advances. However the bank cannot ignore the
other two aspects too. It has to see that the funds remain fairly liquid, safe and give a
reasonable return. In order to have a proper balance, the bank keeps in its investment
portfolio three types of investments-liquid, semi-liquid & income earning investments. It has
to maintain them in optimum proportions.

Considerations about the customer:

The banker while selecting his borrower should have a clear appraisal about the three c’s-
character, capacity and capital. Character denotes integrity of the borrower i.e., he should
have willingness to repay the money borrowed. Capacity denotes his ability to manage his
business. The bank can judge it on the basis of the educational background and the
experience of the entrepreneur. Capital denotes his financial soundness. The borrower should
have some funds of his own also. No banker will like to lend money to a person who does not
put money from his own resources. It may be difficult to find a borrower which has all these
three qualities. However, the banker should see that he does not lack any them in a significant
Considerations about the proposal:
The bank should look to the following aspects regarding the proposal.
The purpose for which the money is being borrowed is gaining more importance on account
of increasing realization on the part of the banks about their social responsibility. The project
which will help in rural upliftment, import substitution or equitable distribution of income
has to be preferred in comparison to other projects. Similarly loans for productive purposes
should be given in priority to loans for unproductive purposes, such as for marriage or other
religious ceremonies.

Security is now considered to be a secondary consideration while advancing loans. However,
the aspect cannot be completely overlooked since it is a safeguard for unexpected defaults in
repayments by the borrower.
Source of repayment:
The banker has also to see whether the project for which it is advancing loan will generate
necessary cash to repay the loan and the interest as per the agreed programme.
The term or the period for which the loan is required is also important. Banks cannot afford to
lock up their funds for long periods. They, therefore, prefer granting of short term loans to
long term loans.
It may be noted that now banks are not bound by Credit Monitoring (CMA) as they used to
be earlier. They are allowed to frame their own credit decisions. It means that they can form

their own strategies for exposure in different industries and clients, which gives them an
opportunity to manage credit risks better.

After assembling the credit information on the potential customer, the lending officer
analyses it to evaluate the creditworthiness of the applicant and to determine whether he is up
to the standard or not. Such an analysis is known as credit analysis. A credit analysis
involves the credit investigation of a potential customer to determine the degree of risk
associated with the loan. The capacity of the applicant to borrow and its ability and
willingness to repay the debt in accordance with the terms of the loan agreement must be
studied. An analysis of the creditworthiness of the applicant therefore, calls of an
investigation of 5 c’s of credit character, capacity, capital, collateral and conditions.
The term credit character refers to the reputation of the pro0spective borrower in
meeting his obligations to the bank. This includes certain moral and mental qualities of
integrity, fairness, responsibility, temperance, trustworthiness, industry and the like credit
character is a relative matter
Capacity refers to the ability of the potential borrower to repay debt when it falls due,
and is indicative of the borrower’s competence to utilize the loan effectively and profitably.
This is the very important variable of credit analysis, for the customer’s ability to repay is
primarily dependent up [on the earning capacity. The repayment of the loan may be made by
the sale of assets, by borrowing funds from others, and by earnings.
Capital represents the general financial position of the potential borrower’s firm, a
special emphasis on tangible net worth and profitably (which indicates the ability to generate
funds continuously over time). The net worth figure of the business enterprise8 is the key
factor that would determine the amount of credit that would be made available to the
Collateral is represented by the assets, which may be offered as a pledge against the
loan. Collateral, thus, serves as a cushion or shock absorber if one or several of the first 3 c’s
are insufficient to give a reasonable assurance of repayment of the loan on maturity.
The term Conditions refers to the economic and business conditions which affect the
borrower’s ability to earn and repay the debt and which are, or may be beyond the control of
the borrower. Economic conditions include all those factors, which have a bearing on the
economic process of production, distribution and consumption. Borrowers may have a right

credit character and potential ability to produce income, for existing or ensuing conditions
may be such as to render the extension of the credit imprudent.
Credit Analysis techniques:
A number of tools have been developed with which a banker can evaluate the 5c”s of an
applicant. Important among these are:
 Ratio analysis
 Cash flow projections
 Funds flow statement
 Credit scoring
Credit decision:
After determining the creditworthiness of the applicant, the lending officer has to
decide whether or not credit facilities should provided to him the credit worthiness of the
applicant should be matched the against the credit standards set out in a loan policy. If the
applicant is above or up to standard the loan should made to him. The difficulty in taking a
credit decision arises where the applicant is marginally creditworthy. In such cases, the
decision should be taken only after matching the potential profitability against the cost of
debt loss the applicant who does not satisfy the standard of acceptability may tell off the
banks helplessness in view of its loan policy. The applicant may be asked to approach other
financial institution for assistanc



 For agricultural loans:

The agricultural lending is an indirect lending made to societies and then pass on to the
members. These loans may be short term or long term depending upon the requirement of

a) Short term loans:

The initial step taken by the applicant is to fill up an application form at the societies.
At the district level, there will be a technical committee, which will fix up the scales of
finance for each crop accordingly. The credit limit application of the member will be
prepared based on land holdings and nature of crops cultivated by the member. The society
and the bank will fix the credit limit and borrowing power of the member. Presently the
maximum individual borrowing power for crop loans is Rs 20,000
b) Long term loans:
Initially, the applicant has to fill the application form at the societies. Then the technical
committee on the land on which cultivation would be done after getting a loan does the field
inspection. Verification is made as per the existence of the land and eligibility for cultivation.
If the applicant has followed all the conditions as per the norms prescribed, the bank will
issue a loan.


Non-farm sectors include small-scale industries, business, housing, and transport
vehicles, education. The first step is to fill in an application form for the bank. The location,
type of business, the location of registrar office of the business etc., are to be mentioned.
The technical committee would verify the existence of the business firm, its registration,
working of the business. The creditworthiness of the application is known and finds whether
he can repay the amount of loan as specified. Thus he can be issued a loan.


A person applied for a personal loan should get surety of other people (2 persons) who are
the employees of the same bank or who have an account in the bank. A person should be
qualified as a ‘B’ class member as per the norms prescribed by NABARD. The
creditworthiness of the borrower has to be known first by the various sources. If the bank is
confident that the applicant has fulfilled his entire obligation regarding the loan procedure,
then the loan can be issued.


A gold loan is issued with the security i.e., pledging gold and lending a loan. The
borrower must get gold in place of getting a loan. An appraiser is appointed in a bank for the
purpose of valuation of gold based on its purity and recommends the amount of loans to be
sanctioned. Based on his report the bank sanctions the loan.


Interest plays an important role in the working of a bank since RBI has deregulated
the interest policy. The banks are at liberty to fix up their own deposit interest rates and
lending rates based on their profitability in order to compete with other banks. The bankers as
per the schedule of interest rates prescribed by the Reserve Bank of India from time to time
charge the interest on advances. These rates are subject to change. In order to overcome the
difficulty experienced by the banks in implementing such interest rates, the bankers usually
get the following provision inserted in the loan agreements as regards interest rates:
“…provided that the interest payable by the borrower shall be subject to the changes in the
interest rates made by the Reserve Bank of India from time to time.”
The effect of such clause is that whenever the RBI revises the interest rates, they are
automatically applicable we’d. the date to revision to all existing loan agreements. A person
would like to go for a bank, which is providing a loan at a lower rate of interest. He will
evaluate one among many alternatives. The profits of the bank mainly depend on the interest
rates. Interest is charged on the loan issued which is an income to the bank. Interest paid by
the bank for the deposits made by the public, which forms an expense to the bank. The
difference between the yield on the funds (interest on loans) and the cost of funds (interest on
deposits paid) is called as the interest spread.
Profitability earnings, expenses and balance of a bank are governed by several factors.
Profitability is directly related to
 Efficiency in the management of loans and advances portfolio
 Staff productivity and
 Capacity to get ancillary and non-fund based industries.

The interest rates offered by the bank for different types of loans are
• CKCC SAO/OPP - 8.50%
• Reschedulement - 10.50%

• VAMBAY – 10.00%
• NFS – 11.00%
• Gold loans – 13.00%
• Personal loans – 14.00%
• RMG – 8.50%
• SHG – 9.00%
• RYG – 11.00%
• CMEY – 15.00%
• LT Loans – 9.75%
• Weavers – 11.00%
• CC marketing – 16.50%



Taking Banking Technology to the common man.



(Taking Banking Technology to the Common Man)

The Indian Bank Limited, the predecessor to Indian bank, had its genesis in
the keen need felt for an Indian Bank managed by Indians, on Western lines in the wake of
the widespread misery caused to the depositors by the failure of the House of Arbuthnot &
Co., in the year 1906. The late Hon’ble Sri. V Krishnaswamy Iyer conceived the idea of
starting a bank in Chennai and called a meeting of prominent citizens, on November 3 rd 1906.
Following his further efforts, the Indian Bank Limited was incorporated on March 5 1909,
with an authorized capital of Rs.20.00 lac. The Bank commenced business on 15th August,

Along with 13 other banks, Indian bank was nationalized on 19th July, 1969. On the
eve of nationalization, it’s paid up capital stood at Rs.88.67 lakhs, reserves at Rs.1.18 crores,
deposits at Rs.89.66 crores and advances at Rs.64.94 crore, with a network of 224 branches,
including 5 overseas branches.

The posts and telegraphs Department issued a Special Cover on August 14, 1982 and
provided a Special Cancellation at a post office in Chennai to mark the Platinum Jubilee of
the Bank. Bank of Thanjavur Ltd., a private sector bank was amalgamated with the Bank on
20th Feb, 1990. The bank celebrated its 90th Anniversary on August15, 1997 that coincided
with the Golden Jubilee of the Country’s Independence.

The Banks deposits, which amounted to Rs.89.66 crore at the time of nationalization,
have grown to Rs.40, 806 crores as on 31st March, 2006. During this period the Bank’s
advances have risen from Rs.64.94 crores t5o Rs.22, 485 crores.

His Excellency, the President of India Shri. APJ Abdul Kalam inaugurated the
Centenary year celebrations of the Bank on 4th September, 2006.

The Bank has a wide circle of patrons, both deposit and borrowal customers. There
has been a progressive improvement in the number of accounts maintained by clients. The
Bank continues to render quality service to its customers and enjoys good brand equity in the

The number of branches of the Bank in the Country has gone up from 224 at the time
of nationalization to 1402 as on March 31, 2006 of which 467 are in RURAL areas. The total
number of employees in the Bank has recorded a manifold increase since nationalization,
from 3,500 to 21,394 as on March 31, 2006.

The Bank’s logo consists of three circling arrows arranged around a central point.
The three arrows represent respectively SAVINGS, INVESTMENT and SURPLUS and that
Savings lead to Investment, Investment to Income and Income in the turn to Surplus or
Savings, in a circular chain.

NAABARD (National Bank for Agriculture and Rural Development):

With the increasing role of institutional credit in the integrated rural development of the
country, a need was felt for a single broad based organization, which would not only extend
adequate financial assistance to the various credit institutions of the rural areas but also
provide guidance in all the matters concerning the formulation and implementation of rural
development programs. So far Reserve Bank of India and Agricultural Refinance and
Development Corporation has performed all such functions. In 1981, the committee to
Review arrangement for Institutional Credit for Agriculture and Rural Development
(CRAFICARD), set up by the RBI, recommended the establishment of the National Bank for
agriculture and Rural Development
( NABARD). The recommendation was approved by the Government and consequently
NABARD came into existence on 12.09.1982.

NABARD has now taken over the functions of

1. The erstwhile Agricultural Credit Department (ACD) and Rural Planning

Credit Cell (RPCC) of the RBI.
2. The function of the RBI as an Apex Institution.
3. The erstwhile Agricultural Refinance and Development Corporation
(ARDC) thus, NABARD has to perform a dual function.
4. The function of ARDC as a refinancing institution.

Being an apex institution, NABARD does not provide credit directly to the farmers and to
other rural people but only through its assistance of Cooperative Banks, Commercial Banks
and Regional Rural Banks.


Following are the FOCUS areas:

1. Circle Head to impress upon all the staff members of their respective
branches to canvass at least ONE account per member per month.
2. Display of broachers in the branch premises, thereby attracting attention.

3. Foster a customer-centric approach among the all staff members –
sensitizing the staff members of all cadres, that every customer who visits
our branches should be given satisfactory service and to ensure that he /
she does not leave the branch premises unsatisfied.
4. Growth of no-cost deposits (Current Accounts) and low-cost deposits
(Saving Bank Account).
5. Focus on CROSS-Selling.
6. Thrust on Educational Loans.
7. Branch Managers to be CONSCIOUS of local market trends and
competitors activities (Market Intelligence).
8. Increased efforts to garner larger share of the younger generation clientele.
9. Extend the ATM – cum – Debit Card base and also increase averages hits
per day.



Special Focus was given for lending to Infrastructure (Especially POWER,


Review of the Credit related policies on an on-going basis keeping in view the Competitions
in the market.

Review of the discretionary powers and upward revision of the powers was done with a view
to ensuring speedy disposal of the credit proposals.

Strengthening of the joint appraisal system has been reiterated for timely and speedy
appraisal of credit needs and faster delivers.

Corporate Credit is one of the areas selected for implementation of SIX SIGMA with
technical assistance from WIPRO, Define, Measure and Analyze phase are already
completed. Pilot projects are presently under implementation and it’s expected to be
completed. The project on implementation is aimed at Customer Satisfaction and improved
profitability for the bank.
A vibrant liaison by Branch / Circle Head especially with high value customers will provide
the needed edge to the Bank in financing good customers.
Although offering to finer interest rate is more market driven, field level should not fail to
take into consideration the cost of funds, operating costs, capital cost, risk premium and a
reasonable spread under the portfolio.
Major portion of Growth in credit should be achieved through the new customers.
Credit growth should be backed by an effective and vibrant monitoring system to identify
possible distortion, if any, at any early stage to take corrective actions at the appropriate time.
Available potential should be tapped fully by focusing on Mid Corporate; Small Medium
Enterprises segments New Entrepreneurs.

Meticulous compliance with system and procedures.


Thrust on Cross Selling of both our deposits and credit products.

Bringing in younger generation borrowers into our fold.
Reaching out to the market needs by contacting the customers, existing as well as prospective
rather than waiting for them to contact the Bank / Branch.
Concentrating on new class of borrower’s viz. Working Women, Working Couple,
Pensioners, and Students etc.
To have tie up with Corporate for offering our products and services.
Arrangements / tie up with builders and contractors.
Efficient and speedy delivery of credit.


All eligible farmers to be covered under Kisan Credit Card Scheme.

Agri clinic scheme to be popularized.
Farm mechanization to be given further fillip
Defunct farmers clubs should be revived.
Focus on Medium size borrower accounts for increasing volumes and per capita borrower
amount which is at present Rs.30 lakh only.
To achieve the Banks aim of doubling the exposure under MICRO CREDIT branches to
scout for micro financing projects under model / derivatives.
To access the providers of infrastructure facilities both Govt and Private for development of


Branches should be pro-active in taking up restructuring / rehabilitation of accounts showing

signs of sickness.
Enforcement of Decrees & Recovery Certificates.
Steps should be taken to conduct LOK ADALATs in suit filed as well as in Non-Suit filed
Steps should be taken for up gradation of NPAs of recent origin by recovering the critical
amount combined with current dues.

Notices under Securitization Act shall be issued in all the eligible and applicable accounts.
Possession of the Properties charged to the Bank should be taken immediately after the expiry
of SIXTY days notice period.


Improvement in Asset Quality.

Branches rate all eligible borrowal accounts.

Submit all data under reporting system be e-mail etc.
Strengthening Internal Controls and Adherence to system and procedures by Branches.


The agro Rural Industries will be thrust area and the eligible proposals will be
covered under KVICREGP Scheme. For this Personal rapport will be created with the State
Khadi Village Industries Board ( KVIB ) and also with KVIC for sponsoring the applications.

Financing of Small Industry / Enterprises in the areas mentioned above and ancillary units of
large industries in identified growth areas will have a large potential. By financing these we
expect to increase credit in volumes and also improve profit.

Indian banks association has come out with specific action points for increasing flow of credit

RBI / GOI have come out with Small Enterprises Financing Centers (SEFC) Scheme wherein
Banks can co-finance SSI Projects with SIDBI Branches (renamed as SEFC) in select areas.


Conducting of Monthly Staff Meetings.

Periodical transfer of clerical staff with in the state.
Ensuring follow up of systems and controls by staff members.
Quick disposal of Disciplinary Proceeding cases.
Enforcement of discipline among staff members.
Single Window concept should be introduced in all branches.
Circle Heads to ensure that the revised duties specified in the settlement.


The branches and Circles while drawing up their Annual Plan had projected certain level of
Profitability based on certain growth pattern in term of deposits, advances and other
parameters. When the actual performance of Branches / Circles fall short of expectations
short fall creeps in attaining the desired goals.

Negative growth branches should turn around immediately. Branches / Circles should
identify the reasons for such Negative Growth and adopt suitable remedial measures to not
only arrest the trend but also to reach the targeted level.

All branches should grow evenly through out the year without showing any negative growth
in any week in terms of all parameters so that average also registers a good growth.

Negative growth in current accounts pushes up our cost of deposits and narrows down the
spread. Branches / Circle should consider this vital aspect and bring in more current

By taking advantage of the higher and competitive rates of interest offered by our Bank,
Branches should effectively mobilize term deposits in a big way.

New connections should be established in all segments and clientele based increased.
Focused attention should be given for bringing younger generation into our fold.


• HOME LOANS: Home Loans continue to be the major thrust area.

Branch Managers are aware that the Home Loan market has enormous potential. All
our Branches do have the necessary experience and expertise in handling this

• The areas of shortcomings in the Home Loan lending ( certain cases

proved to be fatal ) have been identified and communicated to the branches for

rectification as well as for improvement in quality of assessment, follow up,
monitoring etc.
• PREVENTION IS BETTER THAN CURE – needs to be adopted by
following the directions listed ---- a). Home loan to be considered to our customers
following KYC norms. b). Capacity to repay the loan to be carefully examined. C).
Pre-sanction inspection should be done. d).Making disbursements after verification of
the borrower and genuineness of title deeds.
• Improve Retail Credit
• Reducing Overdue
• Eliminating Frauds in Home Loans
• Improving NON INTEREST income by marketing third party financial
• Motivating all the staff members for vigorous marketing of our products.

• Out of 24.25 crore households in the country, as of now only 7.42 crore
households are enjoying banking services in the country as per census
2001. Branches will have to be exhorted to focus on increasing the
clientele base.
• In addition to conventional lending like Short Term and Term Loan for
various purposes, we have to focus on medium size borrowal accounts for
increasing volumes and per capita.
• In rural households in the villages covered by our bank should have
deposit accounts with us and total credit requirements of all our existing
depositors should be sourced through our bank branches by cross selling
our various agricultural loan products as per eligibility.
• Water is the serious limiting factor in improving agricultural production.
Bank will lay special emphasis on introducing water saving devices like
Drip / Sprinkler Irrigation units etc. as irrigated land can absorb higher
investment and these water saving devices can bring more are under

• Micro Financing has emerged as a definite business opportunity for rural,
semi urban and urban branches. Branches are now properly oriented for
enhancing the reach through SHGs. Our Circle aims to double the
exposure under Micro Credit. Branches will scout for micro financing
projects under models / derivatives detailed.
1. Micro Credit Kendra’s
2. Vidhya Shobha Educational Loan Scheme
3. Gramina Mahila Sowbhagya Scheme
4. .SHG – Grihalaxmi
• Agriculture Produce Marketing Loans have to be widely encouraged in all
the areas to enable the farmers to fetch a better price for their produce and
to provide liquidity to farmers.
• Financial Intermediation will also have to be encouraged in the field of
corporate / contract farming in crops like. COTTON, JATROPHA,
up scaling the outreach.


• Bank is conducting an intensive kharif credit campaign for a period of three months
aggressively for improving agriculture advances of high quality. Branches to effectively
market our various agricultural loan products during the campaign and improve business.
• Farm mechanization credit will have to be given further fillip, as all norms
for tractors financed under MOU is now applicable for lending Tractor
purchase without MOU too. Relaxed norms and competitive rate of
interest offered will have to be capitalized and converted to business.
• Branches will be made to aggressively market JEWEL LOAN facility.
Where it is a preferred form of credit by the farming community.
• Farm Graduates have been permitted to be engaged for marketing rural
loan products.
• Agr Graduates with business management acumen have been recruited
from reputed Management Institutes to canvass high-ticket Agr business
through corporate.

• Tie up arrangement with Sugar Mills, Paper Mills, Dairy Societies and
also Companies which source their raw material from agricultural sector
will have to be encouraged for enhancing volume. Besides, intermediation
of such mills also will be put place as such loans to companies of repute
has the least transaction cost and risk of default is least.
• Agri Clinic Scheme has to be popularized to enable employed /
unemployed agricultural graduates to take up establishing information and
service providing centers in rural and semi urban areas.
• Financing of tenant farmers / oral lessees, joint liability groups of farmers
lines of SHG models to be encouraged.
• All eligible farmers to be covered under KISAN CARD SCHEME.

• Banks CD ratio in Lead Districts is less than the industry average of

the district concerned and that of the State. Lead Bank District
Manager’s to sensitize our branches by conducting workshops to take
up Micro Financing & Investment Credit Schemes to enhance the CD
ratio, quantitatively and qualifiedly.
• LDMs have to conduct joint recovery camps in association with line
departments for improving the prospects of recovery under Govt
Sponsored Schemes.
• Concurrence of Members of Parliament on their availability should be
obtained while conducting DLRC meetings and they have to
invariably be invited and requested to chair the proceedings or to be
the Guest of Honor, for functions of the lead bank such as opening of
branches, issuing of KCCs, Credit Linkage of SHGs etc.
• Circle Heads to monitor the performances of the LDMs on a
fortnightly basis.



• Government of India has recognized 128 Industrial Clusters throughout the

country in total. Assigned these Industrial Clusters to the Ind
Development Officers for study and come out with specific loan products
for financing these industrial clusters.
• Large investments are being made for increasing capacities in
Petrochemical, Steel, Textile, Pharma, IT and Automobile sectors. These
areas are expected to have an exponential growth in future.
• Service area to support infrastructure growth and food processing is
another area of promise.
• Financing of Small Industry / Enterprises in the areas mentioned above
and ancillary units of large industries in identified growth areas will have a
large potential. By financing these we expect to increase credit in volumes
and also improve profit.
• For achieving this we are constantly formulating updating structured
products to suit industry specific needs and to smoothen flow of credit
• 1. IB Star Rice Mill ( Food Processing )
• 2.IB KNITEX – for knitwear – Cluster Industry
• IBA has come out with specific action points for increasing flow of credit
to SME Sector.

1) Doubling of SSI and TINY Credit

2) All Banks to finance 5 lakhs new Tiny Units
3) Adopting one cluster of artisans by each bank
4) Financing of Clusters
5) Credit Rating of SSI Units
6) Timely Rehabilitation / Restructuring of SSI units.



A. Agr Outstanding 36359 58350.00
Of Which
1. STPL 25285 5342.21
2.Term Loans 11094 53009.79
B. Agr Disbursement 24117 7744.73
Of Which
1. STPL 21201 4922.02
2. Term Loans 2706 2367.81
3. Produce Marketing 193 64.68
4. Rural Godown / Cold Storage 1 140.00
B1. Indirect Agr Disbursement 16 250.22
C. Jewel Loan – Agr – Dis 8287 1598.65
C1. Jewel Loan – Agr – O/s 7833 1538.21
D. JL-Non Agr-Dis 3262 1215.38
D1. JL-Non Agr- O/s 3941 1303.87
E. No.of branches where JL, yet to be
G. IB Kisan Card Dis 6519 1668.40
H. IB Kisan Bike Dis 149 55.15
I. Agr Vendors 0 0
J. Self Help Groups O/s 2965 1546.15
1.No.of SHGs having a/c with our 3262
branch bank
2. No.of Groips linked 3065 1596.50
Of Which
1. Direct Linkage O/s 2264 700.83
2. Under SGSY O/s 14 28.85
3. Bulk Lending through NGOs 0 0
4. Bulk lending through Federation 0 0
K.Gramina Mahila Sowbhagya Scheme 0 0
M. Agr Clinics 0 0
P. Artisian Credit Card – Dis 10 2.25
Q. NPA Recovery 521 91.05
R. Posiotion of NPA acs 2 34.29
More than Rs.10 lakhs
S. Performance of ACI Priority : 2450.65
Branches – Dis 7414 2342.59
Agr : 7332


• Branches must be pro-active in taking up restructuring /

Rehabilitation of accounts showing signs of sickness to not
Only avoid the slippage of assets but also to help in retaining
The economic activity and the productive assets as also
Avoid loss of jobs. In difficult cases, bank may consider
Scaling down of debt to enable the companies to achieve
Breakeven levels and become viable.
I order to expedite recovery in the NPA ( Non Performing
Asset) accounts, special efforts are to be taken to negotiate
One Time Settlements in accounts particularly those were
BIFR has either rejected the reference or ordered winding
up of the company.
Depending on the availability of charged assets, bank should
Expedite action under SARFAESI Act and bring the assets
To sale for early realization of our dues.
• Accounts where OTS amount are yet to be recovered fully,
Are to be followed up with borrowers for early recovery of
Balance OTS amount.
For Standard and Sub Standard assets under BIFR
Accounts, regular review and renewal proposals should be
Submitted well in time.
Accounts where rehabilitation proposals are sanctioned and
Implemented, Branches to monitor such accounts closely and
Submit quarterly progress reports.
• Branches to get the latest valuation of charged assets and
Balances of other lenders and report.

State Level Award for Best Performance in Khariff ( 2006-09)

Indian Bank received State Level Award form the Chief Minister for the Best
Performance made under Agriculture for the Kharif 06-09. The award was given
on 17th January, 09 by the Chief Minister.


BACKGROUND: In Andhra Pradesh, the state government has moved a step

forward. Based on the experience gained in implementation of SHG-Bank linkage
programme, the state government has in 2003 itself, launched the concept of
‘RYTHU MITHRA GROUPS’ with a view to bringing about holistic
development in the lives of small, marginal, tenant and lessee farmers through
collective action. Thus, more than two lakh RMGs have been formed in the state.
The state government had also desired the guidelines be formulated to finance
RMGs with more emphasis on financing of tenant farmers / oral lessees / share-
croppers. Taking cue from the work done by the SLBC in this regard, NABARD
evolved draft guidelines for financing the RMGs, Which were given final shape
after detailed deliberations at the state level with the concerned departments of the
state government, SLBC and controllers of banks, in its efforts to give a boost to
Agri-credit with coverage of more number of SF/MF, tenant farmers, share
croppers and oral lessees, NABARD decided to launch a pilot project for
financing of RMGs initially in six districts particularly for KHARIF 2004 and Six
more districts for Rabi 2009-10 season, before it is further broad based, there are
106.03 lakh land holdings with an area of 143.73 lakh hectares of which 60.24 %
of the land holdings are less than one hectare accounting for 19 % of the total
area. The holdings of small and marginal farmers are 86 % lakh constituting 82 %
of the total land holdings and their number is gradually increasing due to further
fragmentation of land for various reasons.

Launching the concept of “RYTHU MITHRA GROUPS” is intends to bring about

holistic development in the lives of Small and Marginal Farmers and Land Less


• RMGs are homogenous group of farmers formed with a optimum

membership of 154 farmers and expected to function on the lines of SHGs.
• To serve as a conduct for technology transfer, facilitate common access to
market information and market.
• Training and Technology Dissemination in activities like soil testing,
training, health camps and assessing input requirements etc.
• Providing access to credit facilities from Banks.
• Small farmers, marginal farmers tenant farmers, share croppers and oral
lessees, including women farmers in a village who undertake farming
activities. An RMG has to save a minimum monthly thrift of Rs.50/-
• In view of gradual decline in contribution of agriculture to GDP of the
country, and in view of continuous drought and floods aggravating the
plight of the poor farmers, the Government of India in their revised
economic policy 2009-10, have suggested for extending finance to small,
marginal tenant and lessee farmers, GOI and RBI have announced the
decision for doubling up of credit by all banks to agriculture in three years
by ensuring yearly growth of at least of 27%.


• Exploring a new product with RMG as a medium, for smoothening credit

flow with effectiveness in credit dispensation and recovery.
• More coverage of New Small & Marginal Farmers , particularly more
number of tenant / share croppers and lessee farmers in addition to making
adequate and timely credit available and to impact agriculture production
and productivity.
• Understanding the process and difficulties of the credit delivery system
envisaged under the Pilot Project and getting feed back to decide about
mainstreaming of the Project all over the country.


The project period will be ONE year, covering two crop seasons and including
both loaning and recovery of loans.


A minimum of 1,000 RMGs are to be identified in each district, for financing

under the Pilot Project. There is no upper ceiling on the number of groups to be
covered under the Pilot Project. Care has to be taken to ensure that only groups
with eligible farmers are identified. Present norms with regard to service area
need to be followed financing RMGs.


• Only one member per family will become a member of RMGs.

• RMGs with hitherto uncovered farmers may be identified and given
priority over others.
• RMGs with members cultivating dry crops may be given preference.
• RMGs, which have received grant of Rs.2,500/- may be given preference.
Mis-utilisation of this government grant will make the RMG ineligible for
• In the lessee farmers, the land taken on lease together with his own holding
should not exceed the norm of acreage for small farmer i.e.5 acres of dry
land / 2.5 acres of irrigated land.
• The purpose of financing will be restricted to only crop loans for the
present. Consumption and investment credit could be considered
eventually, to RMGs depending on their maturity.

• RMGs with group dynamics on the lines of SHGs and active existence for
at least SIX months need to be identified. However, it may be viewed
more liberally as RMGs are still in the process of evolution. A RMG –
once credit linked – must follow all the group processes including record
keeping from the beginning. It would facilitate their identification for
higher quantum of loans in future.

• INTER SE CLAUSE: for bringing the uncovered members in the ambit of

Pilot Project, it is necessary that RMG members who have availed
individual bank loans should undertake the liability of the group loans.
Only those RMGs whose members are agreeable to abide by joint and
several responsibility clauses need to be identified under the project.

• Criteria regarding financing of RMGs with defaulters will be same as that

of SHGs and RBI guidelines need to be followed in this regard. In other
words, defaults by a few members of RMG and / or their family members
to the financing bank should not ordinarily come in the way of RMG
financing. However, the bank loan may not be utilized by the RMG for
financing a defaulter member to the bank. In case the RMG intends to
finance such members it may do so from its own fund.
• However, with the latest pronouncements of GOI on Small and Marginal
Farmers, all their defaults could be rescheduled making them eligible for
fresh loans.


• RMGs: The Agriculture Department may initially, impart training to all

the identified RMGs. The training should focus on group dynamics,
dissemination of appropriate technology, and utilization of bank loan and
repayment ethics.


• There should be good co-ordination between the banks and concerned line
departments to facilitate implementation of project. This necessitates
having proper understanding of the job to be handled by the Department of
Agriculture and other line departments.
• The Agr Dept may identify eligible RMGs, assess training needs and take
up necessary measures for capacity building of RMGs to ensure that they
tread on expected lines.
• Help banks in recovery of loans wherever necessary.
• To collect members “PROFILE”.


• Loan can be given to RMG as a Crop Loan / Cash Credit for a period of
One to Three years.


• RMG may prepare a Micro Credit Plan indicating name of the member,
extent of acreage, crop grown / proposed to be grown, finance required and
agreed repayment period for submission to the bank branch, along with its
loan application. In the case of lessee farmers, proof of lease will be
certified by other members of the RMG based on the MICRO CREDIT
PLAN, branch manager may decide the quantum of loan keeping in view
following factors:

1. Individual already availed loans

2. Outstanding position of loanees
3. Status of default and
4. Crops to debt ratio, preferably 1:9

* For the purpose of assessing corpus of the group,

Savings, interest and other income of group as also

Government grant, if any received, may be considered.
The branch manager may interact with RMGs, prior to
And after sanction of loan and loan may be credited to
The bank account, which should be made known to all
the members.



• ROI to be charged by bank on loans to RMG will be as per the RBI

guidelines. However, interest to be charged from members by the group
may be left to the discretion of the group.

• The banks may stipulate that repayment period of crop loans should
coincide with the harvesting season. Focus may be laid on borrower
education emphasizing on creating awareness regarding terms and
conditions of loan, repayment ethics and recycling of funds.


• Margin and security norms for the loan will be as per the guidelines of RBI
issued form time to time. As stipulated by RBI, agriculture loans upto
Rs.50, 000/- can be given to an individual without taking any margin /
collateral security.


• AS Loans are issued in the name of RMGs, the bank may decide about
covering the individual members under personal accident insurance in a
suitable manner.


• The loans to RMGs under the pilot project may be disbursed at the earliest
keeping in view, the cut-off date specified in the crop insurance scheme.
Based on the details given in the credit plan regarding area of cultivation,
crop grown and scale of finance, farmer-wise crop details may be noted for
insurance coverage. The insurance premium may be worked out on the
basis of bank loan proposed to be disbursed and the same could be debited
to RMGs loan account for the all members of RMG. The premia so
collected may be passed on to Agriculture Insurance Corporation as per
the existing guidelines.
• The branches participating in the Pilot Project may be delegated with
adequate sanctioning powers.

• Loan application with Micro Credit Plan of the RMG
• Inter-se agreement
• Article of agreeme

Name of the Rythu Mithra Group :
Address :

Service Area Bank

Name of the member of

Age : Years : Social Status : SC / ST / BC / Others
Village : Mandal & District :

Number of Family

Land Particulars
Own Land
Leased Land
Crop Grown
Source of Irrigation
Whether the member is
owning Tractor :
Loan outstanding with various Banks
Crop Loans
Agr Term Loans
Whether member is
having Converted /
Rescheduled Term Loans
( Crop Loans converted
to Term Loans under
Drought / Flood Relief
Economic activities
proposed to be taken up
Credit Requirements Crop Loans

Agr Term Loan

RYTHU Others

Financial Particulars as on / / 2009

Amount in
Sl No. Particulars Rs.

1 Savings from Members

Matching Grant from Dept of
2 Agriculture, if any
3 Borrowings Outstanding
4 Loans against outstanding members
Amount default, if any, against
5 members
6 Recovery Percentage
7 Cash / Bank balance

Term deposits are deposits opened for specific term ranging from SEVEN days to 120
months. However, deposits can also be accepted for period exceeding 120 months, in
the case (i) MINORS (ii) ORDERS FROM A COMPETENT COURT AND (iii) for a
specific purpose. Interest is payable periodically or on maturity as per the scheme. If
the deposit prematurely withdrawn, then interest is payable as per the following rules:

If the deposit is prematurely closed and renewed for further period, the interest will be
paid at the rate applicable for the period run without penalty.

The deposit ceases to earn interest on its due date. If the overdue deposit is renewed
for further period with a minimum 15 days from the date of presentation for renewal,
interest will be allowed for the overdue period, at the rate prevailing on the date of
maturity of the deposit prevailing on the due date of the deposit.

Interest paid on the term deposits, if exceeds Rs.5, 000/- in a financial year, is liable
for Tax Deduction at Source, under Section 194 A of Income Tax act. (Exception:
Recurring Deposit). Customer can exercise his option for debiting the amount of tax
to his running account (Saving Bank or Current Account), so that he can get the
maturity value in full on the date of maturity.

The facilities of nominations, loan against term deposit and fore closure of term
deposit are available.


1. Fixed Deposit / Short Term Deposit:

The deposits are opened for period up to 180 days will be treated as Short
Term Deposit and the deposits are opened for period 180 days and above, will be
treated as Fixed Deposit. Interest is payable on the due dates in the respect of Short
Term Deposits and quarterly in the case of Fixed Deposit. Monthly interest can also
be paid, but at a discounted rate.


Fixed Deposits placed for short term periods i.e. 15 days to 180 days will be
renewed automatically, on the due date, on the basis of the request from the depositor
for the same period as that of the original deposit for a SIX times.


This scheme offers higher returns and liquidity too. Unit deposits are Fixed
Deposits – with a difference: part withdrawals are allowed. The deposits are accepted
in units of Rs.1000/- each.


Indian Banks “user friendly” facility deposit combines the advantage of Fixed
Deposit with the flexibility of an Overdraft against deposit. A fixed deposit or re-
investment deposit, with a minimum of Rs.10, 000/- or more, in multiples of Rs.1,
000/- is to be made for a minimum period of One Year and maximum period of Three


Reinvestment Deposit (RIP) is accepted for a minimum period of SIX months

and maximum period of 120 months. Under RIP as the interest is compounded


Recurring Deposit is a scheme drawn specially to suit the needs of the

individuals, particularly the salaries class, small traders etc to plan their savings to
meet specific demands. Recurring Deposit account can be opened with a monthly
installment of Rs.5/- or in multiple thereof, for a period of Six months up to maximum
of 120 months. The depositor will get the installment amount along with interest on
the due date. Interest paid on Recurring Deposit is NOT liable for TDS.


Variable Recurring Deposit is a recurring deposit scheme, where the customer

is having an option to vary his monthly installments according to his convenience.

The deposit account opened with a specific amount called core deposit and the
customer can remit the monthly installment up to Rs.10,00,000/-. Interest paid on
Variable Recurring Deposit is liable for TDS.


Particularly the middle income group like salaried, small traders etc. to plan
their savings and to make a financial provision well in advance to meet the future
expenditure like the educational expenses for their children, specific purpose like
investments, payments of annual installments, a unique scheme called “ VIDYA
NIDHI DEPOSIT”. This is combination of Recurring Deposit and Re-investment
Deposit with annual repayments.


Saving Bank account can be opened in the name of Individuals, Single or

Jointly, minors of 14 years of age and HUF. Savings accounts cannot be opened in
the name of prohibited category of Institutions and for trading purpose. There is no
ceiling on the maximum balance earning interest on Saving Bank accounts.

The accounts can be operated by withdrawal slips or by cheques. For withdrawal of

money using withdrawal slips, passbook should accompany.

Interest is payable on the minimum balance between 10th and the last date of the
month. Interest is credited to the account every half yearly viz as on 31st January and
31st July.
Interest Warrants, dividend warrants, local and out station cheques and pension
payable to the account holder will be collected through the account. The facility of
nomination is available.


Under this scheme, a minimum balance of Rs.5, 000/- should be maintained.

Interest will be paid as applicable of Saving Bank Account. The customer will be
given a Health Card. using this Health card, the customer can avail Health Check-up
and diagnostic check-up in select hospitals with a discount. The facility will be
available for FOUR persons, for the account holder, spouse and two other persons,
either children or parents. The card is valid for one year and will be renewed further.


Current Accounts are most suitable for business community. Current accounts
can be opened in the names of individuals (Single or jointly), proprietary concerns,
partnerships, companies etc. The account is operated by cheque. Though no interest
is payable on this account, there is no restriction on the number of transactions. The
facility of nomination is available.

12. ADVANTAGE ACCOUNT: This is an extension of Current Account. This scheme

is operative in selective branches. Under this scheme, a minimum balance of Rs.1.00
lakh should be maintained in Current

Account and the customer is entitled for the following Advantages:

• Issue of DDs / BPOs for all denominations subject to a ceiling of 30

instruments per month or Rs.2.00 lakhs per month

• Immediate credit of local / outstation cheques up to Rs.20, 000/- with

appropriate charges

• Free ATM cards individuals

• Free computerized statement of account

• No folio charges

• Extended business hours for non-cash transaction at total computerized


• Supply of personalized cheque book

Failure to maintain the specific minimum balance is liable for

Penal charges as under:

Rs.30/- per day if the balance falls short of Rs.1.00 lakh but not
Below Rs.50, 000/-,Rs.60/- per day if the balance becomes less than Rs.50, 000/-


Capitalize the Core Banking Net working environment and improve business.
More than 60% of the population owns a MOBILE. With the Core Banking, we may
introduce the e-purse technology through the Mobile Service Providers. In the
Mobile Banking the forerunner though face initial hiccups will reap more benefits.

Semi Urban / Rural branch net work to capitalize upon.

Bank customer clientele age is 55+. Committed and long-standing customer base. As
we are offering the facilities of the techno savvy private / foreign banks, we have to
attract t the kith and kin of the customer clientele.

Introduction of Basle II norms may introduce the capital adequacy depending on our
quality of asset.

Introduction of Internet Banking free transfer facility of Rs.50, 000/- with the bank,
which reduces the work load in the branches.

Issue of Multy City cheque books reducing the cumulative average balance and
irrespective of the limits to OD/OCC accounts.

Indian Bank brand enjoys good customer loyalty which can be trapped with good
customer service. With the implementation of CMS+ and multi-city cheques more
corporate and small business can be taken to our fold which results in more float
Indian Bank, in its centenary year, registered a record performance in business during
the financial year ending 31.03.09. The bank also came out with its IPO in Feb 09,
which was oversubscribed by 33 times. The success of the IPO reflects the
phenomenal faith of the investors and customers on the BANK.


Deposits & Advances:

Very Moderate Current Account and Saving Bank Deposits when compared to the
other players, resulting in high cost of deposits.

More processing time even in the case of medium credit proposals. Combined
appraisal of all proposals of Rs.10 lakh and above from the office of the sanctioning
authority to reduce the processing time.

Exposure to SEZs

Engaging the external agencies for recovery of Non Performed Accounts.

35% to 45% of the Branch time is wasted on administrative work rather than on the
development work.


The average age of the executives is 55+, having good experience, may be able to
compete with the younger generation of techno savvy are retiring in another three to
five years leads a vide gap to make up.

Small branches shall be headed by Scale – II, Medium by Scale – III, Large by Scale
– IV, etc to have better control and exercising judicial discretionary powers.


Consolidation of the Banking Sector

Competing with the intrusion of FOREIGN BANKS
Implementation of BASLE – II norms.


CHEQUE DROP BOX FACILIT: For depositing instruments for collection / clearing, drop
boxes should be provided at branches. Instruments shall also be received at the counter
specified for the purpose. The customer may choose any of the option for depositing
instruments for collection / clearing. Instruments deposited at the counters shall be
acknowledged by the counter staff / officer while receiving them. The counterfoils of cheque
dropped in boxes shall be kept in the spike and the customer may collect during the next visit.

EXTENDED HOURS OF BANKING: Customer service is to be provided during extended

hours even for cash and other transactions.

ENQUIRY COUNTERS: In large / metropolitan branches, enquiry counters must be kept

operative throughout the business hours and the counter should be customer friendly.

SAFE DEPOSIT VAULTS: Linking the locker facility with placement of fixed or any other
beyond what is prescribed is a restrictive practice and should be prohibited forthwith. There
is no reason to force customers to make deposits, as the locker charges are pre-determined
and allowed to be recovered upfront up to three years.

VISITS BY CIRCLE HEADS / SENIOR OFFICERS: Circle Head / Senior Officers of
Circle Office shall pay surprise visits incognito the operational areas give the necessary thrust
to customer service.


pass books or the statement of accounts provided to the customers should give the necessary
details to enable the customer to identify the transaction, particularly inflows. Branches
should also adhere to the monthly periodicity in sending the statements of accounts to the
account holders.

NOMINATION: Nomination facility is available to depositors in their existing and new

accounts.The facility extends to all persons who hold deposit accounts, safe custody accounts
or safe deposit vaults in their individual capacity and not representative capacity.


DEPOSITS: Out of FIFTY branches, 24 branches reached the targets, 24 branches shown
Positive and 2 branches in Negative performance. And whole Circle in Deposits at Rs.1401
crores against target of Rs.1409 crores.

ADVANCES: Out of FIFTY branches, 27 branches reached the targets, 19 branches shown
Positive and FOUR branches in Negative performance and whole circle at Rs.1529 crores
against target of Rs.1732 crores.


(In crores)

PARTICULARS Target Actual Target Actual Target Actual

2006 to 2007 2007to 2008 2008 to 2009
Deposits 1150.8 959.18 1159.1 1125.23 1408.93 1401.65
6 8
Advances 838.75 1061.0 1361.0 1345.24 1731.75 1528.09
6 6

Membership of the bank as on 30.09.2009

S. No Institutions No.
1 Government 1
2 Agricultural societies 56
3 Functional societies 179
Nominal members 8872


The bank is advancing loans to various categories like farmers, small-scale business people,
unemployed youth, technocrats etc such as

 Crop loans
 On purchase of autos, cars and jeeps etc
 For small scale industries
 House construction and repairs
 Long term loans for farmers
 Higher studies

 Personal loans on surety of two employees
 Employees co-op societies
 Gold loans
 Swayam upadhi pathakam
 Dwarka groups
 Loans to farmers to purchase electricity transformers collectively
 Watershed schemes for farmers
 Rajiv gruha kalpa scheme
 Rythu mitra

Cooperative bank is an institution established on the cooperative basis and
Dealing in ordinary banking business. Like other banks, the cooperative
Banks are founded by collecting funds through shares, accept deposits and
Grant loans.

The Credit Structure of the Bank is as follows:

NABARD (National Bank for Agriculture and Rural Development):

With the increasing role of institutional credit in the integrated rural development of
the country, a need was felt for a single broad-based organization, which would not only
extend adequate financial assistance to the various credit institutions of the rural areas but
also provide guidance in all the matters concerning the formulation and implementation of
rural development programs. So far the Reserve Bank of India and the Agricultural Refinance
and Development Corporation (ARDC) have performed all such functions. In 1981, the
committee to Review Arrangement for Institutional Credit for Agriculture and Rural
Development (CRAFICARD), set up by the Reserve Bank of India, recommended the
establishment of the National Bank for Agriculture and Rural Development (NABARD). The
recommendation was approved by the government and consequently NABARD came into
existence on July 12, 1982.

NABARD has now taken over the functions of

a) The erstwhile Agricultural credit Department (ACD) and Rural Planning
Credit Cell (RPCC) of the Reserve Bank of India
b) The erstwhile Agricultural Refinance and Development Corporation (ARDC).

Thus, NABARD has to perform a dual function:

a) The function of the Reserve Bank of India as an apex institution
b) The function of ARDC as a refinancing institution.
Being an apex institution, NABARD does not provide credit directly to the farmers and
to other rural people but only through its assistance of cooperative banks, commercial
banks, and regional rural banks.


State cooperative banks e the apex institutions in the three-tier cooperative credit structure,
operating at the state level. Every state has a state cooperative bank. State cooperative banks
occupy a unique position in the cooperative credit structure because of their three important
a) They provide a link through which the Reserve Bank of India provides credit to the
cooperatives and thus participates in the rural finance
b) They function as balancing centers for the central cooperative banks by making available
the surplus funds of some central cooperative banks. The central cooperative banks are
not permitted to borrow or lend among themselves.
c) They finance, control and supervise the Central Cooperative Banks, and through them,
the primary credit societies.
The lending of the bank is mainly done in the rural areas i.e., to the agricultural sector.
The agricultural lending is done through PACS (primary agricultural coop societies). The
loans and advances are given o the societies and then to the individuals.

Direct lending is done only in the following ways

 Personal loans
 Non_farm loans
 Gold loans
 Staff loans

The target fixed to the bank under deposit mobilization for the year 2009-10 is Rs.24388.00
lakhs. As against this, the deposit position of the bank as at 31.03.2008 Rs.20350.91 lakhs.
To increase the deposit position, the bank has launched deposit mobilization campaign from
December ’2006 onwards by introducing innovative schemes like”SWARNA
The mobilization campaign period is extended up to 30.09.2007. The Nodal Officers, Branch
Managers and the field staff are going to the villages for recovery and disbursements of loans.
At the same time the deposits are also being mobilized targeting the villages.

Year 2007-08 2008-09 2009-10

Target 16050.00 20680.00 24388.00

Achievement 16842.23 20097.62 203505.91
% of achievement to target 104.94% 97.18% 83.45%

The comparative statement for the lending’s under ST and LT loans during the year 2009-10
and 2009-10 are as follows:

Keeping in view, the increase in market prices of fertilizers, lab our, seeds, pesticides and
also with a view to help farmers to the maximum extent of their input and requirements the
IMBP (Individual Maximum Borrowing Power) was increased from Rs.15000 to Rs.20000.
The progress under crop loans disbursed


2009-10 3762.67 362.65 180.85
2005-06 1415.15 6437.88 1106.99
2006-07 6163.18 2986.62 2048.28
2007-08 5236.4 3672.47 725.00
2008-09 6144.00 765.00 1151.00
2009-10 9760.30 1185.00 286.16

The bank has introduced pilot project for financing Rythu Mitra Groups in R.R.District, as
per the guidelines communicated by NABARD/ APCOB. So far, the bank has sanctioned
loans to 92 Rythu Mitra Groups amounting to Rs.38.27 lakhs in RR District as on
31.03.2008 and also during the year 2008-09, the bank has disbursed Rs.109.12 lakhs to 61
Rythu Mitra Groups.

SL.NO Year Amount disbursed

1 2006-07 67.80

2 2007-08 83.24

3 2008-09 109.12

4 2009-10 38.27
The recovery performance during the year 2008-09 to 2007-2008 (as on 31.03.2008) is as
follows: (Rs in lakhs)
% Of
Recoveries collection
S. No.
as on
Particulars Demand As on 31.06. 2005 % Of Collection
1 ST 11732.96 10711.28 91.29% 47.42%
2 LT 2582.03 1551.01 60.07% 42.18%
Total 14314.99 12262.29 85.66% 45.41%
s on 30.06.2005 the bank stands at second position in the state in recovery performance.
With a view to provide timely credit and enable the farmer to utilize the loan
component as and when required for his agricultural operations, the bank is implementing the
scheme of CKCC system and issued 81580 pass books to the members of 97830. As per the
guidelines of NABARD the bank has implemented the kisan credit card policy. This
facilitates the member to draw the amount as per the input requirements for cultivating crops.
The bank has also introduced an innovative scheme for lending farmers under crop loans
(CKCC) to an extent ofRs.75000/- for big farmers irrespective of IMBP.

Integrated co-operative Development Project (ICDP):
The district is selected under NCDC sponsored ICDP programme with the project outlay of
Rs.1128.21 lakhs and the NCDC loan component is Rs.lakhs. The period of implementation
of ICDP is (4). Four years and the project implementation agency (PIA) is Hyderabad
Dist.Co-operative Central Bank Ltd., Hyderabad. There are two inter Departmental co-
ordination committees one at the District Level Committee (DLC) and the other at the State
Level Committee (SLC). The District Level Committee is headed by the District Collector.
The ICDP as released sum Rs 230.00 lakhs so far for development of infrastructural facilities
to the selected societies.
The NPA as on 31.3.2008 is 8.29% compared to the 31.03.2004 position of 29.56%. There is
substantial decrease of NPAs over the previous years.
(NPA POSITION:(Rs in lakhs

Total NPA
As on Outstanding Position % Of NPA

31.3.2006 18717.14 5614.55 29.56%

31.3.2007 22117.25 3231.73 14.61%

31.3.2008 25697.57 1599.56 6.22%

31.3.2009 24779.59 821.41 3.31%

31.3.2010 26882.68 2227.84 8.29%

The bank has issued instructions to all the branch managers to maintain PACS-wise
NPAs register, so as to enable to concentrate for recovery of such loans on priority basis and
also to have control and supervision over the NPAs. Efforts are being made to reduce the
NPAs to its optimum level.

 The bank has got appreciation from the District Administration for the

services in the areas of loans under APMIP scheme and coverage of Rythu Mitra

Groups, on the eve of Independence Day celebrations 15.08.2008

 The chief Executive Officer of the bank and branch managers of 6 branches

were recognized and appreciated for as compared with all the banks in the district, on


 The deposit position increased about Rs 1295.00 lakhs during one year period

of 31.07.2009 to 31.03.2010, which is the highest growth for the last three years

 The bank has compiled with the provisions of section 24 of BR Act 1949 from

June 2008-Defaulted for the last three years.

 The bank stood at second position in the state in recovery of dues during 2009-


 NPAs have come down from 29.56% to 14.16%

 Recorded highest disbursals under ST and LT during 2009-10, for the last5

years(ST- Rs 78.00 crores , LT-Rs 11.00 crores)

 Opened 9 farmers clubs in the R.R District and undertaken social activities like

cleaning of roads, upliftment of temples, encouraging school children, “Annadanam”,

etc.m,Sri Rama farmers club, Manchal received appreciation from NABARD

 Ever in the history of the bank, Audit for 2009-10 completed in the month of

July and Audit certificate was issued. The bank was classified under ”b” class

The performance indicators of the bank for the years from 2005-06 to 2009-10are indicated
(In lakhs)

S.No Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

% of establishment &
1 administration overheads to 1.48 1.46 1.66 1.81 1.80
working capital
% of establishment &
2 administration overheads to 14.85 45.48 46.18 53.88 18.20
gross income
% of establishment &
3 administration overheads to 2.52 2.04 2.29 2.37 1.93
loans outstanding
4 Per staff loans outstanding 84.03 106.18 99.75 102.27 141.62
5 Per staff loan issued 76.83 84.96 60.22 45.73 111.00
6 Per branch salary 15.56 13.25 14.70 14.19 14.47
7 Salary per staff 1.61 1.41 1.63 1.78 2.13
8 Per branch deposits 974.46 755.36 534.89 547.30 581.73
9 Profit/loss 107.44 1210.45 19.84 244.99 -102.55
10 Accumulated losses -755.97 545.52 -863.41 -755.97 -545.52

The cooperative in Andhra Pradesh have passed through revolutionary changes in the
year 1987. Prior to 1987 the situation in the state was one and the same as existing in other
states of India. It means the primary cooperative agricultural societies were meant for the
short-term loan business i.e., loans were given to the farmers for crop loans only. The long
term and investment credit needs of the farmers were met by the primary agricultural

development banks (PADBS). A farmer who is in need of the investment credit loan had to
rush to the two different institutions for obtaining loans or fulfilling his needs.
In the year 1987, a unique system termed as SINGLE WINDOW CREDIT
DELIVARY SYSTEM has been introduced in the state wherein the short term system
(DCCBs) and loaning term system (PADBs) were merged and a unified structure at a district
level commenced from 01.04.1987 onwards. Since then the primary agricultural co-op
societies (PACs) are doing successfully the business of short term with one delivery point. In
the year 1995, further freedom has been given to the cooperatives by the enactment of
MUTUALLY AIDED CO-OP SOCIETIES ACT (MACS). Under this the coop societies will
have full freedom without any government interference and support. However, so far no
PACS in the district have switched over to provision of this act. The FINANCIAL
POSITION and progress of the bank from 2009-10 to 2009-10 is as detailed below.

Financial position of the bank- A comparative statement
Amt in lakhs
As on As on As on As on % of
PARTICULARS 31.03.07 31.03.08 31.03.09 31.03.2010 Growth to
Share capital 1770.83 1835.75 1863.74 2007.93 7.74

Reserves 3383.78 3582.50 4048.96 5059.31 24.96

Own funds 5154.61 5418.25 5912.70 25138.59 3.26
Deposits 13379.85 16842.23 20270.31 20781.55 0.03
Borrowings 10959.98 13325.09 12986.96 11500.92 (-)0.12
Working capital 23863.23 35585.57 39169.97 57421.06 46.60
Loans & advances 22093.08 25697.57 24779.59 26796.70 19.64
Investments 3375.52 5739.88 6763.68 8091.76 0.09
Operating profit (+)210.45 (+)565.36 -- _ ---
Profit/(+)/ loss(-) (-)545.52 (+)19.84 (+)244.99 (-)1092.55 -----
% of Recovery to the 85.66 82.55 89.00 54.12
Gross NPAs 3231.73 1599.56 821.40 2227.84
% of NPAs to 14.61 6.22 3.31 8.29
Provision made 808.33 653.82 407.61 1069.30
Marks secured for 61.75 81 78 65
Classification B A A B

Note: An account of announcement of agriculture debt wavier and debt relief scheme 2008
announced by Govt of India during February 2008 in budget speech

The share capital of the bank has increased substantially from 2005-06
to 2009-10 reflecting the growth in their lending’s of the bank.

The total deposits of the bank as on 31.03.2010 are
20781.55 lakhs. To have an internal resource base, the bank has been launching a deposit
mobilization campaign every year to tap more low cost deposits from individuals.


The borrowings from APCOB as on 31.03.2010 are 11500.93 lakhs. The bank is cautious in
its borrowings and is mainly utilizing its own funds in lending’s.



Term loan procedure
The procedure associated with a term loan involves the following steps:

Submission of loan application

The borrower submits an application form which seeks comprehensive information
about the project. The application form covers the following aspects:
• Promoters background
• Particulars of industrial concern
• Particulars of the project
• Cost of the project
• Means of financing
• Marketing and selling arrangements
• Profitability and cash flow
• Economic consideration
• Government consents

Initial processing of loan application

When the application is received, an officer of the financial institution reviews it to
ascertain whether it is complete for processing. If it is incomplete the borrower is asked to
provide to provide the required additional information. When the application is considered
complete the financial institutions prepares a flash report which is essentially a
summarization of the application. On the basis of flash report it is decided whether the project
justifies a detailed appraisal or not.

Appraisal of the proposed project

The detailed appraisal of the project covers the marketing technical, financial,
managerial, and economic aspects. The appraisal memorandum is normally prepared with in
two months after site inspection. Based on that a decision taken whether the project will be
accepted or not.

Issue of letter of sanction
If the project is accepted, a financial letter of sanction is issued to the borrower. This
communicates to the borrower the assistance sanctioned and the terms and conditions relating
Acceptance of the terms and conditions by the borrowing unit:
On receiving the letter of sanction from the financial institution the borrowing unit
convenes its board meeting at which the terms and conditions associated with the letter of
sanction area accepted and an appropriate resolution is passed to that effect. The acceptance
of the terms and conditions has to be conveyed to the financial institution within a stipulated
Execution of loan agreement:
The financial institution, after receiving the letter of acceptance from the borrower,
sends the draft of the agreement to the borrower to be executed by authorized persons and
properly stamped as per tahe Indian Stamp Act, 1899. The agreements properly executed and
stamped, along with other documents as required by the financial institution must be returned
to it. Once the financial institution also signs the agreement, it becomes agreement.
Disbursement loans
Periodically, the borrower is required to submit information on the physical
Progress of the projects, financial status of the project, arrangements made for financing the
project contribution made b y the promoters, projected funds flow statement, compliance with
various statutory requirements, and fulfillment of the pre disbursement conditions, based on
the information provided by the borrower, the financial institution will determine the amount
of term loan to be disbursed from time to time. Before the entire term loan is disbursed, the
borrowed must fully comply with all terms and conditions of the loan agreement,
Creation of security
The term loans (both rupee and foreign currency) and the deferred payment guarantee
assistance provided by the financial institutions area secured through the first mortgage, by
way of deposit of title deeds, of immovable properties and hypothecation of movable
properties. As the creation of mortgage, particularly in the case of land, tends to be a time
consuming process, the institutions permit interim disbursements against alternate security (in
the form of guarantees by the promoters). The mortgage, however, has to be created within a

year from the date of the first disbursement. Otherwise the borrower has to pay an additional
charge of 1 percent interest.

Monitoring of the project is done at the implementation stage as well as at operational
stage. During the implementation stage, the project is monitored through;
(i) regular reports, furnished by the promoters, which provide information
about placement of orders, construction of buildings, procurement of
plant, installation of plant and machinery, trial production, etc.
(ii) Periodic site visits.
(iii) Discussion with promoters, bankers, suppliers, creditors, and others
connected with the project.
(iv) Progress reports submitted by the nominee directors, and
(v) Audited accounts of the company.

During the operational stage, the project is monitored with the help of
(i) Quarterly progress report on the project,
(ii) Site inspection,
(iii) Reports of nominee directors, and
(iv) Comparison of performance with promise.

The most important aspect of monitoring, of course, is the recovery of dues represented by
interest and principle repayment


I. plant capacity - 20,000 Chicks
(total number of birds) 60,000 Grover Hens
1,80,000 Layer Hens

II. Number of batches per year - 9

III. Growing Charges -

• Per each chick - Rs 7-20P / month

• Per each grower bird - Rs 19-20P / month
• Per each layer bird - Rs 31-20P / month

IV. Medicine Charges -

• Per each chick - Rs 4-00P / month

• Per each grower bird - Rs 3-00P / month
• Per each layer bird - nill

V. Rate of Interest on Bank Loans - 10%

VI. Repayment period - 5 years

VII. Number of acres of land - 12 acres

Raw Material Chicks Growers Layers
Maize √ √ √
Soya √ √ √
Broken Rice √ √ √
Ground Nut √ √ √
Fish (dry) - √ √
Sun Flower - √ √
Shells - - √
DoB - √ √

It requires 12 acres of land for the construction of sheds required for growing the
chicks and birds
• Office Building
• Godown
• Servant quarters
• Sheds

Types of sheds Number of

Chick Shed 1
Grower shed 3
Layer shed 8


For Sheds
2010 Amount 2011 - 2012 Amount
I. Brooding shed I. Brooding shed
1 Shed 1000000 Shed(1) 1000000

Office building 500000 Office building 500000

Servant Quarters 500000 Servant Quarters 500000

Godown 1500000 Godown 1500000

Transformer 125000 Transformer 125000

Vehicles 1250000 Vehicles 1250000

Equipment 200000 Equipment 200000

Total 5075000 Total 5075000
II. Grower Shed II. Grower Shed
3 Shed’s 3000000 Shed(3) 3000000
Cages 2040000 Cages 2040000
Equipment 200000 Equipment 200000
Total 5060000 Total 5060000
III. layer shed III. layer shed
4 Shed’s 4000000 Shed(8) 8000000
Cages 2720000 Cages 5440000
Equipment 200000 Equipment 400000
Total 6740000 Total 1,34,80,000

Land - (12acre x 4000000) 48000000
I. Brooding shed
Shed (1) - 1000000
Equipment - 200000
Total - 1200000 -------- A
II. Grower Shed
Shed (3) - 3000000
Cages - 2040000
Equipment (2lakhs x 3)- 600000
Total - 5640000 ---------- B
III. Layer shed
Shed (4) - 4000000
Cages - 2720000
Equipment (2lakhs x 4)- 200000
Total - 7520000 ------C

IV. Office building - 500000

V. Servant quarters - 500000
VI. Godown - 1500000
- Mixer plant - 600000
- Grinder plant - 600000
- Elevator plant - 300000
Total - 4000000 --------- D

- Tractor & trolley - 600000
- Tanker - 50000
-Van - 600000
Total - 1250000 --------- E

- Tranformer - 125000
- Generator - 100000
- Water pump - 20000
Total - 245000 --------- F

GRAND TOTAL - 67855000

( A+B+C+D+E+F)


Current Assets
Cash in hand 132720
Cash at Bank 95515
Sundry Debtors 4296000
Inventory 3222000
Total A------------- 7746235

Less Current Liabilities

Sundry Creditors 2518025
Out standing expenses 56210
Total B---------------- 2574235
(A-B)----------------- 5172000

Projected Production Statement:

2010 2011 2012
Month No. of No. of Month No. of No. of Month No. of No. of
Birds birds Birds birds Birds birds
sold sold sold
- - - January 100000 - January 160000 20000
- - - February 120000 - February 160000 20000
- - - March 120000 - March 160000 -
- - - April 120000 - April 160000 -
- - - May 140000 - May 160000 20000
- - - June 160000 - June 160000 20000
July 20000 - July 160000 20000 July 160000 20000
August 40000 - August 160000 20000 August 160000 -
Sep 60000 - September 160000 20000 September 160000 -
Oct 60000 - October 160000 - October 160000 20000
Nov 60000 - November 160000 - November 160000 20000
Dec 80000 - December 160000 20000 December 160000 20000

2013 2014 2015

Month No. of No. of Month No. of No. of Month No. of No. of

Birds birds Birds birds Birds birds
sold sold sold
January 160000 - January 160000 20000 January 160000 20000
February 160000 - February 160000 20000 February 160000 -
March 160000 20000 March 160000 20000 March 160000 -
April 160000 20000 April 160000 - April 160000 20000
May 160000 20000 May 160000 - May 160000 20000
June 160000 - June 160000 20000 June 160000 20000
July 160000 - July 160000 20000 July 160000 -
August 160000 20000 August 160000 20000 August 160000 -
Sep 160000 20000 September 160000 - September 160000 20000
Oct 160000 20000 October 160000 - October 160000 20000
Nov 160000 - November 160000 20000 November 160000 20000
Dec 160000 - December 160000 20000 December 160000 -

Projected Expenditure Distribution:

Year Type of Shed Batch No. Months

Chick I 8
I 11
Grower II 10
I 6
II 5
IV 3

Chicks I 9
I 12
Growers II 12
III 12
I 12
II 12
III 12
IV 12
V 12
VI 11
Chicks I 10
I 12
Growers II 12
III 12
I 12
II 12
2012 to 2015
III 12
IV 12
V 12
VI 12
VII 12

Projected Revenue Estimations without any Deductions

For 2010
July 31 20,000 1.40 868000
August 31 40,000 1.40 1736000
September 30 60,000 1.40 2520000
October 31 60,000 1.40 2604000
November 30 60,000 1.40 2520000
December 31 80,000 1.40 3472000

TOTAL 13720000

For 2011
January 31 1,00,000 1.40 43,40,000
February 28 1,20,000 1.40 47,04,000
March 31 1,20,000 1.40 52,08,000

April 30 1,20,000 1.40 50,40,000
May 31 1,40,000 1.40 60,76,000
June 30 1,60,000 1.40 67,20,000
July 31 1,60,000 1.40 69,44,000 6,00,000
August 31 1,60,000 1.40 69,44,000 6,00,000
September 30 1,60,000 1.40 67,20,000 6,00,000
October 31 1,60,000 1.40 69,44,000
November 30 1,60,000 1.40 67,20,000
December 31 1,60,000 1.40 69,44,000 6,00,000
TOTAL 7,33,04,000 24,00,000

For 2012 to 2015

January 31 1,60,000 1.40 69,44,000
February 28 1,60,000 1.40 62,72,000 6,00,000
March 31 1,60,000 1.40 69,44,000
April 30 1,60,000 1.40 67,20,000
May 31 1,60,000 1.40 69,44,000 6,00,000
June 30 1,60,000 1.40 67,20,000 6,00,000
July 31 1,60,000 1.40 69,44,000 6,00,000
August 31 1,60,000 1.40 69,44,000
September 30 1,60,000 1.40 67,20,000
October 31 1,60,000 1.40 69,44,000 6,00,000
November 30 1,60,000 1.40 67,20,000 6,00,000
December 31 1,60,000 1.40 69,44,000 6,00,000
TOTAL 8,17,60,000 42,00,000

Projected Repayment Schedule

Particulars 2010 2011
Most Most
Optimistic Likely Pesimistic Optimistic Likely Pesimistic

Cash at Bank 95515 74300 53100 9325847 396892 283494

Loans and Advances 32500000 32500000 32500000 32500000 32500000 32500000
Start of Repayment from Nill Nill Nill 5500000 Nill Nill
Balance 32500000 32500000 32500000 27000000 32500000 32500000
Particulars 2012 2013
Most Most
Optimistic Likely Pesimistic Optimistic Likely Pesimistic

Cash at Bank 47556129 22289927 321500 90392128 47773927 2134628
Loans and Advances 27000000 32500000 32500000 17000000 22500000 32500000
Start of Repayment from 10000000 10000000 Nill 17000000 15500000 Nill
Balance 17000000 22500000 32500000 Recovered 7000000 32500000
Particulars 2014 2015
Most Most
Optimistic Likely Pesimistic Optimistic Likely Pesimistic

17979212 10246992
Cash at Bank 85092129 25121927 12130628 9 7 19126628
Loans and Advances Nill 7000000 32500000 Nill Nill 22500000
Start of Repayment from Recovered 7000000 10000000 Recovered Recovered 15500000
Balance Recovered Recovered 22500000 Recovered Recovered 7000000


1. In the optimistic resulkts the repayment wil be starts in the year 2011. The
repayment will be recovered in the year 2013.
2. In the most likely resulkts the repayment wil be starts in the year 2012. The
repayment will be recovered in the year 2014.
3. In the pessimistic resulkts the repayment wil be starts in the year 2014. The
repayment will be recovered in the year 2016.



• As per PACS are situated in a rural place it can extend its credit facility to mostly
agriculturists and can increase their profitability and the credit need of villagers are
fulfilled by PACS
• The borrowing of the bank in 2002 – 03 are 101.59 crores and the loans advanced in
2002 – 03 are 197.51 crores. The loans disbursed are more than the borrowings from
outside. It reflects the better utilization of funds.
• The percentage of recovery in 2000 – 01 and 2002 – 03 are 72.025% and 62.79%
respectively. 2003 – 04 is 40.15 %. There is s decrease in the percentage. It is better to
focus on the recovery aspect.

• The operating staff can also be involved in recovery driver along with the field
• The percentage of recovery recovery to demand under shoert term loan 2002- 03 is
49.34%, whereas that under the long term loans in 2002 – 03 is 29.99%. it would be
preferable if percentage of long term loans is concentrated more and increased.
• The NPA should be reduced to 9% to maintain national standards.
• The emphasis is to be made on issuing loans for productive purposes.




The General Manager,
District Co-operative Central Bank,
Abids, Hyderabad.

1) Name of the applicant

2) Address
Office: street name
Tel No:
3) Constitution
(A fetch copy bye-laws, partner-ship deed/
Memorandum and articles of association/
Copy of registration (certificate))
4) Name (s) sole proprietor/parents/directors/
M g. Agents/Managing Directors
5) Chief Executive
6) Nature of Industry
(Manufacturing, Processing or Preservation)
7) Lines of commencement of production
8) Date of commencement of production
9) Brief History of (About the Industry)
10) Original/cost price of Plant and Machinery,
Of the borrowing concern (including in H.O
And branch (es), if any without taking into
Account their depreciation.

11) a) Brief description
b) Technical Feasibility (Furnish copy of the Report)
c) Schedule of completion of scheme
d) Availability of technical know-how

a) Existing and proposed (area) and (value)

b) Whether free-hold or lease-hold
c) If lease-hold, period of lease, Option for
d) Renewal and option of lesser for termination
e) How far land is adequate for present needs And future expansion
f) Location advantages

13) a) Existing area –plinth area
b) Plinth area of proposed construction and cost of construction
c) Who has drawn up estimates and who will undertake construction?
S.NO. Manufacturers particulars of Quantity Value Probable terms
Name and machinery to Foreign date of
Address Be supplied Rupees delivery Payment

(Please attach pro forma invoice/contracts)

15) COST OF THE SCHEME (in thousand of rupees)

Already To be Total Included included Land
a) Building
b) Plant and machinery
a) Imported
b) Indigenous
c) Other fixed assets
d) Technical know-how and expenses
e) Preliminary and pre operative Expense
f) Others (specify)
g) Provision for contingencies

Capital cost of the scheme
Working capital requirements
Total cost of the scheme
(The amount given against working capital should tally with the
Figure given at under “working capital” requirements detailed
Below :)
(In Rs.Thousands)

Estimated capital between the dates of

Purchase of raw materials and the date of sale proceeds
Raw materials and goods in process
During the above period
And the manufacturing expenses
Or the above period
Per expenses, if any ______________________________
Total: _______________________________


h) Raw materials –Maximum carry over stocks
Indicate how many months consumptions that
Represents-Give particulars of quality and value
a) Imported
b) Indigenous
ii) Processing time involved and estimated value
Of materials in process at any time-give
Particulars of quantity and value
iii) Finished goods-Maximum carry over stocks
Indicate how many months production that represents.

iv) a) pre operation of cash sales to credit sales
b) Period of credit allowed maximum and average
c) Maximum amount likely to outstanding
At any time dues from debtors for scales
v) Credit received on purchase of materials bills paid in
How many weeks
(In Thousands of rupees)
Already to be arranged for total Arranged .

17) Means of financing.

a) source of finances
b) share capital equity, preference
c) short term and medium term loans
d) short term borrowings(banks)
e) referred credits(principle amounts only)
f) loans and deposits
g) internal cash accruals
h) any other sources
Note: in respect of long term and medium term differed credits and short term borrowing and
other, specify source, period and security.

18) Products:
a) Annual production
b) Annual sales
c) Profit and loss

19) Whether the units is working to full capacity and production program
for the next three years.
20) Cost of production and profitability

(As estimated for one year of normal working after completion of scheme. In the case of
expansion of existing concerns, please indicate separately figures in respect of existing setup
and as estimated after expansion for one full year)

(In thousands of rupees)

Existing Future

Cost of production
Raw materials
Power and fuel
Repairs and maintenance
Administration over heads
(Viz. office salaries, insurance, rent, traveling, selling
And other expenses etc. ,
Interest on block and working capital loans
Depreciation, other expenses if any
Total ________________________

ii) Total income

Other income if any _________________________
Total income _________________________
iii) Operating profit (ii)–(i)
Less taxation
iv) Estimate of net profit (+)
After taxation or loss (-)
v) Available surplus net profit (+)
After taxation or loss (–)

21) Latest position of the unit

22) Whether audit is done by coop dept

Or charted accountant
(Rupees in thousands)
23) Security for the term loan existing
Land at cost
Building at cost less depreciation
Machinery at cost less depreciation ____________________
Total ____________________
Present market value
Other aspects
i) Staff employed (including owners)
ii) Technical staff
a. existing and proposed
b. their experience in the line
iii) Raw materials required
A. particulars
b. sources’ of supply
c. if imported, proportion of imported
Materials to total requirement position regarding import license
d. estimated value of monthly consumption of indigenous materials and imported
materials ( furnish figures separately for imported and indigenous materials)

24) Terms of credit sales

25) Terms of purchases
Power supply
a. existing load and addition load required
b. arrangement made for additional load
c. cost of power per unit
i) labour availability of skilled and unskilled
ii) Water availability of sufficient water

Selling arrangements
a. conditions obtaining in the industry
i) Any difficulties faced
ii) Position regarding demand and supply
b. i) Market for products
ii) Whether manufactured against firm orders names of important
Purchasers, tie-up arrangements, if any
iii) Value of pending orders on hand
iv) Selling arrangements whether the unit will enter the market directly or through
(In thousands of rupees)
Limit outstanding security
Rs Rs

29) Existing liabilities

Nature of facility
a) i) P.A.C.S
iii) APCOB
b). from other bank
i) From other source
(Including deposits from friend and relatives)
c). contingent (including guarantee given)
d). tax
30) Financial assistant required nature of assistance
i) Medium term loans
ii) Open loan (hypothecation)
iii) Key loan (pledge)
iv) Bills purchased

31) How repayments are proposed in respect of working capital advances

32) Repayment of medium term loan schedule of repayment
Rates of repayment

33) Period of which the loan is required

Whether for
a. short term
b. medium term

34) General
We4 note that all facilities granted to small scale deposit insurance and credit
guaranteed schemes will govern industries and that guarantee commission will be payable by