A

Project Report
On
Summer Training Undertaken at
Credit Structure of Thane Central Co-operative Bank
Submitted in the partial fulfillment for the
Award of degree of
Master of Business Administration

Session: 2011-13
Submitted by:
Santosh Kumari
MBA sem III

Submitted to:
Mrs.Kaneenika Jain
SSISTNT PROFESSOR

SUBODH INSTITUTE OF MANAGEMENT &

CAREER STUDIES, THANE

PREFACE

The main motive behind this project is to provide the knowledge about MICROFINANCE. In this
report I tried to depict the subtle and major aspects of Microfinance in India with respect to
current scenario.
Sources of collection of information are Internet, Books, journals and Magazines. I have taken
assistance from teachers and faculty of SIMCS. This report has been written in a very fair,
simple and lucid language.

ACKNOWLEDGEMENT

I am extremely please to express my gratitude to Mr. V. K. Varma (Managing Director,JCCB,

head office Vaishali Nagar, Thane) for allowing me to undertake summer training as such
estimate organization.
The satisfaction and euphoria that accompanied the successful completion of any task would
be incomplete without the mention of the people who made it possible, whose constant
guidance and encouragement crowned out effort with success. I take this opportunity to
express our deep sense of gratitude and respect to our teacher Mrs. Kaneenika Jain Faculty
Member for the valuable guidance for providing us with essential facilities for completing and
presenting this project. I am greatly indebted to their help, which has been of immense value
and has played a major role in bringing this to a successful completion. I would like to thank our
family and friends for their constant support and encouragement throughout our project.

Santosh Kumari

Executive Summary

To study the Microfinance in India, microfinance as banking perspective.

Understand the concept of Micro finance, need and importation of it. And study the
Co-operative Banks their function, major roles and SHGs works. Threw JCCB mainly
Customer satisfaction, customer expectation, perception etc

TABLE OF CONTENT

Particulars

S.No
.

1.

2.

Page
No.

Introduction to the Industry

An analysis of Micro finance

6-13

Activity in Micro finance

14

Micro finance in India

17-19

Introduction: The Thane Central Cooperative

Bank
Goal, Mission, Value, Strategy

20-24

Organization structure

25

Branches

26

Credit structure by Bank

29

Bank special schemes

30-31

3.

SHGs

32-36

4.

Research Methodology

37-38

5.

Finding & Analysis

39-51

6.

SWOT

52-53

7.

Conclusion

54

8.

Recommendations

55

9.

Biblography

56

An analysis of Micro finance

Chapter 1: Introduction
Microfinance is defined as any activity that includes the provision of financial services such
as credit, savings, and insurance to low income individuals which fall just above the nationally
defined poverty line, and poor individuals which fall below that poverty line, with the goal of
6

creating social value. The creation of social value includes poverty alleviation and the broader
impact of improving livelihood opportunities through the provision of capital for micro enterprise,
and insurance and savings for risk mitigation and consumption smoothing.
A large variety of actors provide microfinance in India, using a range of microfinance
delivery methods. Since the ICICI Bank in India, Grameen banks various actors have
endeavored to provide access to financial services to the poor in creative ways. Governments
also have piloted national programs, NGOs have undertaken the activity of raising donor funds
for on-lending, and some banks have partnered with public organizations or made small inroads
themselves in providing such services. This has resulted in a rather broad definition of
microfinance as any activity that targets poor and low-income individuals for the provision of
financial services. The range of activities undertaken in microfinance include group lending,
individual lending, the provision of savings and insurance, capacity building, and agricultural
business development services. Whatever the form of activity however, the overarching goal
that unifies all actors in the provision of microfinance is the creation of social value.

Microfinance Definition
According to International Labor Organization (ILO), Microfinance is an economic development
approach that involves providing financial services through institutions to low income clients.
In India, Microfinance has been defined by The National Microfinance Taskforce, 1999 as
provision of thrift, credit and other financial services and products of very small amounts to the
7

poor in rural, semi-urban or urban areas for enabling them to raise their income levels and
improve living standards.
"The poor stay poor, not because they are lazy but because they have no access to capital."
The dictionary meaning of finance is management of money. The management of money
denotes acquiring & using money. Micro Finance is buzzing word, used when financing for
micro entrepreneurs. Concept of micro finance is emerged in need of meeting special goal to
empower under-privileged class of society, women, and poor, downtrodden by natural reasons
or men made; caste, creed, religion or otherwise. The principles of Micro Finance are founded
on the philosophy of cooperation and its central values of equality, equity and mutual self-help.
At the heart of these principles are the concept of human development and the brotherhood of
man expressed through people working together to achieve a better life for themselves and
their children.
Traditionally micro finance was focused on providing a very standardized credit product. The
poor, just like anyone else, (in fact need like thirst) need a diverse range of financial instruments
to be able to build assets, stabilize consumption and protect themselves against risks. Thus, we
see a broadening of the concept of micro finance--- our current challenge is to find efficient and
reliable ways of providing a richer menu of micro finance products. Micro Finance is not merely
extending credit, but extending credit to those who require most for their and familys survival. It
cannot be measured in term of quantity, but due weightage to quality measurement. How credit
availed is used to survive and grow with limited means.

Who are the clients of micro finance?

The typical micro finance clients are low-income persons that do not have access to formal
financial institutions. Micro finance clients are typically self-employed, often household-based
entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in
small income-generating activities such as food processing and petty trade. In urban areas,
8

micro finance activities are more diverse and include shopkeepers, service providers, artisans,
street vendors, etc. Micro finance clients are poor and vulnerable non-poor who have a
relatively unstable source of income.
Access to conventional formal financial institutions, for many reasons, is inversely related to
income: the poorer you are, the less likely that you have access. On the other hand, the
chances are that, the poorer you are, the more expensive or onerous informal financial
arrangements. Moreover, informal arrangements may not suitably meet certain financial service
needs or may exclude you anyway. Individuals in this excluded and under-served market
segment are the clients of micro finance.
As we broaden the notion of the types of services micro finance encompasses, the potential
market of micro finance clients also expands. It depends on local conditions and political
climate, activeness of cooperatives, SHG & NGOs and support mechanism. For instance, micro
credit might have a far more limited market scope than say a more diversified range of financial
services, which includes various types of savings products, payment and remittance services,
and various insurance products. For example, many very poor farmers may not really wish to
borrow, but rather, would like a safer place to save the proceeds from their harvest as these are
consumed over several months by the requirements of daily living. Central government in India
has established a strong & extensive link between NABARD (National Bank for Agriculture &
Rural Development), State Cooperative Bank, District Cooperative Banks, Primary Agriculture &
Marketing Societies at national, state, district and village level.

The Need in India

India is said to be the home of one third of the worlds poor; official estimates range from
26 to 50 percent of the more than one billion population.

About 87 percent of the poorest households do not have access to credit.

The demand for microcredit has been estimated at up to $30 billion; the supply is less
than $2.2 billion combined by all involved in the sector.
9

Due to the sheer size of the population living in poverty, India is strategically significant in the
global efforts to alleviate poverty and to achieve the Millennium Development Goal of halving
the worlds poverty by 2015. Microfinance has been present in India in one form or another
since the 1970s and is now widely accepted as an effective poverty alleviation strategy. Over
the last five years, the microfinance industry has achieved significant growth in part due to the
participation of commercial banks. Despite this growth, the poverty situation in India continues
to be challenging.
Some principles that summarize a century and a half of development practice were
encapsulated in 2004 by Consultative Group to Assist the Poor (CGAP) and endorsed by the
Group of Eight leaders at the G8 Summit on June 10, 2004:

Poor people need not just loans but also savings, insurance and money transfer
services.

Microfinance must be useful to poor households: helping them raise income, build up
assets and/or cushion themselves against external shocks.

Microfinance can pay for itself. Subsidies from donors and government are scarce
and uncertain, and so to reach large numbers of poor people, microfinance must pay
for itself.

Microfinance means building permanent local institutions.

Microfinance also means integrating the financial needs of poor people into a
countrys mainstream financial system.

The job of government is to enable financial services, not to provide them.

Donor funds should complement private capital, not compete with it.

The key bottleneck is the shortage of strong institutions and managers. Donors
should focus on capacity building.

Interest rate ceilings hurt poor people by preventing microfinance institutions from
covering their costs, which chokes off the supply of credit.

10

Microfinance institutions should measure and disclose their performance both

financially and socially.

Financial needs and Financial services

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

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

widowhood, old age.

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

death.

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

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

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

Poor people find creative and often collaborative ways to meet these needs, primarily through
creating and exchanging different forms of non-cash value. Common substitutes for cash vary
from country to country but typically include livestock, grains, jewellery and precious metals.

As Marguerite Robinson describes in The Microfinance Revolution, the 1980s demonstrated

that microfinance could provide large-scale outreach profitably, and in the 1990s,
11

microfinance began to develop as an industry. In the 2000s, the microfinance industrys

objective is to satisfy the unmet demand on a much larger scale, and to play a role in reducing
poverty. While much progress has been made in developing a viable, commercial microfinance
sector in the last few decades, several issues remain that need to be addressed before the
industry will be able to satisfy massive worldwide demand.
The obstacles or challenges to building a sound commercial microfinance industry include:

Inappropriate donor subsidies

Poor regulation and supervision of deposit-taking MFIs

Few MFIs that mobilize savings

Limited management capacity in MFIs

Institutional inefficiencies

Need for more dissemination and adoption of rural, agricultural microfinance

methodologies

Role of Microfinance:
The micro credit of microfinance progamme was first initiated in the year 1976 in Bangladesh
with promise of providing credit to the poor without collateral , alleviating poverty and
unleashing human creativity and endeavor of the poor people. Microfinance impact studies
have demonstrated that
Microfinance helps poor households meet basic needs and protects them against risks.
The use of financial services by low-income households leads to improvements in household
economic welfare and enterprise stability and growth.
By supporting womens economic participation, microfinance empowers women, thereby
promoting gender-equity and improving household well being.
The level of impact relates to the length of time clients have had access to financial services.

12

The Origin of Microfinance

Although neither of the terms microcredit or microfinance were used in the academic literature
nor by development aid practitioners before the 1980s or 1990s, respectively, the concept of
providing financial services to low income people is much older.
While the emergence of informal financial institutions in Nigeria dates back to the 15 th century,
they were first established in Europe during the 18th century as a response to the enormous
increase in poverty since the end of the extended European wars (1618 1648). In 1720 the
first loan fund targeting poor people was founded in Ireland by the author Jonathan Swift. After
a special law was passed in 1823, which allowed charity institutions to become formal financial
intermediaries a loan fund board was established in 1836 and a big boom was initiated. Their
outreach peaked just before the government introduced a cap on interest rates in 1843. At this
time, they provided financial services to almost 20% of Irish households. The credit
cooperatives created in Germany in 1847 by Friedrich Wilhelm Raiffeisen served 1.4 million
people by 1910. He stated that the main objectives of these cooperatives should be to control
the use made of money for economic improvements, and to improve the moral and physical
values of people and also, their will to act by themselves.
In the 1880s the British controlled government of Madras in South India, tried to use the
German experience to address poverty which resulted in more than nine million poor Indians
belonging to credit cooperatives by 1946. During this same time the Dutch colonial
administrators constructed a cooperative rural banking system in Indonesia based on the
Raiffeisen model which eventually became Bank Rakyat Indonesia (BRI), now known as the
largest MFI in the world.

13

Microfinance Today
In the 1970s a paradigm shift started to take place. The failure of subsidized government or
donor driven institutions to meet the demand for financial services in developing countries let to
several new approaches. Some of the most prominent ones are presented below.
Bank Dagan Bali (BDB) was established in September 1970 to serve low income people in
Indonesia without any subsidies and is now well-known as the earliest bank to institute
commercial microfinance. While this is not true with regard to the achievements made in
Europe during the 19th century, it still can be seen as a turning point with an ever increasing
impact on the view of politicians and development aid practitioners throughout the world. In
1973 ACCION International, a United States of America (USA) based non governmental
organization (NGO) disbursed its first loan in Brazil and in 1974 Professor Muhammad Yunus
started what later became known as the Grameen Bank by lending a total of $27 to 42 people
in Bangladesh. One year later the Self-Employed Womens Association started to provide loans
of about $1.5 to poor women in India. Although the latter examples still were subsidized
projects, they used a more business oriented approach and showed the world that poor people
can be good credit risks with repayment rates exceeding 95%, even if the interest rate charged
is higher than that of traditional banks. Another milestone was the transformation of BRI starting
in 1984. Once a loss making institution channeling government subsidized credits to inhabitants
of rural Indonesia it is now the largest MFI in the world, being profitable even during the Asian
financial crisis of 1997 1998.
In February 1997 more than 2,900 policymakers, microfinance practitioners and representatives
of various educational institutions and donor agencies from 137 different countries gathered in
Washington D.C. for the first Micro Credit Summit. This was the start of a nine year long
campaign to reach 100 million of the world poorest households with credit for self employment
by 2005. According to the Microcredit Summit Campaign Report 67,606,080 clients have been
reached through 2527 MFIs by the end of 2002, with 41,594,778 of them being amongst the
poorest before they took their first loan. Since the campaign started the average annual growth
rate in reaching clients has been almost 40 percent. If it has continued at that speed more than
100 million people will have access to microcredit by now and by the end of 2005 the goal of
the microcredit summit campaign would be reached. As the president of the World Bank James
Wolfensohn has pointed out, providing financial services to 100 million of the poorest
households means helping as many as 500 600 million poor people.

14

Activities in Microfinance

Microcredit: It is a small amount of money loaned to a client by a bank or other institution.

Microcredit can be offered, often without collateral, to an individual or through group lending.

Micro savings: These are deposit services that allow one to save small amounts of money
for future use. Often without minimum balance requirements, these savings accounts allow
households to save in order to meet unexpected expenses and plan for future expenses.

Micro insurance: It is a system by which people, businesses and other organizations make
a payment to share risk. Access to insurance enables entrepreneurs to concentrate more on
developing their businesses while mitigating other risks affecting property, health or the ability
to work.

Remittances: These are transfer of funds from people in one place to people in another,
usually across borders to family and friends. Compared with other sources of capital that can
fluctuate depending on the political or economic climate, remittances are a relatively steady
source of funds.

15

16

:
17

Microfinance in India
At present lending to the economically active poor both rural and urban is pegged at around Rs
7000 crores in the Indian banks credit outstanding. As against this, according to even the most
conservative estimates, the total demand for credit requirements for this part of Indian society is
somewhere around Rs 2,00,000 crores.

Microfinance changing the face of poor India

Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy.
In India, micro-Finance scene is dominated by Self Help Groups (SHGs) - Banks linkage
Programme, aimed at providing a cost effective mechanism for providing financial services to
the 'unreached poor'. In the Indian context terms like "small and marginal farmers", " rural
artisans" and "economically weaker sections" have been used to broadly define micro-finance
customers. Research across the globe has shown that, over time, microfinance clients increase
their income and assets, increase the number of years of schooling their children receive, and
improve the health and nutrition of their families.
A more refined model of micro-credit delivery has evolved lately, which emphasizes the
combined delivery of financial services along with technical assistance, and agricultural
business development services. When compared to the wider SHG bank linkage movement in
India, private MFIs have had limited outreach. However, we have seen a recent trend of larger
microfinance institutions transforming into Non-Bank Financial Institutions (NBFCs). This
changing face of microfinance in India appears to be positive in terms of the ability of
microfinance to attract more funds and therefore increase outreach.
In terms of demand for micro-credit or micro-finance, there are three segments, which demand
funds. They are:

At the very bottom in terms of income and assets, are those who are landless and
engaged in agricultural work on a seasonal basis, and manual labourers in
forestry, mining, household industries, construction and transport. This segment
requires, first and foremost, consumption credit during those months when they do not
get labour work, and for contingencies such as illness. They also need credit for
18

acquiring small productive assets, such as livestock, using which they can generate
additional income.

The next market segment is small and marginal farmers and rural artisans, weavers
and those self-employed in the urban informal sector as hawkers, vendors, and
workers in household micro-enterprises. This segment mainly needs credit for
working capital, a small part of which also serves consumption needs. This segment also
needs term credit for acquiring additional productive assets, such as irrigation pumpsets,
borewells and livestock in case of farmers, and equipment (looms, machinery) and
worksheds in case of non-farm workers.

The third market segment is of small and medium farmers who have gone in for
commercial crops such as surplus paddy and wheat, cotton, groundnut, and others
engaged in dairying, poultry, fishery, etc. Among non-farm activities, this segment
includes those in villages and slums, engaged in processing or manufacturing activity,
running provision stores, repair workshops, tea shops, and various service enterprises.
These persons are not always poor, though they live barely above the poverty line and
also suffer from inadequate access to formal credit.

Well these are the people who require money and with Microfinance it is possible. Right now
the problem is that, it is SHGs' which are doing this and efforts should be made so that the big
financial institutions also turn up and start supplying funds to these people. This will lead to a
better India and will definitely fulfill the dream of our late Prime Minister, Mrs. Indira Gandhi,
i.e. Poverty.
One of the statement is really appropriate here, which is as:
Money, says the proverb makes money. When you have got a little, it is often easy to
get more. The great difficulty is to get that little.Adams Smith.
Today India is facing major problem in reducing poverty. About 25 million people in India are
under below poverty line. With low per capita income, heavy population pressure, prevalence of
massive unemployment and underemployment , low rate of capital formation , misdistribution of
wealth and assets , prevalence of low technology and poor economics organization and
instability of output of agriculture production and related sectors have made India one of the
poor countries of the world.

19

Present Scenario of India:

India falls under low income class according to World Bank. It is second populated country in
the world and around 70 % of its population lives in rural area. 60% of people depend on
agriculture, as a result there is chronic underemployment and per capita income is only $ 3262.
This is not enough to provide food to more than one individual . The obvious result is abject
poverty , low rate of education, low sex ratio, exploitation. The major factor account for high
incidence of rural poverty is the low asset base. According to Reserve Bank of India, about 51
% of people house possess only 10% of the total asset of India .This has resulted low
production capacity both in agriculture (which contribute around 22-25% of GDP ) and
Manufacturing sector. Rural people have very low access to institutionalized credit( from
commercial bank).

Poverty alleviation programmes and concepualisation of Microfinance:

There has been continuous efforts of planners of India in addressing the poverty . They Have
come up with development programmes like Integrated Rural Development progamme (IRDP),
National Rural Employment Programme (NREP) , Rural Labour Employment Guarantee
Programme (RLEGP) etc. But these progamme have not been able to create massive impact in
poverty alleviation. The production oriented approach of planning without altering the mode of
production could not but result of the gains of development by owners of instrument of
production. The mode of production does remain same as the owner of the instrument have low
access to credit which is the major factor of production. Thus in Nineties National bank for
agriculture and rural development(NABARD) launches pilot projects of Microfinance to bridge
the gap between demand and supply of funds in the lower rungs of rural economy. Microfinance
. the buzzing word of this decade was meant to cure the illness of rural economy. With this
concept of Self Reliance, Self Sufficiency and Self Help gained momentum. The Indian
microfinance is dominated by Self Help Groups (SHGs) and their linkage to Banks.
Deprived of the basic banking facilities, the rural and semi urban Indian masses are still relying
on informal financing intermediaries like money lenders, family members, friends etc.
20

2). The Thane Central Coprative Bank Ltd. Thane

A Brief History -:
The Thane Central Cooperative Bank ltd. Thane. The bank was established in the year
1991. Working area of the Bank consist of Thane district. Bank has 20 branches and 2
extension counters, which are also in Thane district. In the working area of bank, there are total
279 primary Agriculture cooperative societies(PACS). NABARD is the apex institution for RRBs
it gives guidance as well as control various functions of RRBs like TCCBL.

Following are the main services offered by The Thane central cooperative
bank ltd. Thane :
Attractive Saving / Deposit Schemes.
PGB Mitra Scheme (No Frill Accounts)
Easy Loans Facilities.
Krishi Card Scheme for Farmers & Credit facilities for various Agricultural
Operations.
Loan Facilities for Housing, Conveyance, Artisians, SMEs, SSI &
Education.
Swarozgar Credit Card Scheme.
General Credit Card Scheme
Banking Services at door steps.

Goal
At The Thane central cooperative bank ltd. Thane our goal is simple we want to see poor
people, especially the poorest and those living in harder to reach areas, have access to
21

microfinance and technology and as a result of access to these services, move themselves out
of poverty. We envision a world where the poor have broken the generational chain of poverty
and lead lives of respect, dignity and opportunity.

The Thane central cooperative bank ltd. Thane had a network of 20 branches in Thane. It
provide products and services that: 1) reach deeper into poor communities with microfinance
and technology services; 2) provide access to microfinance and technology services among the
poor and poorest in harder to reach areas

Our Mission
The Thane central cooperative bank ltd. Thane mission is to offer the best services to
customers, to help in rural development and to uplift the weaker sector.

Our Values
In all our work, we embrace and draw inspiration from our rich Grameen Bank Heritage. Our
core values are:

We seek to empower the worlds poor.

We hold ourselves accountable for transparency and measurable results, including

social and financial performance.

We first seek to form partnerships with those who can advance our mission before acting
alone;

We respect, invest in and promote local social entrepreneurs and local ownership; and,

We honor the voice, professionalism and integrity of our staff and volunteers.

Our Strategy
22

The Thane central cooperative bank ltd. Thane is a sponsored bank of The Thane central
cooperative bank ltd. Thane. Its total management is under The Thane central cooperative bank ltd.
Thane, As per the strategic visioning of bank, the bank is working on aggressive growth plans as

per its vision , goals and objectives. The bank has been delivering reasonably good operational
and financial performance over the last few years, despite some of the most challenging market
conditions in the financial and credit markets for some time.

Mermbership
Membership of the bank is classified in these three categories:

1).Members of category A:
i) State Government
ii) Apex bank
For these the share capital is Rs. 10000.

2). Members of category B

i.

Primary agriculture Credit Society(PACS)

ii.

Other Cooperative Socities

For these the share capital is Rs. 1000.

3). Members of category C

Autonomous body, Public Corporations and the other registered instiutions and Individuals.

Capital:
The source for the capital of the bank is as follows:
1. Entrance Free
23

2. Share Capital
3. Deposits
4. Loan
5. Subsidies
6. Reserve and other funds
7. Loan debentures

Share Capital Bank:

The total authorized share capital of the bank should not exceed 15.00 cores.

Annual General Board Meeting:

According to the act and rules, it is necessary to call an Annual General Board Meeting
every year.
1/5 part of the total members excluding the nominal members or 50 members whichever is
more
will make the corm.

Bord of Directors:
Board shall consist of 11 elected members, 4 nominated members by Govt.
There sre total 15 board members.
The no of members elected from Primary Agriculture Credit Society(PACS) is 9.

Loans:
1. Loans to cooperative societies and person should be provided according to rules of
24

Apex Cooperative Bank.

2. Facilities of overdraft loans and cash credit limit can be provided to PACS and the
nominal members of category C under the rules describe by the Board of Directors,
but it should according to the rules describe by the Bank/Apex bank.
3. Loan to permanent employees as decided by executive committee after approval from
the register.
4. The time period of the loans provided by the bank would be provided to time by Reserve
Bank of India/NABARD/ Apex Bank and Cooperative department, but in any condition it
should not exceeds 15 years.

Profit Distribution:
The financial year of bank starts from 1st April to 1st March.
According to Act and rules the profit should be distributed as under:
1. Minimum 25% in reserve fund:
2. Minimum 1% in education
3.

Minimum 10% in dividend

Reserve Fund:
It will be undivided fund, no matter will have share in this.

The Thane Central Co-operative Bank Ltd.

Thane
25

Organization Structure

General Body
Board
Chairman
Additional
AEO

Managing Director

Additional
AEO

Executive Officer
Chief Manager

Senior
Manager

Manger

Manager

Manager

(Vigilance
)e)

(T.M.E.)

(Internal
Audit)

Manager

Manager

Manager

(Planning &
Development)

(Account
&
Statistics)

(Inspection
&
Supervision)

26

The Thane Central Co-operative Bank Ltd.

Thane

Branches
1. Bassi
2. Chomu
3. Phagi
4. Kishangarh Renewal
5. Pavta
6. Smbhar
7. Shahpura
8. Chaksu
9. Kothputli
10. Dudu
11. Jamvaramgarh
12. Virat nagar
13. Kishanpole Bazar
14. Chandple, Nai Anaz Mandi
15. Chaura Rasta
16. Jhotwara
17. Sanganer
27

18. Bagru
19. Vaishali Nagar
20. Govindgarh
21. Jalsu
22. Kotkhawda
23. Tunga

The Thane Central Co-operative Bank Ltd.Thane

28

Reserve Bank of
India

NABARD

The Rajasthan
State Cooperative Bank

Jaipur Central
Co-operative
Bank-29

Primary
Agriculture Cooperative Socities

Here is how the hierarchy runs in JCCB From Top to Bottom

Chairman
29

General Managers/ Regional Managers

Senior Manager (scale 3)

Branch manager (scale 2)

Scale 1 manager

Officers

Clerks

Messangers

Guards

The Thane Central Co-operative Bank Ltd. Thane

Credit Facilities Provided the Bank
Introduction
Indian economy is largely dependent on agriculture. Since majority of our population
about their livelihood on agriculture. Cooperative bank plays a bite roles in agriculture
economy. Such bank is focal point of finance which provides credit facility in rural area.
30

At beginning the main object of cooperative bank is to provide short term loan to the
Member of primary agricultural societies for seasonal agriculture Operation(S.A.O.)
like facility to purchase fertilizer, seeds, pesticides etc. such type of loan repaid while
crop comes in the market. Today about 75 to 80% agriculture(S.A.O.) is provided by
through cooperative banks. It was felt that only(S.A.O.) loan does not fulfill the demand
of rural economy.Cooperative bank borrow loan from NABARD through Apex Bank and
lends to the primary agriculture cooperative societies. Only society provide direct loan
to its members.
It has been realized that agricultural alone cannot sustain the pressure of growing
Population. Therefore as complementary activities like tiny, cottage and small scale
Industries in rural area have to be provide stimulus. So that income level of rural
families can be enhanced.

Besides Cooperative Banks were traditionally lending for agriculture. Banks know have
to keep pace with the changing scenario and diversify their resources for non-farm
activities. This will also help bank in build up their turnover, diffuse risk and enhance
profitability. For this purpose under the section 25 of NABARD Act 1981, cooperative
bank were allowed in non-farm sector advances directly and through member of
cooperative society. Initially bylaws of cooperative banks did not allow direct advances
to the borrower. Registrar of cooperative societies made amendment in cooperative act
and allow to cooperative bank to amend their bylaws and allow direct membership.
Such members are known as nominal members. Nominal members do not have voting
Fight. It is in interest of the bank that after becoming nominal member bank can apply
Various sections of Rajasthan Cooperative Societies Acr 2003.

BANK SPECIAL SCHEMES AND OVERVIEW OF BANKS

FUNCTIONAL AREAS
31

Krishi Card Scheme for Farmers & Credit facilities for various Agricultural Operations grant
loans of up to Rs one lakh to farmers under the new Krishi Card scheme, depending on their
land holdings. The interest charged will be only 13.26 per cent, calculated on the basis of prime
lending rate and interest tax.
the farmers can use the card to avail the loan facility from any of the branches of the bank in
the district. Under the scheme, the farmers are not required to submit any bills. ``They can
utilise the card to meet their agricultural input costs and domestic requirements such as
education, consumer items and medical expenses.
The Krishi Card valid for three years, would be issued only to literate farmer with a minimum
land holding of 2.5 acres.

Swarojgar Credit Card Scheme

SCC Scheme aims at providing adequate and timely credit ie. working capital or block capital or
both to small artisans, handloom weavers, service sector personnel, fishermen, self employed
persons, rickshaw owners, other micro-entrepreneures, SHGs, etc., from the banking system in
a flexible, hassle free and cost effective manner.

Borrowers in urban areas can also be covered under SCC Scheme. Small business
covered under priority sector is also eligible under SCC Scheme.

Any scheme/project that is income generating/ employment generating may be covered

under the scheme. The facility may also include a reasonable component for
consumption needs.

Farm sector activities like fisheries, dairy, etc., can also be covered under the scheme.
Generally such of the self-employment activities which have regular turn-over/income
stream on short-interval basis can be covered under SCC scheme.

KISAN MITRA SCHEME

With the objective of financial inclusion of the common masses,the Trust has introduce KISAN
MITRA Scheme at FTC Sacha Khera (dec.2006). Each of the four Kisan Mitra has been
allotted 10 villages for helping the farmers in formation of kisan clubs, Self Help Groups and
motivating them to undertake vermi compost units, orchard farming, attending training, opening
32

of accounts in the bank, etc. Each Kisan Mitra visits the allotted villages for extension work and
financial inclusion. So far, they have brought 41 villages under 100% financial inclusion.
FARMERS TRAINING CENTERS
FTCs provide the above mentioned facilities to all farmers of the neighbouring
districts, irrespective of the fact that whether they have taken any loan from any financial
institution or not or whether they are customers of PNB or any other bank or not. As on 31st
March 2007, PNB's FTCs conducted 3,272 programmes and provided training to more than
87,000 persons. Besides, on location training is provided to more than 28,000 persons through
862 programmes. Besides, these FTCs arrange for (i) animal health check up camps; (ii)
human health check up camps and (iii) farmers' visits to agri fairs/colleges, etc.
VILLAGE ADOPTION SCHEME
Each FTC has adopted one village for developing it as a model village at a cost of Rs 5 lakh.
The activities like establishment of village library (including color TV, book shelf, SFF items,
etc.), water coolers and other electrical items for Government schools, adult literacy centre,
solar lights, homeopathic clinics, sports materials, etc., have been undertaken under this Village
Adoption Programme. The Trust has decided to start training, in collaboration with State
Institute of Rural Development (SIRD), Assam for the economic empowerment of rural youth &
women in North Eastern States.

Chapter 3: Self Help Groups (SHGs)

Self- help groups (SHGs) play today a major role in poverty alleviation in rural India. A growing
number of poor people (mostly women) in various parts of India are members of SHGs and
actively engage in savings and credit (S/C), as well as in other activities (income generation,
natural resources management, literacy, child care and nutrition, etc.). The S/C focus in the
SHG is the most prominent element and offers a chance to create some control over capital,
albeit in very small amounts. The SHG system has proven to be very relevant and effective in
offering women the possibility to break gradually away from exploitation and isolation.
33

3.1 How self-help groups work

NABARD (1997) defines SHGs as "small, economically homogenous affinity groups of rural
poor, voluntarily formed to save and mutually contribute to a common fund to be lent to its
members as per the group members' decision".
Most SHGs in India have 10 to 25 members, who can be either only men, or only women, or
only youth, or a mix of these. As women's SHGs or sangha have been promoted by a wide
range of government and non- governmental agencies, they now make up 90% of all SHGs.
The rules and regulations of SHGs vary according to the preferences of the members and
those facilitating their formation. A common characteristic of the groups is that they meet
regularly (typically once per week or once per fortnight) to collect the savings from members,
decide to which member to give a loan, discuss joint activities (such as training, running of a
communal business, etc.), and to mitigate any conflicts that might arise. Most SHGs have an
elected chairperson, a deputy, a treasurer, and sometimes other office holders.
Most SHGs start without any external financial capital by saving regular contributions by the
members. These contributions can be very small (e.g. 10 Rs per week). After a period of
consistent savings (e.g. 6 months to one year) the SHGs start to give loans from savings in the
form of small internal loans for micro enterprise activities and consumption. Only those SHGs
that have utilized their own funds well are assisted with external funds through linkages with
banks and other financial intermediaries.
However, it is generally accepted that SHGs often do not include the poorest of the poor, for
reasons such as:
(a) Social factors (the poorest are often those who are socially marginalized because of caste
affiliation and those who are most skeptical of the potential benefits of collective action).
(b) Economic factors (the poorest often do not have the financial resources to contribute to
the savings and pay membership fees; they are often the ones who migrate during the lean
season, thus making group membership difficult).
(c) Intrinsic biases of the implementing organizations (as the poorest of the poor are the
most difficult to reach and motivate, implementing agencies tend to leave them out, preferring
to focus on the next wealth category).

3.2 Sources of capital and links between SHGs and Banks

34

SHGs can only fulfill a role in the rural economy if group members have access to financial
capital and markets for their products and services. While the groups initially generate their own
savings through thrift (whereby thrift implies savings created by postponing almost necessary
consumption, while savings imply the existence of surplus wealth), their aim is often to link up
with financial institutions in order to obtain further loans for investments in rural enterprises.
NGOs and banks are giving loans to SHGs either as "matching loans" (whereas the loan
amount is proportionate to the group's savings) or as fixed amounts, depending on the group's
record of repayment, recommendations by group facilitators, collaterals provided, etc.

3.3 How SHGs save

Self-help groups mobilize savings from their members, and may then on-lend these funds to
one another, usually at apparently high rates of interest which reflect the members
understanding of the high returns they can earn on the small sums invested in their microenterprises, and the even higher cost of funds from money lenders. If they do not wish to use
the money, they may deposit it in a bank. If the members need for funds exceeds the groups
accumulated savings, they may borrow from a bank or other organization, such as a microfinance non-government organization, to augment their own fund.
The system is very flexible. The group aggregates the small individual saving and borrowing
requirements of its members, and the bank needs only to maintain one account for the group as
a single entity. The banker must assess the competence and integrity of the group as a microbank, but once he has done this he need not concern himself with the individual loans made by
the group to its members, or the uses to which these loans are put. He can treat the group as a
single customer, whose total business and transactions are probably similar in amount to the
average for his normal customers, because they represent the combined banking business of
some twenty micro-customers. Any bank branch can have a small or a large number of such
accounts, without having to change its methods of operation.
Unlike many customers, demand from SHGs is not price-sensitive. Illiterate village women are
sometimes better bankers than some with more professional qualifications. They know that
rapid access to funds is more important than their cost, and they also know, even though they
might not be able to calculate the figures, that the typical micro-enterprise earns well over 500%
return on the small sum invested in it (Harper, M, 1997, p. 15). The groups thus charge
themselves high rates of interest; they are happy to take advantage of the generous spread that
the NABARD subsidized bank lending rate of 12% allows them, but they are also willing to

35

borrow from NGO/MFIs which on-lend funds from SIDBI at 15%, or from new generation
institutions such as Basix Finance at 18.5% or 21%.

SHGs-Bank Linkage Model

NABARD is presently operating three models of linkage of banks with SHGs and NGOs:

WHAT IS SHG BANK LINKAGE PROGRAMME?

The Self-Help Group-Bank Linkage Programme (SBLP), which started as a pilot programme in
1992 has developed with rapid strides over the years. SHG-Bank Linkage Programme was
started on the basis of recommendation of S K Kalia Committee.

MODELS OF SHG-BANK LINKAGE PROGRAMME

SHG MODEL
The strategy involved in this model is that of forming small, cohesive and participative groups of
the poor, encouraging them to pool their savings regularly and using the pooled savings to
make small interest bearing loans to members and, in the process, learning the nuances of
financial discipline. Subsequently, bank credit also becomes available to the group to augment
its resources for the purpose of lending to its members. The SHG-bank linkage program has
proved to be the major supplementary credit delivery system with a wide acceptance by banks,
NGOs and various government departments. There are three models of SHG-bank linkages
that have evolved over time, especially in India.

MODEL I: SHGS FORMED AND FINANCED BY BANK

36

SHGs

Bank Linkage

NGOs

In this model, banks themselves take up the work of forming and nurturing the groups, opening
their savings accounts and providing them bank loans. Up to March 2006, 20% of the total
number of SHGs financed were from this category. This showed an increase of 61.63 per cent
in bank loan to SHGs over the position as on March 05, reflecting an increased role of banks in
promoting and nurturing SHGs.

MODEL II:
SHGS FORMED BY NGOS AND FORMAL ORGANISATIONS, BUT DIRECTLY
FINANCED BY THE BANKS

Bank

NGOs

Promotions
Training &
Credit Support

SHGs

37

MODEL III

This model continues to have the major share, with 74 % of the total number of SHGs
financed up to 31 March 2006 falling under this category. Here, NGOs and formal
agencies in the field of microfinance act only as facilitators. They facilitate organizing,
forming and nurturing of groups, and train them in thrift and credit management. Banks
give loans directly to these SHGs.

Bank

SHGs

SHG
Members

In the model iii, banks take sole responsibility for promoting, developing, and financing
SHGs. This programme requires considerable effort by the banking staff towards SHG
formation. This model is not an encouraging one and only 8% of SHGs follow this
model.

4). RESEARCH METHODOLOGY

TYPE OF RESEARCH
The research is descriptive in nature
DESCRIPTIVE RESEARCH:
Descriptive research includes surveys and fact-finding enquiries of different kinds. The
major. purpose of descriptive research is description of the state of affairs as it exists at
present.
In this project :
A systematic research is done with the series of the following steps:Step 1. Knowing how SHG and SHG bank linkage are formed and role of bank with the
the help of existing literature.
Step 2. Getting information about how bank approach to the SHG and how SHG bank
linkage functions with help of project guide.
Step 3 Collecting feedback through questionnaire and unstructured interview of various
SHG members.
Step 4 Analysis how this linkage improves the standard of living of poor section of
society.

SAMPLING DESIGN
1.SAMPLING PROCEDURE:- The type of sampling is convenient sampling and
judgmental sampling. I have chosen the sampling area according to the convience for getting
more accuracy and feasibility in the information. Which is vital for survey.

2. SAMPLING AREA :- Out of 22 branches we have selected 8 branches, according to

the zones.

3. SAMPLE SIZE:- I have surveyed 120 members, i.e.30% of the total size, to maintain the
feasibility.

METHODS OF DATA COLLECTION

Research
Methodology
Secondary
Research

Internet

Bank
Documents

Primary
Research

Face to Face
Interview
With
Employees of
the Bank
Face to Face
Interview

Literature
and
books

With SHG
members

Questionnaire
filling by

Reports

SHG members

5). Finding and Analysis

1. Occupation

Salaried person; 8%
Self Employed; 16%
Business Enterprise; 42%

Agriculture sector; 34%

INTERPRETATION
As per my survey I found that the majority of customer of JCCB are salaried person or
Belongs to agriculture sector and it was also found that people who are self employed
are not much friendly with bank yet.

2. INCOME

3.5
3
2.5
2
Column1

1.5
1
0.5
0
less than 10000

10000-20000

20000-35000

35000 & above

INTERPRETATION
The above graph depicts that the maximum number of customers of JCCB are applying
for the credit facilities whose level of income is above Rs.3500 or between 20-35
thousand. The income aspect is being considered by the Bank in order to find out the
repaying capacity of the borrower or the customer. And the Bank considers the repaying
capacity upto 25% of customers income.

3.What features a customer is expecting from the Bank ?

Proper Information; 10%

Less Documentation; 15%
Quick service; 50%

Vriety of Schemes; 25%

INTERPRETATION
As per the findings of the survey the most attracting attribute for a customer from a
Bank is the requirement of less documentation for the purpose of loan with proper
information. As it shows in the above pie chart that 50% of the customer are interested
In less documentation and 25% of the customers feels that adequate information is an
effective attribute.

4). What type of account the customers are operating with JCCB?

Any loan Account; 10%

FD/RD Account; 20% Current Account; 40%

Saving Account; 30%

INTERPRETATION

As per the findings of survey maximum number of customer are operating saving and
current account and 20% of customers are operating FD/RD account and 10% of the
customers are operating any of the account as above.

5). Customers remark on JCCB

Average; 10%

Excellent; 20%

Good ; 70%

INTERPRETATION
According to the customer they found JCCB satisfactory up to the level of their
expectation

6).Which type of credit facility you prefer to have from JCCB?

Investment Credit; 15%

Kishan Credit Card; 30%

Cash Credit Limit; 25%

Term Loan; 30%

INTERPRETATION
As per the survey 30% of customers who has preferred for term are the
salaried persons who find paying monthly installment easy and comfortable.
25% of the customers who are businessman and professionals feels cash
credit limit as a better source of finance.
30% of the customers are attracted towards Kissan Credit Card and
Investment Credit as they belongs to agricultural sector of they have
their own Business Enterprise.

7). According to you which schemes of JCCB attracts you the most?

self Help Group; 15%

Housing Loan; 40%
Mortagage lan; 20%

Personal laon; 25%

INTERPRETATION
As per the survey 65% of the customers have taken personal loan and then housing
loan, 35% of the customers have taken mortagage loan and self help group loan.

8). Which attribute attracts the customer while taking a loan from
JCCB ?

Lower service charges; 5%

less documentation; 15%
Lower Interest rate; 45%

Less processing time; 35%

INTERPRETATION
As per survey, more than 50% of the customers are focused on lower interest rates
offered to them and less documentation requirements. But for the remaining 20%
customers less processing time and lower services charges is the attribute of
attracting for them while taking a loan.

9). What should be the time period for repaying the above loan you
preferred ?

5 yrs; 15%
Above 15 yrs; 25%
5-10 yrs; 10%

10-15 yrs; 50%

INTERPRETATION
As per the findings, 50% of the customers are comfortable to repay the loan
between 10-15 yrs and the 25% of customers feels that the loan repayment period
should be more than 15 yrs. But the people who takes loans are comfortable to
repay the loan within 5 yrs, as per conditions offered by the bank to them.

10). Which new credit services you are expecting from JCCB ?

Credit card; 10%

Vechicle Loan; 30%
Industrial Loan; 20%

Education Loan; 40%

INTERPRETATION
40% of the customers expects that JCCB should provide education loan to the
customers as an extra benefit for them as a new credit facility,
where 30% of the customers feels that it provide vehicle loan to the customers.
20% of the customers desired to have industrial loan credit facility from JCCB as
a new aspect.
Remaining 10% customers requires credit card facility.

11). Are you having an Agricultural land ?

NO; 50%

YES ; 50%

INTERPRETATION
The above pie chart depicts that the half of the majority customers of JCCB belongs to
Agriculture sector and remaining half belongs to various others sectors.

12). Does JCCB fulfill your Agricultural requirement ?

No; 15%

Yes; 85%

INTERPRETATION
The customers who belongs to agricultural sector have answered this question and
85% of them is satisfied with the schemes and services provided by the bank related
to which the agriculture needs of customers are very much fulfilled. And 15% of the
customers still want a improvement in JCCB schemes and credit facilities related to
agriculture.

13). Which is the best agricultural loan scheme of JCCB

according to you ?

Joint liability groups; 1%

MT loan(dairy, tractor); 35% Kishan mitar yojana; 41%

kishan samridhi yojana; 23%

INTERPRETATION
The customers of JCCB who have the agricultural land are taking the above loans
accordingly as per their requirements in future.

6).

SWOT Analysis:

SWOT stands for Strength, Weakness, Opportunity, and Threat.

Strength
Helped in reducing the poverty: The main aim of Micro Finance is to provide the loan
to the individuals who are below the poverty line and cannot able to access from the
commercial banks. As we know that Indian, more than 350 million people in India are
below the poverty and for them the Micro Finance is more than the life. By providing
small loans to this people Micro finance helps in reducing the poverty.
Huge networking available: For MFIs and for borrower, both the huge network is there.
In India there are many more than 350 million who are below the poverty line, so for
MFIs there is a huge demand and network of people. And for borrower there are many
small and medium size MFIs are available in even remote areas.

Weakness
Not properly regulated: In India the Rules and Regulation of Micro Finance Institutions
are not regulated properly. In the absent of the rules and regulation there would be high
case of credit risk and defaults. In the shed of the proper rules and regulation the Micro
finance can function properly and efficiently.
High number of people access to informal sources: According to the World Bank report
80% of the Indian poor cant access to formal source and therefore they depend on the
informal sources for their borrowing and that informal charges 40 to 120% p.a.

Opportunity
Huge demand and supply gap: There is a huge demand and supply gap among the
borrowers and issuers. In India around 350 million of the people are poor and only few
MFIs there to serving them. There is huge opportunity for the MFIs to serve the poor

people and increase their living standard. The annual demand of Micro loans is nearly
Rs 60,000 crore and only 5456 crore are disbursed to the borrower.( April 11)
Employment Opportunity:
Micro Finance helps the poor people by not only providing them with loan but also helps
them in their business; educate them and their children etc.
Opportunity for Pvt. Banks: Many Pvt. Banks are shying away from to serve the people
are unable to access big loans, because of the high intervention of the Govt. but the
door open for the Pvt. Players to get entry and with flexible rules Pvt. Banks are
attracting towards this segment.

Threat
High Competition: This is a serious threat for the Micro Finance industry, because as
the more players will come in the market, their competition will rise , and we know that
the MFIs has the high transaction cost and after entrant of the new players there
transaction cost will rise further, so this would be serious threat.
Neophyte Industry: Basically Micro Finance is not a new concept in India, but that was
all by informal sources. But the formal source of finance through Micro Finance is
novice, and the rules are also not properly placed for it.
Over involvement of Govt.: This is the biggest that threat that many MFIs are facing.
Because the excess of anything is injurious, so in the same way the excess involvement
of Govt. is a serious threat for the MFIs

7). CONCLUSION

The customers of JCCB are satisfied with the bank and its services.

 As per the survey it was found that the majority of customer of

JCCB are salaried person of belongs to agricultural sector and it
was also found that people who are self employed are not much
friendly with the bank yet.
The customers of JCCB are satisfied with the rate interest offered
by the Bank.
The JCCB is dealing wiath both Micro and Macro finance aspect.
Most of the customers are salaried of from the agricultural sector.
The JCCB is playing a major role in financing the Self Help
Groups(SHGs).
The most important attribute which is attracting the customers is
micro financing at lower interest rate while other factors are less
processing time, and effective service, less documentation etc.
Some of the customer feels that JCCB should develop more
beneficial for the agricultural sector.

8). Recommendations and suggestions

 Under mention are the few recommendations and suggestions, which I felt during
my project on JCCB being a reputed organization still had certain area where
improvement or change would be beneficial for the Bank for its credit structure.

Bank should provide attracting schemes for the self employed person too.

Bank should also provide credit facility for educational, vehicle, and industrial
Loans as a new credit facility.

Bank should provide variety of schemes and quick service facility to make their
credit structure more attractive.

As customers who are in need of loan or credit, mostly take loan from the
commercial Bank and still majority of people are not very much aware about the
functioning of Cooperative banks and there schemes of credit and loans for
general public.

9). Bibliography

 RSCB website:- www.rscb.org.in

JCCB Annual report
Technical Brochres of JCCB
www.microfinanceinfo.com
htt:/ifmr.ac.in/cmf
www.basixindia.com
www.nabard.org
www.sewa.com
www.wikipedia.com
www.sbi.com.http:/www.unitedprosperity.org/faqus
http:/mas.co.in/contactus.aspx
http:/www.edarual.com/SHG-Study/Executive-summary.pdf
www.microfinanacefocus.com/
http://indiamicrofinance.com/financial-regulation-financial-inclusions-speechdeputy-governor-reserve-bank-india.html
Yunus, Muhammad. Creating a World Without Poverty: Social Business and the
Future of Capitalism. Public Affairs, New York, 2008.
Vikram Akula, Business Basics at the Base of the Pyramid, Harvard Business
Review, June, 2008