EXECUTIVE SUMMARY

I have done my summer internship project in “DCC BANK SHIMOGA”. During my

summer internship project I implemented many concepts of finance in real life situation.

This project work helped me to apply theoretical knowledge into practical aspects on
collected data which was a worthy experience and during the discussion with company
guide I realized that how important the project report is for the company and me. I also
realized how goal orientation and managing interpersonal relationship and integrate part
of professional life. Therefore this will definitely help me to develop qualities required
for executive. In addition, I understood products of my company and its targeted
customers also I got information what are the basic categories of bank products.

These customers who were not aware about the scheme says that DCC bank should
improve their promotional area through different media like T.V. radio, print media, and
through integrated marketing approach and most of them votes for IMC. More than 80%
of the customers were satisfied with location and condition of the bank and more than
50% were satisfied with the process of disbursement, but maximum of the customers
were dissatisfied with the behaviour of the employee, they give suggestion of that the
DCC bank employees should change and improve their behaviour towards their
customers, from my finding I found that this behaviour of employee is due to daily
routine work load from which they got stressed. I recommended the bank to change the
location of the employee from one branch to another and give them more and more
incentives and also to employ more employee form which work load gets less and the
employee will not feel and pressure and they not feel any stress. Most of the customer’s
choose DCC and because of simple procedure and more number of the interest rate
regarding their business was suitable according to them most of the customer rand good
about DCC bank.
The main purpose of this project work is to analyse the financial statement of the DCC
bank and to check the level of satisfaction, toward this service among the customers.
Financial analysis has become challenging issue for every financial institution as every
organization is trying to provide service superior to the competitors.

I did research at the DCC bank, branch SHIMOGA and the information we received
there, along with the secondary research, helped us in strengthening our knowledge base
regarding the topic.
 CHAPTER 1
INTRODUCTION
INTRODUCTION

Agricultural lenders in today’s environment face many challenges when evaluating the
creditworthiness of farm borrowers. To address these challenges, a survey was
conducted with financial institutions in Kansas and Indiana where agricultural lenders
were asked for their responses to hypothetical agricultural loan requests. Each loan
request differed by the borrower’s character, financial record keeping, productive
standing, Fair Isaac credit bureau score, and credit risk. Lenders provided information
about themselves and their financial institutions. The survey data obtained determine
the relative importance of financial and nonfinancial information when analyzing
agricultural loan applications. Tobit models are estimated to identify the borrower and
lender characteristics that are important in determining loan approval, while OLS
models are used to investigate the factors that affect interest rates offered to farm
borrowers. The results offer a comparison of agricultural lending between two
important agricultural states and provide lenders with insight on the factors that
influence the decision‐making process of other agricultural lenders.

Importance of agricultural loan

1. It will allow you to purchase new inputs
Farmers need to purchase new inputs, such as seeds, fertilizers, pesticides,
irrigation water and more. Agricultural finance can help to make these purchases
easier for farmers. If the seed of a high yielding crop is readily available for
farmers, then the productivity of the farm is improved.
Smaller farms may not have the need for agricultural finance for items such as seeds or
pesticides but larger farms may need help with bulk purchases of these items. Seeds,
fertilizers and irrigation water can prove to be a highly expensive continuing need
which agricultural finance can help to meet.
2. improve permanently
Having agricultural finance means that you are able to make permanent
improvements on your land, such as sinking wells, rotation of crops and even
land reclamation. If you were to attempt such improvements without finance,
you may end up spending more money than you are able.
Finance for agricultural improvements means that you can create the perfect working
farm to improve the productivity of your workers and the output of your land. Being
able to rotate crops effectively will help significantly with better crop production and
sustainability of farmland, and sinking wells will add value to your land should you
decide to sell it.
 3. cover land costs
If farmers are looking to buy new farmland as a budding farmer or simply
increase the amount of land you already have, then agricultural finance can help
cover the land costs you may incur. The land you need will depend on the type
of farming you are planning on doing.
In order to apply for finance for land, they will need to calculate how much land you
need and what kind of land you are looking for. Once you have your loan approved,
you will be able to move forward with your endeavour. Buying land with your own
money may not be feasible as a start-up farm, which is why finance is a good option.

4. It allows you to refinance an older loan

farmers already have an agricultural loan, want to look into
refinancing. This entails taking out a new, lower-interest loan and using
this to pay off the old, higher-interest one. still have a loan but will be
saving money due to the lower interest.
This decision will only make sense if the interest savings outweigh the refinancing
costs. Once you have discussed your options with a financial advisor, can look into
refinancing. It will allow you to use your money for other essentials that you may not
have been able to while repaying the older, expensive loan.

5. Marketing of products
If they are a working farm that sells its produce or livestock, they
will need to successfully market your products. This can involve
significant costs including websites, logos, focused ad campaigns, PR and
marketing costs.
For those who are unfamiliar with marketing, you may need to speak to a consultant
which will also incur consulting costs. they can use agricultural finance as part of your
marketing funds to boost your visibility for retail customers and for private customers
too. Be sure to examine every aspect of any marketing campaign before making any
final decisions.
Recent government policies affecting Indian Agriculture:
In the recent Union Budget , agriculture has got considerable attention with
the various policy initiatives from the side of finance ministry. Some of the
imp0ortant policies are:

 A special purpose tea fund has been launched for re-plantation and
rejuvenation of tea. Government soon plans to put in place similar
financial mechanism for coffee, rubber, spices, cashew and coconut.
 Accelerated Irrigation Benefit Programme (AIBP) has been revamped in
order to complete more irrigation projects in the quickest possible time. As
against an outlayof Rs.7,121 crore in 2006-07, the outlay for 2007-08 has
been increased to Rs.11,000 crore.
 Rs.17,253 crore had been budgeted for fertilizer subsidies in 2006-07.
However, according to the Revised Estimates, this will rise to
Rs.22,452 crore.
 The National Insurance Scheme (NAIS) will be continued for Kharif and
Rabi crops during the year 2007-08. The two per cent interest subvention
scheme will continue in 2007-08.
 Rs. 100 crores have been allocated to new Rain fed Area Development
Programme, set up for coordinating all schemes for watershed development.
Economic factors affecting Indian agriculture

Micro Finance:
Micro finance scheme has been introduced by National Bank for
Agriculture and Rural Development (NABARD), the apex bank for agriculture
and rural development in India, to improve the access of the rural poor to formal
institutional credit and other financial products. In all 547 banks, which include 47
commercial banks, 158 RRBs, 342 cooperative banks are now actively involved in
the operation of Self Help Group (SHG)- Bank Linkage Programme to spread the
facility of micro finance to the needy small and marginal farmers and tiny
entrepreneurs. The programme has enabled nearly 329 lakh poor families in the
country to gain access to micro finance facilities from the formal banking system.
Capital Formation in Agriculture: The share of the agriculture sector's capital
formation in G.D.P. declined from 2.2% in the late 1990s to 1.9% in 2005-06.
Stagnation or fall in the public investment in irrigation is partly responsible for
this fall. However there is indication of a reversal of this trend with public sector
investment in agriculture accelerating since 2002-03.The share of public
investment in gross investment in agriculture increased by 6.5 percentage points
from 1999- 2000 to reach 24.2% in 2005-06.

Agricultural Finance:

Credit: Availability of adequate credit is vital for every sector and agriculture is
not an exception. In India, Commercial Banks, Cooperative Banks, and Regional
Rural Banks ( RRBs) are responsible for smooth flow of credit to agricultural
sector. But a huge unorganized market exists for credit to agricultural sector in
India, which provide timely fund to this sector but at the exorbitant rate of interest.
Among organized credit disbursement to agriculture commercial banks play a vital
role with a share of about 70% where as cooperative sector and RRBs contribute
20% and 10
% respectively.Kisan Credit Card (KCC) scheme was introduced to provide
adequate and timely support from the banking system to the farmers for their
cultivation needs. This scheme has made rapid progress and more than645 lakh
cards issued up to October 2006. The 'Farm Credit Package' announced by the
Government of India in June 2004 stipulated doubling the flow of institutional
credit for agriculture in ensuing three years. Annual targets for this package are
being surpassed in the two consecutive years from its introduction and it is likely to
surpass in the third year also.

Insurance: Insurance is a prime necessity to mitigate uncertainty that persists in

agriculture. In India, agriculture is still affected by such factors, which are beyond
control of human being. So, there is a great need for agricultural insurance in India.
Keeping this inmind, Government of India in coordination with the General
Insurance Corporation of India (GIC), had introduced National Agricultural
Insurance Scheme (NAIS) from rabi 1999-2000 season. The main objective of this
scheme is to protect the farmers against losses suffered by them due to crop failure
on account of natural calamities. Agricultural Insurance Company of India (AICIL)
which was incorporated in December 2002 took over the implementation of NAIS.
AICIL introduced Rainfall Insurance Scheme called 'Varsha Bima' during 2004
southwest monsoon period. Varsha Bima provided for five different options suiting
varied requirements of farming community:

1. Seasonal rainfall insurance based on aggregate rainfall from June to September.

2. Sowing failure insurance based on rainfall between June 15 and August 15.
3. Rainfall distribution insurance with the weight assigned to different weeks

June and
September.
4. Agronomic index constructed on the basis of water requirements of crops.
A catastrophe option covering extremely adverse deviation of 50% and above rainfall
during the season.
During kharif 2006, this Varsha Bima scheme is being implemented in around 150
districts covering 16 states across the country. AICIL is also piloting another weather
related insurance product for mango and coffee.

INFLATION:

Inflation raises prices for farm inputs as well as farm products, resulting in
uncertain effects on the current net incomes of farmers, the National Council of
Applied Economic Research (NCAER) said in its monthly report.

Inflation may benefit people with flexible money incomes but not those whose
money incomes are fixed.

Farmers have flexible money incomes. Therefore, theoretically at least, they should
benefit from an unanticipated increase in the rate of inflation. Empirical studies
however, have not found this connection, the NCAER study said.

As inflation increases, prices paid by farmers for various inputs increase faster than
the prices they receive for their products, thereby the terms of trade for farmers
deteriorate as the rate of inflation rises.

General inflation when accompanied by growth may be associated with a slight

increase in the demand for farm output. However, increase is likely to be small due
to the low-income elasticity of demand for farm output.

On the other hand, higher marketing margins due to imperfections in the agricultural
markets, stirred up by higher wages and various other marketing costs, reduce the
demand for farm output at the farm level, NCAER said.

These opposing forces suggest that the net impact of inflation in the national
economy on prices received by farmers is small in comparison to the impact on prices
paid.
Studies in the United States have observed that in the short run, a rise in input prices
by 10 per cent reduced net income of farmers by 2.3 per cent in short run of 1-2 years
and 1.2 per cent in the long run

COMPANY PROFILE

Background and inception of the Shivamogga District Central Co-

operative Bank Ltd.

M/s Shivamogga District Co-operative Central Bank Limited, (SDCC Bank

or Bank) is a District Central Co-operative Bank established on 18th October

1953. The Bank is governed by the Banking Regulation Act 1949 (AACS),
Karnataka Co-operative Societies Act, 1959 and rules made there under and
directives issued by NABARD/RBI. The Bank is carrying on business of banking
activities within Shivamogga District, Karnataka with 28 Branches spread
throughout the District. The Bank is lending loans to agriculture, non- agriculture
and allied activities in the District.

The bank is funded by members through share capital with accumulated

reserves and deposits. The bank has no Government shareholding or not availed
any financial assistance from the Government.

The area of the business activity of the bank is within Shivamogga District.
It has 28 branches spread within the District. Each branch is headed by the branch
manager and supported by staff to carry out the banking activities.

The bank is accepting deposits from public and mainly lending to

agriculture through Primary Agricultural Co-operatives Societies (PACS) and
direct finance for agricultural, non- agricultural and other allied activities like
Crop Loan, Term Loan, Gold Loan, SHG Loan, Vehicle Loan, Housing Loan etc.
It is also an implementation partner for the schemes and subsidies, etc.,
announced by the Government and NABARD.
 The bank has availed financial assistance from NABARD in the form of
refinance on its agricultural lending activities. The Bank has submitted the action
plan for augmentation of paid-up share capital, mobilization of deposits,
diversification of advances portfolio, increasing membership and borrowing
member coverage, recovery of over dues, efficient management of funds and
reducing the cost of management.
 Promoters of SDCC Bank

The membership of Shivamogga District Central Co-operative Bank

Ltd. is restricted to the co-operative societies, which have registered within the
area of operation referred in by law (IV) of the state government is eligible for
admission. Any individual residing in the area of operation of the bank 18 years
of age and of sound mind shall be eligible for admission as a nominal member.
When applying for admission, a society shall submit along with its application a
resolution of the board, an amount prescribed for share. The board may from time
to time prescribe both a form and amount for the purpose of becoming member
and may sanction or refuses the application at its discretion. Every member shall
hold at least one share. No member at any time hold more shares which shall
represent one fifth of the paid up share capital of the Bank.

There are Primary Agriculture Co-operative Societies (PACS) affiliated

to the Bank the average lending limited to the Co-operative Societies only.

Vision, Mission and Quality Policy

Vision

To support constantly credit needs to agriculture sector, small sale

industries, and self- help groups, consumer appliances in both rural areas and
urban areas, which eventually contribute to overall socio-economic development
of Shivamogga district.

Mission

To offer efficient financial services to the agriculture and related activities

in the district by adopting co-operative principles and to bind strong socio-
economic development.
Quality Policy

Customer satisfaction through team work and professional management

through co- operative principles.
Product and Service Profile
Area of Operation of SDCC Bank

Taluks Branche
s
Shivamogga a) Head office/Main branch, Shivamogga
b) City branch, B.H. Road
c) Vinoba nagar branch
d) Vidya nagar branch
e) Gopala branch
f) APMC branch
g) B.H. Road branch
h) KMF branch
Bhadravathi a) Main branch
b) Old town branch
c) Holehonnuru branch
d) Shankaraghatta branch
Shikaripura a) Main branch
b) Shiralakoppa branch
c) Togarsi branch

Soraba a) Main branch

b) Anavatti branch
c) Ulavi branch

Sagara branch a) Main branch

b) Anandapura branch

c) Heggodu branch
d) Talaguppa branch

Hosanagara branch a) Rippanapet branch

Thirthahalli branch a) Main branch
b) Konandur branch
c) Kammardi branch
d) Tuduru branch
 Infrastructure Facilities

 It maintains a very good communication system externally and

internally as it is prepared with telephones, computers, Xerox
machines and internet services.
 It has well-furnished guest rooms, training center, board hall and
meeting hall.
 The SDCCB has its private transport vehicle for covering the
branches of district.
 The branches have all necessary infrastructure facilities.

Competitor’s Information

The Shivamogga District Central Co-operative Bank Ltd. is essentially a

Co- operative Bank catered to the needs of agriculture, Small Scale Industries
(SSI) and Self Help Group (SHGs). Change in current economic scenario, the
organization is facing rigid competition. As far as interest rate concerns, which
are governed by RBI and NABARD, a violent approach is adopted by commercial
banks, regional rural banks and co-operative societies. Following are the main
competitors of Shivamogga District Central Co-operative Bank Ltd.
1. Regional Rural Banks (RRBs) like Pragathi Gramin Bank etc.,
2. Other Co-operatives societies
3. Money lenders.
4. Commercial Banks like Canara Bank, State Bank of India etc.,
Co-operative Bank
Finance plays an important role in the life of people. The role of finance
both in rural areas and urban areas puts the society in a different stage. Finance is
essential to lead the life of people. Indian financial system consists of commercial,
agriculture and other allied activities. The co-operative movement works towards
the improvement of rural people in agriculture, farming and allied activities. In
urban areas also Co-operative movement plays an important role. We can observe
the co-operative societies works for the people.

History

The co-operative institutions include co-operative societies in rural areas

and urban areas in the form of agricultural co-operative societies, co-operative
banks, milk co- operatives, credit co-operatives. Co-operative banks both in rural
and urban areas helps to improve the life of people by providing finance for self
employment, industries, personal finance to take up activities like animal
husbandry, farming and other activities, These co- operative banks play an
important role to provide credit facilities. Though co-operative societies started
in 1904 the actual progress started during 1920s. The DCC banks stands in a high
position in co-operative credit structure. The financial strengths of co-operative
banks show the success of credit structure.

The first co-operative society was started in 1904. The Maclagen committee
envisaged 3 tier structures in 1914. The 3 tie structures includes Primary
Agricultural Credit Societies (PACS) at the route level, Central co-operative
banks at the district level and state co- operative banks at the state level. During

19th and 20th century, the rural people starved to get the credit facilities. The
lending activities were restricted for the credit requirements of their own
members. The first co-operative banks were started in Gujarath and Mehtha
bhansali committee supported to start urban co-operative banks. Provision of
section 5 of banking regulation act 1949 defined an urban co-operative as a
primary co-operative bank. This is totally different primary co-operative credit
society

The first co-operative society was started in 1904. The Maclagen committee
envisaged 3 tier structures in 1914. The 3 tie structures includes Primary
Agricultural Credit Societies (PACS) at the route level, Central co-operative
banks at the district level and state co- operative banks at the state level. During

19th and 20th century, the rural people starved to get the credit facilities. The
lending activities were restricted for the credit requirements of their own
members. The first co-operative banks were started in Gujarath and Mehtha
bhansali committee supported to start urban co-operative banks. Provision of
section 5 of banking regulation act 1949 defined an urban co-operative as a
primary co-operative bank. This is totally different primary co-operative credit
society.

 The main principles of Co-operative banks are:

 Democratic Member Control.
 Co-operative among Co-operatives.
 Anxiety for the public.
 Unpaid and Open connection.
 Training, Information and Education.
 Self-sufficiency and self-government.
CLASSIFICATION OF CO-OPERATIVE BANK

1.Urban Co-operative Banks

Urban co-operative banks plays an important role in urban, semi-urban
areas and also branches in rural areas. The urban co-operative banks mobilizing
deposits of the people and supply credit to the people for different activities. The
urban co-operative banks are regulated by B/R Act 1949.

2.Rural Co-operative Banks

The credit structure is divided into short-term rural co-operatives and long
term co- operatives.

I. Short-term Rural Co-operatives

Short term credit structure includes 3 tier structures. State co-operative

banks at state level, Central co-operative banks at the district level, primary
agricultural co-operative societies at the village level. The smaller states have 2
tier systems with state co-operative banks and primary agricultural co-operative
banks.

a) State Co-operative Banks

The credit structure in a state includes state co-operative banks at the
highest level. It is a linking institution between RBI, NABARD and PACS. The
RBI and NABARD provide credit to state co-operative banks. NABARD plays a
role of RBI for state co-operative banks.

b) Central Co-operative Banks

The Central Co-operative banks links between State Co-operative Banks
and Primary Agriculture Credit Societies. The work is to lend credit which is
followed from NABARD to the village Primary Agriculture Credit Societies
(PACS).
c) Primary Agriculture Credit Societies(PACS)
At the route level Primary Agriculture Co-operative Societies is the credit
structure for the rural people. To challenge and eradicate the exploitation of
money lenders, village co-operatives play a significant role. The farmers at the
village level will come to these PACS and the success of the village lies in the
working of PACS. It is the institution in which credit facilities for the farming
sector, the poor people, s/c s/t and other members. Government is prompting
widely by providing loan at 0% of interest up to Rs. 300000.
II. Long- term Rural Co-operatives
The farmers require long term credit for their activities. The state co-
operative agriculture and rural development banks at the state level and primary
co-operative agriculture and rural development banks at Taluk level helps for the
farmers. This is a 2 tier system. State Co-operative Agriculture and Rural
Development Banks (SCARBDs) will provide credit facilities to the primary
societies. Primary Co-operative Agriculture and Rural Development Banks
(PCARDBs) will provide credit facilities to the farmers for a long period. The
repayment period is long so that the farmers can use the credit facilities for their
land development, soil conversation and other activities which required huge
amount.

Co-operative Banks and NABARD

In the field of credit for agriculture and other allied activity in the rural
areas is supported by National Bank for Agriculture and Rural Development
(NABARD).It is an Apex institution and plays role like a RBI for the farmers by
financing Apex co-operative banks through which district central co-operative
banks and PACS will get credit facilities.

The main activities of NABARD include:

 Initiating measures towards organization structure for improving

absorptive capability of the credit delivery system, as well as monitoring,

formulation of rehabilitation schemes, reformation of credit institution and
preparation of personal.
 Coordinating the rural financing behavior of all in organization occupied

in development work at the field level.

 Origin of Co-operative Banks
The co-operative movement expected the rural credit societies attract
substantial deposits from the members by which the needs of the village people
would be solved. At the beginning co-operative credit structure was the main idea.
When the movement got momentum the ideas of formation of co-operative banks
was started. It was inspired by the movement’s success in other countries in which
financial system was stream lined by co- operative banks. This also helped
primary agricultural activities, small scale industries, self employment. The
farmers are in the movement for mechanism for pooling the meager resources to
solve their problems in credit inputs, marketing of agricultural products. This
working of co-operative movement helped to enactment of an act in1904. The
Karnataka co- operative societies act in 1959 and rules were framed in 1960.

Operation of Co-operative Banking

Establishments
 Co-operative Banks belong to the money market as well as to
the capital market.
 UCBs provide working capital loans and term loan as well.

Role of Co-operative Banking in India

Co-operative Banks are much more significant in India than anywhere
also in the world. The typical character of this bank is service at a lower cost
and service without exploitation. It has gained its importance by the role
assigned to them, the expectations they are supposed to fulfill, their number,
and the number of offices they operate. Co-operative banks role in rural
financing continues to be important day by day, and their business in the urban
areas also has increased incredibly in recent years mainly due to the sharp
increase in the number of primary co-operative banks. In rural areas, as far as
the agricultural and related activities are concerned, the supply of credit was
inadequate, and money lenders would exploit the poor people in rural areas
providing them loans at higher rates.

Future Prospects of Co-operative Banks

RBI has determined not to permit urban co-operative bank (UCBs)
with less than Rs. 50crore net worth to extend their operation exterior their
state of authority The main risk introduction of UCBs was not credit risk but
interest rate risk, as interest rates paid by these banks, mainly on deposits, were
out of sync with the rest of the banking sector. The pure number of weak
UCBs, which is well over 200, is a reason for concern for the RBI.
Rehabilitation of these banks may involve strategies such as the registrars directing
co-operative courts for speedy recovery process and execution of decrees, unviable
branches being either relocated or closed down, exploring avenues for receiving
additional capital and combination with a well-managed bank.

Agricultural Loans

Agricultural loans are accessible for a huge number of farming purpose.

Farmers may apply for loans to purchase inputs for the agriculture of food grain
crops as well as for horticulture, aquaculture, floriculture, animal husbandry and
sericulture business. There are also particular loans to finance the buy of
agricultural equipments such as tractors, harvesters and trucks. Here is several
information regarding the type of agricultural credit and loans provided by public
sector banks in India.

Short-term Agricultural Loans

The Agricultural loan comprises of crop loan, Medium-term loan, Kisan
Credit and Cash Credit loan superior to marketing activities for the Co-
operatives the types of loan is extensive for a Agriculture and other allied
activities.

 Crop Loans
Crop loans are for seasonal agricultural operations. The activities are
ploughing, preparing land, transplantation. Supply of inputs, seeds, fertilizers,
pesticides and harvesting of crops. For rising the crops short term credit is very
much essential.

 Cash Credit Loans

Bank also extends its credits to co-operative societies in the district in
the type of cash credit. The cash credit loans are too short-term credit in nature
and main objective of the loan is to create advances for marketing activities.
Usually, cash credit loans are superior to co-operative institutions based in their
net disposable resources. The resources are considered based on the following
information.
 Cash, bank balance, advances and cumulated losses.
 Share capital, reserves deposits, borrowing and profit.

 Kisan Credit Card Scheme

Kisan credit card scheme is operated by commercial banks, co-operative
banks, RRBs. All farmers including small and marginal farmers are eligible for
kisan credit card. These kisan credit card holders are covered by personal accident
insurance scheme against accidental death and permanent disability. The
agreement of farmers will be done by farmers
by seeing cultivable areas and finance fixed by district level technical committee.
The kisan credit card in recent years is broad based one.

Medium term and Long term loan

 Medium Term Agriculture Loans

This loan facility also made accessible to the members of PACS for
making of assets. The loans advanced to the members of PACS include of
several schemes, namely, Minor irrigation, Animal husbandry, rearing of
sheep, goat, piggery, poultry and forestry. Likewise loans may be also being
advanced to bullock carts, other agriculture and allied activities.

As the name itself is specified as medium term loans, the reimbursement

period is permanent in an installment base. The loan application is equipped by
the PACS who sanction at their level. Later on, application is submitted to DCC
bank for sanction and release. The unit cost of each scheme has been specified
by the NABARD and therefore, the Bank has to pay out loans to the members
without deviating from the scheme. It is an additional income to the borrowers
and as such borrowers can pay back their loans without making default.

 Conversion of Short-Term into Medium-Term Loan

Short term loan advanced to the borrowers in torrential rain season for
the production of crop merely depends upon monsoon. If any natural disaster
occurs, it leads to harmful crop and borrower will not be in the position to pay
back the loan. In such a case, the Bank has an alternative to convert the short-
term loan into medium-term loan. The Bank has to go after procedure while
converting the short term loan in different aspects. In many situations the Bank
can change short-term loan into medium-term loan as;
 Advance made throughout the season are only eligible for conversion

but non- payment loan accounts are not eligible for conversion.
 Conversion of loan should be made within due date. If it is not likely
 for any reason under technical aspects, extension of time should be
decided for repayment.

After considering the over aspects Short-term loan can be changed into medium
term conversion loan with five yearly installments. Fresh loan may also be
extensive to the same borrower for production of crops for the ensuring reason.
 Loans sanction process
Documentation necessary at the time of sanction of loan:
 Application
 Land declaration
 Pahan (RTC)
 Crop raising declaration
 Crop insurance
 Personal accidental insurance
 Demand promissory note.
Flow of Funds

NABARD

APEX BANK

DCC BANK

PACS

MEMBERS
 Rural Credit System
The rural credit system is changing since from inception previously
private money lenders supplied credit to the people but farmers who required
amount can’t get credit facilities. The enactment of co-operative societies act
helped people, farmers to get credit facilities by co-operatives and commercial
banks. It become priority sector for RBI.
 Agricultural Credit Policy
For providing timely and adequate credit support to farmers to enable
them to adopt modern technology improved agricultural practices for increasing
agricultural productions, the Government of India is emphasizing on policy for
credit flow at the ground level. It is through credit planning reason wise strategy,
lending policies and procedures which will help to increase share of credit in rural
households.

Disbursement of Loans
Disbursement refers to the actual loan amount paid out of the client by the
bank. Sometimes it so happens that the bank sanctions the loan says Rs. 1,00,000
but the client avails this loan benefits only to the amount of Rs.80,000, the
remaining Rs. 20,000 is in fact certified but not disbursed, and hence, it does not
attract any interest.
Later than the documentation process, the loan will be endorsed, but not
disbursed. The disbursement takes place only after some legal procedures, like
sighing of the contract, i.e., the client is made to enter into a contract with the
bank for the punctual repayment of the loan and the client should also make sure
that he use the loan only for the purpose for which bank; in case of the violation
or branch of contract by the client, then legal proceedings will be taken against
him by the bank.

Non-Performing Assets (NPAs)

When an amount is unpaid for 30 days beyond a due date is treated as past
due. The NPA is a facility in which interest or installment of principle is past due
for 2 quarters for agricultural purposes. If interest not aid for last 2 seasons and
become past due such advance should be treated as non-performing assets.
 Repayment
The supposition in delivery of credit as a basis of finance is that the
exercise of credit would make enough income to pay back the loan with interest.
Though, generation of sufficient additional income has to be accompanied by
readiness of borrower to pay back the loan with interest. If loans are not repaid,
the RFI loses both its interest income as well as its capital. Good management of
recovery of dues is, therefore, a complex issue encompassing economic and non-
economic factors and has suggestion for profitability of the RFIs.

Reimbursement of loan mutually with interest by borrowers is critical for recycling

of funds deployed in rural finance. The fuelling of development process by supply
credit is important only when timely reimbursement is approaching.

Over Dues of the Bank

One of the most revolting features in the loan operation of the banks has
been the problem of over dues. Large over dues are the indication of operational
inefficiency of the lending institution as much as they point out its tendency to
make reckless advances. Overdue installments result in the chocking of credit-
worthiness of the banking institution itself in the eyes of its creditor. Over dues
occur out of poor recovery procedures and also willful default.

 Effects of over dues

Commenting on the effect of over dues, the Madhav Das Committee has
observed: “A high level of over dues in a DCC Bank not only erodes its
owned funds but also
affects the reputation before institutional investors. Also the raise in over a period
of time will force the bank to make good out of its owned funds. In the case of
primary banks, a high level of over dues is measured particularly serious because
heavy over dues of primary banks affects the earning capacity of the central co-
operative banks as their income by way of interest loans gets condensed
substantially. Running into the losses, which not only erode their reserves but also
the share capital: with the result their financial position is critically jeopardized”.

 Causes of over dues

In the words of Madhav Das Committee, "main factors affecting recoveries
were found to be imperfect lending policies, in effective field supervision, lack
of performance efforts and will on the part of the bank’s Board of Directors and
staff to recover loans”.

The Committee also observed deficiencies in the appraisal in the case of

loans for tube wells, sinking of wells and trade development. Some banks had not
laid down a sound procedure for follow or measures for verification of utilization
of loans and recovery of work. Miscellaneous reasons included involvement
among the borrowers, State Government instruction to banks not to take coercive
measures or to suspend recoveries and certain lacunae in the laws connecting to
coercive action defaulting members, etc.
 Future Growth and Prospects
The bank is approaching and catering the needs of rural, urban and semi-
urban places of Shivamogga district. The service association is in the becoming
phase and therefore bank has entered into agreements with Oriental Insurance
Company for providing insurance
The Bank has strategy to enlarge branches in many rural areas, where huge
possibility for growth is accessible. SDCCB also has a future suggestion for
internal communication systems, innovation of office and other services
strategies through up gradation to new industry specific technologies. IT
infrastructure facilities and initiated steps for further incorporation of technology.
Two major technological milestones to be achieved are:

 From the viewpoint of financial enclosure there has been a stable enlarge

in the penetration of branches particularly in rural areas.

 Technological progression with all branches adopting or concerning adopt

computerization. The number of branches adopting IT infrastructure

solution has been on the rise.

Needs of the Study

The major portion of population in India is rural based. The people of rural
India depend on Agriculture. It plays an important role in the conditions of people,
their purchasing power, employment opportunities and there by price stability.
Share of Agriculture in India is more than 52% of the workforce. There is a large
scale demand in Agricultural production. As a result it is a concern of the nation.
Agriculture credit is essential for higher production with modern
technology. In recent years Agriculture credit is obtained by small and marginal
farmers and large farmers. They require it for their enhancement of income.
Credit system in agriculture includes formal and
 informal sources. It is necessary to have formal system of sources of credit
supply. The informal sources may not work smoothly in which friends, relatives,
private money lenders or playing an important role. This is not required.

I. Balance sheet of the bank from 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Capital and Liabilities
(Rs. In
lakhs)
Capital 2029.12 2405.42 2620.77 3309.24 3567.84
Reserves 3534.61 3728.19 3898.08 6486.76 7580.72
Deposits 40592.3 51725.7 59700.79 53907.7 61377.6
7 9 9 3
Borrowings 22451.2 25348.8 30179.14 28149.2 18823.8
1 5 1 9
Other liabilities 1420.55 1343.43 3708.80 7672.43 7388.97
Branch adjustment with H. O. 220.59 211.66 - - -
Interest Payable 87.03 75.07 - - -
Profit and Loss Account 295.53 36.91 - - -
Total liability 70631.0 84875.3 100107.5 99525.4 98739.0
1 2 8 3 5

Asset
s
Cash and Bank Balance 28943.7 20516.5 33362.91 25191.5 24081.3
9 0 2 1
Investments 3963.77 4204.77 4320.77 6378.89 9405.37
Advances 36865.5 59039.5 56540.96 51241.8 47558.1
1 9 1 7
Fixed Assets 235.31 256.81 929.22 3259.50 2989.36
Interest receivable on 97.92 176.45 - - -
investments
Other Assets 524.71 681.20 3056.63 8470.78 9821.78
Profit and Loss Account - - 1897.09 4982.93 4883.06
Total Assets 70631.0 84875.3 100107.5 99525.4 98739.0
1 2 8 3 5
 CHAPTER 2
RESEARCH METHODOLOGY
 Introduction about the Internship
An internship is connected to learning skill for individuals who want to
develop hands on the information in a definite area. It is an occasion to
incorporate career linked experience into an education by participating in planned
and supervised work. The internship provides the realistic experience,
information for the career.

The internship is short term in nature which more focusing on applying the
information of classroom to the actual situations. It helps to know the major
functions along with crop and services of the organization. The internship is
necessary to provide the information of the organization in which the student is
placed, report of detailed work carried on. The report of the internship also
provides the information of communication skills and indicates the critical
thinking skills.

Topic Chosen for the Study

Agricultural financing has a chief impact on growth of this sector.
Agriculturists in our country depended mainly on local money lenders for their
financial obligation. But the development of Institutional support is progressively
transforming this scenario. The SDCC Bank functions as a central agency
between “state co-operative bank” and primary agriculture co-operative societies
(PACS)” in the district. Hence a project was under taken at SDCC Bank
Shivamogga to study Agricultural loans lending performance in Bank under the
title. “Performance Evaluation of Agricultural Loans Portfolio” with special
reference to SDCC Bank Ltd. Shivamogga.
 Objectives of the Study
 To know the functions of DCC Bank is providing credit facility.
 To know the different categories of Agricultural loans offered by SDCC
Bank Ltd.
 To examine the Agricultural loans lending by SDCC Bank Ltd, to different
crops.
 To understand the lending practices in DCC Bank.
 To understand the lending provided to Agriculturist by GOI, GOK and
SDCC Bank Ltd.

Scope of the Study

The current study was undertaken to study the performance evaluation of

agricultural loans portfolio at SDCC Bank, Shivamogga. The study covers loans
provided to major crops like Paddy, Banana, Sugarcane, Areca nut, Maize etc.
The study covers lending in the past 5 years. The study covers information taken
from annual reports and information composed through the staff of the Bank.

Methodology Adopted
A good research method will help for the success of my project which
includes definition, data collection and analysis of specific data’s, time and
expenses required to project. The required data’s collected systematically for the
research design. Here the research method is descriptive research. It includes
collection of data, organization of data analyzing the same.

Some key points of Descriptive Research

 Definite interpretation can be arrived at.
 Descriptive research deals with specific predictions

.
 Methodology of Data collection
 Sources of Data
 Primary Data: Primary Data was gathered through formless
interviews and discussions of with the staff members and officers of
the bank.
Primary data are those, which are collected at fresh and for the first
time, and thus happens to be original in character. Primary data used in
this project is collected through two methods, namely, questionnaire
method and direct personal interview method. Both these methods
proved to be great help in getting the required information.

 Secondary Data: Secondary Data extracted from bank’s annual

reports, bank performance report circulars, files, handouts and
through internet.
Secondary data are those, which have already been collected by
someone else and which have already been passed through the statistical
process. Some related information on the two companies and any past
comparison of the two chains was collected through secondary data
from various sources like internet, print media.

The financial statements like profit and loss account, balance sheet of
the bank and banks reports are the main sources of secondary data.

 Tools and Techniques:

 Percentage method is used to analyze and interpret the data.
 The data organization uses tabulation method.
 Graphs have been used to give pictorial meaning of the data.
PLAN OF ANALYSIS

On the basis of information collected through questionnaire. The result thus obtained
will be represented through charts and suitable interpretation will be provided. Charts
are used to display series of numerical data and in graphical format to make it easier
to understand large quantities of data and the relationship between different series of
data. It is portrayed through.

 Tables
 Charts
 Graphs
 Interpretation
 CHAPTER 3
SWOT ANALYSIS
Strengths and weaknesses
Strengths and weaknesses internal to the organization. Strengths represent positive
attributes or characteristics, factors that provide an advantage. Weaknesses are
attributes or characteristics that place the business at a disadvantage relative to others.

Opportunities and threats

Opportunities and threats are external to the organization. Opportunities represent
external trends and chances to improve performance - something happening in the
outside environment that presents positive potential. Threats are elements or trends in
the outside environment that could cause trouble for the business, place it at risk.

SWOT ANALYSIS

 Strength

1. Lending of short term loans with fairly low interest rate for
agriculture and mall-scale industries.
2. Refinancing support accessible from NABARD.
3. Range of new products and schemes in the product line.

 Weakness

1. Rigid operation due to regulatory policies and guideline.

2. Slow implementation to new technologies, latest trends and
developments in current banking business.
3. Limited area of operation lending to short and medium term loans.
 Opportunities

1. Extent for new banking services like online banking, SMS banking,
core banking solution and mobile banking.
2. Successful service industries like insurance.
3. Expansion of agriculture sector, small scale industries and self- help
groups in recent years will enlarge scope for need credit through short
and medium term loans.

 Threats

1. High initial cost in innovative technology up gradation in banking

resolution

2. Other commercial banks and financial institutions.

3. Competitors with dissimilar strategies in co-operative banking business.
 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
Table 1: Performance of the bank with respect to Agricultural loan
distribution

(Rs. In lakhs)

Sl.No Year 2011- 2012-13 2013-14 2014-15 2015-16

. s 12
Particulars
1 Short term loan 4384.7 20383.7 23784.6 23559.1 19783.1
0 8 4 8 7
2 Medium-term 1792.8 1532.58 1223.07 2040.03 571.34
3
loan
3 Long term loan 0 0 0 0 0

Total 6177.5 21916.3 25007.7 25599.2 20354.5

4 7 1 1 1

Interpratation:
It is observed from the table 2 that major lending of Agricultural loan is in
short term loan. This is due to the fact that the major requirements in the
Agricultural sector is based on Short term lending for crop loan, Kissan credit
loan and other related loans.
Calculation of Mean and standard deviation of Actual Agricultural Lending

Short term loan:

(Rs. In lakhs)

Short term loan Medium term loan

Amoun
Years ts (X-A) Amount (X-A)
Sl.No (X-A)2 (X-A)2
(X) s
.
1 2011- 4384.71 - 195842872.8 1792.83 360.86 130219.14
12 13994.39
2 2012-13
20383.79 2004.69 4018777.03 1532.59 100.61 10123.34
3 2013- 23784.64 1408.98 1985215.36 1223.07 -55.08 3033.57
14
4 2014- 23559.18 1183.52 1400711.79 2040.03 761.88 580463.26
15
5 2015- 19783.17 -2592.49 6721022.10 1571.35 -576.80 331776.26
16
Tota 91895.49 257886221.9 7159.87 1294396.5
l 2 6

Mean (A) 18379.10 Mean (A) 1431.97

Standard deviation 7181.72 Standard deviation 508.80
( ) ( )
Co-efficient of 39.07% Co-efficient of 35.53%
variation variation
(C. V) (C. V)

1. Arithmetic mean
∑𝑥
Mean A=
𝑁

Short term loans Medium term loans

Mean A 91895.49
=
 5 M 7
e 1
a 5
n 9
A .
= 8
7

5
Mean A= 18379.10 Mean A = 1431.97

∑(X−A)2
2. Standard deviation √
( )= 𝑁

Short term loans Medium term loans

Standard deviation ( ) = 1294396.56

257886221.92 S. D( ) = √
√ 5
5

S. D( ) =7181.72 S. D( )=508.80

3. Co-efficient of
*100
variation=
𝐴
 Short term loans Medium term loans
7181.72 508.80
C.V= *100 C.V= *100
18379.10 1431.97
C.V=39.07% C.V=35.53%

Interpretation:

The standard deviation of short term loan is Rs. 7181.72 and medium term
loan is
508.80 indicating high absolute variability of short term loan. But when
compare to relative variability, the co-efficient of variation of both loans is
same considering mean value of Rs. 18379.10 per short term loan and Rs.
1431.97for medium term loan.

Comparison statement of crop:

Table 2: Year wise comparison statement for Paddy advances

(Rs. In lakhs)

Particulars Padd Comparison

Sl.No. y
Years Area in acres Amounts Area in acres Amounts
1 2011-12 23795.57 3346 - -
2 2012-13 33998.58 5311.25 10203.01 1965.25
3 2013-14 45285.46 7015.91 11286.88 1704.66
4 2014-15 39327.25 6725.75 -5958.21 -290.16
5 2015-16 38353.74 6011.43 -973.51 -714.32
Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards paddy crop. During the years 2012-
13 and 2013-14 loan disbursement was increased (Rs. 1965.25 lakhs and Rs.
1704.66 lakhs respectively) with increased cultivation area. Decrease in the
amount (Rs. 290.16 lakhs) disbursed to a area of 5958.21 acres during 2014-15
was recorded.
Table 3: Year wise comparison statement for Maize advances
(Rs. In lakhs)

Particulars Maize Comparison

Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 7783.84 687.65 - -
2 2012-13 13223.96 1318.48 5440.12 630.83
3 2013-14 17872.62 1958.41 4648.66 639.93
4 2014-15 15845.76 2046.50 -2026.86 88.09
5 2015-16 15247.29 1822.71 -598.47 -223.79

Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards maize crop. Compare to 2011-12 and
2012-13 loan disbursement towards maize increases by amount of Rs. 630.83
lakhs. In the year 2015-16 the disbursement of amount was decreased by Rs.
223.79 lakhs compared to previous year and also area by 598.47 acres.
Table 4: Year wise comparison statement for Sugarcane advances

(Rs. In lakhs) (Rs. In lakhs)

Particulars Sugarca Comparison

ne
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 4187.47 954.44 - -
2 2012-13 4888.01 1338.01 700.54 383.57
3 2013-14 4895.32 1340.58 7.31 2.57
4 2014-15 4359.1 822.9441 -536.22 -517.64
5 2015-16 4052.35 805.1418 -306.75 -17.80

Interpretation:

The above graph reveals the year wise comparison

statement data pertaining to disbursement of loans towards
Sugarcane crop. Compare to 2011-12 and 2012-13 loan
disbursement towards sugarcane increases by amount of Rs.
683.57 lakhs. In the year 2014- 15 the disbursement of amount
was decreased by Rs. 517.64 lakhs compared to previous year

Table 5: Year wise comparison statement for Ginger advances

Particulars Ginge Comparison

r
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 5485.84 1249.40 - -
2 2012-13 4441.00 1031.75 -1044.84 -217.65
3 2013-14 3777.18 871.59 -663.82 -160.16
4 2014-15 3364.78 761.41 -412.40 -110.17
5 2015-16 3148.31 768.85 -216.47 7.44
Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards Ginger crop. Compare to 2011-12
and 2012-13 loan disbursement towards ginger decreases by amount of Rs.
217.65 lakhs and 1044.84 acres. In the year 2015-16 the disbursement of amount
was increased by Rs. 7.44 lakhs compared to previous year but decrease in area
by 216.47 acres.
Table 6: Year wise comparison statement for Arecanut advances

(Rs. In lakhs)

Particulars Arecan Comparison

ut
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 33075.28 10216.24 - -
2 2012-13 39416.11 14246 6340.83 4029.76
3 2013-14 58388.22 21184.29 18972.11 6938.29
4 2014-15 51996.24 18455.26 -6391.98 -2729.03
5 2015-16 49451.75 18315.72 -2544.49 -139.54

Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards Areca nut crop. Compare to 2011-12
and 2012-13 loan disbursement towards Areca nut increases by amount of Rs.
4029.76 lakhs with an increased area of 6340.83 acres. Similarly when compared
with 2012-13 and 2013-14 tremendous increase was observed both in area
(18972.11 acres) and amount (Rs.6938.29 lakhs). In the year 2014-15 the
disbursement of amount was decreased by Rs. 2729.03 lakhs compared to
previous year and also area by 6391.98 acres. Since areca nut is major crop the
amount lending towards it is more compared to other crops.
Table 7: Year wise comparison statement for Banana advances

(Rs. In lakhs)

Particulars Banan Comparison

a
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 0 0 - -
2 2012-13 1057.38 337.36 1057.38 337.36
3 2013-14 1297.64 381.61 240.26 44.25
4 2014-15 1141.02 402.41 -156.62 20.81
5 2015-16 1026.63 149.00 -114.39 -253.42

Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards banana crop. Compare to 2014-15
and 2015-16 loan disbursement towards banana decreases by amount of Rs.
253.42 lakhs with a decrease in the area of 114.39 acres. In the year 2012-13 and
2013-14 the disbursement of amount was increased by Rs. 44.25 lakhs compared
to previous year and also area by 240.26 acres.
Table 8: Year wise comparison statement for Rubber advances

(Rs. In lakhs)

Particulars Rubbe Comparison

r
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 0 0 - -
2 2012-13 722.76 132.09 722.76 132.09
3 2013-14 1895.00 499.72 1172.24 367.63
4 2014-15 1682.22 460.078 -212.78 -39.64
5 2015-16 1508.73 252.76 -173.49 -207.31

Interpretation:

The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards rubber crop. Compare to 2012-13
and 2013-14 loan disbursement towards rubber increases by amount of Rs. 367.63
lakhs with an increased area of 1172.24 acres. In the year 2015-16 the
disbursement of amount was decreased by Rs.
207.31 lakhs compared to previous year and also area by 173.49 acres.
Table 9: Year wise comparison statement for Coconut advances

(Rs. In lakhs)

Particulars Cocon Comparison

ut
Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 718.88 76.77 - -
2 2012-13 651.27 94.29 -67.61 17.52
3 2013-14 506.90 82.36 -144.37 -11.93
4 2014-15 462.22 81.60 -44.68 -0.75
5 2015-16 413.55 19.39 -48.67 -62.21

Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards coconut crop. Compare to 2011-12
and 2012-13 loan disbursement towards coconut increased by amount of Rs.
17.52 lakhs . In the year 2015-16 the disbursement of amount was decreased by
Rs. 62.21 lakhs compared to previous year and also area by 48.67 acres.
Table 10: Year wise comparison statement for other crops advances

(Rs. In lakhs)

Particulars Other crops Comparison

Sl.No. Years Area in acres Amounts Area in acres Amounts
1 2011-12 2673.66 638.07 - -
2 2012-13 963.65 165.55 -1710.01 -472.52
3 2013-14 1236.54 224.77 272.89 59.22
4 2014-15 1052.32 428.72 -184.22 203.95
5 2015-16 985.62 277.80 -66.7 -150.92

Interpretation:
The above graph reveals the year wise comparison statement data
pertaining to disbursement of loans towards other crops. Compare to 2011-12 and
2012-13 loan disbursement towards other crops decreased by amount of Rs.
472.52 lakhs with an area of 1710.01 acres. In the year 2014-15 the disbursement
of amount was increased by Rs. 203.95 lakhs compared to 2013-14 but decreased
in area by 184.22 acres. In the year 2015-16 the disbursement of amount was
decreased by Rs. 150.92 lakhs compared to previous year and also area by 66.7
acres.
 CHAPTER 05

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 SUMMARY OF FINDINGS

 The majority of loan disbursement by DCC bank, Shivamogga is in short

term loan which contributes 49 percent of total loans disbursed.
 The major lending activity of the DCC bank, Shivamogga is in short term
loans when compared to medium term loans.
 No significant variability is observed between short term loan and medium
term loans
 Advances made towards the paddy were highest during 2013-14 when
compared to previous years.
 Advances to maize have been moderate during all the years.
 Loans distributed to sugarcane were less during 2015-16 when compared
to previous years.
 Considerable decrease in the advance disbursement to Ginger crop was
noticed from 2011-12 to 2015-16.
 Areca nut had received highest amount of loan during 2013-14 when
compared with previous years.
 Constant level was maintained in distributing loans to crops like Rubber,
Banana and coconut. Hence no significant variation was observed.
 The advances disbursed to other crops was less, however moderate level
was maintained in disbursement all the years.
 Among the eight major crops, Arecanut crop received highest loan on an
average of
64.40 percent across the years. Next place was occupied by paddy crop in
receiving the loan of about 21.15 percent.
 The amount lent to crops was improved till 2013-14 and substantial
decrease was observed thereafter.
5.2 SUGGESTIONS

 The bank should spread its lending activity with respect to short term and
medium term loans.
 The bank has to adopt long term loan facilities to farming communities
which improves activities like mechanization in agriculture that directly
helps the farmers.
 The disbursement of agricultural loan should be given in time to the
farmers in purchasing the inputs that increase the productivity and
repayment capacity of farmers.
 The bank lends loans to Arecanut crop as cultivation rate is higher in this
crop. Bank should encourage more in lending loans to Arecanut along with
construction of processing units and mechanizations like use of dehusker
in arecanut which helps the large farming community

5.3 CONCLUSION

 The Government is encouraging Agriculture and allied activities so as to

improve the conditions of people of rural India. The Government is also
encouraging Co-operative sectors by which the rural people can improve
their lifestyle. It is necessary to the rural people to improve their life for
which lending at lower rate of interest for the agriculture and small scale
industries helps to farmers. This is possible through DCC bank and Co-
operative sector. Agriculture is the major segment of Indian economy.
Agricultural lending is available for a multitude of farming purposes. In
Shivamogga district area the major crop is coconut, rubber, paddy, areca
nut, maize, banana etc. so that bank also targeted more in these crops. The
bank can also extend their lending activity more towards the medium term
and long term loans in agriculture sector. The present sensible practices
joined with visions of growth will certainly take the bank to higher level of
growth and achievement.
 BIBLIOGRAPHY

Books:

1. Financial Management-9th Edition

I M Pandey
2. Annual Report of SDCC Bank, Shivamogga
(FYs 2011-12, 2012-13, 2013-14, 2014-15, 2015-16)

Webliography:

1. http://www.google.com.in/search=co-operativebankinIndia
2. http://www.google.com.in/search?q=agriculturallendinginIndia
3. http://www.google.com.in/search=aboutshivamoggadistrict
DEPT. OF MBA, GMIT, DAVANAGERE Page 26
DEPT. OF MBA, VIVEKANADA Page 21
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