CHAPTER-1

INTRODUCTION
INTRODUCTION ABOUT PROJECT
The Study was carried out on "Loans and Advances with Special Reference to "PRIMARY CO
OPERATIVE AGRICULTURAL RURAL & DEVELOPMENT BANK LTD" at Gubbi."
Project work is an essential component of the VTU MBA academic curriculum. It is a good platform for
exploring our knowledge and understands the various skills required to enter a specific area of operation. It
helped in understanding the theoretical knowledge and apply it in real time. It also provides an
understanding of professional cultures, allows for the analysis of work place settings, and provides platforms
for comparing different working styles.
The main goal is to understand the about lending system in Bank in the form of loans and advances. "Loans
and Advances," a topic dealing with the bank's lending activity. The public will borrow loans from banks for
several purposes. By granting loans individuals, bank in turn is providing them build financial aid to
promote or establish the business. An effort has been made to understand the various lending under different
categories. How the recovery of these loans are being made and also to see if there is any impact on financial
health of the bank due to their lending and recovery.
In fact, the purpose of the study was to analyse and make recommendations based on data from the previous
five fiscal years.

INDUSTRY PROFILE
THE BANKING INDUSTRY IN INDIA:
The banking industry in the modern sense were the bank of Hindustan (1770-1829) and the general bank of
India (1786-1829), both of which since gone out of business.
Oudh Commercial bank was the first Indian bank with limited liability to be managed by India Board. It was
founded in 1881 in Faizabad. This bank went bankrupt in 1958. Punjab National Bank, founded in Lahore in
1895, was the first bank solely run by Indians. The Punjab National Bank has not only survived but is now
one of India’s major banks.
The Allahabad Bank is India’s oldest public sector bank, with offices all over the country and a history of
servicing customers for over 145 years, Allahabad Bank, also known as the Bank of Upper India, is one of
India’s oldest joint stock banks. It was founded in 1863 and failed in 1913.
The Indian government nationalised all major banks that it did not already possess in 1969, and these banks
have remained in government hands ever since.
FUNCTIONS OF BANK:
1. Accepting the deposits:
a. Demand deposits:
Demand deposits, also known as current deposits, are those that can be withdrawn at any time by the
depositor using checks. The bank does not pay interest on demand deposits, it is convenient for the
businessmen to pay creditors by drawing cheques and also get the cheques received by them collected
b. Savings deposits:
Savings deposits, on which the bank pays a specific rate of interest to depositors but imposes certain
withdrawal limitations.
C. Fixed deposits:
Fixed deposits are ones that can be withdrawn after a set length of time has passed. These are also
known as time deposits, and they pay a higher rate of interest than savings account.

2. Lending of funds
a. Loan:
Loan is a financial accommodation under which bank grants an advances a separate account called
loan account. Interest was changed on the entire amount of loan sanctioned loans are given to all
types of persons be the personal security of the borrower or beside the personal movable or
immovable properties.
b. Overdraft:
An overdraft is a financial arrangement in which a current account holder is permitted to overdraft
his account up to a certain limit, with interest levied on the precise amount of the overdraft. It is
given in exchange for the borrower’s security.
c. Cash credit:
A cash credit is a type of financial arrangement in which an advance is provided on a separate
account known as a cash credit account up to a certain maximum. Interest is changed on the amount
made use by the borrower it is granted against the security of goods or personal security of one or
more persons other than borrowers.
d. Discounting of bills:
It is financial arrangement under which the customer holdings the bill of exchange can get the loan equivalent
to the value of the bills discount. On maturity, the banker collects the proceeds of the bill from its acceptor,
and the discount represents interest on the money lent during the bill’s unexpired duration.
THE INDIAN BANKING SYSTEM IS STRUCTURED AS FOLLOWS:
India’s contemporary banking system was developed to address the financial needs of trade and industry as
well as the country’s institution.
Bank can be Dividend in to 2 types:
 Scheduled bank
 Non-scheduled bank

CO-OPERATIVE BANK AND CREDIT SOCIETY

These are established with the main intention of meeting the people in the rural area with their requirements.
Usually, these banks are governed under the rules and regulation of co-operative laws, which are framed by
co-operative members. Not only rules of co-operative law is applicable, some parts of the Banking
Regulation Act of 1949 are also used.
State co-operative banks, district co-operative banks, and primary co-operative societies are banks, and
primary co-operative societies are the three types of co-operative societies classified by geographical area.
The strategy is to provide financial assistance and the development of agriculture with the time period of
short term and the medium term is given for the seeds, fertilizers and implements etc. for the formers.
 INDIAN BANKING STRUCTURE

India’s Reserve Bank

Non-scheduled banks
Scheduled banks

Co-operative Banks
commercial Banks

Public
Private
Sector
Regional
Sector
Banks Foreign
State co- Rural
Banks
operative Urban co- Banks Banks

Bank operative Bank

State Bank of India

Nationalized Banks
Other Public
SCHEDULED BANK
The schedule bank, which is the second of India’s reserve banks, is one that is registered. It falls under the
purview of the RBI’s various credit control measures. They are obligated to maintain a particular minimum
balance on their RBI records.
The reserve bank of India qualifies qualifying borrowing and re-discounting offices as scheduled banks.
Schedule bank classified in to two types:
1. Organize a co-operative bank:
The creation of the co-operative credit societies act of 1904, which accommodated the arrangement
of co-operative credit societies, gave birth to co-operative banks.
IT IS FURTHER SUBDIVIDED INTO TWO TYPES:
 Co-operative state:
This bank is a federation of central co-operative banks that keeps an eye on the state’s co-
operative banking structure. State co-operative banks lend to central co-operative banks and
primary societies rather than to farmers directly.
 A Co-operative bank in the city:
Though not formally defined, the term “urban co-operative bank” refers to co-operative banks
located in urban and semi-urban areas. Only urban co-operative banks are allowed to make
loans for non-agriculture uses.
2. Commercial banks with a schedule:
These are the banks listed in the second schedule of the RBI Act of 1934. The banker is someone
who gets cash in the ordinary course of business and repays it to the individuals from whom or on
whose account he received it.
 Bank in the public sector:
 It is a bank in which the government owns a significant stake and is classified into two sorts.
1) The State bank of India
2) The Nationalized bank
 Banks in the private sector:
It is a Bank in which larger part of state or hold by private individual people.
 Regional rural banks:
This Banks are conceived has institution that combines the local feel and familiarity with
rural problems.
 Banks from other countries:
 These banks are foreign-owned and have their headquarters outside of India. This Banks are
also called as exchange banks.

THE NON-SCHEDULED BANK

Banks which are excluded, in the second schedule of RBL non-scheduled banks are not qualified for every
one of those offices that the scheduled banks benefit of from the RBI the banking regulation act 1949 non-
scheduled banks have likewise gone under the RBI control.
COMPANY PROFILE:
PRIMARY CO-OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK LTD. Gubbi has
been started under the variable guidance and support by honourable Sri, Lakshminarasimhaiah Ex Minister
of Karnataka government.

The society have registered under the Karnataka societies Act 1959 vide Registration
No.ART/RCS/1550/1940-41 on dated 27-09-1940 and came in to existence and start functioning inhabited
by middle- and lower-class citizens.

The society has progressed rapidly and has been able to expand its activities with the sole intention of
catering of the needs of its members in particular and the general public at large to enable them to improve
their means of earning.

VISION AND MISSION STATEMENT

VISION:

“To provide financial assistance to farmers for the social and for development of economic of the country.
Helping the farmers to improve quality of life.

MISSION:

“Customer trust is our asset and we look to continue our journey of progress and to share its advantages with
our customers and workers”.

COMPETATORS:

 Banks in rural areas.

 Bank for corporations.
 Some cooperative banks in the area.
AREA OF OPERATION

 Gubbi .
 Chelur.
 Nittur.
 C,S,pura.
 Kadaba.
 Hagalavadi.

SWOT ANALYSIS

The term SWOT stands for strengths, weaknesses, opportunities, and threats. Internal strengths are
the ones that you have. Characteristics those are positive. Processes in the workplace take a look at
these competitive advantages for a moment. Weaknesses are internal as well, and they are the
company’s bad qualities, indicating competitive weaknesses. These should be recognised from
problems in order to avoid an immediate collapse. Weaknesses must be overcome in order for the
company to grow and improve in the future. Threats are coming from outside the firm, and action is
needed.

STRENGTH:

 It focuses rural development and upliftment of rural.

 Most dedicated and efficient staff members.
 Well experienced planning team.
 PCARD have a good reputation among customer.
WEAKNESSES:

 No ATM facility for its customers.

 Not well-developed infrastructure facility.
 There is no daily transaction.
OPPORTUNITIES:

 Government and sponsored bank support.

 Bank can offer more service to more farmers.
 Building the customers relationship with the help of new services and schemes.
THREATS:

 Competition from other co-operative banks.

 Government rules and regulation.

BORD OF DIRECTORS

SL.NO NAME DESIGNATION

01 B.K. Paramashivaiah President
02 K. N. Narasimhaiah Vice-president
03 Nanjeegowda Director
04 N. Sadhashivaiah Director
05 K.B. Pramod Director
06 S. Somasheekar Director
07 Krushnegowda Director
08 Vrushabendra Kumar Director
09 Kalyanamma Director
10 Rekha Director
11 S.L. Narasimhaiah Director
12 Mallikarjun Director
13 H.D. Nagaraj Director
PRODUCT/SERVICES PROFILE
TABLE NO: 2
INTEREST RATE OF DIFFERENT LOANS AND ADVANCES

SL NO. LOAN DETAILS RATE OF INT PER

ANNUM (%)

1 Drip water loan 15

2 Car loan 11

3 Gold loan 13

4 Personal loan 14

5 Tractor loan 14

6 Home mortgage loan 12

7 Fardening 12

8 land development 14

9 Two wheel loan 15

10 Mango loan 15

11 Dairying and mini diary 14

12 Sheep farming 13

BALANCE SHEET OF MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

PCAR&D BANK.
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND
LIABILITIES
SHAREHOLDER'S 7,12,930.00 6,96,430.00 6,95,930.00 6,80,921.00 6,70,921.00
FUNDS
Equity Share Capital 75,27,129.00 73,86,469.00 78,19,729.00 77,95,029.00 76,63,254.00

TOTAL SHARE 82,40,059 80,82,899 85,15,659 84,75,950 83,34,175

CAPITAL
Reserves and Surplus 12,06,097.60 12,06,097.60 12,06,097.60 12,06,097.60 5,82,829.00

Total Reserves and 12,06,097.60 12,06,097.60 12,06,097.60 12,06,097.60 5,82,829.00

Surplus
TOTAL 94,46,156.6 92,88,996.6 97,21,756.6 96,82,047.6 89,17,004.00
SHAREHOLDERS
FUNDS
Deposits 41,23,192.00 39,79,812.00 41,21,257.00 32,47,946.00 31,80,858.00

Borrowings 56165400.63 54053903.85 58231921.64 60330338.11 56848252.39

Other Liabilities and 1455945.00 1967625.00 1803796.00 6197174.33 4339460.54

Provisions
TOTAL CAPITAL AND 71190694.23 69290346.45 73878731.24 75346900.55 72985574.93
LIABILITIES
ASSETS
Cash and Balances with 119267.00 622600.00 878206.00 261785.00 486297.91
Reserve Bank of India
Balances with Banks 2186615.00 5247119.00 2013656.00 4330576.00 2369896.00
Money at Call and Short
Notice
 Investments 2659600.00 2659600.00 2659600.00 2659600.00 2659600.00

Loans and Advances 51197773.91 48051612.91 53026468.91 57082379.91 59697608.91

Gross Block 1853240.00 1953240.00 1793697.00 1753240.00 1253240.00

Revaluation Reserves 58104167.97 9601664.66 12348738.79 3564289.62 5360145.11
Fixed Assets 412050.23 412050.23 412050.23 412050.23 405871.23
Other Assets 735980.12 742459.65 743314.31 743004.82 752915.77
TOTAL ASSETS 71190694.23 69290346.45 73878731.24 75346900.55 72985574.93

FINANCIAL STATEMENTS:

Balance sheet for the year ending 2017 to 2021 of PCARD

P&L Appropriation Account statement for the year ending 2017 to 2021

PROFIT & LOSS MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

ACCOUNT OF
KARNATAKA BANK (in
Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
INCOME 2659600 2659600 2689000 2659600
Interest / Discount on 116090 116090 116090 116090
Advances / Bills
Income from Investments 96848266 62167915 68773526 68946114
Interest on Balance with 6486184 3054881 6242996 2435429
RBI and Other Inter-Bank
funds
Others 45119302 49432983 54303581 59679679
TOTAL INTEREST 1852391 7291377 6164126 7028023
EARNED
Other Income 379000 348240 125849 266952
TOTAL INCOME 15346083 125071086 132797168 141431887
3
EXPENDITURE
Office expenditure 995803 928280 901066 1097379
Administration expenditure 20405 944560 464804 425477
Other expenditure 15410 15314 272816 224259

Depreciation _ 11759 _ _

CHAPTER-2
CONCEPTUAL BACKGROUND AND LITERARUTRE REVIEW

THEORETICAL BACKGROUND OF THE STUDY

The main business of the bank is lending money and improves the economic conditions of members through
granting loans and advances.
Most important activities of the banks are granting loans and advances this is because advances are chief
source of the profit for the bank further advances enable trade, industry and commerce to meet their financial
requirements.
To great loans and advances for many reasons, some reasons are as follows:
 To Possess acquire, alter or construct Agricultural purpose.
 To the members on hire purchase\hypothecation of motor vehicle..

Meaning of Loans and Advances

LOANS
The amount lent by the lender to the borrower for a specific purpose like the construction of the building,
capital requirements, purchase of machinery and so on, for a particular period of time is known as Loan. In
general, loans are granted by the banks and financial institutions. It is an obligation which needs to be repaid
back after the expiry of the stipulated period.
The loan carries an interest rate on the debt advanced. Before advancing loans, the lending institution checks
the credit report of the customer, to know about his credibility, financial position and capacity to pay.
Loan is classified in the following categories:
On the basis of Security:
1.Secured Loan: The loan which is backed by securities is Secured Loan.
2.Unsecured Loan: The loan on which no asset is pledged as security is Unsecured Loan.
On the basis of Repayment:
1. Demand Loan: The loan which is repaid on demand of the lender is Demand Loan.
2. Time Loan: Loan, which is repaid in full at a future specified date is Time Loan.
3. Instalment Loan: Loans which are to be repaid in evenly distributed monthly instalments is Instalment
Loan.
On the basis of Purpose:
1.Agricultural Loan
2. Car Loan
3.Gold Loan
4.Personal Loan
5.TractorLoan
ADVANCES
Advances are the source of finance, which is provided by the banks to the companies to meet the short-term
financial requirement. It is a credit facility which should be repaid within one year as per the terms,
conditions and norms issued by Reserve Bank of India for lending and also by the schemes of the concerned
bank.
They are granted against securities which are as under:
1. Primary Security: Hypothecation of Debtors, Stock Pro-notes, etc.
2. Collateral Security: Mortgage of land and buildings, machinery, etc.
3. Guarantees: Guarantees given by partners, directors or promoters, etc.
The following are the forms of bank advances:
1. Short term loans: Advance in which the entire amount is provided to the borrower at one time.
2. Overdraft: A facility provided by the bank in which the customer can overdraw money from his account
up to a specified limit.
3. Cash Credit: A facility granted by the bank in which the customer can advance money up to a certain
limit against the asset pledged.
4. Bills Purchased: An advance facility provided by the bank against the security of bills.
Loan and Advance information in General:
This is the bank’s survival unit, and until this department succeeds, the bank’s survival is in jeopardy. If this
portion does not function properly, the bank may become bankrupt. This is significant since the bank’s
earning unit is this.
Bank take deposits from depositors on the understanding that they will be paid interest and that their money
will be safe. The question of how the bank will offer interest to the client may now arise, and the easy
answer is via loans and advances.
 Loan and Advance applications
 Loan and Advance are sanctioned

LOANS:
A Loan occurs when a bank gives a lump-sum advance to a borrower, who then withdraws the entire amount
in cash and agrees to repay it in instalments. The advance is placed on a separate loan account to which the
entire loan amount is credited right away..
ADVANCES:
It is done on separate loan account to which the entire loam amount is credited right away.
2.5 various types of loans and advances
 Plant and machinery, a van, and other tangible assets
 Documents proving ownership of commodities. For example, railway receipts, bills of
exchange, and so on
 Securities in the financial sector (shares and debentures)
 Policies for life insurance
 Investing in real estate (land, building, etc)
 Reception of a fixed deposit
 Ornaments, jewellery, and other items made of gold
 Safety of movable or permanent property
 Hypothecation of stocks

LITERATURE REVIEW WITH RESEARCH GAP

LITERATURE REVIEW:
1) Dr. Priya soloman, Tanu Aggarwal (2018): The work in this paper focusing on the Real Estate
advances and Interest rates. The writers applies the path diagram and analysis of moment structure to
know the interest rates with consider State Bank of India, IDBI bank, Canara bank, Indian bank for the
analysis with the help of statistical software on correlation and Regression added SPSS module of on
Public sector banks. The outcome on this paper includes the minimum likelihood model which says that
there is no influence of real estate advances on public sector banks. In other words it gives less
contribution for the real estate sector developed in India.

2) Krishna Kumar Ramanathan, Babu P. GEORGE (2016): In their study on the "Evolving competitive
dynamics in the retail banking sector in India” mention that the India is going through a unique
competitive situation. This work is based on the retail banking, banking products and challenges with
respect to Karnataka bank, India. To analyses the performance they consider the primary data during the
period between 2006 and 2014 they conclude the paper work with the help of findings like Reserves and
surplus growth, Deposits growth, Borrowing Growth, Other liabilities and Provisions Growth, Growth of
cash and balance with RBI, Money short notice, advance growth, Gross Earnings growth, Dividend
Payout, Miscellaneous other findings. Lastly considered as that they have a forceful growth plan and there
is no choice for other banks to improve the quality of their services and become more customers driven.

3) G. Barathi Kamath (Jan 23 2007): The present study analyzes the performance of the intellectual
capital of the Indian banking sector. The paper search for Guess and analyze the value added intellectual
co-efficient for calculate the value based staging of the Indian banking sector for a period of five years
data from 2000 to 2004 through the human capital and Intellectual capital and they consider all 98
scheduled commercial banks as per the condition of Reserve Bank Of India. The Paper elected from the
starting and seminal attempt to understand the suggestions of the business performance of Indian Banking
sector from intellectual resource perspective.
4) Ms. K Kaleeswari, S. Sheik Abdullah (2014): Banking inhabits one of the major positions in the
advanced economic world. It is essential for trade and industry. The study which done on the customers
opinion about loans and advances in banking services and commercial banks to analyze they use both the
primary as well secondary data and they also considers the customers perception for the analysis they
collect the data with the 175 respondents and for calculation they use statistical tools. They conclude the
analysis like the banks need to educate the customers before taking the loans that will helps to get the
confidence for the customers to select the suitable schemes. And also banks needs to know the customer
preferences and opinions about the loans and advances.

5) Pallavi chavan and Leonardo Gambacorta (2016): The reason behind the study to know the bank
lending and loan quality in India. And analyze how the non-performance loans of Indian banks behave
through the cycle. Procyclicality in a lending behavior, Loan Quality, Banking ownership. The
methodology has been carried out by using a dynamic panel data model based on generalized method of
moments. They are considered the data which have been collected as per the RBI instructions along with
other official sources. the bank has need to take more risk during the upturn credit growth and be more
cautious whenever there is a downturn the banks have to be well capitalized to take less credit risk. NPL
ratios reactive to the interest rate environment and the overall growth in the economy Private banks are
more reactive than NPL public banks.

6) P. Maheswari, K M Sudha (2016): The analysis has been done with ratio analysis; Liquidity ratio,
performance ratio, efficiency ratio, profitability ratio to know the financial performance. They consider
the data from the period of 5 years from 2011 to 2015. They find the cost to income of bank which is in
increasing trend. So, the bank should focus more on the earning other income and curtaining operating
expense having comparatively higher degree of consistency in order to have improved profitability
performance.

7) Parama Sivan C (2020): The Purpose of this article is to learn about the performance of private sectors
banks in India. The industry which handles money in country including cash and credit. Banking systems
is one of the well organized and regulated with appropriate authorities over a period of time. With the
effect of merger of public sector banks, state bank of India, Union bank of India, Punjab national bank,
become a largest bank in the world. There is a historical land mark for the Indian banking systems from
private hands to nationalization.it needs to strengthen its performance to meet the global competition.

8) S. Mayilvaganan And E. Saundavarjan (2013): According to the author, customer service in UCBs is
comparatively superior since local personnel who are well acquainted with the customers are hired. As
the business evolves, so do the circumstances. The most qualified personnel should be chosen. They
should be educated on how to use modern information and technology in new systems, such as all-day
banking. ATMs, home banking, telebanking, and other services are available. In order to complete in the
future.
9) E.G Nanasekaran Et.Al (2012):Write that the overall financial performance of urban co-operative banks
in all areas, including share capital, membership, profits and reserve funds, loans and advances, loans
issued, working capital, overdrafts, and so on, is showing a significant and unsurprising trend, as
evidenced by the use of various statistical tools in the study.

10) Seranmadevi and M.G. Saravnraj (2012): Analyze the role of information technology in the Indian
banking industry. Examine the impact of information technology on Indian Bank’s performance in terms
of adds value service and customer satisfaction. The study examines the view of banking customers on
the implementation of IT in banks.

11) E.G NANASEKARAN ET.AL (2012): Write that the overall financial performance of urban co-
operative banks in all areas, including share capital, membership, profits and reserve funds, loans and
advances, loans issued, working capital, overdrafts, and so on, is showing a significant and unsurprising
trend, as evidenced by the use of various statistical tools in the study.

12) SACHIN R. AGRAWAL AND S.S. SOLANKE (2012): In his study paper, he claims that the co-
operative movement has played a significant part in the development of India’s social and economic
environment. However, the Indian government has not provided adequate support to the co-operative,
which has resulted in numerous issues. As a result, an attempt has been made to elucidate the issues and
relative position of co-operative banks in the Indian economy.

13) G Sathish (2016): He claims that the cooperative banking systems, which consists of two big
systems: urban and rural co-operative, is an important aspect of India’s financial system. As financial
intermediaries, urban co-operative banks play an important role in assessing the credit needs of both the
priority sector and the sick segment of the population.

14) S.F. Amiri Aghdaie, F. Faghani (2012): the researcher aimed at applying the SERVQUAL model to
evaluate between mobile banking services satisfaction and services quality and customer satisfaction.
They analyze with the services is tangible, reliability, responsiveness, assurance as the independent
variable. the methodology used to analyses are questionaries’’, surveys etc. the tool which is used is
ANOVA.The ANOVA test shows that there is a significant correlation between mobile banking services
and customer satisfaction. The article concludes that increase in service quality of the mobile banking can
satisfy and develop customer satisfaction that ultimately retains valued customers.

15) S. Mayilvaganan And E. Saundavarjan (2013): According to the author, customer service in UCBs is
comparatively superior since local personnel who are well acquainted with the customers are hired. As
the business evolves, so do the circumstances. The most qualified personnel should be chosen. They
should be educated on how to use modern information and technology in new systems, such as all-day
banking. ATMs, home banking, telebanking, and other services are available. In order to complete in the
future.

16) E.G Nanasekaran Et.Al (2012):Write that the overall financial performance of urban co-operative
banks in all areas, including share capital, membership, profits and reserve funds, loans and advances,
 loans issued, working capital, overdrafts, and so on, is showing a significant and unsurprising trend, as
evidenced by the use of various statistical tools in the study.

17) Seranmadevi and M.G. Saravnraj (2012): Analyze the role of information technology in the Indian
banking industry. Examine the impact of information technology on Indian Bank’s performance in terms
of adds value service and customer satisfaction. The study examines the view of banking customers on
the implementation of IT in banks.

18) E.G NANASEKARAN ET.AL (2012): Write that the overall financial performance of urban co-
operative banks in all areas, including share capital, membership, profits and reserve funds, loans and
advances, loans issued, working capital, overdrafts, and so on, is showing a significant and unsurprising
trend, as evidenced by the use of various statistical tools in the study..

19) SOYELIYA USHAL (2013): I his paper, he claims that the world economy has progressed thanks to
banking business. The goal of the study is to learn about bank lending practices in India and to assess the
efficacy of cooperative banks in the country. The satisfaction level of Bank customers as a result of bank
lending policies was investigated.

20) G Sathish (2016): He claims that the cooperative banking systems, which consists of two big
systems: urban and rural co-operative, is an important aspect of India’s financial system. As financial
intermediaries, urban co-operative banks play an important role in assessing the credit needs of both the
priority sector and the sick segment of the population.

CHAPTER-3

RESEARCH DESIGN
STATEMENT OF THE PROBLEM
“A study on Loans and Advances with special reference to "PRIMARY CO OPERATIVE
AGRICULTURAL RURAL & DELOPMENT BANK LTD" Gubbi.

NEED FOR THE STUDY

This project is mainly to know about banks granting loans and advances to the people.

OBJECTIVES OF THE STUDY

1) To identify the source of the loan or credit financing.
 2) Analyze the growth in various categories of loans and advances.

3) Understand the recovery by the customers against the loan.

4) To understand the impact of lending and recovery on financial health of the bank.

SCOPE OF THE STUDY

1. The study is only limited to the study of loans and advances in primary cooperative agricultural rural
& development bank ltd" Gubbi.
2. This is an empirical study and limited to Gubbi taluk.
3. The outcome and result of the study is based on the five years data provided by the bank.

RESEARCH METHODOLOGY
Data collecting is one of the most crucial components of any research project because it determines the final
outcome. The approach I used to gather the data in the form of both primary and secondary data for
ultimate elucidation.

COLLECTION OF DATA:
Primary data
Primary data were initially gathered from annual Bank disclosures and investor registration. a benefit learn
more about the laws governing loans and advances, regulations, procedures, and more details conversation
with the authorities, which offers useful information.

Secondary data
Secondary data was based on loans and advances, to understand the financial situation, and the various rates
of Interest based on loans that were imported was observed. The data is gathered through secondary sources.
during the project, sources Information that was used to determine performance by data available in their
publications, and standard banking information, such as an annual report.

STATISTICAL TOOL USED

Karl Pearson’s co-efficient of correlation
Correlation: is a measurement that action that demonstrates the level to which at least 2 factors move
according to one another, a positive relationship determines the degree to which those factors increment or
lessening comparative a negative relationship shows the degree to which one variable increment as the other
reduction.
r xy=n ∑ xy −¿ ¿ ¿

HYPOTHESIS

A Theory is a proposed clarification for a wonder. For a speculation to be a logical theory, the logical
strategy necessitates that one can test it. Researchers by and large base logical speculations on past
perception that can't sufficiently be clarified with the accessible logical hypotheses.

Types of hypotheses:
1. Research hypotheses.
2. Logical hypotheses (H0).
3. Statistical hypotheses.

Hypotheses:
Null Hypothesis (H0): There is no significance relationship between lending and recovery of loans.
Alternative Hypothesis (H1): There is a significance relationship between lending and recovery of loans.

LIMITATIONS OF THE STUDY

1. This study covers only aspects involving to the Loans and Advances of the bank.
2. The figures and facts declared in the financial statement and in additional forms are assumed to be true.
3. Some of the information is kept confident with the bank itself.
4. The study is limits due to the time constraints.
 CHAPTER-4
ANALYSIS AND INTERPRETATION

Table Shows the Lending and Recovery of Tractor Loan from 2017 to 2021
Table No. 4.1
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 30,02,432 30,40,925 67.97%
2018 85,08,813 35,88,153 42.16%
2019 40,87,158 15,71,640 38.45%
2020 45,40,383 17,10,722 37.67%
2021 20,92,399 5,40,094 25.81%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Tractor Loan. We can interpret that67.97%of
Tractor loan recovered in the financial year 2017 In the year 2018loan recovery from the customer is
42.16%.In the year 2019 loan recovery from the customer is 38.45%.In the year 2020&2021the loan
recovery from the customer is decrease37.67%&25.81%.

The Graph shows that Lending and Recovery of Tractor Loan from 2017 to 2021
Graph No: 4.1
 9,000,000 8,508,813

8,000,000

7,000,000

6,000,000

5,000,000 4,540,383
4,087,158
4,000,000 3,588,153
3,040,925
3,002,432
3,000,000
2,092,399
2,000,000 1,571,640 1,710,722

1,000,000 540,094

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:

This graph shows the detailed informationabout Tractor Loan in PCARD Bank, 1 st year is normal
recovery of loan and coming 4 years of loan decrease. And the loan recovery amount is decreased in year
by year ,because this banks is provided loans only for formers ,formers do not have any other income they
have only agricultural income .

Table Shows the Lending and Recovery of Gardening Loan from 2017 to 2021
Table No. 4.2
Loan lending Loan recovery Recovery
Year (amount in Rupees) (amount in Rupees) Percentage (%)
2017 91,01,924 79,75,808 87.62%

2018 43,19,358 26,61,560 61.61%

2019 96,61,560 58,09,868 60.13%

2020 45,89,868 25,52,445 55.61%
2021 35,27,445 20,12,798 57.06%
(Sources: Bank Records)

Analysis:
This table shows the details position of Lending and Recovery of Gardening Loan . We can interpret that
87.62% of Gardening loan recovered in the financial year 2017 In the year 2018 loan recovery from the
customer is61.61%In the year 2019 loan recovery from the customer is 60.13%.In the year 2020 & 2021 the
loan recovery from the customer 55.61%&57.06%.
The Graph shows that Lending and Recovery of Gardening Loan from 2017 to 2021
Graph No: 4.2

12,000,000

10,000,000 9,661,560
9,101,924

7,975,808
8,000,000

6,000,000 5,809,868

4,589,868
4,319,358
4,000,000 3,527,445
2,661,560 2,552,445
2,012,798
2,000,000

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:
This graph shows the detailed informationabout Gardening Loan in PCARD Bank 1 st year is recovery of
loan is good and coming years of loan decrease ,and next year automatically decreased because of this
pendemic situation, formers do not have any other income to repay the loan in time to time .
Table Shows the Lending and Recovery of land development & wire fence Loan from 2016 to 2020
Table No. 4.3
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 76,15,050 72,85,328 95.67%
2018 76,79,828 71,23,821 92.76%
2019 75,58,821 71,25,266 94.26%
2020 71,25,266 66,73,105 93.65%
2021 66,73,105 54,32,686 81.41%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Recovery of land development & wire fence
Loan. We can interpret that 95.67% of loan recovered in the financial year 2017 In the year 2018 loan
recovery from the customer is 92.6%In the year 2019 loan recovery from the customer is 94.26%.In the year
2020 & 2021 the loan recovery from the customer 93.65% &81.41%.

The Graph shows that Lending and Recovery of land development & wire fenceLoan from 2016 to
2021
Graph No: 4.3

9000000

8000000 7615050 7679828 7558821

7285328 7123821 7125266 7125266
7000000 6673105 6673105

6000000
5432686
5000000

4000000

3000000

2000000

1000000

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:

This graph shows the detailed informationabout land development & wire fenceLoan in PCARD Bank 1 st
year is normal recovery of loan, And the loan recovery amount is decreased in year by year ,because this
banks is provided loans only for formers ,formers do not have any other income they have only agricultural
income .
Table Shows the Lending and Recovery of Home Mortgage Loan from 2017 to 2021
Table No. 4.4
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 6,00,000 3,40,742 56.79%
2018 12,64,258 7,64,376 60.46%
2019 21,50,000 15,20,711 70.73%
2020 18,29,171 11,81,649 64.60%
2021 16,55,000 9,70,535 58.64%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Home Mortgage Loan. We can interpret that
56.79% of Home Mortgage loan recovered in the financial year 2017 In the year 2018 loan recovery from
the customer is 60.46%In the year 2019 loan recovery from the customer is 70.73% increased .In the year
2020 & 2021 the loan recovery from the customer 64.60% &58.64% it will be decreased
The Graph shows that Lending and Recovery of Home MortgageLoan from 2017 to 2021
Graph No: 4.4
2500000

2150000

2000000
1829171
1655000
1520711
1500000
1264258
1181649
970535
1000000
764376
600000
500000
340742

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:

This graph shows the detailed informationabout Home Mortgage Loan in PCARDBank The first 2 year is
normal recovery of loan and coming next year of loan increased. And next 2 years the loan recovery
amount is decreased ,because this banks is provided loans only for formers . formers don't have to sufficient
amount to repay the loan.
Table Shows the Lending and Recovery of GOLD Loan from 2017 to 2021
Table No. 4.5
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 3,90,000 3,30,000 84.60%
2018 3,11,000 1,97,000 63.34%
2019 2,37,000 1,73,000 72.99%
2020 2,90,000 1,90,000 65.52%
2021 3,24,000 3,24,000 100%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Gold Loan. We can interpret that67.97% of
Gold loan recovered in the financial year 2017 In the year 2018 loan recovery from the customer is
63.34%In the year 2019 loan recovery from the customer is 72.99%.In the year 2020 the loan recovery
from the customer 65.52%&25.81%. in 2021 the recovery of gold loan 100%.
The Graph shows that Lending and Recovery of Gold Loan from 2017 to 2021
Graph No: 4.5
450000

400000 390000

350000 330000 324000

324000
311000
300000 290000

250000 237000
197000 190000
200000 173000
150000

100000

50000

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:

This graph shows the detailed informationabout Gold Loan in PCARD Bank The Gold loan recovery
position is good .
Table Shows the Lending and Recovery of car Loan from 2017 to 2021
Table No. 4.6
Year Loan lending Loan recovery Recovery
 (amount in Rupees) (amount in Rupees) Percentage (%)
2017 13,50,000 8,50,000 62.96%
2018 12,64,258 7,64,376 60.46%
2019 10,50,000 5,85,000 55.71%
2020 15,79,171 5,97,528 37.83%
2021 16,55,000 11,00,535 66.49%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Car Loan. We can interpret that 62.96% of car
loan recovered in the financial year 2017 In the year 2018 loan recovery from the customer is60.46%In the
year 2019 loan recovery from the customer is 55.71%.In the year 2020 the loan recovery from the customer
37.83% decreased ,in 2021 the recovery of car loan increased in 66.49%.
The Graph shows that Lending and Recovery of Car Loan from 2017 to 2021

1800000
1655000
1579171
1600000
1400000 1350000
1264258
1200000 1100535
1050000
1000000
850000
800000 764376
585000 597528
600000
400000
200000
0
2017 2018 loan lending 2019
loan recovery 2020 2021
Graph No: 4.6

Interpretation:

This graph shows the detailed information about car Loan in PCARD Bank. The first 2 year is normal
recovery of loan and coming next years loan decreased, because bank not able to recovery the loan.
Table Shows the Lending and Recovery of Sheep farming Loan from 2017 to 2021
Table No. 4.7
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 3,75,580 2,85,630 76.05%
2018 4,86,500 3,78,000 77.69%
2019 5,53,000 3,54,000 64.40%
2020 5,28,581 3,48,650 65.39%
2021 9,96,610 5,67,925 57.08%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of Sheep farming Loan. We can interpret that
76.05 % of loan recovered in the financial year 2017 In the year 2018 loan recovery from the customer
is77.69%In the year 2019 loan recovery from the customer is 64.40% decreased .In the year 2020 the loan
recovery from the customer 65.39% increased ,in 2021 the recovery of car loan decreased in 57.08% .

The Graph shows that Lending and Recovery of Sheep farmingLoan from 2017 to 2021
Graph No: 4.7

1200000

996610
1000000

800000

600000 553000 567925

528581
486500

400000 375580 378000 354000 348650

285630

200000

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:
This graph shows the detailed information about Sheep farming Loan in PCARD Bank The first 2 years
recovery of loan id good and coming next 3 years of loan decreased, because of former don’t have the
income in this 3 years to repay the loan .

Table Shows the Lending and Recovery of personal Loan from 2017 to 2021
Table No. 4.8
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 16,84,328 10,38,432 61.65%
2018 23,50,000 12,35,000 52.55%
2019 20,12,350 9,58,000 47.60%
2020 15,60,000 4,30,730 27.61%
2021 24,03,500 13,60,950 56.62%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount ofpersonal Loan. We can interpret that 61.65 %
of personal loan recovered in the financial year 2017 In the year 2018 loan recovery from the customer is
52.25%In the year 2019 loan recovery from the customer is 47.60% decreased .In the year 2020 the loan
recovery from the customer 27.61% decreased ,in 2021 the recovery of personal loan increased in 56.62% .
The Graph shows that Lending and Recovery of personalLoan from 2017 to 2021
Graph No: 4.8

3000000

2500000 2350000 2403500

2012350
2000000
1684328
1560000
1500000 1360950
1235000
1038432
1000000 958000

500000 430730

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:
This graph shows the detailed informationabout personal Loan in PCARD Bank. the first year is recovery
of loan is good and coming years of loan increased and decrease,Because formers are do not have the
other income to pay the loan the year by year .
Table Shows the Lending and Recovery of Two wheeler Loan from 2017 to 2021
Table No. 4.9
Year Loan lending Loan recovery Recovery
(amount in Rupees) (amount in Rupees) Percentage (%)
2017 15,03,500 10,60,300 70.52%
2018 22,35,734 14,90,484 66.66%
2019 30,12,435 21,92,834 72.79%
2020 35,40,328 18,50,385 52.26%
2021 20,60,400 12,70,800 61.67%
(Sources: Bank Records)
Analysis:
This table shows the details position of outstanding amount of two wheeler Loan. We can interpret that
70.52% of loan recovered in the financial year 2017 In the year 2018 loan recovery from the customer is
66.66%In the year 2019 loan recovery from the customer is 72.79%.In the year 2020 the loan recovery
from the customer 52.26% decreased ,in 2021 the recovery of car loan increased in 61.67% .
The Graph shows that Lending and Recovery of twowheeler Loan from 2017 to 2021
Graph No: 4.9
 4000000
3540328
3500000
3012435
3000000

2500000
2235734 2192834
2060400
2000000 1850385
1503500 1490484
1500000 1270800
1060300
1000000

500000

0
2017 2018 2019 2020 2021

loan lending loan recovery

Interpretation:
This graph shows the detailed informationabout Two wheeler Loan in PCARD Bank . The loan recovery
of amount in year by year increased and decreased ,Because of some time formers get loss in agricultural
filed that is the main reason for formers get the losses .

Hypothesis testing 1
Lending and recovery of Loan
Year x y xy x2 y2
2016- 30024.3 30409.25 913017052.9 901459791.4 924722485.5
17 2 6 6 6
2017- 85088.1 35881.53 3053092289. 7239989866. 1287484195.
18 3 23 89 14
2018- 40871.5 15716.40 642354099.9 1670486051. 247005228.9
19 8 1 69 6
2019- 45403.8 17107.22 776733308.6 2061507778. 292656976.1
20 3 5 66 2
2020- 20923.9 5400.94 113009214.5 437813357.5
21 9 5 2 29170452.88
222311. 104515.3 5498205965. 5795265946. 2781039338.
Total 85 4 3 19 66
correlation Coefficient = r = 0.4135
n=5

rxy= n ∑ xy−¿ ¿¿

5 ( 5498205965.3 )−(222311.85)( 104515.34)

rxy = √5 ( 5795265946.19 )−(222311.85)2∗√ 5 ( 2781039338.66 )−(104515.34)2
27491029826.5−23234998588.7
rxy= √13905196693.3−49422558650.4∗√ 13905196698.3−10923456295.3
4256031237.8
rxy= √−35517361957.1∗√ 2981740398
4256031237.8
rxy= 188460.505∗54605.3147
4256031237.8
rxy= 10290945184
rxy= 0.4135

Inference: Since the correlation is 0.4135 this should be a positive correlation between two variables hence
there is a relationship between total lending and total recovery of loan.

CHAPTER-5

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSIONS

\
5.1 FINDINGS:
 The recovery percentage of Tractor loan is increased in 2016-2017 that is 67.97% compared to the
previous years. And the year 2020-2021 it slightly decreased to 25.81%.
 The recovery percentage of Gardening loan increased in the year 2016-2017 is 87.62% and in the
year 2020-2021it was slightly decreased to 5.06%.
  The land development & wire fence loan, it is slightly increased in the year 2016-2017 is 95.67%,and
in the year 2020-2021 it was slightly decreased 81.41%.
 The recovery percentage of Home mortgageloan. In the year 2016-2017 it is recovered 56.79% and
next year in 2018-2019 it was slightly increased loan recovery is 70.73%. and the year of 2020-2021
it was slightly decreased 58.64%
 There is an increased every year loan recovery percentage of gold loan. And in the year 2016-2017
is 84.60% and the year of 2020-2021 it was fully recovered 100%.
 The car loan was bank recovered from the customers is 62.96% in the year 2016-2017. And in 2020-
2021 the loan recovery was decreased 66.49%.
 The recover percentage of sheep farming loan is two years good. In 2016-2017the recovery is
76.05%. on 2018-2019 it was recovery percentage slightly decreased 57.08%
 The recovery percentage of personal loan increased in the year 2016-2017 is 61.65% and in the year
2020-2021it was slightly decreased to 56.62%.
 The recovery percentage of Two wheeler loan increased in the year 2016-2017 is 70.52% and in the
year 2020-2021it was slightly decreased to 61.67%.

5.2 SUGGESTIONS:
The PCARD Bank is performing their function professionally through I wish to give the some following
suggestion.
 The bank can maintain same level of lending and recovery practice of Tractor loan.
 The bank should maintain same level of condition and policies towards the Gardening loan .
 The bank should maintain the constant level to get proper recovery land development &wire fence
loan
 The bank maintain the same level payment in Home mortgage loan
 The bank should maintain good level of interest so it useful to attract more number of customers.
 The bank will take some measures for improve the loans and advances. It helps to increases the value
of bank.
 The bank has to introduce more and more schemes for all section people particularly for low income
groups.
 The bank must maintain the same policy in the case of produce loan.
 The bank should take some measures for increasing the advances, so the asset value of bank will be
increase.
 The bank should maintain the constant level to get proper recovery of Loan.

CONCLUSION
The study is made on 5 years I have observed that the PCARD Bank Ltd has providing good services to
customers. The major activity of the bank is to provide the loan for customers, farmers and backward class
peoples for the development. The bank takes the loan from its apex bank for lending to the primary credit
society with intention of lending to the customers. They have taken many schemes and steps for the
development.
PCARD Bank is one of the well-known co-operative bank in Karnataka District. The bank is performing its
function very well. PCARD Bank should increase more schemes year by year to attract more customers.
 ANNEXURE

TOTAL LENDINGS

TYPES OF LOAN 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Tractor Loan 30,02,432 85,08,813 40,87,158 45,40,383 20,92,399

Gardening Loan 91,01,925 43,19,358 96,61,560 45,89,868 35,27,445

Land development &wire 76,15,050 76,79,828 75,58,821 71,25,266 66,73,105

fence

Home Mortgage Loan 6,00,000 12,64,258 21,50,000 18,29,171 16,55,000

Gold Loan 3,90,000 3,11,000 2,37,000 2,90,000 3,24,000

Car Loan 13,50,000 12,64,258 10,50,000 15,79,171 16,55,000

Sheep farming loan 3,75,580 4,86,500 5,53,000 5,28,581 9,96,610

Personal loan 16,84,328 23,50,000 20,12,350 15,60,000 24,03,500

Two wheeler loan 15,03,500 22,35,734 30,12,435 35,40,328 20,60,400

TOTAL RECOVERY

TYPES OF 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

LOAN

Tractor Loan 30,40,925 35,88,153 15,71,640 17,10,722 5,40,094

Gardening Loan 79,75,808 26,61,560 58,09,868 25,52,445 20,12,798

Land 72,85,328 71,23,821 71,25,266 66,73,105 54,32,686

development
&wire fence

Home Mortgage 3,40,742 7,64,376 15,20,711 11,81,649 9,70,535

Loan

Gold Loan 3,30,000 1,97,000 1,73,000 1,90,000 3,24,000

Car Loan 8,50,000 7,64,376 5,85,000 5,97,528 11,00,535

Sheep farming 2,85,630 3,78,000 3,54,000 3,48,650 5,67,925

loan

Personal loan 10,38,432 12,35,000 9,58,000 4,30,730 13,60,950

Two wheeler 10,60,300 14,90,484 21,92,834 18,50,385 12,70,800

loan