A Study On Lending and Recovery Project-1

A STUDY ON LENDING AND RECOVERY AGRICULTURE LOAN AT PRIMARY
CO-CPERATIVE AGRICULTURAL AN RURAL DEVELOPMENT BANK L.T.D AT KOLAR
CHAPTER-1
INTRODUCTION
PART-A
1.1 INTRODUCTION :
In our present day economy, finance is the life blood and nerve center of a
business. Just as circulation of blood is essential in the human body for maintaining
life, finance is Very essential for smooth running of business. It has been rightly
termed as universal lubricant which keeps the enterprise dynamic. Finance is about
the bottom line of business activities. It is that branch of economics that deals with
management of money and assets involving banking, investment, credits, and so on.
Finance is defined as the provision of money at the time when it is required. Every
enterprise, whether big, medium or small, needs finance to carry on its operation and
to achieve its targets. In fact, finance is so indispensable today that it is rightly said to
be the life blood of an enterprises. Without an adequate finance, no enterprises can
possibly accomplish its objective.
1.2 MEANING :
The finance is a Economic Activity concerned with the acquisition,
financing and management of assets with some overall goal in mind.
1.3 THE SUBJECT FINANCE MAY TRADITIONALLY

CLASSIFY TO TWO TYPES:
 Public finance
 Private finance
 Public finance deals with the requirements, receipts, and disbursements of
funds in the . govt. institutions
 Private finance is concerned with requirements, receipts and
disbursements of funds in case of individual profit seeking institution and a non-profit
MAHILA SAMAJA ARTS , SCIENCE, COMMERCE AND MANAGEMENT STUDIES NEW EXTENSION.KOLAR
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organization.
1.4 IMPORTANCE OF FINANCE:

 It helps in decision making for investment.
 It helps in solving their problems and attaining wealth maximization goal.
 It helps in allocation of earnings between payments to shareholders and retained
earnings.
 It helps the management in choosing most viable projects promising maximum
result with minimum risk.
PART:B
BANKING SECTOR
1.5 INTRODUCTION TO BANKING:
The name bank derives from the Italian word Ban co “Desk or Bench”, used
during the renaissance by Jewish Florentine bankers, who used to make their
transitions above a desk covered by a green table cloth. However, there are traces of
banking activity even in ancient time.
In fact, the word trace its origins back to the ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed court yards called
macula a long bench called a Ban co, from which the word Ban co and bank are
derived. As a money changer, the merchant at Ban co did so much invest money as
primer rely convert the foreign currency into only legal tender in Rome-that of the
imperial mint
The earliest evidence of money changing activity in depicted on a silver

drachma coin from ancient Hellenic colony trapezes on the block sea, modern
Trabzon, c.350-325BC, presented in the British museum in London. The coin shows a
bankers table (trapeze) laden with coins, pun on the name of the city
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A bank is a financial institution that accepts deposits and chances those

deposits in to lending activities. Bank primarily provides financial services to
customers while enriching investors. Government restrictions on financial activities
by banks vary time and location. Banks are important players in financial markets and
offer service such as investment funds and loans. In some countries such as Germany,
banks have historically owned major stakes in industrial corporations while in other
countries such as the United States banks are prohibited from owning non-financial
companies. In France banc assurance is prevalent, as most banks offer insurance
services (and real estate services) to their clients
The level of government regulation of the banking industry varies widely, with
countries such as Iceland, having relatively light regulation of the banking sector and
countries such as china having a wide verity of regulations but no systematic process
that can be followed typical of a communist system.
BANK
Meaning- Bank is an important organ of the modern trade and commerce. A bank is
financial institution which deals with deposits, advances and other related services
BANKING
Definition – In general terms the business activity of accepting and safeguarding

`money owned by the other individual and entities and then lending out this money in
order to earn a profit
The word ‘Bank’ has been originally derived from the Italian word ‘Ban co’, meaning
a bench. In the olden days, money lenders used to exhibit the coins of different
countries on a separate bench and business of exchanging the coins were carried on
though those money lender, especially in Greece, Italy and England. Whenever these
money lenders were not in a position to convert the currency of one bench.
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1.6 HISTORY OF BANKING IN INDIA
Phase-I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1 843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank
of India was established which started as private shareholders banks, mostly
Europeans shareholders. In 1865 Allahabad Bank was established and first time
exclusively by Indians, Punjab National Bank Lt& was set up in 1894 with
headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of
India, Bank of Baroda, Cañara Bank, Indian Bank, and Bank of Mysore were set up.
Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
T0 streamline the functioning and activities of commercial
banks, the Government of India came up with the Banking Companies Act, 1949
which was later changed to Banking Regulation Act 1949 as per amending Act of
1965 (Act No: 23 of 1965). Reserve Bank of India was vested with extensive powers
for the supervision of banking in India as the Central Banking Authority. During those
day's public has lesser confidence in the banks. As an aftermath deposit mobilization
was slow. Abreast of it the savings bank facility provided by the Postal department
was comparatively safer. Moreover, funds were largely given to traders.
Phase-Il
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country. Seven banks forming
subsidiary of State Bank of India was nationalized in 1960 on 19th July, 1969, major
process of nationalization was carried out. It was the effort of the then Prime Minister
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of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were
nationalized. Second phase of nationalization Indian Banking Sector Reform was
carried out in 1980 with seven more banks. This step brought 80% of the banking
segment in India under Government ownership. The following are the step~ taken by
the Government of India to Regulate Banking Institutions in the Country:
 1949: Enactment of Banking Regulation Act.
 1955: Nationalization of State Bank of India.
 1959: Nationalization of SBI subsidiaries.
 1961: Insurance cover extended to deposits.
 1969: Nationalization of 14 major banks.
 1971: Creation of credit guarantee corporation.
 1975: Creation of regional rural banks
1980: Nationalization of seven banks with deposits over 200 cores.
After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
Phase-Ill
This phase has introduced many more products arid facilities in the banking sector
in its reforms measure. In 1991, under the chairmanship of lvi Narasimham, a
committee was set up by his name which worked for the liberalization of banking
practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being
put to give a satisfactory service to customers. Phone banking and net banking is
introduced. 'The entire system became more convenient and swift. Time is given more
importance than money.
The financial system of India has shown a great deal of resilience. It is sheltered from
any crisis triggered by any external macroeconomics shock as other East Asian
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Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.
1.7 BANKS IN INDIA:

In India the banks are being segregated in different groups each group has their own
benefits and limitations in operating in India. Each has their own dedicated target
market. Few of them only work in rural sector while other in both rural as well as
urban many even are only catering in cities. Some are of Indian origin and some are
foreign players.
1.8 CO-OPERATIVE BANKS IN INDIA:

The origins of Co-operative banks in India can be traced to the close of the 19th
century when inspired by the success of the experiments related to the Co-operative
movement in Britain and the Co-operative credit movement in Germany. Such society
when set up in India Co-operative banks is an important constituent of Indian
financial system. They are the primary financiers of agriculture activities, some small
scale industries and self employed workers. The Co-operative bank in India is
considered to have been first Co-operative bank in Asia.
The Co-Operative banking sector has been developed in the country to supplant the
village moneylender, the predominant source of rural finance, as the terms on which
he made finance available have generally been detrimental to the development of
Indian agriculture.
Co-operative banks are distinct entities by themselves with separate jurisdiction and
independent board of directors the co-operative banks are organized on the co-
operative basis and are governed by their members by according to the
Co-Operative law. They are under the control of their respective state government.
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Certain provisions of the banking regulation act also apply to co-operative banks. Co-
operative banks in India are federal in their structure. At the lower ladder, there are
primary co-operative societies and on the top, there is the primary co-operative bank.
1.9 DEFINITION AND MEANING OF CO-OPERATIVE BANK:

DEVINE defined a "co-operative bank mutual society formed, composed and
governed by the proper working of employees that encourages regular saving and
granting small loans on easy terms of interest and easy payments".
IN THE WORD OF HENRY WARE "co-operative banking is an agency which is in
a position to deal with the small man on his own forms accepting the security. He has
without drawing on the protecting of the rich"
INTERNATIONAL CO-OPEARATION BANKS ASSOCIATION, "A co-operative
bank is a financial entity which belongs to its members, who are at the same time the
owners and the customers of their bank".
1.10 CHARACTERISTICS OF CO-OPERATIVE BANK:

 Co-operative banks perform all the banking function viz deposits
mobilizations, supply of credit and provision of remittance facilities
1. Co-operative banks accepts all types of deposits including current, savings fixed or
time deposits from the individual, both members and non-members.
 Co-operative banks are intermediaries.
Personalized service is the special features of co-operative banking i.e. in co-
operative banking greater emphasis is laid on the credit worthiness of the borrowing
capacity of borrower.
The Co-Operative sector can be further classified into 4 types

 Primary Co-Operative credit societies
 Central Co-Operative banks
 State Co-Operative banks
 Land development banks
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1.11 MAJOR BANKS IN AGRICULTURAL SECTOR IN INDIA:

One of the major reasons for the poverty is a low accessibility by rural poor. If
banks are helping rural and agricultural mass heavily, then the concern about low
accessibility and disbursement raises doubts about the performance of financial
sectors in India.
Indian banking sector have responsible commitment to strengthen the agricultural
sector and straighten the agricultural sector in loan. India's growing population needs
more food production even to meet its own demand. It is critical now that agricultural
sector has been pushed as a secondary sector rather than primary sector. The
agriculture needs banking sector to consider improving
their loan schemes.
1.12 SOME OF THE IMPORTANT BANKS WHICH LENDS IN

AGRICULTURAL ACTIVITIES ARE AS BELOW.
 NABARD
 KSCA&RD BANK
 STATE BANK OF INDIA
 CANARA Bank
 ANDHRA —Bank
 ALLAHABAD Bank
 ICICI BANK
 HDFC BANK
 BANK OF INDIA
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PART- C
LOANS
1.13 MEANING OF LOAN:
The term loan is popularly used to denote the granting of an advance in lump sum,
usually on the basis of some acceptable securities. Under the loan system, credit is
given for definite purposes and for pre-determined period. An arrangement in which
lender gives money or property to barrower and barrower agrees to return the property
or repay the money usually along with interest at some future period.
1.14 DEFINITION OF LOAN:
According to James w Anderson "the act of giving money, property or other material
goods to another party in exchange for future repayment of principal amount along
with interest or other finance charges. A loan may be for a specific, one-time amount
or can be available as open ended credit up to specified ceiling amount.
1.15 SECURED LOAN:
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or
property) as collateral for the loan.
A mortgage loan is a very common type of debt instrument, used by many individuals
to purchase housing. In this arrangement, the money is used to purchase the property.
The financial institution, however, is given security — a lien on the title to the house
— until the mortgage is paid off in full. If the borrower defaults on the loan, the bank
would have the legal right to repossess the house and sell it, to recover sums owing to
it.
In some instances, a loan taken out to purchase a new or used car may be secured by
the car; in much the same way as a mortgage is secured by housing. The duration of
the loan period is considerably shorter — often corresponding to the useful life of the
car. There are two types of auto loans, direct and indirect. A direct auto loan is where
a bank gives the loan directly to a consumer. An indirect auto loan is where a car
dealership acts as an intermediary between the bank or financial institution and the
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consumer.
A type of loan especially used in limited .partnership agreements is the note. A stock
hedge loan is a special type of securities loan whereby the stock of a borrower is.
Hedged by the lender against loss, using options or other hedging strategies to reduce
lender risk.
A pre-settlement loan is a non-recourse debt, this is when. a monetary loan is given
based on the merit and awardable amount in a lawsuit case. Only certain types of
lawsuit cases are eligible for a pre-settlement loan. This is considered a secured non-
recourse debt due to the fact if the case reaches a verdict in favor of the defendant the
loan is forgiven.
1.16 UNSECURED LOAN

Unsecured loans are monetary loans that are not secured against the borrower's assets.
These may be available from financial institutions under many different guises or
marketing packages:
 credit card debt
 personal loan
 bank overdraft
 credit facilities or lines of credit
 corporate bonds
The interest rates applicable to these different forms may vary depending on the he
borrower. These may or may not be regulated by law. In the United Kingdom, when
applied to individuals, these may come under the Consumer Credit Act 1974.
1.17 TYPES OF LOAN:

Broadly, three types of loan can be identified.
 Fund based loan.

 Non-fund based loan.
 Asset based loan.
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1.18 FUND BASED LOAN:

This is the most direct form of loan. It is granted as a loan or advance with an actual
outflow of cash to the borrower by the bank. In most cases, such loan is supported by
prime securities. Fund based loan can be further classified as short-term loans, Long-
term loans, revolving credits.
1.19 NON-FUND BASED LOAN:

There is no funds outlay for the bank at the time of entering into an agreement with
counter-party on behalf of the bank's customer. However, such arrangements may
crystallize into fund based advances for the bank if the customer fails.
1.20 ASSET BASED LOAN:
This is an emerging category of bank loan. In this type of loan, the bank looks
primarily or solely to the earning capacity of the asset being financed, for servicing its
debt. In most cases, the bank will have little or no recourse to the borrower.
Specialized loan practices such as securitization, or project finance fall under this
category.
1.21 PRINCIPLES OF SOUND LOAN:

Banks deals with the funds of a large number of depositors and banks are required to
return the money to the depositors with the promised amount of interest. Further,
banks are also required to monitor the loans and also ensure that the leans do not turn
bad. The following are the important principles of sound loan.
 Liquidity.
 Safety.
 Profitability.
 Security.
 Loan purpose.
 Diversification of risks.
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 Technical competence.
 Managerial ability.
 Assured repayment.
 Marketability.
 Social objectives.
1.22 TYPES OF GRANTING LOAN:
The main forms/types of granting loans are classified as below.
1. Overdrafts.
2. Cash credit.
3. Loans.
4. Bills discounted.
5. Letters of credit.
1.23 ADVANTAGES OF LOANS :

 Usually results in more customers than cash trade
 Can charge more for goods to cover the risk of bad debt.
 Gain goodwill and loyalty of customers.
 People can buy goods and pay for them at a later date
 Farmers can buy seeds and implements, and pay for them only after the harvest.
 Stimulates agricultural and industrial production and commerce.
 Can be used as a promotional tool.
 Increase the sales.
 Modest rates to be filled
1.24 DISADVANTAGES OF LOANS AND ADVANCE :
 Risk of bad debt.

 High administration expenses.
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 People can buy more than they can afford.

 More working capital needed.
 Risk of Bankruptcy.
 May lose peace of mind.
1.25 FACTORS WHICH INFLUENCING LOANS:

 Nature of the activities
 Financial position
 Product durability
 Length of production process
 Competition and competitors' credit conditions
 Country's economic position
 Conditions at financial institutions
 Discount for early payment
 Debtor's type of business and financial positions
1.26 EFFECTIVE LOAN CONTROL:

 Increases sales
 Reduces bad debts
 Increases profits
 Builds customer loyalty
 Builds confidence of financial industry
 Increase company capitalization
1.27 SOURCES OF INFORMATION ON CREDIT/LOAN

WORTHINESS:
 Business references.
 Bank references.
 Credit agencies.
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 Chambers of commerce.
 Employers.
1.28 DUTIES OF THE CREDIT/LOAN DEPARTMENT:
 Knowing the credit policy and procedures for credit control

 Setting credit limits
 Ensuring that statements of account are sent out
 Ensuring that thorough checks are carried out on credit customers
 Keeping records of all amounts owing
 Ensuring that debts are settled promptly
 Timely reporting to the upper level of management for better management
 Taking necessary steps to ensure settlement of account
 Legal action
1.29 MEANING OF RECOVERY OF LOAN:
In finance the term recovery refers to collection of amount due. The normally

recovery depends on the purpose, time and condition, business running process etc. Normally
loan amount will be recovered on installment basis. The manager can fix installment period on
the basis of nature of their business.
Example:
1. Installment fixes on salaried person on a monthly basis.

2. In the agriculture sector, installment fixes on biannual basis.
3. Business person normally 1 year per installment.
Recovery is different from one loan to another.
 In short term loans recovery is less than 36months.

 In medium term loans recovery is from 36 months to 84 months.
 In long term loans recovery is normally 84 months or longer.
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The repayment period can extend up as per the STC act in exceptional cases, normally
bank recover the loan amount from customer, easily do not give the trouble to them.
Interest earned is the income for the corporation, this should payments, the entire
expenses and plough back requirement therefore, recovery of money is one of the
major sources of funds for the corporation. The health of the corporation is judged by
the extent of recovery that it can affect. All source of funds carry cost, if the cost of
borrowings is higher, it reduces the margin profit, further the profit are subject to
payment of income tax as per applicable laws.The corporation also is bound by
minimum dividend obligation irrespective,
Whether it makes profit or not out of the post tax and post dividend income. The
memos are retained in the corporation by way of reserves. Plough back of finds into
system is emerging as one of the very important source funds in the total resource
mix, if the corporation has to retain sufficient money for the business operations; it
has to generate more income. More income obviously improving the recovery.
Therefore systematic follow-up recovery of loan plays a significant role in our
operations. In fact, is not exaggeration of the state that effective recovery of loans is
the backbone of any financial institutions.
1.30 LOAN RECOVERY PROCESS:
Previously it has been seen that banks may end up writing off a large number of bad
loans, but this puts banks and the economy at risk. For this reason, it is important to be
aware of the process for loan recovery.
 Banks need to be aware of loans that are at risk of not being paid back (also
known as going into default).
 Collections department of the bank will begin contacting the individual loan
holder. They must notify of the amount owed and any interest accrued.
 Collections may also contact any guarantor of the loan.
 If it is a secured loan, the bank may seize the asset.

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 If it is a personal loan without security, the bank may file a lawsuit.
1.31 CREDIT/LOAN COLLECTION OVERDUE ACCOUNTS:

 Attach a notice of overdue account to statement.
 Send a letter asking for settlement of debt.
 Send a second or third letter if first is ineffectual.
 Threaten legal action
1.32 IMPORTANCE OF RECOVERY OF LOANS:
 The importance of recovery of loans need not be overemphasized. There is a

general saying that in a bank, any person can grant advances but only a wise person
can recover the loans. Following are some of the reasons for the importance accorded
to recovery of loans:
 [i] Non-recovery of loans erode profitability of lending banks.
 [ii] The funds, which have been provided as loan, cannot be recycled and to that
extent, the more deserving customers will be deprived of bank credit.
 [iii] A bank saddled with huge overdue loans portfolio will suffer in its image and
may lose public confidence.
 [iv] A loan, which has been considered as bad, when recovered increases the
profitability of the bank.
 [v] Overdue advances results in a lot of correspondence and paper work. A good
recovery percentage will avoid this wastage of time and energy.
 [vi] A good recovery percentage qualifies the branch for a better inspection rating.
1.33 FACTORS CONTRIBUTING TO POOR RECOVERY OF

LOANS:
Innumerable factors contribute to the poor recovery of loans by banks. All these
factors can be broadly classified as follows:
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[I] BORROWER -ORIENTED: The following factors result in non-recovery of loans

and these factors are borrower oriented:
[a] Poor generation of revenue: The inability of the borrower to effect payment of
dues due to poor cash generation and/or failure of the project, be it industry, trade or
agriculture, resulting from influence of external or internal factors.
[b] Unwillingness of the borrower: The borrower may not be willing to repay the
loans because of diversion of funds borrowed to other avenues of investment.
[c] Willful default: The borrower, for no valid reason, may not be willing to repay the
loans in spite of having sufficient funds at his disposal.
[d] Political influence: The borrower may be politically influenced not to repay the
loans in the expectation of waiver of loans, which often takes place in case of
agricultural loans.
[e] Mis-utilization of funds borrowed: The borrowers with a false optimism of earning
sizable sum out of an intermediate investment, may mis-utilize the borrowed sum and
divert the loan proceeds. When the loan borrowed is not ultimately utilized for the
concerned project, the borrowers find it difficult to repay, especially when their
estimation of yield from alternate source fails.
[f] Lack of interest: The borrower may not have any personal interest in the project
for which the loan is borrowed.
[g] Other personal reasons: The borrowers may not repay the loan properly because of
gross negligence and defiant line of the thinking, questionable character of borrowers,
lack of expertise and the burden of maintaining the self and the family.
[II] BANKER -ORIENTED: The bankers, on their part should discharge their
obligations properly failing which it results in non-recovery of loans. The below-
mentioned factors contribute to poor recovery of loans:
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[a] Lack of follow-up by banks: After providing the loans, it is the duty of the bankers
to follow -up at periodical intervals and at times of difficulty for the borrowers, lend a
helping hand to solve their problems.
[b] Inadequate project appraisal by banks: The banks attempt half-heartedly in the
matter of app rising a project be it agriculture or industry leading to sub – standard
lending. The project becomes improperly implemented and insufficient finance ends
in total failure of the project. Poor or inadequate appraisal of the project regarding the
financial feasibility, technical feasibility and economic viability results in non
-recovery of loans.
[c] Under -financing: The bankers have to provide loans in accordance with the
financial requirements of the borrowers. If the bankers resort to under-financing, the
borrowers may borrow the balance amount from outside sources at exorbitant rate of
interest. This may be another reason for non -recovery of loans.
[d] Unrealistic repayment schedules: The bankers, before, deciding the repayment
schedules for the borrowers should make an in depth study about the borrowers’
repayment capacity. If the repayment schedules are unrealistic, recovery of loans
becomes difficult for the borrowers.
[e] Delayed initiation of recovery measures: The banker should take immediate
remedial action once he notices any warning signals. If there is any delay in initiating
the recovery measures, it will result in non -recovery of loans.
[f] Other factors: Apart from these factors, factors like handling large number of
advances, poor staff involvement and other constraints and indiscreet lending under
Government schemes also contribute to poor recovery of loans.
[III] PROJECT-ORIENTED: Non-recovery of loans may be because of the project

chosen by the borrower. The following factors contribute to poor recovery of loans:
[a] Project failure: When a project is not suitable to Indian conditions, the project
fails. Failure of project results in non -recovery of loans.
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[b] Technically unviable: If a project is not technically viable, it will be a total failure.
This contributes to poor recovery of loans.
[c] Lack of experience in marketing: Many of the products fail not because of sub
-standard quality but because of inexperience of the manufacturer/borrower in
marketing the products. If the borrower is inefficient in marketing the product he
produces, he will be unable to repay his dues.
[d] Severe competition: If the borrower is unable to face severe competition, he will
not be able to repay his loans.
[e] Other factors: Problems like erosion of inventories and securities, accumulated
losses, wrong selection of products, external factors beyond the control of the
borrowers and substandard products are other factors contributing to poor recovery.
[IV] GOVERNMENT-ORIENTED: Government is also responsible for non-recovery

of loans. The under-mentioned factors contribute to poor recovery of loans:
[a] Target approach: The Government fixes certain targets to be attained by the
bankers which the bankers attain without making proper appraisal of loans. This
results in non-recovery of loans.
[b] Waiver of loans: The Government, in order to create a good image about its party,
waives the loans borrowed. This results in non -recovery of loans.
1.34 STEPS IN RECOVERY OF LOANS:
“Recovery of loans, that too at the right time, plays a vital role in credit management
as it strengthens the resource position through recycling of funds and exercises
favorable impacts on the cost of funds and profitability. Recovery of the loans granted
has, therefore, to be managed effectively so as to ensure continuous flow of credit,
without which banks liquidity would be in jeopardy as also production cycles, income
generation, employment opportunities etc. would be adversely affected.”
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There are three steps, the bankers used to follow in order to recover the loans
advanced. These steps are
[I] PERSUASION: Persuasion is the first step in the process of recovery. The
recalcitrant borrowers are persuaded by the bankers to repay the loan amount. This is
done by means of sending proper notices to the borrowers. If the borrowers ignore
notices, registered notices are sent to the borrowers. Still, if there is no reply from the
borrowers, the next step is to contact the borrowers personally or over phone. After
this, the banker contacts the borrowers informally with the elite of the place of the
defaulting borrowers to create psychological pressures. Next, the banker tries to
convince the borrower to obtain a new loan as against full repayment of the existing
loan, which is overdue over a period of time.
[II] NEGOTIATION: “The lending banker adopts the next step if persuasion fails to
evoke the desired result. Both the lending banker and borrower have to make certain
sacrifices in their mutual interest. The banker may have to accept revision in the
repayment schedule, interest concessions and margin reduction and waivers.
[III] LITIGATION: The last resort for the lending banker to affect recovery is to
initiate legal actions by filing civil suits in the court of law. Such a step is taken
particularly with incorrigible borrowers with whom all the other techniques of
recovery are exhausted. When it is confirmed that recovery is impossible, suit may be
filed after consulting the bank’s appropriate authority and the legal adviser because
each case needs a separate treatment.
The procedure followed may differ from bank to bank but general guidelines are
given below:
[a] Prepare the case history.
[b] Extract the balances from the ledgers and prepare a statement of account.
[c] See that all documents are in order.
[d] Decide upon the limitation period, i.e. whether documents are not time barred.
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[e] Consult the legal adviser after having obtained permission from the appropriate
authority of the bank.
[f] Serve legal notice on the borrower.
g] File a suit in the court through the legal adviser.
[h] File claim with the DI and CGCI.
1.35 INDIAN AGRICULTURE:
Agriculture in India has been the backbone of economic development with two-thirds
of the population dependent on agriculture. About 25 percent of the country’s GDP is
contributed by this sector which also accounts for about 18 percent share of the value
of national exports. It supplies bulk of wage goods required by non- agriculture sector
and raw material for a large section of the industry.
Agriculture provides the principal means of livelihood for over 58.4% of India’s
population. It contributes approximately one-fifth of total gross domestic product
(GDP). Agriculture accounts for about 10% of the total export earnings and provides
raw materials to large number of industries. Low and volatile growth rates and the
recent escalation of agrarian crisis in several parts of the Indian country side however
are a threat not only to national food security, but also to the economic well-being of
the nation as a whole.
Agriculture is the most important sector of the Indian economy. It contributes about
25% of the total Gross Domestic Product (GDP) and provides employment to about
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67% of the working population of the country. About 184 million acre of land are
reported as agricultural land using about 17 million MT of fertilizer and producing
526 million MT of agricultural produce comprising food grains, pulses, oil seeds,
cotton, jute, sugar cane etc. The food grain production of the country has increased
fourfold during the last five decades. However, despite being self-sufficient in the
production of food grains farmers are unable to obtain remunerative prices for their
farm produce. With the sustained efforts of the Government of India (GOI).
There has been continuous increase in quantity and quality of farm produce due to the
provision of farm support services especially to small / marginal farmers.
1.36 INTRODUCTION OF AGRICULTURE LOANS:
Agricultural loans are available for a multitude of farming purposes. Farmers may
apply for loans to buy inputs for the cultivation of food grain crops as well as for
horticulture, aquaculture, animal husbandry, and floriculture and sericulture
businesses. There are also special loans finance the purchase of agricultural
machinery such as tractors, harvesters and trucks.
Construction of biogas plants and irrigation systems as well as the purchase of

agricultural land may also be financed through special types of agricultural finance.
Here is some information about the kind of agricultural credit and loans provided by
public sector banks in India. In 1981, the government came out with the National
Bank for Agricultural and Rural Development Act that lean to the formation of
National Bank for Agricultural and Rural Development (NABARD) External website
that opens in a new window. This organization is responsible for the flow of credit to
agriculture and related industries. In the late 1990’s, the government launched the
Kisan Credit Card Scheme in consultation with the Reserve Bank of India and
NABARD. This scheme is meant to meet agricultural expenses of crop production,
cultivation and contingency. It allows unlimited withdrawals and repayments. The
adaptation of the Kisan Credit Card Scheme by different banks has to lead easy
availability of agricultural credit and an increase in agricultural Productivity. Other
than this scheme, nationalized banks offer a variety of other agricultural loan options.
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The Honorable Union Finance Minister announced a package on 18 June 2004 to give
a boost to agricultural credit and emphasized the need to double the agricultural credit
in three year period. The agricultural policy of the Government of India envisages
substantial credit flow to increase agricultural production and productivity. Banks
provide term finance to farmers for development purposes and short term.
STORAGE – MAREKTING:
Agricultural marking includes all aspects of markets structure and systems , both
function and institutional , pre/post harvest operations , assembling , grading ,
storage transports and distributions facilities and infrastructure for agricultural
marketing in the country have to be considerably improved and strengthened in
order to enable small farmers to dispose of their products at incentive prices ,
reduce the price spread between the primary producer and the ultimate consumer
and ensure the availability of consumer products and agricultural inputs to the
small farmers at reasonable price.
The present includes all aspects of structure for agricultural commodities in

the country consists of about 22000 hats (village periodic markets ) serving an
of 8-16 km radius 5000 secondary , markets serving an area of 700 km 2, periodic
markets towns based hawkers and representative of big traders who are
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available at the farmers doorstops to buy his produce. The small farmer however
does not get a fair deal in the exiting marketing structure because of poor
holding capacity and trading malpractice
1.37 STEPS TAKEN FOR DEVELOPING AGRICULTURE AND

OBJECTIVES:
 Meeting the challenge of increasing competition

 Managing for innovation
 Copying with growing technological sophistication
 Maintaining relation with various society segments etc
 Providing purposeful direction to the firm
 Managing survival and growth
 Maintaining farms efficiency
1.38 KARNATAKA AGRICULTURE:
Karnataka is the eighth largest state in the country having an area of 1.19 lakh sq.
Kms. It has coastline of 310 Kms. Coastal zone is a narrow strip of land between the
Arabian Sea in the west, the Western Ghats in the East, Kerala in
the South and Goa in the North. It had a population of 52.73 million (2001) with
population density of 275 sq. Kms. The state had a rural population of 34.81 million
and urban population of 17.92 million. More than 71% of this population is engaged
in Agriculture. Scheduled Caste and Scheduled Tribe constitute 16.20% and 6.55% of
the total population.
Average farm size stands at 1.74 hectares as per Agricultural census 2000- 2001.
(Directorate of land use statistics, Karnataka Government, 2004).
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1.39 IMPORTANCE OF AGRICULTURE:
Agriculture plays on important role in the economy of the state. Besides contributing
a substantial part of the state domestic product (about 25.3% in 2005), it is also the
largest source employment. Out of 23.52 million workers in the state (as per
2005census), agriculture and allied activities provide employment to 113.14 million
(55.87%).
1.40 FINANCIAL ASSISTANCE TO AGRICULTURE:
Types of Financial Assistance to Agriculture
1) Short Term Financial Assistance.
2) Medium Term Financial Assistance.
3) Long Term Financial Assistance.
1. SHORT TERM FINANCIAL ASSISTENCE:
Up to eighteen months they providing assistance to agriculture activities the short

term assistance provided by state co-operative banks regional rural banks and other
financial institution approved by RBI for the following purposes.
a) Seasonal agricultural operation.
b) Marketing of agricultural production.
c) Marketing and distribution of such inputs as pesticides, fertilizers.
d) Other activities related to rural agriculture sector.
e) Real commercial trade activities.
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f) Production and marketing of the following activities: handicrafts, small industries,

village and cottage industries, artisans, silk industries.
2. MEDIUM TERM FINANCIAL ASSISTENCE:
For approved agricultural purpose the medium term credit provided by NABARD to
the SBS, LDBS, RRBS and other approved institutions for a period ranging from 18
months to 7 years. The medium term loans are given for investment schemes relating
to agricultural rural sector.
3. LONG TERM FINANCIAL ASSISTENCE:
Provide for the minor irrigation, planting and horticultural, land development, plant
mechanization, animal husbandry, fisheries etc. The NABARD provides long term
development banks, RRBS, commercial banks and to any approved financial
institutions.
1.41 PURPOSE FOR LOANS:
 Production credit
 Investment credit
 Minor irrigation
 Plantation and horticulture
 Land development, soil conservation and water management
 Animal husbandry
 Development of fisheries sector
 Research and development activities
1.42 OBJECTIVES OF FINANCIAL ASSISTANCE TO AGRICULTURE:
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1) To give purpose full direction to integrated rural development.
2) To act as a centre piece for the entire rural credit system at the national level.
3) To provide fund to the agricultural operations.
4) Improvement and development of agricultural sector.
5) Improving agricultural productivity.
6) Increase the national income of a country
7) Increase the job opportunities and increase the agricultural GDP rate.
8) Increase the standard of living of the formers.
9) Providing financial assistance in different stages for different purposes.
10) Introducing the latest technology in agricultural operation
CHAPTER-2
RESEARCH DESIGN
2.1 INTRODUCTION :
Research design in the conceptual structure wit in which research is conducted. It
constitutes the blue print for the collection, measurement and analysis of data.
Research design pertains to decisions regarding what, when how much buy what
concerning on inquiry or a research programme.
According to “Kiplinger” research design is the plan structure and strategy of
investigation conceives so as to obtain answer to research questions and to control
variances.
2.2 TITLE OF THE STUDY:
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“A study on lending and recovery agriculture loan at primary co-

operative agricultural and rural development bank Ltd AT
Kolar.”
2. 3 STATEMENT OF THE PROBLEM:
Banks in recent times has failed as a result of loan recovery problems. Loan is the
major source of bank profitability. However, while going about their lending
activities, banks have their own objectives among which are profitability, growth,
safety, suitability and liquidity. Loan, when not recovered could adversely affect
banks. It is easily granted than recovered. It usually needs proficiency i.e. competency
and expertise in the recovery process. It can lead to illiquidity, insolvency and even
distress as the case may be. There is therefore a need for arriving at strategies for
efficient loan recovery. That is the peak of the problem.
P.C.A.R.D Bank was chosen for conducting the study. The Success of every Bank
depends upon the proper loans and its effective collection. The loan and recovery
function of every co-operative bank is crucial because of its co-operative principle,
and hence it is necessary to study the loans and recovery to know how the loans and
there recovery is effective and to study the profitability and overall financial
operations at "Primary co-operative agricultural and rural development bank".
2.4 OBEJECTIVES OF THE STUDY:
 To study the loans and their recovery procedures of the Bank.

 To study the role of PLD bank towards agricultural development.
 To Study and understand the productivity of various kinds of loans.
 To Finding out several problems in loan recovery.
 To give suggestions in the process of loan and recovery.
2.5 SCOPE OF THE STUDY:
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This study was a very comprehensive study of the LENDING AND RECOVERY at
the "primary cooperative agricultural and rural development bank" and banks itself.
Financial status regarding the management of loan money. This study gives a clear
picture about the LOANS AND RECOVERY in the previous, present and future
years. This study pertains to the LOANS AND RECOVERY for the period from
2013-2016
2.6METHODOLOGY ADOPTED IN THIS RESEARCH:
 DESCRIPTIVE RESEARCH
 ANALYTICAL RESEARCH
 Descriptive research:
The descriptive research means the survey of fact findings through from respondents
and collects the facts and information. The data will be control in the hands of
respondents only and not in the hands of researcher is called descriptive research.
 Analytical research:
The data is already in the hands of researcher at the time researcher analysis the past
information with the present data is called analytical research
2.7 SOURCES OF DATA COLLECTED :
 Primary data
 Secondary data
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The primary data refers to the data that is collected a fresh and recorded for the first
time.
 Interviews
 Observations
1 This primary data was collected mainly from accounts department, assistant
manager, office manager and senior executive.
2 Secondary data is already existing data it’s already collected someone is called
Secondary data.
This will be collecting through from,
 Annual report of Karnataka state Co-operative agricultural and rural

development Bank ltd journals
 , books,
 websites and etc.
 Magazines and news papers
2.8 REFERENCE PERIOD:

The reference period of this study was 6 weeks.
2.9LIMITATIONS OF THE STUDY:
 `This study ignores qualitative items and this study was extensively based on
annual report `provided by the bank.
 Data collected were limited based on the annual reports of the bank, and
information obtained during consideration with the officials of the bank.
 Lack of sufficient statistical data regarding agriculture.
 Lack of appropriate data due to work pressure in bank
 Due to the time constraint in-depth analysis could not be made.
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2.10 OPERATIONAL DEFINITIONS OF THE CONCEPTS:
 BANKER:
Middlemen between savers. Acts for some consideration (bank charges).it

includes lending of loans and advances too.
 CUSTOMER
Beneficiaries who availed bank loans at PLD bank, Kolar town are customer for the
purpose of this project report.
 LOANS
It is a document in writing and acknowledgement of debt, in which banker pays a

lump sum amount to customers in return customers repay the same along with at
different interest rates in monthly installments.
 RECOVERY
The process in which the bank recollects the loan amount given to the customers in
the given time period
2.11 CHAPTER SCHEME:-
CHAPTER-1:- INTRODUCTION:
This chapter includes subject background of the study and industry profile
part a: introduction to finance
part b: banking sector
part c: loans
CHAPTER-2:- RESEARCH DESIGN:

This chapter includes title of the study, Statement of the problem, Objectives of the
, Scope of the study, methodology; Data needed and collected, Sources of data,
Limitations of the study, Chapter scheme.
Page 31
CHAPTER-3:- COMPANY PROFILE:

This chapter contains a complete profile of the organization in terms of the history.
Objectives of bank, the nature of its business, organization structure, number of
branches, staff pattern, future prospects/growth of the company etc.,\
CHAPTER-4:- DATA ANALYSIS AND INTERPRETATION:

This chapter 'contains an analysis of the primary data in tune with the objectives. Each
question is reduced to table followed by explanation and inferences. The analysis
supported by graphs, charts and diagrams.
CHAPTER-5:- SUMMARY OF FINDINGS, CONCLUSIONS

GESTIONS.:
This chapter begins with objectives and scope of the study. The findings should be
summarized and presented in a paragraph form, numbering each of the findings. The
conclusion of the project given so as to justify the objectives of the study
CHAPTER 3
COMPANY PROFILE
3.1 EVOLUTION OF CO-OPERATIVE BANK:
History of almost 100 year. These-cooperative banks are an important constituent of

the co-operative banks have Indian financial system, judging by the role assigned to
them, the expectations they are supposed to fulfill their number, and the number of
offices they operate. The co-operative movement originated in the west, but the
Page 32
importance that such banks have assumed in India is rarely paralleled anywhere else
in the world. According to NAFCUB the total deposits and lending’s of co-operative
banks is much more than Old Private Sector banks & also the New Private Sector
Banks. This exponential growth of co-operative banks is attributed mainly to their
ability to catch the nerve of the local clientele. Though registered under the Co-
operative Societies Act of the co-operative banks are also regulated by the Reserve
Bank of India. They are governed by the Banking Regulation Act 1949 and Banking
Laws (Co-operative Societies) Act, 1965.
MEANING:
The co-operative banks are small-sized units organized in the co-operative sector,
which operate both in urban & non-urban centers. They finance small borrowers in
industrial and trade sectors besides professional and salary classes. Regulated by the
Reserve Bank of India, they are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.
DEFINITION:
A co-operative is an autonomous association of person’s united voluntarily to meet
their common economic, social, and cultural needs and aspirations through a jointly
owned and democratically controlled enterprise.
3.2 HISTORY OF THE PLD BANK IN INDIA:

For the co-operative bank in India, co-operatives are organized groups of people and
jointly managed and democratically controlled enterprises.
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They exist to serve their members and depositors and produce better benefits and
services for them. Professionalism in co-operative banks reflects the co- existence of
high level of silks and standards in performing duties net trusted to an individual
cooperative bank needs current and future development in information technology. It
is INDEED necessary for co-operative banks to devote adequate attention for
maximizing their returns one very unit of resources through effective services, co-
operative banks have completed 100 years of existence in India, and they play a very
important role in the financial system. The co-operative banks in India form an
integral part of our money market.
3.3 TYPES OF CO-OPERATIVE BANKS:

 Primary co-operative credit society
 Central co operative banks
 State co-operative banks
 Land development banks
 Urban co-operative banks
3.4 INCEPTION:
The bank was established on 27/1/1935. Basically it was started as service co-
operative society for few villages only and later on it was converted as V.S.S.N
which included 8-10 villages then it got expanded as sericulture cum farmer co-
operative society by which it started lending to both Seri culturists and farmers. In
later days according to Karnataka…
Page 34
Finally all this funds will be reaching to the formers with the help of primary
agriculture co-operative society through P.L.D. BANK…
3.5 BRANCHES:
Primary co-operative and agricultural and rural development bank ltd., has 12
branches, they are:
 Bangarpet
 Bagepalli
 Chikkaballapur
 Chintamani
 Gowribidanur
 Gudibande
 K.G.F
 Kolar
 Mulbagal
 Malur
 Srinivasapur
 Sidlaghatta
3.6 COMPETITORS:
 Pragathi Gramina Bank.

 State Bank of India.
 DCC Bank.
 State Bank of Mysore.
Page 35
3. 7 SOURCES OF FUNDS:
 Deposits Shares ,entrance fees, share price

 PCARD bank is obtaining funds from government of Karnataka, government
of India according to the law of India
 Gifts and donations
 Interest on deposits.
 Commission
 Yearly Subscription
3.8 PCARD BANK :
P=PRIMARY
C= CO-OPERATIVE
A= AGRICULTURE AND
R = RURAL
D=DEVELOPMENT
 Primary Cooperative Agriculture and Rural Development Bank was

established during 1929. Exploitation of farmers by Private Money Lenders was a
challenge at the beginning of 2O~ Century. It gives importance primarily for
agriculture sector as well as mini agriculturists. It also plays more important in
development of farmers and rural areas. The Birth of Mysore State Co-Operative
Land Mortgage Bank in 1929 was one of the important steps in eradication of this
social evil. Till 1965, this Bank continued to advance long term loans to
Agriculturists for debt (redemption and land improvement), with the establishment of
Agriculture Refinance and Development Corporation (ARDC) in 1963, the Bank
started changing its policies and since 1965 the Bank has been advancing various
types of developmental loans to agriculturists of the State. In conformity with the
changed policies the name was also changed as Land Development Bank. With the
constitution of National Bank for Agriculture and Rural Development (NABARD)
Page 36
during 1982, by merging Agriculture Credit Department of RBI and entire

undertaking of ARDC and extension of credit for Rural Development activities and
also the Bank has changed its name as PRIMARY Cooperative Agriculture and
Rural Development Bank.
 The main head office is located in Bangalore. The General Manager of the bank
and Deputy General Manager and Secretary and Managing Director and President .
and 22 members are Directors of the Bank. The head office will provide financial
facilities to its sub-branches .The bank is formed by shareholders.
 The bank hasthe main aim of developing agriculturists and rural area development
.it provide finance for various activities like purchasing of tractor, equipment’s,
fisheries, coconut form etc. There are 177 Taluk Level Co-Operative Agriculture and
Rural Development Banks (PCARDBanks) spread over all the 175 taluks in the State;
out of which Mulubagilu of Kolar district and Sanduru of Bellary district PCARDB
are under liquidation . The 23 Branch Offices of the KSCA & RD Bank at District
Level are supervising the activities of the PCARD Banks in their jurisdiction. Thus,
there is federal set-up where loaning is made in two tiers. The PCARD Banks are
individual autonomous bodies and are members of the KSCARD Bank. The Bank has
6 Associated Members which are institutions like Karnataka Agro Industries
Corporation, Ware Housing Corporation, Karnataka Electricity Board and Command
Area Development Authorities of Major Irrigation Projects, State Marketing Board,
primary Cooperative Marketing Federation Ltd., etc.
The PCARD Banks in their jurisdiction. Thus, there is federal set-up where loaning
is made in two tiers. The PCARD Banks are individual autonomous bodies and are
members of the PCARD Bank. The bank has 6 associated members which are
institutions like PRIMARY agro Industries Corporation, ware housing corporation,
PRIMARY electricity board and command area development authorities of major
irrigation projects, state marketing boardtoPRIMARY cooperative marketing
federation ltd., etc. It is a bank in which it mainly lends agricultural loans.
3.9 VISION:
"Be a leader in co-operative banking and services through excellent performance by
Page 37
serving customers."
3.10 MISSION:
"Our mission is to fulfill the aspirations of customer with products with new
technology and financial assistance to add value to the assets of our customers and
their by bringing transformation in co-operative banking sector."
3.11 OBJECTIVES OF P.C.A.R.D BANK:

 Provide long —term and short term loan to the agriculturists.
 Development of rural areas.
 Providing fiancé to the mini agriculturists at reasonable interest rate to
develop their agricultural activities.
 Providing various finance schemes at every year to different
 Agriculturist.
 Co- operates with various agriculturists and with state govt.
3.12 TYPE OF INDUSTRY:

P.L.D bank is a service oriented institution which mainly focuses on extending
economic strength to farmers, who are considered as back bone of national.
3.13 NATURE OF INDUSTRY :
Nature of PCARDB at Kolar it is secondary Institution as it will depends mostly on

the man power in order to carry out to different activities in the banking process.
3.14 NATURE OF BUSINESS CARRIED:
The main activity of the bank is dispensation of long term credit; for agricultural and
rural development. The bank is advancing loans under "NORMAL PROGRAMIVIE"
and "SPECIAL DEVELOPMENT PROGRAMME".
Page 38
The normal program covers item like leveling, bundling, fencing, and of cattle shed,
farmhouse, and redemption of old debts, acquiring ownership of land by tenants under
land reforms act etc. the special development programmes cover productive purposes
like minor irrigation, horticultures, plantation crops, farm forestry, waste land
development, dairy development, piggery, gobar/biogas plants, sheep rearing, fish
culture, poultry, ser~cu1ture, farm mechanization, integrated loans for agriculture and
non- agriculture and for the development of lands under major and medium irrigation
projects. Non-farm sector, rural housing, small rural transport operator (SRTO)
scheme and deposit mobilization are the new areas covered by the banks.
3.15 RULES FOLLOWED BY P.C.A.R.D BANK:
 Shareholders are the founders of the bank.

 All administration activities are under the handle of its share holders.
 The shareholders are having the right to take any decision making.
 4. The sub— branches are get rules and regulations, orders, financial f
acilities, staff
 Control activities from its head office.
 Its entire sub — branches are responsible for its head office
3.17 ORGANISATION STRUCTURE OF THE BANK:
Special officer
Managing director
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General Manager
Manager
Senior assistant
Junior assistant
The bank is structured into five major departments each department is headed by a
general manager as shown above.
The Administrative Department:

Looks after the Human Resource Management (HRM).General administration and
training.
 The Finance Department:

Handles borrowings, fixed deposits.Investments, Fund management etc.
The Business Development Department:
Deals with formulation of schemes, techno-economical appraisal, issue of loan
policies and sanction of loans.
 The Technical Monitoring, Evaluation &Research Department:

Takes care of loan repayment follow-up, management information service (MIS),
Maintenance of Statistics and communication of technical matter to different
departments.
 The Recovery Department:
Page 40
`Works on recovery policies, monitoring of recovery performance and submission of

interest concession and subsidy bills to the Government of Karnataka.
3.18 SPECIAL PROVISION TAKEN BY THE PLD BANK FOR

IMPROVING THE AGRICULTURE AND OTHER SECTOR.:
o An temporary employees working in the organization more than 10 years that
time government will take considering and giving appointment orders and
holding permanent basis of education and experience.
o Giving special assistance to non agriculture operations without interest and the
borrower should pay the loan principle amount lump sum in at a time.
o For the security and future reference purpose conversion of books of accounts
into computerization.
o An employee contributing his service more than 10 years in a particular bank at
the time he has to get all the social security benefits.
o Increasing the special scheme relating to increasing the employee salaries for
protecting their interests.
o Granting funds for providing pension to the retired employees as soon as
possible.
o Increasing the bank capital reserve ratio more than compare to last year for the
purpose of avoiding bankruptcy.
o Special importance given to the tribal area peoples and below poverty line
groups for strengthening their lives.
o An borrower repaying their loan before the due date at the time he has to get
other types of loans from bank with confidence.
.3.19 SERVICE PROFIT :
A. AGRICULTURAL LOANS :
Under this, bank will provide loans for agricultural purposes, Such as long term,
medium terms and short term loans under different schemes. All these loans are given
Page 41
to the farmers only after making a study on various like the area of land that the
farmer has, the ability of the farmer to repay the loan etc……
B. NON-AGRICULTURAL LOANS :
These loans include different forms of schemes, they are :
 Loans on gold ornaments :
These loans are provided through all branches. This is a package of program that they
have undertaken to provide loans to needy people at comparatively at very low
percentage.
In this constantly improving society every man desires to build their own house. As
they are not able to fulfill this dream they are opting for loans at a low rate of interest
which is provided by this bank.
 Loans for self helping group :In the year 2015-16 bank is providing loans to
these groups to establish 100 groups newly and among already existing groups 60
groups are considered to be worth to give loans.
3.19 WORK FORCE STRENGTH:

All the activities of Kolar agricultural pcard bank are carried out by totally 13
members, who include 1 junior manager, 1 first divisional assistants, 1 second
divisional assistants, 1 driver and 1 attainders to execute various each and every
activity in the society has to be carried out by men itself and without their efforts none
of the operations can be done.
WORK FORCE CHART :
MANAGERS
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FIRSTDIVISIONAL ASSIST ANT STAFF`
SECOND DIVISIONAL ASSIST ANT STAFF
SUB STAFF
3.20 CREDIT PROVIDED TO AGRICULTURAL ACTIVITIES:
Steps taken for granting agricultural loans are as below.
Page 43
DISTRICT MANAGER
Technical
Recovery Divisional
Officer Legal Officer
Officer Officer
Accountant
Officer
Superintend
FDA
SDA
Primary Bank
Farmers
3.21 ACTIVITIES:
Page 44
The main activity of the Bank is dispensation of Long Term Credit, for Agricultural
and Rural Development. The Bank is advancing loans under "Normal Program" and
"Special Development Program". The Normal Program covers items like leveling,
bunding, fencing, and construction of cattle shed, farmhouse, and redemption of old
debts, acquiring ownership of land by tenants under. Land Reforms Act etc. The
Special Development Program cover productive purposes like Minor Irrigation,
Horticultures, plantation crops, Farm Forestry, Waste Land Development, Dairy
Development, Piggery, Gobar/Bio-Gas Plants, Sheep rearing, Fish Culture, Prawn
culture, poultry, Sericulture, Bullock and Bullock carts, Farm Mechanization,
Integrated loans for Agriculture and Non-agriculture and for the Development of
lands under major and Medium Irrigation projects. Non Farm Sector, Rural Housing,
Small Rural Transport Operator (SRTO) Scheme and Deposit Mobilization and
advancing jewel pledge loan and salary loans to the staff are the new areas covered by
the Banks.
3.22 RESOURCES:
The main financial sources of the Bank are its Share Capital, Reserves, Deposits and
borrowings from NABARD, State Government and Government of India through
flotation of debentures. The State Government Guarantees  all debentures floated
loan raised from NABARD by the Bank for payment of principal and interest.
Government guarantee is extended for drawls of cash credit accommodation also for
initial loan. During the year 2015-16, the Bank has borrowed Rs 65.07 Crores through
flotation of debentures and has borrowed Rs.95.28 Crores through loan system.
Since inception up to 3 1-03-2016, the Bank has floated 342.03 Crores of debentures
under Ordinary Program, and Rs. 327.73 Crores under Special Development Program
and Rs. ('3.18 Crores under Rural Housing (NHB) In total, debentures worth of Rs
3732.942 Crores have been floated. Debentures outstanding as on 3 1.03.2016 are Rs.
1547.59 Crores.
3.24 E-STAMPING:
Page 45
The Bank has introduced E- stamping business in the selected 51 PCARDBs in

-consultation with Stock Holding Corporation of India. Further the bank has decided
to take up remaining PCARDBs to introduce B-Stamping business in consultation
with the Stock Holding Corporation of India. The same is in progress.
3.25 TRAINING INSTITUTE:

We have our own training college called "Staff Training College" Padmanabhanagar.
Bangalore, which was established in the year 1975 under the guidance and financial
assistance from NABARD. The primary aim of our college is to train both official
and Non-official members under various -programs relating to Co-operative
Development activitieswith main focus on HRD matters.
3.26 SHORT TERM LOANS FOR BELOW MENTIONED

IMAGES PURPOSE :-
 SEEDS
 WHEAT
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 PADDY CROP
 CROP CUTTING MACHINE .
Page 47
 MULBURY
 TOMATO
3.27MEDIUM TERM FOR BELLOW SHOWN IMAGE PURPOSE.:
GRAPES
Page 48
 COWS
Page 49
CHAPTER 4
ANALYSIS AND INTERPRETATION
the data is collected from various sources such as information provided by the bank,
data collected by the final reports profit and loss account and balance sheet etc..The
information is collected summarized, classified, tabulated, edited and finally analyzed
and interpreted to get the end result as to know the performance of the PRIMARY
Co-operative Agricultural and Rural Development Bank.
In this chapter a detailed study of the loans and recovery of PCARD Bank has been
undertaken. The prevailing systems have been explained through tables and charts.
Analysis involves the division of facts on the basis of some defined plans classifying
them into classes on the basis of certain condition and presenting them in most
convenient, simple and understandable form.
Interpretation involves many processes like arrangements, establishing relationship

between available facts drawing conclusion on that basis. It is the drawing of
inference and stating what the figure in the statement actually mean. Therefore
analysis and interpretation are closely related, interpretation is not possible without
analysis and without interpretation analysis has no value.
Page 50
THE PRODUCTIVITY OF VARIOUS KINDS OF LOANS:

TABLE -4.1
SHOWING LOANS TO MINOR IRRIGATION:
YEAR TARGET ACHIEVEMENT
2013-14 5713.65 4542.37
2014-15 4000.27 3930.00
2015-16 3780.68 4019.27
ANALYSIS:
The bank is following too many steps. In sanctioning a loan at the same time
bank alsorequired a lot of previous year’s documents bank also spend a lot of time to
study those documents and it is a timely work and bank is not grants loan when there is
need of loan due to a long process of loan and granting loans. Every prospective
customer of any bank wants a speedy work in granting a loans and needs loans when
they are needs.
Page 51
GRAPH-4.1
SHOWING LOANS TO MINOR IRRIGATION:
12000
10000
8000 4542.37
6000 3930 4019.27
4000
5713.65
2000 4000.27 3780.68
0
2013-14 2014-15 2015-16
TARGET ACHIEVEMENT
INTERPRETATION:
Table can be analyzed that the loans to Minor irrigation in the 2013-14 targeted to
5713.65 lakhs that is 100% and it is in 2014-15 I targeted to 4000.27 lakhs and in
2015-16 It is 3708.68 lakhs respectively.- Achievement also varying every- year.
The above table and chart depicts the loans granted to minor irrigation for the year
2013-14 was 4542.37 lakhs i.e. 79.50% of targeted amount and in the year 2014-15
it was 3930.00 lakhs i.e. 98.24% of targeted amount and in 2015-16 it was 4019.27
lakhs i.e.106.31% of targeted amount. Though percentage of loan granted is
increasing due to targeted amount of loan is decreasing every year when compared
to base year.Minor irrigation loan is increasing year by year because there is a
increasing scope for minor irrigation in agricultural sector and farmers are getting
awareness of minor irrigation in profitability of their crops.
Page 52
TABLE 4.2
SHOWS LOANS TO HORTICULTURE:
2013-14 3701.59 1962.74
2014-15 2761.95 2042.81
2015-16 2993.82 2579.73
ANALYSIS:
The loan amount .is increasing over a 86.77% of targeted amount of respective years.
Period of time and percentage of loan granted is increasing respectively
As most of the farmers are producing plantation crops which drastically increases
farmer's profitability and this increases the loans applications for loans under
horticulture.
Page 53
GRAPH 4.2
REPRESENTING LOANS TO HORTICULTURE:
6000
5000
1962.74
2579.73
4000 2042.81
3000
2000 3701.59
2761.95 2993.82
1000
0
2013-14 2014-15 2015-16
TARGET Achievements
INTERPRETATION:
Table can be analyzed that the loans to horticulture in the 2013-14 targeted to 3701.59
lakhs that is 100% and it is in 2014-15 targeted to 2761.95 lakhs and in 2015-16 it is
2993.82 lakhs respectively. Achievement also increasing every year. The above table
and chart depicts the loans granted to horticulture for the year 2013-14 was 1962.74
lakhs i.e. 53.02% of targeted amount and in the year 2014-15 it was 2042.81 lakhs i.e.
73.96% of targeted amount and in 2015-16 it was 2579.73 lakhs i.e.
Page 54
TABLE 4.3
SHOWING LOANS TO SERICULTURE:
YEAR TARGET ACHIVEMENT
2013-14 1370.96 821.29
2014-15 1195.56 875.88
2015-16 1385.48 906.66
ANALYSIS:
\The loan amount is increasing over a period of time and percentage of loan granted is
increasing respectively.
Farmers are producing more sericulture as a result raw-silk production
increases and the loans for sericulture increases from past years.
Page 55
GRAPH4.3
REPRESENTING LOANS TO SERICULTURE:
100%
90% 821.29 875.88 906.66
80%
70%
60%
50%
40% 1370.96 1195.56 1385.48
30%
20%
10%
0%
2013-14 2014-15 2015-16
TARGET ACHIVEMENT
INTERPRETATION:
Table can be analyzed that the loans to sericulture in the 2013-14 targeted to1370.96
lakhs that is 100% and it is in 2014-15. targeted to 1195.56 lakhs and in 2015-16 it is
1385.48 lakhs respectively. Achievement also increasing every year. The above table
and chart depicts the loans granted to sericulture for the year 2013-14 was 821.29
lakhs i.e. 59.29% of targeted amount and in the year 2014-15 it was 875.88 lakhs i.e.
73.26% of targeted amount and in 2015-16 it was 906.66 lakhs i.e. 65.44% of targeted
amount of respective years.
Page 56
TABLE4.4
SHOWING LOANS TO FARM MECHANIZATION:
YEAR TARGET ACHIVEMENT
2013-14 6348.96 7768.90
2014-15 5666.75 8419.53
2015-16 5826.79 7702.78
ANALYSIS:
The loan amount is increasing from 2013-14 to 2014-15 but in 2015-16 the loan
amount is decreased. As a result percentage of loan granted is increasing in 2013-14 to 2014-15
and decreasing in 2015-16 when compared to base year.Farm mechanization helps the farmers
to increase their production as well as their profits. Agriculture now a day's is getting more
mechanization so it increases the loans of the bank for helping agriculturalists to purchase and
use the machines in agricultural land.
Page 57
GRAPH 4.4
REPRESENTING LOANS TO FARM MECHANIZATION:
9000 8419.53
8000 7768.9 7702.78
7000 6348.96
6000 5666.75 5826.79
5000
4000
3000
2000
1000
0
2013-14 2014-15 2015-16
TARGET ACHIVEMENT
INTERPRETATION:
Table can be analyzed that the loans to farm mechanization in the 2013-14 targeted to
6348.96 lakhs that is 100% and it is in 2014-15 targeted to 5666.75 lakhs and in 2015-
16 it is 5826.79 lakhs respectively. Achievement also varying every year. The above
table and chart depicts the loans granted to farm mechanization for the year 2013-14
was 7768.90 lakhs i.e. 122.36% of targeted amount arid in the year .2014-15 it was
8419.53 lakhs i.e. 148.58% of targeted amount and in 2015-16 it was 7702.78 lakhs
i.e. 132.20% of targeted amount of respective years.
Page 58
TABLE4.5
SHOWING LOANS TO RURAL HOUSING:
2013-14 962.66 222.88
2014-15 460.51 183.25
2015-16 290.34 96.92
ANALYSIS:
The loan amount is decreasing over a period and percentage of loan granted is
increasing in 2O13-l4 to 2014-15 but decreased in 2015-l6 because of targeted
amount which has decreased.
Page 59
GRAPH4.5
REPRESENTING LOANS TO RURAL HOUSING:
1200 222.88
1000
800
183.25
600 962.66
400 96.92
460.51
290.34
200
0
2013-14 2014-15 2015-16
TARGET ACHIEVEMENT
INTERPRETATION:-
Table can be analyzed that the loans to rural housing in the 2013-14 targeted to
962.66 lakhs that is 100% and it is in 2014-l5 I targeted to 460.51 lakhs and in 2015-
16 it is 290.34 lakhs respectively. Achievement also decreasing every year. The above
table and chart depicts the loans granted to rural housing for the year 2013-14 was
222.88 lakhs i.e. 23.15% of targeted amount and in the yea]. 2014-I5 l it was 183.25
lakhs i.e. 39.79% of targeted amount and in 2015-16 it was 96.92 lakhs i.e. 33.38% of
targeted 47 amounts of respective years.
Page 60
TABLE 4.6
SHOWING LOANS TO NON FARMING SECTOR:
2013-14 723.59 54.1
2014-15 485.94 102.3
2015-16 304.98 31.99
ANALYSIS:
The loan amount is increased from 2013-14 to 2014-15 and decreased in the year
2015-16 As a result percentage increased in 2013-14 and 2014-15 but decreased in
2015-16.
'The bank is providing mainly agricultural loan as a result it is unable to grants loan to
non farming sector.
Page 61
GRAPH 4.6
REPRESENTING TO NON FARMING SECTOR:
900
800
54.1
700
600
102.3
500
400
723.59
300 31.99
485.94
200
304.98
100
0
2013-14 2014-15 2015-16
TARGET ACHIEVEMENT
INTERPRETATION:
Table can be analyzed that the loans to non farming sector in the 2013-14 targeted to
723.59 lakhs that is 100% and it is in 2014-I5 targeted to 485.94 lakhs and in 2015-16
it is 304.98 lakhs respectively. Achievement also varying every year. The above table
and chart depicts the loans granted to non farming sector for the year 2013-14 was
54.10 lakhs i.e. 7.48% of targeted amount and in the year 2014-15 it was 102.30 lakhs
i.e. 21.05% of targeted amount and in 2015-16. It was 31.99 lakhs i.e. 10.49% of
targeted amount of respective years!
Page 62
TABLE 4.7
SHOWING LOANS TO AGRICULTURAL SECTOR:
Year 2015-16
Minor irrigation including land 40.20

Development
Horticulture 26.00
Sericulture 9.07
Farm mechanization 77.02
Crop loan 17.00
Diversified 38.22
ANALYSIS:
The above table and chart depicts the loans & advances to farm mechanization
covering nearly 40% of loans sanctioned due to increasing utilization of machines in
agricultural sector fallowed by minor irrigation, diversified, horticulture, crop loan,
sericulture.
Page 63
GRAPH4.7
REPRESENTING LOANS TO AGRICULTURAL SECTOR:
90
80
70
60
50 77.02
40
30 38.22
40.2
20 26 17
0 9.07
10 2 3 4 5 6 7 8
1
0
ar d t re re n an ed
Ye lan en l tu ltu tio lo ifi
g m u u za r s
di
n lo
p
rti
c ic an
i op ve
lc u ve o Ser ch Cr Di
De H e
in m
o n m
r
ati Fa
r r ig
ori
in
M
INTERPRETATION:
Table can be analyzed that the loans & advances to agricultural sector in the 2015-16
for minor irrigation (land development) 40.20 crores that is 19.37%, horticulture 26
crores that is l2.53%, sericulture 9.07 crores that is 4.37%, farm mechanization 77.02
Page 64
crores that is 37.12%, crop loan 17 crores that is 8.20% and diversified 38.22 crores
that is 18.41 %.
TABLE4.8
SHOWING LOANS TO NON-AGRICULTURAL SECTOR
. (Rs. in crores)
YEAR 2015-16
Non farming sector 0.32
Rural housing 0.96
Fixed deposit loan . 4.74
ANALYSIS:
The above table and chart depicts the loans & advances to fixed deposit loan covering
nearly 80% of loans sanctioned fallowed by rural housing and non farming sector.
Page 65
GRAPH4.8
REPRESENTING LOANS TO NON AGRICULTURE SECTOR:
2015-16
Non farming sector
5%
Rural housing
16%
Fixed deposit loan .

79%
INTERPRETATION:
Page 66
Table can be analyzed that the loans & advances to non agricultural sector in the
2015-16for non farming sector 0.32 crores that is 5.32%, rural housing 0.96 crores
that is 15.95%, fixed deposit loan 4.74 crores that is78.730/o.
TABLE4.9
SHOWING PCARD BANK AGRICULTURAL LOANS
DISTRIBUTION:
(Rupees in lakhs)
PARTICULARS 2013-14 2014-15 2015-16
SHORT TERM 51.97 623.41 2697.71
LOANS
MEDIUM TERM - - 610.35
LOANS
LONG TERM 64.35 432.47 1436.47
LOANS
TOTAL 142.73 1055.88 4140.53
Page 67
ANALYSIS:
The three years statistical data the above table represents the agricultural loan
distribution by co-operative bank to their customers it includes short-term, medium-
term and long-term loans. The short –term loans providing for the purpose of
purchasing the seeds, pesticides and some other minor instruments Of agricultural
operations.
GRAPH 4.9
SHOWING SHORT TERM, MEDIUM TERM & LONG TERM
LOAN COMPARISION:
Page 68
3000
2697.71
2500
2000
1500 1436.47
1000
623.41 610.35
500 432.47
51.97 0 0 64.35
0
SHORT TERM LOANS MEDIUM TERM LOANS LONG TERM LOANS
2013-14 2014-15 2015-16
INTERPRATATION:
The above represent diagram shows the short term loan contribution by PCARD bank
to the farmers in the year 2013-14 was 51.97[ rupees in lakhs],in the year 2014-15
increases the agricultural loans contribution from 51.97 to 623.41 [Rupees in lakhs]
and in the year 2015-16 drastically changes from the last year contribution to
2697.71[rupees in lakhs].
TABLE 4.10
SHOWING NON REDEMPTION OF LOANS FROM THE
FARMERS:
(Rupees in lakhs)
Page 69
PARTICULARS 2013-14 2014-15 2015-16

LONG TERM LOANS 7031.32 774.25 5288.29
MEDIUM TERM LOANS 1354.74 774.25 604.98
ANALYSIS:
The irrecoverable loans of PCARD bank from the farmers in three years data. The
Statistical data represents the redemption of loans from farmers.
GRAPH4.10
SHOWING IRRECOVERABLE LOANS FROM CUSTOMERS:
Page 70
8000 7031.32
7000
6000 5288.29
5000
4000
3000
2013 2014 2015
2000 1354.74
1000 774.25774.25 604.98
0
1 2 3
particulars LONG TERM LOANS

MEDIUM TERM LOANS
INTERPRETATION:
The customer loans are taken from the PCARD bank and irrecoverable of their loans
taken. The long term loans are drastically decreases from the one year to another the
loans are little bit recovered by borrowers to the bank in the year 2013 the loans are
due from the customers 7031.32 [Rs in lakhs], in the year 2015 it is decreases to
5288.29 [Rs in lakhs]
The medium term loans due from the customers also spontaneously decreased from
2015 to 2016 amounted to 604.98 [Rs in lakhs]
TABLE4.11
Page 71
SHOWING RECOVERY OF LOANS FROM MINOR

IRRIGATION:
YEAR 2013-14 2014-15 2015-16
AMOUNT DUE 13619.24 13687.58 11532.57
COLLECTED 3088.1 4865.56 4304.99
BALANCE 10531.14 8822.02 7227.58
ANALYSIS :
The collection of loan amount is increased from 2013-14 to 2014-15 and 2015-16. As
a result percentage of collection of loan is increased in 2013-14 and 2014-.15 land
2015-16. And the remaining balances are 10531.14, 8822.02, 7227.58 lakhs for 2013-
14, 2014-15, 2015-16 respectively.
The bank has collected a very small amount of money against due amount value of
dues. This shows the recovery of due amount of loan is very slow.
GRAPH4.11
Page 72
REPRESENING COLLECTION OF LOANS FROM MINOR
IRRIGATION:
13619.24 13687.58
14000
11532.57
12000 10531.14
10000 8822.02
7227.58
8000
4865.56
6000 4304.99
3088.1
4000
2000
0
2013-14 2014-15 2015-16
AMOUNT DUE COLLECTED BALANCE
INTERPRETATION:
Table can be analyzed that the collection of loans from minor irrigation in the 2013-
14 is due amount 13619.24 lakhs that is 100 and in 2014-15 due amount 13687.58
lakhs and in 2015-16 it is 11532.57 lakhs respectively.. Collection of due amount is
slow. The above table and chart shows that the collection of loans from minor
irrigation for the year 2013-14 was 3088.1 lakhs i.e. 22.67% of due amount and in the
Page 73
year 2014-15 l it was 4865.56 lakhs i.e. 35.55% of due amount and in 2015-16 it was
4304.99 lakhs i.e. 37.33% of due amount of respective years.
TABLE 4.12
SHOWING RECOVERY OF LOANS FROM HORTICULTURE:
YEARS 2013-14 2014-15 2015-16
AMOUNT DUE 11644.72 13608.07 10296.48
COLLECTION 3360.92 7224.84 5195.7
BALANCE 8283.8 6383.23 5100.78
ANALYSIS:
The collection of loan amount is increased from 2013-14 to 2014-15 and, decreased in
2015-16. As a result percentage of collection of loan is increased in 2013-14 and 2014-
15 land (increased in 2015-16). And the remaining balances are 8283.80, 6383.23,
5100.73 lakhs for 2013-14, 2014-15, 2015-16 respectively.
The bank has collected a very good amount of dues amount against due amount value
this shows the capacity of farmers as well as bank to repay and collect the dues to each
other.
Page 74
GRAPH4.12
REPRESENTING RECOVERY OF LOANS FORM

HORTICULTURE:
13608.07
14000
11644.72
12000 10296.48
10000 8283.8
7224.84
8000 6383.23
5195.7
5100.78
6000
3360.92
4000
2000
0
2013-14 2014-15 2015-16
AMOUNT DUE COLLECTION BALANCE
INTERPRETATION:
Table can be analyzed that the collection of loans from horticulture in the 2013-14 due
amount 11644.72 lakhs that is 100% and in 2014-15 due amount 13608.07 lakhs and
in 2015-16 it is 10296.48 lakhs respectively. Collection of due amount i~ nice. The
above table and chart shows that the collection of loans from horticulture for the year
2013-14 was 3360.92 lakhs i.e. 28.86% of due amount and in the year 2014-15 lilt
was 7224.84 lakhs i.e. 53.09% of due amount and in 2015-16 it was 5195.70 lakhs i.e.
50.46% of due amount of respective years.
Page 75
TABLE 4.13
SHOWING RECOVERY OF LOANS FROM SERICULTURE:
YEARS 2013-14 2014-15 2015-16
AMOUNT DUE 2886.21 3003.11 2832.61
COLLECTION 1272.36 1665.24 1544.96
BALANCE 1613.85 1337.87 1287.65
ANALYSIS :
The collection of loan amount is increased from 2013-14 to 2014-15and decreased in

2015 -16. As a result percentage of collection of loan is increased in 2012-13 and
2013-14 and decreased in 2014-15. And the remaining balances are 1613.85, 1337.87,
1287.65 lakhs for 2012-13, 2013-14, 2014-15 respectively.
The bank has collected a very good amount of dues amount against due amount. This
shows the capacity of farmers as well as bank to repay and collect the dues.
Page 76
GRAPH4.13
REPRESENTING RECOVERY OF LOANS FROM

SERICULTURE :
3500 3003.11
2886.21 2832.61
3000
2500
2000 1613.85 1665.24

1544.96
1272.36 1337.87 1287.65
1500
1000
500
0
2013-14 2014-15 2015-16
INTERPRETATION:
Table can be analyzed that the collection of loans from sericulture in the 2013-14 due
amount 2886.21 lakhs that is 100% and in 2014-15 due amount 3003.11 lakhs and in
2015-16 it is 2832.61 lakhs respectively. Collection of due amount is slow. The above
table and chart shows that the collection of loans from sericulture for the year 2013-14
Page 77
was 1272.36 lakhs i.e. 44.08% of due amount and in the year 2014-15 it was 1665.24
lakhs i.e. 55.45% of due amount and in 2015-16 it was 1544.96 lakhs i.e. 54.54% of
due amount of respective years.
TABLE4.14
SHOWING RECOVERY OF LOANS FROM FARM

MECHANISATION:
YEARS 2013-14 2014-15 2015-16
AMOUNT DUE 12601.28 12880.7 13542.95
COLLECTION 3611.61 10054.12 1134.73
BALANCE 3989.67 2826.58 2228.22
ANALYSIS :
The collection of loan amount is increased from 2013-14 to 2014-15 and 2015-16. As
a result percentage of collection of loan is increased in 2013-14 to 2014-15and 2015-
Page 78
16 And the remaining balances are 3989.67, 2826.58, 2228.22 lakhs for 2013-14,
2014-15,2015-16 respectively.
The bank has collected a very good amount of dues amount against due amount value
this shows the capacity of farmers as well as bank to repay and collect the dues to
each other.
GRAPH4.14
REPRESENTNG RECOVERY OF LOANS FROM FARM

MECHANISATION:
16000
14000 13542.95
12601.28 12880.7
12000
10054.12
10000
8000
6000
3989.67
3611.61
4000 2826.58
2228.22
2000 1134.73
0
2013-14 2014-15 2015-16
INTERPRETATION:
Page 79
Table can be analyzed that the collection of loans from farm mechanization in the
2013-14 due amount 12601.28 lakhs that is 100% and in 2014-15 IL due amount
12880.7 lakhs and in 2015-16 it is 13542.95 lakhs respectively.Collection of due
amount is increasing. The above table and chart shows that the collection of loan
from farm mechanization for the year 2013-14 was 8611.61 lakhs i.e. 68.34% of due
amount and in the year 2014-15 it was 10054.12 1akhsi.e 78.06% of due amount and
in 2015-16 it was 11314.73 lakhs i.e. 83.55% of due amount of respective years.
TABLE4.15
SHOWING RECOVERY OF LOANS FROM RURAL HOUSING

SCHEME:
YEARS 2013-14 2014-15 2015-16
AMOUNT DUE 7018.76 7491.03 6099.91
COLLECTION 2518.17 3245.28 2798.3
BALANCE 4500.59 4245.75 3301.61
ANALYSIS :
The collection of loan amount is increased from 2013-14 to 2014-15 and Decreased
in 2015-16. As a result percentage of collection of loan is increased in 2013-14 and
Page 80
2014-15 land decreased in 2015-16. And the remaining balances are 4500.59,
4245.75, 3301.61 lakhs for 2013-14, 2014-15, 2015-16 respectively.
The collection of loans from Rural Housing is in increasing trend this shows a fair
collection department in the bank.
GRAPH4.15
REPRESENTING RECOVERY OF LOANS FROM RURAL

HOUSING SCHEME :
7491.03
8000 7018.76
7000 6099.91
6000
4500.59 4245.75
5000
4000 3245.28 3301.61
2518.17 2798.3
3000
2000
1000
0
2013-14 2014-15 2015-16
Page 81
INTERPRETATION:
Table can be analyzed that the collection of loans from rural housing in the 2013- 14
due amount 7018.76 lakhs that is 100% and in 2014-15 due amount7491.03 lakhs and
in 2015-16 it is 6099.91 lakhs respectively. Collection of due amount is varying every
year. The above table and chart shows that the collection of loans from rural housing
for the year 2013-14 was 2518.17 lakhs i e. 35.88% of due amount and in the year
2014-15 it was 3245.28 lakhs i.e. 43.32% of due amount and in 2015-16 it was
2798.30 lakhs i.e. 45.87% of due amount of respective years.
TABLE4.16
SHOWING RECOVERY OF LOANS FROM NON FARMING

SECTOR:
YEARS 2013-14 2014-15 2015-16
AMOUNT DUE 4022.66 3553.23 2502.06
COLLECTION 1258.81 1520.88 829.67
BALANCE 2763.85 2032.35 1672.39
ANALYSIS :
Page 82
The collection of loan amount is increased from 2013-14 to 2014-15 and decreased in
2015-16. As a result percentage of collection of loan is increased in 2013-14 and
2014-15 and decreased in 2015-16. And the remaining balances are 2763.85, 2032.35,
1672.39 lakhs for 2013-14, 2014-15, 2015-16 respectively
GRAPH 4.16
RECOVERY OF LOANS FROM NON FARMING SECTOR:
4500 4022.66
4000 3553.23
3500
2763.85
3000 2502.06
2500 2032.35
1520.88 1672.39
2000
1258.81
1500 829.67
1000
500
0
2013-14 2014-15 2015-16
Page 83
INTERPRETATION:
Table can be analyzed that the collection of loans from non farming sector in the
2013-14 due amount 4022.66 lakhs that .is 100% and in 2014-15 due amount3553.23
lakhs and in 2015-16 it is 2502.06 lakhs respectively. Collection of due amount is
varying every year. The above table arid chart shows that the collection of loans from
non farming sector for the year 2013-14 was 1258.81 lakhs i.e. 3 1.29% of due
amount and in the year 2014-15 it was 1520.88 lakhs i.e. 42.80% of due amount and
in 2015-16 it was 829.67 lakhs i.e. 33.16% of due amount of respective years.
TABLE4.17
SHOWING COMPARISON BETWEEN THREE YEARS
AGRICULTURAL LOANS RECOVERY:
[RS IN LAKHS]
YEARS PARTICULARS AMOUNT
2014 Agri loan collection 1009.84
Page 84
ANALYSIS:
The above table represents the three years loans collection amount, the amounts are
continuously increase from one year to another related to the lending and recovery the
data related to the 2014, 2015, 2016 and its amounted to Rs 1009.84, 4383.69 and
1633.4 respectively.
GRAPH4.17
SHOWING COMPARISON BETWEEN THREE YEARS
AGRICULTURAL LOANS RECOVERY:
1009.84
1633.4
4383.69
Page 85
INTERPRETATION:
The above graph represents three years loans amount collection from the customers.
Comparison of the three years loans repayment from the farmers, in the year 2014
large amount of repayment from the barrowers and the optimum Collection is in 2014
and 2016
TABLE 4.18
SHOWING INTEREST RATES OF AGRICULTURAL LOANS:
YEARS LOANS RATE OF INTEREST

2015-16 Short term 1%
2015-16 Medium term 4%
2015-16 Long term 14%
ANALYSIS:
The above table represents the rates of the short-term, medium-term and long-term
loans in the year 2015-16 the short-term lons interest rate 1%, medium -term loans
interest rate 4% and long-term interest rate 14%.
Page 86
GRAPH 4.18
SHOWING AGRICULTURAL LOANS INTEREST RATES FOR
THE YEAR 2015-16:
5%
21%
74%
Page 87
INTERPRETATION:
The above pie graph represents the short term [agricultural] loans and medium term
loans interest rates % in the year 2015-2016. The short term loan duration period for
repayment is 1 year and interest rate is 1%. The medium term loan duration period for
repayment is 1-4 years interest rate is 4%. The long term loan duration period for
repayment is 1-5 years interest rate is 14%.
TABLE4.19
SHOWING THE TOTAL REVENUE DERIVED FROM
AGRICULTURAL INTEREST TO PCARD BANK IN THE YEAR
2014.2015 &2016 [RS IN LAKHS]”
YEAR PARTICULAR AMOUNT
2014 revenue 90.56
2015 revenue 139.29
2016 revenue 105.75
Page 88
ANALYSIS:
The above table represents the PCARD bank revenue derived from agricultural
loan interest. In the year 2014 PCARD derives 90.56[Rs in lakhs], in 2015 it derives
139.29[Rs in lakhs] and in 2016 it derives 105.75[Rs in lakhs] income from
agricultural loans interest.
GRAPH 4.19
SHOWING THE COMPARATIVE REVENUE OF PCARD BANK
FROM AGRICULTURAL LOANS INTEREST [2014, 2015 &
2016] :
90.56
105.75
139.29
Page 89
INTERPRETATION:
The above graph shows the 2014, 2015 and 2016 agricultural revenue of the
PCARD bank. In the year 2014 PCARD bank earns 90.56 [Rs in lakhs] revenue
and in the year 2015 PCARD bank earns the revenue from agricultural loans
amounted to 139.29[Rs in lakhs] but in the year 2016 PCARD bank earns the
revenue from agricultural loans amounted to Rs.105.75.
4.20 PCARD & BANKBRIEF NOTE OF THE BANK (RS IN

LAKHS)
Sl. No. DETAILS 31-03-14 31-03-15 31-03-16

01 No of branches 23 23 23
02 No of PCDARB'S 177 177 177
03 Associate members 13 13 13
04 Authorized Share 10000 10000 10000
05 Paid up share capital 4980.2 5031.91 5207.96

06 Reserve fund 2003.07 2643.63 2658.46
07 Agri. stabilization Fund 663.84 683.75 704.27
08 Provisions for NPA 9608.94 9608.94 9654.32
09 Other reserves 1431.16 1401.09 1579.88
10 Fixed deposits 1435.56 2149.66 2922.27
11 Other deposits 2965.95 3228.73 3739.88
12 Debenture floatation 150734.47 154029.66 154923.48
13 Loan issue 18534.20 19342.98 20879.51
14 Loan outstanding 136611.30 135677.63 133521.80
Page 90
15 Working Capital 188267.19 188986.54 186652.16

16 Minor irrigation Loans 77077.30 78176.63 78921.47
17 Farm mechanization 94770.14 102539.08 110741.87

18 Land development 28161.49 31613.62 34887.99
19 Horticulture/Plantation 42001.22 43964.39 46563.90
0 Diversified 33726.24 37517.11 42246.40
21 Non-farm sector 22221.26 22275.36 22307.35
22 Rural housing 38440.14 38663.02 38759.24
23 General scheme 8580.60 8580.60 8580.60
24 Total loan disbursed 357771.78 377114.76 382508.82
25 No of wells sanctioned 286194 286469 286703
26 No of area developed in 1264949 1283542 1289463
CHAPTER 5
SUMMARY OF FINDINGS, CONCLUSION

AND
SUGGESTIONS
5.1 FINDINGS:
The study is carried out to know the kinds of loans and recovery provided by
PRIMARY Co-operative Agricultural and Rural Development Bank Ltd. After
finishing the analysis and observation of the collected data the following findings
were known:
 Bank provides wide variety of schemes, such as sericulture, farm mechanization,

crop loan, minor irrigation, horticulture and rural housing etc...
Page 91
 There is a significant shift in providing loans and advances from the year 2015 to
the year 2016 by the bank.
 The Housing loans of the concern have a declining trend.
 Loans from time deposits of the bank have a quite increasing trend from the past
three years. This shows that banks earning is increasing and it is good for the
bank.
 Minor irrigation loans are decreasing in trend.
 Plantation or horticulture loans are increasing.
 Seri cultural loans are also increasing slowly.
 Farm mechanization loans are drastically increasing with utilization of machines
in agricultural sector.
 Crop loans are significantly increasing while crop loans are for short period loans.
 Loans under diversified are granting for different other productive, planning
activities of agricultural industry.
 Rural housing loans are affected from other banks housing loans as well as the
Central and State Govt. housing projects and schemes.
 Non farming loans are very low percentage of loans when compared to other loans
of the bank.
 Recovery of loans and advances of the bank is moderate.
 PRIMARY Co-Operative Agricultural and Rural Development Bank Ltd. offering
complete transparency to the customers.
 The financial assistance to agriculture strengthens the rural people lives.
 The customer's perception towards the service of PCARD Bank is good.
Page 92
5.2 CONCLUSION:
Banking sector plays a vital role in the process of economic development of any
country. With different policies catching up like, never before, bank name has become
a cubit above the rest by providing different, wide Variety of loan policies.
The PCARD bank linked with its apex institutions those are RBI and NABARD these
institutions give guidelines to the SCB’s and PCARDB’s.
This project went through the deep study of loan policies of PRIMARY Co-Operative
Agricultural and Rural Development Bank. It is satisfying thing to know that PCARD
Bank is growing towards a "Service of Excellence". All the achievements can be
given a broader sky view by applying and considering the findings and suggestions
given in this project. Efforts have been made to know all spectrum of possibilities
through which PCARD Bank can satisfy their customers more and understandingly.
The bank should provide different credit policies to customers with attractive
schemes, subsidies, in low rate of interest. The industries path is to becoming the
market leader in the banking sector.
Page 93
5.3 SUGGESTIONS:
The PRIMARY CO-OPERATIVE AND AGRICULTURAL AND RURAL

DEVELOPMENT BANK (PCARD) should take corrective action for loans
recovery in appropriate manner.
 PCARD BANK should provide much more customer service should try and
interest rate to make its products more competitive and also give its customers an
option of short term repayment period.
 Bank should improve the operational efficiency to improve the processing speed
of the loans and reduce the time to provide loans.
 The bank has to focus on increasing the loan on clearing of debts and in
proportionate to its LOANS AND ADVANCE.
 BANK has to focus on increasing the surety loan. Because it will attract more and
more customer which in turn increases the returns to the bank.
 The bank should collect the advances from the customer within the credit period
Page 94
say one year or five years.

 The bank should verify the credit worthiness of customer.
 The bank should also verify the characteristics of the customer whether he is
honest, prompting payment etc.
 Before granting the advance the bank should verify the customer has the revenue
value of security, assets. Property etc.
 The bank should also fix different credit period for different schemes
BIBLIOGRAPHY
Name of the author Name of the Book Edition Name of the

Publisher
K.Venkataramana Law & practice of 2008 Seven hills book
banking. publication
Appannaiah, Reddy, Law & practice of 2009 Himalaya
Vijayendra banking. publishing House
O.R. Krishnaswamy Business research 2008 Himalaya
B.G.Sathya Prasad methods publishing House
E.Gordon and Law & practice of 2011 Himalaya
K.Natarajan banking. publishing House
Dr.Purushotamma K.S Indian Financial 2009 Vision book House
BharatishRao system
S.N. Maheshwari Law & practice of 2009 Kalyani publication
S.K Maheshwari banking.
Web Sites:
Page 95
www.pcard&pldbank.com
www.wikipedia.com
www.investopedia.com
www.askanswers.com
www.dictionary.com
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A Study On Lending and Recovery Project-1

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A STUDY ON LENDING AND RECOVERY AGRICULTURE LOAN AT PRIMARY

CO-CPERATIVE AGRICULTURAL AN RURAL DEVELOPMENT BANK L.T.D AT KOLAR

1.3 THE SUBJECT FINANCE MAY TRADITIONALLY

1.4 IMPORTANCE OF FINANCE:

1.5 INTRODUCTION TO BANKING:

The earliest evidence of money changing activity in depicted on a silver

A bank is a financial institution that accepts deposits and chances those

Definition – In general terms the business activity of accepting and safeguarding

1.6 HISTORY OF BANKING IN INDIA

1.7 BANKS IN INDIA:

1.8 CO-OPERATIVE BANKS IN INDIA:

1.9 DEFINITION AND MEANING OF CO-OPERATIVE BANK:

1.10 CHARACTERISTICS OF CO-OPERATIVE BANK:

The Co-Operative sector can be further classified into 4 types

1.11 MAJOR BANKS IN AGRICULTURAL SECTOR IN INDIA:

1.12 SOME OF THE IMPORTANT BANKS WHICH LENDS IN

1.14 DEFINITION OF LOAN:

1.15 SECURED LOAN:

1.16 UNSECURED LOAN

1.17 TYPES OF LOAN:

 Fund based loan.

1.18 FUND BASED LOAN:

1.19 NON-FUND BASED LOAN:

1.20 ASSET BASED LOAN:

1.21 PRINCIPLES OF SOUND LOAN:

1.22 TYPES OF GRANTING LOAN:

The main forms/types of granting loans are classified as below.

1.23 ADVANTAGES OF LOANS :

1.24 DISADVANTAGES OF LOANS AND ADVANCE :

 Risk of bad debt.

 People can buy more than they can afford.

1.25 FACTORS WHICH INFLUENCING LOANS:

1.26 EFFECTIVE LOAN CONTROL:

1.27 SOURCES OF INFORMATION ON CREDIT/LOAN

 Knowing the credit policy and procedures for credit control

1.29 MEANING OF RECOVERY OF LOAN:

In finance the term recovery refers to collection of amount due. The normally

1. Installment fixes on salaried person on a monthly basis.

Recovery is different from one loan to another.

 In short term loans recovery is less than 36months.

1.30 LOAN RECOVERY PROCESS:

 Collections may also contact any guarantor of the loan.

 If it is a secured loan, the bank may seize the asset.

 If it is a personal loan without security, the bank may file a lawsuit.

1.31 CREDIT/LOAN COLLECTION OVERDUE ACCOUNTS:

1.32 IMPORTANCE OF RECOVERY OF LOANS:

 The importance of recovery of loans need not be overemphasized. There is a

1.33 FACTORS CONTRIBUTING TO POOR RECOVERY OF

[I] BORROWER -ORIENTED: The following factors result in non-recovery of loans

[III] PROJECT-ORIENTED: Non-recovery of loans may be because of the project

[IV] GOVERNMENT-ORIENTED: Government is also responsible for non-recovery

1.34 STEPS IN RECOVERY OF LOANS:

[a] Prepare the case history.

[c] See that all documents are in order.

[f] Serve legal notice on the borrower.

g] File a suit in the court through the legal adviser.

[h] File claim with the DI and CGCI.

1.35 INDIAN AGRICULTURE:

1.36 INTRODUCTION OF AGRICULTURE LOANS:

Construction of biogas plants and irrigation systems as well as the purchase of

The present includes all aspects of structure for agricultural commodities in

1.37 STEPS TAKEN FOR DEVELOPING AGRICULTURE AND