report on allahabad bank

7/29/2019 Report on Allahabad Bank

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RESEARCH PROJECT REPORT(MBA - 043)

ONFINANCE TO PRIORITY SECTOR FROM ALLAHABAD

BANK

Submitted in Partial Fulfillment of

Master of Business Administration (MBA)Programme : 2009 -11

of

Gautam Budhha Technical University, Lucknow

Under the Supervision of SUBMITTED BY(Dr. S.P. GUPTA) ANUP SINGHMBA Department ROLL NO. -0901470008S.R.M.S.C.E.T., Bareilly

Faculty of Management ScienceShri Ram Murti Smarak College of Engineering & Technology,

Bareilly

(College Code 014)


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Shri Ram Murti Smarak College of Engineering & Technology,Bareilly (U.P.)

Faculty of Management Science

Certificate

This is to certify that Mr. ANUP SINGH, a student of MBA IV Semester has

completed his Research Project Report titled Finance to priority sector from

Allahabad Bank assigned by MBA Department and under my supervision.

It is further certified that He has personally prepared this report that is the result of his

personal survey/observation. It is of the standard expected to MBA student and hence

recommended for evaluation.

Supervisor

(DR. S. P. GUPTA)

Above statement is endorsed.(Anant Kumar Srivastava)Head - MBA


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DECLARATION

I, shikhar agrawal, hereby declare that I have carried out project report on Topic Finance to priority sector from Allahabad Bankin Bareilly.

I further declare that project work is my original work and no part of this report has

been published or submitted to anybody or university for award of any other degree or

Diploma.

ANUP SINGH

MBA 4th

sem.


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ACKNOWLEDGEMENT

The extensive endeavour, bliss and euphoria that accompany the successful completion

of the task that would not be complete without the expression of gratitude to the people

who made it possible .I take this opportunity to acknowledge all those who guided

,encouraged and helped me in winding up this project.

I am very thankful to Mr. Anant Kumar Srivastava(H.O.D,MBA deptt.) ,who gave me

guidance throughout my Project work. I would also like to extend my feelings of gratitude

towards my faculty mentor Dr. S. P. Gupta ,for his constant guidance, support and

correcting where I was wrong. I thank them with full zeal and enthusiasm that they gave

this big opportunity to me.

ANUP SINGH

DATE- MBA 4TH

SEM

PLACE-


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TABLE OF CONTENT

PAGE NO.

CHAPTER-1 Introduction 1-27

1.1Introduction 1-1

1.2About Allahabad bank 1-5

1.3 Principles of lending and priority sector lending 6-16

1.4 Targets & sub target under priority sector 17-19

1.5 Common guidelines for priority sector advances 20-26

1.6 Advances to priority sector by Allahabad bank. 26-26

1.7 objectives of the research 27-27

CHAPTER-2 Literature Review 28-39

CHAPTER-3 Research Design 40-42

3.1 Research methodology 40-40

3.2 Research design 41-41

3.3 Method of data collection 41-42

CHAPTER-4 Data Analysis and Interpretation 43-51

CHAPTER-5 52-54

5.1 Findings 52-52

5.3 Conclusion 53-53

5.3 suggestion 54-54

CHAPTER-6 55-55

Bibliography 55-55


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LIST OF TABLE

PAGE NO.

Table no -1 Advance to priority sector. 43-43

Table no -2 Advances to agriculture sector. 44-44

Table no -3 Direct finance to agriculture sector. 45-45

Table no -4 Indirect finance to agriculture sector. 47-47

Table no -5 Finance to Micro Small Enterprises Sector. 48-48

Table no -6 Finance to sector such as housing loan education loan etc. 49-49

Table no -7 Finance to weaker section. 50-50


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LIST OF FIGURE

PAGE NO.

Figure no -1 Advance to priority sector. 43-43

Figure no -2 Advances to agriculture sector. 44-44

Figure no -3 Direct finance to agriculture sector. 46-46

Figure no -4 Indirect finance to agriculture sector. 47-47

Figure no -5 Finance to Micro Small Enterprises Sector. 48-48

Figure no -6 Finance to sector such as housing loan education loan etc. 49-49

Figure no -7 Finance to weaker section. 50-50


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CHAPTER-1

INTRODUCTION OF THE TOPIC

1.1 Introduction

The research project report on financing to priority sector from Allahabad bank is

taken as a part of my 4th

semester course of MBA. Finance to priority sector is a prime

concern for the banks and it is given highest priority .

This chapter contains a brief summary about Allahabad bank and the research topic.

Section 1.2 deals with about Allahabad bank. Section 1.3 deals with principles of

lending and priority sector lending. The section 1.4 contains target & sub target under

priority sector. The section 1.5 contains common guidelines for priority sector advances.

The section 1.6 deals with advances to priority sector by Allahabad bank. The last Section

1.7 deals with objectives of the research work.

1.2 About Allahabad bank

Allahabad Bank was founded by group of Europeans on April 24 1865. The Allahabad

Bank has a history of 3 centuries. The Allahabad Bank is the oldest joint stock Bank

in India. Due to business considerations the head office of Allahabad Bank was

shifted to Calcutta (now Kolkatta) in 1923. In March 2007 the business of

Allahabad bank has reached to a mark of 150000 crores.

The Allahabad bank has main branches in Kanpur, Lucknow, Nanital, Kolkatta,

Jabalpur, Meerut, Nagpur, Mumbai, and New Delhi. The Chairman and Managing


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Director of Allahabad Bank is Sri K.R. Kamath. Sri K.K. Agarwal and Sri J.P. Dua

are the executive directors of Allahabad Bank.

The Allahabad bank offers its services to self-employed persons, Professionals,

salaries employees, businessman. The Allahabad bank offers three kinds of products

Deposit products, Retail Credit Products and Other Credit Products. The Flexi-fix

Deposit, Rs.5 Banking, Tax Benefit Term Deposit are some of the famous Deposit

Products of the Allahabad Bank.

The Allahabad Bank also offers its services to NRI customers. It offers International

Banking facility for its NRI customers. The deposit schemes, tax benefits schemes,

remittance facility, forex services are offered by the Allahabad Bank. The NRI

services are available in 312 branches of the Allahabad Bank all over the country.

Philosophy of the Bank

The highest standards of ethical conduct and honest.

Accurate, Fair, Full, Sensible and timely disclosures in reports.

Compliance with laws, regulations and rules.


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Nineteenth Century

The Oldest Joint Stock Bank of the Country, Allahabad Bank was founded on April

24, 1865 by a group of Europeans at Allahabad. At that juncture Organized Industry,

Trade and Banking started taking shape in India. Thus, the History of the Bank spread

over three Centuries - Nineteenth, Twentieth and Twenty-First.

April 24, 1865's The Bank was founded at the confluence city of Allahabad

by a group of Europeans.

Twentieth Century

1920's The Bank became a part of P & O Banking Corporation's

group with a bid price of Rs.436 per share,

1923 The Head Office of the Bank was shifted to Calcutta on

Business considerations.

July 19, 1969 Nationalized along with 13 other banks, Branches - 151

Deposits - Rs.119 crores, Advances - Rs.82 crores.

October, 1989 United Industrial Bank Ltd. merged with Allahabad Bank.

1991 Instituted Allahabad Bank Finance Ltd., a wholly owned

subsidiary for Merchant Banking.


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Twenty-First Century

October, 2002 The Bank came out with Initial Public Offer (IPO), of 10

crores share of face value Rs.10 each, reducing

Government shareholding to 71.16%.

April, 2005 Follow on Public Offer (FPO) of 10 crores equity shares of

face value Rs.10 each with a premium of Rs.72, reducing

Government shareholding to 55.23%.

June, 2006 The Bank Transcended beyond the National Boundary,

opening Representative Office at Shenzen, China.

Oct, 2006 Rolled out first Branch under CBS.

February, 2007 The Bank opened its first overseas branch at Hong Kong.


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Vision

To put the Bank on a higher growth path by building a Strong Customer-base through

Talent Management, induction of State-of-the-art Technology and through Structural

Re-organization.

Mission

To ensure anywhere and anytime banking for the customer with latest state-of-the-art

technology and by developing effective customer centric relationship and to emerge as

a world-class service provider through efficient utilization of Human Resources and

product innovation.


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1.3 Introduction of priority sector

Disposing of money or property with the expectation that the same thing (or an

equivalent) will be returned . Credit is the provision of resources (such as granting a

loan) by one party to another party where that second party does not reimburse the

first party immediately, thereby generating a debt, and instead arranges either to repay

or return those resources (or material(s) of equal value)

Lenders - A loan is a type of debt. Like all debt instruments, a loan entails the

redistribution of financial assets over time

To provide money temporarily on condition that the amount borrowed be

returned, usually with an interest fee.

Today ,the important types of banks, commercial and merchant banks, operating under

the regulation of the Central Bank. The commercial banks engage in retail banking

services through branch networks and operate with a broad deposit base consisting of

demand and time deposit they provide short term lending. On the other hand,

merchant banks are licensed to provide wholesale banking, take deposit and arrange

syndicated loan facilities for long terms by pooling, sometimes, a consortium of

banks, including other financial institutions, to finance capital intensive projects. From

the foregoing, it is realized that banks are generally debtors; they borrow money in

order to lend them out to make profit. No bank can ever survive by just being a

custodian of deposit, but they exist by lending from the deposit on fixed interest

charged. Money lent on interest is always supposed to be secured on some guarantees

or security.


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Since banks depend largely on lending, the need to adhere to the basic principles of

lending is quite inevitable. The principles, if strictly followed, will guarantee

depositors and shareholders funds, increase profitability and make a healthy turn

over. Such advances in turn assist in the transformation of rural environment, promote

rapid expansion of banking habit and improve and boost the nations economy.

The basic considerations in bank lending are the character of the client seeking loan

from the bank. The client must be an honest, upright customer whose record of

transaction with the financial institution or in the society is remarkable. The

information on the character of the borrower could be obtained through a completed

form of his guarantor or his statement of account.

For effective credit administration, the bank must assign functioning lending officers,

properly trained on lending, to be responsible for evaluation of reports and collection

and reporting findings to relevant senior schedule officers, for further consideration

and final approval or rejection

An internal credits/lending policy should be formulated, implemented and pursued

vigorously by the bank to minimize the risk of default from borrowers. The successful

banks operating within the financial system are those that consider and coordinate

basic principles of lending and monitor the activities of borrowers regularly.

The major business of banking company is to grant loans and advances to traders as

well as commercial and industrial institutes. The most important use of banks money

is lending. Yet, there are risks in lending. While lending loans or advances the banks

usually keep such securities and assets as a supports so that lending may be safe and

secured. Suppose, any particular state is hit by disasters but the bank shall get


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advantages from the lending to another states units. Thus, the effect on the entire

business of banking is reduced. So the banks follow certain principles to minimize the

risk. Following are the important areas to be taken care while lending:

Principles of good lending

Basic principles General principle

Basic principles

The success of banks depends upon the basic principles. These are the prime

principles in lending as well as investment

Safety

Liquidity

Profitability

Safety

Normally the bank uses the money of depositors in granting loans and advances.

Because of that while granting loans the banker should think about the safety of

depositors money. The purpose behind the safety is to see the financial position of the

borrower, whether he can pay the debt as well as interest easily. Ensuring safety

means reducing risk associated with lending. The risk involved in lending money is

the credit risk.ie the possibility of the borrower not repaying the amount back on the


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due date. It is necessary for the banks to maintain expert staff to appraise every credit

proposal received by it. Market risk also there , it can be avoided by preferring high

grade securities of short terns.

Liquidity

It is a legal duty of a banker to pay the total deposited money to the depositor on

demand. So the banker has to keep certain percent cash of the total deposits in hand.

Moreover the bank grants loan. It is also for the addition of short term or productive

capital. Such type of lending is recovered on demand. A bank must have sufficient

liquid assets to meet the demands of the depositors .The liquid assets must have

posses certain characteristics.

It must be convertible in to cash quickly and easily.

The conversion must be without any loss of value or risk

SLR : The Banking regulation act of 1949 , section 24 . states that every commercial

bank have to maintain liquid assets in the form of cash , gold, and gilt edged securities

which is not less than 25 % and not more than 40 % of NDTL ( Net Demand and

Time Liabilities )

Profitability

Commercial banks are profit earning institutes; nationalized banks are also not an

exception. They should have planning of deposits in a profitability way to pay more

interest to the depositors and more salary to the employees. Before taking any decision

the banker should make sure that it is profitable.


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PRIORITY SECTOR LENDING

The Government of India through the instrument of Reserve Bank of India (RBI)

mandates certain type of lending on the Banks operating in India irrespective of their

origin. RBI sets targets in terms of percentage (of total money lent by the Banks) to be

lent to certain sectors, which in RBI's perception would not have had access to

organised lending market or could not afford to pay the interest at the commercial

rate. This type of lending is called Priority Sector Lending. Financing of Small Scale

Industry, Small business, Agricultural Activities and Export activities fall under this

category. This is also called directed credit in Indian Banking system.

Financing Priority Sector in the economy is not strictly on commercial basis as not

only the general approach is liberal but also the rate of interest charged on such loans

is less. Export finance is, in fact, available at a discount of 20% or more on the normal

rate of interest to Indian corporates. Part of the cost of this concession is borne by RBI

by means of refinancing such loans at concessional rate. Indian Banks, therefore,

contribute towards economic development of the country by subsidizing the business

activities undertaken by entrepreneurs in the areas which are consider "priority sector"

by RBI.

Principles of lending & Priority sector finance in Banks

Cardinal principles of lending are Safety and liquidity , Profitability and

diversifications of risks and Productive purpose and security

Liquidity with a banker means Cash on Hand, Cash and Bank balances and

Short term current assets to convert into cash


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Customer profitability analysis means Assess the profitability of customers

business

Banker can reduce risk in lending to a borrower by ensuring that there will be

no default on account of lack of liquidity and lack of willingness to pay on the part of

the borrower

In bankers parlance, credit riskin lending refers to default of repayment by a

borrower

Priority sector comprise

Broadly, the priority sector comprises the following :

1. Agriculture

2. Small scale industries (including setting up of industrial estates)

3. Small road and water transport operators (owning upto 10 vehicles).

4. Small business (Original cost of equipment used for business not to exceed Rs 20

lakh)

5. Retail trade (advances to private retail traders upto Rs.10 lakh)

6. Professional and self-employed persons (borrowing limit not exceeding Rs.10 lakh

of which not more than Rs.2 lakh for working capital; in the case of qualified medical

practitioners setting up practice in rural areas, the limits are Rs 15 lakh and Rs 3 lakh

respectively and purchase of one motor vehicle within these limits can be included

under priority sector)

7. State sponsored organisations for Scheduled Castes/Scheduled Tribes

8. Education (educational loans granted to individuals by banks)


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9. Housing [both direct and indirect loans upto Rs.5 lakhs (direct loans upto Rs 10

lakh in urban/ metropolitan areas), Loans upto Rs 1 lakh and Rs 2 lakh for repairing of

houses in rural/ semi-urban and urban areas respectively].

10. Consumption loans (under the consumption credit scheme for weaker sections)

11. Micro-credit provided by banks either directly or through any intermediaty; Loans

to self help groups(SHGs) / Non Governmental Organisations (NGOs) for onlending

to SHGs

12. Loans to the software industry (having credit limit not exceeding Rs 1 crore from

the banking system)

13. Loans to specified industries in the food and agro-processing sector having

investment in plant and machinery up to Rs 5 crore.

14. Investment by banks in venture capital (venture capital funds/ companies

registered with SEBI)

Direct Finance for Agricultural Purposes

Direct Agricultural advances denote advances given by banks directly to farmers for

agricultural purposes. These include short-term loans for raising crops i.e. for crop

loans. In addition, advances upto Rs. 5 lakh to farmers against pledge/hypothecation

of agricultural produce (including warehouse receipts) for a period not exceeding 12

months, where the farmers were given crop loans for raising the produce, provided the

borrowers draw credit from one bank.

Direct finance also includes medium and long-term loans (Provided directly to

farmers for financing production and development needs) such as Purchase of


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agricultural implements and machinery, Development of irrigation potential,

Reclamation and Land Development Schemes, Construction of farm buildings and

structures, etc. Other types of direct finance to farmers includes loans to plantations,

development of allied activities such as fishery, poultry etc and also establishment of

bio-gas plants, purchase of land for agricultural purposes by small and marginal

farmers and loans to agri-clinics and agri-business centres.

Indirect Finance to Agriculture

Indirect finance denotes to finance provided by banks to farmers indirectly, i.e.,

through other agencies. Important items included under indirect finance to agriculture

are as under :

(i) Credit for financing the distribution of fertilisers, pesticides, seeds, etc.

(ii) Loans upto Rs. 25 lakhs granted for financing distribution of inputs for the allied

activities such as, cattle feed, poultry feed, etc.

(iii) Loans to Electricity Boards for reimbursing the expenditure already incurred by

them for providing low tension connection from step-down point to individual farmers

for energising their wells.

(iv) Loans to State Electricity Boards for Systems Improvement Scheme under Special

Project Agriculture (SI-SPA).

(v) Deposits held by the banks in Rural Infrastructure Development Fund (RIDF)

maintained with NABARD.


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(vi) Subscription to bonds issued by Rural Electrification Corporation (REC)

exclusively for financing pump-set energisation programme in rural and semi-urban

areas and also for financing System Improvement Programme (SI-SPA).

(vii) Subscriptions to bonds issued by NABARD with the objective of financing

agriculture/allied activities.

(viii)Finance extended to dealers in drip irrigation/sprinkler irrigation

system/agricultural machinery, subject to the following conditions:

(a) The dealer should be located in the rural/semi-urban areas.

(b) He should be dealing exclusively in such items or if dealing in other products,

should be maintaining separate and distinct records in respect of such items.

(c) A ceiling of upto Rs. 20 lakhs per dealer should be observed.

(ix) Loans to Arthias (commission agents in rural/semi-urban areas) for meeting their

working capital requirements on account of credit extended to farmers for supply of

inputs.

(x) Lending to Non Banking Financial Companies (NBFCs) for on-lending to

agriculture.

Small Scale Industries (SSI)

Small scale industrial units are those engaged in the manufacture, processing or

preservation of goods and whose investment in plant and machinery (original cost)

does not exceed Rs. 1 crore. These would, inter alia, include units engaged in mining

or quarrying, servicing and repairing of machinery. In the case of ancillary units, the

investment in plant and machinery (original cost) should also not exceed Rs. 1 crore to

be classified under small-scale industry.


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The investment limit of Rs.1 crore for classification as SSI has been enhanced to Rs.5

crore in respect of certain specified items under hosiery and hand tools by the

Government of India

Tiny Enterprises

The status of Tiny Enterprises is given to all small scale units whose investment in

plant & machinery is upto Rs. 25 lakhs, irrespective of the location of the unit.

Small Scale Service & Business Enterprises (SSSBEs)

Industry related service and business enterprises with investment upto Rs. 10 lakhs in

fixed assets, excluding land and building will be given benefits of small scale sector.

For computation of value of fixed assets, the original price paid by the original owner

will be considered irrespective of the price paid by subsequent owners.

Indirect finance in the small-scale industrial sector include

Indirect finance to SSI includes the following important items:

i. Financing of agencies involved in assisting the decentralised sector in the

supply of inputs and marketing of outputs of artisans, village and cottage industries.

ii. Finance extended to Government sponsored Corporation/organisations

providing funds to the weaker sections in the priority sector.

iii. Advances to handloom co-operatives.

iv. Term finance/loans in the form of lines of credit made available to State

Industrial Development Corporation/State Financial Corporations for financing SSIs.

v. Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills

vi. Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively

for financing SSI units.


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vii. Subscription to bonds issued by NABARD with the objective of financing

exclusively non-farm sector.

viii. Financing of NBFCS or other intermediaries for on-lending to the tiny sector.

ix. Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in

attaining priority sector targets.

x. Bank finance to HUDCO either as a line of credit or by way of investment in

special bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc.

under tiny sector may be treated as indirect lending to SSI (Tiny) Sector.

Weaker sections within the priority sector

The weaker sections under priority sector include the following:

1. Small and marginal farmers with land holding of 5 acres and less and landless

labourers, tenant farmers and share croppers.

2. Artisans, village and cottage industries where individual credit limits do not

exceed Rs. 50,000/-

3. Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY)

4. Scheduled Castes and Scheduled Tribes

5. Beneficiaries of Differential Rate of Interest (DRI) scheme

6. Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY)

7. Beneficiaries under the Scheme for Liberation and Rehabilitation of

Scavangers (SLRS).

8. Self Help Groups (SHGs)


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1.4 Targets under priority sector lending

The targets under priority sector lending would be linked to Adjusted Bank Credit

(ABC) (total loans and advance plus investments made by UCBs in non-SLR

bonds) or Credit Equivalent amount of Off-Balance Sheet Exposures (OBE),

whichever is higher, as on March 31 of the previous year. Existing investments, as

on August 30, 2007, made by banks in non-SLR bonds held in HTM category will

not be taken into account for calculation of ABC. However, fresh investments by

banks in non-SLR bonds will be taken into account for the purpose. For the

purpose of calculation of credit equivalent of off-balance sheet exposures, banks

may use current exposure method. Inter-bank exposures will not be taken into

account for the purpose of priority sector lending targets/sub-targets.

The targets and sub-targets set under priority sector lending for UCBs are furnished

below:

Targets and sub-targets set under priority sector lending

Total Priority

Sector advances

40 per cent of Adjusted Bank Credit (ABC) or credit equivalent

amount of Off-Balance Sheet Exposure, whichever is higher.

Agriculture

Advances

No target.

Small Enterprise

advances

Advances to small enterprises sector will be reckoned in

computing performance under the overall priority sector target of

40 per cent of ABC or credit equivalent amount of Off-Balance


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Sheet Exposure, whichever is higher.

Micro enterprises

within Small

Enterprises sector

(i) 40 per cent of total advances to small enterprises sector

should go to micro (manufacturing) enterprises having

investment in plant and machinery up to Rs 5 lakh and micro

(service) enterprises having investment in equipment up to

Rs.2lakh;

ii) 20 per cent of total advances to small enterprises sector

should go to micro (manufacturing) enterprises with investment

in plant and machinery above Rs 5 lakh and up to Rs. 25 lakh,

and micro (service) enterprises with investment in equipment

above Rs. 2 lakh and up to Rs. 10 lakh.(Thus, 60 per cent of

small enterprises advances should go to the micro

enterprises).

Advances to

weaker sections

Of the stipulated target for priority sector advances, at least 25%

(or 10% of the ABC or credit equivalent amount of Off-Balance

Sheet Exposure, whichever is higher) should be given to weaker

sections.

Advances to

Minorities.

Within the overall target for priority sector lending and the sub-

target of 25 per cent for the weaker sections, sufficient care may

be taken to ensure that the minority communities also receive an

equitable portion of the credit.


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The targets and sub-targets set under priority sector lending for domestic and

foreign banks operating in India are furnished below :

Domestic banks (both

public sector and private

sector banks)

Foreign banks operating in

India

Total Priority Sector

advances

40 percent of net bank credit 32 percent of net bank credit

Total agricultural advances 18 percent of net bank credit No target

SSI advances No target 10 percent of net bank credit

Export credit Export credit does not form

part of priority sector

12 percent of net bank credit

Advances to weaker sections 10 percent of net bank credit No target


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1.5 COMMON GUIDELINES FOR PRIORITY SECTOR ADVANCES

Common guidelines for priority sector advances are following:-

MODE OF DISBURSEMENT OF LOAN:

Banks may disburse all loans for agricultural purposes in cash.

REPAYMENT SCHEDULE:

Repayment program should be fixed taking into account the sustenance

requirements, surplus generating capacity, the break-even point, the life of the asset,

etc., and not in an "ad hoc manner.

RATES OF INTEREST:

The rates of interest on various categories of priority sector advances will be as per

RBI directives issued from time to time.

PENAL INTEREST:

The issue of charging penal interests that should be levied for reasons such as default

in repayment, non-submission of financial statements, etc. has been left to the Board

of each bank.

Banks will be free to levy penal interest for loans exceeding Rs 25,000

SERVICE CHARGES / INSPECTION CHARGES

No service charges/inspection charges should be levied on priority sector loans up to

Rs. 25,000/-.

For loans above Rs. 25,000/- banks will be free to prescribe service charges with the

prior approval of their Boards

PHOTOGRAPHS OF BORROWERS


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There is no objection to taking photographs of the borrowers for purposes of

identification, banks themselves should make arrangements for the photographs and

also bear the cost of photographs of borrowers falling in the category of Weaker

Sections.

DISCRETIONARY POWERS

All Branch Managers of banks should be vested with discretionary powers to sanction

proposals from weaker sections without reference to any higher authority.

MACHINERY TO LOOK INTO COMPLAINTS

There should be machinery at the regional offices to entertain complaints from the

borrowers if the branches do not follow these guidelines, and to verify periodically

that these guidelines are scrupulously implemented by the branches.

AMENDMENTS

These guidelines are subject to any instructions that may be issued by the RBI from

time to time.

Common Guidelines/Instructions for lending to MSME Sector

Common guidelines for Instructions for lending to MSME Sector are

following:-

1. Processing of Applications

i. Loan Application

Revised Simplified application form will be used for Micro and Small Enterprise. The

existing Common loan Application form applicable to all loans irrespective of limit,

will be applicable for Medium Enterprises sector.

ii. Issue of Acknowledgement of Loan Applications:


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Each branch will issue an acknowledgement for loan applications received from the

borrowers towards financing under this sector and maintain the record of the same.

iii. Disposal of Applications:

In case of Loans up to Rs.25000/- : Within 2 weeks

In case of Loans above Rs.25000 : Within 4 Weeks

(Provided the loan applications are complete in all respects and accompanied by a

'check list' enclosed to the application form).

iv. Register of Receipt/Sanction/Rejection of Applications:

a. A register should be maintained at branch wherein the date of receipt, sanction

/disbursement, rejection with reasons, should be recorded. The register should be

made available to facilitate verification by the Banks officials including Zonal

Manager during visit to the branch.

b. Branch Manager may reject application (except in respect of SC/ST). In the case of

proposals from SC/ST, rejection should be done at a level higher than Branch

Manager.

c. The reason for rejection will be communicated to the borrower in line with

stipulation mentioned in the Fair Practice Lenders Code.

v. Photographs of Borrowers

While there is no objection to take photographs of the borrowers, for the purpose of

identification, branches themselves should make arrangements for the photographs

and also bear the cost of photographs of borrowers falling in the category of Weaker

Sections. It should also be ensured that the procedure does not involve any delay in

loan disbursement.


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2. Composite Loan

A composite loan with maximum limit upto Rs.1.00crore may be considered by bank

to enable the Micro and Small Enterprises {both for manufacturing and service

sector} to avail of their working capital and Term loan requirement through Single

Window.

3. Types of Loans

The Bank may provide all types of funded and non funded facilities to the borrower

under this sector viz, Term Loan, Cash Credit, Letter of Credit, Bank guarantee, etc.

4. Margin

Loan Size Minimum Margin

Up to Rs.25000.00 Nil

Above Rs.25000.00 As per lending policy of the Bank

i. While considering proposals under MSME sector, the book debt upto six months

may be treated as a current assets, for the purpose of computation of permissible bank

finance and drawing power calculation.

ii. The margin on the book debts may also be considered at 20% to 25% on merit of

the case.

iii. In regard to age of the book debts, a certificate preferably from Auditors

/Chartered Accountant to be obtained.

iv. All book debts more than 180days are to be treated as Non-current asset.


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5. Security

5.1No collateral or Third party guarantee for advances up to Rs.5.00 Lacs.

5.2 In case of good track record of the borrower Collateral Security and or third party

guarantee may be waived beyondRs. 5.00 Lac but up to Rs.100.00 Lacs, where

guarantee cover of 62.50% of the amount of default is available from CGTMSE, in

respect of term loan and/or working capital facilities extended to new and

existing entrepreneur. It has also been stipulated by CGTMSE that all proposals of

sanction of Guarantee approvals for credit facilities above Rs.50.00 Lacs and up to Rs.

100.00 Lacs will have to be rated internally by MLIs and should be of investment

grade. Accordingly, all proposals above Rs. 50 Lacs are to be rated on Credit Risk

Grading (CRG 2) as per applicable internal rating modules prescribed under Banks

Credit Risk Management Policy and proposals rated as AB-1 to AB-7 would only be

considered as investment grade subjected to other stipulated norms in relevant policies

/ guidelines. The commission of CGTMSE will be borne by the borrower

5.3. In case of Loan up to Rs.25000.00, minimum Asset Coverage Ratio (Primary

Security /Loan amount) would be 1:1. However, in case of schematic

lending/specified scheme, the guidelines as applicable will be complied with.

5.4. In case of Loan above Rs.25000/- and up to Rs.10.00 Lacs, a minimum asset

coverage ratio must be 1.25:1.


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5.5. In case a loan is not covered under CGTMSE scheme for valid reasons, the

Security coverage Ratio for such loan above Rs.10.00 Lac will be based on the Risk

Rating status of the borrower.

Rating Grade

(As per our Rating module)

Minimum Security Coverage Ratio**

AB-1 1.25:1

AB-2 1.5:1

AB-3 1.75:1

Other rated accounts 2.00:1

** In each of the above case, Primary + collateral Security /Loan amount should

not be less than 1.25:1 so as to ensure the minimum stipulated margin.

1. Nevertheless, availability of collateral security shall not be the mere criterion for

arriving at credit decision.

2. In case of loan accounts not covered under CGTMSE scheme, it may be explored as

far as practicable that the credit facilities/loans extended, are supported by collaterals

in the form of liquid securities or fixed assets, immovable properties, based on

the credit Risks perception.

3. Collateral security shall not be insisted upon in those cases where the RBI

directives specifically advised the banks not to insist on obtaining Collateral security


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/third party guarantee, in certain priority sector credit or Government sponsored

schemes.

4. The other guidelines/amendments as per lending policy of the Banks should be

closely observed.

1.6 Advances to Priority Sector by Allahabad Bank

Advances on Priority sector:-

Priority

sector/Schemes

March 2008 March 2009 March 2010

Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

a. Priority sector 18,774 20,435 24,279

i. Agriculture 9,146 9,568 11,567

- Direct 6,571 7,306 8,340

- Indirect 2,575 2,262 3,227

ii. Micro small

enterprices

3,530 4,593 8,188

iii. Other 6,098 6,275 4,524

b. Weaker

Section

4,455 5,010 6,150

(Source of information- Allahabad bank annual report)


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1.7 Objectives of the study

The study has been undertaken with the following objectives :

1) To evaluate the growth of the Allahabad bank

2) To study of priority sector

3) To analyse the progress made by the Allahabad bank in the various components of

the priority sector lending i.e. agriculture, small scale industries and other priority

sector advances comprised of weaker section, education, housing etc.

4) To make an in-depth study of the priority sector lending of the selected bank.

5) To analyze targets achieved by Allahabad bank

6) To suggest ways and means for improving the quality of lending to this sector.


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CHAPTER-2

Literature Review

The primary objective of social control and nationalisation is to ensure a better

alignment of the commercial banking system to meet the needs of the economy. It is

the duty of the banks to see that credit flows into channels, which are most productive

and most helpful to our growth and development. To promote the welfare of the

people who are socially and economically backward, the concept of priority sector

lending was evolved.

Quantitative targets were set for lending to priority sector and separate subtargets were

also set for lending to agriculture and weaker sections of the society. As a result,

lending to the borrowers in priority sectors have increased substantially. Increased

flow of credit to the different sectors assisted the developmental activities and thereby

expanded the income as well as the standard of living of the people.

Several studies on this subject in a restricted sense have been undertaken by particular

bank/group of banks, individuals and organisations. Number of Committees appointed

by the Govemment of India and RBI have also studied the banking problems of the

country. Reviews of such available literature are presented below.

V. V. Bhat (1970) proposed a scheme of appoved dealers to assist the Lead Banks in

providing finance and guidance to far1ners and small industrialists. In providing

finance and guidance effectively, the banks would have to collect the required

information, ensure recovery of loans and interest, assist in obtaining after sales


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service and keep a watch on the working of the assisted enterprise. This work can be

made easier by creating and supporting a set of approved dealers.

P. N. Joshi (1972) requested the RBI to give clear and specific definition of the

different components of priority sectors. Some of the bankers are not clear about the

precise scope of agricultural lending. Guidance from the RBI would help them to

increase their involvement in farm credit on right lines.

M. A. Oommen (1972) found that among the institutional sources offinance to SSI in

Kerala, commercial banks provided the lions share. The assistance of commercial

banks in Kerala stands at par with some advanced countries.

M. C. Purohith (1973) conducted a survey in Jaipur city to examine the potential of

small artisans in relation to bank financing. The survey revealed that the average

amount borrowed per artisan from bank was Rs. 1,040 and from non-institutional

source was Rs. 3,133. The maximum amount borrowed by an artisan from a

commercial bank was Rs. 2,000 and from non-institutional source was Rs. 17,000.

The small artisans therefore were denied sufficient funds from the commercial banks

forcing them to borrow from non-institutional sources at higher rates of interest. Due

to lack of adequate financial accommodation from the banking system, the artisans

buy raw materials through other financiers at higher prices and sell the product to the

same agency at a low price. With the financial assistance from the banks, this vicious

circle can be broken up.


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N. K. Thingalaya (1974) conducted a study among the village artisans of Kamataka

and found that they are receiving an insignificant per cent of their total credit

requirements from banks. Thus artisans are living under the influence of

moneylenders.

Vadilal Dagli (1975) is of the opinion that the aim of the banking policy should be to

uplift the under privileged class of the society in rural India from subsistence

existence to surplus existence. The concept of priority sector should include only the

real poor of the country and by providing them necessary financial assistance; they

can be lifted from the pitches of animal existence to the heights of human existence.

R. K. Hazari (1976) made it clear that institutional financing does not mean replacing

individual moneylenders with institutionalised moneylenders. Institutional financing

should enable the agriculturists to move on to a level of new technology that will

increase agricultural output and employment. This means productivity of both land

and human beings. Data relating to finance must be able to provide a basis for

assessing how much financing has really contributed to additional output and

employment.

P. C. D. Nambiar (1977) pointed out that the role of commercial banks in the priority

sectors is not confined merely to the provision of finance. They have to evaluate the

feasibility of the project and assist the entrepreneurs to select the right type of project.


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He also emphasised the need for proper co-ordination between govemment agencies

and banks for better results in the development of priority sectors

S. L. Shetty (1978) in his study on the achievement of commercial banks since

nationalisation has found that the banks, which have relatively low priority sector

lending have been the ones with higher than the average credit deposit ratios. Another

finding noticed among the banks is that in regard to the priority sectors, a few

branches of banks achieved impressive ratios, to the neglect of the rest of the areas.

Again there is considerable concentration of priority sector advances in a few a States.

I. G. Patel (1979) reminded the banks about their socio-economic responsibility in the

up-liftment of the poorest strata of the society. A substantial portion of the people live

in abject poverty and the first priority should be to provide productive employment

opportunities to the very poor- whether they are in rural or urban areas. Banks should

equip themselves fully to serve as instruments of development for the poorer sections

of people.

Singh and Balraj (1979) conducted a study on commercial bank lending in Hissar

district of Haryana and concluded that villagers are relieved from the exploitation of

moneylenders by the operation of a nationalised bank. At the same time they also

reported other problems such as uneasy, untimely and non-availability of loans,

expensive and cumbersome procedures, excessive and useless formalities, unsuitable


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procedure of loan repayment and the absence of easy accessibility of banking

facilities.

L. DMello (1980) is very much doubtful about the capacity and suitability of

commercial banks to provide large amount of credit to the priority sectors. Since

banks are high cost organisations, existing developmental agencies can be used by

commercial banks to reduce the cost and to improve efficiency in the use of credit.

C. L. Khemani and K. V. Balakrishnanu (1981) are of the opinion that if the borrower

selected under IRDP is made to approach the money lender for his very genuine

consumption needs, then the very objective of institutional finance for priority sector

will be defeated. Consumption credit granted on the basis of specific needs of the

target groups are not going to cause problems. The actual consumption loans will have

to be related to their minimum needs and their capacity to repay.

A. R. Patel and M. R. Patel (1983) proposed the need for assigning the task of

evaluating the working of various schemes under the 20-point programme to outside

agencies not connected with its implementation. This will result in correct evaluation

of the role played by implementing agencies, benefits derivedby the beneficiaries and

deficiencies noticed in the plamiing and implementation process.


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V. B. Angadils (1983) observed the concentration of priority sector advances in

general and agricultural advances in particular in a few States. The reasons for such

concentration are number of bank offices, deposit mobilisation, total cropped area,

land under certain food and cash crops, extent of irrigated land in respective States,

adoption of high yielding varieties, the availability of co- operative credit and the level

of political awareness in these States.

Senior Executive Seminar on Priority Sector Financing (1983) organized by NIBM

advised the banks to remember the philosophy behind the policy towards priority

sector and to develop faith in this philosophy. Priority sectors should be looked upon

as opportunities of developing the banks business.

B. K. Sarkarl (1983) is of the opinion that to launch a successful marketing drive for

the target groups in the priority sector, the environment pertaining to each segment of

the society has to be carefully scanned and vital information relevant to market

decisions such as ignorance, unwillingness, poverty, political interference etc. have to

be analysed. The best result can be derived only if the customer and his real need

situations are assessed in a meaningful way.

A. R. Patel (1984) conducted a survey on public sector banks to assess their

performance under DRI scheme. The study revealed that the banks had positively

responded to the increasing needs of SC/ST borrowers in respect of DRI loans and had

been able to increase their share of SC/ST borrowers, both in terms of number of


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borrower accounts and the amount outstanding. At the same time, banks are finding it

extremely difficult to finance all those eligible identified beneficiaries who approach

them in view of the limited loanable funds available under the scheme. Thus, demand

and supply forces in respect of this scheme have created problems at the branch level

as well as the beneficiary level. While large numbers of deserving eligible

beneficiaries have so far remained out of the fold of this scheme, a good number of

influential and well to do persons have taken advantage of this scheme.

K. V. Patel and N. B. Shete (1984) analysed the behaviour of weaker section accounts

particularly with reference to their repayment behaviour by examining 1,554 accounts

operated by seven branches of three commercial banks located in five backward

districts in the states of Raj asthan, Madhya Pradesh and Kamataka. The study brings

out the very positive aspects of borrowers willingness to repay and the bankers

promptness in making efforts for recovery. The analysis helps in clearing some of the

misgivings in weaker sections financing and in improving the image of development

banking.

K. V. Patel and N. B. Shete (1984) analysed the priority sector lending by commercial

banks in India from 1969 to 1980 and concluded that quantitatively a very impressive

coverage is achieved during the period of twelve years. The total priority sector

advances have gone up by more than fourteen times. But the credit absorption

capacities of the weaker sections are constrained by a variety of factors, which may

not be under the direct control of the banking industry. Therefore, the co-coordinated


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efforts of executives and developmental agencies require special care and attention in

this matter.

I. Satya Sundaram (1984) opines that there is no point in setting up more and more

credit agencies to help the rural poor. The presence of numerous agencies is creating

confusion in the filed of rural credit. What is required is the proper co-ordination

among the various agencies in implementing the schemes that will be useful to the

rural poor.

Raut (1984) conducted a study on the scope and problems of financing tribal farmers

and concluded that the problem of overdues was mainly due to the misutilisation of

loans by the tribal farmers. The tendency to misutilise the loan was due to the fact that

the consumption priorities of tribal farmers were of more urgent nature than asset

building priorities.

Balishter and Roshan Singh (1984) found in their study of IRDP financed by SBI in

Bichpuri Block of Agra district that the recovery of loans advanced by the bank under

IRDP was satisfactory in all categories of families and this nullified the common

impression that advancing of loans to weaker sections would lead to accumulation of

bad debts.


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Anil Kale and Namdeo Mali (1984) conducted a study in some of the drought-affected

villages of Pune and Nagar districts among the farmers and landless labourers. From

the analysis of data collected it is found that the poor people in rural areas are

subjected to various kinds of exploitations by the very developmental agencies, which

were created by the society or Govemment for their upliftment.

B. S. Viswanathan (1985) stated that the overdues to a large extent were on account of

wilful default, which was either due to ineffective recovery machinery or because of

unfavourable recovery climate.

D. P. Khankhoje and V. T. Godse (1985) found that procedural flaws and gaps cause

delays in the process of loaning activity in the priority sector. So the systems and

procedures adopted by banks particularly with reference to documentation and

accounting have to be simplified. But the simplification of systems and procedures

should not weaken the follow-up, supervision and control.

U. C. Kulshresth (1985) conducted a survey in the Western Region of Uttar Pradesh to

review the progress and working of the Lead Banks and concluded that the banks

which were assigned the lead role undoubtedly made considerable efforts in their lead

districts in conducting of economic surveys, preparing Credit Plans, branch expansion,

deposit mobilisation and credit deployment to priority sectors. Thus the Lead Bank

Scheme holds out the promise to attain socio-economic objects in the society and to

develop the rural economy at the district level.


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S. B. Dangat, S. R. Radkar and M. P. Dhongade (1986) conducted a micro level study

into the borrowings and utilisation of medium and long term loans in Ahmednagar

district and reported that the medium and long term loans were diverted for conduct of

marriages, for consumption and for construction of residential buildings in all the size

group of holdings in both developing and underdeveloped regions. Proper appraisal of

loan proposals, follow-up and supervision after the disbursement of loans were

suggested for effective financing of agriculture.

I. Satya Sundaram (1986) pointed out some of the problems facing the DRI scheme.

Funds are allocated, they are officially spent and yet the poorremains in the same old

state. If necessary safeguard are provided, the funds allocated for this purpose can

through up the desired result..

Economic Research Department of the State Bank of India, Central Office, Bombay

(1987) conducted a study to observe the impact of bank credit on weaker sections in

Kerala. The study revealed that bank loans enabled the borrowers to become self-

employed businessmen or artisans whereas previously they were mere wage eamers.

The utilisation of bank loans generally raised the income and employment of the

borrowers and thereby improved the quality of life.


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N. J. Kurian (1987) conducted a concurrent evaluation of IRDP and found that

commercial banks account for 69 per cent of the loans, 23 per cent is accounted by

RRBs and the balance 8 per cent is provided by the co-operatives. The repayment of

loans by IRDP beneficiaries is no worse than that of otherdebtors who generally are

better off economically.

H. C. Malhotra and D. K. Kulshrestha (1987) made an assessment of the advances by

commercial banks to the weaker sections of the society and concluded that giving

advances to them will be of no use, unless it is ensured that the recipients use these

advances for productive purposes.

Suresh Mehta (2000) noticed that though the banks are flush with surplus funds, they

do not find it profitable and safe in lending to the SSI sector because they are already

saddled with high NPAs in this sector. To reduce the NPAs level, banks have to

strengthen their appraisal system and credit monitoring mechanism; and SSI units

have to develop capabilities to manage borrowed funds more prudently and more

transparently in business operations. These arrangements will help both the banks and

entrepreneurs to remain happy and prosperous.

Swami Agnives (2001) delivering the keynote address at a symposium on New

Economic Policy and Problems faced by Agricultural Sector in Kerala alleged that

while the banks have given the farmers a raw deal, it had written-off the loans availed

by top industrialists to the tune of rupees one lakh crore as non- performing assets.


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The poor farmers house and properties are auctioned forrecovering the loan amount

by the banks even though it would be a meagre amount.

A critical perusal and review of the studies reveal that most of these studies were not

scientifically designed and the opinion surveys were not properly structured. Also

most of the findings were just in the fonn of generalised observations made with out

testing the statistical significance.

Despite the availability of sufficient literature on priority sector lending and rural

credit, no comprehensive and schematic effort has been made to analyse the subject

based on the experience of bank managers and borrowers. The available literature on

the subject is only descriptive, partial and often biased. It covers only some micro

aspects of priority sector lending.

Priority sector lending is done through District Credit Plans. An analysis of priority

sector lending in the State through District Credit Plans is not attempted by any

scholar so far. This study is also an attempt in this direction. It is designed to analyse

the working of District Credit Plans, the weakness in the lending procedures, methods

of making priority sector lending profitable and beneficial and the difficulties

experienced by the bankers and borrowers in the implementation of the scheme.

Hence in this study, different aspects of lending to priority sector together with its

systematic impact are analysed.


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CHAPTER-3

RESEARCH DESIGN

This chapter describe the research methodology, research design, method of data

collection and tools & technique which are used for the better presentation and right

explanation of the data.

3.1 Research Methodology

Research Methodology in a way is systematic representation of research or any other

problem. It is a written game plan for conducting research. It tends to describe the step

taken by a researcher in studying the research problem along with a logical

background.

It tends to describe methodology for solution of the problem that has been taken for

the purpose of study this project focuses on the methodology for technique used for

the collection, classification & tabulation of the data. This plan throws light on the

research problem, the objective of study & limitation of the study. Therefore, in order

to solve a problem, it is necessary to design a research methodology for problem as

the same way differs from problem to problem.


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3.2 RESEARCH DESIGN:

Study is all about the research & analysis of credit to priority sector.

Study is being made for the purpose of analysis of credit to priority sector by the

Allahabad bank that predicts the future growth of the bank by providing better

services by bank can earns more profit.

Study will be carried out at Bareilly.

Secondary data is required for analysis of report.

3.3 METHOD OF DATA COLLECTION-

The study is totally based on secondary data to be suitably modified.

SOURCE- SECONDARY DATA

The secondary data collected from the already sanctioned annual report.

Collection of secondary data from Management journals.

Bank Annual Report 2008-09 and 2009-10

Project proposal.

Respective Banks Web Sites & other sites such as www.rbi.org.

Reference from Management Books.

Newspapers and Articles


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Tools and Techniques:

As no study could be successfully completed without proper tools & techniques, same

with this project. For the better presentation and right explanation researcher used

tools of statistics and computer very frequently and Basic tools which have been used

for project are:

-BAR-CHARTS

- TABLES

Bar chart is very useful tools for every research to show the result in

a clear, simple way. Because researcher used bar charts in my project for showing data

in a systematic way. So researcher need not necessary for any observer to read all the

theoretical detail, simple on seeing the charts anybody that what is being said.

Technological Tools:

MS -WORD

MS-EXCEL


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CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

1. Financing to priority sector by Allahabad bank .

Table no-1 advances on priority sector

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

Priority sector 18,774 20,435 24,279

Figure no -1 Advance on priority sector

Interpretation:

18,774

20,435

24,279

financing to priority sector

2008

2009

2010


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Credit to priority sector grew from Rs.18,774 Crore as on March 2008 to Rs.20,435

Crore as on March 2009 and Credit to priority sector grew from Rs.20,435 Crore as on

March 2009 to Rs.24,279 Crore as on March 2010. registering an absolute YOY

growth of Rs.3844 Crore (18.81 %). Bank has exceeded the National Goal (40.00%)

by achieving 41.29% as on Mar 10

i. Financing to agriculture sector by Allahabad bank.Table no-2 Advances on agriculture sector

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

i. Agriculture 9,146 9,568 11,567

Figure no -2 Advances on agriculture sector

9,146

9,568

11,567

financing to agriculture

2008

2009

2010


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Interpretation:

Agriculture Credit outstanding increased from Rs.9146 Crore as on March 2008 to

Rs.9,568 Crore as on March 2009 and Agriculture Credit increased from Rs.9568

Crore as on March 2009 to Rs.11,567 Crore as on March 2010 , registering an

absolute YOY growth of Rs.1999 Crore (20.90%). Bank has exceeded the National

Goal (18.00%) of Agriculture to ANBC by achieving 18.68% as on Mar10.

- Direct finance to agriculture sector from Allahabad bank.

Table no -3 Direct finance to agriculture sector

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

- Direct in

agriculture

6,571 7,306 8,340


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Figure no -3 Direct finance to agriculture sector

Interpretation:

Direct finance to agriculture of the Bank grew by Rs. 6,571 crores as on 31.3.2008 to

Rs. 7,306 crores as on 31.3.2009 and Rs. 7,306 crores as on 31.3.2009 to Rs. 8,340 as

on 31.3.2010.

6,571

7,306

8,340

direct finance to agriculture

2008

2009

2010


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- Indirect finance to agriculture sector from Allahabad bank.

Table no -4 Indirect finance to agriculture sector

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

- Indirect 2,575 2,262 3,227

Table no -4 Indirect finance to agriculture sector

Interpretation:

Indirect finance to agriculture of the Bank grew by Rs. 2,575 crores as on 31 march ,

2008 to Rs. 2,262 crores as on 31 march , 2009 and Rs. 2,262 crores as on 31.3.2009

to Rs. 3,227 as on 31.3.2010.

2,575

2,262

3,227

indirect finance to agriculture sector

2008

2009

2010


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2. Financing to Micro Small Enterprises Sector from Allahabad Bank.Table no -5 Financing to Micro Small Enterprises Sector

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

Micro small

enterprises

3,530 4,593 8,188

Figure no -5 Financing to Micro Small Enterprises Sector

Interpretation:

Credit to Micro and Small Enterprises (MSE) grew from Rs. 3,530 Crore as on March 2008 to Rs.4593

Crore as on March 2009 and grew from Rs.4593 Crore as on March 2009 to Rs.8,118 Crore as on

March 2010, registering an absolute YOY growth of Rs.3595 Crore (78.27%). Share of Micro

Enterprises to total Micro & Small Enterprises has exceeded the National Goal (60%) by achieving

62.25% as on Mar10.

3,530

4,593

8,118

Financing to Micro Small Enterprises Sector

2008

2009

2010


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3. Financing to other sector such as housing loan education loan etc. FromAllahabad bank.

Table no -6 Financing to sector such as housing loan education loan etc.

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

Other 6,098 6,275 4,524

Figure no -6 Financing to sector such as housing loan education loan etc.

6,098

6,275

4,524

financing to other sector

2008

2009

2010


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Interpretation:

Credit to other sector such as housing loan, education loan etc. grew from Rs. 6,098 Crore as on

March 2008 to Rs.6,275 Crore as on March 2009 but in 2010 credit to other sector was decline from

Rs. 6,275 Crore as on March 2009 to Rs. 4,524 Crore as on March 2010.

4. Financing to weaker section from Allahabad bank.Table no -7 Financing to weaker section

Priority

sector/Schemes


Amount(Rs. crores)

Amount

(Rs. crores)

Amount

(Rs. crores)

Weaker Section 4,455 5,010 6,150


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Figure no -7 Financing to weaker section.

Interpretation:

Credit to weaker section grew from Rs. 4,455 Crore as on March 2008 to Rs. 5,010

Crore as on March 2009 and credit grew from Rs. 5,010 Crore as on March 2009 to

Rs. 6,150 Crore as on March 2010. Credit to weaker section from Allahabad bank

increased year to year .Credit to weaker section was 10.77% of ANBC as against

stipulated norms of 10%.

4,455

5,010

6,150

Financing to weaker section

2008

2009

2010


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CHAPTER -5

5.1 Findings

Credit to priority sector increased as on 31 march 2008 to 31 march 2010. Bank

has exceeded the National Goal (40.00%) by achieving 41.29% as on Mar 10.

Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC by

achieving 18.68% as on Mar10

Share of Micro Enterprises to total Micro & Small Enterprises has exceeded the

National Goal (60%) by achieving 62.25% as on Mar10.

Credit to other section such as housing loan education loan has been increased

as on march 2009 but march 2009 to march 2010 credit to other section has

been decreased.

Credit to weaker section from Allahabad bank increased year to year .Credit to

weaker section was 10.77% of ANBC as against stipulated norms of 10%.


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5. 3 Conclusion

My research in the field of financing to priority sector from Allahabad bank and

Allahabad bank has been grew year to year. This has some interesting facts which can

be drawn from the above analysis.

Bank has exceeded the National Goal (40.00%)of priority sector by

achieving 41.29% as on Mar 10

Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC by

achieving 18.68% as on Mar10

Share of Micro Enterprises to total Micro & Small Enterprises has exceeded

the National Goal (60%) by achieving 62.25% as on Mar10.

Credit to other section such as housing loan education loan has been

increased as on march 2009 but march 2009 to march 2010 credit to other

section has been decreased.

Credit to weaker section from Allahabad bank increased year to year .Credit

to weaker section was 10.77% of ANBC as against stipulated norms of

10%.


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5. 2 Suggestion:

priority sectors are big source of revenue for banks, so bank should encourage

also the unregistered units by providing more facilities like less paper work.

Bank has to increase their credit limit and also decrease the installment amount.

The best way to encourage lending to micro small industries is to improve the

ability of existing institution to construct profitable and efficient lending

programmes.

Building awareness among small business people about the financial sources

offering by bank. Especially in the case of housing loan and education loan is

must. So there is mutual benefits are possible

While granting the loans the bank does not adhere with the margin.

The process followed by the bank in sanctioning the loan is unmanageable;

hence it is suggested to make the process easier in sanctioning the credit

facilities to the priority sector.


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Bibliography

1. E. Gup Benton & W . Kolari James, Commercial Banking 3rd Edition,Singapore

,John Wiley &sons (Asia) ,2005 .

2. Shekher K C & Shekher Lekshmy , Banking theory and practice 19th Edition,

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WEBSITES

www.allahabadbank.com

www.banknetindia.com

www.mybankersbank.com

http://www.rbi.org.in
http://www.banknetindia.com/http://www.banknetindia.com/http://www.rbi.org.in/http://www.rbi.org.in/http://www.banknetindia.com/

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