|










 

|
 






Presentation by   |
FMS-IRM, Jaipur
   |
¢ India is an Agrarian country.
¢ More than 65% population lives in Rural
area.
¢ More than 59% population of Rural area
is engaged in Agriculture and allied to
Agriculture activities.
¢
% are cultivators &
% are Agriculture
labour.
¢ heir Income level is low.
¢ heir savings are negligible.
¢  |
|  from formal or informal
sources in Rural Area.
¢ Rural area means where Small Farmers,
Marginal Farmers, some big farmers
Rural Artisans, and Rural Craftsman lives.
¢ he | is either for
!"
#
!"!$
¢ For Rural Development both Agricultural
and Non-Agricultural credit needs are
required by the people living in rural area.
¢ ther areas of Rural Development is
!"$"  for which
Government is making all efforts under
%&'

 
(
!)$to provide facilities of:
Ò
Roads
Ò

Electricity
Ò
ransportation
Ò
elecommunication
Ò5
Drinking Water Òwith additional Irrigation facility

Ò6
Housing facilities
Ò
Medical facilities &
Ò
Basic Education


 
) | 
  |

¢ he  " |

*++,,+-+"" Ò  Crores
.
¢ he # !
*++.#+/0*--..""
whereas the requirement of food-grains
was about 1++"".
|


 


¢ Farmer¶s need can be classified in 2 broad
groups:
± 23| " 456|7
± $| " 4689
7
¢ hese needs can further be classified in '


categories based on the time period as under :-
¢ ! Ò 6 to
months

¢ ! Ò year to 5 years

¢ ! ÒAbove 5 years up to

years

 ' 
|



ÒFor raising Crops

¢ For raising a crop, a farmer have
certain basic needs of  , which
can be summarized as under :-
± for Purchase of ,
± for purchase of ":
± for purchase of !;
!!
± for payment of | ÒElectricity
Bill or Diesel charges for Pump set.
.
± <| for preparing field and
cutting of Crops.
±  ! to carry Agricultural
produce up to Market/ Mandi Yard.
± | .
 
 
|


 



¢ Medium erm Credit needs of a Farmer
may be for following activities:-
¢ For
"'<= activities such
as
i
|09&" unit for Dairy activity.
ii
For "= Development
iii
For  ;) Development
iv
For purchase of &""!39&""!3#|
¢ For ! # for Irrigation
purpose ÒEPS/DPS
,
¢ For ! 3"
 ".,
¢ For !5 =!
 )
|


 



¢ ong term credit needs may be for
following $  #
± For !
± For $"  !
± For #0""9&#0""
± For Construction of ""to
store water for irrigation in future days.
± For purchase of !!"

4 
¢ !""=
¢ !# "!
¢ |"$;'$
¢ ";$"
¢ ; =
± For construction of )0 of
Produce and other items,
± For construction of $' on Farm
± For construction of $#!3
and stocking of !"#5
± For preparing 2!" on the field,
± For ";'!" of Fruits and
other plants Òincluding ³Wadi´ Project
,
± For construction of |"
 
| >  |

|

ÒA
 No security is
ÒCrop oan
required up to
Rs.5,/- ÒCharge
on Standing Crop
remains with Financer

ÒB
; M &  loans needs
oans Security of and or
Building or other
Securities acceptable
to Banks.
 
')

¢ he average size of holdings is .6 Hectares

Ò
  




Marginal Farmers holding Below .5 Acre land

Small Farmers holding Above .5 Acres to
.5

Acres Òor upto Hect.

Big Farmers holding More than
.5 Acres
or Hectare.
 
  
|
 





Before Nationalization Òtill 969
of major
Banks in the country the Farmer had two
sources of Credit :
¢ $!
Òa
Money enders,
Òb
raders & Commission Agents
¢ "!
Cooperative Banks/Societies.
¢ After Nationalization of  |!"
&3,/?/ and later on
establishment of &,/@A5these
banks have been giving credit facilities to
farmers for their Agricultural needs.
¢ Simultaneously, the $|!"
&3607 also started
financing for Agriculture & allied activities
under RBI directives.
¢ In,/.*5"&3
!"
"$" 6
&
7 was
established by RBI.
¢ he major credit needs were fulfilled by following
Financial Institutions :-
± Commercial Banks ÒNationalized
-
9
± Commercial Banks ÒPrivate Banks
- 
± Regional Rural Banks ÒRRBs- 96
- Now 5
± Cooperative Banks Òincluding - 96
State Coop. Banks & 65 DCCBs

¢ Micro-financing Institutions ÒMFIs
& Non-
Banking Financial Institutions ÒNBFIs
and
NG¶s Ò like BASIX, MYRADA,PRADHAN,
SHARE,DHAN FNDAIN etc.
are
also financing to farmers for Agriculture
and Non-Agricultural activities for income
generating activities in our country.
   |  
|

¢ Norms of Crop Finance is decided on the basis

of ||"$ Ò based on and-holding
with the Farmer.
¢ 
! for different crops are decided
by a !!"| known as District
evel echnical Committee 6|7 whose
Chairman is District Collector along with other
members ÒDDM,B,CE-DCCB, DA,
Ag.Scientists & Progressive Farmers
. Revision
in norms may be done on yearly basis.
Separate Norms are decided for <
8| as under ÒExamples
:
Season Name of Per Acre Norms of finance
Crop Ò  
 
RABI Wheat Rs.
/- per acre
Mustard Rs.5/- per acre
Gram Rs. /- per acre
nion Rs.9/- per acre
Vegetables Rs./- per acre
KHARIF Maize Rs. 5/- per acre
Bajra Rs.
/- per acre
Groundnut Rs.6,/-per acre
Jowar Rs.
/- per acre
omato Rs./- per acre
¢ DE DAES F CRP ANS:
Ò
 
. Kharif Crop - 28th February of the year

. Rabi Crop - 31st May of the year

¢ Interest rates charged by banks on crop
loans : @B<=""&3 Ò
  
For Non-Agril. interest is charged :  to %
¢ Penal interest : -BAB O
O
O

Ò

 ! 
 CREDI NEEDS & AN IMI FR BIG
FARMERS
¢ &  can take Crop loan up to
-A+! for raising crops against the
"Òas per valuation of
their land and other assets
as security
with Bank.
¢ In Cooperative Bank the Scheme is known
as Krishak Mitra Yojana, and other Banks
are giving it on 8
|
|

¢ Documents required by bank from farmers for
sanction of credit for crop loan:
± Copy of and Record ÒJamabandi

± Ration Card/8||/ Election ID
Card.
± Agreement Deed
± wo Guarantors.
± Promissory Note
± etter of Continuity
 |


 
#
) | 

|

¢ Apart from Farmers ,other people like "

5|5""&5
$!!$ play an important
role in Rural Development.
¢ wo types of Credit need may be there for
Non-Agricultural Activities Òalso known as Non-
Farm Sector
:-
,23| " 4
± Òfor purchase of Raw Materials and to meet
out other expenses
,
* $| " 4
± Òfor purchase of Machinery/Equipment &
ools, Construction of Shed, Building etc.

¢ Formal Financial Institutions available in
Rural Area are as under :-
± Cooperative Society Òalso known as 
|

± Cooperative Banks Òalso Known as ||&;
&7
± Regional Rural Banks Òknown as &

± |!"&36<"!!7
± Commercial Banks ÒPrivate Sector
,
± Micro Financing Institutions 6 7
)5 Ò Directly and through SHGs
.
¢ Informal Finance is given by 
>


5 Commission Agents & raders

¢ Banks are providing loans for Non-

agricultural activities under '


categories as under :
± 
± $!;
± &
   

¢ Agro-processing units
¢ Furniture making
¢ Hotel /Restaurant/Dhaba on Road side.
¢ Garment manufacturing
¢ Rice Mill /Maize miller/il mill
¢ Cart making
¢ Milk processing & milk products
 
|

¢ Hair dressing
¢ Carpentry
¢ Blacksmithy
¢ Cobbler /eather work
¢ Farm machinery repair-shop
¢ Welding work
¢ Electric/ electronics repair-shop
 & 

¢ Retail shopkeepers
¢ Electric goods
¢ Agricultural equipments
¢ Cloth merchant
¢ General store
¢ Books & Stationary shop
¢ Grocery shop etc.
 || 
¢ he financial institutions are playing their role as
per directives of RBI/NABARD.
¢ hus, |  and others
under Agricultural and Non-Agricultural sector
are met by the !"
¢ )$ on other hand is developing
!"!" in Rural area so as to
have overall "$" 
¢ CCCCCCC



|

¢ Agriculture oday, Vol. XIII No.
Òhe National
Agriculture Magazine
.
¢ Agriculture and Rural Development in India by Astha
Ahuja, New Century Publications, New Delhi Ò
6
.
¢ Rural Credit ± An Introduction, by Sridhar Krishna, Icfai
Books, he Icfai niversity Press, Hyderabad.
¢ Rural Finance : Role of State and State-owned
Institutions by P. Satish.
¢ Economic Review,
-9
¢ Planning Commission Report, 99-9 .
 BANKING & FINANCE


) &
8 &
8)
Banking means the accepting of deposits
from public for the purpose of lending or
investment of money repayable on
demand or otherwise, and withdrawable
by cheque, draft, order or otherwise.
 &
8 &
8)|
>
Banking Company means any Company
which transacts the business of Banking in
India. A Banking Company in India uses
the word %&3(5%&3(
%&3( in the beginning or in middle
or in last with the name of the Banking
Company.
Examples:
. &3 of Baroda

. riental &3 of Commerce.
. Punjab National &3
. Indian verseas &3
5. State &3 of Bikaner & Jaipur
? &3of Rajasthan
. nited &3 of India
 >
 

|| 
&
8
ÒA
Demand Deposits: Ò
Current Deposits.
Ò

Savings Deposits.

ÒB
ime Deposits : Ò
Recurring Deposits.

Ò

Fixed/erm Deposits.
 Banker & Customer
¢ Debtor and Creditor :
¢ Banker as Debtor Òwhen accepts deposits

Banker as Creditor Òwhen grants loan

he moment the customer opens an
account with the Banker, he becomes
debtor of the customer and the customer
becomes his creditor.
 YPES F BANKS
. RBI

. Commercial Banks
. Public Sector Banks
. Private Sector Banks
5. ocal Area Banks
6. Foreign Banks
. RRBs
. Cooperative Banks &
9. Development Banks.
 !&3=
&

& |# &3

|!"
61A7 6-/?7

<"!!<3 $!<3
& | <3
6-+7 6*/7

<3 
 & ||&
6A7

"<3
" 
|9 
6-+7

0

!"
&3


6-,7
 SCHEDED BANK
A Bank included in the Second Schedule
of the RBI Act, 9 . A Bank is included
in this Schedule if :-
Òi
It is carrying on the Business of Banking in
India.
Òii
Its paid-up Capital and Reserves are not
less than Rs.5 lakhs.
Òiii
It is : Òa
A State Cooperative Bank,
Òb
A Company as defined in the
Companies Act of 956,
Òc
An institution notified by the Central
Govt. in this behalf.

Òd
A Company incorporated by, or under

any law in force in any place outside India

¢ All Nationalized and all the Private sector

Banks are Commercial Scheduled Banks
in India.
¢ Foreign Banks are also Scheduled Banks
in India Ò like HSBC, ABN Amro etc.

¢ Scheduled Banks enjoy the facilities of
accommodation from the RBI, dealing in
Foreign Exchange.
¢ Scheduled Banks are required to maintain
Statutory Reserves with the RBI
Òpresently, % of D of Bank
.
 CPERAIVE BANKS
¢ Started in 9 under Central Act and
then State Acts were passed from 95 .
| $&30=
. wo ier System

. hree ier System.
¢ Since the Cooperation is a State subject,
therefore, the State Govt. decides the
system of Cooperative Banks in the State.
 |
 |


&
8

|# $<3

| $
& |&
&3

& ||&


|9
9 
SCB: State Cooperative Bank td.
SDB: State and Development Bank td
DCCB: District Central Coop. Bank td.
PDB: Primary and Development Bank.
CB : rban Cooperative Bank td.
PACS: Primary Agril. Coop. Society td.
AMPS: arge Area Multi-purpose Society
FSS: Farmer¶s Service Society.
 Functions of Coop. Banks
. o Provide Production oan to raise
crops.

. o Provide Investment oan for Agril.
and allied activities.
m Cooperative Banks provide Short erm,
Medium erm and ong erm Credit facilities
to Farmers and other Rural Artisans in
Village areas.
 REGINA RRA BANKS
¢ RRBs Started in 95
¢ here were 96 RRBs Òtill
9

¢ Now there are 5 RRBs after
reorganization in India.
¢ Major Function of RRBs is to finance all
type of loans in Rural Area specially to
small and marginal farmers. hey function
as Commercial Banks. hey are
sponsored by Commercial Banks.
 DEVEPMEN BANKS
. &"$" &3
6
,#@#,/?17
m It is a Banking Company since
.
m It is a erm ending Institution and a
Bank under B.R. Act, 99.
m Main responsibility is Industrial
Development.
¢ Major Developmental Activities are :-
. Promotional Activities

. echnical Consultancy & Advisory
Services.
. Entrepreneurship Development of
Institutions

. NABARD
¢ 

&
8  
) | 







6
&
7
¢ Established on
-- 9
.
¢ hree major functions:-
. he Credit Function

. he Development Function
. he Regulatory Function
 ther Functions of NABARD
Production and Investment Credit to:
m Agriculture
m Small Scale Industries.
m Cottage and Village Industries,
m Handicrafts,
m Microfinance through Banks and MFIs,
NGs and SHGs.
 . EXIM BANK:
Export & Import Bank
¢ Established : in September, 9
¢ Started as Export Development Bank.
¢ Financing for Exports and Imports.
¢ hree Major Functions:
Òi
Financial Support to Exporters.
Òii
Services.
Òiii
Consultancy.
 . HSING AND RBAN
DEVEPMEN CRPRAIN
¢ HDC: was set-up in 9 Òas GI
undertaking
for Housing & rban
Development.
¢ HDC provides oan to Public
Institutions, State Housing Boards and
Cooperative Housing Societies, etc.
 5. SMA INDSRIES
DEVEPMEN BANK F INDIA
¢ SIDBI was established in 9 and started
working from
--9.
¢ SIDBI was a subsidiary of IDBI
¢ bjectives of SIDBI: ÒDevelopment of SSI

. Financing

. Promotion
. Development
. Coordination with other Agencies.
 6. INFRASRCRE
DEVEPMEN FINANCE C.
¢ IDFC was set up in 99
¢ It is a Non-Governmental Company
¢ Its objective is to give finance to
institutions for infrastructural Development.
 . HER FINANCIA
INSIINS
Ò
'&"'&3
± Set-up on 9-- 9
± It is a Subsidiary of RBI.
± Major function to develop housing infrastructure in
the country.
6*7  |" !| 
.
¢ IFCI was set up on -- 9.
¢ It was a first Development Institution.
¢ Main function was to finance Industrial nits.
Ò
||"|$
| 
¢ ICICI was set up in 96.
¢ Main function was to finance to arge
Industrial Projects.
¢ Converted to ICICI Bank in

ÒMerger
.
¢ It had largest net work of AM till
5,
now SBI is having largest net work of AM
Ò
|;)| 
6,/#,#,/A?7
¢ IC is largest ife Insurance Company in India.
¢ )"!| = ÒGIC
has four
major companies:
. National Insurance Co. td.

. New India Assurance Co. td.
. riental Insurance Co. td.
. nited India Insurance Co. td.
GIC incorporated as a Company in Jan. 9 .
 Ò5
nit rust of India ÒI
, 96
¢ o mobilize community savings through
the sale of its units.
¢ I mutual funds
Ò6
|)|6 !;!
! 7
± Set-up on
August, 96 Òafter banking crisis of
Bengal
. It gives guarantee to Depositors of Banks.

6@7
|)|
D |)
| 
± Established in 95 for giving Guarantee to
Banks/Financial Institutions in favour of exporters
for payment of Credit.
 SEF BANKING
ABBREVIAINS:
AM Automated eller Machine
CAR Capital Adequacy Ratio
CRR Cash Reserve Ratio
DD Demand Draft
DRI Differential Rate of Interest
ECS Electronic Clearing Service
EF Electronic Fund ransfer
¢ EPZ Export Promotion Zone
¢ FD Fixed Deposit
¢ FDI Foreign Direct Investment
¢ FDR Fixed Deposit Receipt
¢ /C etter of Credit
¢ M&A Merger & Acquisitions
¢ MF Mutual Fund
¢ M Mail ransfer
¢ MICR Magnetic Ink Character
¢ Recognition.
¢ NBFC Non Banking Finance Companies
¢ NG Non Governmental rganization
¢ NPA Non Performing Assets
¢ NSE National Stock Exchange
¢ PAN Permanent Account Number
¢ PC Personal Computer
¢ PIN Personal Identification Number
¢ PR Primary ending Rate
¢ PMRY Prime Minister¶s Rozgar Yojana
¢ SCB Scheduled Commercial Bank
¢ SDR Special Drawing Rights
¢ SEBI Securities and Exchange Board
of India
¢ SFC State Financial Corporation
¢ SGSY Swarnjayanti Gram Swarozgar
Yojana
¢ SHG Self Help Group
¢ SHPIs Self Help Promoting Institutions
¢ SR Statutory iquidity Ratio
¢ SSI Small Scale Industries
¢ SME Small & Medium Entrepreneurs
¢ MSME Micro, Small & Medium
Enterprises ÒSSIs

¢ SWIF Society for Worldwide Inter-bank
Financial elecommunication
¢  elegraphic ransfer
¢ VA Value Added ax
 EAD BANK SCHEME
¢ Introduced in December, 969.
¢ No. of Districts covered were : .
¢ ead Banks were identified on the basis of
Maximum Number of Branches &
coverage of population by different Banks
functioning in the District.
ead Bank fficer is appointed by Bank
concerned.
¢ Public Sector Banks were entrusted with
the work of ead Bank.
¢ BJECIVES F HE SCHEME:
¢ - o play ead Role in coordinating the
efforts of all credit institutions, in the
district for :-
¢ Òi
Planned growth in Branch network
¢ Òii
Credit deployed in the districts.
¢
. ead Bank prepares a District Credit
Plan ÒDCP
which includes ±
Òa
Providing Credit to Priority Sectors
Òb
Weaker Section People
ead Bank use to monitor the Bank
Branches working in the district Òead
area

¢ . MIS developed by ead Bank to be followed
by all bank¶s branches to submit the desired
information in the prescribed Schedule as under
:-
¢ BR- : Annual Return ± Credit Plan
¢ BR-
: Monthly Return ± Priority Sector
¢ BR--
:Quarterly Return - -d- rban Br.
Advances.
¢ BR- : Half-yearly Return ± DCB of oans
Part ± A : Deposits & Advances
Part- B : oan outstanding in Priority Sector.
Part ± C : Recovery of Priority Sector ending.


|




 
|'
. Started from -- 99.

. Area of applicability: Semi-urban and Rural
Areas.
. riginal Scheme changed from -
-
 :
¢ Major points of Scheme are :-
¢
Number of Villages in Area ± 5 to
5
¢

Preference to Govt. Sponsored
Schemes in additional villages/semi urban
area.
¢
Now there is no need of ³No Dues
Certificate´ between two branches.
¢ 
No need to prepare Village-wise Credit
Plan.
¢ 5
Annual Credit Plans will be based on
the Potential inked Plans ÒPPs

prepared by NABARD.
¢ 6
Monitoring will be done by Main
Branch, Block evel Banker¶s Committee,
B/DDM, Nabard level.
¢ Basis of review will be BR- , BR-
and
¢ BR- .
 PRIRIY SECR ADVANCES
¢ Started from : July, 96ÒRevised in


¢ Meaning : Priority Sector includes :
¢ Òi
Agriculture Finance.
¢ Òii
Small Enterprises Finance
¢ Òiii
Retail rade Finance
¢ Òiv
Micro Credit
¢ Òv
Education oans and
¢ Òvi
Housing oans.
 Weaker Section in Priority Sector
¢ . Small and Marginal Farmers
¢
Artisans, Village & Cottage Industries
¢ Ò Credit limit upto Rs.5,/-

¢ . Beneficiaries of SGSY and SJSRY
¢ . SC and S
¢ 5. Advances to SHG ± NG.
¢ Banks are required to advance % of
their total advances to Priority Sector.
¢ &
8

6! 7
¢ he Rate of Interest of every Central Bank
is known as Bank Rate. It is also known
as Discount Rate. Bank Rate is 6%.
¢ At this rate, the Central Bank rediscounts
Bills of Exchange and Govt. Securities
held by the Commercial Banks. ÒIt is a
type of borrowing against securities when
cash is needed to fulfill the legal obligation
 CASH RESERVE RAI:
¢ CRR : Every unscheduled bank has to
maintain in India a Cash Reserve with
itself or with RBI @ % of its total demand
and time iabilities in India as on the last
Friday of Second preceding fortnight.
¢ Scheduled Bank maintain CRR with
RBI @ % of D on daily basis.
 SARY IQIDIY RAI:
¢   A Scheduled Bank Òin addition to
CRR under Section 
of RBI Act
and
every other Bank Òin addition to Cash
Reserve under Sec.  of B.R.Act
has to
maintain with RBI or Notified Bank *AB
=4=  in
Cash, Gold, and other balances Òin
Current Account or in erm Deposit
.
 FINANCIA SAEMENS F
BANKS:
. Bank¶s Balance Sheet, and

. Profit and oss account.
he Balance Sheet Ò B/S
of a Bank has

Schedules under which the various
assets and iabilities are classified.
¢ A Balance sheet has two sides:
¢ n one side iabilities are written and
¢ n other side Assets are written.
¢ Similarly in Profit and oss Account also
¢ n one side all types of Income is written
¢ n other side all types of expenses are
written
 IABIIIES

. Capital

.Reserves & Surplus
.Deposits
. Borrowings
5. ther iabilities and Provisions
6. Contingent iabilities.
 ASSES
.Cash and Balances with RBI

.Balances with Banks and money at
Call and Short Notice
.Investments
.Advances & oans
5.Fixed Assets
6.ther Assets.
PRFI AND SS ACCN
¢ INCME: EXPENSES

. Interest earned Interest paid

. ther Income perating expenses
 ANS AND ADVANCES:
System of Financing by Banks:-
. Cash Credit System

.verdrafts System
oan system- For Working Capital &
Investment Capital
Short erm, Medium erm, and ong erm oans
Bridge oans, Composite oans, Consumption
loans.
.Purchase and Discounting of Bills
¢ Secured and nsecured oans,
¢ Insurance of Assets created out of loan,
¢ Documents for oan:
Òa
oan Agreement Deed
Òb
Guarantee deed
Òc
Pledge/Hypothecation Ò Deeds

Òd
Insurance Òcovering various risks

Òe
Security Papers Òitle deeds