RESEARCH PROJECT REPORT (MBA - 043)

ON
FINANCE 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 (Dr. S.P. GUPTA) MBA Department S.R.M.S.C.E.T., Bareilly

SUBMITTED BY ANUP SINGH ROLL NO. -0901470008

Faculty of Management Science

Shri Ram Murti Smarak College of Engineering & Technology, Bareilly

(College Code 014)

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

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.

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 e nthusiasm that they gave this big opportunity to me.

ANUP SINGH DATEPLACEMBA 4TH SEM

TABLE OF CONTENT PAGE NO. CHAPTER-1 Introduction 1.1 Introduction 1.2 About Allahabad bank
1.3 Principles of lending and priority sector lending 1.4 Targets & sub target under priority sector 1.5 Common guidelines for priority sector advances 1.6 Advances to priority sector by Allahabad bank.

1-27 1-1 1-5

6-16 17-19 20-26 26-26

1.7 objectives of the research CHAPTER-2 Literature Review CHAPTER-3 Research Design 3.1 Research methodology 3.2 Research design 3.3 Method of data collection CHAPTER-4 Data Analysis and Interpretation CHAPTER-5 5.1 Findings 5.3 Conclusion 5.3 suggestion CHAPTER-6 Bibliography

27-27 28-39 40-42 40-40 41-41 41-42 43-51 52-54 52-52 53-53 54-54 55-55 55-55

LIST OF TABLE

PAGE NO. Table no -1 Advance to priority sector. Table no -2 Advances to agriculture sector. Table no -3 Direct finance to agriculture sector. Table no -4 Indirect finance to agriculture sector. Table no -5 Finance to Micro Small Enterprises Sector. Table no -6 Finance to sector such as housing loan education loan etc. Table no -7 Finance to weaker section. 43-43 44-44 45-45 47-47 48-48 49-49 50-50

LIST OF FIGURE

PAGE NO.

Figure no -1 Advance to priority sector. Figure no -2 Advances to agriculture sector. Figure no -3 Direct finance to agriculture sector. Figure no -4 Indirect finance to agriculture sector. Figure no -5 Finance to Micro Small Enterprises Sector. Figure no -6 Finance to sector such as housing loan education loan etc. Figure no -7 Finance to weaker section.

43-43 44-44 46-46 47-47 48-48 49-49 50-50

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 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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was

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

y y y

The highest standards of ethical conduct and honest. Accurate, Fair, Full, Sensible and timely disclosures in reports. Compliance with laws, regulations and rules.

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 1991 United Industrial Bank Ltd. merged with Allahabad Bank. Instituted Allahabad Bank Finance Ltd., a wholly owned subsidiary for Merchant Banking.

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 February, 2007

Rolled out first Branch under CBS. The Bank opened its first overseas branch at Hong Kong.

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.

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.

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

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
y Safety y Liquidity y 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

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.

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 p art of the borrower In bankers parlance, credit risk in 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 artisan s, village and cottage industries. ii. Finance extended to Government sponsored Corporation/organisations

providing funds to the weaker sections in the priority sector. iii. iv. Advances to handloom co-operatives. Term finance/loans in the form of lines of credit made available to State

Industrial Development Corporation/State Financial Corporations for financing SSIs. v. vi. Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills 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. ix. Financing of NBFCS or other intermediaries for on-lending to the tiny sector. 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. 4. 5. 6. 7. Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY) Scheduled Castes and Scheduled Tribes Beneficiaries of Differential Rate of Interest (DRI) scheme Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY) 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 40 per cent of Adjusted Bank Credit (ABC) or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

Sector advances Agriculture

No target. Advances Advances to small enterprises sector will be reckoned in Small Enterprise computing performance under the overall priority sector target of advances 40 per cent of ABC or credit equivalent amount of Off-Balance

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Sheet Exposure, whichever is higher. (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; Micro enterprises within Small ii) 20 per cent of total advances to small enterprises sector

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). Of the stipulated target for priority sector advances, at least 25% Advances weaker sections to (or 10% of the ABC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher) should be given to weaker sections. Within the overall target for priority sector lending and the subAdvances Minorities. to 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) Total Priority Sector advances Total agricultural advances SSI advances Export credit 40 percent of net bank credit 18 percent of net bank credit No target Export credit does not form part of priority sector

Foreign banks operating in India

32 percent of net bank credit No target 10 percent of net bank credit 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 ar e 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 y Up to Rs.25000.00 Minimum Margin 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 180d ays are to be treated as Non-current asset.

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5. Security 5.1 No 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 (As per our Rating module) AB-1 AB-2 AB-3 Other rated accounts

Grade

Minimum Security Coverage Ratio**

1.25:1 1.5:1 1.75:1 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

Amount (Rs. crores)

March 2009 Amount (Rs. crores) 20,435 9,568 7,306 2,262 4,593

March 2010 Amount (Rs. crores) 24,279 11,567 8,340 3,227 8,188

a. Priority sector i. Agriculture Direct Indirect

18,774 9,146 6,571 2,575 3,530

ii.

Micro small enterprices

iii.

Other

6,098 4,455

6,275 5,010

4,524 6,150

b. Weaker Section

(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 ows 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 ow 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 nance and guidance to far1ners and small industrialists. In providing nance and guidance effectively, the banks would have to collect the required information, ensure recovery of loans and interest, assist in obtaining after sales

28

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 specic denition 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 of nance 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 nancing. 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 sufcient 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 nanciers at higher prices and sell the product to the same agency at a low price. With the nancial 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 inuence 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 nancing does not mean replacing individual moneylenders with institutionalised moneylenders. Institutional nancing 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 na nce must be able to provide a basis for assessing how much nancing 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 conned merely to the provision of nance. 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 nding 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 rst 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 efciency 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 nance for priority sector will be defeated. Consumption credit granted on the basis of specic 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, benets derived by the beneciaries and deciencies 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 ofces, 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 ava ilability 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

33

borrower accounts and the amount outstanding. At the same time, banks are nding it extremely difcult to nance all those eligible identied beneciaries 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 beneciaries have so far remained out of the fold of this scheme, a good number of inuential 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 ve 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 nancing 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

34

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 nanced 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 nullied 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 aws 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 simplication 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.

36

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 nancing of agriculture.

I. Satya Sundaram (1986) pointed out some of the problems facing the DRI scheme. Funds are allocated, they are ofcially spent and yet the poor remains 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 Ofce, 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 selfemployed 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 beneciaries is no worse than that of other debtors 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 ush with surplus funds, they do not nd it protable and safe in lending to the SSI se ctor 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.

38

The poor farmers house and properties are auctioned for recovering 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 scientically designed and the opinion surveys were not properly structured. Also most of the ndings were just in the fonn of generalised observations made with out testing the statistical signicance.

Despite the availability of sufcient 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 protable and benecial and the difculties 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 COLLECTIONThe 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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CHAPTE
ATA ANAL AND INTE PRETATION

1. Fi
T

i it

ll
sector

l no-1 advances on priori

Priority sector/Sc e es

Marc 2008
A . t

Marc 2009 Amount (Rs crores 20,435

Marc 2010 Amount (Rs crores 24,279

Pri rit sect r

18,774

fin n ing to p io ity s to

18,774 24,279

2008 2009
2010 20,435

Fi

re no -1 Advance on priority sector

Interpretation:

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Credit t pri rit sect r grew from Rs.18,774 Crore as on March 2008 to Rs.20,435 Crore as on March 2009 and Credit to priorit sector grew from Rs.20,435 Crore as on March 2009 to Rs.24,279 Crore as on March 2010. registering an absol te YOY growth of Rs.3844 Crore (18.81 %). Bank has exceeded the National Goal (40.0 0%) by achieving 41.29% as on Mar 10

Financing to agriculture sector by Allahabad bank.

Table no-2 Advances on agriculture sector

Priority sector/Sc emes Marc 2008
A . t

Marc 2009 Amount (Rs crores 9,568

Marc 2010 Amount (Rs crores 11,567

i.

Agriculture

9,146

fi

i g

gi l

9,146 11,567

2008
2009 2010

9,568

Figure no -2 Advances on agriculture sector

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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 Mar 10.

Direct finance to agriculture sector from Allahabad bank.

Table no -3 Direct finance to agriculture sector

Priority sector/Schemes March 2008
Amount (Rs. crores)

March 2009 Amount (Rs. crores) 7,306

March 2010 Amount (Rs. crores) 8,340

Direct in agriculture

6,571

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direct fi a ce t a ric lt re

6,571 8,340 2008 2009

2010

7,306

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.

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Indirect finance to agriculture sector from Allahabad bank.

Table no -4 Indirect finance to agriculture sector

Priority sector/Schemes March 2008
Amount (Rs. crores)

March 2009 Amount (Rs. crores) 2,262

March 2010 Amount (Rs. crores) 3,227

Indirect

2,575

indirect finance to a riculture sector

2,575 3,227

2008 2009 2010

2,262

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.

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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/Sc emes Marc 2008
A . t

Marc 2009 Amount (Rs crores 4,593

Marc 2010 Amount (Rs crores 8,188

Micro small enterprises

3,530

Fin n ing to

i o

ll nt p is s

to

3,530

8,118

2008 2009

2010 4,593

Figure no -5 Financing to Micro Small Enterprises Sector

Interpretation:
Cre it to Micro and Small Enterprises (MSE) gre from Rs 3,530 Crore as on Marc 2008 to Rs 4593 Crore as on Marc 2009 and gre from Rs 4593 Crore as on Marc 2009 to Rs 8,118 Crore as on Marc 2010, registering an absolute YOY growth of Rs 3595 Crore (78.27%). Share of Micro Enterprises to total Micro & Small Enterprises has e ceeded the National Goal (60%) by achieving 62.25% as on Mar 10. 48

3. Financing to other sector such as housing loan education loan etc. From Allahabad bank. Table no -6 Financing to sector such as housing loan education loan etc.

Priority sector/Schemes

March 2008
A . t

March 2009 Amount (Rs. crores) 6,275

March 2010 Amount (Rs. crores) 4,524

Other

6,098

fin n ing to oth

s to

4,524

6,098 2008 2009

2010 6,275

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

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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 March 2008
Amount (Rs. crores)

March 2009 Amount (Rs. crores) 5,010

March 2010 Amount (Rs. crores) 6,150

Weaker Section

4,455

50

Fi a ci

t weaker secti

4,455

6,150

2008 2009

2010

5,010

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%.

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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 Mar 10  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 Mar 10  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, NewDelhi, Vikas Publishing House ,2007 . 3. Natarajan S & Parameswaran, Indian Banking 5th Edition ,NewDelhi, Sulthan Chand &Co ltd ,2007 . 4. Maheswari S. N & Paul R R,Banking theory &practice 3rd Edition ,NewDelhi, Kalyani publishers,2006 .

WEBSITES

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

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