INTRODUCTION

1.1 INTRODUCTION
1.2 REVIEW OF LITERATURE
1.3 STATEMENT OF THE PROBLE004D
1.4 NEED FOR THE STUDY
1.5 OBJECTIVES OF THE STUDY
1.6 RESEARCH METHODOLOGY
1.7 SCOPE OF STUDY
1.8 LIMITATIONS OF THE STUDY
1.9 RESEARCH DESIGN

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 CHAPTER 1

INTRODUCTION AND RESEARCH DESIGN

1.1 INTRODUCTION

Loan is one of the major elements of finance to a common man. The banks
advance money in number of ways like housing loan, education loan, agricultural loan,
property loan, personal loan, vehicle loan etc. banks usually follow different procedure for
advancing different type of loan. In order to know the different procedure in sanctioning
different kind of loan and rate of interest charged to different type of loan the study has been
undertaken.

A bank is a financial is a institution which deals with money and credit. It accepts
deposits from individual firms and companies at lower rate of interest and gives the loan at
higher rate of interest to those who need them. Bank lends money either for productive
purpose to individual, firms etc. The process of credit management begins with accurately
assessing the credit worthiness of the customer base. This is particularly important if the
company choose to extend some type of loans to certain customer.

Proper loan management calls for specific criteria that a customer must meet before receiving
this type of credit arrangement. When the process of credit management functions efficiently,
everyone involved benefits from the efforts. The vendor has a reasonable amount of assurance
that involves issued to client will be paid within terms, or that regular minimum payment will
be received on credit account balance. Customer has the opportunity to build a string rapport
with the vendor and this creates a solid credit reference.

Loans and advances are the most important aspect of any banking organization, loans is a type
of debt. Like all debt instruments a loan traits organization of financial assets over a time. The
borrower initially receives an amount of money from the lender, which they pay back, usually
but not always in regular installment to the lender. This service is generally provided at cost,
referred to as interest in the debt. This sum of borrowed money (principal money) that is
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 generally with interest Loans-value-ratio the relation between the amount of the mortgage
loan and the appraised value of the property expressed as percentage.

Lock lenders guarantee that the mortgages are quoted will be good for a specified number of
days from day of application. Money margin the amount of lender ads to the index on an
adjustable ratio mortgage to establish the adjusted interest rate. Different loans fetch different
rate of interest and that have different securities against them. Such loans are agriculture
loans, consumer loan, car loans. And educational loan, against mortgage. Advances are a term
that describes a secured loan made to a member: Advances are offered at fixed or floating
rates with specific maturities or with embedded spoon for early redemption There are
different types of advances such as cash credit, bank overdraft etc.

Loans and advances are utilized for making payment of current liabilities, wages and salary
of employees, and also tax liability of business. Loans and advances from banks are found to
be "economical" for traders and businessmen, because bank charges reasonable rate of interest
on such a loans and advances. For a loan from money lenders the rate of interest charged is
very high. Compare to money lenders the interest charged by commercial bank is low because
the interest rate is regulated by the Reserve Bank of India Therefore these loans are affordable
for all kind of persons, light from the common man to business man. It mainly helps the
farmers to fulfill their financial needs.

1.2 REVIEW OF LITERATURE

 Satyasai and Badatya (2000) had found that cost of delivery of agricultural credit can be
reduced by changing the composition of working capital and increasing the business base.
Transaction costs of long term credit structure are found to be high. The cooperative
institutions enjoy the same advantage as of non-institutional rural lenders i.e. close interface
with the clientele.

 The Study by Singh, Verma & Babu (2002) examined the impact of credit advanced on
main crops and milk production enterprises in Soraon block of Allahabad district of Uttar
Pradesh for the period 1999-2000 to 2000-2001.The borrowings made by farmers helped
them in making higher investments on their farms for different purposes. The study concluded
that in the post-borrowing conditions credit advances made for different purposes had

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 directly/indirectly resulted in a significant increase in agricultural development i.e. in the level
of income employment on different size groups of farms.

 Singh and Nasir (2003) observed based on a district wise study in Bihar during 1980-81 to
1997-97 that agricultural loans increased continuously in Bihar from Rs. 9806 lakhs in 1980-
81 to Rs. 44646 lakhs in 1996-97. The purchasing power of money had declined
tremendously. Moreover the agricultural credit flow declined in the early nineties which
might have adversely affected the private capital formation on the basis of per hectare credit
flow, agricultural credit flow had been inadequate in Bihar. It may be concluded that efforts to
improve the adoption level of modern crop production technology and expansion of the
network of rural institutions would help in increasing agricultural credit flow in Bihar.

 Ramesh and Chandel (2011) studied the financial performance and viability of four District
Central Cooperative Banks (DCCBs) operating in Hisar division in Haryana for a period of
twelve years (1997-98 to 2008-09) by financial analysis with different parameters and z score
analysis. The financial parameters were taken i.e. profitability, liquidity, efficiency, solvency,
risk and bankruptcy and results revealed that four DCCBs with approximately fifty branches
have not been performing well on all financial parameters taken for study.

 Chanda (2012) evaluated the potentiality of the Kisan Credit Card Scheme in India. The
Kisan Credit Card Scheme was introduced in India in 1998- 99 has since become a flagship
program providing access to short term credit in the agricultural sector. According to the
Government of India, over a 100 million cards had been issued cumulatively by March 2011.
Using data from 2004-05 to 2009-10, he critically examines the determinants of KCC lending
across states in India and districts in Bihar and also examine the effects of the scheme on
agricultural growth and yields. His results suggest that states with initially better access to
agricultural credit show subsequently greater amounts of KCC lending. However, Bihar and
other states also showed a faster adoption rates that cannot be explained by their recent
growth accelerations.

 Kanchu, Thirupathi (2012) examined the growth of DCCBs in India through selective
indicators that included and analysed the Deposits, Credits and C/D Ratios of DCCBs. He
also studies the growth of investment, working Capital and Cost of Management position in

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 DCCBs and collected the data from various secondary sources and analysed it by using
various statistical tools.

 Kumar et al. (2013) examined the performance of agricultural credit flow and has identified the
determinants of increased use of institutional credit at the farm household level in India. The study
was based on the secondary data compiled from several sources, has revealed that the institutional
credit to agriculture in real terms has increased tremendously during the past four decades. The
structure of credit outlets has witnessed a significant change and commercial banks have emerged
as the major source of institutional credit in recent years But, the declining share of investment
credit in the total credit may constrain the sustainable agricultural growth. The quantum of
institutional credit availed by the farming households is affected by a number of socio-
demographic factors which include education, farm size, family size, caste, gender, occupation of
household, etc. The study has suggested simplification of the procedure for a better access to
agricultural credit of smallholders and less-educated/illiterate farmers

 Godara et al. (2014) studied the credit delivery to the agriculture sector and found that it is
continues to be insufficient. It appears that the banking system is still hesitant on various grounds
to provide credit to small and marginal farmers. Transformation in banking policies and practices
and the resultant of access to total bank credit during the post-bank nationalization period have
not satisfactorily addressed equitable and efficient delivery of agriculture and rural credit. Due to
declining in public capital formation in the rural and agriculture sector and the persistent
unenthusiastic attitude of rural bankers towards formal financing, the planners and policymakers
are believe on micro-finance to suitably supplement formal banking in rural India.

 Kaur (2015) analyse the growth of agricultural credit in India for a period of 2000-01 to
2011-12 and collected the data from secondary sources. Percentages and compound annual
growth rates are used for data analysis. The study reveals that flow of institutional credit to
agriculture has increased over a period of time. The amount of loans issued to agriculture both
as direct and indirect finance has shown an increase during the reference period. At the same
time, the loans outstanding have also grown over a period of time.

 Kanchan (2016) studied the role of cooperative banks of Punjab in agricultural finance and
she found that though the number of PACS has shown a tremendous rise but the situation has
deteriorated in Punjab as number of PACS has shown a tremendous downfall. Loans issued

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 by PACS in the state of Punjab recorded very meagre share over the loan issued by all PACS
in India

 Venkatesulu A. (2018) identified that the Urban Co-operative Banks were playing most
significant role in availing funds from NABARD and State Co-operative Banks and
disbursing it to farmers through Primary Agricultural Co-operative Societies and studied the
current status of the urban co-operative banks (UCBs) industry in India. He concluded that
some UCBs have shown credible performance in the recent years, a large number of banks
have shown discernible signs of weakness. The operational efficiency is unsatisfactory and
characterised by low profitability, ever growing non-performing assets (NPA) and relatively
low capital base. Also urban cooperative banks have not been able to service the growing
credit requirements of clients or the newer demands for loans in the field of personal finance.

 Hawaldar, I.T, Spulkar, C, Lokesh, A., Birau, R., Robegen, C. (2020) In their study
analyzing non performing assets in agriculture loans. A case study in India concluded that
there is no significant difference in pre and post sanction of agriculture loans and management
of non-performing assets by banks. The willful default by borrowers and more NPAs in banks
are due to debt waiver policies announced by political parties.

 Jethwani, B., Dave, D., Ali, T., Phansalker, S., and Ahhirao, S. (2020) In their study
Indian agriculture GDP and NPA: A regression model found that the repayment of farm loan
adversely affects as factors like rural population, low export value of crop and low crop
production for the year. It should be understood that the farm loan waivers cannot solve the
problem.

1.3 STATEMENT OF THE PROBLEM

 The enquire about particular issues, as a rule in refers to sum of problems where a specialist
experience their involvement in it.
 The challenge of either a specific a hypothetical circumstance or wants to acquire an answer
for the same.

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  The current dissertation has been embraced to do the problem of Loans and advances in KVG
banks

1.4 NEED FOR THE STUDY

That there is a need of detailed enquiry in to the banking system with respective of credit
management; the bank under the study is functioning efficiently as per the records Therefore,
comparative study to relate the performance in credit management and plans for lending will
help the other bank. Because most of the bank the areas have been dissolved and managed for
the poor performance or detective of the credit result into the losses. Therefore, this study
helps those banks to manage their borrowings. Agricultural loans and advances. The study
helps to understand various categories of funds and advance available in the bank. The study
also helps in analyzing the rate of interest charged by the bank, Risk associated and capacity
to lend. Overall the study provides a brief knowledge about loans and advances the study
relates to the lending practices pattern and influence on the organizational performance. It
also helps to know the objectives and goals as well as it help to know the people's responses
on bank lending. The study on Loans and advances in "KARNATAK VIKAS GRAMEEN
BANK’’.

This study shows us the procedure that is followed for the purpose of providing loans to
customers and also with respect to the study of the whole organization and the process
followed in that organization. Loans and advances are the most important aspect of any
banking organization. Loan is a type of debt like all debt instruments; a loan entails the ready
redistribution of financial assets over time. The borrower initially receives an amount of
money from the lender, which they repay later. This service is generally provided at a cost,
referred to as interest on the debt a sum of borrowed money (principal amount) is generally
repaid with interest which in turn helps the organization loss or profit and also use these
profits for the welfare of the organization as well also pay interest on deposits.

1.5 OBJECTIVES OF THE STUDY

 To know the various kinds of services being offered by the KARNATAKA VIKAS
GRAMEEN BANK to the customer
 To Understand process/system adopted by bank for sanction of loans and advances
 To study the features of agricultural finance in India.

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  To know borrowers Opinion about Loans and Advances
 To evaluate the agricultural finance policies in India.

1.6 RESEARCH METHODOLOGY

The quality of the project depends on the methodology adopted for the study. Which in turn
depends on the nature of the project? The use of proper methodology is an essential part of any
research. In order to conduct the study scientifically, suitable methods and measures are to be
followed.

The collection of required data for the project work followed the sources of data;

Primary Data:
It is one collected for the first time the primary data is collected from the bank manager
through personal discussion, interaction and observation.

Secondary Data:
It involves the data have been already collected by someone for their own reference study.
The data or information for the study is gathered from secondary sources like;

 Annual reports and financial statements of Karnataka vikas Grameen Bank.

 Google search and website of the bank.

 Text books, news papers, magazines, journals, and manuals.

1.7 SCOPE OF STUDY

 Studied as both micro and macro level
 Macro finance deals with different sources of raising funds for agriculture as a whole in the
economy
 It concerned with the lending procedure, rules, regulations, monitoring and controlling of
different agricultural credit institutions.
 Macro-finance is related to financing of agriculture at aggregate level
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  Micro-finance refers to financial management of the individual farm business units.

1.8 LIMITATIONS OF THE STUDY:

The study is mainly based on the secondary data provided by the bank. As such it is subject to
the limitations of the secondary data.
The study is based only on NPAs with respect to loans. The study is based on the data given by
the officials and reports of the bank.
The data is supplied by the bank personnel.
The confidentiality of some facts and figures is a limitation.
The study of data is complex as the data is collected based on conclusions and constraints.
The non-availability of relevant information is one of the limitations.

1.9 RESEARCH DESIGN

CHAPTER 1 INTRODUCTION AND RESEARCH DESIGN

1.1 INTRODUCTION
1.2 REVIEW OF LITERATURE
1.3 STATEMENT OF THE PROBLEM
1.4 NEED FOR THE STUDY
1.5 OBJECTIVES OF THE STUDY
1.6 RESEARCH METHODOLOGY
1.7 SCOPE OF STUDY
1.8 LIMITATIONS OF THE STUDY
1.9 RESEARCH DESIGN

CHAPTER 2 CONCEPTUAL FRAMEWORK