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Chapter IV

REVIEW OF POLICIES AND PROCEDURES

4.1: Various Schemes of State Bank of India for Agricultural

Development:

State Bank of India caters to the needs of agriculturists and

landless agricultural labourers through a network of 6600 rural and

semi-urban branches. There are 972 specialized branches which have

been set up in different parts of the country exclusively for the

development of agriculture through credit deployment. These branches

include 427 Agricultural Development Branches (ADB’s) and 547

branches with Development Banking Department (DBDs) which cater to

agriculturists and 2 Agricultural Business Branches at Chennai and

Hyderabad catering to the needs of hi-tech commercial agricultural

projects. The branches cover a whole gamut of agricultural activities

like crop production, horticulture, plantation crops, farm mechanization,

land development and reclamation, digging of wells, tube wells and

irrigation projects, forestry, construction of cold storages and godowns,

processing of agri-products, finance to agri-input dealers, allied

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activities like dairy , fisheries, poultry, sheep-goat, piggery and rearing

of silk worms. 1*

(www.sbi.com Date: 29-05-2011)

To give special focus to agriculture lending, the State Bank of

India has set up the agri- business unit. There are agri-specialists in

various disciplines to handle projects/ guide farmers in their agri-

ventures. Advances are given for very small activity covering poorest of

the poor to hi-tech activities involving large fund outlays. The various

bank schemes initiated by the bank can be highlighted as follows:

1. Crop Loan:

The purpose of this loan is to provide financial assistance to meet

cultivation expenses for various crops. Agriculturists, Tenant farmers

and Share Croppers who actually cultivate the lands are eligible for

these loans. All categories of farmers - Small/Marginal (SF/MF) and

others are also included. The loan amount is worked based on the cost of

cultivation incurred for each crop per acre of crop cultivated and 90 %

of the cost of cultivation As per the cultivation requirements of the crop,

the loan amount is disbursed in cash and kind (for fertilizers, pesticides

etc). The Security required for availing this loan:

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Loan Amount Security to be furnished

Upto Rs.50,000 Hypothecation of crops.

Above Rs. 50,000 and upto Rs. 1,00,000 i. Hypothecation of crops

ii.Mortgage of lands or Third

party guarantee

Above Rs.1,00,000 i. Hypothecation of crops

ii. Mortgage of lands

For tobacco, Sugarcane and other crops under

tie-up arrangement with boards/ factories/

companies:

i. Upto Rs. 1 Lac

ii. ii. Above one lac

i. Hypothecation of crops

ii.a. Hypothecation of crops

b. Mortgage of lands

The date of repayment for the crop loan will be fixed by allowing

reasonable period for marketing the produce after harvest of the crop.

2. Produce Marketing Loan Scheme:

Under this scheme, the Bank extends financial assistance to help

farmers storing produce in their own premises to prevent distress sale.

This facilitates immediate renewal of crop loans for next season. All

categories of farmers can avail the loan. However, the facility will have

to be availed at the same branch. The loan amount will be 60 % of the

value (minimum support price) of the produce stored. Produce

Marketing Loan upto Rs Five lakhs are given to farmers against

pledge/hypothecation of agricultural produce for a period not exceeding

12 months. The Stock statement is required for valuation.

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After liquidating the crop loan the surplus will be disbursed in

cash. As security, pledge/hypothecation of the stocks is required. The

loan should be liquidated as and when the produce is sold in not

exceeding 12 months.

3. Loan against warehouse receipts / cold storage receipts:

The Bank extends financial assistance to farmers storing produce

in private / government warehouse / cold storages against pledge of

warehouse / cold storage receipt to prevent distress sale. The maximum

repayment period of the loan is 6 months. All categories of farmers

availing crop loan from the bank are eligible to avail this loan.

The loan amount will be 60 % of the value (minimum support price) of

the produce stored. Only the warehouse receipt issued and signed by the

authorized warehouse keeper is required in the form of documents to be

deposited. The warehouse receipt should be duly endorsed in favour of

the Bank. After liquidating the crop loan, the surplus will be disbursed

in cash. As a security, pledge of warehouse receipt can be submitted.

The loan should be liquidated as and when the produce is sold during an

interim period not exceeding 12 months.

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4. Kisan Credit Card Scheme (KCC)

The purpose of the loan is to extend adequate and timely support

to farmers for their short term credit needs. Farmers with excellent

repayment record for 2 years can avail the loan. New farmers with

sizeable deposits with our branches for 3 to 4 years are also eligible.

Borrowers with good track record in other Banks are also eligible.

Farmers who have defaulted in repayment but have liquidated the

outstanding are also eligible. Loan amount is decided based on the

cropping pattern, ancillary and contingency needs of the farmer for the

full year. 90 % of the cost of cultivation (Scale of Finance) is given as

loan per acre. 100 % of the cost is available as loan upto Rs. 50,000/-

and 85 % of the cost is available as loan above Rs. 1, 00,000/-.

As per the cultivation requirements of the crop the loan amount is

disbursed in cash and kind (for fertilizers, pesticides etc)

Security required:

Loan Amount Security to be furnished

Upto Rs. 50,000 Hypothecation of crops.

Above Rs.& 50,000 and upto Rs. 1,00,000 i. Hypothecation of crops

ii. Mortgage of lands or Third

party guarantee

Above Rs. 1,00,000 i. Hypothecation of crops

ii. Mortgage of lands or Third

party guarantee

For tobacco, Sugarcane and other crops under tie-up

arrangement with boards/ factories/ companies

i. Up to Rs. 1 Lac

ii. Above one lac

i. Hypothecation of crops

ii.a. Hypothecation of crops

b. Mortgage of lands or Third

party guarantee

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It is a revolving cash credit limit with any number of withdrawals

and repayments.

5. Agricultural Term Loans (ATL):

Agricultural term loans are provided for the purchase of assets

(farm machinery, bullocks, sheep etc.), creation of assets (orchard

development, poultry, dairy development etc.) connected with rural

activities under agriculture, horticulture, plantation, sericulture, animal

husbandry, fisheries etc., where the loan amount is repayable over a

period of time exceeding 3 years.

All categories of farmers and agricultural labourers are eligible.

Upto Rs.50, 000/- 100 % of the cost of the asset / project cost is

provided as loan. Above Rs.50, 000/-upto 85% of the cost of the

asset/project is given as loan.

For activities like purchase of bullocks etc there is no need for

any documents. For larger amount of loan, estimate/quotation/project

report will be called for. For land based activities one needs to produce

the land records. For loans above Rs. 25,000 no dues certificate from the

banks operating in the area will be required. Generally disbursements

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are made directly to the suppliers as per the schedule set in your

proposal.

Security required for the loan:

Amount of Loan Security to be furnished

A. Where movable assets are not created

(eg.Dugwells, development of land etc.)

a) Upto Rs. 10,000/-

b) Above Rs.10,000/-

B. Where movable assets are created (pumpset,

pipeline etc.)

a) Upto Rs.50,000/-

b) Above Rs.50,000/- to Rs. 1 lac

c) Above Rs. 1 lac

a) Personal Guarantee

b)i.Personal Guarantee

iiMortgageiofoland

a) Hypothecation of the asset

created

b) i. Hypothecation of the

assetsocreated

ii. Mortgage of land or third

partyuguarantee

c) i. Hypothecation of the

assetsucreated

ii. Mortgage of land

6. Land Development Schemes:

The main purpose of this scheme is credit solutions for land

development projects in the form of direct finance to cultivators for

better productivity.Loans under this head cover various activities like

land clearance (removal bushes, trees, etc.), land levelling and shaping,

contour/graded bunding, bench terracing for hilly areas, contour stone

walls, staggered contour trenches, disposal drains, reclamation of

saline/alkaline soils and fencing etc. All farmers owning agricultural

land are eligible.Upto Rs. 50,000/- 100 % of the cost of the asset/project

cost is provided as loan. Above Rs. 50,000/- upto 85% of the cost of the

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asset / project is given as loan. One has to submit a report on the

estimated cost, supported by estimates of a civil engineer.

Security to be submitted:


a) Upto Rs. 10,000/-

b) Above Rs.10,000/- & upto

Rs. 1 lac

c) Above Rs. 1 lac-


b)i. Personal Guarantee

ii Mortgage of land or third party guarantee at the

discretion of the Bank

c) i. Hypothecation of the assets created if any


Repayment of loan will be in quarterly/half yearly / yearly

installments depending on the harvest of the crops or the liquidity

created by the agriculture activity undertaken.

7. Minor Irrigation Schemes:

Credit for creating irrigation facilities from underground / surface

water sources is the main purpose for initiating this scheme. All

structures and equipments connected with it are also financed. Loans

cover various activities like digging of new wells (open/bore wells),

deepening of existing wells (traditional/in well bore), energisation of

wells (oil engine/electrical pump set), laying of pipe lines, installing

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drip/sprinkler irrigation system and lift irrigation system. All farmers

having a known source of water which can be exploited for irrigation

purpose can avail this loan. Upto Rs. 50,000/- 100 % of the cost of the

asset / project cost is provided as loan.Above Rs. 50,000/- upto 85 % of

the cost of the asset / project is provided as loan. An estimate for civil

works to be undertaken and quotation for the assets to be purchased

have to be submitted. Land records to ascertain the title to the property,

geologists’ certificate and feasibility certificate from the electricity

board should also be submitted where relevant.

Security to be deposited:


A.Where movable assets are not created (eg.

Dugwells, development of land etc.)

a) Upto Rs. 10,000/-


B. Where movable assets are created (pumpset,

pipeline etc.)

a) Upto Rs.50,000/-


c) Above Rs. 1 lac



ii Mortgage of land

a) Hypothecation of the asset created

b) i. Hypothecation of the assets

created

ii. Mortgage of land or third party

guarantee

c) i. Hypothecation of the assets

created


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Repayment of loan will be in quarterly/half yearly / yearly

instalments depending on the harvest of the crops or the liquidity created

by the agriculture activity undertaken.

8. Farm Mechanisation Schemes:

Credit is given for purchase of farm equipment and machinery for

agricultural operations. The scheme covers activities ranging from

purchase of tractors and accessories, trailers, power tillers, combine

harvesters, power sprayers, dusters, threshers etc. Farmers owning more

than minimum acreage of perennially irrigated lands are eligible (for

power tillers 2 acres, for tractors 4 acres for > 35 HP and 6 acres for

above 35 HP and for combine 8 acres). Eligibility for purchase of other

farm equipment is decided on the income generated by the agri activity

undertaken by the beneficiary. Upto Rs. 50,000/- 100 % of the cost of

the asset is provided as loan. Above Rs. 50,000/- and upto 85 % of the

cost of the assets provided as loan. Quotations for the assets to be

purchased have to be submitted for procuring the loan. Land records to

ascertain cultivation rights title to the property should also be submitted.

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Upto Rs. 50,000 (other than tractors) Hypothecation of assets financed

Above Rs. 50,000 and upto Rs. 1,00,000 for

tractors

i. Hypothecation of assets

financed

Above Rs. 50,000 (other than tractors) and

Above Rs.1,00,000 for tractors

i. Hypothecation of assets

financed


9. SBI -Tractor Plus:

SBI has entered into tie-up with TAFE Ltd, Mahindra and

Mahindra Ltd, Escorts Ltd, SAME Deutz - Farh India Ltd, HMT Ltd,

Eicher Tractors, Punjab Tractors Ltd (Swaraj), International Tractors

Ltd, Indo Farm Tractors and Motors Ltd, New Holland Tractors Ltd, L

& T John Deere Pvt. Ltd. for financing tractors and with VST Tiller and

Tractors Ltd, for financing power tillers with following concessionary

terms.

a. The companies offer rebate on the price.

b. Companies offer additional service / warranty.

c. State Bank of India finances with a low margin of 10 %

(Amount of contribution from the applicant).

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10. Financing of Combine Harvesters:

Finance is given for the purpose of purchase of combines. Makes

in the approved list of combines only will be financed by the bank. The

following are eligible to procure such a loan:

i. Farmers owning minimum 8 acres of perennially irrigated land.

ii. Non-farmer entrepreneurs capable of utilizing combine harvester

for custom hiring work.

iii. Those who can put the combine harvester with a minimum

productive workload of 1000 hrs.

Upto 75% cost of combine harvester and accessories is available

as loan. Quotations for the combine harvester and accessories to be

purchased have to be submitted. Land records to ascertain cultivation

rights title to the property should also be submitted.



Upto Rs. 50,000 Hypothecation of assets financed

Above Rs. 50,000 and upto Rs.

1,00,000

i. Hypothecation of assets financed

ii. Mortgage of lands or Third party

guarantee

Above Rs. 1,00,000



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Repayment of loan will be in quarterly/half yearly/yearly

installments depending on the liquidity your activity creates. A

maximum period of 5 yrs is allowed.

11. Kisan Gold Card Scheme:

The purpose of this scheme is to sanction hassle free term loans to

farmers having excellent repayment record. Investment credits for which

term loans are ordinarily sanctioned are covered. Consumption loan to

meet domestic expenses like children's education, marriage, medical

expenses etc. are also be included to the extent of 20 % of limit. Farmers

with excellent repayment record for at least past 2 years, new farmers

with sizeable deposits with the branches for 3 to 4 years are eligible for

the loan. Farmers who have defaulted in repayment but have liquidated

the outstanding, farmers who have closed accounts without any default

in the last three years but are not the current borrowers are also eligible.

The loan amount is fixed on the basis of 5 times annual farm income or

50% of the value of the land mortgaged as collateral security minus term

loan outstanding whichever is more subject to a maximum of Rs.5 lacs.

Land records other than that are already given to the Bank viz. like

record of rights are too submitted with the bank.

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Security required:


A. Where movable assets are not created (eg.

Dugwells, development of land etc.)

a) Upto Rs. 10,000/-


B. Where movable assets are created

(pumpset, pipeline etc.)

a) Upto Rs.50,000/-


c) Above Rs. 1 lac



ii Mortgage of land

a) Hypothecation of the assets

created

b) i. Hypothecation of the assets

created

ii. Mortgage of land / other property

or third party guarantee

c) i. Hypothecation of the assets

created

ii. Mortgage of land or other

property

12. Land Purchase Scheme:

The purpose is to provide loan to small and marginal farmers /

landless labourers for purchase of agricultural land. Small/marginal

farmers, tenants, share-croppers owning less than 5 acres of unirrigated /

2.5 acres irrigated land in their own name and landless agricultural

labourers, with record of prompt repayment of loans are eligible to avail

this loan. Maximum loan amount under the scheme will be Rs.5 lac.

Credit facilities for development of land, irrigation facilities and for

cultivation of crops will also be available. A farmer will be required to

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contribute minimum 15 percent of total cost as margin from his own

resources. Land to be purchased with Bank finance will be mortgaged as

security. The rate of interest is as applicable to Agricultural Term Loans.

Repayment of loan will be half yearly / yearly installments

depending on the harvest of the crops or the liquidity created by the

agriculture activity undertaken over a period of 10 years. Adequate

gestation period will be for development of land.

13. Krishi Plus Scheme:

This scheme is for financing tractor to Rural Youth for custom

hiring. Any rural youth below the age of 45 years, and undergone

training in maintenance/repairs of automobiles / tractors; The applicant

and his family belonging to the small and marginal farmer category; any

person having a valid tractor driving license and operating the tractor

himself etc. are eligible to avail the loan. The loan amount is:

i) As per quotation of the tractor and other accessories including trailer

of borrower's choice,

ii) The tractor to be financed should be in the approved list of tractors

circulated to the branches. 85 % of the cost of the asset is provided as

loan. Maximum amount Rs.4 lacs are granted as loan. Documents

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needed are land records in the name of the family and valid driving

license. The loan amount will be paid directly to the supplier of the

tractor and accessories.

Security to be Submitted:


Upto Rs. 50,000 Hypothecation of assets financed

Above Rs. 50,000 and upto Rs.

1,00,000


ii. Mortgage of lands or Third party

guarantee

Above Rs. 1,00,000 i. Hypothecation of assets financed


14. Arthias Plus Scheme:

This scheme finances commission agents against their receivables

of farmers. Commission agents with valid license from the Market

Yard/Board, Agents who are in business for the last 3 years and only

Commission agents having receivables from farmers are eligible under

the scheme. Maximum of Rs.25 lacs in form of cash credit is given to

the beneficiaries. As documents, one needs to provide Statement of book

debts (not older than 6 months), land records of the security offered,

Commission agent’s license and the audited balance sheets. 60 % of the

book debt is given as loan directly in cash.

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15. Dairy Plus Scheme:

The purpose is to finance the purchase of milch cattle, milking

machine, construction of shed, Chaff cutter and other equipments.

Farmers who are member of milk procuring societies or located on milk

route, owners of small dairy with less than 10 milch animals and owning

a minimum of 0.25 acres for every 5 animals, large dairy units with 10

milch animals and more owning a minimum of 1 acre of land for

cultivation of fodder for every 5 animals are eligible for the loan. Up to

Rs.2 lacs per borrower is allowed under this scheme. Up to Rs. 50,000 –

100 % finance is given. Above Rs. 50,000 - 85% finance is given.

Wherever assets are purchased, the loan amount is paid directly to the

supplier/ seller.

Security to be deposited:


Upto Rs. 1,00,000 Hypothecation of assets financed

Above Rs. 1,00,000 i. Hypothecation of assets financed

ii. ii. Mortgage of lands

Above Rs. 1,00,000


ii. ii. Mortgage of lands or third party guarantee or

Group Guarantee

The loan amount should be repaid in monthly instalments over

period 5 lactations.The animal purchase should be in 2 batches. Only

buffaloes producing more than 7 litres of milk per day and cows

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producing more than 8 litres of milk per day are financed. Also, an only

animal in first and second lactation period is financed.

16. Broiler Plus Scheme:

Under the scheme loans are available to farmer for construction of

broiler sheds, any other development work required and to purchase

equipments needed for broiler farming. Farmers who have entered into a

contract with the companies undertaking broiler production through

contract farming are eligible for the loan. One should have a source of

potable water for running the poultry and should have experience in

poultry farming. At present the scheme is operative in the States of

Chennai, Hyderabad, Karnataka and Kolkata. The loan amount is fixed

at up to Rs.3 lacs for every 5000 bird planned to be reared. The

maximum loan will be Rs. 15 lacs. Up to Rs. 50,000 – 100 % finance is

given. Above Rs. 50,000 - 85% finance is given. Loan will be disbursed

in stages for the construction of sheds and directly paid to the suppliers

of the equipment.

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Security to be Submitted :


Upto Rs. 50,000/-

Above Rs. 50,000/-

Hypothecation of assets created by the Bank's finance

i) Hypothecation of assets created by the Bank's finance

ii) Equitable or Registered Mortgage of land on which the

poultry shed and other infrastructure is available or

proposed to be constructed to cover at least 50 % of the

value of the advance.

The loan is repayable installments falling due once in two months

(coinciding with the sale of broilers by the company and settling the

growing charges) over 5 years. A grace period of 6 months is allowed

within the 5 year repayment period.

17. Finance to Horticulture:

Loans under this scheme is for the development of fruit orchards

like mango, chikoo, guava, grapes, pomegranate, apple, lechee etc., as

well as short term fruit crops like banana, pineapple etc., flowers in open

and green houses namely, roses, carnation, chrysanthemums, jasmine

etc. and vegetable crops like potato, tomato, brinjal, gourds, peas etc.

All farmers having cultivable lands are eligible for this loan. Upto Rs.

50,000/- 100 % of the cost of the asset / project cost is provided as loan.

Above Rs. 50,000/- upto 85 % of the cost of the asset / project is given

as loan. For orchard development one needs to submit the following:

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i) Water and soil test report

ii) A feasibility certificate from the local horticulture department.

iii) Land records.

iv) Quotation / estimates for the costs to be incurred

v) If the project is large then a project report.

Generally disbursements are made directly to the suppliers as per

the schedule set in the proposal.

Security asked for:


a) Upto Rs. 50,000/


c) Above Rs. 1 lac

a. Hypothecation of assets created

b i) Hypothecation of assets created

ii. Mortgage of land or third party guarantee

c) i. Hypothecation of the assets created


The loan repayment starts after the completion of the gestation

period varying from 4 to 7 years for different crops. Repayment

commences from the time the crop gives economic yield and is linked to

the income generation of each crop every year and varies between 7

years to 12 years.

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4.2 Policy of Agricultural lending by SBI :

The State Bank of India has been playing a pioneering role in

financing agriculture and rural development in the whole country. This

role has been multidimensional and it has always given a lead to others.

Moreover, covering rural areas by extension of banking facilities with a

network of 3,180 offices (48% all the offices in the country) the bank

has launched a few innovative lending programme which can be called

credit plus programmes. In the true sense, the financing of agricultural

sector for all practical purposes was kept outside the purview of the

commercial banks direct schemes till 1969. The schemes were mostly

confined to indirect advances like gold loans, credit to traders for

procurement and shortage of fertilizers, pesticides and agricultural

produce. The subsistence nature of Indian farming and the governing

banking policies seem to have encouraged this pattern. This attitude,

however, changed gradually with the introduction of high yielding

variety seeds and the social control and nationalization moves adopted

by the government.

The State Bank of India today has made available cultivator-

borrower a number of credit facilities. These are classified into three

types:

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a) Short Term: The purpose of these loans is to assist a cultivator to

purchase seeds, fertilizers, pesticides and other agricultural inputs

as well as to meet labour charged.

b) Medium Term Loans: The main purpose of these loans is to

assist a cultivator in the procurement of agricultural implements

such as pump sets, power tillers tractors etc.

c) Long Term Loans: The purpose of these loans is to help the

farmer in acquiring new lands, deforestation and a forestation,

sinking off wells (including boneweels), digging channels etc.

In addition to these land based schemes, the State Bank of India

also offer loans for the promotion of certain allied activities like dairy

farming and poultry keeping. Some specific schemes like consumption

loans, extension of overdraft facilities to farmers too have been

introduced by the bank is recent tears.

Under normal conditions, the entire amount of short term loan

should be repaid from out of the sale proceed specified crop,

immediately after harvesting. It means these loans are expected to be

cleared within 6 to 12 months. The repayment period for medium term

loans and long term loans are normally fixed between 3 to 5 years, and

between 5 to 7 years, respectively.

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For all land based credits, the stipulated eligibility norms are here-

1) The farmers should have at least 2 acres of cultivation land and be

the owner cultivator;

2) The farmer should be willing to adopt improved and modern

techniques of production;

3) The farm proposed to be financed should have assured irrigation

facilities

4) The farmer should be free from all liabilities in connection with

farm operations.

The condition of owner cultivator, in principle has been relaxed in

recent years. Documented evidence indicating farmer’s cultivation right

has been considered as adequate the ‘Documentation Procedure’ for

agricultural loan was introduced on 1st July 1977. The tangible security

for a crop loan is the standing crop itself for some term loans the

security is the asset created out of the borrowed funds and for others, the

land itself, in addition to life insurance policies, etc. For all loans the

co-obligation of a party accountable to the bank is being insisted.

The extent of financial assistance would generally be restricted to

75 per cent of the expected expenditure. The banks in principle are

supposed to release all advance amounts in the instalments, after being

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satisfied with the utilization of earlier disbursed instalment. In case of

crop loans, one third of the loan amount is given in cash as first

instalment and the remaining as second instalment on production of cash

receipts of fertilizers, pesticides etc.

The term is practice, however, very across the banks and deviate

from the aforesaid norms in more than one dimension. The stipulated

procedures suggest gestation of discretionary powers with branch

managers to clear at least 80 percent of the incoming proposals. Personal

interviews with some selected branch managers revealed that the private

sector banks in particular have not given any sort of discretionary

powers to their branch managers. The branch managers are obliged to

consult their respective head offices for all types of farm loans. Because

of this handicap, while the managers of public sector banks branches are

able to process a loan application within a weeks time, their counterparts

belonging to private sector are taking longer time even months in some

cases.

The interest rates vary across the banks as well as for a bank

across purposes. At present, across the banks the crop loans rate range

from 12 percent to 18 percent and the purpose-wise difference is of the

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order of 12 to 16.50 percent. Similarly, for majority of the banks the

overdue rate is within the specified 3 percent additional rate.

4.3 Indirect Financing of Agriculture by State Bank:

Among the institutional financial agencies, the co-operatives

assume a strategic position in financing agriculture for a long time. To

promote agricultural financing the State Bank of India provides financial

assistance to the cooperatives institutions directly as well as indirectly.

The State bank of India gives direct loans to the cooperatives marketing

societies and processing societies, such as cooperatives sugar factories,

jute baling societies, cotton spinning and pressing societies etc...

Financial assistance to these societies is provided by the State Bank of

India on liberal terms and conditions, against a pledge of goods either

belonging to them or kept with them by their members.

The State Bank of India does not give direct loan to the Primary

Agricultural Societies (PACS) to avoid complications in the federal

structure of the cooperatives credit system in the country. Instead, it

indirectly helps PACs by providing short term assistance to the State

and Central Cooperatives Banks (SCBs/ CCBs) against government

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securities at a concessional rate of interest with a view to maintaining

their liquidity position.

Financing to Central Development Bank:

The State Bank of India has been financing the Land

Development Banks in the following ways---

1. By subscribing to the debentures floated by the Central Land

Development Banks.

2. By giving loans against security of such debentures of the Central

Land Development Banks, so that the market ability of the

debentures is improved.

3. By extending interim financial accommodation to the Central

Land Development Banks against the guarantee of the state

governments

Since the Central Land Development Banks are cooperative

institutions providing long term agricultural credit. By assisting them,

the State Bank of India indirectly promotes agricultural finance.

Remittance Facilities by State Bank:

With its countrywide network of nearly ten thousand branches,

the State Bank of India is in a position to provide cheap and quick

remittance facilities, especially in rural areas. In this context, the State

Bank of India has extended liberalized remittance facilities to State Co-

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operative Banks and Central Co-operative Banks by providing free

transfer of their fund thrice a week. Besides, the State Bank of India

collects the Bills on centers not served by a branch of a State

Cooperative Banks at a concessional rate, and also discounts drafts and

cheques drawn on State Co-operatives by Central Co-operative Banks

for the sake of replenishment of funds. The remittance facilities

provided by the State Bank of India to cooperative institutions under

both the State bank of India and the Reserve Bank of India’s remittance

facilities schemes.

Warehousing Facilities:

The State Bank of India provides financial assistance to the

development of Warehousing and Agricultural Marketing. It has fully

subscribed to the share capital of the Central Warehousing Corporation.

Further, it also makes advances against warehousing receipts. The State

Bank of India has been lending considerable support to the warehousing

schemes and from December 1957, making advances provisions such as

those relating to the representation of the State Bank on the boards of

the National Co-operative Development Corporation and the Central and

State Warehousing Corporations, as also the State Banks participation in

the share capital of these institutions have enabled the bank actively to

associate itself with the warehousing schemes. One of the important

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considerations which the bank keeps in view in selecting places to open

branches is whether the Central or State Warehousing Corporation is

running a warehouse at the centre.

4.4 Direct Financing of Agriculture by State Bank of

India:

Initially, the State Bank of India did not engage in financing the

farmers directly. Since 1966, the State Bank of India group started

granting direct financial help to the agriculturist. A beginning was made

on an experimental basis under the pilot schemes. By resorting to the

direct financing of agriculture, the bank aimed at improving agricultural

production rather than supplementing or substituting existing

institutional source of rural finance. In this newer field also, the bank

traded successfully by formulating a number of schemes. Following

heads are included by all these schemes in their operations.

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4.5 Role of NABARD:

NABARD role in rural development in India is phenomenal.

National Bank for Agriculture & Rural Development (NABARD) is set

up as an apex Development Bank by the Government of India with a

mandate for facilitating credit flow for promotion and development of

agriculture, cottage and village industries. The credit flow to agriculture

activities sanctioned by NABARD reached Rs 1,574,800 million in

2005-2006. The overall GDP is estimated to grow at 8.4 per cent. The

Indian economy as a whole is poised for higher growth in the coming

years. Role of NABARD in overall development of India in general and

rural & agricultural in specific is highly pivotal.

Through assistance of Swiss Agency for Development and

Cooperation, NABARD set up the Rural Infrastructure Development

Fund. Under the RIDF scheme Rs. 512830 million have been sanctioned

for 2,44,651 projects covering irrigation, rural roads and bridges, health

and education, soil conservation, water schemes etc. Rural Innovation

Fund is a fund designed to support innovative, risk friendly,

unconventional experiments in these sectors that would have the

potential to promote livelihood opportunities and employment in rural

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areas. The assistance is extended to Individuals, NGOs, Cooperatives,

Self Help Group, and Panchayati Raj Institutions who have the expertise

and willingness to implement innovative ideas for improving the quality

of life in rural areas. Through member base of 250 million, 600000

cooperatives are working in India at grass root level in almost every

sector of economy. There are linkages between SHG and other type

institutes with that of cooperatives.

The purpose of RIDF is to promote innovation in rural &

agricultural sector through viable means. Effectiveness of the program

depends upon many factors, but the type of organization to which the

assistance is extended is crucial one in generating, executing ideas in

optimum commercial way. Cooperative is member driven formal

organization for socio-economic purpose, while SHG is informal one.

NGO have more of social color while that of PRI is political one. Does

the legal status of an institute influences effectiveness of the program?

How & to what an extent? Cooperative type of organization is better

(Financial efficiency & effectiveness) in functioning (agriculture & rural

sector) compared to NGO, SHG & PRIs.

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Recently in 2007-08, NABARD has started a new direct lending

facility under 'Umbrella Programme for Natural Resource Management'

(UPNRM). Under this facility financial support for natural resource

management activities can be provided as a loan at reasonable rate of

interest. Already 35 projects have been sanctioned involving loan

amount of about Rs 10000 million. The sanctioned projects include

honey collection by tribals in Maharashtra, tussar value chain by a

women producer company ('MASUTA'), eco-tourism in Karnataka etc.

Besides the refinance operations, NABARD is also engaged

mainly in coordinating and developmental activities for the promotion

of agriculture and rural development. Being an apex institution,

NABARD is responsible for fostering a healthy growth of rural credit

and the institutions dispensing it. Keeping this in view, the NABARD

has undertaken a number of measures since its inception, such as,

strengthening and rehabilitation of cooperative credit institutions and

RRB's (Regional Rural Banks), improving the rural credit activities of

commercial banks, measures for improving the recovery performance of

financing institutions, inspection of banks, monitoring and evaluation

and training and extension support, etc.

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At the beginning, a Committee on Agricultural Loans through

Commercial Banks (CALCOB) was set up by the ARDC (Agricultural

Refinance and Development Corporation). With the establishment of

NABARD, the committee was deemed to be a committee constituted by

the NABARD. The CALCOB in its first year, formulated proposals

concerned to recovery performance, past lending of implementing

branches of Commercial Banks for linking them with refinance from

NABARD. This scheme was implemented from July 1983, and

communicated to banks for consultation with Government of India and

the World Bank.

The committee reviewed the criteria applicable to commercial

banks in determining their eligibility to avail the refinance from

NABARD. The committee also discussed the norms for agricultural

lending including the appointment of agricultural field officers and

subject matter specialists, analysis of over dues and maintenance of

Demand, Collection and Balance (DCB) register by branches. The

performance of CBs in agricultural lending was reviewed by the

CALCOB during 1984-85. As a result of the recommendations of the

committee, the Commercial Banks and Regional Rural Banks were

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advised to maintain DCB according to the revised format after receiving

RBI's (Reserve Bank of India) consent regarding the matter.

The problem of mounting over dues in Indian financing

institutions is more serious with regard to institutions engaged in

providing credit to agricultural and rural development. However, there is

a rising trend in the over dues regarding agricultural loans of all types of

agricultural lending institutions. The high level of over dues affects

adversely the quality of lending and proper flow of credit. Increase in

overdubs also creates non-availability of funds for the purpose of

lending and it leads towards under financed, shorter loans maturities,

etc. For maintaining the financial strength of the credit institutions and

recycling of their funds it is necessary that credit disbursed are

recovered timely. The Government of India and Reserve Bank of India

made several efforts in this connection, but the increasing trend in over

dues continued. In this regard, the NABARD also considered the

problem seriously. For maintaining the financial strength of the credit

institutions and for the continuous recycling of funds through timely

recovery of credit, various measures were adopted accordingly.

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4.6 List of few activities which will come under direct

lending to agriculture:

a) Production Finance: Meeting Cultivation expenses of crops,

improvement of land, improvement of irrigation facilities, etc.

b) Equipment Finance: Purchase of agricultural implements such

as tractors, pumpsets, oil engines etc.

c) Processing Finance: Certain crops require to be processed (e.g.

tobacco, turmeric etc.) before they could be marketed. The crops

for seed production will also likewise require to be processed.

d) Construction of godowns including cold storage.

e) Transportation

f) Marketing

g) Special farming activities such as dairy/ poultry/ sheep/ piggery/

pisciculture/ sericulture/ apiary etc.

h) Plantation crops.

4.7 Few Schemes Operated by State Bank of India for

Agricultural Development:

1. Integrated Rural Development Programme and State Bank:

The Integrated Rural Development Programme (IRDP) is a rural

development program of the Government of India launched in Financial

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Year 1978 and extended throughout India by 1980. It is a self

employment program intended to raise the income generation capacity

of target groups among the poor. The target group consists largely of

small and marginal farmers, agricultural labourers and rural artisans

living below the poverty line.

The State Bank group launched in 1978 an integrated Rural

Development Programme on a pilot basis, with the object of meeting all

the development needs, including social and cultural needs of people in

selected villages. Integrated Rural Development may be considered to

be an amalgamation of a number of sub-plans and credit plan, a training

plan, an education plan, a health plan, an employment plan and even a

minimum needs plan.

During 1983 the bank disbursed loans aggregating Rs. 102.70

crores, covering 4.7 lakh beneficiaries under the Integrated Rural

Development Programme upto the end of 1983, cumulative

disbursement under the programme worked out to Rs. 246.7 crores,

covering 10.8 lakh beneficiaries.

The State Bank of India and its subsidiaries has established

several Agricultural Development Branches, under the Area Approach

Scheme which are equipped with the resources and technical expertise

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to perform all these functions. This, of course, does not mean that its

other branches does not adopt villages- they do, but not on an ambitions

scale. Each Agricultural Development Branch however, is entrusted

with a business plan to adopt and cover 100-125 villages and extend

loans to the extent of Rs. 1 crore and one and half crores with in a period

of three to four years.

It is observed that until the end of March 1978 the 315

Agricultural Development Branches of State Bank of India Group have

financed 876351 agriculturists, the aggregate amount of financial

assistance amounting to Rs. 203 crore.

In this context, the roles of Reserve Bank of India and NABARD

become significant.

The Reserve Bank of India has been assisting NABARD in

providing refinance support to the rural sector by making available

funds under the General Line of Credit (GLC 1 & 2). Since January

1993, the existing credit lines were enhanced by the Bank to the extent

of Rs. 1500 crore. For 1994-95, the Bank (RBI) asked commercial banks

to formulate specific plans for increasing their deployment in

agricultural sector. The modifications in the Service Area Approach

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which provide the framework for ensuring that the credit needs to the

rural sector.

2. Village Adoption Approach:

An innovative approach called the Village Adoption Approach

which is an extensive of the area approach has been introduced by the

State Bank of India and its associated banks. A village adoption scheme

was introduced by the banks in 1960s in India with a view to enhancing

their visibility besides encouraging agri-lending in a cost effective

manner. Under this approach, those village centres are adopted which

possess the basic physical requirements and resources, but need

financial assistance and where co-operative have not made a dent. In the

adopted villages, all the financial needs of all the viable and potentially

viable farmers are fully met by the bank.

The State Bank of India had adopted 49,525 villages till the end

of December 1983 with a disbursement of credit of Rs. 757 crores

covering 21.60 farmers, in addition to outstanding advances of Rs. 576

crores covering 16.1 lakh farmers at 431 Agricultural Development

Branches. Together, as at end 1983, the State Bank of India had invested

Rs. 1,333 crores covering 37.70 lakh farmers Average Lending per

farmer averaged to over Rs. 3,550. The average amount invested in each

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village amounted to Rs. 2.69 lakhs. The average number of beneficiaries

per village aggregated to 76. 2*

(Ph.D.Thesis by Saikia Jagat “The Role

played by SBI in Agricultural Financing in Assam. A Performance

Appraisal of its ADB in Golaghat District of Assam”). This pattern of

financing will not result in the integrated development of adopted

villages.

The State Bank of India (SBI), India’s largest bank, now has

taking a new initiative under its corporate social responsibility

programme to revive the scheme, rechristening it as “SBI Ka Apna

Gaon”. For this purpose, the SBI has launched efforts in Uttarakhand

and other states to adopt villages with the active support of village

panchayats. The main purpose of the scheme is to achieve 100 percent

financial inclusion for all BPL families. The scheme would also seek to

promote self help groups (SHGs), farm clubs with the participation of

NGOs and other development agencies. The scheme would also focus

on credit requirements of all eligible rural households and link

community services with SBI banking services.

The SBI has already started identifying villages in this regard. A

detail survey has been launched. The banks staff members would act as

bridge between the villages and the SBI. In Uttarakhand, the SBI would

169

work in tandem with the state government which has also launched a

similar “Atal Adarsh Gram Yojana” in all 670 nayay panchayats. One

village in each nayay panchayats will be identified. Under this scheme,

the thrust will be on development of social and infrastructure facilities in

rural areas to remove regional imbalances.3* (Business Standard,

Saturday, Dec 24, 2011)

3. Service Area Approach:

The SAA is most important policy initiative taken after 1969 ti

improve the credit delivery system in India, thereby enabling bank

branches to operate effectively as an instrument of rural lending. In the

light of development which has been taken place since the introduction

of the scheme, banks were advised in August 1993 to evaluate the

impact of the SAA of grassroot level, identify the operational difficulties

faced in its implementation and make suggestions to overcome them.

It was found that the SAA was generally acceptable subject to

certain modifications. Accordingly, the salient features of the modified

SAA are:

1. block wise grouping of service area branches without disturbing their

service area identities,

2. opening of mobile on satellite offices in large service areas,

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3. enlarging the area of operations of specified branches for optimizing

their infrastructural facilities,

4. realizing the scattered service areas,

5. exempting the large projects covering several districts / states from

SAA and 6 freeing of Regional Rural Banks with disbursals of less than

Rs. 2 crore during 1992-93 from their service area obligations.

However, the remaining Regional Rural Banks have been allowed

to operate within the entire command areas (district) subject to the

obligation of extending financial assistance in their respective service

areas.

Since the introduction of Service Area Approach (SAA) in 1989,

about 83 percent of the bank branches have implemented SAA in the

allotted 1, 21,120 villages. In addition, the banks branches have also

financed non-target group beneficiaries in 55162 villages allotted to

Regional Rural Banks. 4*

(Service Area Approach by Manjula Tyagi)

4. Varieties of Agricultural Loans:

The State Bank of India has been trying to solve the problem of

rural indebtedness. The bank finances owner- cultivators in accordance

with their progressiveness and economic viability of the schemes for

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improvement. Three major types of agricultural loans are provided by

the bank.

a) Instalment Credit Loans, b) Working Capital Loans and c) Term

Loans.

The Bank provides them instalment credit loans for the purchase

of tractor, oil engines, pumpsets and such other farm equipments as well

as for buying fertilizers, pesticides, and seeds. Etc.

The Bank grants short term crop loans to the cultivators to meet

their working capital needs, such as purchase of inputs, payment of

wages to farm labours, etc.

The bank also gives term loans to farmers for minor irrigation

projects, construction of farm houses, cattle sheds, warehouses, etc. as

well as for allied agricultural activities such as horticulture, dairy

farming etc.

5. Small Farmers Scheme:

The State Bank of India has prepared a special scheme to help

small farmers whose credit needs are below Rs. 10,000. They have been

granted loans on the basis of Group borrowing i.e. the members of the

group guarantee each others obligations.

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The group guarantee system consists in granting loans to the

farmers after arranging with them to form into convenient groups with a

minimum of 5. The loans are to be granted individually to the farmer,

but the members in the group should mutually guarantee the loans

granted to one another. The group should be formed voluntarily by the

borrowers and the bank should not play a role in the group promotion.

The field officer (FO) / Regional Development Officers/ Branch

Managers as the case may be should certify on the application to the

above effect.

6. Farm Graduate Scheme:

The State Bank of India also designed a special scheme to help

the Agricultural Graduate to stay in farming loans are granted under the

scheme to agricultural graduate and other graduates with experience in

agricultural or diploma holders and veterinary science graduates. Both

crop loans and term loans are granted, the maximum limit being

restricted to Rs. 2 Lakhs; further loans upto Rs. 25,000 or 50 percent of

the scheme outlay whichever is less can be granted under the scheme

even for the purchase of land.

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7. Financing of Agricultural Labours and Tribals:

The State Bank of India has assisted landless agricultural

labourers, Harijans and Tribal people by fostering scheme of dairy and

poultry farming among them in order to supplement their incomes.

During 1983 the bank made available Rs. 53.6 crores for land

development in command areas of lift irrigation scheme and by way of

production credit for irrigated farming, bringing the total of such

outstanding assistance to Rs. 282.8 crores at the end of the year. The

assistance to persons engaged in the production, processing and

marketing of vegetable oilseeds and pulses amounted to Rs. 8.6 crores,

taking the total assistance for this purpose to allottees of surplus land to

help in pursuing agricultural and other allied activities such as dairy

farming, poultry, etc. stood at Rs. 30.7 crores spread over 2.2 lakh

accounts at the end of the year. Towards the rehabilitation of bonded

labour Rs. 75 lakhs were disbursed during the year, taking the total

outstanding to Rs. 3.0 crores spread over 17,806 accounts at the end of

1983, the programme for the upliftment of scheduled caste/ scheduled

tribes absorbed Rs. 42.9 crores spread over 2.0 lakh borrowed accounts,

bringing the total of such assistance to Rs. 228.00 crores at the end of

the year 1983. In the year 1994-95, the Banks assistance increase to the

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weaker sections such as persons belonging to scheduled caste and

scheduled tribes, small and marginal farmers and landless laboureres

stood at Rs. 3,216 crores.5*

( Ph.D. Thesis By Saikia Jagat “The Role

played by SBI in Agricultural Financing in Assam. A performance

appraisal of its ADB in Golaghat District of Assam”)

8. Lead Bank Scheme & State Bank of India:

Under the Lead Bank Scheme introduced by the Reserve Bank of

India in 1969, major commercial banks have been allotted 383 districts

of the country. The Lead Banks are expected to act as pace setter in their

lead districts for providing integrated banking facilities. For this

purpose, the Lead Banks are expected to conduct extensive surveys of

Lead Districts allotted to them, with a view to evolving plans and

programmes for the integrated development of banking and filling up

existing credit gaps, the Lead Bank as noted elsewhere, is expected to

play a major role in the development of banking and meeting credit

needs in the allotted districts in cooperation with other banks and other

agencies interested in integrated development of the area.

Under the Lead Bank Scheme, the State Bank Group has been

allotted 105 districts 72 to the State Bank and 33 to its Associate Banks.

Survey reports for all the lead districts allotted to the Group were

175

completed by the end of 1973. During 1981, the Bank completed the

formulation of the second round district credit plan for the 77 lead

districts allotted for the period 1980-82. The plants envisage an outlay of

Rs. 718 crores by all financial institutions. The share of commercial

banks in the total outlay is Rs. 405 crores of which the State Bank

accounts for Rs. 159 crores or 39 percent.

9. State Bank of India and Differential Interest Rate Scheme:

The State Bank of India has recorded considerable progress under

the Differential Interest Rate Scheme of Commercial Bank lending to

economically and socially backward class members for productive

endavours, initiated by the government since July 1972. The bank is also

making arrangements to enable borrowers of this class to get supply of

raw materials and selling their products with the assistance of reliable

intermediaries. It has also been making efforts, under the Differential

Interest Rates Scheme, to specially provide financial assistance to the

weakest among the weaker sections of the community such as barbers

cobblers, itinerant vendors, carpenters, rickshaw-pullers, basket

weavers, black smith and so on. There is no doubt that the State Bank

group under the DIR scheme has been giving financial assistance to a

considerable number of borrowers from the poorer sections of the

176

community and thus helping these borrowers to improve their economic

conditions.

10. Agricultural and Rural Debt Relief Scheme: 1990:

Under the scheme, debt relief to the extent of Rs. 10000 was

provided to eligible borrowers who have fulfilled certain eligibility

criteria. According to the provisional data, debt relief to the tune of Rs.

7819 crore has been made provided under the scheme, of which public

sector commercial bank including State Bank of India provided Rs.

2833 crores, Regional Rural Banks Rs. 793 crores and cooperatives Rs.

4193 crore. The Government of India had released in the last four years

ending March 31, 1994 a total sum of Rs. 4925 crore out of its

budgetary allocation and a provision of Rs. 341 crore has been made in

the 1994-95 budget. The funds were utilized to meet the claims of the

public sector commercial banks of Rs. 2258 crore, RRB of Rs. 710

crores and cooperatives of Rs. 1956 crore through NABARD to state

governments for meeting their share of 50 percent in the implementation

of the scheme for borrowers of cooperatives.

177

11. The State Bank of India, Research Development Fund:

Research has a close bearing on the welfare of the community.

There is need to conduct research in various problems of community

development and rural rehabilitation.

The State Bank of India therefore constituted in 1977 a Research

and Development Fund with an initial contribution of Rs. 5 Crores of

the profit of the banks in the year 1976. The Research and Development

Fund is being utilized for supporting research and development

activities undertaken by educational and technical institutions as well as

by individual researcher who undertake research in scheme that would

rise productivity of agriculture and allied activities as also of small scale

and cottage and village industries.

Till the end of June 1978 the State Bank of India sanctioned out

of the Research of Development Fund an amount of Rs. 33.35 lakhs for

research projects involving utilization of individual effluents for

irrigation and manuring of soil, establishment of pilot plant for

production of biogas, development of vocational training facilities for

the blind and physically handicapped, establishment of chairs in

different universities and institutes, etc.

178

At the end of year 1995, the aggregate financial assistance under

these activities worked out to Rs. 224 crores spread over 9.5 lakh

beneficiaries. These activities include financial assistance to woman,

physically handicapped persons, slum dwellers, ex-prisoners, victims of

natural calamities, destitute, and orphans, as also handicapped and under

privileged children. The Bank also provides assistance under certain

government sponsored programme like the 15 point programme for

minority welfare and the new twenty point programme.

Moreover, non banking activities include assistance for Research

and Development activities, donations to various charitable institutions

and organizing social activities like blood donation camps, health check

up camps, family planning camps, veterinary camps, medicine banks,

adult literacy classes special programme for children and planting of

trees.

12. The State Bank of India and Staff Training:

Large branch expansion programme undertaken as also

diversification of activities in such fields as financing of agriculture,

small scale industrial units as also small business units, integrated rural

development and so on has naturally raised the problem of manpower

requirement of the State Bank of India Group. The bank personal

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approach and expertise banking has come to be regarded as an important

instrument of community development and economic progress.

Commercial Banks in India are now required to work in a totality

different context and therefore they are required to make suitable

adjustment in respect of their manpower and training.

The State Bank Group recognized this need to adjust itself to

changing needs and environment and the necessity to equip the growing

number of its personnel with different types of skills and knowledge and

bring about appropriate changes in the attitude of personnel of the

group. It is recognized that this alone would help the state bank group to

play its new role effectively in rural India.

With this end in view, the State Bank staff college at Hyderabad

and 45 training centres has been functioning in different parts of the

country. The training programme are designed to meet emergent needs

in respect of attitudes and emphasizing the necessity and task of meeting

the needs of the small man in general and people from the under

privileged sections of the community in particular.

4.8 Some New Activities by the State Bank of India:

Reorganizing the need for a dynamic approach towards the

financing of the agricultural sector, the State Bank of India like other

180

commercial banks , has recently decide to chalk out new line and

enlarged its older activities in this sphere. The more important items to

which its credit activities are directed are listed below:

1. Production of all the food crops and cash crops

2. Mechanization and modernization of farms

3. Processing of agricultural produce

4. Preservation of agricultural produce including food grains

fruits and vegetables

5. Transportation and construction of godowns and

warehouses

6. Marketing of agricultural produce

7. Special farming activities such as horticulture and orchards

and animal husbandry cattle breeding dairy farming

pisciculture piggery and poultry farming

8. Plantation crops

9. Manufacture of agricultural inputs such as tractors

pumpsets oil engines fertilizers pesticides and agricultural

implements

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10. Purchase storage and distribution of agricultural inputs

such as fertilizers pesticides seeds tractors and other

agricultural implements

11. Financing of joint stock companies for undertaking

agricultural implements

12. Financing of agro industries corporation

Moreover the State Bank has created agricultural credit cells of

each of its local head offices as also at the head offices of subsidiary

banks and in areas where special programmes are proposed to be

undertaken.

In fine, the State Bank of India group is not only playing

pioneering role in the field of agricultural finance but also it is actively

working for the overall rural development of the country by

implementing the integrated rural development programme in selected

villages and other valuable schemes.

Human Resource Development:

The State Bank of India efforts in developing human resources

aimed at improving employee’s motivation and involvement. The

quality circle (QC) movement gathered further momentum during the

182

year and QC teams from the bank won laurels at national and

international forum.

The training system of the bank is effectively harnessed to

improve skills and reorient attitudes of employees for achieving

organizational objectives. Under the recognition and reward system,

annual awards for excellence have been instituted for branch managers,

staff training centres at project reports by trainers. The satellite based

tele-teaching project introduced earlier on an experimental basis was

extended further.

Information Technology

Information technology is the key to the future progress and

efficient service of banks. Keeping this in mind, the bank has made

substantial investment in technology upgradation. Apart from central

mainframes, all the 13 local head offices and 53 zonal offices have been

provided with computer systems for data processing and MIS

(Management Information System)

Branch level mechanization was initiated to sub-serve the

objectives of better customer service, house keeping, faster decision

making and improvement in productivity and profitability. The bank has

extended coverage of bank office system to 700 branches while advance

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ledger posting machines have been installed at 27 branches at the end of

year 1995.

The focus is now shifted to total computerization of branches, as a

totally computerized environment has the potential of providing ultimate

customer satisfaction. So far, 35 branches of the bank have been covered

under the pragramme of total computerization.

With a view to providing round the clock device to the customers,

the Bank has installed Automated Teller Machines (ATMs) at Bombay,

Delhi and Jamshedpur. An Electronic Funds Transfer system for

transmitting financial message through SBI DATA NET with facilities

for transfer of funds on the same day has been implemented at all main,

commercial and industrial finance branches.

A fast cheque collection scheme between important commercial

centres is proposed to be launched shortly. E-mail facility has been

introduced at the central office and is being extended to the local head

offices. The bank is striving to upgrade to the local head offices. Sixty

branches of the banks which account for 85 percent of the banks forex

business are connected to the SWIFT network.

Management Information System

184

Development of appropriate information system, for providing

timely, accurate and relevant information to the managers, especially the

top level management, is a priority area for the bank. Over the years the

Bank has developed information system for reviewing performance

reports, database relating to all its branches and the staff and analysing

expenditure heads as well as branch profiles. System for loans and

advances and information for executive are under different stages of

development.

Inspection and Audit

To make the inspection system more effective, audit manual and

booklets are being revised. In view of mechanization and

computerization of the banks operations, a core group of computer

auditors is being formed. Use of Notebook computers has been

introduced in the inspection and audit system on an experimental basis.

A notable development was the constitution of an Audit Committee of

the Banks Board of Directors. The committee is engaged is reviewing

the accounting policies of the bank, the types of audit, their coverage

and periodicity, follow up action on audit reports and omissions therein.

Vigilance

185

With expansion in the volume and diversity of the Banks

activities, vigilance functions are also continuously being revamped. For

this increasing stress is laid on preventive vigilance apart from detective

and punitive vigilance. During the year 1995, 55 training programme on

preventive vigilance were conducted at different levels.

Customer Focus

The customer continues to be the focal point of all operations of

the Bank. It has been the constant endeavour of the bank to identity the

changing needs and preferences of exciting as well as potential

customers, design products which adequately meet these needs, package

them and deliver at various points of sale. During the year, 1994-95 the

liquid term deposit scheme specially tailored for personal segment to all

the circles.

The quality of service at branches is evaluated on an ongoing

basis and appropriate follow up action is taken. Surveys of customer

satisfaction and preferences are conducted regularly by in-house teams

as well as outside agencies. Grievance Redressal Cells at the local Head

Offices ensure that customers’ complaints are promptly attended to the

bank has identified 224 branches for developing in to Model Branches.

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Of these, 52 have already achieved standards set in the Reserve Bank of

India guidelines.

International Consultancy

International consultancy is a potential growth area in the Bank’s

activities , promising wider recognition and significant fee based

income., the Banks consultancy support to Ghana Commercial Bank

was concluded during the year and it is hoped that more such

assignment will be won by the Bank in future. The Banks’ training

programme at the staff colleges continued to be attended by participants

from Egypt, Ghana, Iran Maldives, Nepal Sri Lanka and Zimbabwe. In

December 1994, a team of trainers from the Bank conducted a Faculty

Development Programme for an overseas bank, which well appreciated.

4.9 Profile of Howly ADB (Agricultural Development

Branch of SBI)

Howly town is a semi urban center having population of 16765 as

per 2001 census. It is the Barpeta District head quarter of Bhawanipur

Development Block under Barpeta District of Assam. It is 12 km. Away

from District head quarter i.e. Barpeta and 138 km. Away from

Guwahati, the state capital of Assam. The center is 47 km. Away from

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International Border i.e. Bhutan. Though the town is small in size,

various economic, social, cultural and political activities are coming up

very fast. The center is having regulated market committee and branch

of state Govt. Marketing board. The center is farmers for whole sale and

retail trade in agricultural products like vegetable, bettlenut, coconut,

jute paddy, milk, fish and fish seed etc. Various retail trade like

stationary, grocery, cloth electronic equipments, medicine etc. are

coming up in the area. Howly is famous for chickney supari which are

largely supplied to different status of India. Jutes are also supplied

mainly to the jute mills of West Bengal, vegetables, fish and fish seeds

are supplied regularly to the different parts of the status. The place is

ideally situated near the 312 no. National Highway and therefore it

renders high facility of road communication for receiving the goods to

other places. Barpeta road Railway station has also extended much more

facilities for the same, which is only 8 km. away from Howly. One of the

major economic activities is growing of bamboo and bamboo products

of the locality. Wood crafts and bamboo crafts of the place have already

been recognized all over India and abroad also. The center is having

branch of UCO Bank and Assam Gramin Vikash Bank and Ascard

Bank. The competition amongst the financial Institutions is considered

188

as fair. Presently integrated Development project and one Research

center of Assam Agricultural University, Jorhat are working in the

center. Despite of fair competition the branch has been able to render

good services to all customers of all business segments. All the staff

members are cordial to the customers, thus enabling the branch to book

good business in its fold. Various important educational institutions like

DIET, Basic training Centre, Normal School. High Schools Junior

College etc. are situated here. Therefore, scope of Personal segment

business is also emerging.

Sources: 1. Howly ADB. (A branch of State Bank of India situated at

Barpeta District)

2. Statistical Hand Book, Assam, 2009

189

REFERENCES

1. www.sbi.com

2. Ph.D.Thesis by Saikia Jagat “The Role played by SBI in

Agricultural Financing in Assam. A performance appraisal of its

ADB in Golaghat District of Assam.”

3. Business Standard, Saturday, Dec 24, 2011

4. Tyagi Manjula: Service Area Approach, RBSA Publishers 340,

Chaura Rasta, Jaipur (India), 2006.

5. Ph.D.Thesis by Saikia Jagat “The Role played by SBI in

Agricultural Financing in Assam. A performance appraisal of its

ADB in Golaghat District of Assam.”