SYNOPSIS ON

A STUDY ON PRIORITY SECTOR LENDING AND ITS PERFORMANCE AT KARNATAKA BANK, HO, MLORE

INTRODUCTION:
The government of India through the instrument of reserve bank of India 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 RBIs perception would not have had access to organized 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 of Indian corporate. 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.

COMPANY PROFILE
The success story of any organization are shown by visionary entrepreneurs perceiving a potential opportunity and relating to their common aspiration and growing concern through collective efforts, shared vision and with a definite purpose. They are guided by their own philosophy that gets reflected in the various initiatives and activities of their organization. Through an effective percolation of such a philosophy to all levels, they transform excellence into a way of life in their functioning. The success story of the Karnataka bank limited is no exception. Setting up of service industries has been a hallmark of the entrepreneurial skill of the people of Dakshina Kannada. Karnataka state occupies a unique place in the nations banking history. The people of this district have always exhibited an innovative and adventurous spirit, which coupled with their inherent entrepreneurial abilities, served as one of the pillars of the progress of the district. The lawyers and agriculturists of Dakshina Kannada joined together and established the

bank on 18 Feb 1924. Its incorporation was obtained from the District Asst. Registrar of Joint Stock Company. The founder of the bank named it as Karnataka bank much before the old Mysore state was officially renamed as the Karnataka state. The founder directors are: B.R.Vyasraya Achar, Mangalore Nellikai Venkat Rao,Mangalore Pejavar Narayana Charaya, Kenjar village Pangal Subba Roa, Mangalore Udupi Venkat Rao, Udupi Narikombu Rama Rao, Mangalore Kalmadi Laxminaraya Rao, Mangalore Vaderahobli Narasimhakaranth Vaderahobli Badakkala Venkatramana Bhat, Mangalore

Specialized branches have been established to cater customer segment in core areas such as agriculture, industry and foreign exchange. It has also entered into Merchant banking, Lease financing, Krishi card, Stock investment and NRI customer cell. The Krishi card has been introduced for agriculturists. Karnataka bank is deeply committed to its social obligation of extending credit and other banking services to its rural customers. It has also contributed a lot in irrigating the dry lands in the state through lending for the purchase of sprinklers sets, pumpsets, oil engines etc. The bank has also assisted the villagers for establishing cottage and small scale industries. The farmers are also assisted for the purchase of tractors and other agricultural implements. The bank apart from rendering financial assistance has being issuing health care pamphlets periodically to its customer as well as to the public through its branches in Karnataka through its objectives of

education and social maladies like drinking, smoking etc. to help them lead happy and healthy life.. Amongst other banks, it was Karnataka Bank Ltd, which first realized the importance of having a centralized banking system and was among the first to deploy the core banking system in the year 2000. Adoption of core banking Anytime/Anywhere banking and networking have enabled the bank in offering customer centric value added product and services like multi branch banking(MBB), flexi term deposits, ATM card linked credit facility(K-Power), etc. The bank is offering free ATM cards, Ordinary card and Privilege cards. Ordinary cards are those cards, which are offered to the regular customers for their convenience. Those who have this card should maintain a balance in their account and can withdraw the cash up to minimum balance of Rs.100. Privilege cards are given to some important customers to whom it is allowed to withdraw cash for a certain fixed amount, even when there is no balance in their account for a fixed charge of interest. Karnataka bank has deployed the state of art technology from the best players in the industries like Infosys and Wipro. These systems provide the highest reliability thus enabling the bank to offer nonstop services of the highest order.

Objectives:
1. To understand the concept of lending activities in the bank. 2. To analyse the RBI guidelines and the priority sector lending activities at Karnataka bank. 3. To know the procedures of priority sector lending adopted by the bank. 4. To analyze the margin ,requirements followed by the Karnataka bank 5. To make recommendation and suggestion

Methodology of the data collection

The study include both descriptive and survey based study and the required information is to be collected from the bank. The required data for the study are to be collected mainly from the two sources. The primary sources and the secondary sources.

Primary sources includes the data collection through observation,discussions and personal interview with the officials of the credit department of the Karnataka bank. Secondary source information will be collected through internet, books from the library, annual reports ,journals, circulars, and the records of the bank.

BIBLIOGRAPHY
http://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=655 http://rbidocs.rbi.org.in/rdocs/notification/PDFs/85412.pd http://www.indiainfoline.com/Markets/Company/Background/CompanyProfile/Karnataka-Bank-Ltd/532652 http://in.reuters.com/finance/stocks/companyProfile?symbol=KBNK.BO