RESEARCH PROJECT REPORT

ON
ALLAHABAD BANK

TABLE OF CONTENT
PA
GE NO.
CHAPTER-1 Introduction
1.1
1.2

1-27

Introduction
About Allahabad bank

1-1
1-5

1.3 Principles of lending and priority sector lending

6-

16
1.4 Targets & sub target under priority sector

17-19

1.5 Common guidelines for priority sector advances

20-26

1.6 Advances to priority sector by Allahabad bank.

26-

26

1.7 objectives of the research

27-27

CHAPTER-2 Literature Review

28-

39
CHAPTER-3 Research Design

40-

42
3.1 Research methodology

40-

3.2 Research design

41-

40

41
3.3 Method of data collection

41-42

CHAPTER-4 Data Analysis and Interpretation

43-51

CHAPTER-5

52-54

5.1 Findings

52-52

5.3 Conclusion

53-53

5.3 suggestion

54-54

CHAPTER-6

55-55

Bibliography

55-55

LIST OF TABLE
PA
GE NO.
Table no -1 Advance to priority sector.

43-

43
Table no -2 Advances to agriculture sector.

44-44

Table no -3 Direct finance to agriculture sector.

45-

45
Table no -4 Indirect finance to agriculture sector.

47-47

Table no -5 Finance to Micro Small Enterprises Sector.

48-

48
Table no -6 Finance to sector such as housing loan education loan etc.
49
Table no -7 Finance to weaker section.
50-50

49-

LIST OF FIGURE
PA
GE NO.

Figure no -1 Advance to priority sector.

43-

43
Figure no -2 Advances to agriculture sector.

44-44

Figure no -3 Direct finance to agriculture sector.

46-

46
Figure no -4 Indirect finance to agriculture sector.
4

47-47

Figure no -5 Finance to Micro Small Enterprises Sector.

48-48

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

49-49
Figure no -7 Finance to weaker section.
50-50

CHAPTER-1
INTRODUCTION OF THE TOPIC

1.1 Introduction
The research project report on financing to priority sector from Allahabad bank
is taken as a part of my 4 th semester course of MBA. Finance to priority sector
is a prime concern for the banks and it is given highest priority .
This chapter contains a brief summary about Allahabad bank and the
research topic. Section 1.2 deals with about Allahabad bank. Section 1.3 deals
with principles of lending and priority sector lending. The section 1.4 contains
target & sub target under priority sector . The section 1.5 contains common
guidelines for priority sector advances . The section 1.6 deals with advances to
priority sector by Allahabad bank. The last Section 1.7 deals with objectives of the

research work.

1.2 About Allahabad bank

Allahabad Bank was founded by group of Europeans on April 24 1865. The
Allahabad Bank has a history of 3 centuries. The Allahabad Bank is the oldest
joint stock Bank in India. Due to business considerations the head office of
Allahabad Bank

was shifted to Calcutta (now Kolkatta) in 1923. In March

2007 the business of

Allahabad bank has reached to a mark of 150000

crores.
1

The Allahabad bank has main branches in Kanpur, Lucknow, Nanital, Kolkatta,
Jabalpur, Meerut, Nagpur, Mumbai, and New Delhi. The Chairman and
Managing Director of Allahabad Bank is Sri K.R. Kamath. Sri K.K. Agarwal and
Sri J.P. Dua are the executive directors of Allahabad Bank.
The

Allahabad

bank

offers

its

services

to

self-employed

persons,

Professionals, salaries employees, businessman. The Allahabad bank offers

three kinds of products Deposit products, Retail Credit Products and Other
Credit Products. The Flexi-fix Deposit, Rs.5 Banking, Tax Benefit Term Deposit
are some of the famous Deposit Products of the Allahabad Bank.
The Allahabad Bank also offers its services to NRI customers. It offers
International Banking facility for its NRI customers. The deposit schemes, tax
benefits schemes, remittance facility, forex services are offered by the
Allahabad Bank. The NRI services are available in 312 branches of the
Allahabad Bank all over the country.

Philosophy of the Bank

The highest standards of ethical conduct and honest.

Accurate, Fair, Full, Sensible and timely disclosures in reports.
Compliance with laws, regulations and rules.

Nineteenth Century
The Oldest Joint Stock Bank of the Country, Allahabad Bank was founded on
April 24, 1865 by a group of Europeans at Allahabad. At that juncture
Organized Industry, Trade and Banking started taking shape in India. Thus,
the History of the Bank spread over three Centuries - Nineteenth, Twentieth
and Twenty-First.
April 24, 1865's

The Bank was founded at the confluence city of

Allahabad by a group of Europeans.

Twentieth Century
1920's

The Bank became a part of P & O Banking

Corporation's group with a bid price of Rs.436 per

1923

share,
The Head Office of the Bank was shifted to Calcutta

July 19, 1969

on Business considerations.
Nationalized along with 13 other banks, Branches 151 Deposits - Rs.119 crores, Advances - Rs.82

October, 1989

crores.
United Industrial Bank Ltd. merged with Allahabad

1991

Bank.
Instituted Allahabad Bank Finance Ltd., a wholly
owned subsidiary for Merchant Banking.
3

Twenty-First Century

October, 2002

The Bank came out with Initial Public Offer (IPO), of

10 crores share of face value Rs.10 each, reducing

April, 2005

Government shareholding to 71.16%.

Follow on Public Offer (FPO) of 10 crores equity
shares of face value Rs.10 each with a premium of
Rs.72, reducing Government shareholding to

June, 2006

55.23%.
The Bank Transcended beyond the National
Boundary, opening Representative Office at Shenzen,

Oct, 2006
February, 2007

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

Vision
To put the Bank on a higher growth path by building a Strong Customer-base
through Talent Management, induction of State-of-the-art Technology and
through Structural Re-organization.

Mission
To ensure anywhere and anytime banking for the customer with latest state-ofthe-art technology and by developing effective customer centric relationship
and to emerge as a world-class service provider through efficient utilization of
Human Resources and product innovation.

1.3 Introduction of priority sector

Disposing of money or property with the expectation that the same thing (or an
equivalent) will be returned . Credit is the provision of resources (such as
granting a loan) by one party to another party where that second party does
not reimburse the first party immediately, thereby generating a debt, and
instead arranges either to repay or return those resources (or material(s) of
equal value)

Lenders - A loan is a type of debt. Like all debt instruments, a loan

entails the redistribution of financial assets over time

To provide money temporarily on condition that the amount borrowed be

returned, usually with an interest fee.

Today ,the important types of banks, commercial and merchant banks,
operating under the regulation of the Central Bank. The commercial banks
engage in retail banking services through branch networks and operate with a
broad deposit base consisting of demand and time deposit they provide
short term lending. On the other hand, merchant banks are licensed to provide
wholesale banking, take deposit and arrange syndicated loan facilities for long
terms by pooling, sometimes, a consortium of banks, including other financial
institutions, to finance capital intensive projects. From the foregoing, it is
realized that banks are generally debtors; they borrow money in order to lend
them out to make profit. No bank can ever survive by just being a custodian of
6

deposit, but they exist by lending from the deposit on fixed interest charged.
Money lent on interest is always supposed to be secured on some guarantees
or security.
Since banks depend largely on lending, the need to adhere to the basic
principles of lending is quite inevitable. The principles, if strictly followed, will
guarantee depositors and shareholders funds, increase profitability and make
a healthy turn over. Such advances in turn assist in the transformation of rural
environment, promote rapid expansion of banking habit and improve and
boost the nations economy.
The basic considerations in bank lending are the character of the client
seeking loan from the bank. The client must be an honest, upright customer
whose record of transaction with the financial institution or in the society is
remarkable. The information on the character of the borrower could be
obtained through a completed form of his guarantor or his statement of
account.
For effective credit administration, the bank must assign functioning lending
officers, properly trained on lending, to be responsible for evaluation of reports
and collection and reporting findings to relevant senior schedule officers, for
further consideration and final approval or rejection
An internal credits/lending policy should be formulated, implemented and
pursued vigorously by the bank to minimize the risk of default from borrowers.
The successful banks operating within the financial system are those that

consider and coordinate basic principles of lending and monitor the activities
of borrowers regularly.
The major business of banking company is to grant loans and advances to
traders as well as commercial and industrial institutes. The most important use
of banks money is lending. Yet, there are risks in lending. While lending loans
or advances the banks usually keep such securities and assets as a supports
so that lending may be safe and secured. Suppose, any particular state is hit
by disasters but the bank shall get advantages from the lending to another
states units. Thus, the effect on the entire business of banking is reduced. So
the banks follow certain principles to minimize the risk. Following are the
important areas to be taken care while lending:

Principles of good lending

Basic principles

General principle

Basic principles

The success of banks depends upon the basic principles. These are the prime
principles in lending as well as investment
Safety
Liquidity
Profitability

Safety
Normally the bank uses the money of depositors in granting loans and
advances. Because of that while granting loans the banker should think about
the safety of depositors money. The purpose behind the safety is to see the
financial position of the borrower, whether he can pay the debt as well as
interest easily. Ensuring safety means reducing risk associated with lending.
The risk involved in lending money is the credit risk.ie the possibility of the
borrower not repaying the amount back on the due date. It is necessary for the
banks to maintain expert staff to appraise every credit proposal received by it.
Market risk also there , it can be avoided by preferring high grade securities
of short terns.

Liquidity
It is a legal duty of a banker to pay the total deposited money to the depositor
on demand. So the banker has to keep certain percent cash of the total
deposits in hand. Moreover the bank grants loan. It is also for the addition of
short term or productive capital. Such type of lending is recovered on demand.
A bank must have sufficient liquid assets to meet the demands of the
depositors .The liquid assets must have posses certain characteristics.
It must be convertible in to cash quickly and easily.
The conversion must be without any loss of value or risk
SLR : The Banking regulation act of 1949 , section 24 . states that every
commercial bank have to maintain liquid assets in the form of cash , gold, and

gilt edged securities which is not less than 25 % and not more than 40 % of
NDTL ( Net Demand and Time Liabilities )

Profitability
Commercial banks are profit earning institutes; nationalized banks are also not
an exception. They should have planning of deposits in a profitability way to
pay more interest to the depositors and more salary to the employees. Before
taking any decision the banker should make sure that it is profitable.
PRIORITY SECTOR LENDING
The Government of India through the instrument of Reserve Bank of India
(RBI) mandates certain type of lending on the Banks operating in India
irrespective of their origin. RBI sets targets in terms of percentage (of total
money lent by the Banks) to be lent to certain sectors, which in RBI's
perception would not have had access to organised lending market or could
not afford to pay the interest at the commercial rate. This type of lending is
called Priority Sector Lending. Financing of Small Scale Industry, Small
business, Agricultural Activities and Export activities fall under this category.
This is also called directed credit in Indian Banking system.
Financing Priority Sector in the economy is not strictly on commercial basis as
not only the general approach is liberal but also the rate of interest charged on
such loans is less. Export finance is, in fact, available at a discount of 20% or
more on the normal rate of interest to Indian corporates. Part of the cost of this
concession is borne by RBI by means of refinancing such loans at

10

concessional rate. Indian Banks, therefore, contribute towards economic

development of the country by subsidizing the business activities undertaken
by entrepreneurs in the areas which are consider "priority sector" by RBI.

Principles of lending & Priority sector finance in Banks

Cardinal principles of lending are Safety and liquidity , Profitability and

diversifications of risks and Productive purpose and security

Liquidity with a banker means Cash on Hand, Cash and Bank balances

and Short term current assets to convert into cash

Customer profitability analysis means Assess the profitability of

customers business

Banker can reduce risk in lending to a borrower by ensuring that there

will be no default on account of lack of liquidity and lack of willingness to pay

on the part of the borrower

In bankers parlance, credit risk in lending refers to default of repayment

by a borrower

Priority sector comprise

Broadly, the priority sector comprises the following :
1. Agriculture
2. Small scale industries (including setting up of industrial estates)
3. Small road and water transport operators (owning upto 10 vehicles).

11

4. Small business (Original cost of equipment used for business not to exceed
Rs 20 lakh)
5. Retail trade (advances to private retail traders upto Rs.10 lakh)
6. Professional and self-employed persons (borrowing limit not exceeding
Rs.10 lakh of which not more than Rs.2 lakh for working capital; in the case of
qualified medical practitioners setting up practice in rural areas, the limits are
Rs 15 lakh and Rs 3 lakh respectively and purchase of one motor vehicle
within these limits can be included under priority sector)
7. State sponsored organisations for Scheduled Castes/Scheduled Tribes
8. Education (educational loans granted to individuals by banks)
9. Housing [both direct and indirect loans upto Rs.5 lakhs (direct loans upto
Rs 10 lakh in urban/ metropolitan areas), Loans upto Rs 1 lakh and Rs 2 lakh
for repairing of houses in rural/ semi-urban and urban areas respectively].
10. Consumption loans (under the consumption credit scheme for weaker
sections)
11. Micro-credit provided by banks either directly or through any intermediaty;
Loans to self help groups(SHGs) / Non Governmental Organisations (NGOs)
for onlending to SHGs
12. Loans to the software industry (having credit limit not exceeding Rs 1
crore from the banking system)
13. Loans to specified industries in the food and agro-processing sector
having investment in plant and machinery up to Rs 5 crore.

12

14. Investment by banks in venture capital (venture capital funds/ companies

registered with SEBI)

Direct Finance for Agricultural Purposes

Direct Agricultural advances denote advances given by banks directly to
farmers for agricultural purposes. These include short-term loans for raising
crops i.e. for crop loans. In addition, advances upto Rs. 5 lakh to farmers
against pledge/hypothecation of agricultural produce (including warehouse
receipts) for a period not exceeding 12 months, where the farmers were given
crop loans for raising the produce, provided the borrowers draw credit from
one bank.
Direct finance also includes medium and long-term loans (Provided directly to
farmers for financing production and development needs) such as Purchase of
agricultural implements and machinery, Development of irrigation potential,
Reclamation and Land Development Schemes, Construction of farm buildings
and structures, etc. Other types of direct finance to farmers includes loans to
plantations, development of allied activities such as fishery, poultry etc and
also establishment of bio-gas plants, purchase of land for agricultural
purposes by small and marginal farmers and loans to agri-clinics and agribusiness centres.

Indirect Finance to Agriculture

13

Indirect finance denotes to finance provided by banks to farmers indirectly,

i.e., through other agencies. Important items included under indirect finance to
agriculture are as under :
(i) Credit for financing the distribution of fertilisers, pesticides, seeds, etc.
(ii) Loans upto Rs. 25 lakhs granted for financing distribution of inputs for the
allied activities such as, cattle feed, poultry feed, etc.
(iii) Loans to Electricity Boards for reimbursing the expenditure already
incurred by them for providing low tension connection from step-down point to
individual farmers for energising their wells.
(iv) Loans to State Electricity Boards for Systems Improvement Scheme under
Special Project Agriculture (SI-SPA).
(v) Deposits held by the banks in Rural Infrastructure Development Fund
(RIDF) maintained with NABARD.
(vi) Subscription to bonds issued by Rural Electrification Corporation (REC)
exclusively for financing pump-set energisation programme in rural and semiurban areas and also for financing System Improvement Programme (SISPA).
(vii) Subscriptions to bonds issued by NABARD with the objective of financing
agriculture/allied activities.
(viii)Finance extended to dealers in drip irrigation/sprinkler irrigation
system/agricultural machinery, subject to the following conditions:
(a) The dealer should be located in the rural/semi-urban areas.

14

(b) He should be dealing exclusively in such items or if dealing in other

products, should be maintaining separate and distinct records in respect of
such items.
(c) A ceiling of upto Rs. 20 lakhs per dealer should be observed.
(ix) Loans to Arthias (commission agents in rural/semi-urban areas) for
meeting their working capital requirements on account of credit extended to
farmers for supply of inputs.
(x) Lending to Non Banking Financial Companies (NBFCs) for on-lending to
agriculture.
Small Scale Industries (SSI)
Small scale industrial units are those engaged in the manufacture, processing
or preservation of goods and whose investment in plant and machinery
(original cost) does not exceed Rs. 1 crore. These would, inter alia, include
units engaged in mining or quarrying, servicing and repairing of machinery. In
the case of ancillary units, the investment in plant and machinery (original
cost) should also not exceed Rs. 1 crore to be classified under small-scale
industry.
The investment limit of Rs.1 crore for classification as SSI has been enhanced
to Rs.5 crore in respect of certain specified items under hosiery and hand
tools by the Government of India
Tiny Enterprises

15

The status of Tiny Enterprises is given to all small scale units whose
investment in plant & machinery is upto Rs. 25 lakhs, irrespective of the
location of the unit.
Small Scale Service & Business Enterprises (SSSBEs)
Industry related service and business enterprises with investment upto Rs. 10
lakhs in fixed assets, excluding land and building will be given benefits of
small scale sector. For computation of value of fixed assets, the original price
paid by the original owner will be considered irrespective of the price paid by
subsequent owners.
Indirect finance in the small-scale industrial sector include
Indirect finance to SSI includes the following important items:
i.

Financing of agencies involved in assisting the decentralised sector in

the supply of inputs and marketing of outputs of artisans, village and cottage
industries.
ii.

Finance extended to Government sponsored Corporation/organisations

providing funds to the weaker sections in the priority sector.

iii.

Advances to handloom co-operatives.

iv.

Term finance/loans in the form of lines of credit made available to State

Industrial Development Corporation/State Financial Corporations for financing

SSIs.
v.

Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills

vi.

Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC

exclusively for financing SSI units.

16

vii.

Subscription to bonds issued by NABARD with the objective of financing

exclusively non-farm sector.

viii.

Financing of NBFCS or other intermediaries for on-lending to the tiny

sector.
ix.

Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in

attaining priority sector targets.

x.

Bank finance to HUDCO either as a line of credit or by way of

investment in special bonds issued by HUDCO for on-lending to artisans,

handloom weavers, etc. under tiny sector may be treated as indirect lending to
SSI (Tiny) Sector.

Weaker sections within the priority sector

The weaker sections under priority sector include the following:
1.

Small and marginal farmers with land holding of 5 acres and less and

landless labourers, tenant farmers and share croppers.

2.

Artisans, village and cottage industries where individual credit limits do

not exceed Rs. 50,000/3.

Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY)

4.

Scheduled Castes and Scheduled Tribes

5.

Beneficiaries of Differential Rate of Interest (DRI) scheme

6.

Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY)

7.

Beneficiaries under the Scheme for Liberation and Rehabilitation of

Scavangers (SLRS).

17

8.

Self Help Groups (SHGs)

1.4 Targets under priority sector lending

The targets under priority sector lending would be linked to Adjusted Bank
Credit (ABC) (total loans and advance plus investments made by UCBs in
non-SLR bonds) or Credit Equivalent amount of Off-Balance Sheet
Exposures (OBE), whichever is higher, as on March 31 of the previous
year. Existing investments, as on August 30, 2007, made by banks in nonSLR bonds held in HTM category will not be taken into account for
calculation of ABC. However, fresh investments by banks in non-SLR
bonds will be taken into account for the purpose. For the purpose of
calculation of credit equivalent of off-balance sheet exposures, banks may
use current exposure method. Inter-bank exposures will not be taken into
account for the purpose of priority sector lending targets/sub-targets.
The targets and sub-targets set under priority sector lending for UCBs are
furnished below:

Targets and sub-targets set under priority sector

Total

lending
Priority 40 per cent of Adjusted Bank Credit (ABC) or credit

Sector

equivalent amount of Off-Balance Sheet Exposure,

advances
Agriculture

whichever is higher.
No target.

Advances
18

Advances to small enterprises sector will be reckoned in

Small
computing performance under the overall priority sector
Enterprise
target of 40 per cent of ABC or credit equivalent amount of
advances
Off-Balance Sheet Exposure, whichever is higher.
(i) 40 per cent of total advances to small enterprises sector
should go to micro (manufacturing) enterprises having
investment in plant and machinery up to Rs 5 lakh and
micro
Micro

(service)

enterprises

equipment

up

having
to

investment

in

Rs.2lakh;

enterprises
within

Small ii) 20 per cent of total advances to small enterprises sector

Enterprises

should go to micro (manufacturing) enterprises with

sector

investment in plant and machinery above Rs 5 lakh and up

to Rs. 25 lakh, and micro (service) enterprises with
investment in equipment above Rs. 2 lakh and up to Rs.
10 lakh.(Thus, 60 per cent of small enterprises
advances should go to the micro enterprises).
Of the stipulated target for priority sector advances,

Advances

to at least 25% (or 10% of the ABC or credit equivalent

weaker sections amount of Off-Balance Sheet Exposure, whichever is

higher) should be given to weaker sections.
Within the overall target for priority sector lending and the
Advances

to sub- target of 25 per cent for the weaker sections,

Minorities.

sufficient care may be taken to ensure that the minority

communities also receive an equitable portion of the credit.
19

The targets and sub-targets set under priority sector lending for domestic
and foreign banks operating in India are furnished below :
Domestic banks (both
Foreign banks operating
public sector and private in India
sector banks)
Total Priority Sector
advances

40 percent of net bank

credit

32 percent of net bank

credit

Total agricultural
advances

18 percent of net bank

credit

No target

SSI advances

No target

10 percent of net bank

credit

Export credit

Export credit does not

form part of priority sector

12 percent of net bank

credit

Advances to weaker
sections

10 percent of net bank credit

No target

20

1.5 COMMON GUIDELINES FOR PRIORITY SECTOR ADVANCES

Common guidelines for priority sector advances are following:MODE OF DISBURSEMENT OF LOAN:
Banks may disburse all loans for agricultural purposes in cash.
REPAYMENT SCHEDULE:
Repayment program should be fixed taking into account the sustenance
requirements, surplus generating capacity, the break-even point, the life of the
asset, etc., and not in an "ad hoc manner.
RATES OF INTEREST:
The rates of interest on various categories of priority sector advances will
be as per RBI directives issued from time to time.
PENAL INTEREST:
The issue of charging penal interests that should be levied for reasons such
as default in repayment, non-submission of financial statements, etc. has
been left to the Board of each bank.
Banks will be free to levy penal interest for loans exceeding Rs 25,000
SERVICE CHARGES / INSPECTION CHARGES
No service charges/inspection charges should be levied on priority sector
loans up to Rs. 25,000/-.
For loans above Rs. 25,000/- banks will be free to prescribe service charges
with the prior approval of their Boards
21

PHOTOGRAPHS OF BORROWERS
There is no objection to taking photographs of the borrowers for purposes of
identification, banks themselves should

make

arrangements for the

photographs and also bear the cost of photographs of borrowers falling in the
category of Weaker Sections.
DISCRETIONARY POWERS
All Branch Managers of banks should be vested with discretionary powers to
sanction proposals from weaker sections without reference to any higher
authority.
MACHINERY TO LOOK INTO COMPLAINTS
There should be machinery at the regional offices to entertain complaints from
the borrowers if the branches do not follow these guidelines, and to verify
periodically that these guidelines are scrupulously implemented by the
branches.
AMENDMENTS
These guidelines are subject to any instructions that may be issued by the RBI
from time to time.
Common Guidelines/Instructions for lending to MSME Sector

Common guidelines for Instructions for lending to MSME Sector are

following:1. Processing of Applications
i. Loan Application

22

Revised Simplified application form will be used for Micro and Small
Enterprise. The existing Common loan Application form applicable to all loans
irrespective of limit, will be applicable for Medium Enterprises sector.
ii. Issue of Acknowledgement of Loan Applications:
Each branch will issue an acknowledgement for loan applications received
from the borrowers towards financing under this sector and maintain the
record of the same.
iii. Disposal of Applications:
In case of Loans up to Rs.25000/- : Within 2 weeks
In case of Loans above Rs.25000 : Within 4 Weeks
(Provided the loan applications are complete in all respects and accompanied
by a 'check list' enclosed to the application form).
iv. Register of Receipt/Sanction/Rejection of Applications:
a. A register should be maintained at branch wherein the date of receipt,
sanction /disbursement, rejection with reasons, should be recorded. The
register should be made available to facilitate verification by the Banks
officials including Zonal Manager during visit to the branch.
b. Branch Manager may reject application (except in respect of SC/ST). In the
case of proposals from SC/ST, rejection should be done at a level higher than
Branch Manager.
c. The reason for rejection will be communicated to the borrower in line with
stipulation mentioned in the Fair Practice Lenders Code.
v. Photographs of Borrowers

23

While there is no objection to take photographs of the borrowers, for the

purpose of identification, branches themselves should make arrangements for
the photographs and also bear the cost of photographs of borrowers falling in
the category of Weaker Sections. It should also be ensured that the procedure
does not involve any delay in loan disbursement.

2. Composite Loan
A composite loan with maximum limit upto Rs.1.00crore may be considered by
bank to enable the Micro and Small Enterprises {both for manufacturing and
service sector} to avail of their working capital and Term loan requirement
through Single Window.
3. Types of Loans
The Bank may provide all types of funded and non funded facilities to the
borrower under this sector viz, Term Loan, Cash Credit, Letter of Credit, Bank
guarantee, etc.
4. Margin
Loan Size

Minimum Margin

Up to Rs.25000.00

Nil

Above Rs.25000.00

As per lending policy of the Bank

24

i. While considering proposals under MSME sector, the book debt upto six
months may be treated as a current assets, for the purpose of computation of
permissible bank finance and drawing power calculation.
ii. The margin on the book debts may also be considered at 20% to 25% on
merit of the case.
iii. In regard to age of the book debts, a certificate preferably from Auditors
/Chartered Accountant to be obtained.
iv. All book debts more than 180days are to be treated as Non-current asset.
5. Security
5.1 No collateral or Third party guarantee for advances up to Rs.5.00 Lacs.
5.2 In case of good track record of the borrower Collateral Security and or
third party guarantee may be waived beyondRs. 5.00 Lac but up to Rs.100.00
Lacs, where guarantee cover of 62.50% of the amount of default is available
from CGTMSE, in respect of term loan and/or working capital facilities
extended to new and existing entrepreneur. It has also been stipulated by
CGTMSE that all proposals of sanction of Guarantee approvals for credit
facilities above Rs.50.00 Lacs and up to Rs. 100.00 Lacs will have to be rated
internally by MLIs and should be of investment grade. Accordingly, all
proposals above Rs. 50 Lacs are to be rated on Credit Risk Grading (CRG 2)
as per applicable internal rating modules prescribed under Banks Credit Risk
Management Policy and proposals rated as AB-1 to AB-7 would only be
considered as investment grade subjected to other stipulated norms in

25

relevant policies / guidelines. The commission of CGTMSE will be borne by

the borrower
5.3. In case of Loan up to Rs.25000.00, minimum Asset Coverage Ratio
(Primary Security /Loan amount) would be 1:1. However, in case of schematic
lending/specified scheme, the guidelines as applicable will be complied with.
5.4. In case of Loan above Rs.25000/- and up to Rs.10.00 Lacs, a minimum
asset coverage ratio must be 1.25:1.
5.5. In case a loan is not covered under CGTMSE scheme for valid reasons,
the Security coverage Ratio for such loan above Rs.10.00 Lac will be based
on the Risk Rating status of the borrower.

Rating

Grade

Minimum Security Coverage Ratio**

(As per our Rating module)

AB-1

1.25:1

AB-2

1.5:1

AB-3

1.75:1

Other rated accounts

2.00:1

** In each of the above case, Primary + collateral Security /Loan

amount should not be less than 1.25:1 so as to ensure the minimum
stipulated margin.

26

1. Nevertheless, availability of collateral security shall not be the mere criterion

for arriving at credit decision.
2. In case of loan accounts not covered under CGTMSE scheme, it may be
explored as far as practicable that the credit facilities/loans extended, are
supported by collaterals in the form of liquid securities or fixed assets,
immovable properties, based on the credit Risks perception.
3. Collateral security shall not be insisted upon in those cases where the RBI
directives specifically advised the banks not to insist on obtaining Collateral
security /third party guarantee, in certain priority sector credit or Government
sponsored schemes.
4. The other guidelines/amendments as per lending policy of the Banks should
be closely observed.

1.6 Advances to Priority Sector by Allahabad Bank

Advances on Priority sector:Priority

sector/Schemes
a. Priority
i.
ii.

sector
Agriculture
Direct
Indirect
Micro small

March 2008
Amount
(Rs. crores)
18,774
9,146
6,571
2,575
3,530

27

March 2009
Amount
(Rs. crores)
20,435

March 2010
Amount
(Rs. crores)
24,279

9,568
7,306
2,262
4,593

11,567
8,340
3,227
8,188

enterprices
iii.
Other
b. Weaker
Section

6,098
4,455

6,275
5,010

4,524
6,150

(Source of information- Allahabad bank annual report)

1.7 Objectives of the study

The study has been undertaken with the following objectives :
1) To evaluate the growth of the Allahabad bank
2) To study of priority sector
3) To analyse the progress made by the Allahabad bank in the various
components of the priority sector lending i.e. agriculture, small scale industries
and other priority sector advances comprised of weaker section, education,
housing etc.
4) To make an in-depth study of the priority sector lending of the selected
bank.
5) To analyze targets achieved by Allahabad bank
6) To suggest ways and means for improving the quality of lending to this
sector.

28

CHAPTER-2
Literature Review
The primary objective of social control and nationalisation is to ensure a better
alignment of the commercial banking system to meet the needs of the
economy. It is the duty of the banks to see that credit ows into channels,
which are most productive and most helpful to our growth and development.
To promote the welfare of the people who are socially and economically
backward, the concept of priority sector lending was evolved.
Quantitative targets were set for lending to priority sector and separate
subtargets were also set for lending to agriculture and weaker sections of the
society. As a result, lending to the borrowers in priority sectors have increased
substantially. Increased ow of credit to the different sectors assisted the
developmental activities and thereby expanded the income as well as the
standard of living of the people.

29

Several studies on this subject in a restricted sense have been undertaken by

particular bank/group of banks, individuals and organisations. Number of
Committees appointed by the Govemment of India and RBI have also studied
the banking problems of the country. Reviews of such available literature are
presented below.

V. V. Bhat (1970) proposed a scheme of appoved dealers to assist the Lead

Banks in providing nance and guidance to far1ners and small industrialists.
In providing nance and guidance effectively, the banks would have to collect
the required information, ensure recovery of loans and interest, assist in
obtaining after sales service and keep a watch on the working of the assisted
enterprise. This work can be made easier by creating and supporting a set of
approved dealers.

P. N. Joshi (1972) requested the RBI to give clear and specic denition of the
different components of priority sectors. Some of the bankers are not clear
about the precise scope of agricultural lending. Guidance from the RBI would
help them to increase their involvement in farm credit on right lines.

M. A. Oommen (1972) found that among the institutional sources of nance to

SSI in Kerala, commercial banks provided the lions share. The assistance of
commercial banks in Kerala stands at par with some advanced countries.

30

M. C. Purohith (1973) conducted a survey in Jaipur city to examine the

potential of small artisans in relation to bank nancing. The survey revealed
that the average amount borrowed per artisan from bank was Rs. 1,040 and
from non-institutional source was Rs. 3,133. The maximum amount borrowed
by an artisan from a commercial bank was Rs. 2,000 and from noninstitutional source was Rs. 17,000. The small artisans therefore were denied
sufcient funds from the commercial banks forcing them to borrow from noninstitutional sources at higher rates of interest. Due to lack of adequate
financial accommodation from the banking system, the artisans buy raw
materials through other nanciers at higher prices and sell the product to the
same agency at a low price. With the nancial assistance from the banks, this
vicious circle can be broken up.

N. K. Thingalaya (1974) conducted a study among the village artisans of

Kamataka and found that they are receiving an insignificant per cent of their
total credit requirements from banks. Thus artisans are living under the
inuence of moneylenders.

Vadilal Dagli (1975) is of the opinion that the aim of the banking policy should
be to uplift the under privileged class of the society in rural India from
subsistence existence to surplus existence. The concept of priority sector
should include only the real poor of the country and by providing them

31

necessary financial assistance; they can be lifted from the pitches of animal
existence to the heights of human existence.

R. K. Hazari (1976) made it clear that institutional nancing does not mean
replacing

individual

moneylenders

with

institutionalised

moneylenders.

Institutional nancing should enable the agriculturists to move on to a level of

new technology that will increase agricultural output and employment. This
means productivity of both land and human beings. Data relating to nance
must be able to provide a basis for assessing how much nancing has really
contributed to additional output and employment.

P. C. D. Nambiar (1977) pointed out that the role of commercial banks in the
priority sectors is not conned merely to the provision of nance. They have to
evaluate the feasibility of the project and assist the entrepreneurs to select the
right type of project. He also emphasised the need for proper co-ordination
between govemment agencies and banks for better results in the development
of priority sectors

S. L. Shetty (1978) in his study on the achievement of commercial banks since

nationalisation has found that the banks, which have relatively low priority
sector lending have been the ones with higher than the average credit deposit
ratios. Another nding noticed among the banks is that in regard to the priority
sectors, a few branches of banks achieved impressive ratios, to the neglect of

32

the rest of the areas. Again there is considerable concentration of priority

sector advances in a few a States.

I. G. Patel (1979) reminded the banks about their socio-economic

responsibility in the up-liftment of the poorest strata of the society. A
substantial portion of the people live in abject poverty and the rst priority
should be to provide productive employment opportunities to the very poorwhether they are in rural or urban areas. Banks should equip themselves fully
to serve as instruments of development for the poorer sections of people.

Singh and Balraj (1979) conducted a study on commercial bank lending in

Hissar district of Haryana and concluded that villagers are relieved from the
exploitation of moneylenders by the operation of a nationalised bank. At the
same time they also reported other problems such as uneasy, untimely and
non-availability of loans, expensive and cumbersome procedures, excessive
and useless formalities, unsuitable procedure of loan repayment and the
absence of easy accessibility of banking facilities.

L. DMello (1980) is very much doubtful about the capacity and suitability of
commercial banks to provide large amount of credit to the priority sectors.
Since banks are high cost organisations, existing developmental agencies can
be used by commercial banks to reduce the cost and to improve efciency in
the use of credit.

33

C. L. Khemani and K. V. Balakrishnanu (1981) are of the opinion that if the

borrower selected under IRDP is made to approach the money lender for his
very genuine consumption needs, then the very objective of institutional
nance for priority sector will be defeated. Consumption credit granted on the
basis of specic needs of the target groups are not going to cause problems.
The actual consumption loans will have to be related to their minimum needs
and their capacity to repay.

A. R. Patel and M. R. Patel (1983) proposed the need for assigning the task of
evaluating the working of various schemes under the 20-point programme to
outside agencies not connected with its implementation. This will result in
correct evaluation of the role played by implementing agencies, benets
derived by the beneciaries and deciencies noticed in the plamiing and
implementation process.

V. B. Angadils (1983) observed the concentration of priority sector advances in

general and agricultural advances in particular in a few States. The reasons
for such concentration are number of bank ofces, deposit mobilisation, total
cropped area, land under certain food and cash crops, extent of irrigated land
in respective States, adoption of high yielding varieties, the availability of cooperative credit and the level of political awareness in these States.

34

Senior Executive Seminar on Priority Sector Financing (1983) organized by

NIBM advised the banks to remember the philosophy behind the policy
towards priority sector and to develop faith in this philosophy. Priority sectors
should be looked upon as opportunities of developing the banks business.

B. K. Sarkarl (1983) is of the opinion that to launch a successful marketing

drive for the target groups in the priority sector, the environment pertaining to
each segment of the society has to be carefully scanned and vital information
relevant to market decisions such as ignorance, unwillingness, poverty,
political interference etc. have to be analysed. The best result can be derived
only if the customer and his real need situations are assessed in a meaningful
way.

A. R. Patel (1984) conducted a survey on public sector banks to assess their

performance under DRI scheme. The study revealed that the banks had
positively responded to the increasing needs of SC/ST borrowers in respect of
DRI loans and had been able to increase their share of SC/ST borrowers, both
in terms of number of borrower accounts and the amount outstanding. At the
same time, banks are nding it extremely difcult to nance all those eligible
identied beneciaries who approach them in view of the limited loanable
funds available under the scheme. Thus, demand and supply forces in respect
of this scheme have created problems at the branch level as well as the

35

beneficiary level. While large numbers of deserving eligible beneciaries have

so far remained out of the fold of this scheme, a good number of inuential
and well to do persons have taken advantage of this scheme.

K. V. Patel and N. B. Shete (1984) analysed the behaviour of weaker section

accounts particularly with reference to their repayment behaviour by
examining 1,554 accounts operated by seven branches of three commercial
banks located in ve backward districts in the states of Raj asthan, Madhya
Pradesh and Kamataka. The study brings out the very positive aspects of
borrowers willingness to repay and the bankers promptness in making efforts
for recovery. The analysis helps in clearing some of the misgivings in weaker
sections nancing and in improving the image of development banking.

K. V. Patel and N. B. Shete (1984) analysed the priority sector lending by

commercial banks in India from 1969 to 1980 and concluded that
quantitatively a very impressive coverage is achieved during the period of
twelve years. The total priority sector advances have gone up by more than
fourteen times. But the credit absorption capacities of the weaker sections are
constrained by a variety of factors, which may not be under the direct control
of the banking industry. Therefore, the co-coordinated efforts of executives
and developmental agencies require special care and attention in this matter.

36

I. Satya Sundaram (1984) opines that there is no point in setting up more and
more credit agencies to help the rural poor. The presence of numerous
agencies is creating confusion in the filed of rural credit. What is required is
the proper co-ordination among the various agencies in implementing the
schemes that will be useful to the rural poor.

Raut (1984) conducted a study on the scope and problems of financing tribal
farmers and concluded that the problem of overdues was mainly due to the
misutilisation of loans by the tribal farmers. The tendency to misutilise the loan
was due to the fact that the consumption priorities of tribal farmers were of
more urgent nature than asset building priorities.

Balishter and Roshan Singh (1984) found in their study of IRDP nanced by
SBI in Bichpuri Block of Agra district that the recovery of loans advanced by
the bank under IRDP was satisfactory in all categories of families and this
nullied the common impression that advancing of loans to weaker sections
would lead to accumulation of bad debts.

Anil Kale and Namdeo Mali (1984) conducted a study in some of the droughtaffected villages of Pune and Nagar districts among the farmers and landless
labourers. From the analysis of data collected it is found that the poor people
in rural areas are subjected to various kinds of exploitations by the very

37

developmental agencies, which were created by the society or Govemment for

their upliftment.

B. S. Viswanathan (1985) stated that the overdues to a large extent were on

account of wilful default, which was either due to ineffective recovery
machinery or because of unfavourable recovery climate.

D. P. Khankhoje and V. T. Godse (1985) found that procedural aws and gaps
cause delays in the process of loaning activity in the priority sector. So the
systems and procedures adopted by banks particularly with reference to
documentation and accounting have to be simplified. But the simplication of
systems and procedures should not weaken the follow-up, supervision and
control.

U. C. Kulshresth (1985) conducted a survey in the Western Region of Uttar

Pradesh to review the progress and working of the Lead Banks and concluded
that the banks which were assigned the lead role undoubtedly made
considerable efforts in their lead districts in conducting of economic surveys,
preparing Credit Plans, branch expansion, deposit mobilisation and credit
deployment to priority sectors. Thus the Lead Bank Scheme holds out the
promise to attain socio-economic objects in the society and to develop the
rural economy at the district level.

38

S. B. Dangat, S. R. Radkar and M. P. Dhongade (1986) conducted a micro

level study into the borrowings and utilisation of medium and long term loans
in Ahmednagar district and reported that the medium and long term loans
were diverted for conduct of marriages, for consumption and for construction
of residential buildings in all the size group of holdings in both developing and
underdeveloped regions. Proper appraisal of loan proposals, follow-up and
supervision after the disbursement of loans were suggested for effective
nancing of agriculture.

I. Satya Sundaram (1986) pointed out some of the problems facing the DRI
scheme. Funds are allocated, they are ofcially spent and yet the poor
remains in the same old state. If necessary safeguard are provided, the funds
allocated for this purpose can through up the desired result..

Economic Research Department of the State Bank of India, Central Ofce,

Bombay (1987) conducted a study to observe the impact of bank credit on
weaker sections in Kerala. The study revealed that bank loans enabled the
borrowers to become self-employed businessmen or artisans whereas
previously they were mere wage eamers. The utilisation of bank loans
generally raised the income and employment of the borrowers and thereby
improved the quality of life.

39

N. J. Kurian (1987) conducted a concurrent evaluation of IRDP and found that

commercial banks account for 69 per cent of the loans, 23 per cent is
accounted by RRBs and the balance 8 per cent is provided by the cooperatives. The repayment of loans by IRDP beneciaries is no worse than
that of other debtors who generally are better off economically.

H. C. Malhotra and D. K. Kulshrestha (1987) made an assessment of the

advances by commercial banks to the weaker sections of the society and
concluded that giving advances to them will be of no use, unless it is ensured
that the recipients use these advances for productive purposes.

Suresh Mehta (2000) noticed that though the banks are ush with surplus
funds, they do not nd it protable and safe in lending to the SSI sector
because they are already saddled with high NPAs in this sector. To reduce the
NPAs level, banks have to strengthen their appraisal system and credit
monitoring mechanism; and SSI units have to develop capabilities to manage
borrowed funds more prudently and more transparently in business
operations. These arrangements will help both the banks and entrepreneurs to
remain happy and prosperous.

Swami Agnives (2001) delivering the keynote address at a symposium on

New Economic Policy and Problems faced by Agricultural Sector in Kerala

40

alleged that while the banks have given the farmers a raw deal, it had writtenoff the loans availed by top industrialists to the tune of rupees one lakh crore
as non- performing assets. The poor farmers house and properties are
auctioned for recovering the loan amount by the banks even though it would
be a meagre amount.

A critical perusal and review of the studies reveal that most of these studies
were not scientically designed and the opinion surveys were not properly
structured. Also most of the ndings were just in the fonn of generalised
observations made with out testing the statistical signicance.

Despite the availability of sufcient literature on priority sector lending and

rural credit, no comprehensive and schematic effort has been made to
analyse the subject based on the experience of bank managers and
borrowers. The available literature on the subject is only descriptive, partial
and often biased. It covers only some micro aspects of priority sector lending.

Priority sector lending is done through District Credit Plans. An analysis of

priority sector lending in the State through District Credit Plans is not
attempted by any scholar so far. This study is also an attempt in this direction.
It is designed to analyse the working of District Credit Plans, the weakness in
the lending procedures, methods of making priority sector lending protable
and benecial and the difculties experienced by the bankers and borrowers

41

in the implementation of the scheme. Hence in this study, different aspects of

lending to priority sector together with its systematic impact are analysed.

CHAPTER-3
RESEARCH DESIGN
This chapter describe the research methodology, research design, method of
data collection and tools & technique which are used for the better
presentation and right explanation of the data.

3.1 Research Methodology

Research Methodology in a way is systematic representation of research or
any other problem. It is a written game plan for conducting research. It tends
to describe the step taken by a researcher in studying the research problem
along with a logical background.
It tends to describe methodology for solution of the problem that has been
taken for the purpose of study this project focuses on the methodology for
technique used for the collection, classification & tabulation of the data. This
plan throws light on the research problem, the objective of study & limitation of
the study. Therefore, in order to solve a problem, it is necessary to design a
research methodology for problem as the same way differs from problem to
problem.

42

3.2 RESEARCH DESIGN:

Study is all about the research & analysis of credit to priority sector.
Study is being made for the purpose of analysis of credit to priority sector by
the Allahabad bank that predicts the future growth of the bank by providing
better services by bank can earns more profit.
Study will be carried out at Bareilly.
Secondary data is required for analysis of report.

3.3 METHOD OF DATA COLLECTIONThe study is totally based on secondary data to be suitably modified.

SOURCE- SECONDARY DATA

The secondary data collected from the already sanctioned annual report.
Collection of secondary data from Management journals.
Bank Annual Report 2008-09 and 2009-10
Project proposal.
Respective Banks Web Sites & other sites such as www.rbi.org.

43

Reference from Management Books.

Newspapers and Articles

Tools and Techniques:

As no study could be successfully completed without proper tools &
techniques,

same

with this project. For the better presentation and right explanation researcher
used tools of statistics and computer very frequently and Basic tools which
have been used for project are:
-BAR-CHARTS
- TABLES
Bar chart is very useful tools for every research to show the result in
a clear, simple way. Because researcher used bar charts in my project for
showing data in a systematic way. So researcher need not necessary for any
observer to read all the theoretical detail, simple on seeing the charts anybody
that what is being said.
Technological Tools:
MS -WORD
MS-EXCEL

44

CHAPTER-4
DATA ANALYSIS AND INTERPRETATION

1. Financing to priority sector by Allahabad bank .

Table no-1 advances on priority sector
Priority
sector/Schemes
Priority sector

March 2008
Amount
(Rs. crores)
18,774

March 2009
Amount
(Rs. crores)
20,435

45

March 2010
Amount
(Rs. crores)
24,279

financing to priority sector

18,774

24,279

2008
2009
2010
20,435

Figure no -1 Advance on priority sector

Interpretation:
Credit to priority sector grew from Rs.18,774 Crore as on March 2008 to
Rs.20,435 Crore as on March 2009 and Credit to priority sector grew from
Rs.20,435 Crore as on March 2009 to Rs.24,279 Crore as on March 2010.
registering an absolute YOY growth of Rs.3844 Crore (18.81 %). Bank has
exceeded the National Goal (40.00%)
by achieving 41.29% as on Mar 10

i.

Financing to agriculture sector by Allahabad bank.

Table no-2 Advances on agriculture sector

Priority
sector/Schemes
i.
Agriculture

March 2008
Amount
(Rs. crores)
9,146

March 2009
Amount
(Rs. crores)
9,568

46

March 2010
Amount
(Rs. crores)
11,567

financing to agriculture

9,146

11,567

2008
2009
2010
9,568

Figure no -2 Advances on agriculture sector

Interpretation:
Agriculture Credit outstanding increased from Rs.9146 Crore as on March
2008 to Rs.9,568 Crore as on March 2009 and Agriculture Credit increased
from Rs.9568 Crore as on March 2009 to Rs.11,567 Crore as on March 2010 ,
registering an absolute YOY growth of Rs.1999 Crore (20.90%). Bank has
exceeded the National Goal (18.00%) of Agriculture to ANBC by achieving
18.68% as on Mar10.

Direct finance to agriculture sector from Allahabad bank.

47

Table no -3 Direct finance to agriculture sector

Priority
sector/Schemes
- Direct in

March 2008
Amount
(Rs. crores)
6,571

March 2009
Amount
(Rs. crores)
7,306

March 2010
Amount
(Rs. crores)
8,340

agriculture

direct finance to agriculture

6,571
8,340

2008
2009
2010

7,306

Figure no -3 Direct finance to agriculture sector

Interpretation:
Direct finance to agriculture of the Bank grew by Rs. 6,571 crores as on
31.3.2008 to Rs. 7,306 crores as on 31.3.2009 and Rs. 7,306 crores as on
31.3.2009 to Rs. 8,340 as on 31.3.2010.

48

Indirect finance to agriculture sector from Allahabad bank.

Table no -4 Indirect finance to agriculture sector

Priority
sector/Schemes
- Indirect

March 2008
Amount
(Rs. crores)
2,575

March 2009
Amount
(Rs. crores)
2,262

March 2010
Amount
(Rs. crores)
3,227

indirect finance to agriculture sector

2,575
3,227

2008
2009
2010

2,262

Table no -4 Indirect finance to agriculture sector

Interpretation:
49

Indirect finance to agriculture of the Bank grew by Rs. 2,575 crores as on 31

march , 2008 to Rs. 2,262 crores as on 31 march , 2009 and Rs. 2,262 crores
as on 31.3.2009 to Rs. 3,227 as on 31.3.2010.

2. Financing to Micro Small Enterprises Sector from Allahabad Bank.

Table no -5 Financing to Micro Small Enterprises Sector
Priority
sector/Schemes
Micro small
enterprises

March 2008
Amount
(Rs. crores)
3,530

March 2009
Amount
(Rs. crores)
4,593

March 2010
Amount
(Rs. crores)
8,188

Financing to Micro Small Enterprises Sector

3,530
2008
2009
2010

8,118

4,593

Figure no -5 Financing to Micro Small Enterprises Sector

Interpretation:

50

Credit to Micro and Small Enterprises (MSE) grew from Rs. 3,530 Crore as on March 2008
to Rs.4593 Crore as on March 2009 and grew from Rs.4593 Crore as on March 2009 to
Rs.8,118 Crore as on March 2010, registering an absolute YOY growth of Rs.3595 Crore
(78.27%). Share of Micro Enterprises to total Micro & Small Enterprises has exceeded the
National Goal (60%) by achieving 62.25% as on Mar10.

3. Financing to other sector such as housing loan education loan etc.

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

Priority

March 2008
Amount
(Rs. crores)
6,098

sector/Schemes
Other

March 2009
Amount
(Rs. crores)
6,275

March 2010
Amount
(Rs. crores)
4,524

financing to other sector

4,524

6,098

2008
2009
2010

6,275

51

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

etc.

Interpretation:
Credit to other sector such as housing loan, education loan etc. grew from Rs. 6,098 Crore
as on March 2008 to Rs.6,275 Crore as on March 2009 but in 2010 credit to other sector
was decline from Rs. 6,275 Crore as on March 2009 to Rs. 4,524 Crore as on March 2010.

4. Financing to weaker section from Allahabad bank.

Table no -7 Financing to weaker section
Priority
sector/Schemes
Weaker Section

March 2008
Amount
(Rs. crores)
4,455

March 2009
Amount
(Rs. crores)
5,010

52

March 2010
Amount
(Rs. crores)
6,150

Financing to weaker section

4,455

2008
2009

6,150

2010

5,010

Figure no -7 Financing to weaker section.

Interpretation:
Credit to weaker section grew from Rs. 4,455 Crore as on March 2008 to Rs.
5,010 Crore as on March 2009 and credit grew from Rs. 5,010 Crore as on
March 2009 to Rs. 6,150 Crore as on March 2010. Credit to weaker section
from Allahabad bank increased year to year .Credit to weaker section was
10.77% of ANBC as against stipulated norms of 10%.

53

CHAPTER -5
5.1 Findings
Credit to priority sector increased as on 31 march 2008 to 31 march
2010. Bank has exceeded the National Goal (40.00%) by achieving
41.29% as on Mar 10.
Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC
by achieving 18.68% as on Mar10
Share of Micro Enterprises to total Micro & Small Enterprises has
exceeded the National Goal (60%) by achieving 62.25% as on Mar10.
Credit to other section such as housing loan education loan has been
increased as on march 2009 but march 2009 to march 2010 credit to
other section has been decreased.
Credit to weaker section from Allahabad bank increased year to year
.Credit to weaker section was 10.77% of ANBC as against stipulated
norms of 10%.

54

5. 3 Conclusion
My research in the field of financing to priority sector from Allahabad bank and
Allahabad bank has been grew year to year. This has some interesting facts
which can be drawn from the above analysis.

Bank has exceeded the National Goal (40.00%)of priority sector by

achieving 41.29% as on Mar 10
Bank has exceeded the National Goal (18.00%) of Agriculture to

ANBC by achieving 18.68% as on Mar10

Share of Micro Enterprises to total Micro & Small Enterprises has
exceeded the National Goal (60%) by achieving 62.25% as on
Mar10.
Credit to other section such as housing loan education loan has
been increased as on march 2009 but march 2009 to march 2010
credit to other section has been decreased.
Credit to weaker section from Allahabad bank increased year to year
.Credit to weaker section was 10.77% of ANBC as against stipulated
norms of 10%.

55

5. 2 Suggestion:
priority sectors are big source of revenue for banks, so bank should
encourage also the unregistered units by providing more facilities like
less paper work.
Bank has to increase their credit limit and also decrease the installment
amount.
The best way to encourage lending to micro small industries is to
improve the ability of existing institution to construct profitable and
efficient lending programmes.
Building awareness among small business people about the financial
sources offering by bank. Especially in the case of housing loan and
education loan is must. So there is mutual benefits are possible
While granting the loans the bank does not adhere with the margin.
The process followed by the bank in sanctioning the loan is
unmanageable; hence it is suggested to make the process easier in
sanctioning the credit facilities to the priority sector.

56

Bibliography
1. E. Gup Benton & W . Kolari James,

Commercial Banking

3rd

Edition,Singapore ,John Wiley &sons (Asia) ,2005 .

2. Shekher K C & Shekher Lekshmy ,

Banking theory and practice 19th

Edition, NewDelhi, Vikas Publishing House ,2007 .

3. Natarajan S & Parameswaran,

Indian Banking 5th Edition

,NewDelhi,

Sulthan Chand &Co ltd ,2007 .

4. Maheswari S. N & Paul R R,Banking theory &practice 3rd Edition
,NewDelhi, Kalyani publishers,2006 .

WEBSITES

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

57