A STUDY ON PRIORITY SECTOR LENDING

THE CENTRAL BANK OF INDIA, PACHORA

IN

OBJECTIVES
To study of priority sector. To analysis the priority sector lending activity in Central bank of India, Pachora. To analysis the progress made by the Central bank of India in various component of the priority sector lending.

To analyze targets achieved by Central bank of India, Pachora

RESEARCH METHODOLOGY
Research methodology is a process of collecting the information and help to find out the solution to the topic selection by the researcher. This Section includes the methodology which includes. it is a systematic way of presenting information.

Type of Research Descriptive research: Project contains Descriptive Research. Analytical research

Data Collection:
There are two types of data collection methods used for the preparation of the project which are as follows. Primary Data: Primary sources includes the data collection through observation, discussions, and personal interview with the officials of the credit department of the Cental Bank of India. Secondary Data: Basic method/sources of collecting secondary data as the Banks rules and regulations, procedure of loan sanctioning, Balance Sheet, referring books etc.

 Sample Size
To study the proceeding three years Annual report of Central Bank of India. Data Analysis: It is done by use of calculations balance sheet, last three years balance sheet. INTERPRETATION OF DATA: The data carefully analyzed and short listed data is then interpreted in the form of charts and graphs for absolute clarity.

SCOPE OF STUDY
The project gives the theoretical as well as practical knowledge. This project is related to the bank loan proposals only. The scope of the study is limited.

Limitations
Every study or work, which is carried out, is full of information but there are certain limitations because of which we are unable to get the information. The limitations can be The information system is confidential and hence the banks records were not fully disclosed. Some of the records regarding the financial aspects were available only at the Head-Office, so these data were not available for the study.

Study of the project is limited to only one bank.

There was a time constraint of 60 days for the completion of the project. This project is related to the bank priority sector lending only. The scope of the study is limited for only one bank loan policy.

PRIORITY SECTOR LENDING

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.

 Definition
Some areas or fields depending on its economic condition or economic importance are prioritized and are called priority sector i.e. industry, agriculture. And lending to these sectors refer to priority sector lending

 CATEGORIES OF PRIORITY SECTOR Agriculture direct Small enterprises direct finance Small enterprises indirect finance Education loan Housing loan

The targets under priority sector lending

Total Priority Sector advances

Domestic banks (both public sector and private sector banks) 40 percent of NBC 18 percent of NBC No target

Total Priority Sector advances Total agricultural advances SSI advances

DATA ANALYSIS AND INTERPRETATION

Financing to priority sector by Central Bank of India .
year Priority sector

Amount (in lakhs)

2010-11 2011-12 2011-12 40,941 45,207 60,754

2011, 40941 2013, 60754

2012, 45207

Direct finance to agriculture sector from Central Bank of India.

year Direct in Agriculture (Rs. lakhs) 11,166 15,341 28,510 advances
30,000 25,000 20,000 advances 15,000 10,000 5,000 0 2011 2012 2013

2010-11 2011-12 2011-12

Small Enterprises direct finance

Financing to Micro manufacturing Enterprises Sector from Central Bank of India.
year 2010-2011 2011-2012 2012-2013 Micro manufacturing Enterprises Sector advance 377 360 269

advances
400
350 300 250 200 150 100 50 0 2011 2012 2013 advances

Small Enterprises direct finance

March 2011 Priority sector/Schem Amount (Rs. lakhs) es March 2012 March 2013

Amount (Rs. lakhs)

360

Amount (Rs. lakhs)

269

Micro manufacturin g Enterprises Sector Small services Enterprises Sector

377

1,413

1,153

632

Micro service Enterprises Sector

3,934

3,970

4,145

Micro manufacturing Enterprises Sector

4500 4000 3500 3000 2500 2000

Small services Enterprises Sector

Micro service Enterprises Sector

1500
1000 500 0 2011 2012 2013 Micro service Enterprises Sector Small services Enterprises Sector Micro manufacturing Enterprises Sector

Financing to housing loan sector From Central Bank of India.

year housing loan (Rs. lakhs)
20,963

2010-2011 2011-2012

21,077 22,568
house loan
23000 22500 22000 21500 21000 20500 20000 2011 2012 2013 house loan

2012-2013

Financing to education loan sector From Central Bank of India.

year Education loan (Rs. lakhs) 3,017 2010-2011

2011-2012 2012-2013

3,257 4,575
education loan
5,000

4,500
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2011 2012 2013 education loan

Findings
Credit to priority sector increased as on 31 march 2011 to 31 march 2013. Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC by achieving 20.68% as on Mar13 Share of Micro Enterprises to total Micro & Small Enterprises has been decreased. Micro services Enterprises Sector increase from other than small services enterprise and micro manufacture enterprise. Micro manufacturing Enterprises Sector and Small services Enterprises Sector has been decreased.

Credit to other section such as housing loan education loan has been increased as on march 2011 to 2013.

 Share of Micro Enterprises to total Micro & Small Enterprises has been decreased. Micro services Enterprises Sector increase from other than small services enterprise and micro manufacture enterprise. Micro manufacturing Enterprises Sector and Small services Enterprises Sector has been decreased.

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 programmers.

 The bank must ensure a systematic follow up of the loans sanctioned in order to reduce non-performing assets. A special officer should be appointed for the recovery of loans. Interest rate, possessing fees, tenure, security and margin money all these are very important an all kinds of loans. So banks should revise all above keeping in view all other banks.

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.

 Bank should appoint some marketing executives for this purpose who can give information of market and other banks. These marketing executives gives report head office directly for timely processing so that the market can be fully captured as early as possible.

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.