A

PROJECT REPORT ON

“Enhancement of Agri & Retail Assets and Banking Services “

At

HDFC Bank, Pimpalgaon(B).

SUBMITTED TO

UNIVERSITY OF MUMBAI

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE

DEGREE OF

MASTER IN MANAGEMENT STUDIES

(FINANCE)

SUBMITTED BY:

KARPE RAM MANOHAR

2017-18

MET INSTITUTE OF MANAGEMENT

BANDRA (W) MUMBAI.

 DECLERATION
I hereby declare that the project title is “Enhancement of Agri & Retail Assets and
Banking Services” is an original piece of work carried out by me under the guidance and
supervision of Mr.Amol Nimonkar. The information has been collected from genuine &
authentic sources. The work has been submitted in partial fulfillment of the requirement
of Master in Management Studies to University of Mumbai.

Date: 08th August 2017

Place: Mumbai Karpe Ram Manohar

 ACKNOWLEDGEMENT
I would like to take this opportunity to express my respect and deep gratitude to my
guide. For giving all guidance required for my project report from being a constant
source of inspiration and motivation. It was my privilege to have worked under his
guidance.

I am thankful to Mr. Venkatesh Kaujalgi (Branch Manager) for making available all
requisite in procuring the required information. I would like to place on my records my
sincere thanks to my friends for their help during my project preparation.

I am also thankful to Mr. Amol Nimonkar and Mr. Rahul Shelke who took keen interest
on my project work and guided me along till the completion of the project work by
providing me all the necessary information.

I would not forget the KGC Team of HDFC Bank for their encouragement and moreover
for their timely support and guidance till the completion of the project.

Above all I am deeply grateful to Dr. Vijay Page (Director General) for helping me and
giving me this opportunity to complete this project successfully.

Last but not least, the backbone of my success and confidence lies on the blessing of my
Parents.
 EXEQUTIVE SUMMERY
This report prepared on the topic “Enhancement of Agri & Retail Assets and Banking
Services” at HDFC Bank. The main objective of working with HDFC Bank is procedure
involve at HDFC Bank of regarding loan appraisal specially Agriculture Loan.

In the course of my project, I learned that the customer rules the roost. The whole
contract of loan can be cancelled if the date on which customer wants cannot be
executed. Working for two months taught me to feel the pulse of the market. The credit
goes to my project coordinator and the organization for making it a memorable
experience.
 INDEX
Chapter
Topic Page no.
No.
1 Introduction 07
2 Company profile 11
3 Objectives of Study 16
4 Project work undertaken 18
5 Data Analysis and Interpretation 26
6 Observation and Findings 28
7 Recommendations 31
9 Conclusion 33
10 Bibliography 35
 LIST OF TABLES
Sr. Page
Topic
No. No.
1. Classification of Banks 10
2. Loan Schedule of HDFC Bank 24
3. Amount Disbursed to Farmers 25
4. Agricultural loan for Medium and Long Term 27
5. Purpose of Borrowing Loan 27
6. Feedback from Farmers 27
 CHAPTER-1
INTRODUCTION
A snapshot of the banking industry

The Reserve Bank of India (RBI), as the central bank of the country, closely monitors
developments in the whole financial sector.

The banking sector is dominated by Scheduled Commercial Banks (SBCs). As at end March 2016,
there were 296 Commercial banks operating in India. This included 27 Public Sector Banks
(PSBs), 33 Private, 43 Foreign and 196 Regional Rural Banks. Also, there were more than 67
scheduled co-operative banks consisting of 51 scheduled urban cooperative banks and 16
scheduled state co-operative banks.

State Bank of India is still the largest bank in India with the market share of 25%. ICICI and its
two subsidiaries merged with ICICI Bank, leading creating the second largest bank in India with
a balance sheet size of `-737546Cr.

Higher provisioning norms, tighter asset classification norms, dispensing with the concept of
‘past due’ for recognition of NPAs, lowering of ceiling on exposure to a single borrower and
group exposure etc., are among the measures in order to improve the banking sector.

Retail Banking is the new mantra in the banking sector. The home Loans alone account for
nearly two-third of the total retail portfolio of the bank. According to one estimate, the retail
segment is expected to grow at 30-40% in the coming years.

Net banking, phone banking, mobile banking, ATMs and bill payments and exciting offers are
the new buzz words that banks are using to lure customers.

With a view to provide an institutional mechanism for sharing of information on borrowers /

potential borrowers by banks and Financial Institutions, the Credit Information Bureau (India)
Ltd. (CIBIL) was set up in August 2000. The Bureau provides a framework for collecting,
processing and sharing credit information on borrowers of credit institutions. SBI and HDFC are
the promoters of the CIBIL.

The RBI is now planning to transfer of its stakes in the SBI, NHB and National Bank for
Agricultural and Rural Development to the private players. Also, the Government has sought to
lower its holding in PSBs to a minimum of 33% of total capital by allowing them to raise capital
from the market. Banks are free to acquire shares, convertible debentures of corporate and
units of equity oriented mutual funds, subject to a ceiling of 5% of the total outstanding
advances (including commercial paper) as on March 31 of the previous year.

The finance ministry spelt out structure of the government-sponsored ARC called the Asset
Reconstruction Company (India) Limited (ARCIL), this pilot project of the ministry would pave
way for smoother functioning of the credit market in the country. The government will hold
49% stake and private players will hold the rest 51% the majority being held by ICICI Bank
(24.5%).

Reforms in the Banking sector

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969
and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant
growth in the geographical coverage of banks. Every bank has to earmark a minimum
percentage of their Loan portfolio to sectors identified as “priority sectors”. The manufacturing
sector also grew during the 1970s in protected environs and the banking sector was a critical
source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980.
Since then the number scheduled commercial banks increased four-fold and the number of
banks branches increased eight-fold.

After the second phase of financial sector reforms and liberalization of the sector in the early
nineties, the Public Sector Banks (PSB) found it extremely difficult to complete with the new
private sector banks and the foreign banks. The new private sector banks first made their
appearance after the guidelines permitting them were issued in January 1993. Eight new private
sector banks are presently in operation. These banks due to their late start have access to state-
of-the-art technology, which in turn helps them to save on manpower costs and provide better
services.
Classification of Banks:
 CHAPTAR NO.2
COMPANY PROFILE
Company Name

 Mission and Vision:

VISION
 To be the preferred financial solutions provider excelling in customer
delivery through insight, empowered employees and smart use of
technology.

MISSION
 Customer service and product innovations tuned to diverse needs of
individual and corporate clientele.
 Continuous technology up gradation while maintaining human values.
 Progressive globalization and achieving international standards.

VALUES
Customer’s satisfaction through:

 Providing quality service effectively, efficiently and secured.

 Periodic customer service Audit.
 Maximization of stakeholder value.
 Success through Teamwork, Integrity and people.
Introduction to HDFC Bank Pimpalgaon Branch:
HDFC bank Pimpalgaon Branch is the regional rural bank of HDFC in India, established in 2002 in
accordance with Regional Rural Bank Act, 1976(2) of 1976 of Government of India. The main
purpose of rural banking is direct banking, product marketing with rural customer. Venkatesh
Kaujalgi has more than 12 years of experience in banking sector and he is appointed as branch
manager of this branch. In this branch there are forty staff members, teller and two sales
executives.
Rural India has witnessed remarkable transformation over the past two decades. Today, around
40 percent sales of automobile industry come from rural areas and customer base of telecom
industry is also increasing here substantially. Considering the future growth of semi-urban and
rural India, the bank has decided to give major thrust on semi-urban and rural areas of the
country.
The bank products included home loans, auto loans, two-wheeler loans, tractor loans, and
agricultural loans besides personal and gold loan.
Primary Customer of this bank is farmer. This area is mainly dependent on agriculture. Grapes,
Onion, Tomato are primary crops of this area. This branch provides good banking facility to its
customers.
UNIQUE FEATURES OF HDFC BRANCH:
 Well finance to customers.
 Net-banking
 ATM
 RTGS & NEFT
 RD, FD.
 Gold loan ,car loan, home loan
 Insurance.
 Fund transfer to third party
 Car insurance
 Pension scheme for senior citizen.
 Instant Cheque clearing.

HISTORY OF HDFC BANK:

HDFC Bank Limited was incorporated in August 1994. It was promoted by Housing Development
Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the
first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector. The Bank started operations as a scheduled commercial bank in
January 1995 under the RBI's liberalization policies.
On 26 February 2000, Times Bank Limited owned by The Times Group (Bennett, Coleman & Co.)
was merged with HDFC Bank Ltd. This was the first merger of two private banks in India.
Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank .
On 23 May 2008, HDFC Bank acquired Centurion Bank of Punjab taking its total branches to
more than 1,000. The amalgamated bank emerged with a base of about `-122,000 Cr and net
advances of about `-89,000 Cr. The balance sheet size of the combined entity is more than `-
163,000 Cr
PRODUCT & SERVICES:
 HDFC- Short term deposit scheme

 HDFC- Long term deposit scheme

 HDFC- Kisan credit card

 HDFC-Insurance scheme

 HDFC- Short term loan

 HDFC-Long Term loan

 HDFC-Forex card

 HDFC-Gold loan

 HDFC-ATM, Net banking, Phone banking.

HDFC LOAN SCHEME:

 HDFC- Agriculture loan scheme.

 HDFC- Consumer loan (durables).

 HDFC- Consumer loan (vehicles).

 HDFC- Personal loan.

 HDFC- Housing loan scheme.

 HDFC- Loan for purchase of Agriculture land.

 HDFC- Loan for renewable energy Equipment’s.

 HDFC- Loan to SSI.

 HDFC- Loans for Diary and Poultry Sectors.

 CHAPTER NO.3
OBJECTIVES OF THE STUDY

Objectives of the Study:

The study is undertaken with the following objectives.

 To know the history and growth of Agriculture sector in India.

 To study the organizational profile of HDFC.

 To study the various products & services offered by the bank.

 To know the various aspects of Agricultural finance.

 To find out the feedback from the farmers who have borrowed from HDFC.

 To give recommendation & suggestion if necessary.

 CHAPTER NO.4
PROJECT WORK UNDERTAKEN

AGRICULTURE:
Agriculture is the backbone of the Indian economy. It is the largest industry of the country. In
India 70% of workforce still engaged in Agriculture & allied activities. At present Agriculture is
main source of supply & support for Indian transport.

The Agriculture is the main source of raw material for leading industries. It is largely stands for
prosperity of our country. The agriculture sector has gone through the various stages like green,
white and yellow revolution. The drastic change takes place from independence till today.
ROLE OF AGRICULTURE IN INDIA:
1. A flourishing Agriculture sector is far more important for the development of the Indian
economy.

2. Since farming is less a business a tradition in India. Even at this stage about 80% population
lives in rural areas & directly or indirectly depends on Agriculture for its livelihood.

3. About 85 Cr. of persons which are further multiplying at the rate of 2.5% per annum depend
on Agriculture sector.

4. Most of our traditional industries depend on our bulk or foreign earnings draw their raw
material from this sector.

5. The surplus generated by this sector would help Indian economy to reach the “golden stage”.

6. The share of Agriculture in national income plays crucial indicator in the economic
development of country.

7. It supplies the necessities of life today Agriculture is feeding about 100 million people. Food
production crossed mark of 253 million tons today.

8. Agriculture has a greater role in economic development in the less developed countries as it
provides livelihood to a vast majority of people living in the country.

9. It provides offers enormous scope of alternative employment.

10. Agriculture exports constitute a major portion of India’s exports & accounted for 50% of the
export at present.

CONTRIBUTION OF AGRICULTURE IN DIFFERENT SECTORS:

The rural area is become more & more independent on the moneylender. It was necessary to
relive the poor farmer from the clutches of village moneylender percentage stop their
exploitation after many days the financial institution are introduced like government,
commercial, private & co-operative societies are introduced & they act as a financial support to
the farmers.
INTRODUCTION TO FINANCIAL SECTOR IN INDIA:
After the globalize economical process, lot of growth opportunities incorporated in service
sector, Hospitality, Entertainment, Tourism, Banking, Insurance & Finance sectors has grown up
vastly not only in term of employments but also started offering various products and services
to customers. Among the above mentioned service sectors the banking and finance sector is
proved to be essential component of consumer’s life so far as financial needs are concerned.

Now-a-days the consumers are concerned about financial products in terms of Personal loans,
Individuals loans and Educational loans and Agricultural loans. Being a student of financial
management and as I belongs to son of an farmer, I have decided to study the Agricultural loan
as a financial product. The reasons for the same are being in the next subtitle.

SELECTION OF THE TOPIC:

Regarding the topic selected by me for study purpose, I want to quote following reasons why
this specific financial product is selected.

(A) History of Agriculture

1. 10,000 years ago the man invited agriculture.

2. A primitive form of agriculture was shifting cultivation of crops.

3. After few years these plots lost fertility & heavily infected with grass and soil born pests, the
cultivator would shift to new site.

4. It is the backbone of Indian economy.

(B) Agriculture in India

1. Agriculture is prime source of live hood of most of the population in India.

2. It provides food for population and also other needs like fiber, fuel, timber, wood & raw
materials to various industries.

3. 60% of the Indian population is engaged in agriculture & agro- based industries.

4. India is exporting fruits, tea, coffee, basmati, rice& also many other agriculture commodities
which help to get foreign exchange.

5. India is the only country having all types of soil& climatic conditions suitable for growing
variety of crops.
6. Different agro- industry system suitable for protection of environment proper land
utilization & increasing Agricultural production.

HDFC AGRICULTURE LOAN SCHEMES:

1. Loan mechanism for crop cultivation:-
A) Purpose:
The purpose of this scheme is that “Meeting the short-term credit needs of farmers
for Cultivation of crops.”
B) Eligibility:
An Agriculturist who owns min. 3 acre agricultural land.
C) Repayment period:
1. Revolving credit facility for 6 months to 1 year.
2. Coinciding with harvesting of crops- season/marketing of produce.
D) Quantum of finance:
As decided by District technical committee & limit worked out for the purpose.
E) Security:
1. Mortgage of land.
2. Hypothecation of crop/Assets.
F) Other Terms & Condition:
1. Assured and timely availability of working capital for crop cultivation.
2. Borrowers are covered under personal accident insurance scheme.
3. Insurance for notified crops is available.

2. Farm Mechanization for Agriculture:-

A) Purpose:
1. Purchase of Tractors/Power Tillers.
2. Purchase of Harvesters.
3. Purchase of Threshers & other farm implements.

B) Eligibility:
An Agriculturist who owns agricultural land.
C) Quantum of Finance:
As decided by District Technical committee & limit worked out for the purpose.
D) Repayment period:
 Revolving credit facility for 7 years.
E) Security:
Mortgage of land.
G) Other Terms & conditions:
Comprehensive insurance of machinery with bank clause.

3. Minor Irrigation for Agriculture:-

A) Purpose:
Digging of new wells, revitalization of existing well, purchase of oil engine, electric
motor, pump set installation of pipe line, sprinkler, irrigation drip irrigation tube
well, bore well, etc.
B) Eligibility:
An agriculturist who owns agricultural land.
C) Quantum of finance:
For new dug wells as per the NABARD unit cost for equipment/estimates.
D) Repayment period:
Depending upon the repaying capacity 7 to 11 years
E) Security:
Mortgage of land.
Hypothecation of movable assets and guarantors
F) Other Terms & Conditions:
Proposed well should be located in white watershed area.
It should not be in dark watershed area.

4. Horticulture:-
A) Purpose:
Cultivation of fruits- Pomegranate, Grapes etc.
B) Eligibility:
Agriculturist with adequate provision of irrigation
C) Quantum of Finance:
As per NABARD Unit costs/ project
D) Repayment Period:
Within 15 years.
E) Security:
 1. Mortgage of Land.
2. Hypothecation of crops.

6. Scheme for Financing Farmers for purchase of land

A) Purpose:
Purchase of land.

B) Eligibility:
Small & Marginal farmers min 3 acre own land.

C) Quantum of finance:
` 300,000/acre.

D) Repayment period:
Depends on repayment capacity premium 1 to 7 years.

F) Security:
Mortgage of land.

G) Other Term & Conditions:

CIBIL record clear and strong banking statement must for every customer.

7. Scheme for Financing Two Wheelers to Farmers.

A) Purpose:
Purchase of two wheeler.
B) Eligibility:
Net annual Income above ` 50,000/- or 5 acres of irrigated land.
C) Quantum of Finance:
80% on vehicles value
D) Repayment period:
3 to 4 years.

E) Security:

Hypothecation of Asset and Guarantors.

 Loan schedule of HDFC bank:
Criteria
Short term Long term

Particular Agriculture Equipment

Crop loan
and development
Land condition Min.3Acres Min. 3 Acres
Loan per Acre `110,000 Average `300,000
Interest Rate Up to `300,000 (4%) &
11.99%
Above `300,000 (11%)
Recovery period 6 months to 1 year 1 to 7 years

This is the loan schedule of HDFC bank. The bank disburse crop loan of
`110,000/acre and long term `300,000/acre and every customer must have
min.3 acre land for this proposal. Bank charges 4% interest on short term
loan and 11.99% on long term loan. Repayment period of short term loan 6
months to 1 year and 1 to 7 years for long term loan.

Amount Disbursed to farmers:

Sr. No Particular Amount Recovered

1 Crops ` 40,000,000 `25,000,000

 2 Equipment,
`25,000,000 `17,000,100
Development

The above table shows bank disbursed loan to farmers in 2016-17. The bank disbursed
17000000 crop loan and 50055910 Agriculture development loan in this year.
 CHAPTER NO.5
DATA ANALYSIS & INTERPRETATION

AGRICULTURE LOAN:
Period Particulars 2015-16 2016-17
Short
term Crop Loan 15,000,000 40,000,000

Long term Agriculture Equipment 28,000,000 85,000,000

 development

PURPOSE OF BORROWING LOAN:

Sr. No
Purpose Percentage
1
Farming >50%
2
Equipment >12%
3
Irrigation >4%
4
Development >10%
5
Others >15%

Feedback from the farmers regarding bank services:

Sr. No Behavior Percentage
1 Co-operative >80%
2 Friendly >15%
3 Non co-operative Negligible

The above table shows the approach of bank officers toward farmers. Like
Co-operative, Friendly & Non co-operative. More than 80% of farmer said
that approach of bank officers towards the farmers is co-operative while
more than 15% said that approach of bank officers towards the farmers
friendly in nature. Also bank officers are negligible non co-operative .
 CHAPTER NO.6
OBSERVATION & FINDINGS

OBSERVATION:
1. Agriculture output depends upon the monsoon, weather & other natural
factors type of land, fertilizer used.

2. Agriculture is not a single homogeneous industry but complex of

different industries.
3. The size of the farm is very important from the Farmers point of view.
Bank Generally prefers to lend to a big farmers than small farmers.

4. In rural areas there is no electricity, farmers can not avail of the credit
made available to them purchase of the electrically operating pump sets &
other farm machinery.

5. Operation of agriculture credit or banking becomes extremely difficult in

such unapproachable places due lack of communication.

6. The problem of overdue becomes very common in agriculture loan due

to problems like natural calamities, wrong utilization of fund, defective
lending policies, lack of inadequateness market facilities & infrastructure

FINDINGS:
1. The need for agriculture finance remains stable & steady, depending
more on nature of agriculture operation rather than the volume of
output.
2. The farmer gives his land as security against loan but land is an asset
which cannot easily converted into cash & hence it is an unsuitable from
of security for commercial banking.
3. Inadequacy of farm income & excessive expense for unproductive
purpose create situation to borrow more & more. This situation compels
him to dispose of his crops at a wrong time, wrong place & at wrong
price & thus adversely affects his repaying capacity.
4. The entire needs of farmers for farm input & credit including
consumption have to be met. Otherwise the credit advanced is likely to
be diverted to non-productive purposes.
5. At present there is no suitable infrastructure to assimilate any credit
made available to the farming community. in the absence of which it is
likely to be diverted to non-productive expenditure which results in
inflation
6. For the banks in rural area, it is difficult to get the repayment of loans
unless they are very watchful & vigilant.
7. While formulating agriculture schemes it is necessary to see their
financial soundness, economical and technical feasibility.
8. The bindings of RBI and Rigid Rules of NABARD adversely effect on
Agriculture finance.
 CHAPTER NO.7
RECOMMENDATIONS

RECOMMENDATION:
1. Bank officers also have to increase the contacts with farmers. Encourage the
people by conducting seminars. So it creates awareness in the farmers.

2. Bank have to focus on enhancing the quality of the some new schemes related
to the farm development, equipment, plantation and farm mechanization which
are helpful to fostering the agriculture production which are more important for
the development of Indian economy.

3. Bank have so take some efforts to create awareness about different financial
product by taking some programs and bank officers have should play proactive
role in aggressive marketing of short term and investment credit to potential
borrowers.

4. People of young age group who are risk takers by nature may be targeted
separately. At present era they are taking the decision in the family. So the bank
officers have to target the youngster’s age group.

5. Some farmers are capable to repay the loan but the intentionally avoid
repaying the loan. In which the government & bank recovery policy should
tighten-up.

6. Because of overlapping of credit result in financial indiscipline both parts of

lenders & borrowers. They should be strictly restricted to borrow loan from more
than one agency.
 CHAPTER NO.9
CONCLUSION

CONCLUSION:
1. After the completion of two months Summer Internship on Enhancement of
Agri & Retail Assets and Banking Services at HDFC bank, Pimpalgaon(B). I can say
that the study of Agriculture loan is very interesting and is very important subject
for the country since development and empowerment of human capital and
resource is in the National interest.
 2. The procedure involved in loan at HDFC bank is very fast for Agriculture; it
requires a lot of documentation process.
 CHAPTER NO.10
BIBILOGRAPHY

BIBLIOGRAPHY:
1. www.hdfcbank.com
2. Brochures.
3. www.rbi.org.in