1. A
TPP REPORT
ON
‘SANCTION OF AGRICULTURAL LOANS’
‘STATE BANK OF INDIA, UKLANA MANDI, HISAR
BRANCH CODE 002499
FOR FULFILING THE REQIREMENT OF THE AWARD OF DEGREE
OF MBA 5 YEAR
Subject: TPP (MBA-883)
Under the Supervision of
Mr. N.B. GAIKWAD
SUBMITTED TO:- SUBMITTED BY :-
The Director ASHISH SONI
9TH
SEMSTER
ROLL NO. 35
Registration no.
(09-UD-705)
INSTISTUTE OF MANAGEMENT STUDIES
KURUKSHETRA UNIVERSITY,KURUKSHETRA
(September 2013)

2. PREFACE
This project report has been prepared as per the requirement of the syllabus ofMBA course
structure under which the students are the required to undertake project.
It was a first-hand experience for us as that we were exposed to the professional
Set-up and were facing the market, which was really a great experience. During project
period, I had very touching experiences. When business is involved, experiences counts a lot,
as we know, experience are an instrument, which leads towards success.
Now I take this opportunity to present the project report and sincerely hope that it will be as
much knowledge enhancing to the readers as it was to use during the fieldwork and the
compilation of the report.
ASHISH SONI

3. ACKNOWLEDGEMENT
Gratitude is the hardest of emotions to express and often one does not find adequate words to
convey that entire one feels. Perhaps it is natural to every human being that when you are
really thankful and sincerely want to express you gratitude towards someone, just you run out
of words; in spiteof healthy vocab.
First of all I would like to thanks Dr. M.K. JAIN (Director, Institute Of Management
Studies, KUKwho gave me opportunity for training by making a part of the esteem
organization.
I express my sincere deep gratitude to MrN.B. GAIKWAD (FIELD OFFICER) under
whose guidance I could achieve my project completion and contributing their skills and
creativity, which made my report appealing and attractive.
Besides, I would like to thanks My family members for their constant cooperation and help.
In the absence of above mentioned people, this project would not have been in the present
style.
ASHISH SONI

4. DECLARATION
I hereby declare that this project titled “To study about agriculture loan (Pre & Post
sanction & schemes)‖ is my own work done underSBI, BRANCH UKLANA MANDI as a
part of my winter training. This work is originally done by me and I have not replicated it
from any other source. Though I have taken few references which have been mentioned in the
bibliography.
ASHISH SONI

5. CONTENTS
Chapter No. Title of the Chapter Page No.
1.Introduction of banking sector 7-11
A) Bank
B)History
C) Economic function
D)Entry regulation
2.Introduction of State Bank of India 12-18
A) History
B) Organisation Structure
C) Vision
D) Mission
E) Products and services
3.Assignment taking during training19-48
-Operational SECTOR
A) Agricultural sector
a) Agri. pre-sanction
-Assessment and
Sanction
-appraisal process
b) Agriculture Credit schemes
B) Agri. postsanction
a) Sanction of credit facilities

6. b) Documentation4
c) Control report
d) Inspection
e) Recovery of bank dues
f) Insurance
C) Findings
4. SWOT analysis,Suggestion & Conclusion 49-52
References 53

7. CHAPTER: I
INTRODUCTIONTO BANKING SECTOR
A) Bank
A bank is license by a government. Its primary activity is to lend money. Many other
financial activities were allowed over time. For example banks are important players in
financial markets and offer financial services such as investment funds In some countries
such as Germany, banks have historically owned major stakes in industrial corporations while
in other countries such as the United States banks are prohibited from owning nonfinancial
companies. In Japan, banks are usually the nexus of a cross-shareholding entity known as the
zaibatsu. In France, banc assurance is prevalent, as most banks offer insurance services (and
now real estate services) to their clients. The level of government regulation of the banking
industry varies widely, with counties such as Iceland, the United Kingdom and the United
States having relatively light regulation of the banking sector, and countries such as China
having relatively heavier regulation (including stricter regulations regarding the level of
reserves).
B) History
Banks have influenced economies and politics for centuries. Historically, the primary purpose
of a bank was to provide loans to trading companies. Banks provided funds to allow
businesses to purchase inventory, and collected those funds back with interest when the
goods were sold. For centuries, the banking industry only dealt with businesses, not
consumers. Banking services have expanded to include services directed at individuals, and
risks in these much smaller transactions are pooled.
C) Economic functions:-
The economic functions of banks include:
1. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because they are
negotiable and/or repayable on demand, and hence valued at par. They are effectively
transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee
may bank or cash.

8. 2. Netting and settlement of payments – banks act as both collection and paying agents for
customers, participating in interbank clearing andsettlement systems to collect, present, be
presented with, and pay payment instruments. This enables banks to economise on reserves
held for settlement of payments, since inward and outward payments offset each other. It also
enables the offsetting of payment flows between geographical areas, reducing the cost of
settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes
from diversification of the bank's assets and capital which provides a buffer to absorb losses
without defaulting on its obligations.
5. Maturity transformation – banks borrow more on demand debt and short term debt, but
provide more long term loans. In other words, they borrow short and lend long. With a
stronger credit quality than most other borrowers, banks can do this by aggregating issues
(e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals).
D) Entry regulation
Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate. Usually the definition of the business of banking for
the purposes of regulation is extended to include acceptance of deposits, even if they are not
repayable to the customer's order—although money lending, by itself, is generally not
included in the definition. Unlike most other regulated industries, the regulator is typically
also a participant in the market, i.e. a government-owned (central) bank. Central banks also
typically have a monopoly on the business of issuing banknotes. However, in some countries
this is not the case. In the UK, for example, the Financial Services Authority licenses banks,
and some commercial banks (such as the Bank of Scotland) issue their own banknotes in
addition to those issued by the Bank of England, the UK government's central bank.
Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements,and therefore regulated under
separate rules.
The requirements for the issue of a bank licence vary between jurisdictionsbut typically
include:
1. Minimum capital

9. 2. Minimum capital ratio
'Fit and Proper' requirements for the bank's controllers, owners, directors,and/or senior
officers. The requirements for the issue of a bank licence vary between jurisdictions but
typically include:
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior
officers.
4. Approval of the bank's
5. Business plan as being sufficiently prudent.
The economic functions of banks include:
6. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because they are
negotiable and/or repayable on demand, and hence valued at par. They are effectively
transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the
payee may bank or cash.
7. Netting and settlement of payments – banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect, present, be
presented with, and pay payment instruments. This enables banks to economise on reserves
held for settlement of payments, since inward and outward payments offset each other. It also
enables the offsetting of payment flows between geographical areas, reducing the cost of
settlement between them.
8. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
9. Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes
from diversification of the bank's assets and capital which provides a buffer to absorb losses
without defaulting on its obligations. However, banknotes and deposits are generally
unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding
it needs to continue to operate, this puts the note holders and depositors in an economically
subordinated position.
10. Maturity transformation :-Banks borrow more on demand debt and short term debt, but
provide more long term loans. In other words, they borrow short and lend long. With a
stronger credit quality than most other borrowers, banks can do this by aggregating issues
(e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and
redemptions of banknotes), maintaining reserves of cash, investing in marketable securities

10. that can be readily converted to cash if needed, and raisingreplacement funding as needed
from various sources (e.g. wholesale cash markets and securities markets).
Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the Customer:-defined as any entity for which the bank agrees to conduct an
account.
The law implies rights and obligations into this relationship as follows:
11. The bank agrees to promptly collect the cheques deposited to the customer's account as
the customer's agent, and to credit the proceeds to the customer's account.
12. The banks have a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.
13. The bank has a lien on cheques deposited to the customer's account, to the extent that the
customer is indebted to the bank.
14. The bank must not disclose details of transactions through the customer's account—unless
the customer consents, there is a public duty to disclose, the bank's interests require it, or the
law demands it.
15. The banks must not close a customer's account without reasonable notice, since cheques
are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular jurisdiction
may also modify the above terms and/or create new rights, obligations or limitations relevant
to the bank-customer relationship.
Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.
Usually the definition of the business of banking for the purposes of regulation is extended to
include acceptance of deposits, even if they are not repayable to the customer's order—
although money lending, by itself, is generally not included in the definition.
Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not the
case. In the UK, for example, the Financial Services Authority licences banks, and some

11. commercial banks(such as the Bank of Scotland) issue their own banknotes in addition
tothose issued by the Bank of England, the UK government's central bank.
Some types of financial institution, such as building societies and credit unions, may be partly
or wholly exempt from bank licence requirements, and therefore regulated under separate
rules.
E) Major competitor
Some of the major competitors for SBI in the banking sector are ICICI Bank, HDFC Bank,
Axis Bank, Bank of India, Punjab National Bank and Bank of Baroda. However in terms of
average market share, SBI is by far the largest player in the market.

12. CHAPTER 2
2. INTRODUCTION OF STATE BANK OF INDIA
State Bank of India (SBI) is a multinational banking and financial services company based
in India. It is a government-owned corporation with its headquarters in Mumbai,
Maharashtra. As of December 2012, it had assets of US$501 billion and 15,003 branches,
including 157 foreign offices, making it the largest banking and financial services company
in India by assets.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the
founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two presidency banks—Bank of
Calcutta and Bank of Bombay—to form the Imperial Bank of India, which in turn became the
State Bank of India. Government of India nationalised the Imperial Bank of India in 1955,
with Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In
2008, the government took over the stake held by the Reserve Bank of India. SBI was ranked
285th in the Fortune Global 500 rankings of the world's biggest corporations for the year
2012.
SBI provides a range of banking products through its network of branches in India and
overseas, including products aimed at non-resident Indians (NRIs). SBI has 14 regional hubs
and 57 Zonal Offices that are located at important cities throughout the country.
SBI is a regional banking behemoth and has 20% market share in deposits and loans among
Indian commercial banks.
The State Bank of India was named the 29th most reputed company in the world according to
Forbes 2012 rankings.and was the only bank featured in the "top 10 brands of India" list in
an annual survey conducted by Brand Finance and The Economic Times in 2012.

13. A) History
Seal of Imperial Bank of India
The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of
Bengal was one of three Presidency banks, the other two being the Bank of Bombay
(incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All
three Presidency banks were incorporated as joint stock companies and were the result of the
royal charters. These three banks received the exclusive right to issue paper currency till 1861
when with the Paper Currency Act, the right was taken over by the Government of India. The
Presidency banks amalgamated on 27 January 1921, and the re-organised banking entity took
as its name Imperial Bank of India. The Imperial Bank of India remained a joint stock
company but without Government participation.
The All India Rural Credit Survey Committee proposed the takeover of theImperial Bank of
India, and integrating with it, the former state-owned or state associate banks. Subsequently,
an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of
India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India
more powerful, because as much as a quarter of the resources of the Indian banking system
were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks)
Act was passed in 1959.
The State Bank of India emerged as a pacesetter, with its operations carried out by the 480
offices comprising branches, sub offices and three Local Head Offices,inherited from the

14. Imperial Bank. Instead of serving as mere repositories of the community's savings and
lending to creditworthy parties, the State Bank of India catered to the needs of the customers,
by banking purposefully.
State Bank of India (SBI) (LSE: SBID) is the largest bank in India. The bank traces its
ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of
Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government
of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India
taking a 60% stake, and renamed it the State Bank of India. In 2008, the Government took
over the stake held by the Reserve Bank of India.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On
1 July 1955, the Imperial Bank of India became the State Bank of India. The government of
India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict
of interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made
eight state banks associates of SBI. A process of consolidation began on 13 September 2008,
when the State Bank of Saurashtra merged with SBI.
SBI has acquired local banks in rescues. The first was the Bank of Behar (est. 1911), which
SBI acquired in 1969, together with its 28 branches. The next year SBI acquired National
Bank of Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired
KrishnaramBaldeo Bank, which had been established in 1916 in Gwalior State, under the
patronage of Maharaja MadhoRaoScindia. The bank had been the DukanPichadi, a small
moneylender, owned by the Maharaja. The new banks first manager was Jall N. Broacha, a
Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was
the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in
Kerala.
The State Bank of India and all its associate banks are identified by the same blue keyhole
logo. The State Bank of India word mark usually has one standard typeface, but also utilises
other typefaces.

15. B)Organisational Structure
Reserve Bank of India is the regulating body for the Indian Banking Industry. It is a mixture
of Public sector, Private sector, Co-operative banks and foreign banks. The private sector
banks are further spilt into old banks and new banks.
Scheduled Banks
Scheduled Commercial Banks
Public Sector
Banks
Private Sector
Banks
Foreign
Banks
Regional
Rural Banks
Nationalized
banks
SBI & its
Associates
Old private sector
Banks
New private sector
Banks
Scheduled Co-operative Banks
Scheduled urban
cooperative Bank
Scheduled State co-
operative Banks

16.  Current Board of Directors
As on 14 January 2013, there are fifteen members in the SBI board of directors:
PratipChaudhuri (Chairman)
Hemant G. Contractor (Managing Director)
Arundhati Bhattacharya (Managing Director & Chief Financial Officer)
A. Krishna Kumar (Managing Director)
S. Visvanathan (Managing Director)
S. Venkatachalam (Director)
D. Sundaram (Director)
Thomas Mathew (Director)
S.K. Mukherjee (Officer Employee Director)
Rajiv Kumar (Director)
JyotiBhushanMohapatra (Workmen Employee Director)
Deepak Amin (Director)
HarichandraBahadur Singh (Director)
 MISSION, VISION AND VALUES
C) MISSION STATEMENT: To retain the Bank‘s position as premiere IndianFinancial
Service Group, with world class standards and significant global committed to excellence in
customer, shareholder and employee satisfaction and to play a leading role in expanding and
diversifying financial service sectors while containing emphasis on its development banking
rule.
D) VISION STATEMENT:
Premier Indian Financial Service Group with prospective world-class Standards of
efficiency and professionalism and institutional values.
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders‘ value through high-sustained earnings per
Share.

17. An institution with cultural mutual care and commitment, satisfying and Good work
environment and continues learning opportunities.
 VALUES:
Excellence in customer service
Profit orientation
Belonging commitment to Bank
Fairness in all dealings and relations
Risk taking and innovative
Team playing
Learning and renewal
Integrity
Transparency and Discipline in policies and systems.
E) PRODUCTS AND SERVICES:
 PRODUCTS:
State Bank Of India renders varieties of services to customers through the following
products:
Personal Loan Product:
SBI Term Deposits
SBI Recurring Deposits
SBI Housing Loan
SBI Car Loan
SBI Educational Loan
SBI Personal Loan
SBI Loan For Pensioners
Loan Against Mortgage Of Property

18. Loan Against Shares & Debentures
Rent Plus Scheme
Medi-Plus Scheme
 SERVICES:
DOMESTIC TREASURY
SBI VISHWA YATRA FOREIGN TRAVEL CARD
BROKING SERVICES
REVISED SERVICE CHARGES
ATM SERVICES
INTERNET BANKING
E-PAY
E-RAIL
RBIEFT
SAFE DEPOSIT LOCKER
GIFT CHEQUES
 Other SBI service points
SBI has 27,000+ ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank
Shri O.P. Bhatt on 31 March 2011, the day of his retirement); and SBI group (including
associate banks) has about 45,000 ATMs. SBI has become the first bank to install an ATM at
Drass in the Jammu & Kashmir Kargil region. This was the Bank's 27,032nd ATM on 27
July 2012.

19. CHAPTER-3
3. ASSIGNMENT TAKING DURING TRAINING
 OPERATIONAL SECTOR
 AGRICULTURAL SECTOR
I. Pre-sanction
II. Post-sanction
1. PRE SANCTION CREDIT PROCESS
a. WHY AGRICULTURE LOAN?
 To provide focused attention to the banking requirement of the agriculture sector.
 To help in making agriculture a commercial proposition.
 To fill credit gaps and make fund available at the right time, in adequate quantity.
 To help in increasing agriculture production and income.
 To aim at integrated development of agriculture.
b. List some of the agriculture activities for which SBI offers
agriculture loans.
 Crop Production
 Buying farm machinery
 Construction of Cold Storage and godawns
 Transportation of Crop from the field to the marketLand development

20. 1.1 TYPES OF AGRICULTURE CREDIT SCHEME
CROP LOAN/ KISAN CREDIT CARD KISAN GOLD CARD
PRODUCE MARKETING LOAN LAND PURCHASE SCHEME
GENERAL CREDIT CARD LOAN GRAMIN BHANDARAN
AGRICULTURE GOLD LOAN MINOR IRRIGATION SCHEMES
SBI KRISHAK UTHAN YOJNA FINANCE TO HORRICULTURE
A.PRODUCTION CREDIT
a) Kisan Credit Card Scheme (KCC)
i. Purpose :To extend adequate and timely support to farmers for their short term credit
needs.
ii. Who are eligible for the loan :Farmers with excellent repayment record for 2 years.
New farmers with sizeabledeposits with our branches for 3 to 4 years are also eligible.
iii. Borrowers with good trackrecord in other Banks are alsoeligible :Farmers who
have defaulted in repayment but have liquidated the outstandings arealso eligible.
TYPES OF
AGRICULUTRE
CREDIT SCHEMES
PRODUCTION
CREDIT
INVESTMENT
CREDIT

21. iv. Loan Amount:Loan amount is decided based on the cropping pattern, ancillary and
contingencyneeds of the farmer for the full year. 90 % of the cost of cultivation (Scale
of
Finance) is given as loan per acre. 100 % of the cost is available as loan up to Rs.50, 000/-
and 85 % of the cost is available as loan above Rs. 1, 00,000/-
Loan Amount: Security to be furnished
up to Rs. 50,000:Hypothecation of crops.
Above Rs. 50,000 and up to Rs.1, 00,0001. Hypothecation of crops
2. Mortgage of lands or Third party guarantee
Above Rs.1, 00,000: 1. Hypothecation of crops
2. Mortgage of lands or Third party guarantee
For tobacco, Sugarcane and1. Hypothecation of crops
other crops under tie-up2. a. Hypothecation of crops
arrangement with boards/b. Mortgage of lands or Third party guarantee
factories/ companies
i. Up to Rs. 1 Lac
ii. Above one lac
v. How do you repay:It is a revolving cash credit limit with any number of withdrawals
and repayments.
vi. How to apply for this loan:You may contact our nearest branch for the application or
even talk to themarketing officers visiting your village and produce the
landdocuments.Loan amount is decided based on the cropping pattern, ancillary and
contingencyneeds of the farmer for the full year. 90 % of the cost of cultivation (Scale
ofFinance) is given as loan per acre. 100 % of the cost is available as loan upto
Rs.50,000/- and 85 % of the cost is available as loan above Rs. 1,00,000/-

22. vii. Documents you need to provide:Land records to ascertain cultivation rights.
Average under different cropsSources of other borrowings eg. Co-operative Societies
and Banks.
viii. Disbursement of the loan : As per the cultivation requirements of the crop the loan
amount is disbursed in cashand kind (for fertilizers, pesticides etc)
b) PRODUCE MARKETING LOAN
i. PURPOSE : To meet short term credit requirement to adjust/repay the outstanding
crop
Loan/KCC limit availed by farmers from the bank and to procure better price by
storing farm produce and selling it at favourable price within a specified period.
ii. ELIGIBILITY : Loan will be available only to those farmers who have availed
themselves of crop loan/KCC facility/composite cash credit limit from our Bank only
for raising
the concerned crops in that season which should not be overdue for repayment.
iii. NATURE & EXTENT OF FACILITY:Short term loan. Maximum up to Rs.5 lakh.
The loan would be twice the amount of crop loan taken by farmer or 75 per cent of the
value of the produce calculated at the Government announced procurement prices,
whichever islower.
iv. REPAYMENT OF LOAN :Produce (Marketing) Loan shall be repaid within a
maximum period of twelve months from the date of its disbursement.
c) GENERAL CREDIT CARD LOAN
i. Purpose
The scheme is to provide hassle-free credit to our customers based on the assessment
of cash flow without insistence on security, purpose or end-use of the credit.
ii. Who are eligible for the loan?
Eligibility:
i. All our existing customers with the branch having satisfactorily conducted deposit
accounts including no frills deposit accounts in our books; say, for the last 6 months,
or so, and / or loan accounts classified as standard assets will be eligible for availing

23. loan under the scheme.
ii. GCC facility should, however, not be extended to the KCC borrowers.
iii. Loan amount Maximum Rs 25000 /
iv. Security: Nil
v. How to repay the loan
Account will be in the nature of cash credit. The outstanding amount in the GCC
should be cleared in full when the applicant is fluid with cash which may be at yearly/
half yearly / quarterly / monthly intervals based on the occupation of the applicant /
his family. In case the entire amount is not repaid a minimum of 20 % of the amount
due along with upto date interest debited should at least be repaid.
vi. How to apply for this loan
you may contact our nearest branch or talk to the marketing officers visiting your
village.
d) AGRICULTURE GOLD LOAN
i. Purpose
Bank extends hassle free finance to farmers / agriculturists against Gold Ornaments /
gold wares to increase their liquidity to meet crop production expenses, Investment
expenses related to agriculture and / or allied agricultural activities.
ii. Eligibility
Any person engaged in agriculture or allied activities as well as persons engaged in
activities permitted to be classified under agriculture.
iii. Quantum of Loan
Upto 70% of the value of the ornaments .Value will be as advised by the bank to the
branches periodically.
iv. Security
Pledge of gold ornaments.
v. How do you repay
Credit / Overdraft: Like KCC, it is a running account for a period of 3 years.
vi. Demand Loan / Term Loan :The repayment period of the loan should be fixed so as
to coincide with the harvesting and marketing season / generation of income from the
activity, allowing 2 to 3 months time after harvesting to market the produce and
realize the proceeds. However, the total period will not generally exceed one year

24. from the disbursement of the loan in the case of short-term loan / production credit
and 36 months in other cases.
vii. How to apply for this loan
Contact your nearest Branch engaged in Agricultural advance.
e) KRISHAK UTHAAN YOJNA
i. Purpose
This scheme is to provide short term production and consumption credit to meet
Genuine requirements of tenant farmers, share croppers and oral lessees who do not
have recorded land records and where there is no written undertaking/ document
available to substantiate raising of crops by the tenant farmer/ share cropper/oral
lessee. It will help increase their income from agriculture production activities.
ii. Who are eligible?
Landless labourers, share croppers, tenant farmers, oral lessees, (also covering oral
tenants & small farmers) having no recorded land records are eligible .They should
have a permanent residential address proof & have been residing at the lace for at
least past 2 years.
• Migratory tillers are not eligible under the scheme.
iii. Loan amount
Maximum of Rs 50000/ .out of which maximum consumption credit will be Rs
10000/
iv. What documents you need to provide
(1) Proof of residence
(2) Proof of identity
(3) Affidavit in the prescribed format, duly notarized
v. Security: Nil
vi. How do you repay:
You should route the sale proceeds through the cash credit account
vii. How to apply for this loan
You may contact our nearest branch or even talk to the marketing officers visiting
your village.

25. b)INVESTMENT CREDIT
a) KISAN GOLD CARD
i. Purpose:To sanction hassle free term loans to farmers having excellent repayment
record. Investment credit for which term loans are ordinarily sanctioned are covered.
Consumption loan to meet domestic expenses like children‘s education, marriage,
medical expenses etc.are also be included to the extent of 20 % of limit.
ii. Who are eligible for Term Loans:
Farmers with excellent repayment record for at least past 2 years. New farmers with sizeable
deposits with our branches for 3 to 4 years. Good borrowers with other Banks. Farmers who
have defaulted in repayment but have liquidated theout standings. Farmers who have closed
accounts without any default in the last three years but are not our current borrowers.
i. Loan Amount : Loan amount is fixed on the basis of 5 times annual farm income or
50% of the value of the land mortgaged as collateral security minus term loan out
standings whichever is more subject to a maximum of Rs.5 lacs.
ii. Documents you need to provide:Land records other than that is already given to the
Bank viz. likerecord of rights / encumbrance if required.
iii. Security
Amount of Loan Security to be FurnishedHypothecation of assets financed
A). Where movable assets
are not created (eg.
Dug wells,development of
land etc.)a) Personal Guarantee
a) Up to Rs. 10,000/- b)b)i. Personal Guarantee
Above Rs.10,000/-ii Mortgage of land
B). Where movable assetsi. Hypothecation of assets financed
are created (pump set,ii. Mortgage of lands or Third party
Pipeline etc.)guarantee.
a) Hypothecation of the assets created
a) up to Rs.50,000/-
b) i. Hypothecation of the assets created
ii. Mortgage of land / other property
or third party guarantee.

26. b) Above Rs.50, 000/- to Rs.
1 lac c) i. Hypothecation of the assets
created
c) Above Rs. 1 lacii. Mortgage of land or other property
i. How do you Repay : Repayment of loan will be in quarterly/half yearly / yearly
instalments
depending on the harvest of the crops or the liquidity created by the
agriculture activity undertaken.
ii. How to apply for this loan :You may contact our nearest branch for the application
or even talk tothe marketing officers visiting your village and produce the
landdocuments.
b) Land Purchase Scheme
i. Purpose:Loan to small and marginal farmers / landless labourers for purchase of
agricultural land.
ii. Eligibility:Small/marginal farmers, tenants, share-croppers owning less than 5 acres
ofunirrigated / 2.5 acres irrigated land in their own name and landless
agriculturallabourers, with record of prompt repayment of loans, are eligible to avail
this loan.Own land before and after purchase should not exceed 5 acres unirrigated /
2.5acres irrigated land.
iii. Loan Amount:Maximum loan amount under the scheme will be Rs.5 lac. Credit
facilities for development of land, irrigation facilities and for cultivation of crops will
also beavailable. A farmer will be required to contribute minimum 15 percent of total
costas margin from his own resources.
iv. Security:Land to be purchased with Bank finance will be mortgaged as security. No
othersecurity will be insisted upon.
v. Rate of Interest:As applicable to Agricultural Term Loans.
vi. How do you Repay:Repayment of loan will be half yearly / yearly installments
depending on the harvest of the crops or the liquidity created by the agriculture
activity undertaken over a period of 10 years. Adequate gestation period will be
allowed for development of land.

27. vii. How to apply for this loan :You may contact our nearest branch for the application
or even talk to the marketing officers visiting your village and produce the land
documents.
c) GRAMIN BHANDARAN YOJNA
i. Purpose
This scheme is for creating scientific storage capacity in the rural areas for storing
farm produce ,thereby prevent distress sale of produce by the farmers after harvest ,by
promoting pledge financing and marketing credit.
ii. Who are eligible for the loan?
1. Individuals / Farmers. Quality cum inputs testing laboratories.
2. Proprietary and partnership terms..
3. Co-operatives, Agro-processing co-operative societies.
4. Companies.
5. Corporations, Agro-Industrial corporations.
6. Agricultural Produce Marketing Committees..
7. Group of Farmers/Growers.
8. NGOs
9. Agro-Processing Corporations..
10. Self Help Groups.
11. Marketing Boards etc.
The godown can be constructed / located in any area outside the limits of a Municipal
Corporation area. Rural godowns located in Food Parks promoted by Ministry of
Food Processing Industries are also eligible.
iii. Loan amount
Depending on the project cost. Maximum Project cost will be Rs 1500/ to 2000/ per
tonne capacity for construction and Rs 500/ per tonne for renovation NABARD is
providing back end subsidy for the projects financed by the Banks ,depending on the
location and capacity of the godowns
Bank will financeupto 80 % of the Project cost
iv. Security: Mortgage /charge of Land and godown
v. How do you repay: The loan should be repaid in 11 years, with a grace period of one
year. Subsidy will be credited as the final instalments .

28. vi. How to apply for this loan?
You may contact our nearest branch or even talk to the marketing officers visiting
your village.
d) Minor Irrigation Schemes
i. Purpose :Credit for creating irrigation facilities from underground / surface water
sources All structures and equipment‘s connected with it are also financed. Loans
cover various activities like digging of new wells (open/bore wells), deepening of
existing wells (traditional/in well bore), energisation of wells (oil engine/electrical
pump set), laying of pipe lines, installing drip/sprinkler irrigation system and lift
irrigation system.
ii. Who are eligible for Term Loans :All farmers having a known source of water
which can be exploited for irrigation purpose.
iii. Amount of Loan:Security to be furnished
A). Where movable assets
are not created(eg.
Dug wells,development of
land etc.
a) UptoRs. 10,000/-a) Personal Guarantee
b) Above Rs.10,000/-b)i. Personal Guarantee
ii Mortgage of land
B). Where movable assets
are created (pumpset,
pipeline etc.)
a) Upto Rs.50,000/-a) Hypothecation of the asset created
b) Above Rs.50,000/- to Rs.b) i. Hypothecation of the assets created
1 lacii. Mortgage of land or third party guarantee
c) Above Rs. 1 lacc) i. Hypothecation of the assets created
ii. Mortgage of land
iv. How do you Repay :Repayment of loan will be in quarterly/half yearly / yearly
instalments depending on the harvest of the crops or the liquidity created by the
agriculture activity undertaken.

29. v. Loan amount :UptoRs. 50,000/- 100 % of the cost of the asset / project cost is
provided as loan.AboveRs. 50,000/- upto 85 % of the cost of the asset / project is
provided as loan.
vi. Documents you need to provide :An estimate for civil works to be undertaken and
quotation for the assets to be purchased have to be submitted. Land records to
ascertain the title to the property, Geologist certificate and feasibility certificate from
the electricity board should also be submitted where relevant.
e) Finance to Horticulture
i. Purpose : Loans for development of fruit orchards like mango, chikoo, Guava,
Grapes, pomegranate, apple, lechee etc., as well as short term fruit crops (banana,
pineapple etc.), flowers in open and green houses (roses, carnation, chrysanthemums,
jasmine etc.) and vegetable crops (potato, tomato, brinjal, gourds, peas etc.) are
financed.
ii. Who are eligible for Term Loans :All farmers having cultivable lands.
iii. Loan Amount :UptoRs. 50,000/- 100 % of the cost of the asset / project cost is
provided as loan. Above Rs. 50,000/- upto 85 % of the cost of the asset / project is
given as loan. For short term loans the loans are given under our crop loan / Kisan
Credit Card scheme and the terms applicable under these scheme are applicable for
these loans. Other requirements for long term loans are given below.
iv. Documents you need to provide: For orchard development you need to submit the
following:
i) Water and soil test report.
ii) A feasibility certificate from the local horticulture department.
iii) Land records.
iv) Quotation / estimates for the costs to be incurred.
v) If the project is large then a project report .

30. i. Disbursement of loan :Generally disbursements are made directly to the suppliers as
per the schedule set in your proposal.
ii. Security
Amount of Loan: Security to be Furnished
a) UptoRs. 50,000/Hypothecation of assets created
b) Above Rs. 50,000/- to Rs. 1i) Hypothecation of assets created
lacii. Mortgage of land or third party guarantee
c) Above Rs. 1 laci. Hypothecation of the assets created
ii. Mortgage of land
i. How do you Repay : The loan repayment starts after the completion of the gestation
period varying from 4 to 7 years for different crops. Repayment commences from the
time the crop gives economic yield and is linked to the income generation of each
crop every year and varies between 7 years to 12 years.
ii. How to apply for this loan : You may contact our nearest branch for the application
or even talk to the marketing officers visiting your village and produce the land
documents.
1.1PRE SANCTIONASSESSMENT AND SANCTION
a) Assessment – Indicative List of Activities
Once the appraisal of a proposal is done, the proposal is sent for assessment. Following is
a list of activities to be carried out while assessing a proposal:
Review the draft proposal together with the back-up details/ notes, and the
Borrower‘s application, financial statements and other reports/ documents
Examined by the Appraiser.
Interact with the Borrower and the Appraiser.
Carry out the pre-sanction visit to the applicant company and their project/ factory
site.
Peruse the financial analysis (Balance Sheet/ Operating Statement/ Ratio Analysis/

31. Funds Flow Statement/ Working Capital Assessment/ Project Cost and Sources/
Break-Even Analysis/ Debt Service/ Security Cover etc.) to see if this is prima facie
in order. If any deficiencies are seen, arrange with the Appraiser for the analysis on
the correct lines.
Examine critically the following aspects of the proposed exposure:
Bank‘s Lending Policy and other guidelines issued by the Bank
RBI Guidelines
Background of promoters/ senior management
Inter-firm comparison
Technology in use in the Company
Market conditions
Projected performance of the Borrower vis-à-vis past estimates and
performance
Viability of the project
Strengths and Weaknessesof the borrower entity.
Proposed structure of facilities
Adequacy/ correctness of limits/ sub-limits, margins, moratorium and
repayment schedule
Adequacy of proposed security cover
Credit Risk Rating
Pricing and other charges and concessions, if any, proposed for the facilities
Risk factors of the proposal and steps proposed to mitigate the risk
Deviations proposed from the norms of the Bank and justifications therefor
Arrange with the Appraiser to draw up the proposal in the final form.
Recommendation for sanction:
Recapitulate briefly the conclusions of the appraisal and state whether the
proposal is economically viable.
Recount briefly the value of the Company‘s/ Group‘s connections
State whether, all considered, the proposal is a fair banking risk.
Finally, give recommendations for grant of the requisite FB and NFB creditfacilities.

32. b) Sanction – Indicative List of Activities
After the assessment of the proposal, in case the proposal is found suitable, the
proposal issanctioned.
A list of activities followed while sanctioning a proposal is given below:
Peruse the proposal to see if the report prima facie presents the proposal in a
comprehensive manner as required.
If any critical information is not provided in the proposal, remit it back to the
Assessor for supply of the required data/ clarifications.
Examine critically the following aspects of the proposed exposure in the light of the
o corresponding instructions in force:
Bank‘s lending policy and other relevant guidelines
RBI Guidelines
Borrower‘s status in the industry
Industry prospects
Experience of the Bank with other units in similar industry
Overall strength of the Borrower
Projected level of operations
Risk factors critical to the exposure and adequacy of safeguards proposed
thereagainst
Value of the existing connection with the Borrower
Credit Risk Rating
Security, pricing, charges and concessions proposed for the exposure and
covenants stipulated vis-à-vis the risk perception
c) Sanction
Accord sanction of the proposal on the terms proposed or by stipulating modified or
additional conditions/ safeguards
OR
Defer decision on the proposal and return it for additional data/ clarifications
OR
Reject the proposal, if it is not acceptable, setting out the reasons for that.

33. d)General Guidelines for Pre-Sanction Process
Functional Responsibilities
Wherever two functionaries are assigned, the functions relating to a single stage (for
example Appraisal), they will carry out all the functions relating to this stage either
Individually or jointly. Following are the functional responsibilities:
The senior functionary will decide the requirement in this regard.
o Each of them will carry the responsibility for discharging the functions with due diligence.
o Wherever a functionary or an Officer at a Controlling Office is assigned the task of
additional assessment‘, such functionary/ Officer will carry out all the functionsrequired for
assessment, either individually or jointly with the functionaries at the Branch as required.
o The functionary/ Officer at the Controlling Office will decide the requirement in this
regard.
o The additional assessment functions will not ordinarily require for each case a presanction
visit and/ or interaction with the Appraiser/ Borrower.
o However, if they are considered necessary, they will also be performed as part of additional
assessment.
o At the appraisal stage, the Appraiser will then review the proposal (including background
papers) in full form, i.e. complete in all respects as a draft.
o The Assessor will then review the proposal and if he finds that additional information/
comments or modified comments are to be furnished, he will arrange with the Appraiser for
such addition/ modification to be incorporated in the draft proposal.
o An integrated final proposal will thereafter be submitted.
o In cases where material changes in a proposal/ report are made by the Assessor, the
Appraiser may, if he so desires, place on record a copy of the draft proposal/ report for later
reference.

34. o When an Official who is to carry out additional assessment finds that the proposal received
is to be re-drafted, the Official will prepare a fresh proposal and submit it to the next
authority. The proposal received from the Assessor will be held only as part of the record.
o In respect of proposals which require sanction separately of different facilities (e.g., FB and
NFB) by authorities at different levels, the highest level authority in the sanction trail will
sanction all the facilities recommended in the proposal or as advised from time to time in the
‗Scheme of Delegation of Financial Powers‘.
o The three stages involved in Pre-sanction Credit Process (PCP) will generally be handled
by three different functionaries.
e) Administrative Clearance
While exercising financial powers vested in them, the Bank‘s officials may have to seek prior
administrative clearance (AC) from higher authorities as laid down by Credit Policy and
Planning Department (CPPD) from time to time. The system of AC affords an opportunity
for prioritization of the banking business from a macro perspective. However, a credit
decision on any proposal has to be viewed from the overall merits of each case and not
merely on the basis of the AC. The AC accorded by Circle Credit Committee (CCC)/ Central
Office Credit Committee (COCC) is valid for 8 weeks. In case the credit proposal is not
submitted to the appropriate Sanctioning Authority (SA) within this period, a fresh AC will
have to be obtained. The credit facilities should be released only after the appropriate
authority sanctions the relative facilities. However, in cases where there is an urgent need for
release of credit facilities in anticipation of sanction, the CCC should accord prior clearance
to the release of credit facilities, in respect of advances that fall within the CCC sanctioning
powers. In case release of credit facilities in anticipation of sanction is sought in respect of
advances requiring sanction by ECCB, the proposal has to be accorded prior AC by the
Chairman. Regular credit proposals and rehabilitation proposals for sanction by/
recommendations of the CCC should be prepared in conformity with the terms of AC given
for the proposal and submitted within the validity of the AC. Any deviation in the proposal
should be clearlyhighlighted.Where there is no deviation, a certificate to this effect should be
incorporated in theproposal.

35. f) Concurrent Borrowing
Before sanctioning any credit limit, the Branch should ensure that the applicant is not
enjoying similar or other credit facilities with other banks. Normally, multiple borrowing/
multiple facilities to the same Borrower from two or more banks should not be allowed. In
case the applicant is found to have any credit facility from any other bank or financial
institution (FI), detailed information should be called from the concerned bank/ FI. Along
with the loan application, the applicant should submit a declaration regarding the existing
credit arrangements. He should also furnish an undertaking that stocks will not be
hypothecated to any other bank without prior approval of the Bank. Such multiple borrowings
by persons, without the Bank‘s written consent, should be viewed as financial indiscipline.In
case it is subsequently found that the Borrower had made a false statement in regard
toconcurrent borrowings, the advances will be recalled forthwith. As far as possible,
Borrowershould be advised to restrict their borrowings to one Bank only.
Applicants seeking credit facilities of Rs. 25 lacs or above, should furnish information, in the
loan application, about all pending litigations, which have been initiated by another financer
including banks against applicants, their partners, directors, etc. for recovery of dues.
Similarly, in the loan proposals, this information should also be furnished in the appraisal
submitted for sanction of credit limits of Rs. 25 lacs and above under ‗Other Details‘, along
with information on RBI Defaulters List/ ECGC Caution List.
g) Sanction within Financial Powers
Sanctioning Authority should ensure that the sanction is within the powers delegated to him
and that the sanction is reported to a higher authority as required in the ‗Scheme of
Delegation of Financial Powers.‘ The Controlling Offices should diligently scrutinize the
Control Returns. If they notice any unusual feature, they should initiate suitable follow-up
action to rectify the position with a view to protecting the Bank‘s interest.Non-submission of
Control Returns in time should be viewed seriously. Necessary stepsshould be initiated to
obtain the pending returns in future.
h) Prescription of Terms and ConditionsAs a measure of effective
follow-up, the Bank stipulates a number of compulsory covenants and optional covenants
in respect of all advances.

36. The covenants relate to:
· The right of examination of Borrower‘s books and inspection of factories either by
the Bank‘s officers or by experts/ Management Consultants of the Bank‘s choice.
The restriction with regard to change in capital structure, scheme of
amalgamation/reconstruction, scheme of expansion or addition to FA, investment by
way of sharecapital/ loans/ advances/ deposits in other concerns, borrowing
arrangements withother banks and FIs, guarantee obligations and declaration of
dividends.
The restriction with regard to (a) Repayment of deposits from friends and relativesof
promoters/ directors without Bank‘s prior permission, and (b) Payment of intereston
those deposits.
The covenants also relate to:
The restriction with regard to transfer of controlling interest in the Company ordrastic
change in the Company‘s management set-up without Bank‘s priorpermission.
Borrower‘s consent permitting banks/ FIs to share or publish information about
theBorrower‘s account in case of default.
The optional covenants relate to nomination of the Bank‘s representatives on
theCompany‘s Board, ceiling in regard to dividend declaration, withdrawal of money
byprincipal shareholders/ Directors, minimum NWC, insurance cover for
standingcharges and loss of profit arising from stoppage of production, informing the
Bankabout the happening of any significant event likely to have an effect on the
workingof the Company or its subsidiaries:
Standard Covenants
Negative Covenants
Letter from Promoters
Credit facilities to Companies whose Directors figure in RBI‘s List ofDefaulters.
Apart from the usual Terms and Conditions of sanction of credit as contained in theStandard
covenants of the Bank‘s loan documents, depending on the degree of financial discipline
required to be imposed in respect of individual cases, reasonable additional conditions as are
considered desirable may be prescribed. However, officials are requiredto ensure that while

37. recommending or sanctioning a loan, onerous Terms and Conditions which are difficult for
the Borrower to fulfil are not stipulated in the first place. The question of stipulating special
covenants in any particular case should be fully discussed with concerned Borrower,
explaining the implications thereof so as to avoid the necessity for modifying them
subsequently. All such special covenants to be stipulated in individual cases should be
indicated in the Appraisal Memorandum highlighting therationale behind their stipulation. If
the risk element is high, the credit worthiness of theproposal may be reviewed afresh. In
order to enable the Bank‘s operating functionaries ensure meticulous and timely compliance
of all the Terms and Conditions governing loans/ advances, such Terms and Conditions
should be clearly spelt out as indicated below:
a. The standard Terms and Conditions pertaining to the limit of the loan/ advance
(e.g.
b. Security, margin, interest, insurance, etc.) should be mentioned in one
particularsection of the proposal. Whenever, some of the conditions are
proposed to befulfilled after disbursement of a facility, this should be so spelt
out (e.g. EM ofimmovable property by way of collateral after release of
limits).
c. Other proposal specific T&C stipulated by the Appraising/ Assessing officials
shouldbe recapitulated and listed separately at the end of the proposal
segregating thepre- and post-disbursement conditions clearly.
d. Any additional T&C stipulated by the Controllers or the Sanctioning Authority
shouldbe specified in the Sanction Letter to the Branch as pre- or post-
disbursementconditions in clear terms.
e. Other observations, not specified as conditions, recorded by the Controllers/
SA willbe advised to the Branch in the letter as guidelines to the Branch on the
conduct ofthe advance sanctioned.
f. While conveying sanction of loans/ advances to Borrowers, Branches should
writein detail all the T&C in clear terms by segregating the pre-
disbursementconditionsfrom the post-disbursement conditions and the time
stipulations, if any, forcompliance for the same.
g.
i) Monitoring Disposal of Credit Proposals

38. For monitoring disposal of credit proposals within the time frame stipulated by the Bank,
Branches should adopt the following procedure:
Loan applications received from Units should be acknowledged by
Branchesimmediately on receipt of the application and entered in the ‗Loan
ApplicationReceived and Disposal Register‘; with care being taken to ensure that a
segmentwiseserial number is generated.
After receipt of the loan application, an indicative checklist of data/ papers, etc. tobe
furnished to the Bank may be given to the applicants.
The credit appraisal officers may ask, as far as possible, all relevant information inone
instalment and avoid piecemeal queries at various stages.
Every meeting/ interface with the applicants should be used to emphasise the needfor
submission of complete particulars/ data to facilitate quick and timely disposal ofloan
proposals.
The BM/ MoD should verify this register at periodic intervals.
Date and status of disposal of applications by way of sanction/ rejection (if
rejected,reasons therefor) should be recorded in the register.
Controllers should scrutinize this register during their visits to the Branches.
Each Branch will submit to its Controllers a monthly status report on pending
loanapplications, indicating the reasons for the delay.
Statement of pending proposals at LHO.
Branches should not indulge in any act such as verbal promise or issue of
anyconsent letter to sanction loans pending formal sanction etc., which may give
falsehopes to the prospective borrowers.
A Date Chart must accompany every proposal. It should be the responsibility of
theSA to ensure that this chart is completed at all levels.
If credit facilities applied for are wholly or partially rejected, the reasons for
thatshould be briefly mentioned in the ‗Loan Applications Received and
DisposalRegister‘.
In order to ensure that there is no delay in the disbursement of sanctioned
facilitiesand also to avoid any need to change the collateral security after
obtainingsanction, a preliminary scrutiny of the documents relating to the
property should becarried out at the Branch to ensure that the title is clear.

39. j) Pre-Sanction Process in Present Environment
 Existing Accounts at Branch
For an existing account at a Branch:
 Obtain request letter from the Unit/ Borrowers.
 Compile Feedback Report, various Inspection and Audit Reports and
Branchcomments thereon and Comments on Corporate Governance in case of
Corporateaccounts.
 Submit the value of accounts, viz., Interest, Exchange, Commission, Forex Salesand
Purchases, utilisation percentage of loans, comments on pro-rata share (forboth
current and previous year), credit and debit summations, number of LCsissued/
devolved, number of BGs issued/ invoked, etc. in the Feedback Report.
 Forward Unit‘s request letter along with the Feedback Report, comments on I and
AReports, CMA Data and last 3 years Audited Financials to Credit Processing
Cell(CPC)/ Small Enterprises Credit Cell (SECC) within 3 days.
k) Areas of Responsibilities at Branch
Following are the responsibilities taken up at the Branch to carry out the pre-sanction
process:
 Customer identification, completion of Know Your Customer (KYC) formalities
inrespect of new customers.
 Compilation of Opinion Reports (on the Borrower as well as on the Guarantors).
 Obtaining Opinion Reports from other banks/ FIs in respect of new customers
andAssociate Concerns of the Unit.
 Compilation of Group Profile.
 Inspection of the collateral and assessment of value thereof.
1) Areas of Responsibilities at CPC/SECC
Following are the responsibilities taken up at the CPC/SECC to carry out the pre-sanction
process:
Appraisal, Assessment and Recommendations in respect of proposals comingunder
their purview.

40. Presentation of proposal to CCC-II and above/ Zonal Office Credit Committee(ZCC)
for sanction/ approval.
·Advising of sanction/ approval to the Branch and the Unit.
Submission of Control Reports in respect of sanctions obtained by CPC/ SECC.
In case of proposals not considered acceptable, the CPC/ SECC will advise the Branch/Unit
accordingly after obtaining approval from the competent authority.
1.2 The Appraisal Process
Overview to Appraisal
As the name indicates, Appraisal is a process that determines the value of the proposal
Submitted by a Borrower for credit. The Appraisal process consists of the following stages:
a. Preliminary Appraisal
b. Detailed Appraisal
c. Present relationship with the Bank
d. Credit Risk Rating
e. Opinion Reports
f. Structure of facilities and Terms of Sanction
g. Review of the proposal
h. Proposal for sanction
i. Assistance to Assessment
a) Preliminary Appraisal
In case the Branch finds the proposal acceptable, it will call for a fully comprehensive
application in the prescribed proforma from the applicant.
In addition a copy of the proposal/ project report, covering specific credit requirement of the
Company and other essential data/ information is required. The other essential data include
the following:
oOrganizational set-up with a list of Board of Directors
oDemand and supply projections along with a copy of the market survey report
oCurrent practices for the particular product/ service
oEstimates of sales, Cost of Production and Profitability

41. oProjected Profit and Loss Account and Balance Sheet for the operating years during the
currency of the Bank assistance
o If the request includes project financing, Branch should obtain additionally (i) Appraisal
report from FIs in case they have done appraisal; (ii) NOC from term lenders if already
financed by them and (iii) Report from Merchant Bankers in case capital market is being
accessed, wherever necessary.
In addition in respect of existing concerns, particulars regarding the history of the concern,
its past performance, present financial position, etc. should also be evaluated.
This data/ information should be supplemented by the following supporting documents:
o Audited Profit and Loss Account and Balance Sheet for the past 3 years
o Details of existing borrowing agreements, if any
o Credit information reports from the existing bankers on the applicant company
o Financial statements and borrowing relationship of Associate/ Group companies
The evaluation of all the aspects discussed till now constitutes the Preliminary Appraisal
stage. After the Preliminary Appraisal stage, the next stage is Detailed Appraisal.
b) Detailed Appraisal
After a pre-sanction inspection of the project site or factory in the case of existing units, the
Branch may take up the Detailed Appraisal exercise using the appropriate format. The
following aspects should be evaluated in Detailed Appraisal stage:
o The viability of a project should be examined to ascertain that the company would
have the ability to service its loan and interest obligations out of cash accruals from
the business.
o While appraising a project or a loan proposal, nothing should be taken for granted.
o All the data/ information should be checked and wherever possible counter checked
through inter-firm and inter-industry comparisons.
o Summarise the conclusions of the financial analysis carried out on the basis of the
Company‘s Audited Financials for the last 3 years.
o The method of depreciation followed by the company – SLM, WDV Method or any other
method and whether the Company has changed the method of depreciation in the past and, if
so, the reason thereof
o Whether the Company has revalued any of its FA any time in the past and the present status
of the Revaluation Reserve, if any, created for the purpose

42. o Record of major defaults, if any, in repayment in the past and history of past sickness, if
any.
o The position regarding the Company‘s tax assessment – whether the provisionsmade in the
Balance Sheets are adequate to take care of the Company‘s tax liabilities.
o The nature and purpose of Contingent Liabilities, together with comments thereon
o Pending suits by or against the Company and their financial implications
o Qualified/ adverse remarks, if any, made by the Statutory Auditors on the Company‘s
accounts
c) Present Relationship with the Bank
Credit facilities now granted
a. Conduct of the existing account
b. Utilisation of limits – FB and NFB
c. Occurrence of irregularities, if any
d. Frequency of irregularities, i.e. number of times and total number of days the account
was irregular during the last 12 months
e. Repayment of term commitments
f. Compliance with requirements regarding submission of Stock Statements, FFR
Reports, renewal data, etc.
g. Stock turnover, realisation of book debts
h. Value of account with break-up of income earned
i. Pro-rata share of non-fund and Forex business
j. Concessions extended and value thereof
d) Credit Risk Rating
The Bank has introduced a Credit Risk Assessment (CRA) system for an effective
administration of the Bank‘s exposure to Credit Risk. All C&I loans and Commercial
Advance Accounts of above Rs. 25 lacs in respect of SSI and Agricultural advances are
covered by the revised system of CRA introduced w.e.f. 1st April 2004. The CRA
forfinancing Trade Advances and for NBFCs is as per the earlier instructions and
modificationsare expected shortly,CRA is central to the credit appraisal process. Assets,
which are classified as Standard.

43. Assets –Performing Assets – only, are to be risk rated. Major parameters that are considered
for appraising the risk associated with a loan are categorised into Financial, Business,
Industry and Management risks. All these categories of risks are rated separately. In order to
arrive at the overall risk rating, the factors duly weighted are aggregated and calibrated on a
score of 100, to arrive at a single point indicator of risk associated with the credit decision.
The credit risk rating is drawn up for:
a. Working Capital
b. Term Finance
The overall score for risk rating is rated on an 8-point scale and the ratings are given as SB 1
to SB 8 for Working Capital Advances and SB TL 1 to SB TL 8 for Term Loans.
e) Opinion report
The following terms and conditions (T&C) for exposures proposed – facility wise and
overall, should be fixed well in advance:
i. Limit for each facility/sub-facility
Sub-limits for inventory and receivables within the overall assessed fund based Working
Capital credit limits are fixed for operational convenience. In cases where large build up of
any item of inventory or receivables is required and the reasons are acceptable, sub-limits
should be fixed in a flexible manner. In case of borrowers with credit rating SB 1 and SB 2, if
the borrower desires, no sub-limits are fixed. Within the overall assessed credit limits,
branches should fix separate limits for financing inland credit sales. In respect of borrowers
enjoying credit limits of Rs. 5 crores and above from the Banking system, minimum of 25%
of the finance for inland credit sales as Bill Purchase limits should be stipulated. To
determine the quantum of finance for inland credit sales, the aggregate credit limits will
comprise of all types of credit facilities extended for financing inland credit sales such as
cash credit/ sub-limit against book debts, bills purchased/ discounted limits, overdrafts/ cash
credit limit/ sub-limit against Government supply bills, as may have been made available
within the overall Bank finance limitssanctioned.
ii. SecurityCredit provided by Banks creates assets, which are called Primary Assets
or Securities. Any additional security provided is commonly known as Collateral
Security. Collateral securities could be in the form of tangible collateral securities

44. such as liquid collaterals or mortgage of immovable properties or intangible
collaterals such as Third Party Guarantee. The bank officials verify the securities
offered by the borrower before they are accepted for covering the credit facilities and
are stipulated as a part of the recommendation of the loan and as the terms and
conditions of sanction.
iii. Margin
The margin stipulations as per the extant guidelines that are also dependent on the nature of
the current assets offered as primary security are stipulated as a part of the terms and
conditions.
The bands of the margin are stipulated by the Bank within which, depending on the risk
perception of the primary security being offered such as Raw Materials, Stocks in process,
Finished Goods and Receivables, margins are fixed by the recommending authorities for
approval of the sanctioning authorities.
f) Structure of Facilities and Terms and Conditions of Sanction
The rate of interest will be generally based on the Credit Risk rating. In specific cases,
however, rate of interest can be fine tuned depending on the value of connections/ potential
for business development and profits and other strategic reasons. The necessary
recommendations for seeking concessionary rates of interest should form a part of the Credit
Proposal and put up to the appropriate authorities for necessary approval / sanction.
In case of loans up to Rs. 2 lacs, RBI regulates interest rates.
i. Rate of Commission
Depending on the value of connections, potential for business development and profits and
other strategic reasons, these rates are recommended as a part of the credit proposal for
approval of the appropriate sanctioning authorities.
ii. Concessional Facilities and Value of the Credit- As per the recommendations and
the approvals obtained from the sanctioning authorities, the terms and conditions
would stipulate the concessions offered.
iii. Repayment TermsIn respect of term loans sanctioned, the instalments of the term
loans and the moratorium or start up period, which are permitted for the repayment of
the loan, are stipulated.

45. iv. ECGC Cover
In respect of units which have been sanctioned, export packing credit, which includes Pre-
shipment facilities and Post-Shipment facilities, the facilities are covered under the ECGC
Guarantees / Policies as per extant guidelines.
v. Other Standard Covenants
Apart from the usual terms and conditions of sanction of credit facilities, as contained in the
standard covenants of the Bank's loan documents, depending on the degree of
financialdiscipline required to be imposed, reasonable additional conditions are considered
necessary, in view of more than the normal risk perception of the loan proposal. However,
while recommending or sanctioning a loan, onerous terms and conditions that are difficult for
the borrowers to fulfil should not be stipulated. Special covenants in any particular case
should be discussed with the concerned borrowers, explaining the implications, so as to avoid
the necessity for modifying them subsequently. These covenants should be indicated in the
Appraisal Memorandum highlighting the rationale behind the stipulation.
g) Review of the Proposal
The review of the proposal should cover:
o Strengths and weaknesses of the exposure proposed
o Risk factors and steps proposed to mitigate them
o Deviations proposed from usual norms of the Bank and the related reasons
The draft proposal is put up to the assessing officer who gives a macro look to the proposal
and suggests various changes and inputs. Thus the gaps in the proposal, if any, arecovered so
that the final proposal in the required format of submission to the sanctioning authorities is
prepared.
h) Proposal for SanctionPrepare a final proposal, incorporating the changes proposed by the
assessing officials, in prescribed format with required back-up details and with
recommendation for sanction.
i) Assistance to Assessment

46. In order to help Assessor, interact with the Assessor, provide additional inputs arising from
the assessment, incorporate these and required modifications in the draft proposal. Finally,
generate an integrated final proposal for sanction.
2.POST SANCTION
a. SANCTION OF CREDIT FACILITIES
Preparation of proposal in prescribed format with back-up details and with
recommendation for sanction
The competent authority will exercise the discretionary powers as delegated by
respective circle. The sanctioning authority to accord sanction of credit facilities on
terms proposed or by stipulating modified or additional condition/safeguards.
The sanction shall be reported for control to the next higher authority for review, as
required.
b. DOCUMENTATION
Following are the documents used under agriculture credit:
 Hypothecation agreement
 Deed of guarantee
 Deed of mortgage
 Letter to the borrower demanding repayment of crop loans
 Supplemental hypothecation agreement
 Supplemental deed of guarantee
 Deed of extension of mortgage to cover the aggregate limit
 Deed of mortgage by the guarantor
 Revival letter for mortgage
c. CONTROL REPORTS
 Control report to be submitted in duplicate
 One copy shall be received by bank with comments of controlling
authority.
 Attend the observation and submit reply to controlling authority.

47. d. POWER EXERCISED BY FO/ MOD
 Control report to their controlling authority i.e. branch manager.
 Simple listing to controller at month end
e. INSPECTIONS
 Before making field visits to villages, field officials should jot down the
account-wise particulars e.g. ,total outstanding, over dues, last date of
credit and amount credited, interest applied in respect of each borrower in
relative folio of the village-wise inspection register.
 Field visits and inspection would be so arranged that the bank official is
able to contact the borrowers a few days before the amount/ instalment is
due.
 The field staff should draw up their tour programme wellin advance and
properly plan to maximize effectiveness by extensive coverage of the
financed villages.
 In case of produce marketing loans against stock stored in farmer‘s farm
house, stocks should be inspected at monthly intervals for loans above
Rs.25000/- and once in two month in other cases.
 When produce is stored in a warehouse, periodical inspection of the goods
covered by the warehouse receipt is not necessary.
 However, the branch manager should periodically obtain from the
warehouse man , a certificate in respect of the condition of goods covered
by the warehouse receipts and pledged to bank.
f. RECOVERY OF BANK DUES
 In case of wilful defaults by a borrower, initiation of recovery proceedings
may be started without loss of time.
 As farmers would have cash surplus during specified periods of the years,
timeliness of follow-up is crucial to recovery of agricultural dues.
 Efforts for recovery should commence well in advance of the due dates.
 The demand notices should be prepared in duplicate, original to be
dispatched to the borrower by ordinary post and other copy to be retained
as office copy.

48. g. INSURANCE
 Except where the bank has agreed to dispense with insurance, fixed assets
and stocks under pledge/ hypothecation to bank must be kept insured for
full market value with an insurance company (private or public sector) or
at least to the extent of bank‘s interest / lien noted therein.
 Insurance of agricultural machinery / equipment, cattle, silkworm,
honeybee, poultry etc. is essential.
 The policies must stand in the joint names of the borrower and the bank.
However insurance cover of vehicles/ tractor/ trailer/ power tiller should
be taken only in the name of the borrowers and Bank‘s interest/ lien noted
therein.
 National Agriculture insurance Scheme is implemented for providing
insurance coverage to all farmers including share croppers and tenant
farmers growing notified crop in notified area.
 The scheme for crop insurance is available to farmers as well as non-
loanee farmers irrespective of the size of holding.
Findings:-
 State bank of India is strictly following the guidelines of RBI on Project Financing.
 Sanctioning for the projects is approved by RASMECC (Retailed Assets Small and
Medium Enterprises Credit Cell).
 The bank finances the projects only through term loans.
 Interest rates are fixed depending upon the projects which is known as State Bank
advance rate.
 When the clients fail to pay the interest, 3 months from the due date the term loan
granted will be treated as Non-Performing Assets.
 If the interest is due further 3 more months then it will be treated as doubtful assets
and interest rates becomes zero.
 Again for further 3 months it goes as loss assets and the bank write off the account.

49. CHAPTER-4
SWOT ANALYSIS
Strengths
Brand Name:-SBI Bank has earned a reputation in the market over the period of
time(Beingthe oldest bank in India tracing history back to 1806).
 Market Leader:-
SBI is ranked at 285th
in 2012 Fortune Global 500 list. With an asset base of $501 billion and
its reach, it is a regional banking behemoth.
Wide Distribution Network: Excellent penetration in the country with more than branches
more than 15003 branches of associate banks (subsidiaries).
 Diversified Portfolio
SBI Bank has all the products under its belt, which help it to extend the relationship with
existing customer‘s Bank has umbrella of products to offer their customers, if once customer
has relationship with the bank. SomeProducts, which SBI Bank is offering are: Retail
Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans
& Car loans Insurance Housing Loans
 Government Owned:-
Government owns 60% stake in SBI. This gives SBI an edge over private banks in terms of
customer security.
 Low Transition Costs-SBI offers very low transition costs which attracts small
customers.
 SBI is the largest bank in India in terms of market share, revenue and assets.
Weakness
 Lack of proper technology driven services when compared to private banks.
 Employees show reluctance to solve issues quickly due to higher job security and
customers‘ waiting period is long when compared to private banks.
 The bank spends a huge amount on its rented buildings.
 SBI has the largest number of employees in banking sector; hence the bank spends a
considerable amount of its income in employee‘s salary compensation.

50.  In spite of modernization, the bank still carries the perception of traditional bank to
new age customers.
 SBI fails to attract salary accounts of corporate and many government sector
employees salary accounts are also shifted to private bank for ease of operations
unlike before.
Opportunities
 SBI‘s merger with five more banks namely State Bank of Hyderabad, State bank of
Patiala, State bank of Bikaner and Jaipur, State of bank of Travancore and State bank
of Mysore are in approval stage.
 Mergers will result in expansion of market share to defend its number one position.
 SBI is planning to expand and invest in international operations due to good inflow of
money from Asian Market.
 Since the bank is yet to modernize few of its banking operations, there is a better
scope of using advanced technologies and software to improve customer relations.
 Young and talented pool of graduates and B schools are in rise to open new horizon to
so called ―old government bank‖.
Threats
 Net profit of the year has decline13.6 per cent drop in net profit to Rs 3,241 crore in
the fiscal first quarter compared with Rs 3,752 crore a year ago.
 This shows the reduction in market share to its close competitor ICICI.
 Other private banks like HDFC, AXIS bank etc.
 FDIs allowed in banking sector is increased to 49% , this is a major threat to SBI as
people tend to switch to foreign banks for better facilities and technologies in banking
service.
 Other government banks like PNB, Andhra, Allahabad bank and Indian bank are
showing.
 Customer prefer to switch to private banks and financial service providers for loans
and mortgages, as SBI involves stringent verification procedures and take long time
for processing.

51. SUGGESTION
Banks has to grant the loans for the establishment of business at a moderate rate of
interest. Because of this, the people can repay the loan amount to bank regularly and
promptly.
Bank should not issue entire amount of loan to agriculture sector at a time, it should
release the loan in instalments. If the climatic conditions are good then they have to
release remaining amount.
SBI has to reduce the Interest Rate.
SBI has to entertain indirect sectors of agriculture so that it can have more number of
borrowers for the Bank.
CONCLUSION:
The project undertaken has helped a lot in gaining knowledge of the PRE-SANCTION &
POST SANCTION AGRICULTURE LAND’ in Nationalized Bank with special reference
to State Bank Of India. Pre-sanction and Post sanction in the agriculture land of the Bank has
become very vital in the smooth operation of the banking activities. Agriculture credit
scheme of the Bank provides the growth of agriculture sector (a) whether to provide by the
agriloan (b) how much credit to extend. The Project work has certainly enriched the
knowledge about the effective management of ―Agriculture loan‖ and ―Different agriculture
credit schemes‖ in banking sector.
―Pre & post sanction of land‖ and ―agri. Credit schemes‖ is a vast subject and it is
very difficult to cover all the aspects within a short period. However, every effort
has been made to cover most of the important aspects, which have a direct bearing
on improving the financial performance of Banking Industry

52. To sum up, it would not be out of way to mention here that the State Bank Of India
has given special inputs on ―Agriculture loan‖ and ―Credit Risk Management‖. In
pursuance of the instructions and guidelines issued by the Reserve Bank of India,
the State bank Of India is granting and expanding credit to all sectors.
The concerted efforts put in by the Management and Staff of State Bank of India has
helped the Bank in achieving remarkable progress in almost all the important
parameters. The Bank is marching ahead in the direction of achieving the Number-1
position in the Banking Industry.

53. REFERNCES
BOOKS REFERRED:
1. M.Y.Khan and P.K.Jain, Management Accounting (Third Edition), Tata McGraw
Hill.
2. M.Y.Khan and P.K.Jain, Financial Management (Fourth Edition), Tata McGraw Hill.
3. D.M.Mittal, Money, Banking, International Trade and Public Finance (Eleventh
Edition), Himalaya Publishing House.
WEB SITES
1. www.sbi.co.in
2. www.icicidirect.com
3. www.rbi.org
4. www.indiainfoline.com
5. www.google.com
BANKS INTERNAL RECOREDS:
1. Annual Reports of State bank Of India (20011-20014)
2. State bank Of India Manuals
3. Circulars sent to all Branches, Regional Offices and all the Departments of Corporate
Offices.