reasons for slow growth in personal and agricultural loan
SUMMER TRAINING PROJECT
ANALYZING REASONS FOR SLOW GROWTH IN PERSONAL
AND AGRICULTURAL LOAN IN BORSAD AND ANAND ROAD
BRANCHES OF STATE BANK OF INDIA
Dr. Mahesh R Prajapati
Content of presentation
• Objectives of study
• Results analysis and discussion
• The banking sector is the most dominating sector of the
financial system in India. Significant progress has been made
with respect to the banking sector in new economic era (post
• Deregulation has opened new opportunities for banks to
• Liberalization has created the more competitive environment
in banking sector.
• The macroeconomic situation continues to raise concerns.
Even as growth has slowed significantly, inflation remains
well beyond the comfort level of the Reserve Bank.
• The impact from domestic and international economic
developments posed challenges to the banking sector during
the year 2012-13
• Higher capital requirements and the need for meaningful
financial inclusion are the primary challenges before banks.
• Under extreme shocks, some banks could face moderate
liquidity problems and their profitability could be affected.
• India has recorded syndicated loan volume of only $7.2 billion for
the first nine months of 2012, just one-third of the $21.2 billion
closed by the end of the third quarter last year.
• Volume has dropped significantly this year in the absence of large
offshore M&A deals, previously a big volume booster. And deal
flow has been muted amid a dramatic slowdown in economic
Trends in advances
• Over the past 12 months, total bank loans have risen by less than
four percent, while deposits have increased over eight percent.
• The overall loan-deposit ratio for the banking industry is getting
• Business loans are the fastest growing segment, with real estate and
consumer loans just barely expanding.
• SBI expects to achieve lower advances growth rate of 16% in 2013
advances as compare to 21% of previous year
Challenges for bank
• Financial inclusion
• Non-Performing Assets
• Credit risk
State Bank Of India - A Brief Introduction
The State Bank of India is the largest bank in India.
SBI history started in the year 1806 with formation of the Bank
Bank of Bengal in 1809.
Imperial Bank of India 1921.
State Bank of India (SBI) 1955.
creation of the State Bank of India Group (SBI Group) 1959.
• Personal Banking
• Agricultural & Rural Banking
• NRI Services
• International Banking
• Corporate Banking
• Govt. Business
Kisan Vikas Patra
• Kisan Vikas Patra is a saving scheme that was announced
by the Government of India that doubles the money
invested in eight years and seven months
• The “kisan” in Kisan Vikas Patra does not mean that only
farmers can buy these saving certificates but means that the
revenue mobilized by this scheme will be used by the
Government of India in welfare schemes for farmers.
OBJECTIVES OF THE STUDY
To find out the reasons behind the slow growth/ negligible growth in
personal and Agricultural loan.
To know the view of people regarding institutional loan and its procedures
with particular emphasis on SBI’s Personal and Agricultural loan.
To know the awareness regarding loan against
Kisan Vikas Patra
• Background of study-
• The growth in retail advances of the bank has become
stagnant. Also the asset quality is getting degraded day
by day; the study aims to identify the reasons which are
responsible for the slow growth in loan segment. The
study is based on analysis of Factors (of bank and
and their linkages, within the research
framework of 10 weeks.
Source of data
• Primary data:
Data collected from the bank officials as well as from people
(customers as well as other) through semi structured
• Secondary data:
reports, financial journals, economic issues, as well as RBI &
Non Probability Sampling
Borsad and Anand region
Customers and non customers of
Interpreting using charts, graphs
and tables etc.
Do you have an account in any bank
Taken loan from any
source of loan
Reason for non institutional
b. flexibility of
e. No other option
Types of institutional loan
Source of institutional credit
Reasons for choosing SBI loan
offer from the
Difficulties / Problems of institutional
Start up / continue taking up SBI
If no then what is the reason
Reason for continuity/starting up
loan from SBI
low interest rate
Valuation or scale of finance is
Do you know about Kisan Vikas
Aware of loan against KVP
Taken up loan against KVP
Conclusion from discussion with bank
• Although the growth in advances is at par with deposits but still the
overall loan deposit ratio is less.
• Rising NPA causing degradation in asset quality hence it is
adversely affecting the lending abilities of bank.
• The recovery of agricultural loan is not efficient in rural areas like
Borsad which is ultimately creating the burden on other segments
e.g. Personal and small financing.
• The officers who process loan is made responsible if it defaults.
• Farmers who own the land jointly with other
family members find it difficult to take the
• Lack of staff is also causing the loss of
unaddressed of their problems.
Conclusion of customer analysis
• The customer processing time is huge in loan application as an
average it takes minimum 10 days to process a loan from application
to final sanctioning.
• People think that loan from institutions is a tiring procedure and
requires heavy paperwork and lot of time.
• Respondents of semi urban and rural areas were having less
awareness of various schemes and facilities provided by the bank to
promote the advances, as loan against securities and KVP had less
impact on the people.
• Need of little flexibility in terms of amount under
consideration, time and documents requirements.
• Banks should promote the schemes related to loan
against the KVP, property and other collateral
according to socio-economic profile of the region.
• The complaints of customers should address as quickly
• The recovery of loan should be done professionally.
• The staff should be given more authority and power to
verify the loan procedure and to recover it, so they can
feel free while sanctioning the loan.
• Employee turnover should be reduced as it takes time
to build the relations again with new staff and
accessed on 18 July 2013.
• Anonymous; www.rbi.org.in; RBI web page accessed on 20 Aug 2013.
• Anonymous; www.sbi.co.in; accessed on 15 July 2013
• Bhatt, O. P.; State Bank of India: Pioneer in Agricultural lending.
• Hunt Robert; Case Study: State Bank of India, World's Largest Centralized
Core Processing Implementation
• Singh Anurag. B.; Priyanka Tandon; “A study of financial performance: a
comparative analysis of sbi and icici bank” International Journal of
Marketing, Financial Services & Management Research; Vol.1 Issue
11, November 2012, ISSN 2277 3622.