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Impact Assessment of Financing Schemes of SBI in Rural Sector



Dr.Nidhi Srivastava


I, Kumar Abhishek, hereby declare that the project entitled Impact Assessment of financing
Schemes of SBI in Rural Sector submitted in partial fulfillment of the requirements for the
Degree of Master of Business Administration of Uttarprades Technichal University, is an original
work and the same has not been submitted for the award of any other degree, diploma, fellowship,
or any other similar title or prizes.

Kumar Abhishek

(Name of the Candidate)


Roll. No. - 0911470044


It is my proud privilege to release the feelings of my gratitude to several persons who helped me
directly or indirectly to conduct this project work. I express my heart full indebtness and owe a
deep sense of gratitude to my teacher and my faculty guide IPEM Institute of Professional
Excellence And Management,Ghaziabad
I am also extremely thankful to all those persons who have positively helped me and I also thank
all my friends who have more or less contributed to the preparation of this project report. I will
be always indebted to them.

Thanking You
Kumar Abhishek


State Bank of India Caters to the needs of agriculturists and landless agricultural labourers
through a network of 8750 rural and semi-urban branches. Apart from the branches, there are
428 Agricultural Development Branches (ADBs) which also cater to agriculturists. SBI are the
leaders in agri finance in the country with a portfolio of Rs. 64,000 crs in agri advances
covering around 80 lac accounts.
Progress is a continuous process. It is relative and absolute. We cannot stop at a certain
destination and declare that target has been achieved and we need not go further.
This project report are designed to give special focus to agriculture lending Bank has also
appointed agri specialists in various disciplines to handle projects/ guide farmers in their agri
ventures. Advances are given to borrowers for very small activities covering poorest of the poor
to hitech activities involving large fund outlays.
We also have an effective Marketing and recovery team in each region with responsibilities for
marketing and building relationships with dealers of agri-products, organizing promotional
events and for loan sanction, processing, monitoring and recovery.


With a collective effort of Govt. and the people, SBI are set forth to continue growth in the rural
and agri development and become the Banker to Every Indian.





























Company Profile

Brief history of SBI and Introduction to Rural finance

Scope of study
Use and importance




State Bank of India is the largest and one of the oldest commercial bank in India, in existence for
more than 200 years. The bank provides a full range of corporate, commercial and retail
banking services in India. Indian central bank namely Reserve Bank of India (RBI) is the major
share holder of the bank with 59.7% stake. The bank is capitalized to the extent of Rs.646bn with
the public holding (other than promoters) at 40.3%. SBI has the largest branch and ATM
network spread across every corner of India. The bank has a branch network of over 14,000
branches (including subsidiaries). Apart from Indian network it also has a network of 73
overseas offices in 30 countries in all time zones, correspondent relationship with 520
International banks in 123 countries. In recent past, SBI has acquired banks in Mauritius, Kenya
and Indonesia. The bank had total staff strength of 198,774 as on 31st March, 2006. Of this,
29.51% are officers, 45.19% clerical staff and the remaining 25.30% were sub-staff. The bank is
listed on the Bombay Stock Exchange, National Stock Exchange, Kolkata Stock Exchange,
Chennai Stock Exchange and Ahmadabad Stock Exchange while its GDRs are listed on the
London Stock Exchange. SBI group accounts for around 25% of the total business of the banking
industry while it accounts for 35% of the total foreign exchange in India. With this type of strong
base, SBI has displayed a continued performance in the last few years in scaling up its efficiency
levels. Net Interest Income of the bank has witnessed a CAGR of 13.3% during the last five
years. During the same period, net interest margin (NIM) of the bank has gone up from as low as
2.9% in FY02 to 3.40% in FY06 and currently is at 3.32%.






What Is Rural Banking

Rural banking is a common practice in places where banking institutions are few and far
between, and people who need to carry out banking transactions may have difficulty finding a
way to do so. With modern technology, more and more people have access to online systems that
allow them to conduct certain types of banking without a nearby branch, but this technology is
not available for everyone, and demand for rural banking is still high in some areas.
Rural banking is the process of conducting banking transactions out in the country where bank
branches are too far away to be of use. Rural banking is popular for very small towns and
farmers who live far away from areas of larger population and cannot make the drive to these
locations whenever they need to use banking services. Typically, an agent of the bank will visit
these rural locations and offer to make transactions in an official capacity.
Types of Services
Rural banking attempts to offer all the basic banking services that people living in rural areas
need. Cash deposits are one of the most common services, since these occur on a regular basis
and must often be done in person. Loan and loan repayment services are also offered for those
who cannot make their payments in any other way.
Service Process
The agent who goes out into rural areas and helps account holders works for an MFI, or
microfinance institution, which specializes in offering banking services to a certain area. The
agent records and honors the transactions immediately, in the presence of the account holder.
Rural banking is very common in countries with emerging markets that are beginning to offer a
wider selection of banking services. This includes places like India, rural China and countries in


Technology plays an important role in rural banking. One of the main problems agents run
into is a question of identity--if the person they are working with is really the account holder.
Technology such as portable fingerprint scanners and cell phones with satellite service allow
the agents to verify identity more accurately.
State Bank of India Caters to the needs of agriculturists and landless agricultural labourers
through a network of 8750 rural and semi-urban branches. Apart from the branches, there are 428
Agricultural Development Branches (ADBs) which also cater to agriculturists. We are the leaders
in agri finance in the country with a portfolio of Rs. 64,000 crs in agri advances covering around
80 lac accounts. Our branches have covered a whole gamut of agricultural activities like crop
production , horticulture , plantation crops, farm mechanization, land development and
reclamation, digging of wells, tube wells and irrigation projects, forestry, construction of cold
storages and godowns, processing of agri-products, finance to agri-input dealers, allied activities
like dairy , fisheries, poultry, sheep-goat, piggery and rearing of silk worms.
To give special focus to agriculture lending Bank has also appointed agri specialists in various
disciplines to handle projects/ guide farmers in their agri ventures. Advances are given to
borrowers for very small activities covering poorest of the poor to hitech activities involving
large fund outlays.
Now we are setting up Agri Commercial Branches (ACBs) which will handle high value agri
financing involving large investments. It envisages lending through corporate partnerships and
other large enterprises for commodity financing, investment credit, other high value agriculture
segments like horticulture, floriculture & food processing etc. It also focuses on Agri related
SME including setting up of Rice and Dhal mills, seed processing industry, food processing
industry, large and small scale dairy units, etc.
Traditionally, rural business is associated with agriculture and allied activities. Of late however,
the trickle down effect of economic growth, renewed focus on infrastructure development, and
employment generation in rural areas have led to huge investment by the Government in rural
India, with a view to bridge the urban and rural divide.
Considering that agriculture would continue to be significant driver of Indian economy, with the
possibilities of rapid growth in emerging areas like contract farming, agro-processing and agroexport zones, etc., a separate Agri Business Unit (ABU) with a distinct organizational structure
has been set up in the Bank and under noted objectives has been created in 2004 :-


o Providing focused attention on the banking requirements of the agriculture segment,

o Achieving 18% target under agricultural advances as required under priority sector
o Focus on micro finance and SHG opportunities (now part of non-farm sector in Rural
o Focus on Key Corporate and Institutional relationships in agriculture, emerging
opportunities, and special initiatives, as may be necessary,
o Focus on product development and management,
o Reduce NPA levels in Agriculture,

Make agriculture a commercial proposition.

Agricultural credit

Kisan Credit Card (KCC)

Agricultural gold loans
Kisan Gold Card Scheme (KGC)
Produce marketing loan
Land purchase scheme
Establishing of Agri-clinic and Agri business centres
Financing of used/second hand tractors scheme
Scoring model for tractor loans
Financing for combine harvesters
Financing power tillers


Dairy Plus Scheme for financing dairy units

Scheme for financing agricultural equipments where tangible properties are formed
Broiler Plus
Dairy Society Plus - Scheme for financing dairy societies
SBI Krishak Uthaan Yojna

Scheme for covering loans for general purpose under - General Credit Card (GCC)
Scheme for financing private warehouses/private cold storage for onlending to farmers
Gramin Bhandaran Yojna - capital investment subsidy scheme for
renovation/construction of
agricultural godowns
Mortgage loan to seed processing units
Scheme for financing seed processors
Scheme for debt switching of borrowers
Capital investment subsidy scheme for commercial production units of organic inputs
under national project on organic farming
Minor irrigation schemes
Arthiyas Plus scheme
Financing JLG of tenant farmers
Finance to cultivation/gardening
Scheme for financing non government organisations (NGOs)/micro finance institutions
Financing for organic farming
Krishi Kalyan
Financing JLG of tenant farmers

Micro Credit

Financial inclusion
Micro credit (Self help group)


ABU has four departments headed by Deputy General Managers. :1. Agri Business, Planning, Monitoring and Market Intelligence.
2. Corporate and Institutional Relationship.
3. Product Development and Marketing.
4. RRBs & Lead Bank Department.

The banking sector in India is passing through a period of structural change under the combined
impact of financial sector reforms, internal competition, changes in regulations, new technology,
global competitive pressure and fast evolving strategic objectives of banks and their existing and
potential competitors. Until the last decade, banks were regarded largely as institutions rather
akin to public utilities. The market for banking services were oligopolies and Centralized while
the market place was regulated and banks were expected to receive assured spreads over their
cost of funds. This phenomenon, which was caricatured as 3-6-3 banking in the united states,
meaning that banks accepted deposits at 3%, lent at 6%, and went home at 3 p.m. to play golf,
was the result of the sheltered markets and administrated prices for banking products. Existence
of entry barriers for new banks meant that competition was restricted to existing players, who
often operated as a cartel, even in areas where the freedom to price their products existed.
The market place began to change for banks in India as a result of reforms of the financial
sectors initiated in the current decade. On account of policy measures introduce to infuse greater
competitive vitality in the system, the banking has entered in to a competitive phase.
Competition has emerged not only from within the banking system but also from non-banking
institutions. Lowering of entry barriers, deregulation of interest rates and growing sophistication
of customers have made banking far less oligopolistic today. Introduction of capital adequacy
and other prudential norms, freedom granted to enter into new turfs and greater overlap of
functions between banks and non-banks have forced banks to get out of their cozy little world
and think of the future of the banking.
Emerging Environment of Banking in India
Full convertibility of rupee leading to free mobility of capital, which will mean virtual collapse
of the national borders for trade and capital flows.


Greater coordination between monetary, fiscal and exchanged rate policies for achieving the
goals of faster and sustainable economic growth, macro-economic stability and export
Close integration of various financial markets such as money market, capital market and forex
Removal of lowering of existing barriers of competitiveness, which are present today in the form
of quantitative instructions on certain imports protective custom duties, reservation of certain
utilities for the public sector.

Growing privatization and commercialization infrastructure sector.

Today, Banks customers are better informed, more sophisticated and discerning. They also have
a wide choice to choose from various banks and non-bank intermediaries. Their expectations are
soaring. This is particularly true for banks corporate clientele but also applies to customers from
personal segment.
This is changing profile of customers call for a shift from product-based approach to customersbased approach. A bank aiming at maximizing customer value must, of necessity, plan for
customized products. A combination of marketing skills and state-of-the-art technology should
enable to bank in maximizing its profits through customer satisfaction.
In the next millennium banks will have to be more and more cautions about customer service,
profitability, increased productivity, to keep face with changing banking scenario. As banks in
India prepare themselves for the millenium these are the shifts in the paradigm they are likely to
experience. The 21st century may see the dawn of DARWINIAN BANKING. Only the banks
could fulfill the demands of markets and changing items would survive and prosper.

A word about SBI card


SBI Segment : Small business credit card (SBI credit card)

Preamble :
Small business units, retail traders, artisans, village industries, small-scale industrial units and
tiny units, professionals and self employed persons etc., contribute significantly to the growth of
our economy. The entrepreneur himself manages many of the units. Very often, these
entrepreneurs complain of procedural delay in sanctions and renewal of limits. They also find it
difficult to cope with the demands for audited balance sheet and other statements sought by the
bank from time to time for availing credit facilities. With a view to providing hassle free
financial supports to the above categories of entrepreneurs who have shown commitment to run
the unit successfully and who are dealing with the banks for last two years satisfactorily, new and
friendly credit product namely small business credit card scheme is designed.

Under the scheme, cumbersome procedural aspects relating to reviews and renewals, submission
of balance sheet, stock statements and other statements are done with credit delivery made
simple and easy.
Purpose :
To meet the credit requirements of small business units, industrial unit, retail trader, artisan,
Small Scale Industry (SSI) and tiny units.
Eligibility :
A. Customers of the following segments with a satisfactory track record for the last two years
enjoying credit facilities.

Small industrial units (SSI and tiny units including artisans)

Small retail traders (Under SBF)

Professional and self employed persons

Small business enterprise


B. Units who do not enjoy credit limit with us/other banks at present with excellent performance
and credential may be considered.
Quantum of loan :
Loan up to Rs. 5 Lakh can be sanctioned to eligible persons.
Assessment :
The small business credit card limit can be fixed as follows :

For small business, retail trader etc. 20% of the annual turnover declared for tax purpose
or last twelve months turnover in the operative accounts, whichever is higher.

In respect of parties with good track record, where sales tax returns are not available, the credit
limits may be decided taking into consideration the actual turnover in the accounts during the last
two years.

For professionals and self employed persons, 50% of their gross annual income as per IT
return shall be considered as the limit for issuing the SBI credit card.
For small scale industrial units, tiny sector units the assessment norms in vogue as per
the Nayak Committee recommendations would continue.

Validity :

Credit card limit will be valid for a period of three years, subject to satisfactory conduct
of the accounts.


Annual review will be done based on conduct/operations of the A/cs. A major portion of
the sales turnover should have been routed through the accounts as revealed by the credit

Repayment :

The working capital advance may be continued subject to that review every year
provided the credit summations in the account is not less than 50% of the projected sales
turnover. If the credit summations is less than 50% of projected sales turnover. The
outstanding as on the due date of review should be made repayable in suitable monthly
The term loan is repayable in suitable installments with in a maximum period of five
In case of composite loans, only the term loan is repayable in installments up to a
maximum period of five years.

Interest rate :
As per extent instructions issued from time to time relating the market segment.
Refinance :
No refinance is to be claim from SIDBI

Security :
Primary : Hypothecation of the stock in trade receivables, machinery, office equipment.
Collateral :
Under SSI-No collateral security as per existing guidelines of RBI.
User SBF :


Up to Rs. 25000/- No collateral security.

Over Rs. 25000/- charge over movable/immovable property or third party granted.

However, in case of the excellent track record, sanctioning authority may waive collateral
Margins :
Up to Rs. 25000/- - NIL
Rs. 25001/- to Rs. 5,00,000/-

- 20%

Documents as per extant instructions.

Credit Card - A Convenient Banking Product :
The credit card is a hassle free convenient banking product aimed at simplifying the credit
delivery mechanism.Cumbersome procedural aspects relating to reviews and renewals,
submission of stock statement, balance sheet and other statements are done away with. The credit
limit will be worked as detail above.
Small business credit card

Card No.

Account No.

Tel. No.

Limit Rs.

Date of issue

Valid upto

.. (Branch Code)


Signature of the Brach Manager

Card holders Photograph with signature

The borrower would be issued a photo card indicating sanctioned limit and validity of the limit
(sample card)

Insurance :

Fixed assets/stock pledged/hypothecated to the bank be fully insured at least to the extent
of the bank interests.
Bank may waive insurance of assets for equipment against the fire and other risk up to

Cover under credit guarantee scheme :

All eligible loan accounts sanctioned for small scale industries (other than services) would
qualify for cover under CGTFSI scheme (presently the scheme has been introduce in five circles
on pilot basis viz. New Delhi, Chandigarh, Lucknow, Patna & Hydrabad).


Small business credit card accounts should be maintained in a separate ledger.

Cheque book should be issued and marked as small business credit card account.

Pass book should be issued for mall business credit card holders.

Stock statement waived.

Submission of audited balance sheet waived.

Borrower would be issued a small business credit card with photograph thereon. Cost of
photograph to be borne by banks.

IRAC norms would be applicable.

Brief opinion report should be recorded. Marked inquiries should be made and recorded
in the opinion report and singed by the field officer/cash officer or officers not below that

Units within a radius of 5 kilometers may be covered intensively for the issue of credit
card. This condition may be waived for such of those units already in the book of the


Inspections :

Half-yearly inspection/monitoring to ensure the end user funds.

Sanction :

Required loan may be sanctioned with in a week after receipt of detailed information.
Control return after sanction may be sent to next higher authority for approval .

Scoring Model :

Loan would be sanctioned up to Rs. 5,00,000/- based on the simplified scoring model as
given in annexure- II. Those who are scoring less than 60% would not qualify for the

Rationale :

New schemes for hassle free credit facilities to small borrower.

Automatic Teller Machine (ATM)

An ATM (Automatic Teller Machine) card is useful to a card holder as it helps him to withdraw
cash from banks even when they are closed. This can be done by inserting the card in the ATM
installed at various banks locations.

State Bank Cash Plus CARD

Signature Panel.
Magnetic Stripe


Features of State Bank Cash Plus Card

State Bank Cash Plus Card having the 19 digit.

Name of the card holders mention there on it.

In case of State Bank Cash Plus Card, there is no expiry period but for the old card, the
date after which your card needs to be renewed is the last day of the month indicated on
your card.

Signature panel on which you must sign as soon as youre your card. It identifies the card
as your State Bank Card Plus Card.

The magnetic stripe, which contains encoded information.

ATM card possess pincode which having the 4 digit.

In 1955, the State Bank of India (SBI) was established to extend banking facilities on a large
scale, particularly to the rural and semi-urban areas in the country, and also to serve various
other public purposes. To strengthen financial access to the poor, the Indian government
nationalized thecommercial banks in July 1969 when a major portion of the banking system (i.e.
fourteen bigcommercial banks) were brought under the public sector to progressively better
serve thedevelopment needs of the economy in conformity with the countrys national policies
and objectives.Further, six more banks were nationalized in April 1980. India undertook
massive drive for bankbranch expansion, particularly in the rural areas in the 1970s and 1980s.
In addition to SBI, RRBswere created to cater to the needs of rural farmers. As a result, India
witnessed a phenomenal growth in its formal rural banking system 11 not only in terms of
geographical spread, but also with regards to deposit mobilization and disbursement of credit.
Table 3 presents the trends in banking growth in the post-nationalization era. Public sector
banks account for more than 90 percent of the commercial banking business. Table 3 shows that
the total number of bank branches expanded by more than seven times during 1969 and 1997
reaching 63,550 whereas rural branches witnessed phenomenal eighteen time expansion. This


resulted in significant (more than four times) reduction in population per office reaching 15
thousand people per office in 1997 from 64 thousand per office in 1969. Scheduled commercial
banks advances in priority sector increased by 186 times during this period reaching Rs. 2.78
billion in 1997. The year 2005 witnessed further expansion (more than four times) to reach rs.
11.24 billion . The share of priority sector advances total credits of scheduled commercial banks
increased by 2.4 times during this period reaching 34.8 Percent.

Trends in Banking Growth in Post-Nationalization Era in India

Banking Parameters June 1969 March 1997 March 2005
(i) Number of offices (including branches)
of which: 8,262 63,550 68,355
Rural 1,833 32,915 32,082
Semi-urban 3,342 13,766 15,043
(ii) Population per office (in thousands) 64 15 16
(iii) Deposits of scheduled commercial banks
(in Rupees. 10 million)
4,646 499,763 1,732,858
(iv) Credits of scheduled commercial banks
(in Rupees. 10 million)
3,599 278,401 1,124,300
(v) Scheduled commercial banks advances
in priority sector (in Rupees. 10 million)
504 93,807 400,775


Rural Business Group, which deals with the business of the Bank at all rural and semiurban
centres, now handles a deposit portfolio of Rs. 2,15,931 crores and a creditportfolio
of Rs. 1,20,617 crores, which is 32% and 26% of the Bank's total domesticdeposit and credit
portfolio respectively as on 31.03.2009.


(Amount in Rs. crores)

As on 31.03.2008
As on 31.03.2009

Growth %

Highlights/Initiatives during the year

The rate of growth, both in deposits and advances, has been better than thegrowth rate of ASCB
rural and semi urban branches. As a result, the Bank's market share inrural and semi urban areas
improved by 1.35% in deposits and 1.27% in advances betweenMarch and December 2008.
High proportion (54% of total deposits) of Current Account & Savings Account(CASA)
deposits in the group contributes to its lower cost of deposits at 5.23%, which issignificantly
lower than the Whole Bank average of 6.03%.
The business strategy envisaged setting up of multi pronged sourcing agentscoupled with
improved back end processing capacity.
Front end sourcing force comprises, besides branches, alternate channels likeOfficers
Marketing and Recovery (OMR) and Business Facilitators (BFs) and BusinessCorrespondents


OMRs numbering around 4800 now source not only high value Agriculture segmentloans but
all types of deposits, loans and cross-selling products across all the segments.
The Bank has appointed about 18,000 Customer Service Point (CSP)/outlets ofBusiness
Correspondents/Business Facilitators (BC/BFs). Some of the national level BC/BFsare India Post
and ITC. During the year, the alliance with India Post has been scaled upnation wide and now
covers more than 5,200 Post Offices across all States.

To increase its outreach, the Bank has opened about 481 new branches in ruraland semi urban
areas during FY-09.
To improve the processing capacity, 158 Rural Central Processing Centres (RCPCs)have been
opened during FY-09.

Agri Business:
Agriculture Highlights

(Amount in Rs. crores)

As on 31.03.2008
As on 31.03.2009



Achievements during the year

The Bank has consecutively for the second time crossed the 18% Benchmark in AgriPriority
Sector Advances with achievement of 18.46% in FY '09.
The Bank has surpassed the GOI target for credit flow to Agriculture byachieving Agri.
disbursements of Rs. 28,442 crores in 2008-09 against the target of Rs. 28,000 crores and
financed 10.68 lac new farmers against the target of 7.40 lac during theyear.
The Bank achieved more than 50% absolute reduction in Agri NPAs (NPAs reduced toRs. 1,454
crores from Rs. 3,079 crores) in FY '09.

To improve quality of lendings and diversification of portfolio, AreaDevelopment Schemes

have been prepared under National Business Plan, covering thrust areasviz. Horticulture, Dairy,
Fisheries, Food Processing, Biotechnology, etc.
Thrust continues to be laid on Contract Farming and Value Chain Financing.
Bonding with Farmers: To enhance customer awareness and ensure continuedrelationship with
the farming community, various initiatives have been taken under'Bonding with Farmers'.
Achievements during FY '09 are given in the table.

Villages adopted (SBI ka Apna Gaon)
Farmers' Clubs formed
Farmers' Meets conducted
Kisan Manch established



The Bank has successfully implemented Agricultural Debt Waiver & Debt ReliefScheme, 2008
of GOI in more than 6,550 Agri lending branches, covering 42 lac farmers. TheBank has
submitted Agri. Debt Waiver claim of Rs. 5,287 crores to RBI and received firstinstalment
of Rs. 2,168 crores (41% of the claim).
Micro Finance and Financial Inclusion:
In addition to financial intermediation, many micro finance institutions providesocial
intermediation such as group formation, training in financial literacy andmanagement
capabilities. Micro finance is therefore not just a banking tool butalso a development tool. Along
with benefits to the rural population, thefinancial institutions advancing the credit also enjoy
better recovery rates.

The most prevalent method of providing micro finance in India is through Self-Help Groups
A SHG is a group of individuals ranging from 5 to 20 members, who cometogether for a
mutually beneficial purpose. They are homogenous in somerespect and have certain pre-defined
social binding factors.

Members of a SHG contribute to a common fund from which collateral

loans are given to needy members as per the group decisions.After at
least 6 months if a bank is convinced, the SHG can become
eligible for
linkage to the bank for availing credit and can open a savings account in
its name and can receive up to 4 times its savings balance as credit. The
membersof the SHG in turn receive credit as per their needs. This linkage
wasintroduced by the NABARD in 1991-92 through pilot project.

. The SHG decides the rate to be charged to its members.

Similarly, the bank negotiates about appropriate repayment period with the


SHG and the SHG decides on the repayment schedule for its members,
generally in weekly installments.

If members require larger amounts of loans they can approach the bank for
individual loans, with the SHG accepting responsibility for proper credit
utilization, repayment by the member and monitoring of the same
Micro finance is thus a potent method of rural credit delivery with
tremendous potential for serving the rural masses.

The Bank is the market leader in SHG-Bank credit linkage programme having creditlinked so
far 13.73 lakh SHGs and disbursed loans to the extent of Rs. 8,050 crores. Bankhas rolled out
several unique products like SHG Credit card and SHG Gold Card.
A new scheme for financing NGOs/MFIs for on-lending to SHGs has been introduced.
A Micro Insurance product - Grameen Shakti has been rolled out.
SBI has been rated as the Best Public Sector Bank for Rural Reach by Dun&Bradstreet.
The Bank has won awards for topping SHG-Bank Credit linkage in Orissa,Jharkhand,
Maharashtra, Uttarakhand, Tamil Nadu and Uttar Pradesh.
Coverage of unbanked village increased from 12,515 in March 2008 to about 53,000upto
March 2009.


The Bank is the major player in Electronic Benefit Transfer (EBT) projects ofGovernment
benefit payments, with participation in 5 States.
Multiple IT enabled channels for Financial Inclusion:
The Bank has gone beyond the usual domains of technology in terms of platform,solution,
operational details and service contents in a very aggressive manner to servethe excluded
common citizen with minimal costs. Some of these channels are:
a) SBI Tiny - Smart Card based accounts: This is a secure account working on
biometricvalidation of the customer and RFID technology. Around 19.11 lakh
customers have beenenrolled with one technology partner. To broad base the
outreach, cards of a differenttechnology have been introduced and about 4.5 lakh
customers enrolled.
b) Internet based kiosk channel: This PC based solution launched in August
2008leverages existing kiosk infrastructure in villages. Transactions are equally
secure asthis channel also works on biometric validation of the customer.

c) Mobile based accounts: These accounts work with mobile phone based low
costtechnical solution. A pilot project is currently being implemented in Uttam
Nagar, NewDelhi.
d) Low cost biometric ATMs: Low cost biometric ATMs have been deployed starting
withCuddalore district of Tamil Nadu. This platform will be expanded

Regional Rural Banks (RRBs)

Post amalgamation, the Bank has got 17 RRBs with a network of 2557 branchesspread over
122 districts and 17 states in the country. The aggregate deposits andadvances of the sponsored


RRBs stood at Rs. 17,273 crores and Rs. 10,242 crores respectivelyas on 31st March 2009. The
profits increased from Rs. 115.68 crores as on March 2008 toRs.203.31 crores as on March 2009.
Recommendations of the Committee to formulate a comprehensive Human ResourcesPolicy for
RRBs (Dr. Thorat Committee) regarding categorisation of RRBs and theirbranches,
organisational structuring etc. and accepted by the Government have beenimplemented in all our
sponsored RRBs.
Credit Assistance provided to Scheduled Castes and Scheduled Tribes
The credit assistance provided by the Bank to Scheduled Castes and Scheduled Tribesstands
atRs. 12,939 crores and forms 7.9 % of total Priority Sector advances of the Bankas on the 31st
March 2009.
Prime Minister's Rozgar Yojana (PMRY)
Swarnajayanti Gram Swarozgar Yojana (SGSY)

Recovery %

Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

Scheme for Liberation & Rehabilitation of Scavengers (SLRS)


Differential Rate of Interest (DRI)


Prime Minister's New 15 Point Programme for the

AndImplementation of Sachar Committee recommendations.




Our Bank has implemented Prime Minister's New 15 Point Programme for the welfareof
Minorities, whose important objective is to ensure that an appropriate percentage ofthe Priority
Sector Lendings is targeted for the minority communities and that thebenefits of various
Government sponsored schemes reach the under-privileged, particularlythe disadvantaged
section of minority communities (Christians, Muslims, Buddhists, Sikhsand Zoroastrians).


The year wise position in respect of our financial assistance to minority communitiesin the
identified Minority Concentration Districts (MCDs) is given below:

Table : Credit Assistance to Minorities

Period as
March 2007
March 2008
March 2009

No. of districts identified by GOI (MCDs) No. of A/cs Amount (Rs. in crores)
44 7.94 lacs
121 9.88 lacs
121 9.91 lacs


Minority cells for co-ordination have already been created at Local Head Officelevel and Nodal
Officers have been designated to monitor the progress in lendings tominority communities as
well as to redress the grievances of minority communities.
As per Sachar Committee recommendations, our bank has opened 177 new branches inunderbanked / unbanked areas in MCDs during the financial year 2008-09.


All the lead district managers have been advised to monitor applicationsreceived from minority
committees and their disposal. Also, quarterly informationregarding Minority Lendings is loaded
on the Bank's Website.



To assess the impact of rural finance made by State Bank of India.

To indentify the improvement and development made by the SBI Financial

services in the area of rural livelihood.

To describe banking services to the doorstep of rural masses, particularly


in hitherto unbanked rural areas.

To assess how the SBI mobilize rural savings and channelize them for
supporting productive activities in rural areas



Each and every project study along with its certain objectives also have scope for future. And
this scope in future gives to new researches a new need to research a new project with a new


scope. Scope of the study not only consist one or two future business plan but sometime it also
gives idea about a new business which becomes much more profitable for the researches then the
older one.
Scope of the study could give the projected scenario for a new successful strategy with a
proper implementation plan. Whatever scope I observed in my project are not exactly having all
the features of the scope which I described above but also not lacking all the features.

Research study could give an idea of network expansion for capturing more market
and customer with better services and lower cost, with out compromising with

In future customer requirements could be added with the product and services for
getting an edge over competitors.


Consumer behavior could also be used for the purpose of launching a new product
with extra benefits which are required by customers for their account (saving or
current ) and/or for their investments.

Factors which are responsible for the performance for bank can also be used for the
modification of the strategy and product for being more profitable.

Factors which I observed while doing project study are following

Customer Behaviour
Advertisement/promotional activities
Attitude of manpower and
Economic conditions


These all could also be interchanged with each other for each other in banks
strategies for making a final business plan to effect the market with a positive way
without disturbing a lot to market, customers and competitors with disturbance in
market shares.

The proposed move to bring down government holding in State Bank of India (SBI) to 51 per
cent from about 59 per cent now could help the lender raise around Rs 12,000 crore, a top SBI
official said here on Friday.
We now have a headroom to raise Rs 12,000 crore, SBI Chief Financial Officer, Mr S S
Ranjan said when asked to comment on reports that the government has cleared a Bill that seeks
to lower government equity in the public sector bank to 51 per cent.
The central government is the largest shareholder of the banking behemoth with a majority
59.41 per cent stake. With the amendment to the State Bank of India (Amendment) Bill, the
government can now reduce its ownership in the bank by around eight per ce nt to up to 51 per

The capital infusion can either happen through a rights issue or by way of other financial
Insurance companies currently own 11.23 per cent stake in the bank while the FII holding, as at
September 30, stands at 9.87 per cent.


The Reserve Bank of India had a majority stake in SBI, which was subsequently transferred to
the government.
State Bank, which controls a fifth of the countrys banking system in terms of assets, will need Rs
36,000 crore over the next five years to maintain a capital adequacy ratio of 12 per cent.




This research is basically usefull to management students in order to

make carrier in the field of rural development.

Such report is useful to those who are engage in research work.

Importance of rural finance

For purchase of farm implements viz. indigenous wooden implements,

improved iron implements, agricultural implements, hand tools etc.

For purchase of tractors with accessories, threshers, power tillers, combine

harvesters, power sprayers.

For purchase of oil engines, electrical engines, pump sets, construction of

wells, leveling of ground for irrigational purposes etc.

For the purpose of construction and repairs to farm buildings/structure of

the type viz bullocks shed, farm store, godowns, animal farm etc.

For the purposes of bunding, terracing, leveling, drainage, reclamation of

ravine lands, moisture conservation practices

For purchase of seeds including high yielding/hybrid fertilizers, manure,

pesticides, fungicides etc.


For meeting capital expenditure and working capital on units and dairy,
poultry, piggery etc. for construction of buildings, purchase of animal
equipment, feeds, medicines, vehicles etc.

Future of Rural Banking

As per the estimate of Agricultural Credit Review Committee (KhusroCommittee) the demand
for agricultural credit in 2001-2002 would be of theorder of Rs. 1,10.873 Crores (Rs. 53,534
Crores for short terms &Rs. 57,339Crores for term loans) & the supply of institutional credit
would be Rs. 89,447Crores implying a shortfall ofRs.21,426 crores.
The demand for finance will alsogo up on account of intensive use of modern technology,
increase inconsumption of fertilizers, insecticides & pesticides, creation of irrigationfacilities,
growing use of high yielding variety crops & diversification ofagriculture to various allied
Despite the multi agency approachadopted for providing rural credit, certain inbuilt formalities
viz.documentation, restricted working hours, loan amount, purpose of loan &proximity factors
have been causing inconvenience to the deserving rural poor.Yet, exploitation of the rural poor
continues by the local money-lenders.Of this,the formal sector accounts for about 20 %.
The nature of this segment demands a level of customization that the formalbanking network has
failed to provide. The uniform treatment meted out and thecentralized structure of the system are
the basic causes for the failure to cultivatea healthy banking habit in the rural areas.
All these causes and effects, create a situation where an innovative means ofcredit delivery is
called for. The process of customization that is the need of theday has been titled micro


Micro finance has been defined by the task force set up by the NABARD as"provision of thrift,
credit and other financial services and products of very smallamounts to the poor in rural, semiurban or urban areas for enabling them toraise their income levels and improve living standards.
Micro finance institutionscan include NGOs (Non-Government Organisations), co-operatives,
banks(commercial, RRBs, other nationalised and public sector banks) and NBFCs(Non-Banking
Financial Companies). The NABARD felt that banks would beunable to efficiently organize such
grass-root level groups and thus NGOs andVoluntary Agencies were introduced into the picture.
New micro creditcompanies such as Basix and the SEWA-aided bank represent a primarily
NGO-driven effort to charge market linked, risk adjusted rates of interest on smallloans to small
borrowers. At the same time they ensure hurdle free access toborrowers and high repayment rates
for themselves.




THIS Research is totally based on explorative research design, and secondary source for the
purpose of data collection were taken.
1. Secondary Data:
Secondary data for the base of the project I collected from intranet of the Bank and from internet,
RBI Bulletin.
Tools and Techniques
As no study could be successfully completed without proper tools and techniques, same with my
project. For the better presentation and right explanation I used tools of statistics and computer
very frequently. And I am very thankful to all those tools for helping me a lot. Basic tools which
I used for project from statistics are Bar Charts
Pie charts


Bar charts and pie charts are really useful tools for every research to show the result in a well
clear, ease and simple way. Because I used bar charts and pie cahrts in project for showing data
in a systematic way, so it need not necessary for any observer to read all the theoretical detail,
simple on seeing the charts any body could know that what is being said.
Technological Tools
Ms- Excel
Above application software of Microsoft helped me a lot in making project more interactive and





































































From above graph we can say that the SBI has good investment schemes in respect of other
major player operating in that sector, it is found to be 50% in relation to other rivals. Also it has
good credibility which is found to be 40% in relation to whole market covered by various player
operating in that rural sector.


2. Rural business

Rural Business Group, which deals with the business of the Bank at all rural and semi urban
centres, now handles a deposit portfolio of Rs. 2,15,931 crores and a credit portfolio of Rs.
1,20,617 crores, which is 32% and 26% of the Bank's total domestic deposit and credit portfolio
respectively as on 31.03.2009.
Rural business is the one of the major thrust of SBI financing schemes. From above analysis we
can say that the advances made by the SBI in rural sector are continuing icreasing year by year,
let say in the year 2008 it was 8777crores and in the year 2010 it was 14981 crores . Therefore


we can conclude that SBI day by day increasing their investment schemes in order to tap more
and more rural customer.

2. Area covered by SBI in rural sector



The area covered by the SBI in the year 2008 was 29653 and consequently increasing in the year
2009 was 53000 and in 2010 it was 103938. so we can state that area coverage propensity is
increasing year by year which leads to devlop the rural areas

3. Micro Finance provided to Self Helped Group


Self helped group (SHG) is again the such group which help the individual rural backward
people for their credit demand and such group are basically financed by the SBI for the purpose
of making self reliant . In the year 2008 SBI provide credit assistance to SHGs was 5302
crores ,similarly in the year 2010 it was financed 11562 crores which is showing the tremendous
scope further development.

4. Credit Assistances given to the minorities group.


The credit assistance provided by the Bank to Scheduled Castes and Scheduled Tribes standsat
Rs.12,939 crores and forms 7.9 % of total Priority Sector advances of the Bank as on the 31st
March 2009. The number of accounts opened during the year 2008 was 8 lakhs and the amount
granted to this section is 2100 crores and consequently in the year it was 9.9lakhs and the credit
granted to them was 5091 crores, so therefore we can say that the credit assistance and the
number of account opened to that minority section is increasing year by year, which lead further
development of the whole economy.

5. Amount of credit assistance provided to Small and Medium enterprises business unit.


We can say that the SBI is providing a large number of amount to the small scale industries in
India and it is increasing year by year. It is the only bank that provide the credit assistance to the
SMEBU in the rural areas.


6. SBI Achievements in the area of Rural devlopments.

No. of
villages to
be covered :
1 lakh

No. of
to go up
to 10,000

nts in
banking &


No. of
ATMs in
areas to
go up to




Priority Sector Advances of the Bank reached a level of Rs.32,713 crore as at March
2010 constituting 45.88% of ANBC against the mandatory level of 40%. The Bank has
covered more than 19.38 lakh customers under Priority Sector Advances.
Credit to Agriculture reached a level of Rs.13,135 crore forming 18.42% of ANBC as at
March 2010 against the mandatory level of 18%. The Bank has covered more than 12.78
lakh customers under agricultural advances.
The disbursement under Special Plan for Agricultural Credit during the year amounted to
Rs.8,014 crore recording an annual growth of 34.08%. Disbursements under investment
credit was Rs.1,267 crore during the year.
The Bank has consecutively for the second time crossed the 18% Benchmark in
AgriPriority Sector Advances with achievement of 18.46% in FY '09.
The Bank has surpassed the GOI target for credit flow to Agriculture by achieving Agri.
disbursements of Rs. 28,442 crores in 2008-09 against the target of Rs. 28,000 crores and
financed 10.68 lac new farmers against the target of 7.40 lac during the year.
The Bank achieved more than 50% absolute reduction in Agri NPAs (NPAs reduced toRs.
1,454 crores from Rs. 3,079 crores) in FY '09.


To improve quality of lendings and diversification of portfolio, Area Development

Schemes have been prepared under National Business Plan, covering thrust areas viz.
Horticulture, Dairy, Fisheries, Food Processing, Biotechnology, etc.

The Bank has successfully implemented Agricultural Debt Waiver & Debt ReliefScheme,
2008 of GOI in more than 6,550 Agri lending branches, covering 42 lac farmers.
TheBank has submitted Agri. Debt Waiver claim of Rs. 5,287 crores to RBI and received
firstinstalment of Rs. 2,168 crores (41% of the claim).




Agricultural credit both traditional and new thrust areas like contract farming,
farmers nanced through Agri Export Zones (AEZs) and value chain nancing.
Increase in disbursements during FY08 was 83% against the Govt. of India target
of 30%. Agricultural advances grew from a level of Rs.205.26bn in FY07 to
Rs.305.16bn as at the end of March 08.
Focused on the SME sector, projects under Uptech are taken up in location
specic and activity specic industry clusters. So far the bank has taken 28
projects for modernization under the Project Uptech covering industries like
foundry, pumps, glass, auto components,and knitwear, etc. The bank has also
covered agro based industries like rice mills, sago and starch and horticulture
activities like Apple Orchards and grape farming under the scheme. The deposits
of the SME SBU increased to Rs.1,042.70bn as at the end of March 2008
fromRs.890.60bn of previous year recording a growth of 17.08% during the
year2009. SME advances increased to Rs.456.53bn from Rs.328.30bn of previous
year2009, recording a growth of 39.06 %.
Due to financial restructuring the Bank has got 17 RRBs with a network of 2557
branches spread over 122 districts and 17 states in the country. The aggregate
deposits and advances of the sponsore RRBs stoodRs.17,273 crores and
Rs.10,242crores respectively as on 31st March 2009. The profits increased from
Rs.115.68 crores as on March 2008 to Rs.203.31 crores as on March 2009.


The Bank has successfully implemented Agricultural Debt Waiver & Debt Relief
Scheme,2008 of GOI in more than 6,550 Agri lending branches, covering 42 lac
farmers. The Bank has submitted Agri. Debt Waiver claim of Rs.crores to RBI
and received first instalment of Rs. 2,168 crores (41% of the claim).




Following recommendations can be stated after analyzing such aforesaid data pertaining to SBI
Rural financing schemes:-

SBI need to focus on every financial schemes which is provided to rural people so as to
gain maximum number of rural customers.

The major crux in order to get the maximum number of such customers is lied upon the
successful implementation of promotional campaign, and such campaign is found very
limimted and they are for very short durations. Therefore, they have to focused upon the
whole society as well as the whole nation for implementing such campaign.

The farmers or you can say rural people need to be educated for the purpose providing
such finacial services to them.

Training camp need to be install for providing education and awareness to the backward
farmers and rural people, so that they can utilize such financial assistance provided by
SBI in a better way and can able to generate more and more produces.




Each and every research certain boundaries and limits in which it lies to be here
are few limitatioin which are stated as :-

This project is restricted to only secondary source of data collection so we cannot

provide true information by conducting such report.

Secondary data is always subject to biasness.

Limited information provide by the concern in respect of rural financing.

Time is another the major constraints while conducting such project.





Books referred:
Financial services by Dr.E.Dharmaraj
Rural Baning in India