Agriculture Finance in India

MUMBAI UNIVERSITY

Project on
AGRICULTURAL FINANCE IN INDIA

BACHELOR OF COMMERCE(banking & insurance)
SEMESTER V

SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF
THE DEGREE OF BACHELOR OF COMMERCE (B & I)

BY
MISS SCHIYA PRAMOD
GUIDED BY
Prof. SEEMA PAWAR

KELKAR EDUCATION TRUST’S
Vinayak Ganesh Vaze College
Of Arts, Science & Commerce
MITHAGAR ROAD MULUND (EAST)

INDEX ChapterNo. | TOPIC | PageNo. | 1 | 1.1 | Agricultural finance in india | 1 | | 1.2 | Agricultural finance- global view | 3 | | | | | 2 | 2.1 | Meaning of agricultural finance | 6 | | 2.2 | Definition | 6 | | 2.3 | Nature and scope | 6 | | 2.4 | Significance | 7 | | 2.5 | Credit needs | 9 | | | | | 3 | 3.1 | Agricultural growth rate in india | 16 | | 3.2 | Crop loan | 21 | | 3.3 | Agricultural loans offered by nationalised banks | 23 | | 3.4 | Schemes of co-operative agriculture banks | 31 | | 3.5 | Innovations in rural and agricultural finance | 47 | | 3.6 | Microfinance and agriculture finance | 49 | | 3.7 | Recent progress in rural finance | 50 | | 3.8 | Taking agricultural finance to small farmers | 54 | | | | | 4 | | Case study: State bank of India – the pioneer in agriculture lending | 58 | | | | | 5 | | Conclusion & bibliography | 69 | | | | |

DECLARATION

I Miss Schiya Pramod student of KET’S V.G.VAZE COLLEGE, T.Y. B.com (Banking & Insurance) semester- v (2012-2013) hereby declare that I have completed the project on ‘AGRICULTURAL FINANCE IN INDIA’.

The information submitted is true and original to the best of my knowledge.

Date:

Signature of
(Schiya pramod)

ACKNOWLEDGEMENT

Presenting the project as contemporary and comprehensive treatise on the subject would not have been possible without reference to the authentic literature and the other publications on the subject. I would like to express my sincere gratitude to all of them who have unconditionally helped me in this project and without any vested interest.

I would like to thank our principal Dr. B. B. Sharma. I would also like to thank my project guide and course co-ordinator Mrs Seema pawar who has taken time from her busy schedule to give me valuable tips and suggestions to improve my project.

I would like to thank the librarians Mr. pawar and Mrs. Kavita for their support and co-ordination in getting books from the library. I would also like to thank Ms.alka madam.

I would like to make a special mention of Mrs. Nisha shilimkar the assistant manager of State Bank Of India, Badlapur (E) for providing me with the valuable information.

And last but not the least I would like to thank my parents, friends, classmates and all faculty members for helping me in any manner possible.

DESIGN OF STUDY

Scope: Agriculture in India is the means of livelihood of almost two thirds of the work force in the country. It has always been India’s most important economic sector. Realizing the importance of Indian agricultural production for economic development, the central Government of India has played an active role in all aspects of agricultural development. Planning is centralized, and plan priorities, policies, and resource allocations are decided at the central level. Food and price policy also are decided by the central government. Thus, although agriculture in India is constitutionally the responsibility of the states rather than the central government, the latter plays a key role in formulating policy and providing financial resources for agriculture.

Limitation: This report is a study on the Agricultural Finance in India, its credit needs and the schemes and loans offered by the nationalized banks but, however a lot of problems were faced during the research work in finding the information. The time constraints and the length & depth of study are limited to the requirements of the University of Mumbai.

Objective: * To get an overview of the schemes and lending procedures in agriculture finance. * To analyze the agriculture finance provided by the banks. * To know about the benefits and limitations to the farmers due to the finance provided for agricultural purpose.

Research methodology:

The information has been collected by the research methodology tools i.e. primary data and secondary data.

For the collection of the primary data, the relevant bank has also been visited i.e. the State Bank of India which helped for the making of the project report.

For the secondary data, the websites of the banks and the related sites have helped for the collection of information. Some books and newspapers also helped in the findings for the related topics.

EXECUTIVE SUMMARY

Rural development means nothing but the transformation of the subsistence agricultural production to a market oriented agricultural economy. Availability and access to financial resources is one of the key elements to this transition. Financial resource is a very important, if not the most important, factor in economic development.

Shortage of finance is one of the major problems facing small farmers. Farmers need financial resource to buy improved agricultural inputs and farm implements so that they can increase their output and income level and break the cycle of poverty. Farmer’s investment in these technologies cannot be real without having in place organizations and systems that are capable of adequate providing rural financial services to farmers. So, the effort to develop agriculture could suffer in the absence of a strong financial base that aims at expanding access to credit for small farmers.

Agriculture is unorganized profession. Its success and failure depends on climatic factors. It is also not possible to distinguish productive and unproductive loans required for farmers. Therefore, banks do not show much interest in advancing loans to agriculture. Therefore farmers have to depend on moneylenders, mahajans etc. who exploits them due to strong grip on socio-economic position in rural areas.

This report focuses on the different sources of agriculture finance and various products and services offered by the banks.