EXECUTIVE SUMMARY

The phenomenal changes that are taking place in the global political arena, the new
economic integration, the greater concern for the environment and the emergence of

India and China are the most important events that mark the beginning of the 21 st
century. In India’s emergence Banking has captured the attention of the world. Banking
has become the barometer that reflects the economic emergence of a nation.

Indian Banking sector is dominated by Public sector banks (PSBs) which accounted for
72.6% of total advances for all SCBs as on 31st March 2009. PSBs have rapidly
expanded their foot prints after nationalization of banks in India in 1969 and further in
1980. Although there is a restrictive entry/expansion for private and foreign banks in
India, these banks have increased their presence and business over last 5 years.

Peculiar characteristic of Indian banks unlike their western counterparts such as high
share of household savings in deposits (57.4% of total deposits), adequate
capitalization, stricter regulations and lower leverage makes them less prone to financial
crisis, as was seen in the western world in mid FY09.

The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth
from FY04 to the mid of FY09. Total deposits, advances and net profit grew at 19.6%,
27.4% and 20.2% respectively from FY03 to FY08. Banking sector recorded credit
growth of 33.3% in FY05 which was highest in last 2 and half decades and credit growth
in excess of 31% for five consecutive years from FY04 to FY09, which is best in the
banking industry so far. Increase in economic activity and robust primary and secondary
markets during this period have helped the banks to garner larger increase in their fee
based incomes.

Going forward to the eastern region of the country, the distribution of the banking sector
is as follow:
 Population Rural Semi-urban urban metropolitan All centres
group

year 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
Eastern 6704 6720 906 907 90 90 3 3 7703 7720
region

The cash-deposit ratio of the scheduled commercial bank has increased from 53.5 to
72.4 from FY-01 to FY -09 respectively which turns to the increase in 35.32% from FY-
01 to FY-09.

(Occupation-wise) deployment of bank credit:

• The share of agriculture credit in gross bank credit declined marginally to 10.9
per cent from 11.3 per cent in 2008. The share of credit to industry increased to
39.8 per cent in 2009 from 38.4 per cent in 2008.

• The share of personal loans decreased to 19.4 per cent of gross bank credit in
2009 from the level of 20.1 per cent in the previous year.

• The share of credit to trade increased to 9.7 per cent in 2009 as against 8.8 per
cent in 2008.
With the downturn in the economy, CARE Research expects that credit and deposit
growth will moderate in coming years. Credit growth will be led by spending on the
infrastructure while retail credit will show a moderate growth. Margin pressures due to
lag effect of rate cuts between interest rate on deposits and advances, is likely to put
pressure in the bottom line of the banks.

This makes it imperative and important to study Bank and its operations. As a first step
towards that I took up my summer project in a nationalized bank “VANANCHAL
GRAMIN BANK”. The aim of the project was to study the various functionalities of the
bank with emphasis on the working of micro credit system through “SELF HELP
LINKAGE” formation.
 INTRODUCTION

Credit management is an important part of a bank’s management policy as bank credit

is a major source of revenue in form of interest income by banks, and also a back bone
for the purpose for which it has been availed by the consumer. Different banks have
different policies to manage their credit operations each of which are devised keeping in
mind the goals of the bank. This report throws a light upon the working of self help
group under micro credit system and different parts of it. It also shows vividly the
importance of micro finance in India.

I have been working in credit department of Vananchal Gramin Bank, Garhwa which is
under rural development banks of India. Garhwa which Is among developing districts of
Jharkhand has a population of 1034151 (2001 census). Garhwa District is primarily rural
and most of the population resides in villages. Tribal population of the district still lives in
forest zones. The rate of urbanization has been extremely slow due to rural economy
based on agriculture. Total population of the district as per 2001 census is 10, 34,151.
In 2001 census the rural population was recorded 991492 as against the urban
population of 42659. The sex ratio is adverse for females in Garhwa like other district of
Jharkhand.

SERVICES INDUSTRY :- An Insight

A service is any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may
not be tied to a physical product.

The service sector accounts for more than 50% of India’s GDP. It is growing at a much
faster rate than the other two sectors, namely, manufacturing and agriculture. In a highly
competitive, rapidly globalizing environment, the designing and managing of services is
going to be a challenging task. Companies facing parity with competitive offerings on
product features use service dimensions for successful differentiation. Companies seek
to develop a reputation for superior performance in delivery, a better and faster
response to queries, and a quicker resolution of complaints
The government sector with its courts, employment services, hospitals, loan agencies,
military services, police and fire departments, postal services, regulatory agencies, and
schools is in the service business. The private non profit sector, with its museums,
charities, church, colleges, foundations and hospitals is in the service business good
part of the business sector, with its airlines, banks, hotels, insurance companies, law
firms, management consulting firms, medical practices, motion picture companies,
plumbing repair companies and real estate firm is in the service business.

DISTINCTIVE CHARACTERISTICS OF SERVICES:-

Services have four distinctive characteristics that greatly affect the design of marketing
programs:-

(1) Intangibility

(2) Inseparability

(3) Variability

(4) Perishability

(1) INTANGIBILITY:-Unlike physical products, services cannot be seen, tasted, felt,

heard or smelled before they are bought. The service provider’s task is to manage the
evidence and to tangibilize the intangible. Whereas product marketers are challenged to
add abstract ideas, service marketers are challenged to add physical evidence and
imagery to abstract offers. Service companies can try to demonstrate their service
quality through physical evidence and presentation. Suppose a bank wants to position
itself as the “fast bank”. It could make its positioning strategy tangible through a number
of marketing tools:

(a) Place-The exterior and interior should have clean lines. The layout of the desks
and the traffic flow should be planned carefully. Waiting lines should not get
overly long.
(b) People-Personnel should be busy .There should be a sufficient number of
employees to manage the workload.

(c) Equipment-Computer, copying machines desks should be and look “state of the
art”.

(d) Symbols-The name and symbols should suggest fast service.

(e) Communication material-Printed materials, text and photos should suggest

efficiency and speed.

(2 ) INSEPARABILITY-Services are typically produced and consumed simultaneously.

If a person renders the service, then the provider is part of the service. Because the
client is also present as the service is produced, provider-client interaction is a special
feature of services marketing

(3) VARIABILITY-Because services depend upon who provides them and where they
are provided, they are highly variable. Service buyers are aware of this variability and
often talk to others before selecting a service provider. Service firms can take following
three steps to increase quality control:-

(i) Invest in good hiring and training procedures.

(ii) Standardize the service performance process throughout the organization.

(iii) Monitor customer satisfaction.

(4)PERISHABILITY-Services cannot be stored. Perishability is not a problem when

demand is steady. When demand fluctuates services firms have problems. Several
strategies can produce a better match between demand and supply in a service
business.

On the demand side:

(i) Differential pricing
(ii) Nonpeak demand
 (iii) Complementary
(iv) Reservation systems

On the supply side:

(i) Part time employees

(ii) Peak time efficiency

(iii) Increased consumer participation

(iv) Shared services

(v) Facilities for future expansion

BANKING INDUSTRY:-

Financial services are provided by the finance industry which is mainly concerned with
the management of money. This industry includes organizations such as banks, credit
card companies, brokerage firms, insurance companies, investment funds and some
government sponsored enterprises. The word bank is derived from the latin word
“banco” which means “desk or bench”.

Banks act as payment agents by conducting checking or current accounts for customers
paying and collecting cheques. Banks borrow most of the funds from households and
non-financial businesses and lend most funds to households and non-financial
businesses. Bank accounts are accounting records produced by the banks under the
various accounting standards of the world. The commercial role of the banks is not
limited to banking rather it includes the following:-

(i) Issue of banknotes.

(ii) Processing of payments by internet banking

(iii) Issue of drafts and cheques

(iv) Term deposits

(v) Providing overdraft facility

(vi) Currency exchange

(vii) Remittance

(viii) Purchase and sale

 Regional Rural Banks

The institution of Regional Rural Banks (RRBs) was created to meet the excess
demand for institutional credit in the rural areas, particularly among the economically
and socially marginalised sections. Although the cooperative banks and the commercial
banks had reasonable records in terms of geographical coverage and disbursement of
credit, in terms of population groups the cooperative banks were dominated by the rural
rich, while the commercial banks had a clear urban bias. In order to provide access to
low-cost banking facilities to the poor, the Narasimham Working Group (1975) proposed
the establishment of a new set of banks, as institutions which "combine the local feel
and the familiarity with rural problems which the cooperatives possess and the degree
of business organization, ability to mobilize deposits, access to central money markets
and modernized outlook which the commercial banks have". The multi-agency approach
to rural credit was also to sub serve the needs of the input-intensive agricultural strategy
(Green Revolution) which had initially focused on `betting on the strong’ but by the mid-
seventies was ready to spread more widely through the Indian countryside. In addition,
the potential and the need for diversification of economic activities in the rural areas had
begun to be recognized, and this was a sector where the RRBs could play a meaningful
role. The RRBs Act, 1976 succinctly sums up this overall vision to sub-serve both the
developmental and the redistributive objectives:

The RRBs were established “with a view to developing the rural economy by providing,
for the purpose of development of agriculture, trade, commerce, industry and other
productive activities in the rural areas, credit and other facilities, particularly to small and
marginal farmers, agricultural labourers , artisans and small entrepreneurs, and for
matters connected therewith and incidental thereto”
Introduction and emergence of micro credit system in India

Despite vast expansion of formal credit system in India , dependence of rural people on
informal credit system still continues for meeting emerging credit requirements. Such
dependence is pronounced in the case of marginal farmers, landless labourers ,petty
traders, rural artisans belonging to socially and economically backward class and the
tribal people particularly in the resource poor areas . The concept of microcredit was
earlier confined to the job of donor agencies and the NGO’S . There are numerous
variants of micro credit which are vogue in India. Though the technologies of different
micro credit system might be different, the basic premises on which they work is to
extend financial service to the poorer section of the people who have hitherto been
neglected by the formal finance system. Among the variants of micro credit programme,
i.e , financing byte banks through SHG has shown high rate of success . the initiative for
this programme has been taken by the national bank for agriculture and rural
development which had sponsored an action research project in 1986-87. Linkage
banking has now been adopted as the mainstream financing programme for all banks.
 Micro finance in India

1. FINANCIAL NETWORK

Skewed distribution and access to resources, adequate generation of gainful

employment opportunities in rural areas and lesser production and productivity have
been the major cause for poverty in many developing countries including India. Despite
35,400 rural branches and regional rural banks , the access of institutional financial
services by resource poor needs to improved a lot keeping in view , the sizable ,330
million population living below poverty line in India. The per capita income is rs 4100 per
annum which is the third lowest level in the worked . however ,with the implementation
of IRDP and other programme ,India stands as the largest micro credit dispenser in the
world. Government of India, Other banks, NABARD, RBI have adopted the policy of
massive expansion of rural branches , directed priority sector lending, concessional
credit and service area approach to address some issues related to micro finance.
Thrust has been on priority sector lending with less focus and attention on micro finance
, thought there were targets to finance weaker sections.

The poverty reduction and self employment generation programme such as IRDP, DRI,
SC/ST WELFARE PROGRAMMES , PMRY and minor irrigation programmes to cater to
the credit of small and marginal farmers resources poor SC/ ST farmers , agricultural
labourers, poor tenant farmers and weavers.

Micro credit :-

Microcredit means provision of small loans to resource poor microcredit is the extension
of small loans to entrepreneurs too poor to qualify for traditional bank loans. it has
proven an effective and popular measure in the ongoing struggle against poverty,
enabling those without access to lending institutions to borrow at bank rates , and start
small business.
Micro finance:-

Micro finance deals with moblisation of savings , provision of small loans and other
services (input advice and supply ,training ,marketing etc) to resource poor without
collateral this involves participatory approach and economic empowerment of people .

Micro finance institution :-

The institution which deals with the micro finance with the objective of provision of
improved access to financial related services for the poor in a sustainable manner.

Need for shift from micro credit to micro finance:-

Most of the programs meant for resource poor in India have been micro credit
programmes with less emphasis on savings and other finance related services, except
the SHG linkage project being implemented by NABARD.

Hence , there is need to reorient our policies towards micro finance and address the
issue at all levels.

Issues related to micro finance :-

a. Coordination issue.
b. Viability issues.

a. Coordination issues

1. How to exclude reach people?

2. Screening of borrowers.
3. Lack of people’s participation.
4. Viewed as government sponsored programmmes.
5. Improper identification and.
6. appraisal of activity.
 7. Under financing
8. Undue delay in disbursement of loans.
9. Lack of flexibility y bank officials.
10. Poor backward and forward linkage.

b. Viability issues

1. Lending to poor considered a financial burden.

2. Poor performance of formal sector on micro finance.

3. Disincentives to save.

4. Fixing market related interest rates.

5. High transaction cost.

6. High risk cost.

7. Less incentives to staff

DESCRIPTIVE RESEARCH

RESEARCH OBJECTIVES :
The objective of study is as follow:-

1. To know about the credit system which are necessary to meet the emerging
credit requirements of rural poor.
2. Formation of self help group and its characteristics.
3. Issues related to micro finance.
4. Linkage of SHG s with banks.
5. To get an overall idea about the performance of the Bank.

 Apart from that I have prepared some common questions which related with
SHGs.

COLLECTION OF DATA :

For every research work, data are very important to continue. Data can be collected by
many process like survey, questionnaire, scheduling etc. the data collected must be
accurate, recent and fixed under every given circumstances

Basically there are two modes of collecting data. They are

1. Primary sources

2. Secondary sources

PRIMARY SOURCES : In primary data collection, you collect the data yourself
using methods such as interviews and questionnaires. The key point here is that the
data you collect is unique to you and your research and, until you publish, no one else
has access to it.

There are many methods of collecting primary data and the main methods include:

 questionnaires
 interviews
 focus group interviews
 observation
  case-studies
 diaries
 critical incidents
 portfolios.

SECONADRY SOURCES :

Secondary data is data collected by someone other than the user. Common sources of
secondary data for social science include censuses, surveys, organizational records
and data collected through qualitative methodologies or qualitative research. Primary
data, by contrast, are collected by the investigator conducting the research.

secondary data can be obtained from two different research strands:

 Quantitative: Census, housing, social security as well as electoral statistics and

other related databases.

 Qualitative: Semi-structured and structured interviews, focus groups transcripts,

field notes, observation records and other personal, research-related documents.

This project has been done completely on the basis of secondary sources of
information. The data are collected from banks annual reports, brochures. Earlier
projects has also been taken into consideration .
 SELF HELP GROUPS

1. BACK GROUND

The Indian experience shows that non involvement of people has lead to the attitude of
total dependence on the government for every development effort leading to the lack of
effort and accountability of people. There were also instances in the seventies and
eighties in the other developing countries like Kenya , korea , Bangladesh and Nepal
where the various programmes for agriculture and rural development , when modeled
on participatory approach showed better impacts and results. Based on these
experience, the international agencies like world bank , International Labour
Organisation (ILO) ,started emphasizing the need for making development a people’s
movement. The focus of attention shifted on developing people’s institution accountable
to the community having linkage with various developmental and financial agencies.
Against this backdrop the concept of SHG could be a good alternative source to involve
people in developmental processes.

The experience in Kenya on the cooperative linked scheme linked to cooperative

production credit scheme, modification of traditional key system and integration into the
mutual credit programs in Korea, The Small Farmer Development agencies group in
Nepal and Grameen in Bangladesh, which were basically started owing to resource
crunch shows that huge resource could be mobilized from even among the poor people.
Another feature was the management of resources by the people only.

The agricultural credit review committee (1989) had identified a number of weakness in
the Indian banking sector. Some of the identified institutional weaknesses are low
recovery and poor recycling of funds, poor deposit mobilization and ineffective vis a vis
available potential. Apart from the weaknesses , the banking sector has been able to
reach only 36% of the rural families inspite of vast expansion.

On the other hand , most of the informal finance in the rural money market comes from
two main sources ie professional money lender and traders (credit and trade linked
facilities) .After sometimes , it appears that the rate of interest demanded by the formal
agencies is too high which leads to the perpetual indebtedness of the poor. However,
the easy and timely availability, flexibility in delivery to the needy clientele places them
better as compared to the formal agencies .

The SHG linkage to banking sector is expected to combine specific advantages to the
both the above systems and also enables larger and faster coverage of rural people.

2. WHAT IS A SELF HELP GROUP?

The self help group (SHGs) are voluntary association of people formed to attain a
collective goal. People who are homogeneous with respect to social background,
heritage, caste or traditional occupations come together for a common cause to raise
and mange resources for the benefit of group members.

The process by which the group of people with a common objectives are facilitated to
come together in order ti participate in the developmental activities i.e. savings, credit,
income generation etc, is called GROUP FORMATION.

Although the SHGs can be formed for any development activities for financial
institutions to use them as a conduit for banking activities , the SHGs should be
practicing thrift and credit and be familiar to money management.

3. GROUP FORMATION

Existing group :

Before considering the formation of a new groups,it is essential to understand the

nature of existing groups in the societies and the role of the poor in them. In many parts
of India,it is possible to identify societies, where there are economic groups and
activities groups already in existence, which may or may not take any organized
development activities.
New SHGs

In the formation of new SHGs basically two stages are involved vis-à-vis pre group
formation stage and promotion stage.

Pre -group formation : in this stage , it is important that the SHG promoter visits the
village frequently, gathers information about various facets of the village life ,its
environment and people. During this stage, promoters also build up rapport with
villagers.

Promotion stage (group dynamics):

There are four stages in this face.

1. Forming : in this stage , people come together informally and meet. They are
encouraged to talk about their problems and solutions . during this stage, based
on the felt need , homogeneous group emerge naturally.
2. Storming : during this stage conflicts between individual interest and groups
interest surface and are dealt with it. the leadership emerges. The procedures ,
rules and roles are established.
3. Norming : trust development among group members leading to cohesiveness in
the group.
4. Performing : this is the final stage when the group becomes operational and
starts functioning for the benefit of its member.
4. GROUP FUNCTIONING

Formation of a group is only the beginning. The group has to function vigorously with
active participation of its member in the development process. For the groups process
to be effective, the group has to have some characteristics.

1. Group meeting: monthly, fortnightly, weekly etc.

2. Saving mobilization.
3. Loaning activity.
4. Recycling of funds.
5. Leadership.
6. Maintenance of books.

a) Saving register
b) Loan register
c) Meeting proceedings
d) Attendance

7. group discipline
8. group sustainability
SOME COMMON POINTS RELATED TO SHGs

 Size of SHG should preferably between 10 to 20 members.

 Care should be taken to include only poorest people who don’t have access to credit
from the bank.
 Loan ceiling to SHG has no general recommendation.
 The groups are free to approach any branch convenient to them.
 The bank should not appraise the individual borrower member of SHG. SHG before
approaching the bank for credit may access the credit requirement.
 Loans should be credited to the SB ACCOUNT of the group maintained with the
branch.
 Through Normally the group are expected to stabilize and be ready to handle credit
after 6-7 months.
 The loan amount to be given to the SHG depends on the deposites with the banks,
generally it 4 times the savings, but the branch manager could give larger amount
depending on the confidence.
 It is not necessary that all the member to get equal amount .it is left for the group to
decide.the bank should watch that the decision ois taken in democratic manner.
 The bank is free to give any number of loans to the group on the basis of the need.
 The decision of the utilization of loans is left to the group . the branch manger
however keep himself posted of the activities of the group through regular
interaction.
 The accounts of the group are operated by their representatives on the basis of
collective delegation granted to them by the group.if the leader changes ,the group
can authorize some other member in their place.
 3

2.5

1.5

0.5

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

(SCALE : 1 SD = 10 UNITS)

Graph shows no. of linkage facilities in dandai branch of Vananchal Gramin bank.

From the above graph,it could be easily inferred that SHG are one of the most
successful programmes which are carried by the government through RRB .as the
number of linkage increased from 150 in 2003-04 to 230 in 2009-2010.this results into
an increase in 64% . Average annual increase is of 5.75% from 2003-04 to 2009-2010.
The number of linkage is different for different branches of the district, with highest
number of linkage witness from Dandai branch and the lowest number from Ranka .

ROLE OF NABARD
Various other government organization helps the rural area to augment their loan
facilities. Organizations like NABARD offer group loan schemes to the villagers.
NABARD has its own norm and regulations for the provision.

NABARD has been supporting NGOs for the formation and linkage of SHGs with the
banks. While it is recognized that promotional cost of the first SHG by an NGO may be
quite high , cost of promoting subsequent SHGs by the same NGOs may be relatively
less. Similarly , NGO which are already engaged in social sector program may have the
advantage of the area where they may be planning to adopt SHG promotion approach .
hence, cost of promotion of SHG for such NGOs would be relatively lower than other
NGO which are exclusively engaged in MF sector related activities. Further , with the
awareness of the SHG approach spreading steadily in the rural areas , the cost of
promotion of SHG has been coming down . in the above background, NABARD has
preferred to supplement the resources of such NGOs which take up SHGs promotion as
an add on activity.
 ITS ADVANTAGES TO THE BANKS.

Financing of SHGs has been increasingly as a cost effective mechanism for the banks
in expanding the outreach to the poor and adding quality loan portfolio to their branches.
However, banks continue to depend largely on the NGOs promotion of the SHGs due to
various reasons including the availability of time and appropriate manpower in rural
branches. By utilizing the services of VVV clubs ( a programme promoted by NABARD)
, the banks would be able to externalize a number of function in promoting SHGs in cost
effective manner. Utilizing services of the socially committed rural individual in
promotion of SHG through VVV clubs would help intensify participation of banks in the
areas with low NGO presence. Besides the direct business accrual in banking with
SHGs , the branch is expected to benefit from generation of good will for the branch in
service areas which may get translated into incremental business and good repayments
from the rural clients.
 BENEFITS TO A BANK FOR FINANCING SHGs

 Reduction in transaction cost.

 Reduction in work load of branch.
 Excellent recovery percentage.
 Inbuilt walk in deposit for branch.
 Unviable rural branch may be made viable.
 No need to identify beneficiaries.
 Maintaining and servicing one account instead of 20 accounts for 20 members of
one SHG.
 Saving time for doing other business.
 Achievement of the target under advances to the weaker sections.

BENEFITS OF BEING A MEMBER OF SHG

 Cultivate saving habit.
 Freedom to select an activity.
 Opportunity to undertake a group activity.
 Facility to avail credit for either consumption or productive service.
 Availability of credit even beyond office hours.
 No security.
 Training to undertake group activity.
 Empowered to participate in the development programmes.
 Reduction in transaction cost.
 Less interest when compared to money lender.
 Backward and forward support by NGO.
 LIMITATIONS

My study was purely done in a descriptive basis . The data are for general purpose only
and are not scaled. Some other limitations are:-

 Lack of awareness.
 The study of project was of short period of time.
 The study was limited to the information provided by the bank in Garhwa district
only.
 Data collected are mostly from secondary sources.
 CONCLUSION

The work of performing this project has laid a foundation for knowing about the
condition of banking scenario in the rural part of the agro-based nation. It provided me
with the knowledge of the group loan scheme . the scheme which helps to enhance
credit lending rates to the poor artisans , villagers ,thus , helping them to increase their

Productivity in the agriculture segment or to start a new small scale industry with the
loan. The scheme also provide some basic skills like to work as a team, team effort. The
work of NABARD along with its various schemes like VVV (vikas volunteer vahini) helps
the government banks to promote this linkage formation more easily and effectively.

This scheme also helps the bank to appraise the groups on the basis of their
performance. The groups getting maximum points are provided with some rewards by
the bank as a tool of motivation. The concept is fully based on the surveys. It is scientific
method of getting things done by the groups.

Apart from the constraints present the group loaning scheme has a good future in Indian
rural areas. The basic requirement could be fulfilled along with upgradation in the living
standard of the poor.
 RECOMMENDATIONS

Based on the findings and conclusions drawn from the study, the following suggestions
are made for making SHG programme more effective and successful. These findings
and suggestions might be useful to the government and banking authorities to identify
and rectify the defects of the scheme.

 It is apparent that banking is still a habit of males. Women must be encouraged

by giving credit support in their self-employment ventures and thereby enabling
them to participate at par in socio- economic development. The voluntary
agencies, NGO’s etc. can be sought for the promotion of women involvement.

 Banks are not utilizing the mass media for popularizing, SHG (self help group)
scheme. The benefits of SHG must reach to those who are socially and
economically weaker .Borrowers must be educated about the various schemes
and programmes through the effective awareness campaign. The banks should
resort to all publicly measures to create awareness among public .Also, individual
approaches may be made about development programmes .Thus the poor must
be empowered for suitable development.

 Due to procedural delay the SHG borrowers are not sanctioned with the loans on
time .Procedures should be simplified and unnecessary paper work should be cut
down to minimum.

 Quick expedition of loan application is essential to save time and energy. The
officer concerned should ensure that the loan proposals are disposed off within
the stipulated time period. The bankers must strictly adhere to the time discipline
related to sanctioning of loans.\

 Emphasis on the entrepreneurship development and skills should be increased.

 Use of modern and appropriate technologies, particularly for quantum ,and

quality production, better packaging should be done.
 BIBLIOGRAPHY

Books:-

 Karmakar, K.G.; Micro Finance in India, Sage Publication, 2006

 Patnaik, U.C., Mishra, R.N.; Rural Banking in India, Anmol
Publication, 2005
 Trend and Progress of Banking in India, Annual Report of RBI

Internet sites:-

 www.indiatimes.com
 www.scribd.com
 www.google.com
 CONTENTS

 EXECUTIVE SUMMARY 1
 INTRODUCTION 4
 SERVICE INDUSTRY 4
 BANKING INDUSTRY 7
 REGIONAL RURAL BANKS

 INTRODUCTION AND EMERGENCE OF MICROCREDIT

SYSTEM IN INDIA. 10

 MICRO-FINANCE IN INDIA. 11
 DESCRIPTIVE RESEARCH 14

 RESEARCH OBJECTIVE.
 COLLECTION OF DATA.

 SELF HELP GROUPS 16

 BACKGROUND
 WHAT IS A SELF HELP GROUP.
 GROUP FORMATION
 GROUP FUNCTIONING.

 SOME COMMON THINGS RELATED TO SHG. 20

 ROLE OF NABARD ITS ADVANTAGE TO BANKS. 22
 BENEFITS TO A BANK FOR FINANCING SHGs. 23
 BENEFITS OF BEING A MEMBER OF SHG. 25
 LIMITATION 26
 CONCLUSION. 27
 RECOMMENDATION. 28
 BIBLIOGRAPHY. 29
 DECLARATION CERTIFICATE

This is to certify that the work presented in the project entitled “STUDY OF
SHG LOAN UNDER RRB“ in partial fulfillment of the requirement for the
award of degree of bachelor of business administration of Birla Institute of
Technology, Mesra, Lalpur extension center is an authentic work carried
outward under
 Certificate of approval

We here by approve the project in title “STUDY OF SHG UNDER RRB”

submitted by Bipul Biplav Mukherjee (BBA/2038/08) for partial
fulfillment of the requirement for the award of BBA degree of BIT
LALPUR,RANCHI
INTERNAL EXAMINER EXTERNAL EXAMINER

ACKNOWLEDGEMENT
I AM VERY THANKFULL TO MR. AK SINGH SIR WHOSE GUIDANCE AND HELP
HAS BEEN EXTREMELY BENIFICIAL IN PREPARATION AND COMPLETION OF
THIS PROJECT ON THE “STUDY OF SHG UNDER RRB ”.

HE HAS BEEN CONSTAND SOURSE OF INSPIRATION PROVIDING VALUABLE

INFORMATION AND SUGGESTION DURING THE PROJECT.

BIPUL BIPLAV MUKHERJEE

BBA/2038/08