3.4.1.Impact Study Agri Gold Loan- May 2009

8/10/2019 3.4.1.Impact Study Agri Gold Loan- May 2009

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IMPACT STUDY

AGRI GOLD LOAN

By

N.D.S.V.Nageswara RaoChief Manager (Research)

STATE BANK INSTITUTE OF RURAL DEVELOPMEHYDERABAD

MAY 2009


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ACKNOWLEDGEMENT

Agri Gold Loan is the traditional safest advance with very low rate of

NPAs. After the simplification of the scheme, it is desired by the Top

Management to carry out an impact study. I thank the Top Management for

allowing me to take up this study.

My heartfelt thanks are due to my Principal & CGM Shri M.Bhagavantha

Rao for his invaluable encouragement while conducting the study.

I am grateful to Shri Magdhum M. Shaik, DGM & Vice Principal for his

support and guidance.

I thank all the operating functionaries who had contributed in bringing out

this report.

My special thanks to Team SBIRD for their support.

N.D.S.V.Nageswara Rao

Chief Manager (Research)

Hyderabad,

18thMay 2009


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INDEX

Executive Summary i

Introduction 1

Objectives 2

Methodology 2

Results & Discussions 3

Campaigns launched by different Circles 11

Views of operating functionaries 13

Availability of potential 17

Competitors moves 19

Conclusion 21


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IMPACT STUDY AGRI GOLD LOAN

- N.D.S.V.Nageswara RaoChief Manager (Research)

EXECUTIVE SUMMARY

Gold Loan was one of the agriculture loans, most popular in Hyderabad and

Chennai Circles. To make it more popular and customer-friendly among all

Circles, Corporate Centre revisited the scheme and simplified the scheme in

June 2007. On a suggestion from Corporate Centre, the Institute conducted

impact study on how the simplified process helped in garnering more business.

Circle-wise performance indicated that Chennai Circle followed by Hyderabad

Circle topped the list with higher outstandings. Kerala Circle came at third

position whereas Bangalore Circle came at a distant fourth position. All other

Circles could not improve the performance even after simplification of the

scheme.

Further analysis brought out the fact that the growth in Chennai Circlepeaked

up after June06 (well before the introduction of the simplified scheme) and

continued at the same tempo upto Mar08. However, the downfall till Sep08 and

a marginal growth thereafter indicated a disturbing trend. In respect of

Hyderabad Circlethe growth curve had reached a plateau and had not peaked

up even after the simplification process. Kerala Circle, which had a small

portfolio till June07 with a very small growth percentage, had peaked its

performance and there was no looking back after that. It was understood that the

campaigns launched by the Circle coupled with simplification of processes,

helped in this achievement.

The study also discussed about the campaigns launched by various Circles andthe views expressed by operating functionaries through SBIRDs Discussion

Forum on State Bank Times.

The study also had a look on the way various finance companies are poaching

the customers and the availability of vast potential for financing under Gold Loan

scheme.


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1

IMPACT STUDY AGRI GOLD LOAN

INTRODUCTION

Gold Loan was one of the agriculture loans, most popular in Hyderabad and

Chennai Circles. To make it more popular and customer-friendly among all

Circles, Corporate Centre revisited the scheme and simplified the scheme in

June 2007. SBIRD was also involved in this process and provided useful inputs

in the simplification of the scheme.

Later on, while approving the Annual Action Plan of the Institute for the year

2007-08, Corporate Centre suggested an impact study to be conducted on the

simplified Gold Loan scheme. It was understood that the objective was how the

simplified process helped in garnering more business.

As the simplified scheme was circulated only after June 2007, it was decided that

the impact study to be conducted only after a period of one year, to have

sufficient data to analyze. Now that the data of business under the scheme is

available for more than one year (Sept 2007 to Dec 2008), the study was taken

up.

The business under Agricultural Gold Loan at whole bank level over the years

was as under :

As on Mar 2005 Mar 2006 Mar 2007 Mar 2008 Dec 2008

Business Level

(Rs. in crores) 503 1247 2413 3275 3376

The growth percentage during 2005-06 and 2006-07 was on high trajectory,

whereas during 2007-08 it looked a bit low. However, a cursory glance at

individual Circles indicated that some Circles had sizeably increased the Gold

Loan portfolio.


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2

OBJECTIVES

The objectives of this study were as under :

i. Compare the growth position in Gold Loans vis--vis total Agri Loans for thelast 3 years

ii. Compare the growth position in Gold Loans before and after introduction of

the simplified Gold Loan Scheme

iii. Identify the Circles / Modules where there was high growth after the

implementation of simplified scheme

iv. Bring out the success stories / campaigns of various Circles and provide

suggestions for success in other Circles.

METHODOLOGY

i. The data available in MIS ONLINE on State Bank Times was used for

analysis.

ii. Interactions with the operating functionaries for their feedback on their growth

in Agri Gold Loan portfolio.

iii. Ideas generated in the discussion on Agri Gold Loans in the discussion

forum hosted on State Bank Times by the Institute.


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Coming to the Circle-wise performance in Agri Gold Loans during the period

under review (ie., Dec05 to Dec08) indicated as under :

Rs.Crores

Circle Dec' 05 June' 07 Dec' 08

Ahmedabad 0.42 1.16 33.03

Bangalore 9.28 18.38 42.07

Bengal 2.77 4.74 16.45

Bhopal 0.38 0.52 0.76

Bhubaneswar 9.70 12.79 12.59

Chandigarh 0.79 1.40 5.84Chennai 570.31 1733.12 1958.11

Delhi 0.10 0.44 0.86

Hyderabad 509.10 665.29 1018.02

Kerala 46.49 75.57 282.91

Lucknow 0.16 0.27 0.37

Mumbai 1.45 1.46 3.05

North east -- 0.06 1.22

Patna 0.03 0.17 0.44

(Source : MIS ONLINE)


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5

Ahmedabad

Bangalore

Bengal

Bhopal

B

hubaneswar

Chandhigar

Chennai

Delhi

Hyderabad

Kerala

Lucknow

Mumbai

N t h t

33.03 42.07 16.45 0.76 12.59 5.84

1958.11

0.86 1

018.

02

282.91

0.37 3.05 1

1.16 18.38 4.74 0.52 12.79 1.41733.1

2

0.44

665.29

75.57 0.27 1.46 0

0.42 9.28 2.77 0.38 9.7 0.79

570.31

0.1

509.1

46.49 0.16 1.45

Circles

Gold Loan Portfolio


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Circle wise performance indicated as under :

Chennai Circle topped the list with highest outstandings, but the growth during

Dec05-June07 (204%) was much more higher than during June07-Dec08

(13%). It was understood that the campaigns launched by the Circle in the first

half ensured highest growth, than the simplified loan in the second half.

The next topper Hyderabad Circle showed a growth of 31% during Dec05-

June07 and 53% during June07-Dec08. It was understood that the Circle was

doing well under the simplified model.

With a total outstanding of Rs.282.91 crores as on Dec08, Kerala Circlecame

in the third position. The growth in this Circle during Dec05-June07 was 63%

and the growth during June07-Dec08 was at a spectacular level of 274%. The

push given by the Circle for gold loans was visible in the way the portfolio was

growing.

With an outstanding of Rs.42.07 crores as on Dec08, Bangalore Circlecame to

a distant fourth position. The growth in this Circle during Dec05-June07 was

98% and the growth during June07-Dec08 was at a good level of 129%. The

Circle was pushing the product well by launching campaigns on an on-going

basis, like G-100 campaign.

These 4 Circles combined together had a share of Rs.3301.11 crores out of

total Agri Gold Loan portfolio of Rs.3375.72 crores of the Bank. This itself

indicated the very low performance of other Circles in this regard.

The performance of top 3 Circles was analyzed quarter-wise to have better

understanding in the growth pattern.


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Agri Gold Loan

0

500

1000

1500

2000

2500

Period

Outsta

ndings

Chennai 570.31 649.46 745.13 1143.7 1461.9 1638.8 1733.1 1916.2 2036.7 2124.4 1982 1892.9 1Hyderabad 509.1 511.61 506.43 567.43 661.07 667.62 665.29 747.01 837.35 842.86 818.2 846.97 1

Kerala 46.49 47.36 47.13 55.56 62.17 69.78 75.57 98.44 173.5 218.07 236.05 260.82 2

Dec'

05

March'

06

June'

06

Sept'

06

Dec'

06

March'

07

June'

07

Sept'

07

Dec'

07

March'

08

June'

08

Sept'

08


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From the above graph, it could be interpreted that the growth in Chennai Circle

peaked up after June06 (well before the introduction of the simplified scheme)

and continued at the same tempo upto Mar08. However, the downfall till Sep08

and a marginal growth thereafter indicated a disturbing trend. And it was not

possible to interpret whether the simplification of Gold Loan helped the branches

or not.

While the performance of Hyderabad Circle was satisfactory all through the

period, the growth curve had reached a plateau and had not peaked up even

after the simplification process. Thus, here also it was difficult to interpret

whether the simplification had any effect on improvement in portfolio.

Kerala Circle, which had a small portfolio till June07 with a very small growthpercentage, had peaked its performance and there was no looking back after

that. It was understood that the campaigns launched by the Circle coupled with

simplification of processes, helped in this achievement.

Further analysis down to the level of modules indicated the following :

Chennai Circle:

Agri Gold Loan - Chennai Circle

83.73

172.82157.33

213.49

545.25

301

738.36

156.42

404.52

569.85

416.98

501.77

0

100

200

300

400

500

600

700

800

Module-wise

Outstandings

Dec' 05 83.73 172.82 157.33 156.42

June' 07 213.49 404.52 569.85 545.25

Dec' 08 301 416.98 738.36 501.77

Chennai Coimbatore Madurai Tiruchirapalli


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The Coimbatore module, Madurai module and Tiruchirapalli module were almost

at the same level in Dec05. However, Madurai module peaked up before

June07 and also after June07. Coimbatore module also done well till June07

but the growth stagnated almost at the same level even in Dec08. However,

Tiruchirapalli module which peaked up till June07 showed a negative trend and

the outstandings fell down by Dec08. Chennai module had a normal continued

growth all through the period.

Hyderabad Circle:

Agri Gold Loan - Hyderabad Circle

33.4

212.88

191.43

71.39

37.17

273.14

249.27

105.71

57.81

391.21

411.32

157.68

0

50

100

150

200

250

300

350

400

450

Module-wise

Outstandings

Dec' 05 33.4 212.88 191.43 71.39

June' 07 37.17 273.14 249.27 105.71

Dec' 08 57.81 391.21 411.32 157.68

Hyderabad Tirupati Vijayawada Visakhapatnam

Tirupati and Vijayawada modules which were leading from the beginning,continued the same tempo during the entire period of 3 years with good growth

momentum. However, the growth percentage was better during the second half,

as could be seen above. The simplified loan might have helped in this regard.


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TOP GOLD LOAN BRANCHES IN CHENNAI & HYDERABAD CIRCLES

CIRCLE Module Region Branch June 07

Amt.

outstan-

dings

Rs.lacs

(No. of loan

a/cs)

Dec 08

Amt.

outstan-

dings

Rs.lacs

(No. of loan

a/cs)

Chennai Chennai 6 Sundarampalli 1512.93

(5365)

3350.81

(9629)

Chennai Madurai 1 Madurai ADB 2208.32

(6347)

2579.86

(5583)

Chennai Madurai 3 Chemanvilai 1948.97

(5464)

Chennai Madurai 3 Udangudi 1509.72(5059)

2393.79(6837)

Chennai Madurai 3 Vilathikulam 577.33

(2347)

1400.60

(5023)

Hyderabad Vijayawada 1 Kakumanu 746.85

(3904)

976.31

(4146)

Now, let us see the various campaigns launched by different Circles. While the

Gold Loan campaign in Chennai Circle was launched before simplification of the

scheme, the following campaigns were launched after the simplification of the

scheme.


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CAMPAIGNS LAUNCHED BY DIFFERENT CIRCLES

BANGALORE CIRCLE

AGRICULTURAL GOLD LOANS : G-100 SCHEME

(Ref: CIRCO/137 dated 16.08.2008)

The details of the scheme are as under:

1) The targets include achieving:

a. Minimum 100 Gold loans by each branch

b. Minimum Rs. 50 Lacs disbursed through Gold loans by each branch

c. Minimum Rs. 100 Crores levels by the Circle as at 31stMarch 2009.

2) The scheme was applicable to all branches that have potential for

financing under Agriculture.

3) The Scheme was in operation from 1st August 2008 to 31st December

2008.

4) During the campaign, processing charges for Agri Gold Loans were

50% of the applicable charges

6) Competent Authority had approved an incentive based approach for

Branches as well as Regions for promotion of the scheme. The

incentives shall not be payable in cash and should be disbursed to each

employee in the form of a memento or gift card only.

7) Branches were advised to aggressively market the scheme and conduct

Gold Loan Melas. They were also advised to explore marketing gold

loans through SHGs / Business Facilitators / Co-operative Societies in

the campaign. Hut painting or Wall painting was also undertaken at

selected places. The awareness created through the publicity campaign

was to be effectively used to attract more business by the branches.

8) No shortcuts were allowed in the appraisal, sanction and disbursement

of loans, which were as per extant instructions.


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CHANDIGARH CIRCLE

AGRICULTURE GOLD LOAN : INCENTIVE SCHEME

To popularize the Gold Loan scheme, the Circle had approved a Gold Loan

incentive scheme to encourage financing under Agri Gold Loan Scheme for

Rural and Semi Urban branches of the Circle. The incentive scheme was

implemented during the period 01-07-07 to 30-09-07 and the award was given

based upon the performance during the said period. Targets were set for

branches as well as Regions for achieving the growth.

PUBLICITY BY KERALA CIRCLE

Golden Scheme for Farmers

NEW GOLD LOAN

Agri Gold Loan as KCC and ATL also.

Farmer can save on interest due to ongoing deposit/ withdrawal

facility.(which is not there when it is availed as a demand loan).

Need not wait for closing and opening new gold loan every time need

arises.

(Branches with no locker facility can suggest Gold loan as KCC to farmers)

BENEFIT TO BANK:

Reduction in work load.

Risk of purity checking every time is not there.

Most secure loan.

(See CIRCO ADV 94 dated 18-6-07)


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VIEWS OF OPERATING FUNCTIONARIES

Even the simplification had not helped in improving the portfolio in other Circles

implied that there were other factors which might be hindering the growth. As all

the Circles were improving the overall agri loan portfolio year after year, the non-

proliferation of Agri Gold Loan needed rationale for the same. The Institute tried

to get the views of the operating functionaries through the Discussion Forum

during Dec 2008 on the Agri Gold Loan scheme. The views were summarized

below.

Shri R.Yuvaraj, Manager, RCPC, Salem says:

Popularising a product requires meticulous planning taking into account the

infrastructure available at the branch and the potential for marketing the products

amongst the public. So when we want to market agricultural gold loans we have

to strengthen our internal response systems, facilities and the quality of service.

To elaborate on this aspect a few basic necessities are given:

a. The basic requirements for giving the loans i.e. application forms must be

available, weighing machines should be in condition, the operating staff the

permanent official as well as the officiating person should have undergone

sufficient training in appraising the gold ornaments and also be willing to

accept the responsibility;

b. The loans should be made available on any day even if the timings are fixed

and within a reasonable waiting time say one hour. This will create

confidence in the minds of the public that their need will be definitely fulfilled;

c. The security environment is conducive for the people to wait and take the

loan;

d. While redeeming the loan also the borrower should be able to remit cash at

the SWO counters within a reasonable time and take possession of the

ornaments;


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e. The intending borrowers should be assured that without any pressure or

recommendation the loans will be available. If necessary a board may be

displayed advising them to contact the Cash Officer directly;

f. The campaign for gold loans can be taken up as a project in Quality Circles;

There are ever so many advertising methods to popularize the scheme outside

such as distribution of hand bills, putting slides in theatres, scrolling in cable

network, announcement through mobile vans with loudspeakers etc. The positive

aspects like low interest rates, charges, security for the ornaments should be

highlighted in the campaigns.

R. SAVITHA, OMR(RURAL), CHITTAR, RII, Coimbatore says

Agri gold loan is an easy and secured advance to our bank. While sanction of

KCC needs pre-sanction inspection, document verification, land holding

verification. etc. which take considerable time, sanction of Gold Loan requires

much less time, as here the ornament purity is the most important item. So we

can get good and secured business, with minimum man power. Most of our

branches easily achieve their budget because of gold loans. One of my cluster

branch sanctions minimum 18 loans per day because that cash officer has very

good knowledge about gold loans and its importance in achieving branch budget.

Encouragement by giving excellence certificate may motivate others also

towards this end.

D S Arunakumar, Manager (Training), SBLC, Dharwad says

There is a very large potential for gold loans business. Generally Indians have

very strong family attachment for Gold ornaments. There is very little chance for

the loans becoming NPA as simple notice prevents them from falling into this

category. There is Plenty of Gold in rural India and there is vast scope to

increase our business in this particular segment. This will increase our standard

asset portfolio which is very safe and profitable and also very useful to the farmer

in times of need. Gold loan business is hidden treasure for Bank.


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P.Dharmalingam, Credit Officer, RCPC, Salem came with an innovative idea

as under :

The Bank is lending against various categories of assets - Immovable properties,

crops, equipments to name a few. In assets like crops, only the symbolic

possession is with the Bank and the borrowers enjoy the benefits. Can we

formulate a scheme under which the gold ornaments will be in the custody of the

borrowers and the Bank will extend finance. Whatever precautions or

conditions applicable to the other borrowers like insurance, inspections etc can

be applied to such advances also. Such an arrangement will eliminate the need

to keep the ornaments in the Bank and the related security arrangements.

Srinivasan Venkateswaran, Assistant General Manager, IT-ALM Department

says

From the early days of the birth of SBI, Crop Loan and Agricultural Gold Loan

were the two most popular and well known schemes in the rural areas. Even for

the bank, this scheme is very easy to handle for the staff. For the rural folk,

taking gold loan is very easy and in most cases repayment is assured as the

rural womenfolk has sentimental attachment to the gold ornaments. I will narrate

how these branches handle the portfolio.

The Cash Officer (presently the cash in charge) of the branch keeps with him

sets of Ag Gold Loans. He invariably gets the documentation done one hour

before the start of the days work when he is relatively free. Hence the customer

gets the money within an hour of opening of the cash counter. I know of many

cash officers and special assistants who handled cash, earning huge amount as

incentive during 2005-06 when the bank had a scheme for payment of incentive

for the gold loans sanctioned. Basically, the person who is cash in charge of the

branch should be service minded. There is huge untapped potential of

Agricultural Gold Loans in our branches. Once the news spreads that SBI is

freely sanctioning such loans, there will be a Q for availing Ag Gold Loans. If the

cash in charge keeps a diary for following up the payment and touches


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the borrower in time, there will be no NPAs in this segment. I used to contact the

wife of the borrower whenever my branch Ag Gold Loans were about to become

NPA. The wives never allowed their ornaments to be sold in auction under any

circumstances and pressurised their husbands to some how settle the matter

with the bank.

Ultimately timely sanction of loans without making the applicants visiting the

branch more than once, timely reminders, auction notices when the resale value

is much more than the loan outstandings, will help to keep a healthy Ag Gold

Loan portfolio. The customers should know that whenever they require urgent

funds, SBI will come to their rescue.


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AVAILABILITY OF POTENTIAL

Report of the Technical Group Set up to Review Legislations on Money

Lending dated 24th July 2007 (headed by Shri S.C.Gupta, Legal Adviser-in-

Charge, Legal Department, Reserve Bank of India) in its report stated as under:

QUOTE

The AIl India Debt and Investment Survey (NSS Fifty-Ninth Round) has revealed

that share of institutional agencies in the total cash dues of urban households

had increased from 72 per cent in 1991 to 75.1 per cent in 2002 and that of

moneylenders had also increased during the period from 10.2 per cent to 14.1

per cent. In the case of rural households, on the other hand, the share of

institutional agencies had in fact declined from 64 per cent in 1991 to 57.1 per

cent in 2002. And more significantly, the share of moneylenders had increased

in the same period from 17.5 per cent to 29.6 per cent in the case of rural

households.

The survey reveals that out of every Rs.1,000 outstanding of farmer households

in the country, Rs.257 was sourced from moneylenders. The share of

moneylenders in the indebtedness of farmer households in Bihar, Manipur,

Punjab, Rajasthan, Tamil Nadu and Andhra Pradesh were well above thenational average, with Andhra Pradesh at the top. The penetration of

moneylenders is significant even in States that are regarded as being adequately

banked (Andhra Pradesh and Tamil Nadu).

In the profile of Informal Credit Providersthe report further states that :

Various categories of informal credit providers are in existence in most of the

States where the survey was conducted. The categories of informal credit

providers in order of frequency are pawnbrokers followed by input suppliers,

arthiya/commission agents, kirana shopkeepers, lender against land, etc.

According to what was reported by the 11 Regional Offices of the RBI there were

12,601 registered moneylenders as on March 1995. This number has increased


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to 19,627 as on March 2006. Anecdotal evidence suggests that there is a

corresponding increase in unregistered moneylenders.

Their mode of operations, viz, maintaining inter-personal relationship with the

borrowers, their informal approach, round-the-clock availability of finance, etc.,

has made them the most important lenders in the villages. Their policy of 'any

time, anywhere, any amount', which is borrower-friendly, has strengthened their

position in the villages, thus reducing the role of banks. They offer a variety of

products tailor-made to the needs of the borrowers.

Amount lent by moneylenders: District officials from only five States could furnish

the data on the amount of loan advanced by the moneylenders in their

jurisdiction as under: Amt. in Rs. Crore

Purpose: The loans provided by the informal credit providers were generally

short-term in nature and mainly for the purpose of meeting social obligations

associated with weddings, birth or death ceremonies. Loans for farming and

livelihood were also common.

Security obtained: Mostly all the loans were granted against the security of

gold jewellery, land documents, cultivation rights, promissory notes and evenagainst utensils.

UNQUOTE

The available data as above indicated that the moneylenders are still

thriving, where our branches were not able to market the safest advance

i.e., Gold Loan.

Name of State As on March 1995 As on March 2006

Gujarat 38.34 139.65

Maharashtra 29.90 82.28

Kerala 25.00 138.00

Karnataka 19.22 87.70

Uttar Pradesh 34.22 181.92


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COMPETITORS MOVES

Not only that, Manappuram General Finance & Leasing Ltd. proudly

advertises in its website as well as airs in FM radios that

Welcome to India`s Largest Listed and Highest Credit Rated Gold Loan Company!

GOLD LOAN or Loan against Gold

Pledge your gold ornaments with us and draw cash against it.

Depending on the weight and purity of the gold, cash will be

disbursed.

We have various Schemes that will enable you to make your favourable choice !

Attractive features:

Loan availed within minutes.

Highest Amount availed per gram of Gold.

Diminishing interest rates.

Pay interest only for the number of days your pledge is with us.

Various schemes to suit all income classes of people.

No other hidden charges.

Of course, this company could do well by achieving a Gold Loan portfolio of

Rs.149 crores as on 31.03.2009, up from Rs.60 crores as on 31.03.2009


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Muthoot Finance, banking and finance wing of Muthoot Groupannounces :

Muthoot Finance is the largest gold banking portfolio in India. It is the fastest and

most flexible branded personal loan product. It has a gross annual investment

portfolio of over Rs.100 billion against gold securities. An ISO 9001:2000

certified organization, Muthoot Finance has a growing network of over 1000

offices across 20 states.

Gold Power Loan

Maximum Per Gram Rates.

Fastest disbursement of Loans.

Rates of Interest starting from Rs.1.16 per month.

8 different Schemes suiting all Categories.

Only Identity proof required.

Any Person No Account required.

Interest only for actual number of days.

100% insured and Gold kept in strong rooms only.

Any time redemption facility with out penalty.

Special reward points for M-Power Cardholders.

Business Line edition of May 02, 2009says that :

TRUE VALUE GOLD LOANThe (Muthoot) group has recently launched new True Value Gold Loan Scheme

offering loans at the rate of 14 per cent interest with no service charges. Interest

is calculated only for actual number of days even if it is for one day. This has

been a huge success and the company has disbursed over Rs.1,000 crore in the

scheme during the last two months alone.

The Muthoot Finance Ltd achieved a total business turnover of Rs.14,500 crore

in the last fiscal. In a month, the company disburses Rs.1,500 crore as loans

against gold and distributes one lakh money transfer remittances across the

country.

It achieved 50 per cent loan growth and 51 per cent growth in secured

debentures collection during the last fiscal.


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CONCLUSION

All the indicators discussed in previous pages explain that there is plenty of

potential available in the market for Gold Loans. But, the branches are not able

to encash that potential.

An earlier study conducted by this Institute on Potential for Agri Gold Loans in

Ahmedabad Circle brought out the following observations :

62% of respondent farmers are not aware of Agri Gold Loan being

provided by SBI. Sources of Agri Gold Loan from private money lenders constitute 47% and

those from Co-operative Banks constitute 33% leaving the share of SBI

and other PSBs at 10%.

Present marketing effort on the part of branch officials is not upto the

mark. It needs greater attention to make the farmers community aware of

our product.

There appears to be mental block on the part of Cash Officers / Sr.

Assistant or Special Assistant in charge of cash not to finance gold loan.

The figures of Agri Gold Loan in Ahmedabad explain the situation. The Agri Gold

Loan portfolio was Rs.0.42 crores as on Dec 05 and in June 07 it was Rs.1.16

crores. The figure went up to Rs.33.03 crores mainly because of business came

from e-SBS. This amply shows that e-SBS could garner a portfolio of nearly

Rs.30 crores in the same State, whereas the erstwhile Circle could not do the

same.


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Thus, it can be concluded that,

More marketing efforts are needed to capture the potential available in the

market.

The mindset of operating functionaries to be changed positively towards

sanctioning of Agri Gold Loans.

As the NPA percentage is very low, i.e., 0.23% and the interest income is

lucrative, branches should try to improve the portfolio to achieve their agri

budgets.

Controllers should motivate the branch functionaries to go ahead in Agri Gold

Loans and suitable targets to be fixed to achieve the business.

If not captured now, the business will go to small size firms like NBFCs. Why

lose it when the customer is banking with us for other purposes? Cross-sell

Agri Gold Loanto every farmer-customer to Achieve Great Levelin branch

business.

Documents

3.4.1.Impact Study Agri Gold Loan- May 2009