A STUDY ON OPERATIONAL AND FINANCIAL PERFORMANCE OF SAPTAGIRI GRAMEENA BANK, CHITTOOR

PROJECT REPORT
Submitted in the Partial Fulfillment of the Requirement for the Award of the degree Of MASTER OF BUSINESS ADMINISTRATION JAWAHARLAL NEHURU TECHNOLOGICAL UNIVERSITYANANTAPUR Submitted By D.RAMYA KRISHNA Reg.No:11751E0040 Under the Guidance of Dr .V.MURALI KRISHNA, M.Com, Ph.D, MBA. Asst. Prof. Dept. of M.B.A SITAMS

SREENIVASA INSTITUTE OF TECHNOLOGY AND MANAGEMENT STUDIES

ACCREDITED BY NATIONAL BOARD OF ACCREDITION Dr .VISWESWARAIAH ROAD (BANGALORE-TIRUPATHI BYE-PASS MURUKAMBATTU POST, CHITTOOR-517127(A.P)
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2011-2013

SREENIVASA INSTITUTE OF TECHNOLOGY AND MANAGEMENT STUDIES

APPROVED BY AICTE, NEW DELHI & AFFILIATED TO JNTU, ANANTAPUR.

DR.Visweswaraiah Road, (Bangalore-Tirupathi Bye-Pass Road) Murukumbatu, CHITTOOR-517127

CERTIFICATE
This is to certify that the project report entitled A STUDY ON

OPERATIONAL AND FINANCIAL PERFORMANCE OF SAPTAGIRI GRAMEENA BANK CHITTOOR is a record of bonafied work done and submitted
by D.RAMYA KRISHNA (Reg No: 11751EOO40) in partial fulfillment of the requirements for the award of the degree in NISMASTER OF BUSINESS ADMITRATION under JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, ANANTAPUR.The performance of his/her satisfactory relation to the concurrent project work during the academic year 2012-2013.

PROJECT GUIDE DIRECTOR Dr.V.MURALI KRISHNA, M.Com, Ph.D, MBA. SUBRAHMANYAM MBA.,Phd ASSOCIATE PROFESSOR, HOD ,Dept . ofMBA

Dr. S. E.V.

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MBA DEPARTMENT, SITAMS, SITAMS, CHITTOOR. CHITTOOR.

INTRODUCTION
Meaning of Bank Bank is a lawful organization, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it. Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. After this, the Indian government established three presidency banks in India. The first of three was the Bank of Bengal, which obtains charter in 1809, the other two presidency bank, viz., the Bank of Bombay and the Bank of Madras, were established in 1840 and 1843, respectively. The three presidency banks were subsequently amalgamated into the Imperial Bank of India (IBI) under the Imperial Bank of India Act, 1920 which is now known as the State Bank of India. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After Indias independence in 1947, the Reserve Bank was nationalized and given broader powers. As the banking institutions expand and become increasingly complex under the impact of deregulation, innovation and technological upgradation, it is crucial to maintain balance between efficiency and stability. During the last 30 years since nationalization tremendous changes have taken place in the financial markets as well as in the banking industry due to financial sector reforms. The banks have shed their traditional functions and have been innovating, improving
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and coming out with new types of services to cater emerging needs of their customers. Banks have been given greater freedom to frame their own policies.

ROLE OF BANKING Banks provide funds for business as well as personal needs of individuals. They play a significantrole in the economy of a nation. Let us know about the role of banking. It encourages savings habit amongst people and thereby makes funds available for productiveuse. It acts as an intermediary between people having surplus money and those requiring moneyfor various business activities. It facilitates business transactions through receipts and payments by cheques instead ofcurrency. It provides loans and advances to businessmen for short term and long-term purposes. It also facilitates import export transactions. It helps in national development by providing credit to farmers, small-scale industries andself-employed people as well as to large business houses which lead to balanced economicdevelopment in the country. It helps in raising the standard of living of people in general by providing loans for purchaseof consumer durable goods, houses, automobiles, etc. TYPES OF BANKS There are various types of banks which operate in our country to meet the financial requirementsof different categories of people engaged in agriculture, business, profession, etc. On the basis offunctions, the banking institutions in India may be divided into the following types: 1. Central Bank 2. Development Banks 3. Specialized Banks(RBI, in India) (EXIM Bank ,SIDBI, NABARD) 4. Commercial Banks i. Public Sector Banks ii. Private Sector Banks
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iii. Foreign Banks 5. Cooperative banks i. Primary Credit Societies ii. Central Co-operative Banks iii. State Co-operative Banks Now let us learn about each of these banks in detail. 1) Central Bank A bank which is entrusted with the functions of guiding and regulating the banking system of acountry is known as its Central bank. Such a bank does not deal with the general public. It actsessentially as Governments banker, maintain deposit accounts of all other banks and advancesmoney to other banks, when needed. The Central Bank provides guidance to other bankswhenever they face any problem. It is therefore known as the bankers bank. The ReserveBank of India is the central bank of our country.The Central Bank maintains record of Government revenue and expenditure under various heads.It also advises the Government on monetary and credit policies and decides on the interest ratesfor bank deposits and bank loans. In addition, foreign exchange rates are also determined by thecentral bank.Another important function of the Central Bank is the issuance of currency notes, regulating theircirculation in the country by different methods. No other bank than the Central Bank can issuecurrency. 2) Commercial Banks Commercial Banks are banking institutions that accept deposits and grant short-term loans andadvances to their customers. In addition to giving shortterm loans, commercial banks also givemedium-term and long-term loan to business enterprises. Now-a-days some of the commercialbanks are also providing housing loan on a long-term basis to individuals. There are also manyother functions of commercial banks, which are discussed later in this lesson. Types of Commercial banks: Commercial banks are of three types i.e., Public sector banks, Private sector banks and Foreign banks. (i) Public Sector Banks: These are banks where majority stake is held by the Government ofIndia or Reserve Bank of India. Examples of public sector banks are: State Bank of India,Corporation Bank, Bank of Baroda and Dena Bank, etc.

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(ii)

Private Sectors Banks: In case of private sector banks majority of share capital of thebank is held by private individuals. These banks are registered as companies with limitedliability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd.,Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd.,Global Trust Bank, Vysya Bank, etc.

(iii) Foreign Banks: These banks are registered and have their headquarters in a foreign countrybut operate their branches in our country. Some of the foreign banks operating in ourcountry are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, AmericanExpress Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreignbanks operating in our country has increased since the financial sector reforms of 1991. 3) Development Banks Business often requires medium and long-term capital for purchase of machinery and equipmentfor using latest technology, or for expansion and modernization. Such financial assistance isprovided by Development Banks. They also undertake other development measures likePublic Sector Bankscomprise 19nationalized banks andState Bank of India andits 7 associate banks.Business Studiessubscribing to the shares and debentures issued by companies, in case of under subscription ofthe issue by the public. Industrial Finance Corporation of India (IFCI) and State FinancialCorporations (SFCs) are examples of development banks in India. 5) Co-operative Banks People who come together to jointly serve their common interest often form a co-operativesociety under the Co-operative Societies Act. When a cooperative society engages itself inbanking business it is called a Co-operative Bank. The society has to obtain a license from theReserve Bank of India before starting banking business. Any co-operative bank as a society isto function under the overall supervision of the Registrar, Co-operative Societies of the State.As regards banking business, the society must follow the guidelines set and issued by the ReserveBank of India. Types of Co-operative Banks There are three types of co-operative banks operating in our country. They are primary creditsocieties, central co-operative banks and state co-operative banks. These banks are organizedat three levels, village or town level, district level and state level.
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(i)

Primary Credit Societies: These are formed at the village or town level with borrowerand non-borrower members residing in one locality. The operations of each society arerestricted to a small area so that the members know each other and are able to watch overthe activities of all members to prevent frauds. Central Co-operative Banks: These banks operate at the district level having some ofthe primary credit societies belonging to the same district as their members. These banksprovide loans to their members (i.e., primary credit societies) and function as a link betweenthe primary credit societies and state co-operative banks.

(ii)

(iii) State Co-operative Banks: These are the apex (highest level) cooperative banks in allthe states of the country. They mobilize funds and help in its proper channelization amongvarious sectors. The money reaches the individual borrowers from the state co-operativebanks through the central co-operative banks and the primary credit societies. 6) Specialized Banks There are some banks, which cater to the requirements and provide overall support for settingup business in specific areas of activity. EXIM Bank, SIDBI and NABARD are examples ofsuch banks. They engage themselves in some specific area or activity and thus, are calledspecialized banks. Let us know about them. i. Export Import Bank of India (EXIM Bank): If you want to set up a business for exportingproducts abroad or importing products from foreign countries for sale in our country, EXIMbank can provide you the required support and assistance. The bank grants loans toexporters and importers and also provides information about the international market. Itgives guidance about the opportunities for export or import, the risks involved in it and thecompetition to be faced, etc. Small Industries Development Bank of India (SIDBI): If you want to establish asmall-scale business unit or industry, loan on easy terms can be available through SIDBI. Italso finances modernization of small-scale industrial units, use of new

ii.

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technology and marketactivities. The aim and focus of SIDBI is to promote, finance and develop small-scaleindustries. iii. National Bank for Agricultural and Rural Development (NABARD): It is a centralor apex institution for financing agricultural and rural sectors. If a person is engaged inagriculture or other activities like handloom weaving, fishing, etc. NABARD can providecredit, both short-term and long-term, through regional rural banks.

It provides financialassistance, especially, to co-operative credit, in the field of agriculture, small-scale industries,cottage and village industries handicrafts and allied economic activities in rural areas. 7) Grameen Bank The Grameen Bank is a community development bank started in Bangladesh. They give small loans (known as microcredit or "grameencredit" [1]) to poor people without asking for money before the loan is given. The word "Grameen", is made of the word "gram" or "village", and means "of the village". The system of this bank is based on the idea that the poor have skills but have no chance to use their skills without some money. The bank also controls some businesses, such as fabric, telephone and energy companies. Most of the banks loans go to women.

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INDUSTRY PROFILE
HISTORY OF GRAMEEN BANK The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives: Extend banking facilities to poor men and women; Eliminate the exploitation of the poor by money lenders; Create opportunities for self-employment for the vast multitude of unemployed people in rural areas. Bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves. and Reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income". The action research demonstrated its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 19761979. With the sponsorship of the central bank of the country and support of the nationalized commercial banks, the project was extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979. With the success in Tangail, the project was extended to several other districts in the country. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the
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Bank own 90% of its shares, while the remaining 10% is owned by the government.
ROLE OF REGIONAL RURAL BANKS IN ECONOMIC DEVELOPMENT

The importance of the rural banking in the economic development of a country cannot be overlooked. As Gandhi said Real India lies in villages, and village economy is the backbone of Indian economy. Without the upliftment of the rural economy as well as the rural people of our country, the objectives of economic planning cannot be achieved. In fact, the real growth of Indian economylied in the emancipation of rural masses from acute poverty, unemployment, and socio-economic backwardness. Keeping this end in view, various important plans and programmes of rural development have been conceived and implemented by the government of India since the commencement of first five-year plan from 1951-56. But an appraisal of the achievement of these programmes clearly reveals that much programmes failed to achieve the desired objectives due to the backward economic condition and lack of adequate finance to the poor people in the rural areas. Hence, bank and other financial institutions are of vital importance for development of rural economy of a country. The presentstudy is a modest attempt to make an appraisal of the credit needs of the rural people and the way Regional Rural Bank, i.e., Arunachal Pradesh Rural Bank, has been extending its service to meet the same in the state of Arunachal Pradesh. It deals with the performance evaluation of Arunachal Pradesh. Rural Bank (APRB) for the economic development of the state. Further, an attempt has also been made to study the growth and performance of Scheduled Commercial Banks with special emphasis on Regional Rural Banks (RRBs) in Indian and North-East Region.

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SAPTAGIRI GRAMEENA BANKPROFILE

The Bank in Brief:
In terms of decision to amalgamate the RRBs sponsored by the same bank in the state wide GO dated 26.06.2006, Government of India have notified formation of SaptagiriGrameena Bank ,amalgamating ShrivenkateswaraGrameena Bank (SVGB) operating in Chittoor district and KanakadurgaGrameena Bank (KDGB) is perating in Krishna diastrict of Andhra Pradesh.Indian bank sponsored both the RRBs. The amalgamated entity i.e.,SaptagiriGrameena Bank started functioning w.e.f.01.07.2006 with the Head Ofiice at Chittoor.

Operational Area:
Banks operationalarea is spread across chittoor and Krishna districts in the state of Andhra Pradesh.Chittoor district is located on the southern part of the state .Chittoor is the district head quarters. The district covers on extent of 15152 sqkms. It is divided into 3 Revenue Divisions viz., Chittoor,Madanapalle and Tirupati and 66 mandals. Krishna district is located on the east coast of the state. The geographical area of the district is divided into 4 Revenue Divisions viz., Gudivada, Machilipatanam, Nuzivedu and Vijayawada and 40 mandals.

Branch Network:
The bank is having 154 branches. Of the above 100 branches are located in Chittoor District and 54 branches are located in Krishna District. Of the above 127 branches 12 are located in Urban areas, 36 in Semi-Urban areas and remaining 106 are located in Rural areas.

Share Capital:
In terms of section 5 of RRB Act 1976, the authorized capital of Bank is Rs.500 lakhs divided into 5 lakhs fully paid shares of Rs.100/- each. The paid up capital of the Bank as on 31 03 2008 is Rs.200 lakhs, contributed by Govt of India, Sponsor Bank and Govt of A.P. in the ratio of 50%, 35% and 15% respectively.

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1) Savings Bank 2) Suraksha Savings 3) Janatha Savings (No Frill) 4) Current Account 5) Fixed Deposit 6) Short Term Deposit 7) Reinvestment Plan 8) Recurring Deposit 9) Kamadhenu Deposit (Unit Deposit) 10) Variable Recurring Deposit 11) N R E - RIP 12) N R E - TD 13) N R E - Savings Bank

Deposit Schemes:

Loans Products/Schemes:
1) GrameenKisan Credit Cards (GKC) 2) Swarojgar Credit Card 3) General Credit Card 4) Ag STPL 5) Ag Jewel Loan 6) Ag Term Loan for a) Land Development b) Purchase of Land c) Minor Irrigation d) Farm Mechanisation (Tractors/Tillers/Crushers) e) Plantation and Horticulture. f) Agri Clinics and Agri Business. 7) Agricultural Allied Term Loans for a) Dairy b) Poultry c) Bullocks and Cart d) Duckery e) Fishery f) Sheep, Goat, Rabbit Rearing g) Seri Culture. 8) Self Help Groups Financing. 9) M S M E 10) Rural Artisans 11) Small Loans Small Business, Retail Trade, SRTO, P & S E 12) Loan Against Mort of Property (LAMP) 13) Salary Loans, NSC loans, LIC loans. 14) S O D, O D, OCC, Fair Price Shops. 15) Two Wheeler Loans under tie up with Hero Honda 16) Car Loan Scheme under tie-up with Maruthi 17) Educational Loans 18) Housing Loans
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19) Rent Encash 20) S G B Rural Housing Scheme 21) S G B Post Harvest Financing Scheme.

Other Services (Marketing Products):

1) LIC of India 2) United India Insurance co ltd. 3) UTI Mutual Fund.

OBJECTIVES OF THE STUDY

To study the financial performance of SaptagiriGrameenabank(SGB), Chittoor. To know thebank is earning reasonable rate of return in order to meet their obligations I the long. To make important suggestons to improve the working of SGB. the

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STATEMENT OF THE PROBLEM

The most serious problem faced by the bank is their economic nonviability., insufficiency of interest revenue and transaction costs incurred by it. It is always argued that the bank have not been able to earn much profit in view of their policy. Hence the research is intended to study the growth and progress of the bank among the Profit making the bank.

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SCOPE OF THE STUDY

The current study is undertaken for the purpose of analyzing the Operational And Financial Performance of SaptagiriGrameena Bank, Chittoor. In this study includes the past and present performance of the bank. This study may helps the bank to take financial decisions.

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NEED FOR THE STUDY

There is an availability of vast literature on operational and financial performance of scheduled commercial banks. But there is an extreme dearth of significant studies inth arena of RRBs. In this reference the present study attemps to contribute little but significant contribution to the literature. The implications of this project are expected to be of great use to the policy makers for designing further strategy for SaptagiriGrameena Bank to stergthen the rural customers.

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LIMITATIONS OF THE STUDY

The present study relates to the only Saptagiri Grameena Bank performance in the total RRBs in India. The present study considers the performance of bank only for five years from 2007-2012. The time factor is the major constraint for the study.

The calculations are made on the basis of data supplied/given by banking authorities.

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RESEARCH METHODOLOGY

Research Methodology The Research Methodology refers to the way adopted for collecting information forthe purpose of drawing inferences. The Research is a process in which the researcher wishes to find out the end result for a given problem and thus the solution helps in the future course of action. Redman and Mory defines the research as a systematized effort to gain new knowledge. The present study depends upon purely secondary data. The secondary data will be obtained from the previous project reports, websites, bank records, and other financial books. But primary data used to profit of the bank from starting to present from the officials of the bank.

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CHAPTER SCHEME

CHAPTER 1 Introduction It provides information regarding the stock exchanges in India CHAPTER 2 Industry Profile - meaning of commodity and the major three markets of commodity Derivatives. CHAPTER 3 Company Profile- It providing the profile of Adithya Birla Money Pvt. Ltd., Chittoor. CHAPTER 4 Research Methodology objectives need of the study - scope of the study data collection chapter scheme of the project. CHAPTER 5 Analysis - Study of the primary data of selected commodities in the commodities market for the observation period. CHAPTER 6

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Findings, Suggestions and Conclusion Offering conclusions and suggestions made on the analysis

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