Learning Note on Exposure training at Baroda Uttar Pradesh Gramin Bank,

Raebareli
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DDM, Nabard:
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Learning Note on Exposure Training to Regional Rural Banks

at Raebareli.
Baroda Uttar Pradesh Gramin Bank
Mr. G.V. Sunil Kumar
Uday Kumar, Asst. Manager
21.02.2016 noon to 27.02.2016 noon

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The learning note revolves around discussions held with officials at Head office,
Regional office and Rural branches of Baroda Uttar Pradesh Gramin Bank. Interaction with Bank
Mitra/Bank Sakhi-Banking Correspondents, visit to Financial Literacy Centre, field visit to kiosk
centre (Jan Suvidha Kendra) were done so as to gain the idea of financial extension services in
rural areas. As part of understanding SHG Credit linkage programme, a visit was also scheduled
to Rajiv Gandhi Mahila Vikas Pariyojana Block office.
1.0 Visits to Head Office, BUPGB
The discussion in Head office of BUPGB centered on geographical stretch, organizational
structure, Board of Directors composition, comparative structure of business share for last two
years, other committees and sub-committees of banks, functions under Human Resource
department of bank and major initiatives under financial inclusion programmes in this financial
year.
o The major indicators of BUPGB at a glance are written below:Sr.no. Particulars
1
2
3
4
5
6
7
8
9
10

Regional Offices
Number of Branches
Area of operation in districts
Service Area Villages
Total Business FY 2014-15
NPA status
BCs
VLEs
FLCs
Priority Sector Lending Volume

o Board of Directors Composition:Page 1 of 8

Scale/unit/figur
e
10
920
14
2164
19456 Crore
0
2000
4000
14
82%

Chairman
1
Directors as Public representative nominated by Central Govt.
2
Director nominated by NABARD
1
Director nominated by RBI
1
Directors nominated by State Government (Department of financial 2
services)
Directors of Sponsor Bank
2
Total at present (Minimum 6 meetings in one year)
9
o There are mainly 5 committees of Board which mainly discusses the issues and then
apprises the Board. They are Audit, Asset and liability Management, Risk Management,
Customer Service, Special Review Committee. Some Sub-committees are Business
Development Committee, Central Audit Committee.
o There are basically 5 category branches A: Business volume >= 11 crores, B: 11 crores
< Business Volume <= 31 crores, C: 31 crores < Business Volume <= 75 crores, D: 75
crores < Business Volume <= 200 crores, E: Business Volume > 200 Crores
.
o The Business share mainly corresponds to Deposit mobilized by the bank and total
advances to customers. At present, it is around Rs. 19,500 crores and it is targeted to
reach around Rs. 20,500 crores by the end of March, 2016.
o As per our interaction with the chief manager of the advances department Mr. Shyam Ji
Agarwal. He gave us a brief overview about the ST (SAO), fixation of the KCC limit,
business loans and, the importance of the documentation and securities in order to protect
the rights of the lender. We also discussed the various terminologies and procedures
related to the above mentioned terms like scale of finance, crop insurance, maintenance
costs, rotating fund, loan appraisal and disbursements etc.
o The functions of Human Resource department are Manpower planning, looking after
benefits of employees, Promotion and recruitment, Trainings, staff deployment as per
need basis of regional offices.
o Looking into some figures of banks, it has been understood that borrowings have tripled
in last 3 years and net worth of the bank has doubled in those years. It has also made
good progress in Credit-Deposit ratio.
o As per discussion with officials of Grameen Bank, it has been learnt there are basically
three indicators of measuring the effectiveness/ impact outlay of RRBs in rural areas and
they are (1) Total value of Business making (2) Total number of branches outreach, (3)
Total value of profit making. And Baroda UP Grameen Bank is ahead in one or two
criteria every year talking a calculative study of all RRBs in India.
o Mr. Gupta ji has shown two project proposals of rural non-farm sectors- (a) Warehouse
Loan worth Rs. 3.5 crores (b) setting up a private Hospital. We learnt the project appraisal
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process of Banks from Regional Rural Branch to Regional Office and Head Office
Committees comments and check and balances. Basically. They focus on financial ratios
and cash flow analysis and the projected balance sheet. If they are not satisfied with the
ratio, they can ask the concerned party to get another project proposal from different CA.
In terms of security, the bank asks for 200% of primary security and 100% of collateral
security. The Branch Manager reviews the customer credit history first once he/she
receives any project proposal for financing. The concerned Branch Manager also visits
the site and gets the valuation of land by empanelled advocate. There is also Title
Investigation report by the advocate. There is scale wise financing appraisal system in
bank. After sanctioning of the loan, there is PSR (Post Sanction Report) which is to be
sent to the next level of management, like Branch will send to RO office. This PSR is for
the cross-checking of loans sanctioned. As regards disbursement, it is also a step wise
process.
o The Chief Manager of investment and operations department, Mr. M.C. Soni, taught us
the basic investment concepts and the profits earned by the bank through investments in
the capital markets in instruments like Government Securities. Investment is always a
matter of central department of an organization. There are two types of investment SLR
and non-SLR. As regards SLR, there are three types (1) Held to Maturity, (2) Held for
Trading (3) Available for Sale. It is always decided at the beginning of a financial year.
However, It can be rearranged only once in a year that also with the approval of Board.
Then we understood the concept of Premium Amortization. As regard, Non-SLR
investments, There are two types (1) Fixed Income Market (2) Equity Market. Then we
understood the concepts of Liquidity Crunch and its risks and opportunities therein, the
difference between coupon rate and yield rate, the concepts of risk assessment and period
of horizontal (time period), Deficit financing. He shared some of the names of Bonds and
Debentures as issued by PSU and various corporate.
2.0 Visits to Regional Office, BUPGB
We visited the RO at Raebareli itself. It had 89 branches under its coverage area. There are 7
departments: HR, Advance, Inspection, Vigilance, Operations, IT and P&E at RO. We interacted
with Senior Managers and Managers of each department and acquired basic working knowledge
of their respective department. Some of the learning mentioned below:o A new concept of deposit and advances among RRBs was learnt. The Head office
maintains a general ledger of all branches. If a branch has deposits worth Rs. 100/- and
has done advances worth Rs. 60/- in a day, the branch will earn interest at the rate of
6.5% on its Rs. 40/- savings. And if a branch has deposits worth Rs. 60/- and has done
advances to Rs. 100/- , the branch needs extra Rs. 40/- to lend it to the customer, in this
case, it takes a loan of Rs. 40/- from Head Office at the interest rate of 7% for meeting its
shortfall.
o The RO office does the Post Sanction Review (PSR) of all loans sanctioned at the branch
level so as to cross-verify the deviations, if any in its terms and conditions. The PSR
verifies the rules compliances and limits sanctioned.
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o We understood the mechanism of NPA provisioning, and reasons for NPA.

o Mainly, we understood the monitoring mechanism of all branches in its ambit by
Regional Office on weekly basis. There is an excel sheet format, in which deposit and
advance outstanding are shown branch wise. The excel sheet calculates the %age growth
and also variance over last week. It reflects the calculated figure of Variance towards
completion of Target achievement for the ongoing financial year. There is an ongoing
monitoring over the business volume of each branch in terms of growth in total deposits
(current and savings) and advances.
o The Financial Inclusion team of RO office briefed us on various financial inclusion
programs of BUPGB across all 14 districts in its coverage area. The bank has started
Mobile banking facility under which there is a mobile van. This mobile van has a Bank
Manager/ Officer, ATM and security staffs. The Van also carries a projector/ TV
displaying the financial literacy programs, ATM functioning audio visuals, KCC benefits
and its rules of applying for the same. Apart from this, it is also running a Financial
Literacy Centre (FLC) supported by NABARD.
3.0 Visit to Rural Branch of BUPGB at Dirwa in Raebareli
The purpose of visit to this branch mainly focused on sanctioning of KCC loan and SHG credit
linkage. We understood the end to end procedure of KCC loan sanctioning to a farmer which is
detailed below:o The branch manager plans a choupal/ village level meeting. The details of meeting are
already conveyed to the village people so as to get a good crowd on the scheduled day.
The Bank Manager/ officer inform villagers the details of KCC and its terms and
conditions. The willing farmer applies for the same. He producers Khasara/ Khatouni
documents and other details of identity proof. He also informs of the types of crops to be
grown on this crop field. And then as per scale of finance, the credit limit is sanctioned to
the farmer. The KCC limit is fixed for 5 years. The Cash Credit limit is increased at the
rate of 10% for the next year. However, if he wishes for some term loan investment like
Cattle finance, tractor finance, there is also a column in the said application. The CC
limit also takes inclusion of some consumption needs (30%) of the farmer, Crop
insurance and other factors in consideration. There no collateral security for loans till Rs.
1 Lakh. However, above this loan, there is collateral security. There are some other
procedural documents which need to be produced by the farmer, they are NEC- NonEncumberance Certificate, an affidavit of No-Dues certificate, DP Demand
Prohibitionary note, crops hypothecation, Declaration cum undertaking letter for not misutilising the loan. Mortgage format is sent to the registrat. There is no stamp duty till 10
lakhs. Drawing power is fixed for every year and there is controlled disbursement. The
rate of interest is 7% but there is 2% interest subvention scheme and 1% subsidy on
prompt repayment. Hence, the effective rate of interest is only 4% on the part of farmer
towards KCC loan.

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o As regards SHG credit linkage, there is Samooh Rath which goes to a particular SHG.
The Samooh Rath has an officer who checks the books of records of SHG. S/he sees the
savings of SHG, monthly meeting attendance, inter-loaning of SHGs savings and its
repayments by members. The officer grades the SHG and sanctions the SHG loan then
and there after satisfaction and satisfactory grading of SHG. Later on the concerned
officer send the document of SHG loan application to the concerned branch for
disbursement. Basically, the loan amount to a SHG is 20 times the savings amount,
however, it is a at the discretion of Bank Manager.
4.0 Visit to a block office of Rajiv Gandhi Mahila Vikash Pariyojana (RGMVY)
RGMVY is an unit of Rajiv Gandhi Trust operating in various districts of Uttar Pradesh.
RGMVY was started in the year 2002. However, it started its functioning in Raebareli in the year
2005. In terms of SHG formation, its nurturing and nourishment, the RGMVY has reached the
saturation point in Raebareli district. Till date, it has formed 17000 SHGs in 15 blocks of this
district. The main points of understanding of this visit to the office and one of its SHG are
written below:o SHGs of RGMVY are well matured as it has gone upto the formation of tertiary level of
SHG structure. 10-15 SHGs has been grouped together to form the village organization- a
secondary level of structure and then 20-25 VOs have been grouped together to form the
Block level Federation tertiary level of federation. There are various level of Office
bearers claiming the major functions of this SHG movement.
o There are many committees comprising of SHG women taking the responsibility of
Education, Bank linkage, Loan recovery, Health, Social Audit Committee, Social Action
Committee.
o There is a very robust mechanism of MIS entry. All SHGs and their details are entered on
the MIS system. Subsequently, their respective VO and BLF details are mentioned in
MIS entry. Details of SHG savings, Loan to members and their repayment status are also
shown in the MIS entry on quarterly basis.
o There is a dedicated workforce in this system, who supervises/ monitors all the activities
related to SHG formation, its nurturing and nourishment, its further federating into VO
and BLF, Book keeping compliance and savings account opening and credit linkage of
SHGs in banks and then its repayment.
o Along with regular savings and inter-loaning, a good many social cause initiatives are
taken in SHG meetings like awareness on Panchayati Raj Awareness, Health awareness,
voting awareness, compost making, SRI and SWI new agriculture practices, Goat
farming and buffalo farming.
o All SHGs of RGMVY have been recently associated with NRLM.

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o Our visit to one SHG, members shared their bundles of joy of their association with this
SHG, one of the oldest in the block. Members took loan for income generating activities
like buffalo faming, village level shops, peppermint farming. They have doubled or
trebled their income by this income generating activity over the years. Almost all
members have, till date, taken 3-4 times loan from SHG and repaid the loans. They have
shared their initial days of sufferings of poverty and then the transformation in their lives
through SHG formation in terms of women empowerment, assetization, household
income generation, toilet facility in their houses and education perspective towards their
children.
o There is good number of Community Resource Persons like Meeting Sakhi, Samooh
Sakhi, Bank Sakhi, Swachtta Sakhi, Community Book Keeper and Community Mobiliser
working for the common good of SHGs.

5.0 Other Financial Inclusion Initiatives of BUPGB

5.1 Baoda Jagriti Financial Literacy Centre (FLC) at Rahi block in Raebareli
o The FLC center was responsible for creating awareness and strengthening the rural
population by an effective banking mechanism. FLCs in association with Bank Mitras
are responsible for organizing Choupals for information dissemination in the villages.
During the first of the creation of the FLC, 80% of support is being provided by Nabard
and rest 20% is borne by the bank. FLCs are playing an important role to mobilize the
masses and empower them through delivery of banking services.
o It creates an awareness of Government flagship programs like PMJDY, PMJBY, APY,
Kisan Credit card and other new innovative and simplest features of banking to the rural
populace.
o It does the camp/ choupal in schools also so as to educate the youths of financial banking
operations.
5.2 Kiosk Model (Jan Suvidha Kendra)/ Micro-ATM
o The Kiosk Model is one stop solution to mostly financial needs of a rural consumer like
Deposit, Withdrawals, Fund Transfer, Aadhar enabled payment system, Insurance policies
and the best part of it is this is done on an economic sustainable model. This is a
financially viable model. For each of the above banking transactions, a fixed amount of
commission is given to the village level entrepreneur. A total 0.40% of each transaction
value is given to Corporate BC (In this case SAHAJ) and in turn BC retains 0.08% and
passes 0.32% on to the VLE. VLE has an overdraft facility of Rs. 10,000/-. The VLE is
assisted with a laptop.

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o The business of VLE/ Kiosk model thrives on building up of trust among rural
consumers, and thereon his/ her goodwill increases over a period of time. This fetches
him/her recognition among villagers and the customer volume increases.
o Along with financial needs of the customers, the kiosk model (Jan Suvidha Kendra) also
gives other facilities like PAN card application generation, Aadhar card application
generation, Aadhar card enabling account and other financial inclusion pograms like
PMJDY and insurance and Pensions programs of Government.
o This model has been recently introduced by bank, hence a comparative analysis of
income generation of VLE for last six months cant be carried out.
o In future, there may be some additions to services rendered by VLE like loans and its
recovery processes, etc.
5.3 POS Machine model
o The Bank Sakhi (also an SHG member having good record of Panch Sutra following,
loan repayment and an active member in SHG) operates the POS machine. The acronym
POS stands for Point of Sale.
o There is an overdraft of Rs. 10,000/-. She can open savings account, takes deposit upto
Rs. 10,000/- and does the withdrawal upto Rs. 10,000/-. There are three more functions
which she can do is the balance enquiry, fund transfer and Mini Statement. For each
transaction she will have to authorize the transaction through her finger switching to the
Machine. There is also an antenna attached to the POS machine for connectivity.
o The POS machine is available in English, Hindi and regional language also.
o A snapshot of main POS machine looks like this:Cash

Balance

Cash Deposit

Fund Transfer

Mini Statement
Previous

I must thank all the officers and staffs of Baroda Uttar Pradesh Gramin Bank for making us feel
as a part of their family and patiently listening to our questions and enlightening us with all sorts
of knowledge they have learned over the years. This experience has been very much informative.

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I am extremely thankful to Mr. G.V. Sunil Kumar (DDM) for providing all the arrangements and
making our stay the most comfortable. I must thank for sharing your experiences learnt over the
years in NABARD with us.

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