Introduction

Chapter I – Introduction
Access to finance by the poor and vulnerable groups is a prerequisite for
employment generation, economic growth, poverty reduction and social cohesion. It will
empower the marginalized groups by giving them an opportunity to have a bank account,
to save and invest, to insure their homes or to partake credit, thereby facilitating them to
break the chain of poverty. A well functioning financial system empowers individuals,
facilitates better integration with the economy, actively contributes to development and
affords protection against economic shocks. Till 1960s, Indian banks were more
conservative and inward looking, concerned with their profits and banking services were
greatly used by a segment of the people. Class banking was prevalent during those days
as majority of the banks were private commercial banks, local oriented and primarily
serving the business community. Further banks had limited range of activities,
competition did not exist and basically concentrated on selling their loans to those who
are financially sound and are capable of providing security for their borrowings.

However, after the nationalization of 14 major commercial banks in 1969, Indian

banks woke up from their isolation, and evaluated the rapidly changing environment. The
slogan during the bank nationalization was ‘transformation from class banking to mass
banking’. Social control and nationalization has brought about revolutionary changes in
the approach of banks and a plethora of schemes were introduced to bring the rural
masses under the service umbrella of banks. The massive branch expansion, priority
sector credit, purposive lending, district credit plans, service area approach etc were all
made possible under public ownership of banks.

Inspite of the efforts taken by the Government and Reserve Bank of India, a
sizeable majority of the population, particularly vulnerable groups, continue to remain
excluded from the opportunities and services provided by the financial sector. The
Financial exclusion is the lack of access by certain consumers to appropriate, low cost,
fair and safe financial products and services from mainstream providers. It is of more
concern in the community when it applies to lower income consumers and/or those in
financial hardship. In the absence of finance, people who are not connected with formal
financial system lack opportunities to grow, the country's growth retard, business loss to
banks , loss of opportunities to thrift and borrow and employment barriers. The main
reason for financial exclusion is the lack of a regular or substantial income to the
households and in most of the cases people with low income do not qualify for a loan.

The proximity of the financial service is another constraint and most of the
financially excluded consumers are not aware of the bank’s products, which are
beneficial for them and they find that getting money from a local money lender is easier
than getting a loan from the bank. Further most of the banks insist on collateral for their
loans, which is very difficult for a low income individual to provide security for a bank
loan. Moreover, banks in their urge to maximize profit give more importance to meeting
their financial targets and hence they focus on larger accounts. With a view to correct this
situation and extend the reach of the financial sector to such groups by minimizing the
barriers to access as encountered by them, on 22nd June 2006 the Government of India
constituted a “Committee on Financial Inclusion” headed by Dr. C. Rangarajan,
Chairman, Economic Advisory Council to the Prime Minister. The objective of this
committee was to suggest a strategy to extend financial services to small and marginal
farmers and other vulnerable groups, including measures to streamline and simplify
procedures, reduce transaction costs and make the operations transparent and to look into
the issues involved and suggest measures for bringing the excluded population into the
ambit of financial system.

Financial inclusion may be defined as “the process of ensuring access to financial

services and timely and adequate credit where needed by vulnerable groups such as
weaker sections and low income groups at an affordable cost”. The financial services
include the entire gamut - savings, loans, insurance, credit, payments etc and the essence
of financial inclusion is in trying to ensure that a range of appropriate financial services is
available to every individual and enabling them to understand and access those services.
Apart from the regular form of financial intermediation, it may include a basic no frills
banking account for making and receiving payments, a savings product suited to the
pattern of cash flows of a poor household, money transfer facilities, small loans and
overdrafts for productive, personal and other purposes, insurance (life and non-life), etc.
Inclusive finance is expected to remove poverty from the Indian context, everybody gets
an opportunity to access formal financial services, provide banking related financial
transactions in an easy and speedy way and safe savings along with financial services.

1.1 Statement of the Problem

Recognising the importance of agriculture sector in India’s development, the
Government and the Reserve Bank of India (RBI) have played a vital role in creating a
broad-based institutional framework for catering to the increasing credit requirements to
this sector. NSSO (National Sample Survey Organization) data reveal that 45.9 million
farmer households in the country (51.4%), out of a total of 89.3 million households do
not access credit, either from institutional or no institutional sources. Further, despite the
vast network of bank branches, only 27% of total farm households are indebted to formal
sources (of which one-third also borrow from informal sources). Nevertheless, data do
show that there is exclusion and that poorer sections of the society have not been able to
access adequately financial services from the organized financial system. There is an
imperative need to modify the credit and financial services delivery system to achieve
greater inclusion.
Financial inclusion brings several reforms in agriculture and allied sectors, as it
provides business opportunity for the financial institutions at the bottom of the pyramid
to expand the volume of business, and profitability can be increased by finding newer
avenues for deployment of funds. It leads to economic and social empowerment of poor
and low income people, leading to overall development of the households, villages, states
and finally the nation.
 The commercial banks are slowly coming to appreciate the business potential
in financial inclusion and also the need for better involvement. The commercial banks
have been cognizant of their social responsibility in regard to small farmers, their focus
on marginal and sub marginal farmers, tenants, share croppers, oral lessees and non-
cultivator households, viz., the very poor and disadvantaged sectors. The implementation
of the recommendations made by “Committee on Financial Inclusion” could go a long
way to modify particularly the credit delivery system of the banks and other related
institutions to meet the credit requirements of marginal and sub-marginal farmers in the
rural areas in a fuller measure. The need of credit to be supplemented by efforts to
improve the productivity of small and marginal farmers and other entrepreneurs so that
the credit made available can be productively employed. While banks and other financial
institutions can also take some efforts on their own to improve the absorptive capacity of
the clients, it is equally important for Government at various levels to initiate actions to
enhance the earnings capacity of the poorer sections of the society. The two together can
bring about the desired change of greater inclusion quickly.
Dhanlaxmi Bank Limited is an 81 years old private sector bank with great focus
on rural sector funding incorporated in November 1927 at its corporate headquarter in
Thrissur, Kerala, with the mission of becoming a strong and innovative bank with
integrity and social responsibility and to maximize customer satisfaction and the
satisfaction of its employees, shareholders and the community. In the year 1977; bank
achieved a status of the Scheduled Commercial Bank, besides, on 28th September 2009, it
received an award for the best bank in the private sector.
With a view to addressing the issue of financial inclusion the bank focus attention
on the requirement of each segment of society and from time to time the bank has taken
several initiatives which comprises of providing credit, counseling services in rural and
urban areas, SHG workshops are conducted in association with NGOs to address the
issue of financial inclusion for empowerment of women folk, Zero balance, no frill SB
accounts viz. Dhanam Simple are targeted at the common folk. The Bank’s agriculture
portfolio (retail) covers crop loans, farm equipments loans, commodity finance, working
capital loans to traders, microfinance and jewel loans. On this context the present study
examine the role of Dhanlaxmi Bank in promoting financial inclusion and to review the
progress of the scheme. On this background the present study will analyze the impact of
financial inclusion activities in Palakkad district of Kerala state.

1.2 Objectives of the Study

The study has the following specific objectives:

• To study the extent of financial inclusion by the sample banks and

• To analyze the impact of financial inclusion among the sample respondents

1.3 Scope and Significance of the Study

The study will examine the recent financial inclusion drives in Palakkad district, in
order to assess to what extent the goals of this drive have been fulfilled. It is expected to
bring out the relevance of rural lending and to analyze the performance of financial
products in agriculture and allied sector. It facilitates to understand, the farmer’s behavior
towards the Kisan Credit Card scheme, DIR, “No Frills account” holders and the role of
SHG (Self Help Group) in agricultural lending, implemented by the Dhanlaxmi Bank. It
may be of much help in framing the future plan in related areas and highlights the
rigorous impact evaluation of the drive for financial inclusion.

1.4 Methodology

The study will cover Palakkad District was deliberately selected for the study because
it is one of the district was identified by SLBC Trivandrum, to implement the “pilot
project on 100 per cent financial inclusion” by opening `no frills' account or zero balance
accounts especially for the poor. The district has covered 100% of households by 30 th
September 2006 and to become the first district in the country to have achieved 100%
financial inclusion.
 Palakkad District is one of the agricultural oriented area to the state and accounts
for about 38% of paddy area and about 34% of the rice production in the state and is
considered to be the “Granary” of the state. Out of total of 845181 workers 348299 i.e.
41% are agricultural labourers, so it is relevant to study the impact of the financial
inclusion on agriculture in Palakkad district.
In accordance with the number of branches in rural areas of Palakkad district
Dhanlaxmi Bank holds first position by establishing 14 branches among the all private
sector banks. Banking Statistics of Palakkad District as on 31-03-2010 reveals that
Dhanlaxmi Bank is in the first position by providing 66% to the total advances in the
Priority Sector lending. Data of five consecutive years (2006-2010) shows that
Dhanlaxmi bank has dominant position in priority sector lending. Also bank opened
19326 a/c’s in agricultural advances with 137% of target achievement in agricultural
lending. Dhanlaxmi bank dominates other private sector banks in the formation of Self
Help Group and issuing of kisan credit card. They are at 1st position and 2nd position
respectively. During the campaign of 100% financial inclusion, the Dhanlaxmi Bank has
achieved 57593 new accounts out of 67 wards in the district.

1.5 Sample Techniques

Both primary and secondary data were required for the study. The primary data
will collected from records of bank, selected SHG and farmers with the help of a pre-
tested structured interview schedule. Based on the distributing branches 3 blocks have
selected and 5 branches identified, 20 respondents from each branch including SHG
members, KCC and DIR and new No Frills account holders will selected for the study. It
will analyze behavior of farmers towards the Kisan Credit Card scheme and agricultural
credit through Self Help Group. Secondary data were collected from, published reports
and websites. The collected data were analyzed using appropriate statistical tools and
techniques.
1.6 Limitations of the Study

Owing to time constraint, a large sample couldn’t be selected for the study. The small
sample size, limited geographical location and personal bias of the respondents will be
affecting the validity of the generalizations.

1.7 Observations Based On

• Duration of a/c

• Frequency of transactions

• Savings/deposit level

• Loans utilized

• Other serviced advanced

• Awareness about services and bank product

• Changes in the perception/attitude of customers

1.8 Chapter Plan of the Project Report

The study is presented in six chapters. The first chapter covers introduction,
statement of the problem, objectives, significance, scope and limitation of the study. The
materials and methods employed for the study are outlined in the second chapter. The
third chapter covers review of literature and the fourth chapter outlines the profile of
Dhanlaxmi Bank Ltd. The fifth chapter is devoted for results and discussion of the study.
The sixth chapter presents the summary of findings and conclusion of the study.
Materials and Methods
 Chapter II – Materials and Methods

The present study analyses the comparative performance of Dhanlaxmi Bank Ltd,
Catholic Syrian Bank, Federal Bank Ltd, HDFC Bank and South Indian Bank in order to
find out extent of financial inclusion by the sample banks. The impact of financial
inclusion activities among the sample customers of the bank were examined by using
various analytical tools. The methodology of the study is outlined in this chapter.

2.1. Sampling Design

2.1.1. Study area and period

The study was conducted during a period of two months from 17 th September 2010
to 17th November 2010 at Palakkad district of the Kerala state.

2.1.2 Selection of sample respondents

The sample for the survey includes hundred no frills account holders selected at
random from different parts of Palakkad district. Other than Dhanlaxmi Bank Ltd four
banks were selected among major private sector banks in the Palakkad district including
Catholic Syrian Bank, Federal Bank Ltd, HDFC Bank and South Indian Bank.

2.2. Data Collection

Even though the study was based mainly on primary data, secondary data were
also used for the study. The primary data required for the study were collected from
sample survey of customers by interview method by administering separate pre-tested
structured schedules. The schedules were designed after reviewing relevant literature and
consultation with experts in the field. Secondary data were collected from published
reports and websites.

2.3. Data Analysis

Review of Literature
 Chapter III – Review of Literature
A comprehensive review of the past studies is useful to formulate concepts,
methodology and tools of analysis to be use for any research. This part of the study is an
attempt to review the available literature in the area of agricultural finance of banks in
general which would be beneficial to the study. The available literatures are categorized
under the following heads.

3.1 Financial Inclusion Definitions

This section presents an analysis, derived from existing literature, of the definitions
of financial inclusion and exclusion, as well as a summary of financial inclusion
initiatives in India and other countries.

In 1995, Leyshon and Thrift in their paper defined financial exclusion as “those
processes that prevent poor and disadvantaged social groups from gaining access to the
financial system. It has important implications for uneven development because it
amplifies geographical differences in levels of income and economic development.”

The European commission in its paper on prevention of financial exclusion

defines financial exclusion as “a process whereby people encounter difficulties accessing
and / or using financial services and product in the mainstream market that are
appropriate to their needs and enable them to lead a normal social life in the society in
which they belong.”

This simple definition encompasses the two dimensions of financial inclusion

(United Nations, 2006). Firstly, financial inclusion refers to a customer having access to a
range of formal financial services, from simple ones like credit and savings to more
complex ones like insurance and pensions. Secondly, financial inclusion implies that
customers have access to more than one provider of financial services so that clients have
access to a variety of competitive options.
 The Committee on Financial Inclusion (Chairman: C. Rangarajan) defines
financial inclusion as “the process of ensuring access to financial services and timely and
adequate credit where needed by vulnerable groups such as weaker sections and low
income groups at an affordable cost.”

Usha Thorat, Deputy Governor, RBI in her speech on financial inclusion said
“financial exclusion, broadly, is construed as the inability to access necessary financial
services in the appropriate form due to problems associated with access, conditions,
prices, marketing or self-exclusion.”

3.2 Financial inclusion initiatives

A variety of schemes have been designed and implemented across the world to
tackle financial exclusion.
United States passed the Community Reinvestment act in 1977 that prohibits
banks from targeting rich neighborhoods alone. The law of exclusion in France makes
holding bank account as a right. Credit unions in the US and the UK offered flexibility in
providing affordable credit to customers. South Africa has ‘MZANSI’ account which is a
low cost card-based savings account with easy accessibility. Mexico has a microfinance
program called ‘PATMIR’ where savings take precedence over credit. Canada has free
encashment of government cheques even for non-customers. The UK has set up a
separate independent financial inclusion task force which mainly looks at three priority
areas namely access to banking, access to affordable credit and access to free face to face
money advice. The government also allotted 120 million pounds to the fund for financial
inclusion over three years. Banks in various countries have extended basic savings
accounts similar to ‘no frills’ account, though with different names, with a view to
making financial services accessible to the common man.
 The Committee for Financial Inclusion (Chairman: C. Rangarajan) which was
constituted by the Government of India for preparing a strategy on financial inclusion
called for a National Mission on Financial Inclusion comprising representatives of all
stakeholders. It also called for providing access to comprehensive financial services to at
least 50 percent of the excluded rural households by 2012 and the rest by 2015, and
extending access to credit to at least 250 households per branch per annum.

3.3 Financial Inclusion Review

Dev, (2008) discusses the implications of loan waivers for farmers and other
proposals relating to core agricultural issues. The farm loan waiver must be seen as a
purely temporary relief and there must be programmes to improve agriculture. There can
be some positive outcomes of the loan waiver, if implemented properly. However, the
exclusions and limitations outweigh any positive outcome of the scheme. The main
criticism of the loan waiver scheme relates to its impact on future loans and financial
inclusion. Given the short-run and structural long-term problems in agriculture, the
budget should have given a large push to core issues like public investment in
infrastructures, land and water management, research and extension and price
stabilization to make cultivation viable and profitable. This huge thrust is needed so that
the farmers do not fall back into a debt trap, needing another loan waiver in the next few
years.

Nachiket-Mor and Bindu-Ananth (2007) suggested several principles (including

capital adequacy, cost recovery, and institutional prerequisites of entities warehousing
risk) that should be kept in mind when designing inclusive financial systems. It also
discusses some lessons from past experience such as allowing deposit-taking by poorly
capitalized entities, all with a focus on design considerations. When designing a financial
system to maximize access to the poor, it is argued that basic design principles that are
key to sustainability should not be diluted but rather should be adhered to even more
rigorously. The ICICI Bank case study (India) is discussed as a specific configuration
consistent with these principles and designed for maximizing financial inclusion.

Jones, Williams, Nilsson, and Yashwant-Thorat (2007) given their physical

presence in India, banks are arguably well-placed to improve financial inclusion in rural
areas. However, uncertain repayment capacities and high transaction costs mean formal
financial institutions are often reluctant to lend to the rural poor. Conversely, high
transaction costs in dealing with banks are also incurred by clients, through, for example,
lengthy, cumbersome and potentially ignominious procedures. Negative attitudes towards
poor clients can be an important component of such transaction costs. An applied
research project funded by the Enterprise Development Innovation Fund (EDIF-DFID)
developed an innovative training programme designed to encourage more positive
attitudes of bank staff towards poor clients, and towards their own role in rural poverty
alleviation and development. This paper examines the development of the training
programme, its implementation, and the results of its evaluation. It is shown that training
can bring about attitudinal change, which in turn is reflected in behavior and social
impact.

Beck & De la Torr, (2006) outlined financial inclusion emphasizes access to more
than just any one financial service, the breadth of financial services in a region or a
country is typically measured by the percentage of people in the region who have access
to bank accounts. This is primarily because a bank account enables poor households to
perform important financial functions such as saving money safely outside the house,
accessing credit, making loan or premium payments and transferring money within the
country. While in developed nations, almost everyone has access to banking services, in
less developed countries, access to banking services is often limited to a small section of
the population. Increasingly, access to finance in developing countries is now being
posited as a vital public good which is as important and fundamental as access to safe
water or primary education.

Kempson, (2006) suggested in developed countries on the other hand, financial

inclusion is generally related to issues about social exclusion and welfare. Further, levels
of inequality (as measured by Gini coefficients for the respective countries) are
negatively correlated to levels of financial inclusion. Specifically, the psychological and
cultural stumbling blocks which deter people from using banks. Rural households may
feel intimidated by banks and develop a belief that banks are for more educated and
richer individuals. This self-exclusion by low-income households may be as important a
cause for exclusion as direct exclusion by banks. As practice with microfinance has
shown, poor households, especially in rural areas, may respond better to ‘doorstep’
banking, that is banking which takes place off-site at a location which is both convenient
and comfortable for users.

Mohan, (2006) find out bank account helps individuals to form relationships with
banks leading to access and usage of other financial services. Although this definition
does take in a range of financial services, its wording reveals a bias in policy to place
provision of credit services ahead of other financial services. In fact, till recently, the
discussion on financial Inclusion in policy and academic circles tends to revolve around
the extension of institutional credit, specifically to the rural sector.

Beck and de la Torre (2006) also refer to the Schumpeterian process of ‘creative
destruction’ whereby a financial system is able to allocate resources to efficient
newcomers. Empirical studies also show that small firms in countries with greater
outreach and access face lower financing obstacles and grow at a higher rate. Although
the causal link between financial depth and growth is well-established, the link between
the breadth of financial services and growth is less well-defined.
 Basu, (2005) views that as a result, banks were nationalized in 1969 with the
following objectives in mind: checking the control of banks by a few corporations,
organizing savings from remote and rural regions, using the deposits mustered by banks
to achieve equitable growth and concentrating on priority sectors like agriculture and
small industry. Commercial banks, rather than RRBs, are the most important source of
credit for those rural households who have access to credit. The RFAS 2003 confirms this
by demonstrating that farmers with bigger landholdings benefit more from financial
services in comparison to smaller farmers. Given the absence of formal sources of credit,
rural borrowers turn to non-formal sources of credit such as moneylenders. Informal
lending is most significant for marginal farm households, followed by small and
commercial households, which would tallies well with the data that shows that marginal
farmers are the most deprived of formal credit.

Honohan, (2004) research in the last decade leads, a well functioning financial
system is linked to faster and equitable growth. One of the most important empirical
relationships revealed in the last decade has been the establishment of the causal link
between financial depth and growth. The four central functions of finance are: mobilizing
savings; allocating capital; monitoring the use of loanable funds by entrepreneurs; and
transforming risk by pooling and repackaging it. These functions need to be buttressed by
legal, regulatory and informational structures that enhance the quality of the financial
system, which cannot be measured simply by looking at the scale or the breadth of the
system.

3.4 Agricultural Finance

Fan, Ashok-Gulati, Sukhadeo-Thorat (2008) examined the trends in government

subsidies and investments in and for Indian agriculture; develops a conceptual framework
and a model to assess the impact of various subsidies and investments on agricultural
growth and poverty reduction; and presents reform options with regard to re-prioritizing
government spending. Subsidies in credit, fertilizer, and irrigation have been crucial for
small farmers to adopt new technologies particularly during the initial stage of the green
revolution in the late 1960s and 1970s. But it is now investments in agricultural research,
education, and rural roads that are the three most effective public spending items in
promoting agricultural growth and reducing poverty.

Sriram, (2007) examines issues on productivity of rural credit in India. The

policy intervention in agriculture has been credit-driven. This is even more pronounced in
the recent interventions made by the state in the package announced for distressed
farmers, in doubling agricultural credit, providing subvention and putting an upper cap on
interest rates for agricultural loans. Existing literature and data is used to argue that the
causality of agricultural output with increased doses of credit cannot be clearly
established. It is argued that Indian agriculture is undergoing a fundamental change
wherein the technology and inputs are moving out of the hands of the farmers to external
suppliers. This, over a period of time, may have resulted in the de-skilling of farmers and
without adequate public investments in support services and without appropriate risk
mitigation products, has created a near-crisis in agriculture. Thus, it is argued that policy
interventions have to be necessarily holistic. Looking specifically at the rural financial
markets using some primary data, it is argued that it is necessary to understand the rural
financial markets from the demand side. It is concluded that by identifying some
directions in which the policy intervention could move, keeping the overall rural
economy in view rather than being focused only on agriculture.

Rakesh-Mohan (2006) briefly discusses the historical overview of agricultural

credit in India and provides an assessment of progress in agricultural credit in India. It
delineates the changing face of agriculture and then highlights the elements of a new
approach in agricultural credit. A review of the performance of agricultural credit in India
reveals that though the overall flow of institutional credit has increased over the years,
there are several gaps in the system like inadequate provision of credit to small and
marginal farmers, paucity of medium and long-term lending and limited deposit
mobilization and heavy dependence on borrowed funds by major agricultural credit
purveyors. The study suggests the need for strong and viable agricultural financial
institutions to provide the financial requirements for building the necessary institutional
and financial structure.

Sahu, Rajasekhar, (2005) outlined the data on the total outstanding credit provided
by commercial banks to the Indian agricultural sector during the period 1981-2000. It is
shown that: (1) the share of credit to agriculture in the total net bank credit had
significantly declined after the introduction of banking sector reforms; (2) the provision
of credit subsidy adversely affected the supply of agricultural credit; (3) increasing the
lending rate may not be a suitable measure to reduce the rate of credit subsidy; (4) the
interest rate serves the usual allocative role of equating supply and demand for loanable
funds; and (5) the closure of rural bank branches may have resulted in the reduction of
credit flow to agriculture.

Sankaran, (2005) studied the origin, development and growth of the micro credit
programme in India. National Bank for Agriculture and Rural Development in India
launched its pilot phase of the Self Help Group Bank Linkage programme in 1992. Self
Help Groups have been recognized by the policy makers as the effective conduits for
accomplishing the distributional objectives of monetary policy. The SHG-bank linkage
programme has emerged as the largest micro credit programme in the world. The
programme has made rapid progress since its inception in 1992. The progress under the
SHG-Bank linkage programme has been quite impressive. Nearly 16.7 million families
were assisted through this programme and 1 079 091 Self Help Groups were provided
with bank loans. Total amounts of 867 million US$ were given to the Self Help Groups
for employment generating activities. NGOs have emerged as effective change agents by
organizing, nurturing and stabilizing SHGs and affecting their linkage with banks as also
by adopting other delivery mechanisms for providing financial services directly or
indirectly to the poor.
 Namboodiri, (2005) discussed the general overview is presented of the agricultural
credit scenario in India, along with the innovations in the rural financial system, and the
extent of farm indebtedness. Various issues are reviewed, including: the flow of
agricultural credit; credit use by size of holdings; the impact of credit on income,
employment and poverty; loan repayment, overdue and causes of default; credit
diversion; cost of credit; microfinance; the Kisan Credit Card scheme; and the structure
and factors determining indebtedness.

Shylendra and Saini-Harmeet (2004) observed the Self-help groups have become an
important instrument in the delivery of microfinance services like savings and credit for
the poor. They seem to have given their members an easy access to small savings and
credit facilities. This in turn helped the members to take up various income-generating
and livelihood activities. SHG leaders and members are given orientation and training in
SHG management. Linkages are established with local banks and other agencies for
savings, credit and other purposes.

Ranganathan, (2003) analyzed the effectiveness of the World Bank's initiatives in

economic development and poverty alleviation in India is explored. The Bank's own
perspectives on growth and development are outlined. An analysis of India's agriculture
and forestry sectors is undertaken, followed by a study of the power sector, to which the
maximum amount of Bank funds has been directed. Urban and social development issues
are also dealt with. The paper concludes with an analysis of the Bank's lending policies.

Shete, (2002) highlights on the performance of the public sector banks (PSBs) in
India under the priority sector credit during the post-reform period 1991-2001. The study
is based on secondary data source of information. It shows that process of financial sector
reforms has bypassed the agricultural sector in general and weaker section in particular.
The flow of credit to the priority sector has declined substantially and a large number of
PSBs are not able to reach the prescribed target of lending to agriculture and weaker
sections. The priority sector or agricultural finance at present suffers from a dichotomy in
purpose and direction in view of the increasing concerns about the food situation as a
result of population growth and accelerated food demand. Dynamic and conflicting
changes appear to be operating in curtailing the current supply of priority sector credit,
while at the same time, financial requirements of agriculture and other activities are
increasing in rural areas. The study concludes that particular attention needs to be given
on the removal of distortions in the priority sector lending by commercial banks for
agriculture and rural sectors.

Udayakumar, Thattil, (2001) looked in to current status of the Kisan Credit Cards
business in India, particularly in Kerala. Results of a micro level study on the credit
utilization pattern among Kisan Credit Card holders of a primary agricultural society in
Trivandrum district, Kerala, are presented. This study highlights the fact that agricultural
finance being provided to poor and marginal farmers should be linked to a total credit
delivery system.

Singh, Rawat, (2001) study on the impact of farm credit on agriculture in Deoria
district, Uttar Pradesh, India, has the following specific objectives: to analyze the
magnitude of loan disbursement; to assess the costs and returns of borrowers and non-
borrowers under different size of farms; and to examine the resource use efficiency on
different size of farms. Data were collected through interviews with 66 farmers, classified
into borrowers and non-borrowers with each group further classified into 3 sub-groups
based on size of holding. The study related to the agricultural year 1998-99. The findings
show that maximum crop loan, livestock loan, and pump set/tube well loan was disbursed
by cooperative societies, regional rural banks, and commercial banks, respectively. The
highest crop and livestock loan was accorded by the smallest groups of farms. All costs
were higher on borrower farms than non-borrower farmers because borrower farms were
using more input factors as compared to non-borrower farms. Returns were higher on
borrower farms than non-borrower farms.
Profile of the Company
 Chapter IV – Profile of the Bank

The history of Dhanlaxmi Bank Ltd. Starts from 9 th November 1927, which was a
memorable day in Thrissur, the cultural capital of Kerala. The denial of financial
assistance from a promised source to a poor father for the marriage of his daughter was
the sole reason for some good Samaritans of Thrissur to decide on that day about the
formation of Dhanlaxmi Bank to take care of the needy and definitely not to build a
banking empire. The bank was incorporated on 14th November 1927 with the capital of
Rs. 11000, managed by just seven employees with its registered office at Thrissur. Till
1937, the operational were localized in Thrissur. In 1937 the bank opened its branches at
Ernakulam and Palakkad district. In 1964, three banks, The Lakshmi Prasad Bank Ltd,
Sree Radhakrishna Bank Ltd. and the Parli Bank Ltd were amalgamate with Dhanlaxmi
Bank Ltd.

In mid 70’s the bank recorded a spectacular growth and was subsequently
become a scheduled commercial bank in the year 1977. There after the bank opened
branches beyond Kerala state. It has today attained national stature with network of 270
branches and 280 ATMs in 136 cities and towns across India. The Bank organized
business into six verticals, four of which are in the area of asset management are
wholesale Banking Group, Trade and Advances Group, Microfinance and Agriculture
Group, and Retail Asset Group.

In the year 2010 Bank's total business increased by 48% to Rs. 12,155 crore
from Rs. 8,214 crore, which is a record. While deposits increased by 43% from Rs.
4,969 crore to Rs. 7,098 crore, advances rose from Rs. 3,245 crore to Rs. 5,056 crore at
56%. The credit deposit ratio increased from 65.31% as on march 31, 2009, to 71.23%
as on March 31, 2010. Priority sector and weaker section advances as a percentage to
Net Bank Credit (NBC) stood at 43.61% and 14.76% against the RBI norms of 40% and
10% respectively. A new brand identity was launched during the year of 2010 while
retaining the original name ‘The Dhanalakshmi Bank Ltd’ in to Dhanlaxmi Bank Ltd
with new color.

Vision & Mission

“To become a strong and innovative bank with integrity and social responsibility and to
maximize customer satisfaction and the satisfaction of its employees, shareholders and
the community.”

Features

Personal banking

Savings Account
MaxiGain Savings Account: The unique feature of MaxiGain Savings Account is an
Auto Sweep-in Sweep-out facility which maximises your returns with easy liquidity.
Above a certain limit your balances are transferred into a FD and can also be swept back
to your account. Not only that, the lowest rate FD gets liquidated first to ensure
maximum gains for customers.