ECO 611 Agricultural Finance and Insurance (1+1)
Objective
The objective of the course is to impart knowledge relating to disbursement of institutional finance to priority sector, credit management and financial risk management. The course would also focus on various appraisal techniques in investment of agricultural projects.
Theory
Unit 1 Role and Importance of Agricultural Finance
Evolution of Banking System in India. Rural Indebtedness. Financial Institutions and Credit Flow to Rural/ Priority Sector. Agricultural Lending – Direct and Indirect Financing - Financing through Co-operatives, Commercial Banks and RRBs. Role of Lead Bank and NABARD. District Credit Plan and Lending to Agriculture / Priority Sector. Credit Linked Rural Development Programmes. Micro-Financing and Role of MFI‘s - NGO‘s, and SHG‘s.
Unit 2 Lending to Farmers
Principles of Credit – The concept of 5 C‘s, 7 P‘s and 3 R's of Credit. Estimation of Technical Feasibility, Economic Viability and Repaying Capacity of Borrowers and Appraisal of Credit Proposals. Supervisory Credit System. Overdue Problem – Causes, Consequences and Mitigating Measures. Credit Inclusion – Credit Widening and Credit Deepening.
Unit 3 Farm Financial Analysis
Financial Decisions on Farm Investment. Preparation of Financial Statements - Balance Sheet, Income Statement and Cash Flow Statement. Ratio Analysis - Leverage, Liquidity and Solvency Ratios. Farm Planning and Budgeting – Partial and Complete Budgeting. Assessing the Performance of Farm / Firm – Farm Efficiency and Break - Even Analysis.
Unit 4 Crop Insurance Programme
Risks in Financing Agricultural Projects. Risk Management Strategies and Coping Mechanism Adopted by Bankers and Firms / Farms. Crop Insurance Programmes – Review of Different Crop Insurance Schemes - Yield and Weather Based Insurance Schemes and their Applications.
Practical
1. Development of Rural Institutional Lending - Branch Expansion, Demand and Supply of Institutional Agricultural Credit.
2. Financial Inclusion, Overdues and Loan Waiving: An Overview.
3. Rural Lending Programmes of Co-operative Lending Institutions.
4. Rural Lending Programmes of Commercial Banks and RRBs.
5. Lead Bank Scheme - Preparation of District Credit Plan.
6. NABARD – Functions. Policies for Revamping the Rural Institutional Credit System.
7. Financial Instruments and Methods – E - banking, Kisan Credit Cards and Core Banking.
8. Performance of Micro Financing Institutions - NGO‘s and Self-Help Groups.
9. Preparation of Financial Statements using Farm / Firm Level Data.
10. Farm Credit Appraisal Techniques.
11. Monitoring and Evaluation of Agricultural Projects.
12. Farm Financial Analysis through Financial Statements.
13. Case Study Analysis of an Agricultural Project.
14. Financial Risk and Risk Management Strategies – Crop Insurance Schemes.
Suggested Readings
Dhubashi, P.R. 1986. Policy and Performance - Agricultural and Rural Development in Post Independent India. SAGE Publications.
Gittinger, J.P. 1982. Economic Analysis of Agricultural Projects. The Johns Hopkins Universit Press.
Gupta, S.C. 1987. Development Banking for Rural Development. Deep and Deep Publications.
Little, I.M.D. and J.A. Mirlees. 1974. Project Appraisal and Planning for Developing Countries. Oxford and IBH Publications, New Delhi.
Muniraj, R. 1987. Farm Finance for Development. Oxford and IBH Publications.
Reddy Subba S., 2008, Agriculture Finance and Management, Oxfordand IBH, New Delhi.
e-Resources
http://pages.stern.nyu.edu/~adamodar/
http://educ.jmu.edu//~drakepp/
www.microfinancegateway.org
http://www.ruralfinance.org
www.nabard.org
www.rbi.org