The Gujarat State Co-Operative Agricultural and rural development bank ltd

Loan Sanctioning Procedure

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Bank's loan was recoverable by annual equated installment comprising of principal as well as interest but since 1988 it was replaced by annual equal installment. Due date for repayment of yearly installment is fixed on the basis of harvesting of crops accordingly 31st January is fixed for those loanees as taking Kharif crops while 31st March is kept for those who are taking Rabi crops. The Demand Statements are prepared every year at branch level and collection notices are issued to each loanee well in advance before maturity date. Loanes are regular in their repayment while some of them are to be contacted to persuade to repay the due installment by launching recovery drive. If the loanes does not repay the yearly installment on or before due date, he becomes defaulter and legal action can be taken against him under the provisions of Gujarat Co-operative Societies Act. There are mainly tow provisions to effect recovery under the Act. One by auction sale of mortgaged properties by special recovery officer (SRO's) as well as foreteiture of other movable property by revenue authorities on the strength of certificate issued by District Registrar to recover the defaulted amount as a arrear of land revenue and another provision for auction sale of mortgaged property by Bank's own staff who are delegated the powers of sales officer.

As the Bank is financing of agricultural and allied agricultural activated which is mostly depend upon vagaries of nature, the repayment of loan naturally becomes uncertain. There are many reasons for the default in loan repayment and there by the increase in over dues, Poor recovery is combined effect of various factors' such as drought, natural calamities, poor rural economy, willful defaults, lack of supervision and timely contact with the borrowers. Infractuous investment, miss or under utilisation of loan, defective lending system, non-remunerative price of agricultural produce, lack of co-ordinated recovery drive etc. Bank is doing its utmost to recover defaulted loans and to tackle the problem of over dues for smooth recycling of funds.