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L.N. Revathy

Coimbatore , July 13

BANK of India has identified three niche branches for micro-credit delivery in Krishnagiri district. The bank proposes to transform these branches at Krishnagiri, Thogarapalli and Alapatti into `model' branches for SHG (self-help group) financing.

"Competition is brewing up for financing this segment. We are live to innovate in this area," Mr B.G. Kurup, Zonal Manager of the Coimbatore Zone of the bank, told Business Line.

Explaining about the bank's thrust on extension of financial assistance to SHGs, Mr Kurup conceded that assistance to such groups would not be possible without the coordination of an NGO.

"With the help of Integrated Village Development Programme (IVDP), an NGO, we managed to service over 1,250 groups in Krishnagiri district to the tune of Rs 17.69 crore for various activities. For the 2004-05 fiscal, we have fixed the disbursement target (by these three branches) at Rs 17 crore. We are hoping to cover another 800 groups.'

The SHGs, he said, initially availed themselves of the loan to repay their dues to the village moneylenders, before graduating to pursue economic activities. He categorically stated that the groups did not falter in repayment and in certain instances prepaid their dues.

"The members of the group have gained an insight into the concept and their level of participation clearly indicated their progress in life. They are not the same women who used to come to the bank 5 years ago. They assert their rights and participate in discussions. Their awareness level is amazing," Mr Kurup said.

Bulk lending to the tune of Rs 3 crore has been made to IVDP for onward lending to the SHGs under housing programme. Of this, the bank has already received Rs 1.20 crore. Mr Kurup said that `Home-less International' - a London-based agency had guaranteed to the extent of 25 per cent of this loan and placed the amount at BoI's London branch.

While stating that the SHG financing concept managed to keep the village moneylenders at bay, Mr Kurup said that it had certainly made social banking possible and easy for banks, without any sacrifice to the profit element. "The transaction cost is less, there is no incidence of bad debts and there is an overall improvement in agriculture and other priority sector credit offtake."

More Stories on : Public Sector Banks | Tamil Nadu

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