The Hindu Business Line : Chitradurga Gramin Bank turns around

The Sanghakshema Vima Yojane is an insurance-linked savings product developed for self help groups (SHGs). In addition to life risk cover, it provides health insurance cover for the SHG member, spouse and two dependent children up to Rs 10,000.

Bangalore , March 21

"THE bank's performance in the last three years only proves that rural banking is a viable option," says Mr N. Narasa Reddy, Chairman, Chitradurga Gramin Bank (CGB), a Canara Bank-sponsored RRB.

CGB, which was a loss-making bank in 2001, today has reserves of Rs 7 crore. Mr Reddy recalls the low motivation level of the staff three years ago and how they were burdened with the disrepute of being known as the bank with the lowest per employee and per branch business among the eight RRBs sponsored by Canara Bank.

The turnaround was possible when employees were trained to adopt `best practices that increased the operational efficiency of the bank', according to him. In addition to this, the bank also decided to bring out some innovative deposit and loan schemes.

But most important, maintains Mr Reddy, was the need for a good talent pool. One of the first initiatives the bank undertook was to strengthen the training programmes for the staff. A joint training programme for all the four Canara Bank-sponsored RRBs was put in place. Other processes that helped employees in improving their performance were updation of manuals, improvement and simplification of systems and procedures, and providing better ambience and amenities at bank branches.

"These were some of the internal changes, but we also introduced some innovative schemes for customers that improved deposits and loan disbursement and recovery,'' Mr Reddy said.

For instance, the Sanghakshema Vima Yojane is an insurance-linked savings product developed for self help groups (SHGs). In addition to life risk cover, it provides health insurance cover for the SHG member, spouse and two dependent children up to Rs 10,000.

"In fact, this scheme has become so popular that the Government of India has introduced a similar health insurance scheme for SHGs." Currently, 100 SHGs are being covered under this scheme.

The bank is also reaching out to SHGs through its horticulture development loan to farmers to help them in cultivation of mango, papaya, sapota and pomegranate. "Nearly 1,800 acres have been covered," Mr Reddy says.

About 25 SHGs have been covered under the pilot project of portfolio financing for micro-watershed development. The aim is to cover about 700 groups in the coming years.

According to Mr Reddy, rural banks should aim at preserving the rural character of the regions they are operating in. "That's why we are focusing on SHGs and Farmer Clubs which are like the two eyes for our bank," he says.

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