The Hindu Business Line : Gramin banks in Karnataka

Much has been written about Grameen Bank ever since Mr Muhammad Yunus and his brainchild concept won this year's Nobel Peace Prize. Not many may know that `gramin banks' have been popular in Karnataka ever since 1976.

"Compared to those operating in different states, these banks have proved to be viable rural credit agencies accessible to the weaker sections of society," writes Dr N.K. Thingalaya in `Karnataka: Fifty Years of Development,' published recently by the Justice K.S. Hegde Institute of Management.

Canara Bank sponsored the first gramin bank, Tungabhadra Grameena Bank, in Bellary, "named after the river, which was irrigating a vast portion of the command area of this bank". In the same year, 1976, Syndicate Bank established Malaprabha Grameena Bank in Dharwad, and State Bank of Mysore was behind the Cauvery Grameena Bank.

Among other such banks (and sponsors) that find mention in Dr Thingalaya's book are: Krishna Grameena Bank (State Bank of India); Chithradurga Grameena Bank, Kolar Grameena Bank and Sahyadri Grameena Bank (Canara Bank); Kalpatharu Grameena Bank (State Bank of Mysore); Bijapur Gramin Bank, Netravati Grameena Bank, and Varada Grameena Bank (Syndicate Bank); and Chikamagalur-Kodagu Grameena Bank (Corporation Bank). "The last gramin bank to come up in the state was Visweshvaraya Grameena Bank at Mandya in 1985," with Vijaya Bank as the sponsor, and named after the famous engineer-statesman, "who was the architect of the irrigational facilities, ushering in prosperity to Mandya District."

Mergers

Mergers became necessary among the gramin banks as a move towards revitalisation. For instance, four such banks, viz. Malaprabha, Varada, Netravati and Bijapur, merged into Karnataka Vikas Grameena Bank, resulting in a network of nearly 400 branches in 9 districts. "This was the first gramin bank in the country to install an ATM," says Dr Thingalaya. A score more ATMs are in the pipeline.

Rural banking share

Gramin banks enjoy a good share of rural banking in the State, measured by several indicators, according to statistics as of March 2005. Gramin's share of rural branches is 53 per cent. Nearly half of the total rural deposit accounts of nearly 90 lakh are with gramin banks. `Borrowing accounts' number about 22 lakh in rural category; in this, gramin has about 54 per cent share. "Nearly 83 per cent of their borrowing accounts are in the advances group of less than Rs 25,000."

The author is of the view that gramin banks should adopt modern practices. "Rural branches should not remain like the village ration shops, selling only the subsidised products to the selected groups, as the branches of gramin banks have been doing all along."

Retail outlets

What then? "They should evolve themselves as the retail outlets of financial supermarkets, selling the fast moving products (such as insurance and mutual fund products) at competitive prices and have a strong door-delivery wing for the special customers, SHGs (self-help groups)," suggests Dr Thingalaya.

Interestingly, "Karnataka Vikas Grameena Bank's annual report indicates that the bank has earned a commission of Rs 24 lakh by selling life insurance and non-life insurance products during financial year 2005-06."

More Stories on : Regional Rural Banks | Rural Development | Karnataka

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