The Hindu Business Line : Bank bid to rid Kerala villages of moneylenders

Thiruvananthapuram, Oct. 29 After crossing the milestone of total financial inclusion, Kerala is on way to realising another emerging banking concept, ‘moneylender-free’ villages.

The initiative for freeing villages in the State from the clutches of moneylenders, better known as ‘blade mafia’, is being launched by South Malabar Gramin Bank (SMGB) at its Pulikkal branch in Malappuram district on November 5. In all, the bank has identified eight villages to set the project in motion on a pilot basis.

Mr U. Ramesh Kumar, General Manager, said that the bank had carried out a survey in each ward with the help of farmers’ clubs, panchayat members and self-help groups to find out the extent of indebtedness among the rural folks and had already sanctioned loans ranging between Rs 7,000 and Rs 25,000 to 35 people to help them settle their dues to non-institutional lenders.

The maximum amount of loan is Rs 25,000, which is, however, subject to relaxation at the discretion of the branches.

There is no stipulation of any margin money and the loan carries an interest of 12 per cent per annum.

Mr Kumar said that the interest rate was insignificant considering the steep rates being charged by the moneylenders, that too on daily and monthly basis. The bank’s rate works out to just one per cent per month.

The interest will be charged only on the outstanding amount of loan and calculated on daily balance basis. The period of repayment has now been fixed as three years.

SMGB was now operating in eight districts in the State and the project would be extended to other areas gradually, Mr Kumar said.

More Stories on : Credit Market | Rural Development | Regional Rural Banks

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