The Hindu Business Line : HDFC Bank to lend more for micro-financing

HDFC Bank is planning to increase its financing in micro-finance institutions. Mr N.S. Kishore Kumar, Head — Agri-business and Micro Finance, said, "We are hoping to increase our funding to Rs 250 crore this year compared to Rs 75 crore in fiscal 2005." HDFC Bank started its micro-finance operations in mid-2003.

Micro financing involves financing of small loans extended by non-governmental organisations (NGOs) and self help groups (SHGs) to individuals for starting or sustaining a small economic activity — whether it is crop tilling, sheep rearing, small trading or running a paan shop.

The bank lends money to these groups at about 10 per cent interest.

The groups lend this money to the individuals after taking into account its costs, at between 15 per cent and 20 per cent.

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