The Indian Finance Minister, P. Chidambaram, has announced that his government will be establishing two new microfinance funds to help provide easier credit access for the nation’s poor. The two funds, the Financial Inclusion Fund and the Financial Inclusion Technology Fund, will be worth Rs 5 billion (USD 127 million) each.
These funds are based on the recommendations of the interim report of the country’s Financial Inclusion Committee. The Financial Inclusion Fund will be set up with the National Bank for Agriculture and Rural Development (NABARD) for “meeting the cost of developmental and promotional interventions.” The Financial Inclusion Technology Fund will meet the costs of technology adoption. The initial funding for each is to be met by the Central Government, the Reserve Bank of India (RBI) and NABARD. These funds will be separate from the Rs 1 billion (USD 25 million) microfinance development fund that has already been set up by the Government.
The Indian Government established the Financial Inclusion Committee in June 2006, under the chairmanship of Dr C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister. During its analysis of the current financial inclusion situation, the committee established that half of all Indians are unbanked, as reported by MicroCapital in September.
The Committee has been asked to suggest strategies to extend financial services to small and marginal farmers and other vulnerable groups, as well as measures, including institutional changes, to be undertaken by the financial sector to implement financial inclusion.
Amy Rennison, MicroCapital writer
Additional Sources:
The Hindu:
http://www.hindu.com/2007/10/10/stories/2007101055991700.htm
The Indian Express:
http://www.indianexpress.com/story/226611.html
The Hindu Business Line:
http://www.thehindubusinessline.com/bline/2006/06/27/stories/2006062703510900.htm
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