Mumbai, May 28: Buoyed by the growing success of micro-finance movement in the country, National Bank for Agriculture and Rural Development (NABARD) has proposed to set up an institution for this purpose which would have a corpus of Rs 500 crore in three years.
The micro-finance institution, to be set up on a pilot basis, is aimed at providing easy credit to needy farmers who are now at the mercy of local money lenders. “I intend to start a micro-finance institution with the approval of my Board. Its a pilot project, initially the investment will not be very high but it will reach Rs 500 crore in three years,” NABARD Chairman Y S P Thorat said.
“The proposed institution would demonstrate all the best practices … as against the usurious interest rate, extortion, lifting of cattle amomg other problems being faced by the farmers borrowing from local money lenders and financial institutions,” Thorat said.
NABARD has done quite a lot in area of mirco-finance for over a decade now. During 2006-07 NABARD credit linkages to 3.12 lakh new self-help groups (SHGs) and 2.41 lakh existing SHGs as against a target of 3.85 SHGs. Bank loan of Rs 2,922 crore was disbursed supported by NABARD refinance of Rs 1,161 crore.
Cumulatively, the number of SHGs credit linked as on March 31 was 25.50 lakh groups with a bank loan of Rs 14,320 crore and NABARD refinance of Rs 5320 crore. Through NABARD’s initiatives the share of non-Southern states in SHG movement has increased from 29 per cent in 2000-01 to 50 per cent in 2006-07.
Draft Micro-Finance Bill on micro-financial sector development and regualtion was introduced in Lok Sabha in March and subsequently referred to the Parliamentary Standing Committee.
Through the micro-finance initiative, NABARD will be also extending the frontiers of financial inclusion. The proposed fund will be specifically used for the purpose of improving credit absorption levels, particularly among the vulnerable sections of the society.
The agriculture and rural development agency will also be increasing its role in the matter of co-finance, Thorat said, adding “In 2007-08 NABARD has allocated Rs 600 crore for co-finance.”
Co-finance is finance extended together with a bank or financial institution for the project in which the NABARD would normally not make an investment. With regards to extending financial inclusion, NABARD is also setting up a technology fund to improve the level of inclusion through the usage of technology.
Source: The Hindu
http://www.hindu.com/thehindu/holnus/006200705280322.htm
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