In Madurai, Indian Bank will be opening a new branch exclusively for the purpose of microfinancing. This will be the 15th such branch for Indian Bank.
Founded in 1907, Indian Bank is owned by the Government of India and has 1,582 branches in India and 240 overseas banks in 70 countries. The total assets in March 2008 were reported at Rs. 705 billion (USD 14.3 billion) with a return on assets of 1.6 percent in September 2008. Its total debt equity was 13.37 percent in March 2008.
M. Kathiresan, Deputy General Manager and Circle Head of Indian Bank, states, “The branch will serve as a one-stop shop for providing credit and credit-plus services to self-help groups.” In the branch’s first year performance, Kathiresan projects that the new branch will add 2,500 new self help groups and make Rs. 250 million, equivalent to about 4.81 million, worth of new loans. Within three years, he predicts a total of 9,500 self help groups (SHG) and credit to the tune of Rs. 1.25 billion (USD 24.1 million).
The term “self help group” is used to describe a wide range of financial and nonfinancial associations. In India, it has come to refer to a form of a type of informal savings group promoted by either government agencies, NGOs, or banks. According to a study done in 2002, most SHGs manage and lend their accumulated savings as well as externally leveraged funds to their members.
The accounts of 910 groups will be transferred to the bank’s new microfinance branch from nine of their regular branches in the area. These accounts total to approximately Rs. 85.6 million (USD 1.65 million). Headed by a specialist officer, the new Madurai branch would focus exclusively on SHG promotion, self help group credit linkages, skill-retraining groups, product promotion, and market linkage.
The branch would also serve as a study center for the SGH movement. It will have a mini library carrying various reading material on women empowerment, social aspects of the self help group movement, products available in the banking sector, and government support for self help group members.
Apart from the regular services and products offered, the branch would also offer special schemes for housing, children’s education, and the Janashree Bima Yojana, a type of life insurance provided by the Life Insurance Corporation of India (LIC). The largest life insurer in India today, the LIC was created in 1956 and has the objective of spreading life insurance much more widely, in particular to the rural areas, at a reasonable cost.
Indian Bank plans to open another 13 branches like this one across the country. Nine of which would be located in Tamil Nadu.
By: Andrea Chu
Additional Resources:
The Hindu, February 28, 2009: “Bank Branch for Micro-finance Soon”
MicroCapital.org article, January 16, 2009: “Indian Bank Launches The Latest Of Its Rural Development Initiatives, Financial Literacy and Credit Counselling Centres (FLCC) and Micro State Branches, to Support Microfinance”
Indian Bank “home”
More information on Self Help Groups in India: “here“
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