The Hindu : Tamil Nadu / Chennai News : NABARD to extend credit to SHGs through post offices in State

Online edition of India's National Newspaper
Sunday, May 22, 2005

Tamil Nadu

Tamil Nadu - Chennai

NABARD to extend credit to SHGs through post offices in State

Special Correspondent

Micro credit will be given through post offices

CHENNAI: For the first time in the country, the National bank for Agriculture and Rural Development (NABARD) will extend micro credit to self-help groups (SHG) in Tamil Nadu through post offices.

A pilot project will be implemented in two or three districts, which will be extended throughout the State and replicated in other parts of the country based on the success of the scheme.

A memorandum of understanding (MoU) was signed here on Friday between the NABARD and the Department of Posts in this connection.

The Chief General Manager of the bank, Prakash Bakshi, said the large network of post offices in rural areas would be utilised by the NABARD for its micro credit delivery system to 2.2-lakh SHGs in the State. The post offices would act as a mediator between the bank and the SHGs, which would extend loan on 9 per cent simple interest per annum, retaining an interest margin of 3 per cent. The loan product would be in the form of term loans and was repayable in 24 months.

The bank had set apart Rs. 30 lakhs for the project. It would be a small amount compared to Rs. 200 crores distributed by the NABARD through scheduled banks in the State. If there was good response, more funds would be pumped into the programme.

Training for employees

On the repayment, Dr. Bakshi said the NABARD would take the risk, as the existing Postal Act did not permit the post offices to involve in lending operations. As postal employees were not conversant with lending procedures, the bank would train them, who were identified by the Department for implementing the scheme.

It would be the responsibility of the bank to arrange for conducting capacity-building programmes and to provide necessary training to the postal staff, he added.

U. Srinivasa Raghavan, Member (Operations and Marketing), Department of Posts, said the post offices having a deposit of Rs. 30,000 crores would not have any difficulty to take up the new venture as they were already engaged in banking and insurance operations.

The Deputy Director-General, Ministry of Communication, Shoba Koshy, who signed the MoU on behalf of the Postal department, said the SHGs would have better access to the post office as its density in rural areas was more than that of banks.

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