The Hindu : Business : Nabard to float micro finance institution

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Thursday, Jul 19, 2007
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Nabard to float micro finance institution

Special Correspondent

The venture will become operational this fiscal

KOLKATA: National Bank for Agriculture and Rural Development (Nabard) is planning to start a micro-finance institution in order to take financing to the ‘poorest of the poor’, Chairman, Y. S. P. Thorat, said.

Talking to reporters after addressing the FICCI conclave on financial inclusion, he said the venture would be launched in partnership with commercial banks with Nabard holding 51 per cent stake on an authorised capital of Rs. 100 crore. Likely to be named NABFIN, the venture will become operational during this fiscal.

Pointing out that Nabard has been approached by public sector banks (PSBs) like Canara Bank for a partnership, Dr. Thorat said he was willing to raise the authorised capital.

There were many notions about microfinance institutions like their high interest rates (of about 30 per cent) and recovery methods, Dr. Thorat said, adding that NABFIN would seek to dispel these notions. He was, however, unwilling to divulge the likely interest rates.

He also said that Nabard was planning to launch a financial advisory unit which would provide advisory services in areas which have higher incidents of farmers’ suicides. The States that might be covered by these services were Andhra Pradesh, Kerala and Maharashtra where various types of counselling services would be provided.

Earlier in his address he said in the absence of any alternative, the poor and the weaker sections depended on unorganised financial system. He said financial services should ideally follow where the first steps towards inclusion like access, banking and counselling had been taken already.

He said while the role of the State in providing an inclusive framework was through fiscal measures, the role of the financial system in reducing poverty in all its forms was through providing enabling facilities and livelihood opportunities.

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