The Hindu : Andhra Pradesh News : DRDA plans to implement TFI in every village

Online edition of India's National Newspaper
Wednesday, Oct 10, 2007
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Andhra Pradesh

Andhra Pradesh

DRDA plans to implement TFI in every village

Staff Reporter

VISAKHAPATNAM: Of the various programmes run by the District Rural Development Agency (DRDA), Total Financial Inclusion (TFI) programme introduced in the year 2005-06 and implemented in 2006-07 to create greater access to the banking facilities for poor, with no frill accounts, has been largely successful in helping the poorest of the poor in fighting the ‘debt trap.’

Looking at the success story, the TFI model is being proposed by the Government in one village in each service area of Deccan Grameena Bank, which has the banking network with 1666 branches in Adilabad, Karimnagar, Nizamabad and Ranga Reddy districts.

The main advantage under financial inclusion as compared to the other micro financing methods is that the Government reimburses the interest charged over and above three per cent to the Self Help Groups (SHGs).

According to the DRDA Project Director J. Murali, the rate of interest charged by the private agencies and some NGOs was as high as 36 per cent. It often made poor people fall into the vicious cycle of debt trap as they could not pay the borrowed amount on time and were forced to borrow more to repay.

DRDA had planned to cover the total of 225 village organisations this year. Each village organisation consist of 20-30 self help groups. Till now it was grounded in 51 village organisations covering 556 Self Help Groups (SHGs) with the lending to the tune of Rs.20.88 crores. Ten more were to be grounded soon.

For SHGs, the bank linkage in the Visakhapatnam has improved from Rs. 88.16 crores in 2001 to 2003-04 to Rs.380.14 crores in 2004-05 to 2006-07 and to Rs.52.07 crores up to Aug 2007. The coordinating officers keep a close watch on the performance of each branch of the bank in the implementation of the Financial Inclusion.

Under the scheme, the per group finance has risen from Rs.15,000 in 2001-02 to Rs.69,000 in 2005-06. It is estimated that the requirement per family (including both short-term and long term) is around Rs.30,000 per year. The gap between the actual financial requirement and the bank linkage was Rs.25,000 per family and for the entire group was Rs.2,80,000 in 05-06, is slowly being reduced.

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