Micro mantra: Business with social objectives

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: Policy makers have woken up to the fact that their poverty alleviation programmes, mandatory priority sector lending by banks, and many other government schemes have hardly made a dent in improving the living standard of those below the poverty line.

Micro-finance is now fast gaining recognition; especially among poor nations and developing countries like ours, as not only a solution but also an antidote to prevent recurrences of heading back below the poverty line.

The approach is daring and more known for not only its frontal-attack approach in tackling poverty from its roots but also in creating a sense of responsibility among those living in the dark, as to how they, themselves, can help in wiping out the curse of poverty. In a country like ours, where one third of the over one billion population lives under the poverty line, micro-finance is the biggest saviour that is all set to bring about a revolutionary change among the lives of many underprivileged people.

This is perhaps the first time in history where banks, policy makers, NGOs, self-help groups (SHGs) and the beneficiaries have come together to attack the root cause of poverty-deliverables.

What long drawn poverty alleviation programmes under priority sector lending and rural banking could not achieve in the past, delivery channels under micro-finance activities of banks will be able to tackle successfully, opine bankers unanimously.

Take the example of the country’s largest government bank, the State Bank of India. The bank today claims to be among the first to link credit to SHGs.

“SBI is a prime driver for the movement,” says OP Bhatt, chairman of SBI. SBI, with a share of approximately 47% of total SHGs financed by commercial banks, is far ahead of others.

The bank has successfully initiated various innovative initiatives toward widening its SHG network. To list a few, it has sensitised the entire staff in rural and semi-urban branches towards the programme and launched its housing loan product for SHG members.

According to committee findings, 73% of farm households still have no access to formal credit sources. This is despite the fact that state-owned banks have disbursed agricultural loans of over Rs 2 lakh crore in 2006-07. The report suggests that a large number of farmers prefer to access credit from non-institutional sources, primarily because it is less cumbersome.