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Corporation Bank targets social entrepreneurs

Rajiv Tikoo

Social entepreneurship in the country is set to get a fillip. The Corporation Bank and the Bharatiya Yuva Shakti Trust (BYST) are joining hands to promote entrepreneurship amongst under-privileged youth. Announcing the details of the memorandum of understanding (MoU), K Cherian Varghese, chairman & managing director of Corporation Bank, said: “We have earmarked Rs 5 crore for the purpose.” Mr Varghese was addressing a seminar on ‘Business Volunteering: Corporates in Community’, organised by the BYST in partnership with the United Nations Development Programme (UNDP), in the Capital on December 10. BYST is a trust dedicated to assisting disadvantaged youth to set up or expand small businesses with finance as well as mentors.

The scheme provides for grant of loans up to Rs 1 lakh or a maximum of 75 per cent of the project cost, whichever is lower without any collateral security. The trust will finance 20 per cent of the cost of the project and the balance of 5 per cent will have to be borne by the entrepreneur. The assets acquired out of the loan would be the primary security for the bank and the trust on pari passu charge. Mr Varghese added: “The best thing is that the trust will provide mentors to all entrepreneurs.”

Loans for expansion of business can go up to a maximum of Rs 5 lakh. While the bank will provide 75 per cent of the amount, the entrepreneur will have to contribute 25 per cent. Entrepreneurs will be financed for both term loans and working capital needs. The interest will be charged on diminishing balances and loans will be repayable in equated monthly installments. The repayment will be shared on a pro-rata basis by the Corporation Bank and BYST, proportionate to the amount financed by them.

The scheme will be introduced in Delhi and Haryana and thereafter will be implemented in Chennai, Pune, Hyderabad and Mumbai.

This is not the first community initiative taken by Corporation Bank.

The bank is particularly active in supporting self-help groups engaged in agricultural work. Reasons Mr Varghese: “The recovery is excellent in this sphere.”

Besides, the bank is also supporting an initiative to support Child Relief & You (CRY). It has been contributing to the non-governmental organisation Rs 5 for every new account opened with it since July this year.