Bangalore January 3rd, 2014: Karnataka Vikas Grameena Bank (KVG Bank), a regional rural bank sponsored by Syndicate Bank, has set a Rs 500-crore target to fund small entrepreneurs at the village level over the next three months.
“The aim is to strengthen the rural credit-delivery system and also take on the microfinance institutions in the north Karnataka region, which are charging exorbitant rates. It is also to motivate the common man to take up income-generating activities on a small scale,” Ashok Reddy Chairman, KVG Bank, told Business Line.
The bank is targeting customers who intend to take up activities such asretail trade, small businesses, artisanship, handicraft-making, dairying, poultry, and sheep/goat rearing, and so on.
The bank is planning to offer easy repayment option under the ‘Vikas Janashakti’ scheme. Repayment is linked to the small amounts contributed by entrepreneurs on a daily basis to their ‘Daily Deposit’ scheme of the bank (Pigmy A/c).
Not wilful defaulters
According to Reddy, “The loan accounts of customers of small means often become overdue not because of any intentional default on their part, but because of the difficulty in visiting branches frequently to make repayment.
“At the same time, on account of the subsistence level of income from their enterprises, they are not in a position to accumulate adequate savings to make the monthly repayment.”
MFIs which are catering to the needs of these people charge as high as 24-26 per cent interest. “ KVG Bank’s 14.5 per cent is much more affordable and investor-friendly,” Reddy explained.
“Under Vikas Janashakti, the bank is aiming to disburse loans ranging between Rs 5,000 and Rs 50,000. The loans are for 36 months, including repayment holiday of one month.”
To popularise the product, the bank has instructed its employees to visit small entrepreneurs in villages for loan processing and disbursement.Business Line
