Indian Bank to focus on urban poor

Public sector Indian Bank is set to provide more thrust to meet financial requirements of the urban poor formed as Self Help Groups (SHGs) with the opening of three more 'Microsate' (a satellite branch for micro loans).

The bank plans to open Microsate branches in Bhubaneshwar, Pune, and Bangalore this month, taking the total number of Microsate branches operates by it to 12.

The bank opened its ninth Microsate and 1,500th branch in New Delhi a few days ago. Credit assistance to the tune of Rs 24.85 crore through six NGOs for lending to SHGs, joint liability groups (JLGs) and Rs 65 lakh to 87 SHGs as direct credit linkage totalling Rs 25.50 crore was extended during the opening of the Delhi branch, a statement said.

Indian Bank was the first bank to introduce exclusive microcredit branches to provide credit to SHGs. The first Microsate branch was opened in May 2005 at Chetpet in Chennai.

Encouraged by the success of the concept, the bank opened more Microsate branches in Patna, Vijayawada, Hyderabad, Nadiad (Ahmedabad), Kollam, Kolkata and Tiruvanmiyur in Chennai during the first half of fiscal 2007-08.

These branches will serve as one-stop shops for all the needs of the urban poor. Apart from catering to the credit needs of the urban poor, Microsate branches will also provide non-credit services like training, counselling and marketing, among others.

So far 8,418 groups have been given credit to the tune of Rs 74.25 crore through these Microsate branches.

M S Sundara Rajan, Chairman and Managing Director, Indian Bank, said the bank pioneered the SHG concept in rural areas by piloting a women's development project in 1989 in Dharmapuri district of Tamil Nadu.

The success has now spread through 921 bank branches across the country and the bank has so far credit linked over 2.30 lakh SHGs to the tune of Rs 1,665.75 crore.

Apart from direct loans, tailormade loan products such as 'Vidya Shoba', an educational loan scheme, and 'Grihalakshmi', a housing loan scheme, are being implemented for the benefit of SHG members. The branches also offer a life insurance scheme, Janashree Bima Yojana, and a universal health insurance scheme at low premiums for SHGs.

Indian Bank, with this move, joins India's largest private sector bank, ICICI Bank to get into micro finance. ICICI Bank during the last year, increased its commitment to this segment by taking a substantial stake along with IFC to fuel expansion of Fino.

Besides such moves by established players, NGOs such as Janaagraha armed with investment from Dell Foundation also has started serious micro finance organisations.