ABN, Grameen and Dutch firms in rural finance binge

ABN Amro Bank, US-based Grameen Foundation and Dutch funding agencies, Cordaid and Nowip, are joining hands to build infrastructure for taking micro-finance to the rural masses.

Functioning as supervisory agent, ABN Amro Bank would monitor the usage of loans given to micro-finance institutions (MFIs) and also provide the basic infrastructure framework to MFIs.

"Most of the times, we observe that a single MFI is receiving assistance for capacity building from five-six different organisations. This has given rise to the need for a common platform based on a joint assessment," said Moumita Sensarma, vice-president and head-micro-finance, India, ABN Amro.

Through the partnership, there will be a clear demarcation of roles between the parties involved for providing funds, meeting human resources needs and making available fund management expertise and the necessary technology. Sensarma said the bank acting as the screening agency would lend greater transparency to the procedures.

ABN Amro Bank's current microfinance portfolio stands at Rs 62 crore and has covered 1,60,000 households, via 16 MFIs. The aggregate amount sanctioned has exceeded Rs 102 crore.

In order to achieve greater levels of penetration, the bank now plans to split the existing microfinance team into two factions - one for deepening relationships and the other for capacity building.

The bank structured five back-to-back arrangements with few Dutch agencies and through this, channelised 2 million euros to Indian MFIs.

Grameen Foundation is a non-profit organization using microfinance and technology to tackle issues related to global poverty. The current network of microfinance partners with Grameen Foundation has already reached nearly 1.4 million families in 22 countries.

Cordaid is an international organisation that aims to reduce structural poverty and strengthen institutions. It lends great attention to sustainable development.