BoB to start micro finance division

Bank of Baroda (BoB) has decided to set up a dedicated micro finance division for furthering its aim to develop rural heartlands of the country.

"We are opening a new micro finance division as we think that lending to the poor is not a loss making proposition. It only has to be done in a proper way to ensure returns," Anil Khandelwal, chairman and managing director, BoB told reporters here.

The state-owned bank has already identified 350 "thrust branches" for dealing in micro finance. It has also started an institute for micro finance at Jaipur and 90 field people have been appointed to execute the bank's programmes.

BoB has adopted the Dungarpur district in Rajasthan, and has outlined numerous development projects for a period of three years with a budget of Rs 55 crore.

"There should not be any worries regarding recovery of loans from self help groups (SHGs). As per our knowledge, recovery rate from SHGs is around 90%," he said.

The Dungarpur district consists of over 800 villages with population over 11 lakh, predominantly tribals. The literacy rate is below 25% and income levels are extremely low.