News: Taking banking to India's poorest of poor

(BL 08/10/2006) Chennai - The frontiers of financial inclusion is taking banking to the poorest of the poor - the beggars.

Imagine a beggar opening a savings bank account! Twenty beggars in Rameshwaram opened savings bank accounts with the HDFC Bank on Saturday. Next week, they will be given Rs 1.2 lakh, or Rs 6,000 each, so that they can buy gift articles and retail them in the temple town. These people have been begging all their lives, notes K. Manohara Raj, a Vice-President with HDFC Bank.

The proposal came from a Ramanathapuram-based NGO called Cherdi. HDFC Bank has been in touch with a number of NGOs across the country. The NGOs are rated against a list of parameters and those that qualify are used as `correspondent service providers' for micro loans.

Cherdi scheme

Cherdi came up with a proposal for loans to rehabilitate beggars and the bank believes it is a risk worth taking. While this instance of "beggar loans" might be one-off, it so happens that the bank's micro-finance sweep has touched the lives of dacoits and sex workers too.

For instance, in a town near Kodaikanal, the bank helped 140 sex workers join 70 existing self-help groups (SHGs), two in each to ensure that they are well assimilated into the groups and not form a stigmatised sub-group. "These tribal women were into this profession only for survival," notes Manohara Raj.

Five of the 70 SHGs are engaged in buying essential goods from a department store in Kodaikanal and selling them in the far-flung villages spread over the hills.

Tribals programme

HDFC Bank has initiated a programme, which it calls MFIT (Micro Financial Inclusion for Tribals). As the name suggests, it is focussed on tribals. Economic development is inevitable, but when it happens it is the tribals who are the worst hit, observes N.S. Kishore Kumar, senior Vice-President, HDFC Bank, who heads the bank's agriculture-lending and micro-finance activities.

Jhabua in Madhya Pradesh is the place HDFC Bank has chosen to beta-test MFIT. Two months ago, the bank disbursed Rs 60 lakh to 1,500 beneficiaries (through NGO-co-ordinated SHGs). Many of these tribals used to borrow from local moneylenders, as a consequence of which some turned into dacoits.

These tribals had hardly heard of banks and were wary of the lenders' motives when HDFC officials approached them with offer of money. Using a local NGO called Action for Social Advancement (ASA) the bank managed to open accounts and lend.

The tribals used the money for various purposes. Many bought goats and sheep, some got into kitchen gardening. In just two months, the results have started showing. Essentially most of the tribals are getting out of the clutches of local moneylenders.

Kishore Kumar feels that the tribals can be enabled to take up a number of forest-produce and farming related business activities. "They need finance, agglomeration and institutional support," he said. HDFC Bank is also talking to companies for "offtake of the products made by tribals."