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| Union Bank sets aside Rs 500 cr for financial inclusion |
| T E Narasimhan / Chennai Aug 11, 2010, 00:23 IST |
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Union Bank of India (UBI) is planning to create a loan corpus of Rs 500 crore for farmers in Andhra Pradesh. Besides, as part of its financial inclusion programme, the bank is planning to focus on the Surat-Ganjam (Orrisa) corridor to target the migrant worker remittances and also plans to introduce mobile-based savings bank account.
Speaking on the sidelines of Great Lakes Financial Inclusion Conference organised by Union Bank of India and Great Lakes Institute of Management, MV Nair, chairman and managing director, Union Bank of India, said that the bank had drawn up a medium-term financial inclusion plan 2010-13 for systematic coverage of the unreached.
The bank intends to cover 32,000 villages over the next three years, accounting for nearly five per cent of the total number of villages in the country. During this period, the bank expects to add 6.2 million new customers, taking its total customers to 10 million by 2013. The business model that the bank was looking at has breakeven period of 3-4 years, he said.
The bank was also experimenting with providing finance to the members of Primary Agricultural Cooperative Societies (PACS) in Andhra Pradesh through Co-options Technologies Ltd (COTL). A pilot project was initiated in February 2008 in Nizamabad district of Andhra Pradesh, with an initial corpus of Rs 2 crore. Later, this was extended to Chittoor and East Godavari districts with a corpus of Rs 20 crore for crop loans and Rs 1 crore for vehicle loans called Kisan Chakra.
The bank has completed two crop seasons, during which the bank extended Rs 11 crore as loans to 3,000 farmers of 58 PACS. “In the next stage, we are extending this to 650 PACS covering around 1.25 lakh farmers with a loan corpus of Rs 500 crore”, said Nair.
The other initiative relates to a remittance product for urban poor. “Financial inclusion is not only restricted to rural areas, but the same is evident in urban areas too,” he said.
He said the urban slum dwellers, most of whom are migrant labourers, do not have access to banking and other financial services. The bank introduced remittance facility at affordable charges and delivery terms were provided at the door-step of the customer.
At present the bank is covering two money-moving corridors -- Mumbai-Eastern Uttar Pradesh (UP) and Bihar and Delhi-Eastern UP and Bihar corridor. Around three lakh customers have enrolled and an amount of Rs 112 crore was remitted involving 2.4 lakh transactions, he noted.
“We will shortly replicate this model in other money-moving corridors like Surat-Ganjam (Orrisa),” said Nair.
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