HSBC to offer micro finance to schools in south

The UK-based HSBC has identified potential for micro-finance lending in 11,000 privately-owned schools in Hyderabad and Chennai.

The programme, which was initiated as a corporate social responsibility activity, has now blossomed into a commercial lending activity.

HSBC, in collaboration with Centre for British Teachers (CfBT), launched the business aimed at enabling private schools in these two south Indian cities to get finance from HSBC.

Subir Mehra, head - commercial banking, HSBC, said, "HSBC has so far financed approximately 12 such schools in Hyderabad and Chennai. The loan size varies between Rs 50,000 and Rs 7.5 lakh, with a maximum tenure of four years."

The programme, Equip (enabling quality improvement programme in schools), is targeted at schools educating children from low-income families.

The borrower schools need to be registered as a 'trust' or 'society'. Funds could be disbursed for purchase of computers, furniture, library books, sports equipment and infrastructural requirements.

Primarily, CfBT identifies the needy school and completes the initial eligibility check and, accordingly, apprises HSBC of the school's suitability.

The school then forwards the application to the bank. A simultaneous financial assessment is carried out separately by HSBC and CfBT, following which the decision is taken on the loan approval.

In the given environment of tight interest spreads, different banks are known to chase the same set of borrowers. In such a situation, it would serve the purpose better to widen the size of the overall pie rather than dividing the same pie into more number of smaller pieces.