SBI to provide financial muscle to farmers

Largest PSU bank to provide microfinance in Wardha district

The State Bank of India (SBI) has embarked on a unique project of educating and financially empowering the lot of farmers in two talukas of Wardha district.

Under the scheme, part of a national mission towards "total financial inclusion" launched by public sector banks, SBI intends encouraging savings, teaching farmers to operate saving bank accounts, providing insurance cover, and micro-credit in its now immensely successful cluster financing mode.

The original plan, initiated at the behest of the Finance Ministry, called upon the public sector banks to take up groups of talukas for offering micro-credit in the districts where they were operating.

The programme is aimed at improving the credit delivery mechanism ensuring a more "inclusive approach" so that eventually the entire district be covered for reaching credit to the needy.

The SBI has gone a step further and decided to teach basic banking and money management to illiterate farmers, besides offering insurance.

Though Jalna district in the Marathwada region was identified for the mission in Maharashtra, SBI has independently launched a parallel programme in Wardha.

Going it alone, it has zeroed in on the two talukas of Arvi and Deoli in Gandhi's 'karambhoomi' Wardha and launched its more comprehensive programme.

"We wanted to do something for the farmers here where there has been a spate of suicides for want of adequate credit facilities," explained SBI's Business Head (Micro Credit), Moin Qazi on the choice of the talukas for the experiment.

The bank now plans to cover the entire district on its own within a year. "A lot depends on the success of the project in Arvi and Deoli. We are offering credit facilities, assistance in opening and maintaining a savings bank account, and also insurance cover," Qazi said.

The model adopted for implementing the plan is similar to the hugely successful self-help group project promoted by the bank at various places in the state.

Groups of five small and marginal farmers are being identified for offering credit on a collective basis. The money is to be used for setting up irrigation pumps, making or repairing irrigation facilities and other rudimentary farm infrastructure activities.

As the money is lent collectively, the group shares the facilities and is gradually taught to pay for the usage. The SBI has a target of disbursing Rs 15 crore and Rs 13 crore as loans to such clusters in Arvi and Deoli respectively. This is big money in Vidarbha where farmers have ended lives for their inability to repay loans as less as Rs 5,000.

Encouragement for saving money is provided through personal interaction with group members, deciding on a group leader, and giving neatly printed envelopes with individual names of group members written on them to the farmers.

The group members are motivated to save a little and seal the same in the envelope which is later handed over to the group leader. The leader subsequently, deposits the money with the bank and appropriate entries are made in passbooks of group members.

Qazi said formal withdrawal facilities are yet to be introduced though group members are free to withdraw their money in case of an emergency. The project also includes providing kissan credit cards to farmers and getting village women to form groups of 10 members for availing separate loans.