Case5-March-2014
Financing poor is not just about ‘amount’ given as finance. It provides a hope for them to live, ensures meeting of basic needs, supports livelihood stabilization and enables them to live with dignity. But formal finance is out of reach of poor at times of need, due to in adequate and improper delivery systems. Moreover, the practices of informal credit system are also exploitative or not adequate. Without ensuring access to affordable, adequate and timely credit services to poor,“ financial inclusion” which is in the priority list of the nation will remain as a distant dream.
Kalanjiam Development Financial Services (KDFS) attempts to streamline credit to poor by providing relevant financial services to them, who are part of self-help institutions. KDFS, a Sec.25 Not – for Profit Company was promoted by SHGs and professionally managed to address the credit gap among vulnerable sections. Bridging the gap in development finance is its mission. The service of KDFS is not just financing but also it facilitates demonstration process to the MFI sector on better bank linkages. It enables the capacity of poor members in SHGs to plan and govern financial resources. It stitches the gap on time and much more in relation with poverty reduction through leveraging funds from various sources.
For the past twelve years, KDFS kept its promises well. During last quarter of 2013 – 14, another feather is added in the cap of KDFS with Bharathiya Mahila Bank (BMB) collaboration. Bharathiya Mahila Bank is first National bank with an exclusive focus on women empowerment and servicing to Women. It was established with a greater vision, “for the women, by the women and to the women” on 19th Nov 2013 by Union government. In fact it could be the first and only women bank in the world. Presently they are focusing on initiating one bank branch in a state . The bank consists of seven women directors in the board with Ms.Usha Anantha subramaniyam serving as CMD of the Bharathiya Mahila Bank. Soon after its formal initiation, BMB was looking for collaboration with likeminded partners to reach out its financial services to women and DHAN Foundation was also approached for the same. In December 2013 a meeting was convened at Chennai in which Ms.Padmavathy, KDFS chairperson, Mr.Kalyanasundaram, one of the Board of Directors, KDFS and, Mr.Janakiraman, Chief Executive Officer of KDFS participated and discussed with the Ms.Usha Ananthasubramaniyam,CMD, about the scope for collaboration. The activities of KDFS, method of service delivery and its reach was discussed in detail.
Impressed by the community driven model of KDFS and the very thin margin retained by KDFS, the CMD assured the support to KDFS. A credit support portfolio for the SHGs in Maharashtra was also handed over to her during the meeting for facilitating linkage to those groups.
In continuation of this, field visits to federations under
Madurai Urban was done on 18th and 19th January
2014, by the Deputy General Manager and Assistant
General Manager (Priority sector) to understand KDFS
systems, procedures and its relevance to credit support to
groups. The systems and the model of f our Kalanjiam
institutions impressed them. The Chief Manager also
went on a visit to Sholapur, Maharashtra to see our
groups and federations to study the feasibility of the
collaboration on 27th Feb, 2014. A loan of र 26 crores
got sanctioned to KDFS from the BMB on 1st March
2014 after all these processes.
Though KDFS has regular credit support from many nationalized banks, this collaboration is very unique.
This tie up was with the first women bank in the country.
KDFS also was successful in getting र 26 crores, which
is the highest loan availed from any bank so far and
a important milestone in the history of KDFS . The
rate of interest at which the loan was offered initially
was 12 percent which was reduced to 11.75 percent
upon negotiation. DHAN incidentally is the first large
scale collaborator for them and there is more scope for
expanding this facility to other people institutions.