Allahabad Bank's new scheme for credit linkage with Micro-Finance Institutions launched

Demand for Micro Finance by Rural/Urban poor is growing fast as an effective tool for their poverty alleviation. Besides formal Banking system, Micro Finance Institutions (MFIs) such as NGOs, Trust, Non-profit company and NBFCs etc. are also active players in providing micro-finance to Self Help Groups (SHGs) for on lending to Rural/Urban poor for their economic empowerment. To supplement resources of the MFIs for such lending, Allahabad Bank has launched a scheme for bulk lending to MFIs, specially belonging to of small and medium sized categories for on lending to individual member of SHGs.

Sri O. N. Singh, Chairman & Managing Director of Allahabad Bank, while launching the scheme mentioned that the scheme envisages hassle free delivery of micro finance to MFIs on a liberalized terms and conditions. Loans upto Rs2.00 crores will be provided to the eligible & well-rated MFIs under the scheme either as refinance facility against the existing loan portfolios to SHGs or based on pooled savings mobilised from Self Help Groups. Interest rates on loans will vary from 8.50% to 9.00% per annum depending upon the rating points secured by the MFIs. Shri Singh expressed hope that this scheme would be well accepted by MFIs to meet their resource gap in providing adequate loans to SHGs as per their demand.

Sri Singh also indicated that that Allahabad Bank will go for intensive financing under the scheme during 2005-06 to augment flow of credit to MFIs and in turn to individual members of Self Help Groups enabling them to pursue their economic activities gainfully.