prpri Bringing a Smile & Financial inclusion to Rural Poor of India Bringing a Smile & Financial inclusion to Rural Poor of India

Introduction :

What began as a Small experiment by Padma Vibhushan Dr Veerandra Heggade in the sector of Financial Inclusion Plan has grown up to become a sleeping giant in the State of Karnataka having spread out in almost all the 31 districts of the State with a very good track record of managing the loan book portfolio which has become a rarity these days. SKDRDP also known as Sri Kshetra Dharmasthala Rural Development Program began its operations in the year 1991 at a place called as Navoor, a small village in Belthangadi Taluk of Dakshina Kannada District of Karnataka as a Trust to Run & Manage SHG (Self Help Group) which has risen over the years to become an formidable organization for the betterment of Rural poor, inculcating seeds of empowerment to Women at large who stand at almost 80% of the loan portfolio beneficiaries with their unique approach of financing the SHG. If you do a quick analysis the Average size of an SHG stands anywhere between (8 – 10 members)

SKDRDP in numbers

Active SHG 5,58,762
Members 45,41,279
O/S loan (In Crs) 14,321

SKDRDP as a BC and BF : SKDRDP took an active part in implementing the financial inclusion plan of the Government of India by working as Banking Business Correspondent and Business Facilitator (BC and BF) in all the areas of its operation. Under the programme SKDRDP is promoting Self Help groups, enabling the poor people in the remote villages to access banking facilities at their door steps. SKDRDP is BC and BF to State Bank of India, Union Bank of India, Canara Bank, IDBI bank, Karnataka Grameena Bank and Bank Of Baroda.

Banking Business correspondent & Business facilitator explained :

Credit Access for the rural people and masses has always been a mirage because of low credit worthiness of the rural population due to very low savings and lack of financial products to cover their needs, so in short they are left from the mainstream of financial inclusion in the overall economy. India has a total of 742 districts and reaching out to the rural power is a huge task and it is worthwhile to note that SKDRDP is doing a path braking work in the state of Karnataka with disbursements of almost Rs 70,000 Crores since its inception from the year 1991 till date. The arithmetic of loan is very simple, SKDRDP acts a banking correspondent of the above mentioned banks who lend to SHG through SKDRDP at around 7% and they take a fee of 5 % as generating a loan and managing the loan expenses, with an additional 0.5% as handling charges of managing the cash of SHG. Thereby lending to the SHG at 12 to 14 % who in turn lend to its members at anywhere between 13.5 % to 14 % which is a good deal for the rural poor people of India since Micro Finance Lenders do charge anywhere between 18 % to 24 % and the poor people are exploited by the MFI , so SKDRDP is far ahead in terms of pricing of loan which is essential for energizing Rural India, till date there has been no default in the loan repayment by the SHG and if at all there are any defaults , that much of amount will be deducted from the fees to that extent of default, but until date there has been no defaults and its almost clean Loan portfolio. SKDRDP also works in tandem with NRLM – Program sponsored by the Central Government for the Uplift Ment of Rural poor.


1 ) Rural Insurance schemes

2 )  Pragathi Raksha Kavacha for loans taken

3 ) New Pension scheme – NPS

4 ) Micro Bachat scheme of LIC

5 ) Sampoorna Suraksha for Health Insurance

6 ) Arogya Raksha for Emergency Health issues

7 ) Redevelopment / Rejuvenation of water bodies

What started as a small experiment in rural financing has grown up in to a success full venture having made a profit of almost 620 Crores which has been distributed amongst all the stakeholders bringing a smile on the members of SHG. Even during the adverse Covid of both the First and Second wave, weekly meetings at the ground levels were conducted and the amount collected from the borrowers and deposited the same in to banks to keep the loan records of payments and disbursals straight. SKDRDP can afford to price loan at a lower rate than MFI  because Capital adequacy requirements are not applicable to them Like Small Finance Banks & MFI’s and they have to concentrate only on arranging and disbursing of the loan and collection of the same on a periodic basis and return the same back to the lender.

Usually the SHG has to follow the following steps  on a regular basis and SKDRDP has taken help of technology to be a tech enabled company keeping in mind the huge number of its members.

♦ Regular meetings

♦  Regular savings

♦  Regular inter-loaning

♦  Timely repayment, and

♦  Up-to-date books of Accounts

For the Bankers too it’s a Win Win situation because they are at least risk of losing money and the surplus funds lying with them can be gainfully employed for the Un initiated rural poor borrower, they get customers on a platter and that was the reason why Prime Minister Modiji flew in to Dharmasthala to launch SBI Rupay card for 12 Lakh members for the Empowerment of rural women in October 2017, this only speaks volumes about the success of the scheme.

Since SKDRDP is also working closely with National Rural Lending Mission (NRLM) which has adopted the ‘Panchasutra” as its Principles for the identification and disbursement of loans to the needy at specifically rural level, the Panchasutra is more of managing the SHG at the block level.

The various processes in lending can be classified as below

♦  Internal Lending

♦  SB Account opening

♦  RF ( Revolving Fund )

♦  MCP ( Micro Credit Plan) Prepared

♦ CIF ( Community Investment Fund )

♦  Bank Credit 1 St Linkage

♦  Bank credit 2 nd Linkage

♦  Bank credit 3 rd Linkage in ( 0- 40 months Period )

Conclusion :

On an average loan of Rs 300,000 to the SHG, there is a scheme available from NRLM where loans are given at 7 % PA and for the prompt Re- payment there is a scheme of interest subvention to the extent of 3 %  which can result in a subsidy of Rs 15,000 on the interest part which has resulted in a surplus of almost Rs 250 crores which has been distributed amongst the SHG Members equitably. So there is an internal urge to perform well on a continuous basis because of the additional accruing financial disbursements.

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July 2021