Nabard Lauding our efforts on Debt Swapping
>> Thursday, April 7, 2011
While the debt swapping scheme did not bear desired fruit elsewhere, NABARD lauded the efforts of North Malabar Gramin Bank. The scheme was implemented through the survey conducted by Kakkengad Farmers' Club.
Excerpts from Nabard's "Report of the Task Force on Credit Related Issues of Farmers"
"3.21 A review of the debt swap schemes of banks has revealed that these schemes had limited success as farmers were reluctant to disclose the name of the money-lenders, were hesitant to make payment of existing debt to their lenders, apprehensive in disclosing debt and some had even repaid the existing debt out of their KCC limits. Even though the Task Force came across some good debt swap schemes (Box 3.2), bankers reported difficulty in taking these to scale and also reported that there was little guarantee that farmers would not ever again borrow from moneylenders, or that a village could remain moneylender free. The Task Force, therefore, recommends that a systematic study be taken by an independent agency to assess the impact of the scheme for further development as a financial product and upscaling".
The footnote (Box 3.2) Reads
Box 3.2
Debt Swap Scheme of North Malabar Gramin Bank and South Malabar Gramin Bank of Kerala Comprehensive village survey (household survey) was conducted with the help of members of farmers clubs, SHGs and local NGOs. The survey revealed that the extent of indebtedness ranged from Rs. 15,000 to Rs. 25,000, the interest on borrowings ranged from 60% to 120% per annum, and purposes of loan included agriculture, marriage expenses, health, house repair. A screening committee of bank officials, representatives of panchayat, farmers' clubs, SHGs and NGOs interviewed the indebted villagers personally to confirm the findings of the survey and recommended to the concerned branches for disbursal of loans to the indebted persons. The loans were sanctioned directly to the borrowers under GCC, KCC, and through SHGs. The banks did not seek documentary proof for the debt owed by the borrower. No security was insisted upon. It was ensured that the loan was utilised by the borrowers to repay their debt to the moneylender. Bank officials encouraged formation of SHGs of individual borrowers to ensure prompt repayment. To augment the income of borrowers so as to not let them fall again into the clutches of moneylenders, the banks financed the SHGs for income generating activities.
Nabard's Report can be seen here
(Expert team from Regional Training college, Mangalore visit to Kakkagad Branch to study the debt swapping scheme)
Excerpts from Nabard's "Report of the Task Force on Credit Related Issues of Farmers"
"3.21 A review of the debt swap schemes of banks has revealed that these schemes had limited success as farmers were reluctant to disclose the name of the money-lenders, were hesitant to make payment of existing debt to their lenders, apprehensive in disclosing debt and some had even repaid the existing debt out of their KCC limits. Even though the Task Force came across some good debt swap schemes (Box 3.2), bankers reported difficulty in taking these to scale and also reported that there was little guarantee that farmers would not ever again borrow from moneylenders, or that a village could remain moneylender free. The Task Force, therefore, recommends that a systematic study be taken by an independent agency to assess the impact of the scheme for further development as a financial product and upscaling".
The footnote (Box 3.2) Reads
Box 3.2
Debt Swap Scheme of North Malabar Gramin Bank and South Malabar Gramin Bank of Kerala Comprehensive village survey (household survey) was conducted with the help of members of farmers clubs, SHGs and local NGOs. The survey revealed that the extent of indebtedness ranged from Rs. 15,000 to Rs. 25,000, the interest on borrowings ranged from 60% to 120% per annum, and purposes of loan included agriculture, marriage expenses, health, house repair. A screening committee of bank officials, representatives of panchayat, farmers' clubs, SHGs and NGOs interviewed the indebted villagers personally to confirm the findings of the survey and recommended to the concerned branches for disbursal of loans to the indebted persons. The loans were sanctioned directly to the borrowers under GCC, KCC, and through SHGs. The banks did not seek documentary proof for the debt owed by the borrower. No security was insisted upon. It was ensured that the loan was utilised by the borrowers to repay their debt to the moneylender. Bank officials encouraged formation of SHGs of individual borrowers to ensure prompt repayment. To augment the income of borrowers so as to not let them fall again into the clutches of moneylenders, the banks financed the SHGs for income generating activities.
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