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Tuesday, January 31, 2012

Nabard sanctions Rs 20 lakh to Ahmedabad bank to finance JLGs

The National Bank for Agriculture and Rural Development (NABARD) has sanctioned a grant assistance of Rs 20 lakh to the Ahmedabad District Cooperative Bank for a project involving formation and finance of 1,000 Joint Liability Groups (JLGs).

The Bank will be financing these groups in Ahmedabad and Gandhinagar districts in two years. The assistance from NABARD is partly given at the time of sanction of loan by the bank to JLG and partly after prompt repayment by JLG, Mr H R Dave, Chief General Manager, said here on Tuesday.

With land-holdings becoming smaller, making it difficult for the banks to reach out to such increasing number of marginal farmers, NABARD has been focusing on financing through JLGs to facilitate easy availability of loans to clients such as tenant farmers, oral lessees, farmers without proper land records, groups starting micro enterprises and individuals who find it difficult to access formal credit.

NABARD had launched a new banking innovation of JLGs to reach out to such farmers. The JLG is an informal group comprising 4 to 10 members pursuing any individual or joint activity. The main purpose for formation of such groups is to avail loan from formal banking institutions.

In order to encourage the banks to adopt the JLG model, NABARD had earlier provided assistance of Rs 34 lakh to three regional rural banks in Gujarat for financing 1,700 JLGs.

The Ahmedabad District Cooperative Bank is the second cooperative bank after the Rajkot District Cooperative Bank to receive the grant.

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