Bandhan microfinance targets unemployed youth

By Naagesh Naaraayana

Microfinance Focus, Aug. 31, 2009: Apparently there is no avenue of microfinance that it does not enter.  Kolkata-based microfinance institution Bandhan has recently launched a new product for the unemployed youth called “Employing the Unemployed”. In less than two months, it has reached 35 beneficiaries in 18 districts spread over two districts in West bengal. Unlike Bandhan’s other programs aimed at the poor women or rural unbanked people, this product is meant to help the youth to learn skills for future employement.
In less than eight years, Bandhan has emerged as one of the the largest microfinance institution in India and was ranked second in the world by Forbes magazine in its first ever listing of the world’s top 50 microfinance institutions (MFIs).  Bandhan’s steep rise in volume and reach is often attributed to its variety of products within the microfinance sphere.
Last year, the MFI launched free schools in villages for underprivileged children up to the age of 14 years, who couldn’t ever go to school or had to drop out because their parents couldn’t afford to educate them.
In less than two years, Bandhan has set up 60 such schools in six districts of West Bengal—Jalpaiguri, Darjeeling, Cooch Behar, Nadia, North 24 Parganas and South 24 Parganas. Each district has 10 schools, and each school has around 33 students. In all 2,000 students study in these schools and 60% of them are girls.
Almost all these schools are located in areas where there is no government school. The classes are held in rented spaces, which cost around Rs 300 a month, and the teachers are local educated young. The cost per student is around Rs 1,000 a year, and Bandhan spends around Rs 35,000 a year on each school. The positive side of it is two-fold — it helped Bandhan expand its microfinance business and also overcome resistance from local moneylenders. At least 1,000 students who study in these schools are borrowers’ children.
The curriculum for classes I-IV is taught not in four but in three years without any summer or winter break. Students attend school round the year for 3 hours a day from 8.30 to 11.30am. After they complete three years at Bandhan schools, they will be encouraged to enroll in government schools in class V. Bandhan is currently conducting a survey to open 100 more schools by 2010. Down in the south, a Bidar-based MFI Nirantara has started similar program for the children of its borrowers.
Bandhan – meaning “togetherness” – offers microfinance services to poor women in the state of West Bengal. Founded by Mr. Chandra Shekhar Ghosh in November 2000, Bandhan started operations in 2002 and is currently registered with the Reserve Bank of India (RBI) as a non-banking finance company (NBFC).
Bandhan Financial Services Pvt Ltd (NBFC), the microfinance arm of Bandhan, enjoys a capital adequacy ratio of nearly 17%, which is 5% more than the stipulated level of 12%. Its financial products include micro-loan products, the micro enterprise programme (larger loans to women who are in income-generating projects) and health care loans to address emergency health requirements of poor families.
Microfinance is not the last word for Bandhan and it prefers extending other support that the poor need for their holistic development.  Its program to lend to the poorest of the poor called ‘Targeting the Hardcore Poor’ is precisely designed to track the targeted people and develop their skills to manage a local enterprise. After the training, the poor are given assets to manage on their own.
As of July 2009, it had 1.8 million members and 850 branches spread over 11 states in India, with a loan outstanding amount of Rs. 797 crore and a cumulative loan disbursed amount of Rs. 2,810 crore. It has set a target of disbursing Rs 2,500 crore in 2009-10 and is planning to expand its presence in other countries like Afghanistan, Brazil and South Africa.

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