AIF- PNB sign first-ever MoU to bring rickshaw pullers into banking fold
NEW DELHI, June 17, 2008
Punjab National Bank today entered into an agreement with the American India Foundation, a not-for-profit organization leveraging people and resources in the United States for development in India, to make credit facility available to NGOs working in the sphere of livelihood promotion and generation. For the first time, this MOU will enable informal sector workers like rickshaw pullers to avail loans.
The bank will extend credit facility to NGOs across India, identified and recommended by AIF. Loans will be for two kinds of projects, Rickshaw Sangh under which borrowing NGOs will in turn give loans to rickshaw drivers to own rickshaws, and the Rickshaw Enterprise Project under which drivers will be given rickshaws on rent by the borrowing NGO. However, they would be encouraged to own the rickshaw ultimately. For this, the NGO will give a time frame in the credit proposal.
“An overwhelming majority of rickshaw pullers are victims of high daily rental making it nearly impossible to earn enough to ever own a rickshaw in their lifetime,” said Mr. Pradeep Kashyap, vice-chair of AIF. “They have never had access to basic formal banking services such as loans, savings, insurance, disposable income to access basic utilities or provide adequately for families. This initiative intends to promote micro entrepreneurship among urban poor and rural migrants.”
Rickshaws are a significant means of transport and conveyance in India. There are currently estimated to be 8 million rickshaw pullers in India. In Delhi itself, government records peg the number of rickshaws at 600,000.
PNB has declared 2008 as the “Year of Financial Inclusion”. “The MoU aims to bring Rickshaw Pullers in the banking fold and take care of their financial needs for improvement of the standard of lives of their families,” said Dr. K C Chakrabarty, CMD. “PNB would like to make this community a productive asset of the economy and connect them with the banking stream to enable them to benefit from the economic development of the country as well.”
PNB has earlier partnered with AIF on two rickshaw projects, in Varanasi and Patna. The plan is to finance 10,000 Rickshaw Pullers in next two years and 1 lakh rickshaw pullers in next 5 years.
Life for a puller is tough: the work is hard, the living conditions worse. Almost all are migrants in search of employment, often fleeing famine, floods or debt. They subsist on very little as they try and save as much as they can to send back to their families in the villages.
After working his rickshaw for over 25 years, Atif Idris of Delhi says he still cannot afford to buy his own rickshaw. A rickshaw costs about Rs 9,000, but then there is the matter of obtaining a license and the bribes required for it. In addition, similar to other rental services, he has to bear the cost of any accidental damage to the vehicle on which there is no insurance option. Inability to do so leads to harassment, physical, mental and financial, and compels them to flee their place of residence.
Every day, Idris pays hire charges to his maalik, the rickshaw owner. “I could have bought many rickshaws with the amount I have paid back,” he laments.
The MOU is a significant step towards bringing such marginalized groups into the purview of formal financial services, and reducing their vulnerability. Besides rickshaw pullers, gradually credit will also be extended other excluded groups -- waste-workers, construction labor, small-scale dairy enterprises, and also to NGOs working on market-led vocational training, skill development, job-linking and social security.
About Punjab National Bank:
Punjab National Bank, the largest nationalized bank has pan India presence with a network of 4589 Offices including 322 Extension counters and 1516 ATMs across the country. Total business of the bank registered a growth of 21% to reach Rs 2.86 lakh crore as on March 31, 2008. The bank earned a Net profit of Rs 2048.76 crore for the year which is 33% higher than the previous year. The impressive performance was brought about by Bank’s focus on a more inclusive approach to banking, various cost control measures, better asset liability management, prudent risk management and strengthening the recovery mechanism.
The bank has been contributing to rural development and employment generation through financing agriculture, SHGs, rural youth through PMRY, SGSY, SJSRY and other Govt. sponsored poverty alleviation programs. At the end of March 2008, Priority sector advances of the bank amounted to Rs 43412 crore accounting for 44.11% of ANBC which is higher than the national goal of 40%. Credit to Agriculture increased to Rs 19946 crore which is 18.94% of ANBC, higher than the National Goal of 18%. The bank had issued 23.85 lakh Kisan Credit Cards (KCCs) of which 2.67 lakh were issued during 2007-08. Credit to women beneficiaries at Rs 5209 crore as on March 31, 2008 constituted 5.29% of ANBC, higher than the target of 5%. The Bank along with its RRBs had opened 10.70 lakh “No Frill” accounts by the end of March 2008 under PNB Mitra Scheme.
About American India Foundation
AIF's mission is to accelerate social and economic change in India. By mobilizing people and resources in the United States, AIF has invested in over 100 Indian non-governmental organizations since its inception in 2001. AIF awards grants to education, livelihood and public health projects in India - with emphases on elementary education, women's empowerment and maternal and child health respectively. AIF also administers two programs: (1) Digital Equalizer, which bridges the "digital divide" by providing computers, Internet access and training in under-resourced schools, and (2) Service Corps, which builds the capacity of Indian NGOs by placing qualified young American professionals for ten-month volunteer assignments. President Bill Clinton serves as Honorary Chair of AIF.
For details contact:
American India Foundation
Nidhi Raj Kapoor 9810360134
Nicole Patel 9873496647