MICROCAPITAL STORY: State-owned Indian Bank of Baroda (BoB) Partners with Centre for Micro Finance (CMF) for Microfinance Initiative in Dungarpur

As part of its initiative to reach the unbanked Indian population with microfinance, state-owned Bank of Baroda (BoB) has signed a memorandum of understanding (MoU) with the Centre for Micro Finance (CMF), a microfinance research institute. As of March 2007, the Bank of Baroda had 38,000 employees and 2,700 branches in 21 countries. It had USD 36.4 billion (INR 143,146 crore or 1.43 trillion) in total assets and a return on assets (ROA) of 0.72 percent.

The CMF works with microfinance institutions (MFIs) to provide high-level training and strategy-building. In the memorandum, the CMF agrees to use its Research Unit (RU) to provide the BoB with industry expertise on scaling up the bank’s operations in certain districts. The MFIs Strategy Unit (MSU), the capacity-building arm of the CMF, will offer region-specific training for the field functionaries of the bank.

The BoB recently adopted Dungarpur district of Rajasthan, one of the most underdeveloped districts in India. The bank aims to achieve 100 percent financial inclusion in the area. BoB Chairman and Managing Director Ali K. Khandelwal has said that the bank will dedicate USD 14 million to development operations in Dungarpur over the next three years (2007 to 2010). The BoB aims to increase the district’s per-capita income by 100 percent in that time by helping to establish dairy farms, high-value spice crops and vegetable crops. The bank will also establish over 400 Farmers’ Clubs in order to provide local people with expert advice on agricultural and financial issues. Both the BoB and the CMF will focus on promotion of quality self-help groups (SHGs) as well.

In addition to its agreement with the Centre for Micro Finance, the BoB plans to partner with local MFIs. It is currently working with SKS Microfinance, a South Asian MFI which had USD 78.8 million in total assets and a gross loan portfolio of USD 63.2 million as of December 2007.

Additional Resources:

The Hindu: “Bank ties up with microfinance body.”

MicroCapital.org: “Indian Government-owned Bank of Baroda to Establish Microfinance Division.” October 16, 2007.

Times of India: “BoB to start a micro finance division.”

The Economic Times: “Bank of Baroda expands financial reach, adopts Rajasthan district.”

Microfinance Information eXchange (MIX): SKS (SKS Microfinance Private Limited)

Bank of Baroda

Centre for Micro Finance

Marketing partner:
Business Loan Get a business loan in as little as 72 hours, based upon merchant processing history.

Similar Posts: