Barclays launches Rs 5.5-cr microfinance initiative

Barclays launches Rs 5.5-cr microfinance initiative

Commendable. Foreign Banks in India have their presence for over a century but their services (like Deposits, Credit Cards, Personal Loans, etc.) were mainly confined to two or three metro cities only. Most of them are located in Mumbai or New Delhi with a single branch presence. The strong and popular ones like Citi Bank, Standard Chartered, HSBC, Amex and Bank of America are steadily functioning discharging their responsibilities and obligations.  In May 2010, I came across an interesting report from PwC titled Foreign Banks in China.  The report covered many aspects like Market Environment, Risk Management, Products and Market Segments, Investments, Liquidity and Funding, Regulation, Performance and Peer Review.  It has given lots of data and finally complimented Foreign Banks in China as Partners in Success.

In 2005, RBI invited more and more foreign banks to open branches in India with a view to encouraging a level playing field and a purpose of introducing competition to PSBs and Private Banks in India. However, not much headway was made by these foreign banks. While PSBs and Private Banks in this country are required to extend 40% of their lending to Priority Sector like Agriculture and SMEs to be financed, Foreign Banks have been given a lower target of 32%. Even this is rarely achieved by the foreign banks but they choose the alternative to invest in the Bonds of NABARD and SIDBI to fulfil their obligation.

Corporate Social Responsibility undertaken by Barclays is interesting. That too partnering with two NGOs and taking the initiative ofoffering microfinance of Rs. 5.5 crore speaks at its willingness to lend to poorer sections and rural customers. I read from the net that earlier ABN-AMRO and HSBC also made attempts to enter Microfinance area in a small way.  I wish more and more Private and Foreign Banks join the PSBs in taking up rural finance projects to live up to their Priority Sector obligations in real sense.