Manipur discovers the transformative power of small banks and microloans-Business News, Firstpost


Loans are only granted after careful selection of clients and the approval of their guarantors.

Imphal: In just three months, the North East Small Finance Bank (NESFB), which has two branches in the twin capital of Imphal East and West, provided loans to more than 3,000 women who needed to finance their small businesses. The two agencies deal with more than 350 loan-seeking clients every day. However, loans are only granted after careful selection of clients and the approval of their guarantors. In most cases, the borrower’s husband and family are guarantors.

Deepak Samom, 34, a chicken feed vendor from Imphal East, said that although it is relatively easy to get a loan from NESFB, the bank does not provide loans to customers if the one of the five members of the Joint Responsibility Group (JLG) is not present at the time of loan disbursement, due to illness or other reasons. Deepak is waiting for his wife while she negotiates with the bank officials for a micro loan of between Rs 25,000 and Rs 35,000 during the first cycle.

Small Financial Bank of the North-East. 101 journalists.

He says that unlike other banks, NESFB provides loans without having to produce a lot of documents. The bank provides microloans to small businesses in several stages, starting with the initial loan granting cycle between Rs 25,000 and Rs 35,000 and moving on to the second cycle where clients can avail loans from Rs 50,000. But the bank has a maximum ceiling of Rs 100,000 in the third cycle as part of its JLG program.

For borrowers at the bottom of the pyramid

Salam Mema, 45, mosquito net maker and seller from Uripok Huidrom Leikai in Imphal West, said that after taking out a loan of Rs 35,000 in the last week of February, she was able to finance her small business. Mema said she can buy a thal (a length of cloth) for anything from Rs 1,500 to Rs 3,000 and can make seven mosquito nets which will earn her a profit of at least Rs 500 each. She is now also providing fabric to make mosquito nets for others like her.

Mema said it was a fluke that led her to take out a loan from NESFB as she joined a joint responsibility group of 15 women at the insistence of one of her cousins. The group was running out of members and she joined after getting her husband’s approval.

Shanta Lourembam, manager of NESFB’s Imphal East branch in Prompat, said Rs 4.5 crore has been paid to around 1,500 clients in the past three months. Meanwhile, Ajay Waikhom, manager of Imphal West’s branch at RIMS Road, said the past three-month unpaid amount was Rs 4.8 crore and the branch made loans to 1,545 claimants. ready.

Pranjal Medhi, head of liabilities and marketing at NESFB, explains that the bank having experience in microfinance, it limits itself to lending money to women borrowers at the bottom of the pyramid. But, now that it has become a full-fledged bank, it will start lending to all segments of society from April.

“Eight of our branches that previously operated as branches of microfinance institutions (MFIs) have been converted to bank branches and the remaining 145 branches will also gradually be transformed into full-fledged bank branches,” Medhi said.

He also said that as a NESFB graduated from an MFI to a bank, it will also launch mobile banking services to reach the most remote areas. But given its experience in micro-banking, the bank prefers to organize camps with potential clients to spread financial literacy.

Thangjam Laishung Meetei, head of NESFB’s micro-bank in Imphal East, says the bank lends at 23% per annum at a reduced rate. He said the two branches only lend to customers within a 17 km radius from now on. Meetei says he has three loan officers to help him and that they collectively help finance a variety of small businesses, including weaving, embroidery and needlework, small restaurants, poultry farming and growing vegetables. with green leaves like chives and Chinese cabbage.

Other outstanding loans

NESFB officials say the response they have gotten to their microfinance initiatives so far has been phenomenal and far beyond expectations. The bank which has an asset book close to Rs. 1,000 crore and liabilities of around Rs. 200 crore, plans to provide other loans including loans to individuals, small and medium enterprises, to the agriculture and home improvement from the next quarter from April.

Medhi says their loan processing times are faster than that of other banks, and their field and loan officers go door-to-door to reach people in remote areas while holding meetings and camps. He also says that at NESFB’s credit, he retained 4.7 lakh clients which he developed through his microfinance initiatives.

An official at a cooperative bank in Imphal says his bank lends at 15 percent a year at reduced rates, significantly lower than the NESFB’s 23 percent rate. In addition, some loan seekers complain that each JLG member is required to deposit Rs 1,000 before the loan application can be considered.

But as NESFB looks more like a regular bank and increases its deposit base, the cost of its funds will decrease and they will be able to pass this savings on to their customers in the form of lower borrowing costs. This will also allow it to compete with all other banks, whether they are cooperative, private or public.

(Armstrong Chanambam is a freelance journalist based at Imphal and a member of, a pan-Indian network of local journalists)

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