Citi, SKS enter Rs 180 cr rural microfinance programme

New Delhi, May 9 (UNI) Citibank India and SKS Microfinance today entered into Rs 180 crore financing programme initiating Citibank's foray into the rural microfinance.

The programme will deliver income-generating loans between Rs 5,000 and Rs 20,000 to over two lakh unbanked customers spread across 7,000 villages in 11 states across the country in 2007-08.

The partnership emerges to fulfill a shared objective of greater financial inclusion and poverty alleviation through commercially viable and sustainable lending programmes.

The highlight of the Citi-SKS agreement is that each individual loan, initiated by SKS is purchased by Citibank, which shares credit risk in the transaction.

''The initiative will provide increased economic opportunity to hundreds of thousands of poor families across the country and move us closer to our goal of scaling to five million families by 2010,'' SKS Founder and CEO Vikram Akula said.

The programme encompasses 49 rural branches of SKS in the states of Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Jharkhand, Uttar Pradesh, Bihar, Rajasthan, Chattisgarh and West Bengal.

Under the partnership, the origination and servicing of loans will rest with SKS. SKS utilises a five-member group methodology, in which the group serves as the ultimate guarantor for each of its members.

As additional groups are formed within a single village, a 'center' emerges which is composed of up to 10 groups or 50 members. Center members also provide social collateral, and are responsible for repayments if one member is unable to pay an installment.

Citi's Global Director of Microfinance Mr Robert Annibale said, ''This innovative financing structure provides risk participation and funding diversification that will support SKS's significant growth plans.'' SKS Microfinance is an organisation which offers income-generating loans and life and health insurance for the poor and urban microfinance for country's thousands of slum-dwellers.

UNI