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LATEST NEWS UPDATES | Government looking for overall financial inclusion through Aajeevika Development and Financial Corporation by Urmi A Goswami

Government looking for overall financial inclusion through Aajeevika Development and Financial Corporation by Urmi A Goswami

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published Published on Sep 10, 2011   modified Modified on Sep 10, 2011

In an attempt to bolster its aam aadmi image, the government is setting up the Aajeevika Development and Financial Corporation, a financial institution to ensure easily available funding for self-help groups under the National Rural Livelihood Mission.

Problems in accessing credit for families below poverty line have been a major hurdle for the livelihood mission. The rural development ministry is in the process of inter-ministerial consultations on the proposed financial institution and is expected to seek Cabinet approval by mid-September. The rural development ministry, which is promoting the Aajeevika Development and Financial Corporation (ADFC), plans to formally launch the financial institution on February 2 next year, which is the Mahatma Gandhi National Rural Employment Guarantee Act Day.

Aajeevika aims at eliminating poverty by enabling the people below poverty line, particularly women, to access financial resources at affordable rates and to ensure sustainable livelihoods.

Financial inclusion or access to saving and credit services from formal financial institutions like banks for all below poverty level households is key to help bring at least 7 crore rural households out of abject poverty. The ADFC will give credit and subsidy to self-help groups and federations, particularly those run by women.

The successful roll out of the rural livelihoods mission, an important election manifesto promise of the Congress, requires access to funds. The party had pledged that "at least half of the country's rural women population will be enrolled as members of self-help groups linked with banks and that they will get loans from banks at moderate interest rates."

However, on the ground this has been a problem as banks have failed to disburse funds to self-help groups. As against an annual demand of Rs 40,000 crore, banks were able to give out only Rs 14,000 crore in the last fiscal.

The proposed ADFC will be able to step in where the banks have failed. It is geared towards promoting financial inclusion for self-help groups of rural women below poverty line.

It will be set up as a not-for profit company, on the lines of the National Skill Development Corporation. The initial funding of the corporation will be to the tune of Rs 3000 crore. Of this, Rs 500 crore announced by the finance minister in the Budget.


The Economic Times, 10 September, 2011, http://economictimes.indiatimes.com/news/economy/indicators/government-looking-for-overall-financial-inclusion-through-aajeevika-development-and-financial-corpo


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