ShalIni Singh of the Hindu has filed a report on Nabard’s overly generous act of giving money to a particular foundation in Uttar Pradesh. The report is an indictment of the way the Nabard’s fund is being distributed. The report is being produced here Of total grants of Rs 7.88 crore disbursed to 303 NGOs in Uttar Pradesh in 2012-13, Janhit Foundation alone secured Rs.6.01 crore. A meager Rs.1.87 crore accounting for an average grant size of between Rs.8,000 to Rs.80,000 was disbursed to the remaining 302 NGOs.
New evidence reveals a pattern of grants by the National Bank for Agriculture and Rural Development (Nabard) to dubious NGOs that are profiting from the rural poor instead of uplifting them. These NGOs have all been found to be connected to those managing Nabard’s affairs, either in the board room or in the Finance Ministry.
Janhit Foundation, Lucknow, and its banking partner Shivalik Mercantile Cooperative Bank (SMCB), which are linked to former Secretary, Department of Financial Services (DFS), Ministry of Finance, D.K. Mittal — who, in his official capacity, was a strong influence in Nabard’s decisions until recently — have been found to be the biggest beneficiaries.
Investigation reveals that Mr. D. K. Mittal’s brother, Dr. Sanjeev Kumar Mittal is on the Board of Shivalik Bank. During his tenure as DFS Secretary, Nabard, Mr. Mittal permitted Urban Cooperative Banks, which are under the RBI’s supervisory jurisdiction, to promote and finance Joint Liability Groups (JLGs) in rural areas. Shivalik Bank went on to become the lone beneficiary of this concession.
Janhit-Shivalik’s abnormal commercial appetite is laid bare by a Nabard Inter Office Memorandum which documents the fact that Shivalik Bank mobilises the savings of the poor at a meager interest rate of 3%-4% while lending this money to an urban clientele at a whopping 24%.
Despite its lucrative business model, loans to its associated and poor Self Help Groups (SHG’s) which are collectively called Joint Liablility Group (JLGs ) – are disbursed at a high 18%, while its group members bear a staggering 24% interest rate, including the 6% service charge paid to Janhit.
