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Our Bureau

New Delhi, Feb. 21 To provide low-cost credit to low income groups and weaker sections under its financial inclusion programme, the Government today cleared setting up of two funds with a corpus of Rs 500 crore each. The Cabinet on Thursday approved constitution of a Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF).

This is in keeping with the announcement made by the Finance Minster, Mr P. Chidambaram, during Budget 2007-08. The funds would have an initial corpus of Rs 25 crore each. While the Government and the Reserve Bank of India would contribute 40 per cent each to the funds, the National Bank for Agriculture and Rural Development (Nabard) would finance 20 per cent.

According to an official statement, a maximum amount of Rs 200 crore each will be contributed by the Centre to the funds over a maximum period of five years.

FIF would be used for providing funding support for capacity building inputs to business facilitators and correspondents, who would ensure institutional credit as representatives of banks, particularly among weaker sections and low income groups.

The FITF would be used to support user-friendly technology aimed at providing affordable financial services to the disadvantaged sections, the statement added. The fund would also be used for creating a common technology infrastructure with comprehensive credit information, and providing viability gap funding for unproven, but potential technological interventions.

The financial inclusion programme would be implemented and monitored by Nabard and an Advisory Board would be set up to provide guidance on aspects relating to the funds.

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