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Tuesday, July 31, 2001

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U. K. fund for poor launched

By Our Staff Reporter

HYDERABAD, JULY 30. A Financial Deepening Challenge Fund (FDCF), sponsored by the U.K. Government's Department for International Development (DFID), was launched here on Monday by Deloitte Haskins and Sells, fund managers in India.

The FDCF is intended to improve the access of poor and middle income groups in developing countries to financial services such as credit, savings, leasing, insurance and investment capital.

The FDCF consists of a fund of 15 million pound sterling established by the British Government. This would be used to give one-time grants, ranging from 50,000 to 1 million pounds sterling, to established profitable organisations with schemes to reach financial services to people and areas where normally these would not be extended.

Clarifying that this fund is not intended to be a charitable grant, Mr. Jeremy Swainson, Project Director, Enterplan, said the purpose of the grant was to make previously neglected areas and populations viable and profitable for private sector investment. In effect, this grant would cover the ``risk'' that they would undertake in extending financial services to economically weak sections, who would generally not qualify as credit-worthy.

While NGOs are encouraged to apply for the grant, they must come in alliance with established profit-making organisations with good financial health. Money would only be awarded to those projects which are self-sustaining and could continue to function after the grant was over, he said. NGOs and others with innovative ideas might also be helped to link up with appropriate financial organisations by the fund managers, but these schemes should not be donor-dependent.

Giving examples from Kenya, where the pilot project was launched two years ago, Mr. Swainson said a co-operative merchant bank had been given a two-year grant to develop an IT franchise for primary cooperative societies to enhance their competitiveness and to ensure greater security to their members.

Similarly, an alliance between a leading Kenyan bank and a health insurance company had managed to develop health insurance schemes which were targeted primarily towards the poor. A dairy micro- enterprise project which proposed to provide comprehensive financial services to small milk producers too secured a grant.

At present this project was being launched in Andhra Pradesh and Madhya Pradesh. Proposals, in the form of ``concept notes,''should be submitted by August 31, to Ms. Chandrika Shah, Deloitte Haskins and Sells, Mafatlal House, Backbay Reclamation, Bombay 400 020, email: chandrika.shah@deloitteindia.com.

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