NDB’S DIVI ARUNA - a microfinance loan scheme stimulating rural livelihood development
The NDB, which is promoting the national cause of livelihood development at grassroots level through sustainable financial inclusion, says its revolutionary loan scheme titled DIVI ARUNA -‘Awakening of lives’ has been very successful.Started in June 2010, this scheme is aimed at developing livelihood for prospective entrepreneurs not within the mainstream of banking. “The philosophy for introducing this scheme underlies the thinking that; in the economic resurgence that will generate many growth opportunities - where industries like fisheries, agriculture and infrastructure development are poised to take off, the improvised and marginalized individuals in the rural sector may lose out, if not given a helping hand at inception,” according to a media statement issued by the NDB.
The bank said that with the socio-economic boom subsequent to the cessation of a 30 year civil war, it has intensified its growth strategies towards the rural sector which essentially forms the backbone of the country’s economy. “Considering that over 80 per cent [i]out of Sri Lanka’s population of 20 million consists of rural population, NDB’s focus and emphasis on the rural econo- mies is both vital and timely,” it said.
Though the DIVI ARUNA project initially commenced in the North and East the scheme now extends to the South as well. It has the significance of a microfinance project geared to livelihood development.
The primary feature of this initiative is that no collateral is taken as security for the loans. Loan approval is primarily based on the bank’s evaluation of the applicant’s vocation and its confidence in the success of the enterprise.The DIVI ARUNA loan scheme also aims to promote a savings culture while including the marginalized and the overlooked into the main banking stream. Supplementing the DIVI ARUNA loan scheme, is an investment-based savings scheme where it’s mandatory for the borrowers to contribute an additional agreed amount every month towards a savings build up which could be used as collateral for any future expansion of business activity.
According to a recent study conducted by the Lanka Micro Finance Practitioners Association, micro finance institutions in the country account for deposits to the value of over Rs. 55 billion with approximately five million depositors. The said sum also includes the loan security deposits made by the borrowers of these institutions. “Since many of them live from day to day, usually spending more than they actually earn, the DIVI ARUNA scheme gives the option of saving a specified sum monthly. The scheme has not only uplifted their standard of living and given them confidence to enter the mainstream of banking but has also offered them a wide array of value additions such as ATM cards thereby instilling in them a sense of belonging to the community,” the statement added.
Projects financed through this scheme range from purchasing boats, equipment and nets to providing working capital for women engaged in making maldive fish, financing tractors for farmers, purchasing equipment for pottery makers and livestock for dairy industry as well as granting financial assistance for infrastructural improvement .
An analysis of the projects funded up to date under the scheme reveals that the fisheries sector has accounted for the majority of loans granted while dairy and agriculture sectors have also been given equal prominence. In addition, traditional crafts such as pottery and cane products have also benefited from the scheme.
“It is envisaged that DIVI ARUNA scheme would be further expanded and streamlined to include targeted market segments such as small scale agriculturists, cultivators and milk farmers who already maintain supplier linkages,” it said.