NDB 'DIVI ARUNA', a Microfinance loan scheme

Promoting the national cause of livelihood development at grass root level through sustainable financial inclusion has always been a key focal area for NDB. The Bank has pioneered many initiatives in this regard truly fulfilling its commitment towards this worthy national cause.

The NDB loan scheme titled DIVI ARUNA "Awakening of lives ", which commenced in June2010, 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.

Although the 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 .It is a scald product in that it does not deal with individuals but with groups .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 DIVIARUNA 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 is 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. Since most DIVI ARUNA borrowers indicate a tendency to graduate to the SME sector within a short period; such savings build up is vital both from a personal and business point of view.

In this regard, it is interesting to note that 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 5 Billion depositors. 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.

To date, NDB has financed projects across a gamut of industries through its DIVI ARUNA loan scheme. These projects 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. As to geographical distribution of projects, the north and east have been predominantly benefited .

The DIVIARUNA initiative will continue to contribute immensely to NDB's objective of financial inclusion and the scheme has also become a tool to inculcate the savings habit among the hard working, underserved yet most deserving economic sector.