Pygmy: Small-scale Lending Scheme from India

The Syndicate Bank in Karnataka State, India, has successfully implemented its Pygmy Deposit Scheme, which caters to small-scale savers and borrowers. The "mimicry" aspect of this scheme lies in the small size of the amounts collected by field agents on a daily basis from the doorsteps of customers (street vendors, labourers, village traders).

The minimum required deposit was initially a quarter of a rupee per day. Interest rates paid on these deposits are lower than the rates on regular savings deposits on the grounds that collection costs are high and that there is no alternative use for such small sums anyway, other than their remaining idle.

Furthermore, from the point of view of the targeted population, there are two other aspects of the scheme which still make it attractive, despite the low deposit rates. One is that local deposits are used for local investments. The other is that credit and technical assistance facilities are made available to small-scale farmers, retail traders, transport operators and other progessionals.

Note:Syndicate Bank discontinued this scheme in the late '90s

Hari Srinivas - hsrinivas@gdrc.org
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