“Khatamband†Scheme to protect & promote golden hands
GreaterKashmir.com (press release), India
SAJJAD BAZAZ
In Kashmir handicrafts sector plays a vital role in providing employment to thousands of persons and thousands of families are directly dependent on it for their livelihood. The turnover of Kashmiri handicrafts runs into hundreds of crores annually. But lack of access to adequate and timely financial resources has pushed many unique handicraft products to the level of extinction. One of the key areas, as far as financial resources is concerned, is the banking industry, which has been very conservative in allowing credit flow to the artisans
So, far want of financial assistance, the artisans have suffered. This is despite the fact that Artisans Credit Card (ACC) scheme was introduced in April 2005 to ensure timely and adequate availability of working capital to the artisans. Under this scheme individual artisans are eligible to get a hassle free loan of Rs.25,000 and a group of artisans under the Self Help Group can obtain a loan up to Rs.2,00,000 at cheaper rate of interest. But the banks haven’t played active role in selling this product at a large scale.
In other words, the banking community has failed to protect and promote the golden hands of Kashmiri artisans. Take the case of languishing handicraft “Khatambandâ€. This six centuries old handicraft unique to Kashmir is the traditional technique of paneling the ceiling with wooden pieces arranged in intricate geometric patterns. Even as there has been significant increase in demand for Khatamband in the State on account of gradual transition in its use from shrines and official buildings to middle class homes, the number of craftsmen associated with the craft has dwindled over the years. Main reason for this situation has been the financial constraints faced by these artisans. At present, there are only about 320 craftsmen & 99 registered units of Khatamband localized around Safakadal, Iddgah & adjoining localities of Srinagar.
While taking note of the danger of extinction of this traditional heritage craft, the J&K Bank under its initiative towards micro-credit programme, ventured to provide much needed fillip to this craft by tailoring an exclusive product “JK Bank Khatamband Financeâ€. The main objective of the product is to extend means of providing easy and timely finance to the craftsmen associated with Khatamband.
The Khatamband finance scheme has been designed to meet the working capital requirements of the craftsmen and shall be in the nature of Cash Credit facility on revolving basis. All artisans irrespective of their location, associated with the Khatamband trade are eligible to avail the loan facility. However, the artisan must be between 18-55 years of age.
As far quantum of finance is concerned, the maximum loan granted is Rs 1.00 lac per Unit. As per the scheme, a Khatamband unit comprises of at least 4 craftsmen. The loan amount shall be worked out according to the estimation of monthly cost of Khatamband per craftsman/ month. This includes Rs.5, 000 for 10 sq.ft of raw material (wood) per craftsmen / month. Rs. 6,000 have been worked out as labour charges per head/ month and Rs.1,000 has been estimated as miscellaneous expenses per head/ month. This means, an mount of Rs.12,000 have been estimated as total requirements per head/month.
While giving further calculations, the scheme has projected an income of Rs.5,500 per craftsmen per month. This has been calculated on the basis of a projected turnover of Rs.17,500/- per craftsmen (Monthly production of 125 sq.ft per craftsmen per head at Rs 140/-).
On the basis of above estimation, the artisans shall be granted financial assistance under the scheme. However, they have to bear a margin of 20% of the total estimated amount. If the bank sanctions Rs.1.00 lac in favour of a unit, the artisans associated with the unit have to contribute Rs.20,000 and Rs.80,000 shall be granted as loan by the bank.
The bank has also taken special care of the artisans by way of interest rate component. Even as the scenario vis-Ã -vis rate of interest on loans has changed and this is the time of high interest rate on loans, the scheme carries interest rate of 12% on loans upto Rs. 50,000 (PLR-1 %) and 12.50% on loans above Rs. 50,000 to Rs 1,00,000. However, Interest shall be applied with monthly rests. It is notable that the borrowers have to pay processing charges of 0.50% of the amount sanctioned with a minimum cap of Rs.25/- at the time of applying for the loan.
The loan shall be secured primarily through hypothecation of stocks (Raw materials, semi- finished and finished goods) created out of Bank finance. In addition to this, the artisans have to give collateral security in the shape of third party guarantee of two persons, preferably fellow unit-holders.
Since the nature of facility is cash credit on revolving basis, the schemes envisages that the borrower has to bring the account into credit at least once a year. There will be review of the account / limit of the loan granted at the end of the year. The limit shall be revised, cancelled or enhanced on the performance of the borrowers.
As far as legal documentation is concerned, the product has been simplified and restricted to minimum possible level. This includes D.P.Note, Hypothecation Agreement, Letter of Guarantee and an affidavit that the party is not a defaulter with any bank/ branch of the bank. Involvement of third parties for documentation has been avoided in the scheme.
The Khatamband Finance scheme is sure to provide a financial relief to the craftsmen and also to save this traditional heritage craft of Kashmir from languishing. The product is going to play a vital role in protection and promoting the golden hands of Kashmiri artisans involved in the trade.