Empowering Rural Schools through Finance

If higher education is what sets up the trajectory of an individual in the society, it is the schooling and quality of it that sets up the course. The merits of providing good education at the grassroots level far supersede any justification there is to lay little stress on it.

With the rural hinterland comprising of a significant chunk of the populace, schools in the region are the crucial change-agents that could make or break and perhaps define the path to inclusion for years to come.

The KGFS-RPSNE (Rural Private Schools Network Enterprise) combine through their pilot in the Thanjavur region have tried to empower the private schools in the region in providing better education by providing financing facilities.

The product launched on 1st Oct 09, enables the availing school to take up a term loan to improve upon the school’s infrastructure and other facilities. The loan, which is given for a minimum 1-year and maximum 3 years provides for a loan amount which varies from 40 percent to 100 percent of the annual surplus assessed depending upon the duration.

The initial due diligence to assess eligibility of a school to avail loan is done by the KGFS-RPSNE team. RPSNE measures various parameters like teacher quality, study materials, training levels etc. After a loan is provided RPSNE continues with its assessment of the availing school. KGFS on the other hand arranges the financing of the loan to the eligible school.

To arrive at the loan amount KGFS uses an in-house customized template to compute the annual surplus of the school. A collateral and a personal guarantee from one of the trustees of the school back the loan amount.

Currently the product is rolled out in the Pudhuaaru KGFS region, with plans to extend it to other KFGS regions in Dhanei and Sahastradhra.

To know more about this product please contact Arun Vats (arun.vats [at] ifmr.co.in), IFMR Rural Finance team.