Hero Cycles launches new Micro-Finance scheme

In India, a car or a two wheeler is a means of empowerment to the middle and lower middle classes respectively, due to the sheer mobility these machines offer. On a similar note, the ubiquitous bicycle is a means of mobility for those sections of Indians, who cannot afford a two wheeler or a car.

It is for this very reason that governments across many developing nations choose to empower their financially disadvantaged citizens with bicycles. In India, many state governments offer bicycles at subsidized prices/free of cost, to students in rural areas, for whom going to school without access to public transport is a major challenge. 

Micro-finance, for which Bangladeshi social entrepreneur Muhammed Yunus and Grameen Bank, received a Nobel Peace prize, is a method of financing those sections of people who would otherwise have no access to institutional credit. Micro-finance, like its name suggests involves small sums of money, which are often considered to be too small or trivial for bigger financial institutions such as banks to consider as viable lending opportunities. 

Micro-finance has been known to empower financially disadvantaged sections of people across developing countries by eliminating money lenders, who charge exorbitant rates of interest. Also, micro finance has been seen to foster a spirit of entrepreneurship among the urban and rural poor by eliminating the biggest roadblock to entrepreneurship: lack of access to timely credit.  

Indian bicycle maker Hero Cycles, which is the world's largest manufacturer of bicycles, has now come up with a unique micro-finance initiative to make buying a bicycle easier for the teeming millions of Indians, for whom affording a bicycle continues to remain a pipe dream. 

Hero Cycles has tied up with financial institutions to disburse loans through the micro-finance route for the purchase of bicycles. This initiative is targeted at the weaker sections of the Indian society and a pilot project is already on, in the states of Gujarat and Maharashtra.

Fullerton India, a non banking financial corporation (NBFC) will provide finance in the aforementioned states. Partial and full finance schemes, at competitive rates of interest will be made available to prospective buyers of Hero bicycles through the micro-finance model of lending.

This project is likely to roll into other Indian states in the months to come. Also, it may be noted that micro-finance schemes for buying bicycles has existed for quite some time in India. However, Hero's initiative is one-of-its-kind as it represents the first instance of a bicycle manufacturer tying up with micro-finance institutions for financing people.