Malappuram: A bank in Kerala has allied with the rural poor to free them from the grip of moneylenders, heralding a unique era in Indian banking.

The 'Snehagramam' (Friendship Village) scheme of the South Malabar Gramin Bank, headquartered here, offers to pay back debts the rural poor owe to moneylenders.

The bank not only provides funds to clear the debts but also offers loans to start small ventures. The loan comes without any collateral.

"Studies conducted on farmer suicides prompted the bank to devise such a scheme. Many suicides were due to harassment byf private moneylenders," T.S. Madhusoodanan Nair, the bank's general manager, told IANS.

The scheme, which was started on an experimental basis in November 2007 in eight branches, is being implemented in all the 225 branches this financial year.

"Usually bank loans are big amounts. Rural people need only nominal sums but they need it fast. For this nominal amount they are hesitant to approach banks. Moneylenders know the pulse of a village and the villagers' needs. The villagers get hassle-free loans from moneylenders," says P. Aravindan, a senior manager in the bank.