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Shobha Kannan

Mumbai, Aug. 29 YES Bank is looking at using mobile phone as a platform to enhance the reach and bring down the cost of micro-finance.

The bank along with Accion, the US based micro-finance agency, plans to tie up with a global software provider in order to find a software solution for the same. “We will pass on the cost benefits to our customer by bringing down the interest rates on micro-finance,” said Mr Somak Ghosh, President, Corporate Finance and Development Banking, YES Bank.

“We are in advanced stages of talks and are hopeful of launching the product by the end of this year or by March 2008,” he said. He felt it would bring down the cost of operations by about 30-35 per cent. The bank also plans to lend it to other banks and micro-finance institutions.

The bank is looking at a three-way partnership to develop the technology. “While Accion will provide the necessary expertise, the bank will provide investment and the required testing ground for the product,” said Mr Ghosh. The technology platform will not only deal with issues of risk assessment but will also enhance credit delivery.

Mr Ghosh felt that the productivity of individual loan officers would be doubled using this technology thereby enabling the achievement of scale much faster.

YES Bank launched direct micro lending to its urban clients in July this year. The bank has 30 clients and the size of loan ranges from Rs 8,000-Rs 25,000 for a period of eight months.

The bank also plans to start individual lending in rural areas by September this year. The loan size for rural customers will be lower as compared to that for urban clients. Though the bank was not willing to disclose the rate of interest charged on such loans, it said the margins would be similar to that from other businesses such as corporate lending at about 2-2.50 per cent.

The bank also plans to launch more products such as medical loan, emergency loan, special events loan and home improvement loan from the second and third year based on its experience and the track record of its clients.

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