Money & Banking

How small borrowers in six villages went digital

G Naga Sridhar Hyderabad | Updated on January 27, 2018

Encouraged by the pilot in Odisha; Bharat Financial Inclusion now going cashless across all its branches

In a first-of-its-kind initiative in micro-finance post-demonetisation, 60,000 small borrowers from six small villages in Odisha are leading the way towards cashless transactions.

This was made possible thanks to a pilot done by Bharat Financial Inclusion (formerly SKS Microfinance) for cashless and paperless disbursals.

“This is helping us in bringing down the loan-processing time from seven days to seven minutes at the doorsteps of the borrowers,” KV Rao, Chief Operating Officer, Bharat Financial Inclusion, told BusinessLine.

The process requires a tablet, and a dongle to recognise the Aadhaar identity and synchronise the credit bureau data and e-sign of the borrower.

“Our field executives, who are called Sangam managers, go to the borrowers with the tab, ascertain their bank-linked Aadhaar number/identity. Once credit bureau rating is established as per existing RBI norms, the loan amount is transferred within minutes to the bank account of the borrower,” Rao said. The primary Know Your Customer (KYC) proof has to be the Aadhaar card or the Voter Id.

There is an internal cap of ₹60,000 for total indebtedness of the borrower, including loans from other MFIs.

The pilot, which was completed in December 2016, was implemented in six branches that had Aadhaar-linked loan account members in locations such as Balasore, Balugaon, Berhampur, Bhadrak, Hinjilikattu, Keonjhar and Kurdha.

National roll-out

Encouraged by the response, Bharat Financial is expanding the process across all its branches. “The process will be completed by June this year,” Rao said.

On the advantages, Rao said it will increase the efficiency of operations besides helping drive cashless transactions post-demonetisation. “The cost of operations too will come down over a period of time,” he added.

The field staff have already been trained in the use of the devices as it had started rolling out tablets for its staff in 2015 itself.

Bharat Financial is the second-largest micro-finance company in the country with a gross loan portfolio of ₹8,531 crore, 66 lakh members and 1,391 branches.

Lending at 19.75 per cent, the lowest rate in the sector at present, it will become the first MFI to go fully cashless and paperless if the digitisation drive is completed as planned.

Published on January 26, 2017

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