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Rise of cashless economy: NBFC-MFIs go high on e-payments

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Portraying a major transition in sync with the “Digital India “drive, 60 per cent  Non Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs) have adopted cashless methods for disbursements.

The transformation of NBFC-MFIs with regards to cashless payment modes has been majorly accredited to the benefits of risk mitigation and inflated operational efficiency that involves revised cash management practices, increased safety and staff productivity.

Reportedly, demonetisation and the Central Government’s consistent push to adopt digital modes of transaction have enabled NBFC-MFIs’ transition to cashless modes.

A recent report by the Microfinance Institutions Network (MFIN) focused on adoption of cash-lite models among MFIs in the country said that over 60 per cent of NBFC-MFIs have adopted cashless methods for disbursement.

The report revealed that in quarter four of FY 2016-17, 39 per cent of total reported disbursements were based on cash-lite transactions.

 “While many NBFC-MFIs already do a significant share of transactions through cashless modes, many other institutions have initiated pilots to analyse the best suitable methods for them. As the microfinance industry moves towards digitisation, we believe it will lead to the achievement of financial inclusion in the true sense through providing seamless and quicker processing of credit to clients along with increasing cost benefits for NBFC-MFIs in the longer term,” said Ratna Vishwanathan, CEO, MFIN.

88 per cent of the total cashless disbursements by NBFC-MFIs were made through National Electronic Funds Transfer (NEFT) / Immediate Payment Service (IMPS) in 2016-17 followed by cheques (50 per cent) and Electronic Clearing Service (33 per cent), the study reported.

Other transaction models adopted by the NBFC-MFIs and clients included, Aadhaar enabled payments, mobile wallet and pre-paid cards.

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