Financial literacy, digital transactions to boost MFIs’ growth

digital banking

devesh_sachdevFusion Microfinance has taken extra-miler steps towards making a difference in the lives of over one million households to inculcate the banking habits of customers. Striving to create a cashless culture in a predominantly cash-based ecosystem, we are putting conscious efforts to create this radical transformation, says Devesh Sachdev, Chief Executive Officer and Director, Fusion Microfinance, in conversation with Elets News Network (ENN).

The Non-Banking Finance Company Microfinance Institutions (NBFCMFIs) registered a robust growth in 2016-17. How promising has been this growth for MFIs?

The key reason for the growth of the sector has been its adaptability to change, resilience in the face of persistent challenges and an ability to maintain high repayment rates of almost 99.5 per cent. Right now, MFIs have reached out to only 10-12 per cent of the households in India which indicates that there is enough headroom for further growth.

Going forward, in my view, this segment’s continued focus on financial literacy by sector’s stakeholders, increased enablement of cash-in and cash-out points in remote areas using biometric authentication and most importantly, growth in digital transaction infrastructure are going to be the key drivers for the NBFC-MFIs sector’s growth.

How significantly is technology transforming the MFIs in India? What technologies are you using in your organisation?

There are many ways in which the technology is transforming the MFIs in India. These include processes that involve managing of entire customer lifecycle – from offering them a convenient banking experience to enabling last-mile connectivity through modes such as tablet and digital banking. Companies are also leveraging automation for driving a faster turnaround of services and making use of cloud computing for the purpose of clients servicing, on boarding etc.

In our organisation, we employ many cutting-edge technologies that include cloud computing among others. Our robust IT infrastructure has enabled us to link more than 95 per cent of our clients with Aadhaar on our database. Besides, carrying out the data analysis of existing clients, we also carry out their ‘Area identification’ through our ‘Area Lucrative Index’ Analysis. Our current Client Contact Tracking Mechanism is very effective and at present, 90 per cent of our customer contacts stay updated in our system. We currently have over 55 per cent of cashless disbursements and we are looking at further increasing its share. We also have digital branches where we operate paperless with 100 per cent cashless disbursements. Last but not the least, another area where we employ technology is the Credit Bureau Auto Check, which helps us in defining the creditworthiness of our customers.

Fusion Microfinance primarily focuses on the poorer section of the society. How challenging is ensuring the services to a section that is said to have low financial awareness?

Yes, that’s true. A majority of people living in rural areas lack basic financial services, having no bank accounts and/or lacking the knowledge to use them. They not only lack in awareness on saving, sending and borrowing money but also on aspects such as financial security and mitigation of financial risks. In addition, women in this segment are generally excluded from the formal financial ecosystem. There is also the problem of lack of valid identification documents/ KYC in this segment. Moreover, the companies operating in this segment have to manage higher operational costs along with risks related to unsecured lending and put in huge efforts to ensure last mile reach. Despite such hurdles, Fusion Microfinance has made extra efforts to make a difference in the lives of over one million households through giving them easy access to financial services.  The company is also striving to create a cashless culture in a predominantly cash-based ecosystem, and to this effect, we are putting conscious efforts towards contributing to this radical transformation in our economy.

Fusion Microfinance takes its Corporate Social Responsibility (CSR) earnestly and contributes towards the development of society and the environment. What services do you offer under your CSR initiative?

We have undertaken several initiatives under our CSR programme. These include various Digital and Financial Literacy Programmes. Further, considering that women in rural areas are often prone to health issues because of inaccessibility to proper healthcare system in their locations, Fusion has started organising health camps for its clients and their families. In these health camps, our attempt is to give them access to Gynaecologists, General physicians, ENT and Eye specialists who are especially made to travel to these villages. We also distribute medicines to the clients thus providing them with complete healthcare solution under one roof. In addition, as part of our livelihood training programme ‘Jivika’ clients are trained in livelihood skills such as paper bag making, tailoring, pickle and papad making etc. We also train and assist them in product packaging and market linkage to enhance their knowledge on selling the products in the right market.

Banking, Financial Services and Insurance sector (BFSI) in India is progressively working towards promoting the women. How is your brand contributing to this cause?

Fusion takes great pride in serving women clients and it’s a matter of great pleasure for us to share that the firm has already played a key role in transforming the lives of one million women clients from across the nook and corner of the country.

Fusion is a frontrunner in promoting the holistic development of women. Through providing easy accessibility to credit, it provides women a means to generate income, which ultimately leads to an increase in their status not only within their households but in the wider community as well.

Some of our key efforts in making women entrepreneurs self-reliant are directed towards increasing creditworthiness of the unbanked segment of the society, driving financial and digital literacy in the remotest of regions. We also strive to inculcate saving habits in the unbanked and underbanked clients along with providing insurance cover to both the customer and her spouse. Additionally, we also provide them with emergency loans to meet adhoc needs of the customers.

In a nutshell, we are contributing in enhancing the sectoral image of MFIs in India by encouraging the women entrepreneurs to participate in the livelihood earning leading to their financial empowerment.

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