Leveraging ICT for Micro-finance

1. Leveraging ICT for Micro-finance Subodh Gupta Safal Solutions Pvt Ltd System Automation in Finance and Livelihood

2. Outline • Deterrents in scaling up of Micro-finance • Leveraging ICT to reduce deterrents • Automation in MFIs & LPOs • SaralMAP – Case I • SafalPACS – Case II • BASIX ITSL: Sudama Card – Case - III • Learning Systems Automation in Finance and Livelihood

3. Deterrents in scaling up of Micro-finance • Thinly spread out operations • Smaller size of operations • Higher transaction cost • Multiple models of Micro-finance • Higher risk in agriculture loan • Clients often illiterate, socially and economically disadvantaged Systems Automation in Finance and Livelihood

4. Leveraging ICT applications to reduce deterrents • Use of automation in capturing, transferring and processing of transactions • MIS to meet timely information needs of the management, governance and the customers • Development of flexible financial products combining saving, lending and insurance that meet the requirement of customers and also reduce the cost of transaction • Automation of retailing of financial services of multiple providers through single delivery point Systems Automation in Finance and Livelihood

5. SaralMAP PRADAN – Case I • PRADAN is a Livelihood Promoting Organization (LPO) and operates through 19 teams and 3 support cells spread over 7 states. • PRADAN wishes to monitor 150 indicators of SHG promotion, Livelihood promotions and Infrastructure creations • Data comes in Excel sheet from 22 teams and is then manually aggregated into master excel sheet Systems Automation in Finance and Livelihood

6. Continued • Problems with the existing systems • Human errors while entering data again and again • Problems in tallying numbers • Data of many indicators not reported • Valuable time of meetings spent in correcting the data • Use of names differently – Chaibasa some times called West Singhbhum Systems Automation in Finance and Livelihood

7. Continued • SaralMAP – an affordable solutions for PRADAN • Six data panes designed after system understanding and discussion with PRADAN senior staff. They capture 60 indicators. • It has a data entry module at the team level these data can be updated periodically. It generates one excel sheet to be sent to HO • There is data consolidation module that consolidates these 60 indicators • SaralMAP is ready with the data for the meetings • It also provides online analytical tools for min, max, average, standard deviation Systems Automation in Finance and Livelihood

8. SafalPACS – Case II • District Central Cooperative Bank, Bidar has 171 PACS. Average accounts a PACS handles is 800-1000. All the books are maintained by CEO of PACS manually • PACS delivers Kishan Credit Card loan, SHG and BDP loans. It also provides fertilizers and grocery items like wheat, sugar and K oil. • All the problems of manually maintained accounts – time spent in correcting, reports not ready on time etc Systems Automation in Finance and Livelihood

9. Balance sheet P&L Trail Balance Ledger Vouchers Case II Operation Diagram Down load data When needed On dial up line SafalPACS @ DCCB Branch All financial transactions SafalPACS @ PACS Systems Automation in Finance and Livelihood

10. Case II continued • SafalPACS is a package where there are two sets of software – one sits on iStation a hand held device and the second sits on a PC located in the Bank branch of DCCB. • Day to day transactions are entered online on iStation and monthly balance sheet, P&L, Stock book are printed in the PACS • For SHG, Digitized Demand information (DIDI) sheet is printed and updated at PACS level • Depending on transactions, data is transferred on dial up line to DCCB branch PC. Systems Automation in Finance and Livelihood

11. Case II continued • Advantages of SafalPACS • Affordable solutions for automation at PACS level • Low power and low maintenance requirement and low bandwidth, Hence one need not wait for long • Advantage of automation – timely reports, elimination of human error Systems Automation in Finance and Livelihood

12. BASIX ITSL: Sudama Card- Case III • Objective: Delivering credit to the poorest in commercially viable way • PCO booth operator is authorized to deliver credit as per a guideline and capture the transactions through a card reader and a smart card named as Sudama card of the borrower Systems Automation in Finance and Livelihood

13. BPA Bank Account FAMIS2000 Update Server Sudama Server Card fees Repayment Loan Definition Approval BASIXPOT Sudama Card Disburse Loan Case III Operational model Systems Automation in Finance and Livelihood

14. Case III continued • Advantages – • Delivery channel cost is reduced and capacity of the channel enhanced • Reduced the cost of transaction • Creates platform for delivering innovative financial products combining credit, deposit and insurance Systems Automation in Finance and Livelihood

15. Learning and Conclusion • Making of micro modules and loading them on thin devices that needs less power, less maintenance and low bandwidth • Develop innovative financial products combining deposit, credit and insurance for better margin • Automation for retailing the financial services through PCO booth has more relevance in future • Braking of the processes and braking down the technology provide the right mix for micro finance recipe Systems Automation in Finance and Livelihood

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