insights success's exclusive edition of 'The Most Trusted Microfinance Companies , has interviewed the exemplary leaders of these social business enterprises
4. Editor’s Note
he role of microfinance in the upliftment of
Tfinancially excluded sections of the society is
immense. Being the world’s sixth-largest
developing economy and on its way to becoming a
developed economy, India’s central bank comprehends this
astutely.
th
In this regard, March 14 , 2022, will be seen in the future as
the opening up of a golden chapter in India’s microfinance
growth story. On this very day, the Reserve Bank of India
(RBI) came up with new directives for microfinance
lending. RBI further stated that all banking and financial
entities, including Banks, Non-Banking Financial
Institutions (NBFCs), and Microfinance Institutions (MFIs),
will be subjected to these same regulations.
RBI also redefined microfinance loans as ‘collateral-free’
loans granted to any household with an annual household
income of rupees three lakhs, erasing the earlier rural-urban
divide and treating all these households qualified for the
MARCHING
INTO THE
GOLDEN ERA OF
MICROFINANCE
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FIs),
’
d
ban
microfinance loans under these new regulations. The
guidelines are tremendously positive for the entire
microfinance industry and the millions of borrowers
depending on the industry to fulfil their basic financial
needs. It will also expand the microfinance market for the
players, creating a level playing field.
Battling various crises, including the COVID pandemic, the
industry is again showing the signs of recovery with higher
disbursements by microfinance players in the two quarters
of 2022 than at the pre-COVID level. Also, the collection
efficiency of these players was enhanced by reaching
ninety-six to ninety-eight per cent level by February 2022.
This recent growth could be attributed to the scope,
efficiency, and reliability achieved by some of the best
microfinance institutions in the country. These MFIs were
not only adhering to the strictest of norms when it came to
lending and collection but also showing other players how
to conduct the social business of poverty alleviation. And
with the RBIs new policy, these MFIs benchmarks will be
emulated by all the other players in the industry.
To bring out and celebrate the stories of these exceptional
MFIs, Insights Success’s exclusive edition of ‘The Most
Trusted Microfinance Companies’ has interviewed the
exemplary leaders of these social business enterprises and
depicted their successful achievements against all odds in
the following pages for you.
Also included in the edition are two trendy articles on the
microfinance sector, curated by our in-house editorial team.
Let us march into this upcoming golden era of Indian
microfinance together. Flip on the pages, read, learn, and
enjoy!
Abhishek Joshi
Deputy Editor
abhishek.joshi@insightssuccess.com
7. e
T E N T
A r t i c l e s
Belghoria Janakalyan Samity
Social Upliftment through Microfinance
16
Inditrade Micro nance
A Quest to make Micro-Lending Better
24
Pahal
Banking without Boundaries
32
20 28
Micro-Tech
How can Technology
Enhance Access to Microfinance?
Rural Insights
How Micro Finance is
Changing the Rural Landscape?
9. Pvt. Ltd.
8/75953
d.
Management Brief
Company Name
Rakesh Kumar,
CEO
Headquartered in Ahmedabad, Gujarat, Light Microfinance provides
micro and meso finance products and services with gender and poverty-
focused programs, targeting rural and peri-urban areas, with a specific
focus on poor women.
Light Microfinance
Private Limited
Bishwajit Das,
Founder and CEO
BJS uses Microfinance as a tool for poverty alleviation and the
empowerment of women of the poorest section of the society.
Belghoria Janakalyan
Samity
Anil Kothuri,
MD and CEO
Fedbank Financial Services Ltd (Fedfina) caters to products like Gold
Loan, Home Loan, Loan Against Property (LAP) and Business Loan.
FedBank Financial
Services Ltd.
Sudip Bandyopadhyay,
Director
Inditrade Capital Ltd. is focused on ‘Financial Progress’ and catering
to the underserved and under-serviced segments of the population
Indi Trade
Purvi Bavsar,
Managing Director
Pahal Financial Services provides microfinance services to low-
income households.
Pahal Financial
Services Pvt Ltd
Mr. Vivek Tiwari,
MD, CEO and CIO
SATYA MicroCapital Limited is emerging as one of the fastest-
growing Highly Technology-driven Micro Finance Institutions in
the country.
SATYA MicroCapital
Limited
Malkit Didyala,
Co-Founder and COO
Sindhuja Microcredit (Sindhuja) is a new generation Micro Finance
Company which offers credit products like Micro Finance and Micro
Enterprise Loan, insurance, pension and other services to its customers.
Sindhuja Microcredit
Pvt Ltd
The Most
Trusted
Companies
MICROFINANCE
10. EnlighteningHomes
Founders Deepak Amin, Rakesh Kumar and Aviral Saini interacting
with their women customers at Kaniyal village in Gujarat.
Light
Micronance
12. Leaving their daily chores, women of Kaniyal village
in Gujarat’s Kheda district were today stealing
some time for themselves. These few hours were
away from their daily struggle of life, taking care of home,
children, farm and cattle. There was so much to talk and
discuss with the guests from Ahmedabad that these women
arrived before time.
Most of them were young and beaming with confidence.
There was a smile of accomplishment. When 25-year-old
Baraiya Vinaben Chaatrasinh was asked what’s so
important about today’s meeting, she said, “I want to ask
them if the loan amount could be increased next time. When
will they start giving loans for other purposes like buying a
smartphone, motorcycle and building a house?”
The Light Microfinance founders Deepak Amin, Rakesh
Kumar and Aviral Saini encourage these women to share
their thoughts, grievances and opportunities. The three
founders try to keep their pulse on the ground with their
clients. The visits are like a family get-together where trust
is paramount and everyone can talk freely. “We are field
persons and love to engage with our clients. The feedback is
raw and straight, which we respect and want. It helps us to
look for new engagements and new opportunities for
expanding to new areas,” says Deepak.
Microfinance in India is playing a vital role in rural
women’s empowerment. Despite challenging times like
COVID-19, the rural women workforce recorded 9.2%
growth in 2021 compared to 2020 and microfinance played
a significant role in enabling that. Light Microfinance client
Sheetal Ben (25) is one of them.
She says, “My kids are one and 3-years-old, so I wanted an
opportunity where I could work from home and not
compromise with my daily chores.” She and her
companions Kamla, Sajan and Jamili took a loan of Rs
60,000 each to buy milch cattle and supplement household
income for their growing needs like children’s education,
health, food, etc.
These women attribute this empowerment to Kalpesh
Kumar, senior field executive, who introduced them to an
opportunity with Light Microfinance. They say he instilled
confidence in them and explained the working of
microfinance in detail. What attracted them most was
doorstep delivery for everything. “The paperwork and
instalment collections are all done from within the village
or at the doorstep of our house and we don’t have to waste
any extra time to visit any office. It’s a big relief,” women
added.
Ahmedabad-based Light Microfinance (Light) is a privately
held NBFC-MFI registered and regulated by the Reserve
Bank of India. Today, it caters to over 3.09 lakh borrowers
with a wide array of products. They are serviced through
125 branches across 68 districts of Gujarat, Rajasthan,
Madhya Pradesh and Haryana.
Backed by three leading European impact investors, Nordic
Microfinance Initiative, Incofin and Triple Jump, Light’s
footprint is expanding and its gross NPA is lowest among
the microfinance industry.
Light’s CEO Rakesh Kumar says, “Motivated employees,
customer-centric products, unique credit underwriting and
massive technology intervention are key factors for Light’s
growth. Our employee and customer selection are very
rigorous and those selected get a unique experience with the
company. Light is an attractive place for field executives for
one of the best compensation, local hiring, growth
opportunities and work-life balance. On the back of strong
credit underwriting, the company provides higher ticket
loans with a convenient EMI size and monthly repayment
frequency to its qualified borrowers. Light is typically the
preferred lender to its borrowers wherever it operates.”
According to microfinance industry body MFIN
(Microfinance Institutions Network), as of Sept 30, 2021,
3.1 crore clients have a loan outstanding from NBFC-MFIs,
which is 3.2% higher than clients as of Sept 30, 2020. The
aggregate GLP of MFIs is Rs 81,408 Cr as of Sept 30,
2021, including an owned portfolio of Rs 71,010 Cr and
managed portfolio (off BS) of Rs 10,398 Cr.
Light’s CFO Aviral Saini says, “In an Industry where
weekly repayments account for 43% of the disbursements,
Light’s unique service proposition includes hassle free-
renewal process and flexibility in repayments. We provide
higher ticket loans to customers if they have sufficient cash
flow and good credit record”. The company uses AI
(Artificial Intelligence) and ML (Machine Learning) for
credit underwriting and operational insights like attrition
prediction, collection, and loss forecasting. Light
Microfinance was one of the first MFIs to build an in-house
The Most Trusted Microfinance Companies
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GPS-enabled end-to-end mobile app in 2014 and the first to
adopt cloud for its core loan management software. Light
has been investing in innovative and leading-edge
technologies and processes since its inception. The
company’s growth with one of the best asset qualities in the
industry is a result of continuous and long-term investment
in technology, systems and people.
The lives of women associated with Light Microfinance
have seen a significant improvement that includes building
pucca houses, financing children's education, regular
income to support uncertain times like the pandemic, to
name a few. The experience of these women with the
company has been excellent, according to them. Customers
are given top priority at the company. As a result, many
borrowers are either repeat customers or are in talks with
the company to take another loan once they have finished
the current loan.
During the ongoing COVID-19 crisis, the company focused
on business fundamentals, technology led interventions and
responded to problems proactively. It retained all its
employees and provided them with the perks and incentives
to keep them motivated when the industry saw shedding of
staff.
“It feels like a family at Light and the last two COVID-19
years have strengthened this belief. Since 2020, when the
lockdown was announced, I would hear stories of pink slips
being handed over from family and friends. Still, my family
and I had a sound sleep with no fear of job loss,” says Jigar
Jodhani, working as an Assistant IT Manager with the
company for the last six years. Jigar defines the work
environment as exciting with ample opportunities to grow.
Light’s inception story is as intriguing as its journey.
Deepak spent a lot of his childhood time in his ancestral
village in north Gujarat and has been a witness to financial
and livelihood hardships.
From the 1980s to the late ’90s, Deepak worked in
Microsoft at the US head office in Seattle. He was closely
Management team of Light Microfinance.
14. involved with various international charities and NGOs but
felt he wanted to do more where he was directly working in
the field with the beneficiaries. He came back to India ready
to take the plunge with constructive solutions.
He felt the need to contribute in a scalable manner and
adopt a model which is sustainable. Given his role as a
technology advisor to Noble laurate Dr Muhammad
Yunus’s Grameen Foundation, he felt starting a
microfinance company in India would help him to impact
lives of economically weaker women directly.
Deepak says, “We wanted a model that was empowering,
sustainable and scalable. It should have financial discipline
concepts like budgeting, spending judiciously, repaying,
etc., which is missing today in this segment. I don’t blame
people for lack of financial planning because it’s never
taught. We learn it as we grow much later in life. Besides,
such concepts are difficult to practice and easy to preach
with irregular incomes.” That’s when he got convinced that
microfinance was a compelling model to address the needs
of the financially excluded segments of India.
Deepak says he is fortunate to have a core founding team in
Rakesh and Aviral and a world class management team. The
partnership between the three is now over a decade old and
the management team at Light Microfinance has one of the
best talents in the industry.
Rakesh says, “What I like about Deepak is that he is clear
with the company’s roadmap. He brings lots of insights
from his all-around experience of setting multiple
enterprises particularly in technology, while my
engagement is focussed on execution, team building, setting
system and processes for scaling.” Rakesh is a postgraduate
from the Institute of Rural Management, Anand (IRMA)
and is known in the microfinance industry for implementing
microcredit lending in Bihar known as Bihar experiment.
Like many Indians and Deepak, Aviral had returned from
Canada with a zeal to do something to build the nation with
his business and technology expertise. Aviral says, “My role
of being a financial discipline leader was very intriguing for
me too. We were technology as well as customer-focused.
We believed in prudent spending and our long term vision
matched.”
He points out that the company’s core principle never
hampered its growth. Difficult times of COVID-19 and
lockdown were handled in a humane and financially
Branch Credit Manager Kalyani Vaniya undertaking document verification.
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prudent manner keeping its customer and 1600 employees
as the focus. There were no pink slips and salary cuts. The
company aligned its philosophy to bridge the supply and
demand gap for credit need of customers.
The trio had the advantage of being early movers when they
came up with efficient and world-class cost-effective, timely
and technology-driven customer focused products. The
company aligned its philosophy to bridge the credit and
product gap for the customers. The company holds a strong
vision of expanding its customer base and reaching more
deprived, unserved and underserved societies with
innovation.
When asked, ‘How do you see the evolution of
microfinance,’ the team shared
Microfinance is still in a developing stage. Since 2010,
microfinance has gained huge traction among rural India.
The government has realized the sector’s potential and
clearly indicated its intent to nurture the sector. It has
become an essential tool for financial inclusion and poverty
alleviation.
The strengthening of the regulatory framework by RBI is
making it a more attractive option for investors and lenders
while ensuring fair and inclusive treatment of the
customers. Simultaneously, efforts are being made to make
it a level playing field for all entities in microfinance sector.
The banking license for microfinance was a shot in the arm.
In the new microfinance landscape, you can see old players
embracing new technologies to expand their footprint,
while new players are experimenting with new delivery
mechanisms and products. Artificial Intelligence (AI) and
Machine Learning (ML) will become essential tools. The
fact is that existing companies have not been able to tap
even half of the market potential.
The new microfinance lending system announced by RBI
could see digitization. Submitting documents using home
coordinates, online payment, instalment repayments
through payment wallets, etc. Like India, Bharat is also
embracing technology and entrepreneurship opportunities
with full gusto and microfinance is a key driving force.
Light’s Growth Trajectory
2018 2019 2020 2021 Feb, 2022
0
50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
Customers
2018 2019 2020 2021 Feb, 2022
0
200
400
600
800
1000
1200
2.17 Lakh
3.09 Lakh
Rs 1064 Cr
Rs 623.15 Cr
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18. Social Upliftment through Microfinance
Bishwajit Das
Founder and CEO
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16 | May 2022 | www.insightssuccess.in
19. Poverty alleviation and women empowerment are the
two guaranteed solutions for societal development
and national prosperity. And microfinance is the
surest answer to the question of holistic development of the
weaker section of the society, especially women and
children.
In this mission, Belghoria Janakalyan Samity (BJS)
began its noble journey as a non-governmental, non-
profitable organisation for social upliftment by poverty
alleviation and women empowerment through
microfinance. It is registered under the West Bengal
Societies Registration Act XXVI of 1961.
Over the years, BJS could maintain a steady growth of the
services and placed itself in a reputed position in the
industry because of the indomitable spirit of its Founder
Bishwajit Das, who is also its Chief Executive Officer
(CEO). BJS grew due to his strong determination,
commitment, hard work, and honest appeals to its holistic
task.
“Above all, these achievements would not be possible if the
clients could not keep trust and faith in our commitments,”
stated Mr Das. He spoke with Insights Success for its
edition of “The Most Trusted Microfinance Companies”.
In a candid discussion, Mr Das spoke about the
microfinance industry in general and particularly his and
BJS’s journey in it so far.
Below are the excerpts of his compassionate wisdom.
Sir, please give our audience a brief overview of your
journey in BJS.
I came from a very simple lower-middle-class family seeing
many odds and obstructions in daily life from my early
boyhood. I could understand the agony of the distressed
people of my class or lower. Therefore, I had a very positive
mindset to stand beside the neighbouring people of my area,
relatives, associates and friends in case of need to help in
any situation.
With almost six years of working experience in a reputed
organisation in the microfinance field and social
development sector, I started the operation of BJS in 2006.
This was the result of my thinking to do something for the
class of people formally that I nurtured in my mind from
my boyhood.
In the early years, we had faced many obstructions,
particularly a fund crisis when there was a massive demand
in the field, but we didn’t have many resources. In the first
three years, we could not arrange any financial assistance
from any bank. We got our first loan from the State Bank of
India in 2009 and got sub-debt equity from SIDBI in 2012.
The operation got the momentum in 2014, and afterwards,
at a point in time total number of lenders rose to 19.
Geographical penetration now encompasses seven districts
of West Bengal, and 27 branches are involved in the
operation.
Tell us more about BJS, its vision, and the key aspects of
its stronghold in the Microfinance space.
BJS is a social development organisation working for the
livelihood generation by promoting enterprise development
among the poorer and downtrodden class. The motto is to
alleviate poverty through the financial inclusion of the
unserved class of women.
Through these activities, the vision is to build a happy and
prosperous society through the overall development of the
people, especially women and children, by ensuring their
strong and active participation. Over the last fifty years of
operational history, microfinance has evolved as a powerful
tool for poverty alleviation, women empowerment,
economic development, and establishing a peaceful society.
This is the largest industry wherein the highest number of
people in the world are engaged for their livelihood
activities. BJS became the part of this vast and noble work,
and we feel proud that we, the people in the organisation,
are involved in such a work where we are not doing the
work for ourselves only, but also some people of the society
are getting some benefit out of our work. This gives us
immense pleasure, pleasantly driving us for the next day’s
work.
From a business leadership perspective, what is your
opinion on the impact of the COVID-19 pandemic on
the Microfinance Industry?
We cannot dream of a society keeping aside this sector. On
the other hand, our vision is a long-term process. As you
know, the resources and capacity are also limited; achieving
the goal of having a happy and prosperous society is
required to support the targeted sector continuously.
The Most Trusted Microfinance Companies
17 | May 2022 | www.insightssuccess.in
20. But in the CIOVID-19 pandemic, the process had been
disrupted profoundly in two ways. For example,
unavailability of resources to deploy among the members of
the sector, and most people in the industry were also unable
to do their work for their livelihood earning.
In fact, the pandemic pushed the development vehicle
backwards by a huge gap. Most of our microfinance
borrowers could not do any work for a long period, and
they have consumed their small savings and other resources
that they had in their hands.
At some point in time, a big uncertainty engulfed the hope
of the life of many people. There was a very big blow on
the microfinance sector, and it may take several years to
recover the position as it was immediately before the
pandemic started.
What efforts did you take during the pandemic to
sustain operations and ensure the safety of your team at
the same time?
A few months during the initial lockdown period, the
operation at the field was totally closed. However, we kept
close contact over the mobile phone with our borrowers. We
gave them motivational thoughts and safety tips to protect
themselves and their families from getting infected by the
coronavirus and combat the virus if infected. At the first
step of the new normal period, the field level staff met the
borrowers at their house, kept probable safety measures,
and handed over two pieces of soap to each member to
wash hands regularly. We have arranged a sufficient number
of masks and sanitisers for all our staff.
What is your opinion on the necessity for Microfinance
companies to align their offerings with technologies like
AI and ML?
In the digitisation process, AI and ML are coming as an
integral part in all sectors. However, it may take more time
to take the benefit of AI and ML in our field as the
infrastructure development and the digital learning among
our targeted class of people is still too far and lagging
behind.
As an established industry leader, what would be your
advice to the budding entrepreneurs and enthusiasts
aspiring to venture into the Microfinance Space?
Presently the state-wise Microfinance Penetration Index
(MPI) shows a big gap between the requirement and
coverage. The MPI of southern states is around 62%, and
that in the eastern states around 21%. In central, western,
north and north-eastern states, the MPI is below 10.
Therefore, budding entrepreneurs have the opportunity to
work in many vacant places. The only requirement is to
have a positive mindset to render the service and build up a
strong, dedicated team.
How do you envision further strengthening BJS’s
stronghold in 2022 and beyond?
We have faced many challenges over the last 16 years and
have kept the organisation on the right trajectory. This had
been possible with the support of all our bankers, our
mentors, the governing body members, and last but not
least, our workforce – our people in the organisation.
With the people's intense level of motivation, the
organisation will continue with its mission beyond 2022,
particularly in this post-pandemic period. We know still we
have to go many miles more, and we will continue
to do so.
BJS is a social development organisation
working for the livelihood generation
through promoting enterprise
development among the poorer and
downtrodden class of people
“
“
18 | May 2022 | www.insightssuccess.in
22. How
Micro Finance
is Changing the
Rural Landscape?
India, being a developing country, a significant part of
its population still resides in rural areas. Therefore, the
overall development of the economy totally depends
on the parallel growth of its rural economy.
The key idea of microfinance is to uplift the earnings of
rural people. In the past half-century, the concept of
microfinance has gained massive importance and impetus in
India through the support of cooperative societies and its
MFI model. Fundamentally, it is meant for tiny farmers,
households, small businessmen and cottage industries in
order to carry out their routine business activities.
Microfinance is emerging as an anti-poverty vaccine in
India by offering wide-ranging financial services to the
people of low-income groups, especially in rural areas who
cannot take bank assistance.
As Microfinance is providing financial services such as
savings accounts, insurance funds, and credit, the rural
people are also observing improvement in their standard of
living. The essential feature of microfinance is that it
provides loans without security.
As microfinance loans are provided with no collateral, the
borrower is not bound to pledge something as security for
repayment of these loans.
20 | May 2022 | www.insightssuccess.in
24. It also offers a better overall loan repayment rate than
traditional banking products and enhances the possibility of
future investments as it is a sustainable process.
Through their NGOs, they improve saving habits among
poor people. There are Self Help Groups (SHGs), where the
members of these groups get loans and advances through
the financial resources produced through savings and
microcredit obtained from banks. In this way, microfinance
institutions help in the mobilization of savings and using
the same for the welfare of their members.
Microfinance also supports women's empowerment. In the
year 1992, NABARD initiated the SHG-Bank Linkage
Programme (SBLP). This programme motivated women
belonging to financially backward classes to unite and form
a group of 10-15 members. These women gave their
individual savings to the group at regular intervals. Then,
the members of the group got loans from their
contributions. Later, self-help groups (SHG) also provided
loans for income-generating activities.
Another financial service that borrowers of microloans get
is Microinsurance. The premiums for these insurance plans
are lower than traditional insurance policies. The
significance of microinsurance is that it is the machinery to
protect the poor people from all the mishaps that might take
place in future—for instance, chronic diseases, Accidents
etc.
Microfinance makes insurance plans by studying all kinds
of risks that people of low-income groups or poor people
face worldwide.
To reduce poverty in rural areas, the significant step is to
create employment and provide an income-generating
opportunity for the poor rural people. The main objective of
people participating in the microfinance program is to get
access to credit funds to start micro-business and create
self-employment at the local level.
Rural people invest the amount of money received from
microloans to operate small retail shops like grocery,
cosmetics, furniture, and food processing. They also run
service industries like- beauty parlours, tailoring, photo
studio, and hotel restaurant.
In villages, there are agro-based enterprises like vegetable
farming, pig farming, poultry farming, and goat farming. As
microfinance provides loans, creating self-employment at
the local level with the help of these industries is possible
for rural people.
The lack of financial stability results in creating barriers to
the education of children of poor families. These barriers
also include lack of transportation facilities in rural areas,
inability to afford schoolbooks and uniforms, as well as lost
hours of child labour that would contribute to family
income.
Microfinance institutions specifically give loans to women,
as women are likely to place more importance on educating
their children than men. This results in increased household
expenditure on education. So, in this way, Microfinance is
supporting both women's empowerment and child
education.
The Future Course
No country can progress by neglecting its rural people.
India is an agricultural country; more than 65% of people
live in villages. So, if India wants to prosper, it has to take
necessary actions to uplift the rural people's lives.
In recent years, Microfinance is emerging as a boon for
rural people. By providing various financial services, it
focuses on assisting economically excluded communities in
achieving a greater level of asset creation and income
security at the household and community level.
-Pooja Jaipal
22 | May 2022 | www.insightssuccess.in
26. A Quest to make Micro-Lending Better
Microfinance
Microfinance institutes and
organizations play a
significant role in the
development of India. It acts as an anti-
poverty vaccine for the people living in
rural areas. It aims to assist
economically excluded communities in
achieving a greater level of asset
creation and income security at the
household and community levels.
The utmost significance of
microfinance in India is that it
dispenses access to capital to small
entrepreneurs. Microfinance
organizations and institutes in India
provide loans, insurance, access to
savings accounts.
Moreover, the concept of microfinance
focuses on women also by granting
them loans. It acts as a tool for the
empowerment of poor women as
women are becoming independent,
they can contribute directly to the well-
being of their families, and they can
confront all the gender inequalities.
These organizations and institutes
majorly target the poor rural and urban
households and women too.
Also, the Reserve Bank of India
imparts no ceiling concerning
minimum and maximum amounts to be
given as loans. As a result,
microfinance plays a significant role in
alleviating poverty in society.
Many banks in India have initiated to
lend money to microfinance
institutions. It works towards the
empowerment of women, which is an
excellent move towards the
development of the country. This is
where Inditrade Microfinance excels
as a leading player in the microfinance
industry.
Under the visionary leadership of Mr
Sudip Bandyopadhyay, Director, the
company bequests an industrial
presence of five years and
counting—focused on “Financial
Progress” and catering to the
underserved and under-serviced
population segments.
In an interview with Insights Success,
Mr Sudip sheds light on the journey of
Inditrade Microfinance, with some
facts on the current industry scenario,
and his opinions on the future of the
company.
Please tell us about Inditrade
Microfinance's professional tenure in
the microfinance industry.
Our journey in Microfinance Industry
started when we sought RBI approval
for a Microfinance license in mid-2016.
After obtaining the requisite approval
in March 2017, we launched our
business in Solapur, Maharashtra, on
17th April 2017. Thus, with an
industrial presence of five years and
counting, Inditrade Capital Ltd. is
focused on “Financial Progress” and
catering to the underserved and under-
serviced segments of the population.
Amongst the other segments, we found
that the Microfinance industry offers
significant opportunities for not only
catering to under-serviced segments of
the society but also women
empowerment. In the Microfinance
business, we only lend to women. 70%
of our business is in the three southern
states of Tamil Nadu, Karnataka and
Kerala, and this geography continues
to be our stronghold.
What was the impact of the
pandemic on the microfinance
industry, and how did Inditrade
Microfinance surmount the
adversities of the COVID-19?
COVID has definitely impacted the
Microfinance industry. However, the
industry has seen similar other
disturbances during natural calamities
(e.g., flood, cyclone etc.) and
demonetization.
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24 | May 2022 | www.insightssuccess.in
27. -
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Mr Sudip Bandyopadhyay
Director
Inditrade Capital
Ltd. is focused on
'Financial
Progress' and
catering to the
underserved and
under-serviced
segments of the
population
“
“
The Most Trusted Microfinance Companies
25 | May 2022 | www.insightssuccess.in
28. In the case of natural calamities, our
clients may lose their earning assets
(like loss of cattle during floods), or the
same may get damaged. Fortunately,
in the case of COVID, there was no
impact on their assets; their lives and
livelihood were interrupted, which
affected their income.
In the Microfinance business, where
99% of collection happens physically,
our representatives visit the clients and
collect cash. The lockdowns
introduced consequently upon the
pandemic was disastrous.
This led to a delay in collecting
repayments and corresponding account
classification of receivables into NPAs.
However, these are mere delays in
collection and not necessarily defaults,
and the industry has since then
bounced back.
We believe that within a few months,
the industry would reach a steady state
where the asset quality problem will be
only to the extent of 1-2% of the book.
Pandemic was a challenging time, and
we still are extremely careful about our
employees' health, safety, and well-
being.
Apart from procuring separate COVID
Insurance for all our employees, on top
of our existing health insurance, we
also arranged company transport as
and when we were allowed to operate
in compliance with local and state
norms.
We continue to educate all our
employees about the “dos and don'ts.”
Whenever necessary, we supported our
employees who were suffering from
the infection.
As an industry professional, share
your opinion on how emerging
technologies like AI and ML are
revolutionizing the industry?
Technology is a great enabler. We are
fine-tuning our lending mechanism and
credit engines with artificial
intelligence and machine learning.
This should help us to reduce the
possibilities of intentional defaults
even further. This will enable us to
service the target audience more
efficiently and effectively.
What is the microfinance industry's
current scenario, and how do you
envision scaling Inditrade
Microfinance's operations
eventually?
There is significant scope of expanding
Microfinance business in India, and we
need many more well-intentioned and
principled participants to meet the
ever-growing needs of the target
audience. The industry is rewarding
and facilitates poverty eradication in
the true sense.
The last two years have been a lean
period for us due to the COVID-19
pandemic. However, in the near future,
we plan to significantly scale up our
business operations in the existing
markets and move into contiguous
states in the next fiscal year.
26 | May 2022 | www.insightssuccess.in
31. How can
Technology Enhance
Access to
Micro nance?
he development in science and technology has
Timpacted every aspect of human life. With the
innovations in technology, creating new channels of
engagement, expanding opportunities and increasing
efficiency for individuals, businesses and governments are
possible.
In rural areas, the microfinance industry, by adapting
technology, dispensing capital access to small
entrepreneurs. It provides loans, insurance, and access to
savings accounts to unemployed or low-income individuals
or groups who otherwise would have no other access to
financial services.
Microfinance is trying to bridge the gap between the
financial service providers and the financially excluded
population with the help of technology, innovation and
knowledge, the key drivers of economic growth today.
The Application of Technology helps in Customer-
Centricity
Data and Digital technology allow financial service
providers to serve the financially excluded more effectively
with a 'customer-centric' approach.
By using specialized algorithms, providers can analyse
information on a customer's mobile telephone (e.g.,
frequency and amount of airtime top-up) and non-
traditional data (e.g., social media profiles) to create a
customer report when they make lending decisions.
With these digital footprints, financial service providers
can interact better with customers and provides a range of
financial products and services based on a deeper
understanding of their financial needs.
Reduces operational risk
With the use of digital channels, microfinance institutions
can mitigate cash risk and increase operational efficiency.
The Present microfinance lending models are cash-
intensive, exposing the institution and customer to cash
risk, such as during storage and transit, which incurs
additional costs.
29 | May 2022 | www.insightssuccess.in
32. This time that could have been used more productively is
spent managing the risk. With the help of digital
technology, clients have the flexibility to repay loans
through their mobile phones, avoiding the risks of cash-in-
transit. So, in this way, technology saves valuable time.
Supports for Innovative business models
Mobile banking helps new business models through mobile
technology and data analytics in credit scoring, decision
and underwriting processes. Though, mobile network
operators are responsible for implementation and, to some
extent, large commercial banks and a small number of new
cashless microfinance institutions.
As traditional institutes are famous for their expertise in
clients' needs, they adapt and develop more capacity to stay
competitive and relevant to take advantage of mobile
banking services.
Furthermore, crowdfunding can enhance access to finance
for unserved and underserved borrowers, which creates
cheaper, community-based financial products, and enables
access to digital investments for people with limited options
to receive financial returns on their savings.
Eases the process
Microfinance institutions involve all aspects of gathering,
storing, tracking, retrieving and using the information
within a business or organization. With the development of
computers and software applications, much of this work can
now be automated and information more readily accessed.
The loan officers can track their clients' repayment
schedules and balances with the help of an information
system. It also eases management to assess the quality of
the loan portfolio and can also support the entire institution
in monitoring progress toward operational objectives.
The application of technology can improve transparency
and efficiency, improve reporting, and allow management to
make more informed decisions. In this way, it is making the
process easier and enhancing access to microfinance.
Helps in building trust
FinTech and Microfinance institutions face similar
challenges in building trust around new financial services,
and ensuring reliable and stable service delivery takes time.
As providers establish communication channels and
complaint resolution mechanisms, it helps to address
customers' risk perceptions.
By using approaches like assisted digitization (step-by-step
demonstrations of processes that show transactions in
passbooks or receipts), it assists the client's transition to
digital financial services.
Reduces costs
The use of ATMs, Smart cards, and Fingerprint
Identification makes it less costly to provide loans to
customers and process their savings. For instance, smart
cards with embedded microchips allow data storage and
contain all loan-related and purchase information.
Smart cards contain all the necessary information about the
customer's cash dispensers can operate in the most remote
location without a permanent network connection.
With the help of fingerprint identification, illiterate
customers can easily use the dispenser. Even In case of theft
or card loss, it protects customers from unauthorised usage.
On a Futuristic Path
The emergence of Microfinance, as a possible alternative, to
formal financial systems has expanded beyond what many
considered at its inception. Areas of the world where there
were no realistic means for the poorest and least educated to
obtain credit now rely on microfinance. It helps to avoid the
exclusionary nature of formal banking systems.
All this progress has been due to the pioneering use of
technologies that allow microfinance institutions to survive
or even thrive in financial environments that are
exceptionally difficult to work with. But the continued
growth of the microfinance industry will depend on
overcoming technology-related problems that have yet to be
adequately addressed.
-Pooja Jaipal
30 | May 2022 | www.insightssuccess.in
34. with
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Banking without Boundaries
The Indian economy has been hugely affected by the
outbreak of COVID-19. Among the many indus-
tries, NBFCs have faced unprecedented challenges
and a liquidity crunch. The lack of credit and increased
operational costs made the situation more intricate for
companies to sustain.
However, fighting against all odds, Pahal Financial
Services Pvt Ltd has made its way through by granting
loans to the bottom of the pyramid section. With over a
decade of experience in the company and under the
influential leadership of the Managing Director, Ms Purvi
Bavsar, they are close to achieving the astonishing vision
of providing loans to over two million women.
As the industry is getting back on foot, Pahal Financial
Services has planned and implemented various strategies
for having a smooth roadmap ahead. In an interview with
Insights Success, Managing Director Purvi Bavsar sheds
light on the journey of the company and the challenges it
faced in the financial niche.
Give us a brief overview of your journey in your
respective company.
It all started with an intent to do something more
meaningful, scalable and impactful. From being an
employee to being an employer after working for 17 years
Ms Purvi Bavsar
Managing Director
32 | May 2022 | www.insightssuccess.in
35. with various large corporates and banks, we started by
acquiring a small portfolio of a trust and merging it with an
acquired NBFC. It was a very small beginning indeed.
From just being in one state with 12 branch operations to
now eight states and more than 200 branches across the
country, we are spreading our wings further.
We had to go through the turbulent times during
demonetization as we were comparatively smaller in size
and, hence, fragile. We also utilized the difficult times
during the first and second waves of COVID to convert
ourselves from being a traditional microfinance institution
to a more technologically-enabled and digitally-focused
one.
Pahal has reached a balance sheet size of close to 1000
crores with more than 1700 people working in 200+
branches spread across eight states and is technologically
well poised to take advantage of the changing landscape.
Tell us more about your company, its vision, and the key
aspects of its stronghold in the microfinance space.
We started with a vision to reach out to two million women
borrowers at competitive rates. Our vision also included
achieving internationally acceptable returns on investments
to attract mainstream capital in the segment's service at the
bottom of the pyramid.
We were one of the few microfinance companies to emerge
from the western hemisphere, and we continue to have a
strong market presence in Gujarat. So far, we have reached
out close to a million borrowers.
From a business leadership perspective, what is your
opinion on the impact of the COVID-19 pandemic on
the microfinance industry?
Since microfinance is all about reaching out to financially
excluded and vulnerable communities and people, the
impact was very devastating.
However, fighting and getting back to normal was the only
option for survival for our customers. The impact has been
very severe during the first two waves—right from losing
some close family members to the pandemic to losing their
livelihood and going through the pains of migration in some
cases.
At an organisational level, we had never encountered a
problem of this magnitude before, and hence every day was
a new or unknown challenge. This included everything right
from taking care of our own people to reaching out to
customers in need to managing the operational expenses in
such a delicate situation and managing funders or investors.
• Medium-term impact
The cost of operations has increased for most players
considering the efforts required for collection. Credit costs
have gone up compared to the track record of microfinance
organisations. The cost of funds has been favourable for
some time due to the availability of funds under
government schemes for medium and large MFI's.
• Long term
The sector is on the cusp of recovery and is well-placed to
deliver a very healthy growth rate in AUM and earnings,
coupled with expected new RBI regulations.
What efforts did you take during the pandemic to
sustain operations and ensure the safety of your team at
the same time?
For us at Pahal, the safety and well-being of our people and
customers are at the centre of everything that we do.
To sustain the operations, we -
• actively engaged with customers through tele-calling
at a central and branch level to start with.
• created training videos to educate staff and create
awareness among customers about the COVID
protocol and guidelines announced by RBI regarding
the moratorium.
Pahal has reached a
balance sheet size of
close to Rs 1000 crores
with more than 1700
people working in 200+
branches spread across
eight states
““
The Most Trusted Microfinance Companies
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33 | May 2022 | www.insightssuccess.in
36. We also increased the health insurance and life insurance
cover for our employees, and this timely decision has been
of great help to our people during the most difficult times.
In addition to the insurance benefits, we also started to take
care of our employees’ families for one year in the
unfortunate event of death.
What is your opinion on the necessity for microfinance
companies to align their offerings with technologies like
AI and ML?
Given the dynamic external environment, it is critical for
microfinance firms to adapt to newer technologies and ways
of working. This is soon going to be more of a compulsion
than a choice that one has.
As an established industry leader, what would be your
advice to the budding entrepreneurs and enthusiasts
aspiring to venture into the microfinance space?
I always say that financial services, including microfinance,
is a business of relevant credit and efficient collection, not
money distribution. This business also requires a lot of
patience as the ticket sizes are smaller and geography is
difficult. However, the satisfaction of creating an impact
and being relevant and available to the bottom of the
pyramid customers, particularly women, is worth all the
effort and pain!
How do you envision further strengthening your
company’s stronghold in 2022 and beyond?
We will further strengthen the company by -
• Adding newer geographies
• Adding newer and more focused products that are
more relevant to our customers. This is one of the
most critical pieces considering the changed market
and customer requirements in a post-pandemic
scenario and to capitalise on new opportunities
available in the market
• Moving to cashless and digital collections
• Continue to upgrade the technology to enhance the
customer experience
• Build more robust credit evaluation systems
• Continue to remain focused on Risk Management and
Compliance
• Once the vaccination programme was announced,
ensuring our staff was vaccinated was a priority.
• Engaging with the funders or investors.
• Managing our cash position on a daily basis to ensure
that we have at least 2-3 months of run-way at all
times.
• One of the most important things was to align the
systems to deal with the moratorium and related
changes.
During the pandemic, we took some immediate steps for
our staff, like -
We reached out to all our employees on a regular basis to
ensure they were safe and gave them confidence about the
job security and continuation of their remuneration, even
when there was a lockdown and they were not able to work.
We did not lay off even a single employee or rationalise
their salaries. In fact, against all the odds, we ensured we
paid their salaries on time.
34 | May 2022 | www.insightssuccess.in
