www.insightssuccess.in December 2018
10 Acclaimed T h e
Most
Micro Finance
Companies Company of the Month
Devesh Sachdev Founder & CEO
Dr. Joslin Thambi, Founder, & MD BWDA Finance Limited
Fusion Microfinance Empowering Rural and Semi Urban Women through Innovative Financial Services
Editorial
I
n developing country like India, the microfinance sector is playing a crucial role in the economic, psychological, and social development of the nation. Microfinance provides an opportunity to low income individuals to become financially independent. It creates confidence, skill, and courage in the marginalized section of society. MFIs can be treated as a key element in the sustained and long-term economic development all over the world.
Effective Implementation of ‘Mobile Financial Services’ for Micronance Institutes
In recent years, mobile devices and increased use of internet services are transforming banking and microfinance sector in an amazing way. Microfinance institutes are using this technology to overcome the existing limits of traditional Brach-based baking. ‘Mobile Financial Services’ (MFS) covers a wide range of transaction from simple money transfer to providing loans and savings. The mobile phone has not the only potential to develop more affordable and further-reaching microfinance business models, but also providing an opportunity to deepen financial inclusion by reaching the unbanked. Implementation of mobile services has benefits in terms of less client’s meetings, more security, lower cost of delivery, easier mobilization of savings, and reduced operational and financial fraud risks. Additionally, for most microfinance institutions, MFS represents an opportunity to dramatically increase their reach. The path to adopting ‘Mobile Financial Services’ is not free from the challenges. Customers of microfinance are often lacked education. It is important to have a basic knowledge of interacting with technology. Budget, skilled staff, infrastructure, localization are some of the factors that play a crucial role in adapting mobile financial services. It is vital for microfinance institutes to analyze and assess how to best integrate a digital channel for their customers. MFIs should comprehensively look at how they can deploy mobile channels and data strategies to scale operations, expand services, and ultimately better serve shareholders, whether those are investors, donors, or the customer base. MFS has emerged as the new wave of hope that will reach the last mile for a consumer in the most convenient and affordable manner. The future will witness remarkable advancements which would successfully contribute to making India ‘Developed’.
Abhijeet kakade Abhijeet Kakade
Editor-in-Chief Pooja M. Bansal Managing Editor Shweta Priyadarshini Executive Editor Abhijeet Kakade Art & Design Head Amol Kamble Associate Designer Poonam, Shweta Art & Picture Editor Rahul Kavnekar Co-designer Shweta Ambilwade Business Development Manager Akansha Garewal Marketing Manager Dhruv Apte Sales Executives Vaishnavi, Tejaswini Technical Head Swapnil Patil Technical Specialist Amar, Pratiksha Digital Marketing Manager Prashant, Rahul SME-SMO Executives Swati, Manoj Circulation Manager Tanaji sales@insightssuccess.com
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Company of the Month
Fusion Microď€ nance Empowering Rural and Semi Urban Women through Innovative Financial Services
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BWDA Finance Limited Driving Financial Inclusion for Underprivileged People
28
CXO Expert’s ViewPoint Unchanged Repo Rates Astute from All Angles
CONTENTS 20 26
Arohan Financial Services
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Accelerating Financial Inclusion for the Underserved
S V Creditline Empowering the Rural India by Aiding their Financial Needs
32 38
Samasta Micronance
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Empowering Individuals, Enriching Communities
SMART CFO Services
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Driving Signicant Improvement to Clients Financial Health through Quality CFO Level Services
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34
40
Tech-Advancements
Micro N Finance
Digital Revolution
Inventive Technologies Streamlining the Banking Space
Micronance – Evolving with New Directions
Digital Revolution of Micronance Sector
10
Most Acclaimed
Micro Finance Companies
Micronance: A Way Out for the Poor
P
eople in urban, semi-urban and rural areas of India need some sort of financial help for their business and other requirements. Microfinance companies have become a catalyst to change the lives of low-income individuals by aiding their financial needs. Microfinance institutes have an explicitly “social” goal of helping these people to lift themselves out of poverty. In this edition, we introduce “The 10 Most Acclaimed Micro Finance Companies” in order to assist businesses to choose their right microfinance companies. Assessing the scenario in versatile perceptions, our magazine has brought light onto the companies, who have flaunted excellence in providing numerous financial services. This list showcases the microfinance companies which are creating a better world to live. In this issue, we have specially featured, Fusion Microfinance as a cover story. Fusion Microfinance is a registered NBFC – MFI which operates in a Joint Liability Group lending model of Grameen and offers financial services to women living in rural and semi-urban areas. Fusion serves more than 1.3 million clients through its strong team of 4000 people in 400+ branches spread across 18 states of India. Since inception, it has cumulatively disbursed more than 5000 Crs across India. We have listed BWDA Finance Limited (BFL) as the company of the month that works for the financial inclusion of low-income households. Samasta Microfinance Limited aims to provide financial services to the financially weaker sections in the southern and western states of India. Arohan Financial Service offers financial inclusion products to the underserved. The SMART CFO services provide shared CFO Services to SMEs and Start-ups. S.V.Creditline Private Limited is registered as a Non-Banking Finance Company (NBFC-MFI) offering financial services to poor people. Bell Finvest India Ltd is Non-Banking Finance Company providing an array of comprehensive financial assistance and solutions. Micro Housing Finance Corporation Limited was incorporated with the objective to provide housing finance for lower-income households (mostly in the informal sector) in urban India. Taraashna Services Limited (TSL) facilitates access to finance by providing credit, micro- insurance and saving facilities to the unbanked clients in India. Moneywise Financial Services Pvt. Ltd. (SMC Finance) is a wholly-owned subsidiary of SMC Global Securities Ltd. It is registered with the RBI as an NBFC-ND and is classified as Loan Company. Our in-house editors have come up with some adroitly written articles such as Microfinance – Evolving with New Directions, Digital Revolution of Microfinance Sector, and Inventive Technologies Streamlining the Banking Space We have included article like Unchanged Repo Rates Astute from All Angles Written by Anuj Puri who is Chairman of ANAROCK Property Consultants Private Limited. It’s time to flip the pages and empower yourself with microfinance knowledge!
Devesh Sachdev Founder & CEO
COVER STORY
Fusion Microfinance Empowering Rural and Semi Urban Women through Innovative Financial Services
“
P
overty is not just a lack of money, it is not having the capability to realize one’s full potential as a human being”- Amartya Sen, Eminent Economist and Philosopher
Being poor can be challenging anywhere, particularly in a developing country. In such a scenario, the support of empathetic peer groups can be crucial in bolstering the confidence and helping to circumvent the binds of social do’s and don’ts with minimal friction and adverse repercussions. In present economic system of India, women-centric microfinance institutions can play a vital role in enabling women to realize their strengths by leveraging the power of aggregation. Access to credit is a key factor in empowering women. The latent credit demand of an emerging India will allow microfinance companies to fill the gap, especially where traditional banks have been wary to serve. With social vision to reach out underprivileged women who are unbanked with economic opportunities, Fusion Microfinance Private Limited offers wide-range of
10 T h e
Most Acclaimed
Micro Finance Companies
investor and mentor to some of the startups in India.
financial products and services to transform the lives of women who belong to the rural and semi urban areas. The foundation stone of the organization was laid with a vision to make a social impact through financial inclusion and woman empowerment. The motto was to serve the women from the unserved and underserved strata of the society who were entrepreneurs or wanted to start an enterprise. The Company is creating opportunities for its clients by enabling them to channelize their true potential. Distinctive Services for Nourishing Financial Needs Fusion is a Microfinance institution registered as a NBFC-MFI (NonDeposit Taking) with Reserve Bank of India. The company operates on the time tested Grameen Joint Liability Group (JLG) model offering financial products and services for women. Income generation loans are provided to economically active women who want to either start a new business or to scale up their existing business. To provide a risk cover, life insurance is provided to both the client and her spouse.
An Ingenious Leader of Fusion Microfinance With over sixteen years of rich service sector experience, Devesh Sachdev is the Founder and CEO of Fusion Microfinance. He has completed his post-graduation from XLRI. On account of his strategic vision, Fusion is among top 10 leading Microfinance Institutions in India. Devesh successfully completed ‘The Strategic Leadership Program’ from the Harvard Business School in the year 2015. He is on the board of MFIN, which is a Self-Regulatory Organization for NBFC-MFIs in India. He has also been listed in the “50 fastest growing CEOs of India” in a reputed magazine. As a passion to support the entrepreneurial culture, he is an angel
Women Empowerment: The pillar of Success Fusion only serves women clients and has already touched the lives of around 1.3 million women. It is a frontrunner in promoting holistic development of women. The distribution of loans provides women with a way to generate income, which increases their status within the household as well as within the community. Fusion works on the underlying principles of customer centricity thereby building a strong connection with its Clients. The company is driving financial literacy through digital payments. It inculcates saving habits in the unserved and underserved women clients. It is providing emergency loans to meet ad hoc needs of the customers and also provides insurance cover to both the customer and her spouse. The company is contributing in remolding the sectorial image by encouraging the women entrepreneurs to participate in livelihood trainings and inculcate those learnings in their day to day lives. Contribution to Financial Sector Growing with responsibility has been a core value of Fusion’s culture. As a responsible company, it has consciously developed a strategic model to imbibe positive sectorial
image of microfinance sector. The company has made an efficient use of media and press coverage to create awareness both at a national and regional level. Fusion has worked towards alleviating the perception issues of the microfinance sector creating an affirmative outlook. This has led to a gradual but tremendous change of how the sector is perceived today in the eyes of external Stakeholders. At a regional level, key personnel from Fusion team collaborate with Government Institutions and Local Authorities, thereby strengthening corporate relationships. What do Fusion clients gain by doing business with Fusion? Customer centricity is the key essence of Fusion work culture. By availing the doorstep services, Fusion Clients are able to live up to their entrepreneurial aspirations and contribute to the household income. Growing with responsibility, the Organization aims at holistic development of its Clients by encompassing financial literacy and digital innovation in conjunction with economic empowerment of women. For instance, Financial Literacy Programs help Clients by making them aware of the innovative technology and digital payment modes, thereby advocating financial literacy with an entire gamut of flexible and convenient withdrawal options. Additionally, the company’s digital literacy programs help in transforming the customer’s banking experience by empowering them with the digital banking platforms. Need based livelihood trainings are also provided to the Clients from marginalized communities which fuels their earning potential. It provides job prospects by extending direct employment to youth in the rural areas. In parallel, a lot of employment avenues are created by Fusion Clients through their entrepreneurial ventures. The company puts consistent efforts in contributing towards
Award & Achievements With its Best-in-class services Fusion Microfinance has achieved following milestones Winner of the prestigious Project of the Year Award 2018 by Project Management Institute of India – the award is the highest recognition for Project Management in the Country
Winner of Best NBFC MFI Award 2018 for Customer Literacy and Capacity Building Featured in the 15th Asian Network of Quality Congress 2017 held in Kathmandu for Cashless endeavors ‘Business World Digital India Award 2017' for the usage of Information Communication and Technology (ICT) in Rural Development awarded by Sri Ravi Shankar Prasad, Honb’ Union Minister of India Received 92% score in Code of Conduct Assessment in May 2017 against the guidelines of unified code of conduct, RBI FPC and RBI guidelines for NBFC-MFI ‘Super Achiever’s Award 2016' under BFSI category instituted by Stars of the Industry Group, Mumbai Client Protection Principles - SMART CAMPAIGN has awarded Fusion with Client Protection Certification for embedding client protection practices into the organizational culture and meeting strong standards of client care in Aug 2016
‘Best MFI of the year 2014 Award’ at ‘Microfinance India Awards 2014' instituted by ACCESS Included in the list of India’s 25 leading MFIs by CRISIL in 2014
“
We at Fusion, will continue
to work towards our mission and vision of creating a
difference in the lives of the underprivileged rural
women. We believe, that the entrepreneurial
opportunities ushered by
Fusion in the rural landscape will make a positive impact
in the lives of the clients and
their families at large as they
“
start contributing to the household livelihood.
the Environment, Health and Safety (EHS) standards of all its Clients. The company organizes health camps in remote areas to create awareness around health and hygiene of Clients by providing medical facilities to them. Looking into the Future Fusion has recently concluded its Series E investment round of INR 520 crores Warburg Pincus making Fusion one of India’s most preferred companies in the financial inclusion space. This is the first investment of Warburg Pincus’s in the Indian microfinance space. Progressing forward with positive approach, the company will continue to enhance its technology driven innovative solutions for financial inclusion in the rural landscape. Fusion aims to not only provide microcredit services to clients but also enable them grow as an individual and become self-reliant financially. The company will continue to generate awareness about the digital payment platforms to clients. It is dedicated to provide financial services to clients with core values of respect for the individual, collaboration, transparency, and humility.
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Company of the Month
WDA B
Finance Limited Driving Financial Inclusion for Underprivileged People
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We are implementing various development programs and projects focusing on holistic growth and development of our society
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obilization and circulation of finance is the primary requirement of development of an economy. In the current scenario, financial institutions are the robust pillars of progress, economic growth, and development of the economy. Financial Inclusion is one of the fastest growing socio-economic sectors in India that aims to provide financial services at affordable costs to the underprivileged people. Access to safe, easy and affordable credit and other financial services for the poor and vulnerable groups are the key factors in accelerating the growth and reducing income disparities and poverty. With the vision to develop poverty free, prosperous, equitable and sustainable society, BWDA Finance Limited (BFL) works for the financial inclusion of low-income households. Bullock-cart Workers Development Association (BFL’s parent NGO), was one of the pioneers of the Self Help Group (SHG) movement in Tamil Nadu. It was founded with the primary objective of rendering selfless, dedicated and yeomen service to bullock cart workers, laborers, rural artisans, poor and needy women and children in the regions of Tamil Nadu, Kerala, Pondicherry, and Andaman & Nicobar Islands. BWDA believes in the holistic development of its beneficiaries. Presently, BFL undertakes microfinance operations while BWDA focuses on the development activities and projects. Distinctive Financial and Capacity Building Services BFL offers market-oriented financial services and other credit plus services to
DECEMBER 2018
Dr. Joslin Thambi Founder & MD
improve financial inclusion and access for low-income households, who are marginalized and unbanked. BFL facilitates access to a bouquet of formal financial services such as savings, credit, remittance, pension, and insurance. BFL primarily provides services to beneficiaries through the SHG model. Additionally, it caters to JLGs (Joint Liability Groups) and individuals. BFL offers various loan products to meet the credit requirements for livelihood activities, income generating programs, microenterprises, education expenses, medical expenses and consumption needs of the client. It also facilitates water credit to ensure safe drinking water and hygienic sanitation to its beneficiaries. The Widows and Destitute Welfare Initiative links the most stigmatized women in the society to skilling and credit to set up and run their own microenterprises. BFL firmly believes that financial inclusion i.e. delivery of financial services at affordable cost to lowDECEMBER 2018
income segments of society and the linking of the poor to mainstream financial services coupled with capacity building are the key factors of empowerment. BFL spreading its roots in BWDA, facilitates holistic development of beneficiaries and works with BWDA to contribute to 14 out of the 17 United Nations’ Sustainable Development Goals. An Ingenious Leader of BFL “Without hard work, no fruit can be expected” Dr. Joslin Thambi, the Founder and Managing Director has been a model of hard work, simplicity, and perseverance for the society. BWDA had its humble beginning in 1985 with a cycle, a typewriter, Rs.2500 and a passionate 28-year old who wanted to empower the marginalized people. Hailing from a family as the 8th child, whose prime breadwinner was a bullock-carter and experiencing the turmoil first hand, Joslin wanted to work for the empowerment of bullock-
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BFL works for a poverty free, equitable, prosperous, and sustainable society through nancial inclusion and holistic development initiatives
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cart workers. His contributions are well balanced, shaping the underprivileged society with holistic development. Today, through various initiatives, Joslin’s efforts have empowered 5.4 million beneficiaries. Successful Journey over the Years Bullock-cart Workers Development Association (BWDA) was established on 2nd October 1985 by Dr. Joslin Thambi and was registered in 1986 under the Tamil Nadu Societies Registration. In 1988, BWDA started forming Self Help Groups (SHGs) of bullock cart workers’ families to build self-sufficiency and facilitate poverty alleviation. In 1992, BWDA started working with other low-income households and also linked SHGs to local banks to meet their credit needs for managing their livelihood and income-generating activities. Later in 1999, BWDA started direct lending to improve access to finance to empower the underprivileged in Tamil Nadu, Pondicherry, and Andaman & Nicobar Islands and to supplement loans from banks. In 2003, BWDA acquired an NBFC, renamed as BWDA Finance Limited (BFL) to streamline its financial inclusion operations. BWDA resumed lending activities under the Business Correspondent Model in 2012 in partnership with Yes Bank. BWDA works as the BC of Yes Bank, IDBI and SBI to facilitate financial inclusion of members. BFL has two well know institutional investors, SIDBI and Dia Vikas and caters to member needs through direct lending and an esteemed business associate partnership with SBI. Making the World a Better Place
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BWDA has a member base of 36,221 Self Help Groups and JLGs with 6,09,559 members. BWDA has facilitated credit linkage of INR 1386.78 Crores to 1, 29,212 groups with 15,34,723 members. The B-WASH (BWDA Water Sanitation and Hygiene) Program has developed 8767 toilets and 2829,935 water connections by facilitating water credit of INR. 3514.41 lakhs. Empowerment is collective and it is done through empowering the women of the family first, followed by children and other household members. BWDA and BFL are working for the holistic development of the household. Financial inclusion caters to members’ financial needs. The company’s health programs create awareness, access to basic health services and dedicated access for TB. The company’s child welfare program rescues children in danger and creates awareness on child protection through the Childline initiative, provides summer learning avenues for rural children. BWDA’s BWaSH programs provide access to low-cost water credit for development of water connections and toilets. BWDA’s education initiatives offer formal education through two schools and two colleges. Furthermore, the company’s senior citizen program empowers the aged people. Women empowerment programs offer capacity building, widows and destitute welfare, livelihood development, microenterprise development, access to fair priced goods.
DECEMBER 2018
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We are delivering nancial services at affordable cost to sections of disadvantaged and low-income segments of society
BWDA’s relief and rehabilitation program supports lowincome households in dire situations like floods, fires, and other natural calamities. The animal welfare program caters to the needs of our member’s livestock. There are also many other programs that address almost all requirements of BFL’s beneficiaries. Believe in Customer Satisfaction BFL offers market led customized products for beneficiaries. There are no hidden costs, no wishy-washy terms, and conditions, no partiality based on caste or religion or other factors. It offers a bouquet of financial services to meet all needs of members coupled with a whole ambit of development initiatives. BFL is transparent and adopts proper client protection principles to ensure that all terms and pricing is clearly communicated to members. BFL adopts all guidelines of the regulator to the letter to create a conducive environment for its beneficiaries. Converting Challenges into Opportunities The social development and financial inclusion sectors are fast evolving and largely driven by disruptive innovations. Staying relevant to the funding institutions and matching the needs of the beneficiaries and their adaptability to the disruptive solutions are challenges for the company. Further, data analytics and digitalization is becoming important and keeping the human component relevant is imperative. Also strengthening of the human capital (staff and beneficiaries) to match these innovative delivery methodologies involves resources and time. Many international donor institutions, seek to work with larger players resulting in lack of support for medium and small institutions. Finding the right people with passion and service mind is a challenge, as they hail from different backgrounds and their mindset has to be molded in a way that is appealing and upholding the basic belief of the institution.
DECEMBER 2018
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BFL has been certified as an NBFC – MFI, which equips BFL to reach out to more banks and financial institutions; which will help serve our beneficiaries better. BFL also has plans to expand to other states. The needs and adaptability of beneficiaries differ based on demographics, local status quo, social and cultural factors, income attributes etc. Rolling out a program requires a clear understanding of the social dynamics and good relationship with the opinion leaders and other members in the PRI hierarchy. With over 33 years of grass root level presence, BFL has a very good grass-root level relationship and a clear understanding of member needs. BWDA Self Help Groups have even celebrated their 20th and 25th-year anniversaries. BFL in partnership with BWDA is looking towards expanding its work to smart agriculture, climate change, and resilient livelihoods. The company has a dynamic Board, a zealous Managing Director, a highly experienced and passionate senior management team and a proficient staff team. BFL has been giving focused effort towards knowledge and innovation for beneficiaries. Dynamic Future of the Company With “25 by 25” slogan, BFL will facilitate the financial inclusion of over 25 lakh households by 2025. BWDA Finance Limited, currently an NBFC – MFI aims to become a Small Finance Bank to cater better services for beneficiaries. The company is dedicated to implementing innovative solutions to cater to the needs of beneficiaries. BFL will explore new methods to ensure sustainable development and address the existing issues of the poor. BFL programs will be aligned with the UN Sustainable Development Goals. Progressing forward with a positive approach, the company’s new programs will be initiated in additional areas such as climate change, smart agriculture, clean energy, food security.
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Arohan Financial Services Accelerating Financial Inclusion for the Underserved
F
inancial inclusion has been recognized as a key building block which forms the foundation for achieving several sustainable development goals of the country. Lack of accessible, affordable and appropriate financial services has always been a global problem. Financial access can really boost the financial condition and standards of life of the poor and the disadvantaged. Established in 2006 in Kolkata, Arohan Financial Services Limited, part of the AavishkaarIntellecap Group, is one of eastern India’s largest NBFC-MFI operating in thirteen states of which ten are low-income states across the central, east and north-east. Arohan offers financial inclusion products to boost the financial condition and standard of life of the poor and the disadvantaged. The company truly believes that doing social good can be achieved while being commercially viable. Offering Best-in-Class Financial Inclusion Products Arohan offers financial inclusion
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An Ingenious Leader
Manoj Kumar Nambiar Managing Director
Considered as a pioneer in the Impact Investment space, Vineet Rai, Founder of the Aavishkaar-Intellecap Group, believes in building the entire ecosystem for Impact Investing rather than just financial products and tools. He set up Aavishkaar and Intellecap in 2001/2 with a view to providing equity capital from Aavishkaar funds to entrepreneurs working with an impact motive and also intellectual capital through Intellecap.
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products to over 1.5 million underserved clients, through 575 branches with a loan portfolio of around INR 3000 Cr in microfinance and MSME lending. Arohan is driven by the Group’s mission to work with businesses which cater to the other 3 billion of the world’s population. Between equity and debt, the Group manages a portfolio of over INR 5000Cr as of today and is one of the few entities which offers an INR 10,000, as well as, an INR 10 Cr loan facility.
We offer a wide variety of product and services to meet all nancial needs of our customers
DECEMBER 2018
10
Most Acclaimed
Micro Finance Companies
Manoj Kumar Nambiar is the Managing Director of Arohan Finance Limited. Manoj has around three decades of experience in consumer finance & retail banking. He, along with the management team, has turned around an INR 28 Cr portfolio and INR 14 Cr networth company to an INR 3000 Cr portfolio and an INR 440 Cr networth institution, as of November 30, 2018. From 2013, Manoj is also a director on the governing board of Microfinance Finance Institutions Network (MFIN) ‒ the RBI licensed microfinance industry Self-Regulatory Organization (SRO) and was also its President in 2015/16. MFIN, during this tenure, has taken many momentous decisions like getting licensed by the RBI as a formal SRO, strengthening the credit discipline with credit bureaus, using Aadhaar as the preferred KYC document to ensure proper debt and lending, code of conduct to ensure all lenders become responsible lenders to the segment, improving investor and lender sentiment towards the sector, amongst others. Manoj completed his mechanical engineering from VJTI in 1986 and his MBA in Marketing from JBIMS in 1988, both from Mumbai University and has tertiary qualifications in insurance from Insurance Institute of India. He has also completed the “Strategic Leadership in Microfinance” course from the Harvard Business School, Boston, the US in April’13. Empowering Underserved by aiding their Financial Needs Arohan primarily serves women clients at the BoP sector, mainly in non-urban areas. The company serves over 1.5 million end clients of which over 95% are women with 67% plus from rural areas of the 10 LIS in which the company operates. While about 33% of the client are first-time microfinance clients, the remaining clients are second or third cycle beneficiaries who have taken loans, from the company, to grow their businesses such as handicrafts, livestock, small grocery, and retail outlets amongst others. The loans help them grow their business, help them become self-reliant and also generate employment in the entity by adding to staff.
DECEMBER 2018
Arohan, being among the Top 6 NBFC MFI in the country and growing, will play its part in improving access to FI products to a wide range of client base. Walk an Extra Mile for the Clients Arohan is one of the leading NBFC-MFIs with a special focus on 10 LIS, a strong and committed, as well as, credible promoter group backing along with an ability to raise, both equity and debt capital year-on-year. It has an end-to-end IT platform with a paperless and cashless focus to support the wide credit suite with ticket sizes ranging from INR 10,000 to INR 100 lakh across microfinance and MSME sectors. The company has a unique inorganic channel (Strategic Alliances Unit) with partners in the field, while it also focuses on the crosssell of financial and non-financial products. With a strong and capable management team guided by an eminent board of directors, the company offers the best-in-class services to its clients. Clients get the benefit of doorstep services and frequent repayment options along with microloans from the company. Most of the clients are first-time borrowers needing credit to scale up and grow their businesses. With its focus on FI, Arohan offers its clients the access to other financial services like insurance, pensions and banking products, beyond core credit. A Look into the Future Microfinance sector will continue to grow at a good pace with the availability of capital, favorable policies of the RBI, and the support extended by the state and central governments. On account of its best-in-class finance inclusion services, Arohan aims to become one of the Top 3 Financial inclusion players in the country. With the vision to cross an INR 10,000 Cr portfolio outstanding in the next 4 to 5 years, the company will serve around 10 million end clients while being among the Top 10 Places to Work.
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DECEMBER 2018
TECH-ADVANCEMENTS
S
ince 1969, the banking industry has undergone tremendous changes. Banks have shattered their traditional functions and have been coming out with the new services to serve to the increasing needs of their customers. Enormous branch enlargement in the rural areas, utilization of savings and expansion of credit facilities to small-scale industrial and agricultural areas, other preferred sectors like export sector etc. have caused in widening the financial infrastructure and have transferred the major character of ‘class-banking’ into the ‘mass-banking’. The recent trends are growing competition, reinforcing risk management systems, product branding, and emphasis on technology. Many safety features, such as advanced cryptography and biometrics, will effectively provide protection against the bank scams, and remote applications to perform banking operations without visiting a branch and this experience will prove to be more customer-friendly. Blockchain Technology Blockchain technology is all ready to renovate the banking and financial services. It disperses the financial management from a central authority to a vast network of computers. In this technology, the financial transactions are fragmented into ‘blocks’ which are converted into the computer code which is then encrypted to achieve enhanced Cybersecurity. With its high potential to improve numerous facets of banking, there is no doubt that Blockchain will change the face of the banking industry. Chatbots Various banks are now embracing AI (Artificial Intelligence) and deploying it across multiple business process functions whether it is front-end or back-end functions; which reduces the response time to the customers considerably. Chatbots and intelligent digital assistants with M2M (Machine-to-Machine) learning capabilities and selflearning concept are providing seamless customer interactions for many banks and players in the industry. Upgraded ATMs The concept of ATM was incepted in the bank-tech system in 1967. Since then, it has been undergoing various up-gradations serving the banking customers with the efficient and unique services. Furthermore, the next astounding revolt of ATMs is going to involve contactless
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payments with which one can easily perform contactless ATM transactions with a smartphone. Latest inventions like biometric authentication are already executed in India and iris recognition technology is implemented in UAE’s National Bank ATMs. This way, the technologies are uplifting the overall bank security by preventing ATM hacks. Mobile & Digital Banking The mobile and digital transformation in the banking space has just begun and its growth is explosive. Today, banks are investing largely in the digital banking technology, in which the customer can access the banking services through mobile, web, or digital platforms. According to a recent survey, around eighty-percent of banks indicated that these types of services show their top technology investments. Partnerships Irrespective of the banks' high investment in technology, the fastest way to bring in the financial innovation is probably going to include strategic partnerships. The evolving companies that are undergoing a new wave of tech or social media platforms could create excellent partners for traditional banks which would boost the customer experience. Various marketing companies which involve in data analytics, is partnering with several financial institutions to influence secure purchase data r to tailor the marketing based on consumer’s use of the card. Smart-Wearable Smart-watches will probably bring the booming future for the retail banking experience, according to a recent survey. For an instance, the banks could use the bluetooth beacons to push personal greetings to the customers’ smart-watches when they enter a banking location. Smart-glasses which is another unique wearable invented for the bank tellers would process customer banking information for the employee when they are busy performing other customer service tasks. The trends in smart devices and consumer behavior are gearing the banking technology in the direction of convenience. The application of remote technologies will allow one to interact with the bank right from the palm of the hand. From dwelling over the email inbox to visiting a branch, one can expect to encounter a whole new transformed customer experience in the coming days. The Rise of Non-Banking Organizations With the advancements in the technology, banks are anticipating faster delivery methods as well as transparent experience to the customers. Nevertheless, a huge portion of their resources is essentially devoted for dealing with the security, compliance, and other industry-specific requirements, with which the non-banks or financial service providers to embellish the banking industry. The non-banking companies can contribute a larger percentage of their assets to the enactment of financial technology; as they might bring in rapid innovations than the traditional banks and might attract tech-savvy customers in the process. Transcendent Future Today, banking system is re-constructed with the information technology and it is obvious that the future of banking will offer more sophisticated services to its customers with the continuous product and process innovations. Implementation of strategies like strict prudential norms and higher capital standards, better risk management systems, reception of internationally accepted accounting practices and the increased disclosures as well as transparency will ensure the Indian Banking industry cope with other developed banking systems. The industry will further multiply its growth and complexity while being an important agent of the economic growth and combining different segments of the financial sector.
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S V Creditline Empowering the Rural India by Aiding their Financial Needs
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been the founding team member of CASHPOR and founder of SONATA Finance Pvt Ltd. He served as the President of MFIN for two consecutive years and currently, he is Board Member of MFIN.
nclusive development is one of the critical determinants of national growth. Microfinance sector has helped millions of small households in the remote areas and also gave life to their dreams. It started out as an alternate source of finance to the unserved masses comprising the bottom of the socio-economic pyramid and gradually turned out to be a tool for uplifting their standards and working their way out of the poverty. Established in 2010, S V Creditline Limited (SVCL) is one of India’s largest and most respected NonBanking Financial Companies. It is incepted with the vision to uplift “entrepreneurial poor” specifically women through giving them easy access to credit. The objective to promote these entrepreneurs is complemented with relevant financial tools enabling them to re-engineer and uplift their financial status in the long run. SVCL is registered as a Non-Banking Finance Company (NBFC-MFI) under Reserve Bank of India and is promoted by Vans Pte. Ltd. and SV Corporation Pvt. Ltd. The corporate office is located at Gurugram, Haryana, along with a major presence in the northern and central territories of the country. In the
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With over two decades of experience in microfinance, Durgeshwar Mishra, CFO of S V Creditline, was the part of the initial management team that built CASHPOR Micro Credit (CMC) from scratch to one of the largest MFIs in North India. Mr. Mishra has handled almost all key functions of the company including Microfinance
Rakesh Dubey CEO
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long term, it plans to have a PAN India presence to cement themselves as a prominent player in the industry.
The Three Pillars of SVCL Rakesh Dubey, CEO of S V Creditline is charting the course for the future of the company. With over two decades of experience, he is a seasoned entrepreneur with a deep background in the microfinance domain along with setting up of MFI’s in the domestic as well as in international locations. Prior to commencing his journey, he has also
We are delivering superior quality products and services with innovative technology
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Operations, Internal Audit, Monitoring & Reporting, ICT, Insurance, Administration and HR. He heads Fund Mobilization, Finance & Accounts and Administration departments. He has served as a member of MFIN’s Enforcement Committee. KK Singh, COO of S V Creditline, has over 20 years of experience in microfinance sector. He was part of senior management team at CASHPOR Micro Credit, with responsibility of HR, Operations & Training. Heading the Business Operation at SVCL, Mr. Singh has charted out a new vision and growth strategy for the company. With his leadership has come a lot of success stories where micro credit assistance not only helped the clients in scaling up their living status but also increased their saving level. Distinctive Product and Services The entity has been set up with the vision of building a professionally managed and sustainable microfinance institution. The motive is to assist the under-served households by providing an easy access to credit as well as other financial services to make them economically independent. The business also aims to empower the women to help their family by providing opportunities to earn. Some of the mentionable products are: 1) Business Loan a) Group Loan The company follows a social collateral model wherein microfinance group lending with joint liability allows assetpoor individuals to replace physical collateral by social collateral. This informal secured borrowing works better in rural areas as compared to urban areas as rural social networks are typically denser, which results in higher social collateral. It also encourages rural people to opt for income generation loans so that they can start their own business. b) Short-Term Individual Loan The organization has designed a short-term loan for individuals who are in urgent need of funds. The loan tenure is about three months and the fund is disbursed at very low-interest rates taken from the authorized and unauthorized lenders in the market. The process is kept simple and is provided through an online application with all the details about the individual and the loan.
buyers within quick TAT and with easy documentation. With growing awareness about global warming, e-rickshaw has come up as a viable option in densely populated areas. SVCL was swift enough to gauge the issues of the prospective buyers and they introduced the easy finance model which encouraged people to buy the e-rickshaw to enhance their business. 3) Shelter Loan Although this constitutes a very small portion, the organization has introduced housing loan for families who want to build their homes or expand their house pertaining to diverse needs. Customer-based Business Philosophy The customer-centric approach is amply reflected in their product offerings, followed by simplified processes, transparent pricing structure and strong customer service orientation. The company set-ups are conveniently located and easily accessible for customers, who are also reached out to, by its trained field staff. The products offered by the entity include small credit for income generating activities linked with credit life coverage. The robust management team has the expertise to manage complex operations, identify new markets and formulate business strategies. SVCL Application suite is an innovative web-based application which is designed to perform as lending platform along with analysis, monitoring, accounting, supervision and works towards enabling a paperless environment. A Look into the Future Progressing forward with positive approach, the company aims to provide financial assistance for two million households by 2020 across India, to significantly improve their living standards. The company will be dedicated to build a sustainable microfinance model that not only delivers high standards of service and value to customers but is also rewarding to all stakeholders. SV Creditline will continue to work towards strengthening the scene of financial inclusion in India through financial literacy workshops and Mass awareness Camps. The Company is doing 100% cashless disbursement through NEFT and planning to implement various methods and techniques of cashless collection.
2) Green Loan S V Creditline has introduced easy finance for e-rickshaw
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Expert’s ViewPoint
UNCHANGED
Repo Rates Astute from All Angles
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he recent stand-off between the government and the RBI owing to the NBFC crisis and the apex bank’s endeavor to maintain its autonomy and reserves had caused the industry to watch closely whether the repo rate will increase or remain unchanged. That said, today’s move by the RBI to keep the repo rate unchanged at 6.5% was more or less expected. This was not solely because inflation targets are still under control. Politically, an upward revision would not have served the current Government well as the 2019 elections are around the corner. From the economic standpoint, a hike in repo rates would have had a direct impact on home loan rates. High housing loan interest rates are known deterrents to many buyers, especially in the affordable segment where higher interest rates can and do weaken sentiment. Any move to further discourage customers from availing of bank credit would ultimate exacerbate the liquidity crunch and adversely impact the economy. From that perspective, the unchanged repo rate will at least keep the demand for housing loans at status quo. The RBI obviously needs to maintain an adequate buffer for the economy – especially in light of the massive changes that are likely to come about in the next few months in form of REITs and SPVs. Also, the NBFC crisis currently shows no signs of relenting, and keeping the repo rates unchanged is definitely in tune with the current market signals.
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About the Author Anuj Puri is an acknowledged expert on Indian real estate both in India and internationally. He enjoys strong relationships with private investors as well as local and global corporates. Anuj recently acquired the Residential brokerage business and Fund Management vertical of JLL in India and runs them independently under his latest venture as Chairman of ANAROCK Property Consultants Private Limited.
Anuj Puri Chairman
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Samasta Microfinance Empowering Individuals, Enriching Communities
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he past decades have seen the microfinance industry grow by leaps and bounds globally and India is no exception. With increasing focus on financial inclusion in India, Microfinance Institutions (MFIs) are occupying centre stage as a prominent conduit for extending financial services to unbanked sections of population. With each passing day, MFIs are playing a pivotal role in eradicating poverty. According to an independent survey, microfinance has been able to uplift the income of poor and hence their standard of living. One such organization embracing every opportunity and delivering exclusive services to empower mankind is IIFL Group company, Samasta Microfinance Limited. The success story of Samasta was scripted in the year 2008 when the company was launched with the vision of providing financial services to unbanked regions of the country. Since then, Samasta has come a long way in providing financial assistance to rural and semi-urban women who are economically active and enterprising. The company’s main objective is to support women’s
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Getting Financial Services to the Unbanked People from the unbanked category have financial needs that are typically not addressed by conventional financial institutions. This hinders their aspiration to progress. This is where Samasta comes in the picture. Samasta brings affordable financial services to the customers’ neighbourhood, giving them quick access to finance to materialise their growth aspirations. Today, Samasta has become synonymous with trust, warmth and responsible lending.
Venkatesh N Managing Director
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entrepreneurial endeavors with access to critical financial services, thereby helping families to increase their incomes and improve lives.
Samasta Microfinance was established to drive social change among the urban and rural poor in South India. It believes that the participation of the private sector in social development can ensure transparency in governance, which is essential for transformation at the grassroot level.
Impacting the lives of women in society
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Samasta has a comprehensive portfolio of financial products ranging from loans for income generation, dairy cattle, education and consumer products to MSME loans. Its services are tailored to suit varied needs of customers. The company, a subsidiary of financial conglomerate IIFL Group, carries out regular survey in the areas where it operates to understand the kind of activities that people are engaged in there. This helps the company to tailor products that suit customer needs rather than providing the one-size-fits-all products. The solutions meet a variety of needs like increasing working capital, buying inventories or supplies, purchasing of machinery or equipment and even providing start-up capital for new businesses. Through training sessions and financial literacy programs, Samasta provides necessary support to customers to engage in economic activities. The company tracks utilisation of loans, provide timely guidance and make credit interventions with top-up loans to help customers grow and sustain their businesses. Catalyst for Financial Inclusion Microfinance industry plays a crucial role in sustainable financial inclusion and economic empowerment. Samasta acts as a catalyst for financial inclusion by giving unbanked population access to affordable financial services and products to build businesses, increase incomes, meet their needs and drive the progress they desire. “We are in the responsible lending business. We help our customers to create opportunities for themselves by giving them timely access to finance. By doing this, we contribute largely to the upward mobility of our customers and promote sustainable and inclusive economic growth of the country,” says Venkatesh N, Managing Director, Samasta Microfinance. Services from Samasta help customers to improve their financial resilience and achieve better standard of living.
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What is more important is, over a period of time, the customers become eligible to access mainstream financial services. Customers, once denied access to mainstream financial products due to subprime credit scores or non-existent credit files, become eligible to access mainstream financial services. This is made possible by timely financial support from Samasta to improve their income levels and also with credit history and record of financial transactions. Huge Opportunities Ahead With RBI giving differentiated bank licences for small finance banks and payments banks, customers have access to a wide range of options to select from. Samasta still sees a huge demand for credit and financial services facilities in rural and semi-urban areas. It is entering new geographies, improving and strengthening their connection to customers with new branches across the length and breadth of the country. The company leverages state-of-the-art technology to streamline operations, standardize processes and deliver services efficiently while ensuring superior customer experience. By following the latest advances in technology, the company continuously improves operational efficiency while scaling the business for growth. It has adopted a technology driven approach that helps to reduce turnaround time for service delivery, get better visibility into the performance of the product portfolio and gain insights about customers. Making a Mark It requires a determined, focused and positive approach to grow any business. Like any other business, Samasta also had ups and downs, but faced those challenges heads-on. The company strives to provide the entire gamut of financial services to customers, leaving a lasting impact on their lives. It also chases bigger dreams of transforming the business to the next level mainstreaming within the larger financial services market.
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MICROF
“
M
icrofinance is an idea whose time has come” - Kofi Annan, 7th SecretaryGeneral of the United Nations (1997 - 2006)
The commercial banks traditionally concentrate on large formal enterprises which have the expertise of doing business and possess collateral. They miss out SMEs as they lack expertise as well as riskier investment. Major problem faced by the micro-enterprises is the access to finance. This improper access to finance is one of the factors hindering the SMEs growth. Thanks to the Microfinance channels which are facilitating finance at its best. Easy accessibility of services which directly impact the sales, profit and physical assets development of SME’s as well as other low income individuals is what describes the word microfinance. In India, microfinance exclusively operates through two channels: Self-help Group Bank Linkage Programme – Here, a small group of ten-twenty women or men make savings by contributing periodically and begin the lending processes. Further, they get linked to banks and banks lend to self-help group after checking their flexibility. Microfinance Institutions – It is an organization that offers microfinance services to small non-profit organization to larger banks. These institutions emerged as a cornerstone for informal credit and an effective instrument for providing funds and financial help in order to strengthen the SME's.
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Micro N Finance
FINANCE Evolving with New Directions Empowering SMEs and Low Income Individuals Microfinance is a prominent trend which is revolutionizing the world of banking and finance by providing loans to existing as well as aspiring small and medium sized business players. Backing SME's, it is playing a pivotal role in economic development by creating employment, eradicating poverty and generating profitable outcomes. On the other hand, it is promoting the business development and acts as a source of business growth by uplifting the working capital. Microfinance is amongst the key ingredients which helped SMEs to create a niche in its sector and establish itself as a one-of-its-kind brand. It can augment the supply of capital, labour and appropriate management and opportunities for investments that are profitable. Besides, microfinance channels also offer a few highly standardized products which can effectively help the Micro and Small enterprises to manage large-scale operations. These products come up with few advantages including Streamlined loan administration, Simplified decision-making for field staffs, Reduced information requirements from clients, Low operational costs, and Simplified repayment obligations. Along with this standardization, the microfinance institutions are also paying a closer attention to product flexibility. This will also increase the individual need-based loans designed to cater to the specific requirements of the clients. One of the significant roles that microfinance has in boosting the SMEs is by providing them with financial stability. It gives them the opportunity to generate enough income to
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attain the basic necessities such as food, clothing and shelter. Providing stability it is driving the mankind towards the pathway of civilization. This will also eradicate the poverty and offer low-income or poor families with the means long-term financial stability. Additionally, it also reduces the number of people on public assistance programs, which benefits local and national economies. Microfinance has created a platform for the SMEs, where small communities are earning more income and spending their earnings within their community. This helps stimulate local economic growth as well as empower the growth of SMEs. Hence, as these communities will grow and the local economies begin to prosper, the SMEs would go beyond and see beyond the traditional horizons of business and create a history. Creating Possibilities like Never Before Opening and operating as a result of a microfinance loan cannot create jobs in as large numbers as bigger multinational corporations, but, it can surely change the lives of poor. With each passing day, the microfinance loans are unlocking various job opportunities for the people who live in some of the poorest areas of the world. This in turn, is diverting the people to embrace these opportunities and associate with the corporate world. Lack of money leads to lack of food and lack of clean water leads to lack of sanitary living conditions. By extending microfinance opportunities, the people can enable access to small amounts of credit, which can then stop poverty at a rapid pace. Microfinance changes this scenario by generating sufficient amount of capital. By extending microfinance opportunities, the people can enable access to small amounts of credit, which can then stop poverty at a rapid pace. Microfinance is helping break the poverty cycle of the current generation and work towards ending global poverty for the Gen Z. It tends to target women borrowers and is contributing in women empowerment with an aim to energize the economy in the longer run. To be precise, when these basic needs are met, families can successfully invest into better wells, better sanitation, and afford the time to access the health care they need. Also, people can stay more productive and play a significant role in being the building blocks of tomorrow. And when this happens, the possibility of future investments will occur and create possibilities to flourish like never before.
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SMART CFO Services I
n today’s complex and uncertain markets, companies require accurate and timely corporate accounting. But more than that, they need financial advice that gives certainty and assurance. The role of the CFO plays a pivotal role in the growth of the enterprise. With more startups coming up and raising money, the need for shared CFO Service is growing day-by-day. Entrepreneurs are looking forward for an experienced finance professional who overlooks their finance department, make a business plan for their concept and arrange funding, negotiate a deal with the Investors.
reductions, planning, reporting, and controls. He has given his fruitful contribution to Aramark India (Food and Facility Management) as Country CFO and Corporate Secretary. He also contributed for JV’s of Future Group as CFO. His experiences were in Shoppers Stop (Retail), Goldshield International (Pharma), Coca-Cola India (FMCG) and HINDALCO (Manufacturing).
Balkishan Chandak (BK) Founder Partner
SMART CFO Services is founded with the vision to drive significant improvement to clients' financial health through innovative business solutions & supportive implementation while building enduring business partnership. The company aims to benefit growing SMEs and startups by providing access, advice, and insights of expert CFOs & business consultants.
corporate world and provide services to SME’s, as there is a huge gap in this market for skill services to a smaller organization at a reasonable cost. To provide the right financial services to smaller organization Balkishan Chandak founded SMART CFO Services.
Meet the Veteran Leader When Balkishan was working with Aramark India as Country CFO, he met a couple of Directors of SME’s and understood that many small businesses struggle to find the right financial expertise. With an experience of more than 10+ years as CFO, he knew the exact roles and responsibility of a CFO. Later he decided to leave the
Balkishan has comprehensive, in-depth experience of over two decades across all components of corporate finance, strategic planning, financial analysis, capital restructuring, fund-raising & treasury, performance management, corporate tax planning. He has demonstrated the ability to quickly learn the intricacies of diverse industries and make immediate improvements on cash flows, costs
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Balkishan is an excellent leader with a track record of documented contributions leading to improved financial performance, heightened productivity, and enhanced internal
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We deliver exceptional nancial and commercial expertise to enable the business to seize opportunities for growth, change, and success
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controls. On account of his superior management, communication, leadership, and supervisory skills, the company paved a way towards success. He is a keen planner, strategist, and implementer with demonstrated abilities in spearheading finance functions and accelerating the business growth. One-stop Platform for all Financial Advisory Needs SMART CFO is a Shared CFO Services firm with a strong network of associate partners providing a one-stop solution for all financial advisory needs especially for Startups, SME & and companies in need of a CFO. It’s a specialist firm of experienced Chief Financial Officers (CFOs) and Business Consultant who deliver exceptional financial and commercial expertise to enable a business to seize opportunities for growth, change and success. In the company, CFOs and Business Consultants are engaged full time, part time, project, interim, outsourced or supplemental basis specifically to suit the business needs. Below is the coverage of the broad service by the firm • Develop or refine the business model • Create a financial model, cost structure & cash flow projections • Assistance with development and implementation of growth strategies • Develop Key Performance Indicators (KPIs) and a dashboard to track progress • Determine funding requirements, type of funding, and preparation for due diligence • Create Capitalization Table and determine dilution effects • Corporate Governance/Board Management/Investor Relations • Development of accounting processes (A/R, A/P, Procurement, etc.) • Oversight of existing accounting staff or work with outsourced accounting Firm • One-time accounting system assessment, catch-up, and clean-up The company also helps start-up clients in accounting outsourcing & tax filings services for a temporary period until the time the client is able to recruit & build the team. Since these are not a permanent assignment, the company helps them to select the right CFO candidate and then do a transition of the knowledge.
Manager cost levels. SMART CFO’s one-stop solution offer services far beyond standard accounting practices. The company’s easily accessible team of experts with diversified skills ensures that the client’s financial and tax positions are considered throughout the year not just at tax time. This helps business owners make better decisions, grow their business and plan for the future SMART CFO has developed a strong network of Associated Partners covering all fields in legal, finance and investment. Attention to detail, correct and timely information and a strong commitment to personal service ensure a superior and satisfying experience. Consumer-based philosophy Having worked with large corporates and MNC’s for the last 15+ years, the company’s chief financial officers are not only well versed with nuances of accounting and auditing but also with business-oriented skill sets to resolve all issues and guide the overall financial requirement of a company. With shared CFO services, entrepreneurs would integrate good business ideas to take forward their brand value of the company. With a practical hands-on approach, the company offers with hasslefree, cost-effective and high-quality services to clients. The company’s expert team is powered by Chief Financial Officers (CFOs) of large companies, senior management and finance professionals, chartered accountants, company secretaries, and business analysts. Additionally, the company’s associates and partner firms provide with additional expertise and experience in the fields of investment banking, international taxation, and legal advisory. “The key is to stay relevant and focused on what the client actually requires. The success of the client is our success and the philosophy is walking that painful road with them”, says Balkishan Future Ahead “We all know that India has a tremendous amount of talent and so many people don’t move out of their geographical boundaries and spread their knowledge. My long-term goal will be to expand my boundaries to some developing countries in the African region eg. Nigeria, Tanzania and provide the CFO Services as there is a genuine need of skilled people in those countries”, says Balkishan
Standing Out in the Crowd CFO Service adds significant value to the clients’ strategic and operational capability and efficiency through enhanced quality of decision-making on a day-to-day basis. SMART CFO provides top-of-the-line CFO capability at Finance-
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Digital Revolution of Microfinance
Sector P
overty exposes poor to unfavorable and uncontrollable circumstances, restricting them to avail numerous services from financial sector. Microfinance is considered as a tool for socio-economic development for low income individuals. Financial services could enable the poor to leverage their initiative, accelerating the process of building incomes, assets and economic security.
Technological advancements and developments in world has changed the way world operates and has improved standard of living of the nation. Technology has become key driver of the Indian economy. Digitalization represents huge opportunity to enhance financial inclusion in nation. It is changing the way in which financial services are delivered by MFIs in India. Benefits of Digitalization Customer-centric Approach Convergence of digital platform in financial inclusion benefits MFIs and clients alike. Automation of transactions due to digitization enables MFIs enhance capital, flow of information, and makes it convenient to organize and scrutinize data.
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Digital Revolution
New Business model Loan applications with clients in remote areas are now processed using handheld device, eliminating need for paper loan applications. Simultaneously clients are also benefitted by faster turnaround time of loan processing and approval, safe and secure way of repayment of loans through mobile wallets. Cost effectiveness The adaptation of digitalization allows microfinance institutes through a variety of channels resulting in quicker processing times for loan approval and disbursal, reduced costs of physical data storage, and reduced risk of cash. Digital Channels Driving Growth of Digitalization Digitalization has allowed microfinance to reach customers in more efficiently and conveniently at a lower cost. Following are some of the channels that are leveraged by microfinance institutes. Mobile and Internet: Extensive use of mobile phone is transforming the services which are provided by microfinance sector. MFIs have made successful foray into mobile technology for operations through better tracking of transactions on real-time basis, digitization of huge physical records, bringing higher levels of transparency in operations, time-saving & process efficiency and greater scalability.
Digitalization helps financial service providers to interact better with customers. It allows microfinance companies to provide range of financial products and services based on a deeper understanding of their financial needs. Reducing Risk It has opened various opportunities by reducing use of cash in operations resulting in significant cost savings and has also led to increase in outreach in cost effective manner. In digitalization clients have the flexibility to repay loans through their mobile phones, avoiding the risks of cash-in-transit.
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Biometrics: Biometric micro ATMs integrated with biometric modality for authentication are contributing towards development of micro finance. Biometric identity authentication is must before performing transactions like withdrawing or putting money into their bank accounts. It enables MFIs to conduct secure transactions remotely besides eliminating presence of staff members during authentication. Management Information System: Automation due to development of computers and software applications like MIS has transformed the way MFIs operate. Information is made readily accessible by MIS. It facilitates loan officers track clients’ repayment schedules &balances
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and monitors progress toward attainment of operational objectives. Challenges to overcome Path to digitalization is not free from challenges. Following are some of the challenges with digitalization. Education: To adopt the digitalization it is very important to have basic knowledge of interacting with technology. Customers of MFI are often illiterate and lack education. Educating customer is necessary step for digitalization of India. Infrastructure: Lack of transportation, communication, electric wiring in remote and rural areas act as a hurdle in implementation of digital mode by MFIs. Even if there is proper infrastructure, there are additional transaction costs associated as clients are spread out in the rural areas. Affordability: Small microfinance institutions are either not able to afford mature software packages and ICT solutions or they are unsuitable for them. Lack of skilled staff to support technology, lack of budget to upgrade technology, and high need of localization of software are some of challenges for small MFIs in adopting digital channels. A New Wave Over a period of time, performance and progress of microfinance institutions both in private and public sector has improved significantly along with benefitting deprived sections of society. Digitization of microfinance institutions has emerged as the new wave of hope that will reach the last mile for consumer in the most convenient and affordable manner. Outreach of MFIs due to digitization has undoubtedly increased in terms of its operations, clients and loan disbursement but it has not been able to capture giant market share. The future will witness remarkable advancements which would help to capture these giant market shares and successfully contribute in making India ‘Developed’.
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