Operations Management in Banking sector 33

There is a lot of operation infrastructure that goes behind a successful operation in the MFI sector. To talk specifically about for-profit MFI’s. In a layman’s language the process goes like, first there is a center formation, the clients are shared about the loan disbursement process, the repayment process, the importance of punctuality during the repayment. Once the loan is disbursed after proper client verification by the field staff/Loan officer of the MFI. Further there is a meeting for payment of installment that is scheduled every fortnight or in a month that varies for different MFI’s.

From the operation point of view, it is very important that the whole process runs smoothly. The operations team ensure that at every point the focus is on increasing the efficiency in the performance of the team as a whole.

In India, Covid crises has posed lot of challenges to the MFI’s. Most if not all of the clients of MFIs have been impacted by the COVID crisis, directly or indirectly. The direct impacts were due to the mandatory or self-imposed closures of business activities or own decisions to temporarily discontinue their businesses for personal reasons such as health risks or family situation. The indirect impacts include the consequences of the compulsory lockdown in the country due to the COVID pandemic which caused the disruption of the supply chains and decreased the demand for certain products and services offered by the microfinance clients. This eventually impacted the loan repayment cycle as well. This led to most of the MFI’s incurring losses in the quarter following the lockdown in the country. Further in India as thing resuming back after the peak of first wave of Covid, the microfinance sector has also shown an improvement in the overall loan portfolio. Moreover, the second wave of Covid is where the MFI sector will use their experience of tackling the situation during the first wave of covid.

About the Author:

Mr. Sarvesh Chaturvedi

Sarvesh Chaturvedi is an MBA-Rural Management graduate (2018-2020 batch), from Xavier Institute of Management Bhubaneswar (XIMB). Currently he is working as management associate in the operations department at Satin Creditcare Network Limited (SCNL). He has worked as an research intern at UNDP on a project to provide intervention to the problem of tribal community in Dhar district, Madhya Pradesh, India. His Interest areas: Operations, Supply change management, Rural Development, Water Resource and Skill Development, community mobilization and capacity building.