-By Jesselyn Friley, Lucinda Gibbs, Katherine Hoffmann, Robert Toews, Damilola Sobo and Zachary Hoberg, Stanford University

At the beginning of the summer, the six of us Stanford summer interns set out to determine, through field interviews and market research, if there was a viable gap in the higher education loan market in Thanjavur that KGFS might productively fill by offering its own education loan product, thereby allowing more low-income students to pursue higher education. With the help of colleagues from IFMR Ventures and Tamil-speaking researchers from the InnerWorlds team, we began a unique research project that would take us into rural villagers’ homes, bustling bank branches and college campuses across Thanjavur district. Now that our last day in Chennai has arrived, we take this opportunity to summarize our experience and some of our discoveries.

On our first research trip to Thanjavur district, we conducted interviews with secondary school administrators, college principals, students, and bank managers within the city of Thanjavur and nearby areas. As a result of these interviews, we found ourselves somewhat discouraged as to the need of a KGFS higher education product. This discouragement stemmed, above all, from our discovery that commercial banks were mandated by the Tamil Nadu government to extend higher education loans to all deserving students, without collateral, for amounts up to 4 lakh rupees. Moreover, the mandate had recently been expanded such that students did not have to pay interest on the loans while enrolled in college. Given this mandate, as well as the existence of many government scholarship programs, it seemed to us that the introduction of a KGFS product might be unnecessary. After all, students–including low-income ones who did not have collateral–could simply avail a relatively low-cost education loan at a commercial bank if they needed one, and would not even have to pay interest on it for a few years.

However, upon returning to Thanjavur for a second round of research interviews, this time focusing more on the small villages in the surrounding area, we began to uncover gaps in the loan disbursal process that increasingly indicated the value of developing a new loan product. To begin with, we found that even though banks were required by law to extend these education loans, they tended to “hesitate” on doing so. They frequently delayed approving loans to low-income individuals for as long as possible, through such methods as continually requesting more paperwork from applicants.

In our interviews with students we found that these delays frequently lasted several months, often forcing their families to resort to higher cost financing options. In our discussions with bank managers, they were very frank with us about the reason for the banks’ attitude: repayment rates for educational loans are very low in Thanjavur district and across India, often coming in at between 50% and 60%. Though banks are compelled to offer these education loans because of the government mandate, they are simply not good business for the banks. Another consideration that we encountered is that there are significant costs associated with pursuing a higher education on top of tuition, which is the only cost that many bank loans and government scholarships cover. These additional costs include, but are not limited to, housing, college “donation” fees, transportation, school supplies, and the opportunity cost of foregoing entry into the labor force.

We returned to IFMR headquarters in Chennai and, after a lot of research and many brainstorming sessions, we designed a menu of loan products that we believe address many of the constraints to financing higher education that we encountered through our field research in Thanjavur. These products include a bridge loan, to be disbursed to families waiting for an education loan from the bank to be disbursed; a supplemental loan, to cover a student’s costs other than tuition; and a savings program. We also explored various ways to increase repayment rates and ensure the financial sustainability of these products.

We believe that KGFS’s unique position within the social structure of villages gives it a marked advantage over commercial banks when it comes to encouraging repayment. Finally, we put forth a proposal for the establishment of an independent education office within villages, which would be charged with the duty of raising awareness about the requirements, financial and otherwise, of higher education planning. We believe such an education office would contribute enormously toward the goal of increasing the number of low-income villagers who decide to pursue a higher education, and address the principal challenge that we identified in our field research: an information gap regarding financial and educational opportunities. We hope that at least some of the suggestions in our final report will prove useful for KGFS and can be developed into financial instruments to be offered to students in Thanjavur, allowing more of them to pursue a higher education and ultimately secure employment.

As we return to Stanford to complete our own higher educations, we will bring with us fond memories from our field research–including playing cricket and eating fantastic home-cooked meals in villagers’ homes, and working with a truly inspiring and diverse team of IFMR colleagues. We are all grateful to have gained a greater understanding of rural India and of the role of finance in reducing poverty. We look forward to following the progress of KGFS’s higher education products and other IFMR projects in the future.

By Bindu Ananth, President, IFMR Trust

In a recent visit to the Dhanei KGFS, I had the pleasure of spending time with four outstanding Wealth Managers (WM).

Sukanta is a WM who has been working with Dhanei for almost a year now. He is 27 years old and is currently pursuing a correspondence course in English. He had to drop out of college when he was 19 to sell vessels so that his three sisters could get married.  Lalit worked as a fitter in Bangalore and did a diploma in customer service through Dr. Reddy’s training initiative before coming to work for Dhanei. Patnaik is a BA who was very proud of his sister who is a topper in her class having completed her MPhil (and spoke more about her than himself!). Finally, Panigrahi is a trainee WM posted at this branch. He has a BSc and is from a village where Dhanei KGFS set up one of its initial branches. His father and mother are enrolled with us there.

Sasan Ambagaon branch had proudly displayed their “Best Branch” and “Best Customer Case Analysis” trophies.

True to their name, all four had a deep and nuanced understanding of the needs of their households. They related to us in detail a case of a joint family with three sons and their wives and kids, for whom migration was a principal source of income. They spoke earnestly about how this family had enough time to plan for the education and marriage of the kids and that they need to urgently start their investment plan. They even accounted for inflation when forecasting the needs of this household! In addition they greatly emphasised the need to adequately insure the lives and working ability of the earning members.

We took a walk around Sasan Ambagaon along with the WMs. They are clearly heroes locally – people called out to them as we passed by. They knew and had visited every household in the village. One elderly gentleman had in fact, come to the branch to get a letter read out to him.

Ashit (CEO, Dhanei KGFS) told me how his wealth managers inspire him each time he meets them – I can see why!

Business Correspondence (BC) model or the third-party agent banking was launched in 2006 in India, with the intent of increasing the ambit of the formal banking sector. Since its inception in 2006, various banks have promoted the BC model in all corners of the country.

In the rural areas around Bangalore, FINO has partnered with a bank towards the extension of banking services through the BC model. FINO is delivering the BC services through “FINO Fintech Foundation” which is a section 25 company.

Recently members from IFMR Finance foundation (IFF) and IFMR Rural Finance visited the FINO Customer Service Points (CSP) in the area to understand better the working of their BC model and to interact with the FINO CSPs and their clients.  The team visited the Ramanagar and Gulberga blocks near Bangalore along with the respective block-coordinators, and was guided by Mr. Sharan, District coordinator of FINO. The visit enabled us to have deeper insights into the pros and cons of the BC model.

The FINO BC model offers no-frill account services involving savings and withdrawals, few CSPs had also tried selling insurance products on a very small-scale. Each CSP at the client level reports to the Block Coordinator, who is in turn, headed by a District Coordinator. The CSP is a contract employee of FINO Fintech foundation, who is a local resident, and is given a fixed remuneration of Rs 750 plus a commission of 50ps on every transaction irrespective of the amount transacted. These CSPs work an average of 4 hours per day and have this job as either the only source of income or as a part-time business.

On an average each CSP handles around 700-800 clients in her/his service area. Each CSP is provided with a POS machine for transactions and has to deposit an initial amount of Rs 10,000 with FINO Fintech foundation (Rs 5000 for the POS and Rs 5000 for the CSP) as guarantee money. A transaction limit of Rs 5000 is imposed on the CSP and once the limit breaches, the POS machine of the CSP gets blocked. It would then require a visit by the Block Coordinator to collect the cash and unlock the machine to carry out further transactions.

The CSPs, with whom the team interacted, found it difficult to sustain the business, as the income obtained from the present BC model was difficult to cover the costs incurred; the door-to-door services provided by the CSPs added to their cost. Apart from this, only 30-40% of the clients were active which further reduced the commissions for the CSP. However it was feasible for CSPs who ran Kirana stores, as majority of their clients visited the store as part of their daily chores and also made transactions with the CSP; he made fewer door step services than other CSPs who were housewives or working in other companies.

On interactions with the clients, the team could infer that the transaction limits imposed on the CSP was a major hindrance to the clients in utilizing these services efficiently and frequently. Many a times, any client who wants to withdraw or deposit amount that is greater than the limit would have to inform the CSP prior hand, thus it would usually take around three days to complete the transaction, consequently undermining the efficiency of the system.

Currently dealing with a minimal set of services, FINO is looking to widen its base by including NREGA payments and Insurance to ensure the sustainability of the model for all the partners.
—
Farzana Najeeb of IFMR Finance Foundation contributed to this post.

An article in The Hindu a few months back by P. Sainath stated that migrants from Ganjam staying in Surat send home Rs.400 crore a year. A fourth of that is sent through ‘tappawalas’, an informal courier system. On our recent trip to Orissa we had a two-hour long interview with a tappawala to understand his remittance business.

Aakash Swain (name changed) was 26 when he landed in the Bombay docks to work as a wage labourer with dreams of making it big in the city. But he soon became frustrated with the meager wages and in spite of opposition from his family, started this business in 2002. The first sum of money he collected was Rs. 4000 which was sent through a demand draft and which he personally encashed and disbursed in Ganjam. It took him a month to do this.

Today, he has 5000 customers spread across Mumbai, Surat and Bhavnagar. They are engaged in occupations as diverse as ship breaking, textile weaving, construction and iron ore loading. On an average, each sends Rs. 5000 per month for which he charges Rs 30-35 and the money is delivered within 24 hours. Two of his own relatives in Ganjam withdraw cash and disburse it to the recipients, so trust is not an issue. They verify details such as the sender’s and recipient’s name and address and hand over the money in the presence of two witnesses who sign the receipt along with the recipient.

Swain is also an LIC agent and has sold life insurance policies to all his customers. He makes around Rs. 20000-30000 from courier charges in a month and around Rs. 10000 from his job as an LIC agent. He spends 15 days in Surat and Bombay and 15 days in Berhampur. His customers are informed about his travel plans and tickets are booked well in advance. They let him stay with them and take good care of him, providing him with a comfortable place to stay and also arranging for his food. When he disburses money, families are happy to welcome him and sometimes offer him cold drinks and snacks.

He claims to have more than 25 accounts in various banks in Mumbai, Surat and Bhavnagar, all in his name. When questioned on how he managed to do that, he says that he just needed to produce a ration card or an address proof to open these accounts. He deposits money collected from customers in them and usually maintains enough balance to withdraw cash for disbursement. He said that he did not maintain any record of his accounts or transactions and remembered each one by memory.

Focus group discussion with migrant labourers and their families in Jakarapalli village of Ganjam district.

Most workers he served belonged to either backward castes or scheduled castes while most tappawalas belong to Other Backward Castes (OBC’s) such as Jena, Swain and Gouda. According to him, the reason why people find it convenient to send money through him is because they work in shifts and find it difficult to deposit money during bank working hours. Also, many of them are illiterate and are afraid of going to the banks to open an account and to deposit money. They can barely sign their names. The family members back in the village are worse off as they are illiterate as well and are afraid to go to the banks to withdraw cash. Bank branches are also located far away from their villages.

Another one of his USP’s is that he extends a special facility to clients who need money urgently. He gives a maximum of Rs 10,000 as advance payment to a customer and no interest is charged for this. The money is collected from the sender during the next cycle. The only charges are his courier charges. He admits that it is a risky business due to the large amounts of cash he has to handle and he faces the risk of losing money due to theft or dacoity. But so far he does not seem to have faced any such incident.

For a villager who just studied till the 12th grade, he has come a long way. He owns a house, is married and a father of 2 sons. He is happy that today he is wealthy, respected and better off than his brothers. He wants his sons to be educated and not follow him in his business as the competition now is too intense. Also, more and more people have bank accounts today and prefer to send money through banks. He knows that his business is shrinking and soon he will have to think of other opportunities to make money. But for the time being he is not worried and enjoys the risk he faces every day and every minute.

—
Vijayalakshmi C and Shilpa Sathe of InnerWorlds contributed to this post.

Including the poor into the formal financial system has been hard despite numerous and sustained efforts. The difficulty in achieving inclusion attains a whole new meaning in hills and mountainous regions where populations are sparse and connectivity is extremely low. My realization of this fact achieved some maturity after a recent 5th birthday celebration meeting of the Center for Micro Finance (CMF) research.

After a lot of research and some excellent recommendation from Anupama Joshi (CEO, Sahastradhara KGFS), Lakshmi Krishnan and Deeptha Umapathy  (Program Heads at CMF) zeroed in on Kanatal Resorts, Uttarakhand as the site for CMFs most recent research associate-birthday bash meeting. Located amidst the picturesque Tehri-Garwhal hills, Kanatal is a site for sore eyes and a panacea for the tired soul and body.

The drive up to Kanatal

After a half day of deliberations and updates on various research projects that CMF is leading across the country, Anupama Joshi closed the first day meeting with a brief presentation on Sahastradhara KGFS (SKGFS) – entity aimed at underserved rural areas of Uttarakhand. Ms. Joshi’s presentation highlighted some of the challenges faced in serving the hills, namely –

• Due to the extremely low population densities, SKGFS has had to relax its service radius and population number criterion from other KGFS ventures in the plains (DKGFS and PKGFS).
• Due to the hilly terrain and larger distances between the service provider and the served, technology is much more relevant in attracting and retaining clients. SKGFS has evolved a financial delivery model that is hybrid of branch-based and doorstep delivery.
• Compared to the plains, women’s participation is extremely low (probably due to a potent combination of travel difficulty and household/farm-related chores).
• Credit culture is low, and traditional JLGs do not work well. Financial trust among villagers who are even related to each other is not high.

SKGFS and CMF staff at Jadipani branch

To help understand these issues better, SKGFS invited CMF to its Jadipani branch the following day. After a brief introduction to operations, CMFers split into groups of 5-8 and ventured into nearby villages to hold brief discussions with local households. Each CMF team was ably led by an SKGFS wealth manager who played the role of a guide and host to perfection. CMFers huffed and puffed along the hilly tracks very quickly humbled by the terrain, further adding to the appreciation of the work that wealth managers and SKGFS is doing.

Projjal talking to Mr. Govindram and his wife.

The different CMF teams interviewed about 16 households in total. Post-visit here are some key observations from our group (Stuti, Deepti, Shreyas, Srikumar and Sushanta) –

Socio-economic conditions and access to finance:

1. The sanitation conditions and quality of the house structures were much better in Jadipani than much of India. Anecdotally, it seems that people invest a lot in making their houses better.
2. Most of the households we visited had some members in army which had helped them keep a decent standard of living because of the pensions provided by the Government. We noticed that pensions were the bulk of the income for many households.
3. Most households had access to bank accounts (according to the Branch Manager of Uttarakhand Grameen Bank, 700 households in a radius of 5kms had bank accounts. He estimated that the total population in the radius to be 2000). 70% of these accounts however were NREGA-disbursement accounts, with voluntarily created savings-accounts in the minority.
4. Savings is a space where private players can enter as the living standard in the region suggests that significant savings can be mobilized. Villagers currently invest on their house and in jewelry.
5. Almost all households had younger members who had left the village for better livelihood. The younger members were remitting money back home either through the post office or through acquaintances. We suggest that villagers’ interest in efficient remittance services be explored.
6. Agriculture is a primary source of work, although contribution to income is low due to poor rainfall in non-monsoon seasons over the last three years. This is unfortunate and easily remediable because the region still receives rainfall in the monsoon months. Loans for water-harvest tanks can help push up agricultural productivity significantly. A lot of the landscape is barren due to deforestation, thus loans for plantation can potentially help increase incomes and improve local ecosystem as well. Also the region grows apples and potatoes as cash crops, however there are a few insurance companies that provide cover for these crops. Households generally seemed to be interested in this kind of financial service but due to geographical constraints list of service getters remains limited to the ones living close to the market/road.
7. As mentioned in Anupama Joshi’s presentation, women seem to participate very actively in economic roles, but their say in financial decisions is low. Reasons for this low participation maybe a combination of culture and hard terrain. If hard terrain were the principal reason (which I suspect), technology and service at the doorstep or at the farm can improve the situation greatly. On a related note, could the fact that most JLGs are male groups be a cause for JLG under performance? Would carefully nurtured women’s groups perform better?

The Jadipani visit has thrown up many research and operational questions that need to be answered quickly, for financial inclusion in the hills to be a reality. Hopefully the initial steps that SKGFS has taken on the service delivery side and research studies that CMF is starting in Uttarakhand, will soon shed light on straightforward questions that need very innovative answers.

—
Ajaykumar Tannirkulam, CMF, contributed this post. Photo credit: Projjal Saha, Sushmita Meka and Srikumar

A team from the Department for International Development of UK Govt visited Dhanei KGFS on 17th March 2010, to understand the KGFS model and how it is having an impact at the ground level.

From left: Lindsey Block (DFID), Anand Bhal (DFID), Ashit and Manjula Singh (DFID).

They were initially briefed at the HO in Berhampur about the KGFS model and the operational aspects concerning it. Later they were taken for field visits to Badakushastali and Hugulapatta branches.  It was great to be interacting with them on various aspects of our work and explore upon areas where we could potentially collaborate.

During the course of our interactions they queried on how this model can help the poorest of the poor? We briefed them that at KGFS, we don’t differentiate our customers on any grounds be it economic condition, religion, political affinity etc. Thus, the customers in question can avail any suitable financial product from the bouquet of products offered by us.

In addition, the team was apprised of our customer centric approach in launching products tailor-made for them. The team was given the examples of PAI, MMMF and low-interest rates compared to the MFIs, which are designed keeping the financial condition and requirements of our rural customers in mind. More importantly, it was emphasised that we conduct the process of wealth management for our customer, which helps us in identifying his/her financial needs, and thus results in improvement of their financial well-being. They were also apprised of our synergetic collaboration with IFMR Ventures and IFMR Capital to improve the general economic condition of the geography.

They wondered if so many MFIs are already operating in the Ganjam District, why have they not made substantial impact and how will KGFS be able to make a difference?  They were informed that MFIs offer more or less 1-2 products, which in most instances do not meet the varied requirements of the rural customers, and their interest rate are also significantly higher. KGFS intends to bring in a range of products that will address all the needs of our customers, at a much lower rate.

At the Badakushastali branch – Having a look at the CMS

Details of the local terrain and the challenges in operating at such locations were also shared, along with IFMR Venture’s work on market linkages in various fields like dairy, rural tourism, ware house receipt financing, etc and IFMR Capital’s role in capital markets.

The visitors were pleased to know the KGFS model and the way it has been implemented on the ground, and felt it was a great effort towards improving the financial well-being of the rural people.

—
Ashit Mahapartra, CEO, Dhanei KGFS, contributed to this post.

Having a coffee at other stores could be a routine affair, but at Starbucks it’s an experience altogether. To learn what goes into making this experience so unique, Nachiket, Bindu and I visited Starbucks stores in Washington D.C accompanied by Deidra Wager, our governing council member and a team of senior managers from Starbucks. The objective of the visit was to understand, observe and learn from the Starbucks model in terms of their Culture, Processes, Training, People policies and Community engagement and carry some of these lessons back to our financial services work in KGFS.

Interaction with managers from Starbucks

We had an action packed day in which we went from store to store, met Baristas, looked at the back office operations and of course, indulged in coffee tasting!

The biggest takeaway for us was that great culture does not happen on its own, everyone at Starbucks works hard to sustain it. There are a number of small and big rituals that help enforce this.

Take the ‘Green Apron Card‘, which everyone carries in their pocket and that has a beautiful description of the mission and core values. Partners (as employees are called) are given cards illustrating each core value, which they confer on a particular Partner if they exemplify a specific Starbucks value; something that the partners really value a great deal and looked forward to. The team emphasized the importance of “repeatable routines” to reinforce culture.

Green Apron Board

The interactions between the barista and the customer, the barista and the store manager and so on are well-defined and there is a shared language that is tightly aligned to their values. Starbucks lays great emphasis on people management and goes the proverbial extra mile when it comes to valuing its people.  This clearly shows with the mutual respect and genuine admiration that the team members have for each other.

Anil (extreme left) interacting at the store

At the end of the day, our heads were buzzing with ideas for KGFS. The Starbucks team was fascinated at the potential applications of their model to a very different world – that of providing financial services in remote rural India. As one of them remarked, “we give people an enriching experience, you could change their lives!”

—
Anil SG and Bindu Ananth contributed to this post.

It took us a few hours of twists and turns on our way to the Jaikot branch of Sahastradhara KGFS, where I had planned to spend two days. Jaikot is a small village of approximately 150 households.

There was a wedding in the village so it was great to see villagers from the same & neighboring villages gather to celebrate the event. Many seemed to be involved in various preparations of Pahari delicacies. Our JLG customers were obviously part of the celebrations too. My host, Budhi Singh, a farmer by profession, and I sat and talked at length about our lives over fresh milk and rusks.

Budhi Singh, and the other villagers kept wondering as to why have we taken so much pain to come to their village and I could sense that they had a never-ending suspicion about being cheated by a financial company.  It took me a while to make him and the ones who had gathered to understand that we are here to provide them all they want in terms of financial services. What seemed to worry them the most was the consequence of not repaying – ‘What are the penalties you levy?’

On a personal front their problems revolved around water. They felt that water scarcity in the area is their major problem; they can see Bhagirathi flowing down and in spite of one of Asia’s highest dam, The Tehri Dam, in the vicinity, they do not have enough to irrigate. As fields are drying and farming not giving enough revenues they are forced to migrate to Rishikesh, Delhi, Chandigarh and work as waiters and cooks. There is the NREG scheme to build canals but they say what is the point having a canal when there is no water!

Later, shadowy charms of the night and rejuvenating freshness of the morning made me wonder how can one leave this place for the polluted towns.

I also met Basanti Devi, an Ex- Pradhan of the village, our JLG member and also an MMMF account holder. She took the loan to purchase a buffalo while her other group members took it for the repayment of their previous loan, purchase of cattle and house repair.  While Basanti is content with her life, her neighbor’s daughter seemed to be more progressive and was keen to know how we can facilitate her in opening a small tailoring shop.

The JLG customers seemed to be very happy about the transparency at our branch – “They do what they say”, the best thing they thought was the opportunity to have a next cycle of loan.

While it is a good start, there is still bit of apprehension amongst people that we need to win over, which I feel our sustained efforts towards building trust among the locals should address.

—
Sanjesh Salaria, IT Manger, Sahastradhara KGFS contributed to this post.

For the smooth functioning of an organization the importance of support teams cannot be emphasized enough.  Though behind the scenes, they are instrumental in enabling us to do our work efficiently and effectively.

With the novel mission that we have, it is our intent and firm belief that all the teams are in sync towards understanding and attaining our larger objective of ‘Financial Inclusion’. Towards this endeavor, the support teams (Accounts & Admin) on Jan 21st and 22nd visited some of the branch locations that we serve to understand and appreciate the work we are doing on the field and how it is impacting the lives of the local people.

They share their experience below:

Undertaking this field visit was a very good experience and exposure for the team. The support teams normally sits at the Head office, having fewer opportunities to make field visits. However, this visit gave us clear knowledge of the root level functions and an opportunity to meet more trustees who contribute directly to the Trust’s mission.

Dinesh Babu, of Admin team, taking notes on customer statistics

Mr. Gurunath, the CEO of PKGFS, C. Balaji COO of PKGFS, and their colleagues gave us a brief of the PKGFS functions, infrastructure, security systems, facilities, different services to customers and the locations where PKGFS branches are spread.

Mr. Gurunath, briefing the PKGFS activities

Visiting 13 branches during our two-day visit, it was quite exciting to talk to the Wealth Mangers of the different branches and also the customers with whom we had interacted and sought feedback from. The wealth managers provided us with brief knowledge on the procedures for customer registration, product description, product policies, usage of bio metric systems etc.

We are also proud that during the visit we got an opportunity to share few moments with the Koonanchery Branch that just completed one-year of branch operation.

Hepsiba interacting with Veeramangudi JLG customers

It was a great experience to be able to undertake the field trip to the various branch locations and we thank the PKGFS team in making our visit memorable and truly inspiring.

—
The Accounts and Admin team of IFMR Trust, contributed to this post.

Prof. Jonathan Morduch, Professor of Public Policy and Economics at New York University, visited Pudhuaaru KGFS this week. His work has had considerable influence on the way we think about access to finance, shaping some of the key ideas behind the KGFS model.

He first used the ideas of convenience, reliability, continuity and flexibility together in the context of micro finance; ideas that we consider definitional for high quality financial services delivery. Prof. Morduch, who also manages the Financial Access Initiative, has written two very influential books: ‘The Economics of Microfinance’ and ‘Portfolios of the Poor’.

While The Economics of Microfinance was the first comprehensive review of the theory of microfinance, the empirical insights in Portfolios of the Poor brought out the texture of the process by which financial functions are fulfilled by the households, highlighting the importance of consumption smoothing and risk management, widening the narrow enterprise finance focus, which seemed to have become the dominant theme in discussions about micro finance.

Prof. Morduch took time from his hectic India visit to spend one day in Thanjavur, making field visits and brainstorming about the model being developed.

Beginning the day with a brief discussion on the KGFS model, he visited three KGFS branches, starting with Karambayam, the 1st branch of Pudhuaaru KGFS.

The branch visits gave Prof. Morduch the opportunity to interact with clients and KGFS staffs. He discussed many ideas, both conceptual and operational. Though Prof. Morduch was quite generous in his praise of the effort underway at Thanjavur, he gave many critical inputs to improve the model and its implementation. For instance, he suggested that since consumption smoothing is an important function of financial service, the CMS should capture the seasonality of income and expenditure to the extent possible.

In Picture (from left): Shilpa Sathe, Puneet Gupta, Bindu Ananth, Prof. Jonathan Morduch, Anil SG, Jacob Goldston, Suyash Rai, Chandrachudan

We also had a long conversation about the wealth management process, about which he had many ideas, especially on getting the heuristics of the process right. For example, he suggested that we should have a default package of services that could be advised to the client at the time of the enrollment, based on a basic understanding of the client’s profile. Once this is done, the remaining wealth management conversations can happen over a longer period of time. He also suggested some product innovations that could improve the effectiveness of the model. This power packed day has given us much to take away and work on.

—
Suyash Rai from IFMR Trust contributed to this post.