-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 Anupama Joshi, CEO, Sahastradhara KGFS and Advait Behara, IFMR Rural Finance
In an earlier post on this blog, we mentioned that ‘Mobility’ was going to play an important role in enabling access to KGFS’ products and services in remote rural locations.
In the district of Tehri Garhwal in Uttarakhand where Sahastradhara KGFS operates, physical access to KGFS branches is made challenging by an inhospitable terrain. With much of the district located at and between the foothills of the Himalayas, access by road is limited. For many villages access is restricted to un-motorable roads which are often sealed by landslides caused by torrential downpours – a frequent occurrence during the monsoons. The monsoons are particularly fierce in these hills and continue from June until late September. Winter doesn’t make things easier. Snow in the more northern areas often brings life to a standstill – Villages are cutoff from power, communications and access to basic supplies.
It’s no doubt then that Sahastradhara makes an ideal case for mobility solutions that tackle many of these access restrictions.
Where would we start?
Enrolling a significant number of potential customers is a fundamental step in delivering services. Enrolments are necessary in building the critical mass of customers that is needed to effect change and create real access to the benefits that KGFS could bring to an area.
Most Sahastradhara branches cover a service area with a population of around 7000 inhabitants. Branches are typically centrally located near a market place making them accessible when people visit the market.
Since its start, at every place that Sahastradhara opened a branch, local store owners were quick to realize its benefits. Store owners were often the first customers of the branch. Thereafter frequent visitors to the market would approach KGFS to inquire about its services and would usually signup as well. This process would continue for a few months until a certain level of enrolment equilibrium had been reached at that branch.
After a few months activity would slow down. New customers would become scattered. New enrolments would no longer be proactive. New enrollees would visit KGFS to address a specific need – a sudden loan requirement – rather than as a planned financial initiative. Also many of these had family members that were already KGFS customers – and had already experienced the benefits that Sahastrasdhara KGFS had to offer. Unfortunately new (financially excluded) families were still keeping away. Sahastradhara recognized this. There was a need to “reach-out” to more people. Enrolling more people into the Sahastradhara network was one way of spreading the message and creating awareness.
The Challenge of Enrolment
The enrolment process at the branch was straight forward. Unlike signing up for common utility or government services, it was easy (customers only needed proof of their identification and home address) and it was free.
KGFS had incorporated a comprehensive customer registration system. This was done to create a unique customer profile that would allow easy access to all services that KGFS had to offer. In addition to basic demographic information, the system was capable of capturing details about the family, its lifestyle, its assets and liabilities and importantly digital copies of the customer’s photo, fingerprints, and even scanned images of identification documents. A high degree of branch automation using computers, technology peripherals and internet connectivity made all this possible.
And therein lay the challenge.
How was branch automation going to be made portable enough to allow Sahastradhara to ‘reach out’ further?
Early trials with laptops that replicated the branch setup were encouraging. The premise was that field staff would be able to take the branch setup (in a portable form using laptops) to the customer’s doorstep.
While theoretically feasible, in practice this setup did create an interesting set of challenges:
- Portability/Weight: A Laptop computer + a flat bed scanner + an optical fingerprint reader + camera + necessary charging and connectivity cables suddenly meant that field staff needed to carry a few kilos in a backpack while climbing up and down steep inclines to get to villages in their territories. Reports from the field suggested this was difficult particularly during harsher weather.
- Power: Even with extended capability batteries – peripherals that drew current from the laptop ensured a typical battery life of only 3-4 hours. With access to power still a challenge in some villages frequent trips back to the branch were necessary.
- Cost: The multiple peripherals required meant more fixed costs per branch – sometimes in excess of 10% of existing fixed branch costs.
- Human Angle: While technology in the form of television, satellite tv, and telephone was common place in these areas – computers and the peripherals necessary for enrolment were still alien. Field staff would often face puzzled looks and hesitation as they went about setting up the equipment before starting an enrolment. Customers were uncomfortable with the elaborate technology layout for what they felt should have been no more strenuous than a paper based survey – the type other agencies in the area often used. Allaying people’s reservations and fears was necessary.
All these challenges pointed toward a need for mobility that was ultraportable, efficient, and easy to use.
Enter the Mobile Phone
Mobile phones seemed like a reasonable alternative. They were ultraportable, easy to use, easily available, affordable, rugged and a familiar technology in rural India. But were they a possible replacement for the laptop system?
To replicate the laptop system (and the branch) the mobile phone would need to be an all-in-one data entry/capture device; it would need to be the camera it replaced; also the flat-bed scanner, and the biometric authentication device.
Could this be done?
To make the system viable, hardware costs needed to be kept to a minimum. But fingerprint biometrics built-in to phones were rare and did not always meet regulatory requirements. Thus the fingerprint scanner had to be an external device capable of interfacing with the phone. This was an added cost. The cost of the phone therefore needed to be minimal – necessitating a very simple phone with a basic feature set.
The Beginning of the End Result
Sahastradhara KGFS has recently successfully run a proof-of-concept field pilot for mobile phone powered enrolments that addresses a number of these feasibility questions.
Using a basic camera enabled mobile phone with special software, field staff were able to capture photographs of new customers. The images were clear and distinguishable with a resolution comparable with the branch based system. Know your customer (KYC) document images were also captured using the same camera.
A wireless and portable finger print scanner was used to capture customer finger prints and automatically transfer them to the phone’s memory. Customer demographic and other details were (for the time being) captured using a standard paper based customer registration form – in the future this too could be entirely phone based making the paper form obsolete.
At the branch new customer data was entered into the system manually, and the corresponding images and finger prints were uploaded to a remote server through the local computer and internet connection.
Going forward
Still at an early stage in its development cycle the system has already been well received by field staff. At the pilot branch where the system was tested, month on month enrolments nearly doubled. If these numbers are indicative, the system shows great promise going forward.
This is a first, yet important, step as we make mobility an important element in our mission to provide financial access in even the remotest of places.
By definition, the likelihood of almost any uncertain event can be quantified. Operational risk management however is qualitative since it involves not just events, but people, systems and processes. At a recent Spark session Biswaranjan Mohanty, outlined the framework and mechanics of the operational risk management system at KGFS.
Basel II defines operational risk as “The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.”
Losses can be of three types:
- Expected Losses
- Unexpected Losses
- Catastrophic Losses
Loss frequency and severity
Companies deal with expected losses by provisioning for them and insure themselves against catastrophic losses. Unexpected losses however, can be controlled by implementing efficient risk management techniques. They can be managed using the operational risk management framework.
The three pillars of the Operational Risk Management framework are:
- Risk Measurement
- Risk Management
- Risk Governance
These pillars provide foundation for: Risk Assessment, Key Risk Indicators, Risk Mitigation and Loss Data Management.
Risk Assessment is performed through both qualitative and quantitative techniques and frequently use models based on scenarios. Key Risk Indicators are metrics that can evaluate potential loss or exposure to a risky event. A risky event is one whose outcome is uncertain. Risks can be mitigated through stringent identification, assessment, analysis and governance of risk and risk management policies.
Loss Data Management
The denominator of the capital adequacy ratio – Risk Weighted Assets (RWA), is a summation of Credit RWA, Market RWA and Operational RWA. In the case of operational risk weighted assets, KGFS specific metrics are put in place to detect events, triggers and losses. All anomalies and issues are catalogued using a three level classification (based on the ramifications of these issues). Classifying loss events in this manner makes for easy review and reporting. All such events are also assigned a code to facilitate the creation of a very generic risk management model. Any event which results in an operational risk loss to the organisation will be captured through the database. The same data would be of help in future to build a suitable model for determining the PD (Probability of Default) and LGD (Loss Given Default).
Key Risk Indicator Analysis
A Key Risk Indicator (KRI) library has been developed to track risk metrics. All KRIs are coupled with processes since these processes are standardized and are common across all risk entities. KRI specific thresholds are also incorporated into the model. Regular Audits are conducted at KGFS once in a quarter and the observations are fed into a web based audit application called the Centralized Auditing System. A specific format has been developed to capture these observations. The format lists all existing processes and sub-processes and all observations are pigeon-holed into buckets that fall under this classification. The thresholds for the KRIs have been set at this level. As part of risk review and mitigation, KRI reports are generated every month or every quarter.
However robust risk management mechanisms alone are not sufficient for handling highly qualitative risks. Operational risk definition, governance and policies have to be continuously updated in order to maintain a quality risk management system.
- By Anupama Joshi, CEO, Sahastradhara KGFS and Advait Behara, IFMR Rural Finance
Well regarded academicians have highlighted the importance of financial services in bringing about a transformation in the lives of those that haven’t traditionally had access to those services. The IFMR Trust was an early leader in understanding this need.
In a relatively short span of time, in the three geographies where the Kshetriya Gramin Financial Services (KGFS) initiative has been active, we have already seen a significant difference in the overall well-being of those families that have actively sought to leverage the services of KGFS and those that have not. KGFS was able to provide these families with a sense of financial stability through a portfolio of specially designed products and services and thereby improve their prospects of a brighter and more comfortable future. KGFS excelled in providing its customers products that were competitive and culturally significant to the local territory.
The next important step for KGFS, in affirming its competence in this role, needed to be customer appreciation of its services. Key to making this happen was going to be:
Accessibility, convenience, and usability
To achieve these, there was a need for KGFS to be closer to its customer, and similarly to bring the customer closer to KGFS. This need for flexibility in delivering services is what made the element of MOBILITY as a new entrant into the operating model so imperative. Mobility was thus a combination of accessibility, convenience and usability delivered using a combination of mobile technologies.
Customer Challenges
Early feedback from the field had indicated two clear challenges facing customers on the ground.
1) In-person Payments
2) Branch Access Restrictions
Several KGFS loan products like the Joint Liability Group (JLG) loan required customers to repay their installments weekly, and in the case of the JLG, the payment had to be in person, with all group members present at repayment. This was a challenge for many customers, some of whom had to forgo daily wages to be present at the branch, often spend on transport to reach the branch and coordinate to ensure that all group members were present at the same time.
The other issue was that, while KGFS branches opened early and shut late – even working all-day on Saturdays; certain customers had expressed their inability to be present within branch timings and had started requesting longer branch hours.
Clearly, distances and immobile infrastructure were hurdles in accessibility, convenience and usability.
Thinner branch front-ends using technology
As KGFS expanded through a growing network of branches, it was reaching ever closer to its customers – typically no more than a 5 kilometer radius away. The distances between customer and branch were being shortened. With a high degree of branch automation using computers and internet access, branches had been optimized to cater to large numbers of customers with minimal operational overheads. Yet, some important questions had to be answered –
Could the branch front-ends be made even thinner and even more nimble?
An important need was that the branch not just be in proximity of, but feel local to every customer it served. This was an interesting challenge. KGFS realized that a network of appointed agents could provide exactly that flexibility.
Could KGFS take its services to the customer’s doorstep?
Roving agents would:
a) Complement the activities of the primary area branch – and often even free up branches from routine activities.
b) Allow the branch to focus on more skilled services such as financial advice in the form of customized wealth management discussions.
For the customer, interactions with the branch needed to be direct when required – such as when discussing wealth management strategies and indirect (through an agent) in less private dealings.
How was this going to be possible?
Technology was no doubt the answer. A combination of devices and access points was going to be necessary. For example:
- Automated cash deposit machines – possibly located at a main market or in a prominent store could do away with agent intervention while handling cash.
- An agent equipped with a portable access device would be free to transact from a fixed location or at the customer’s doorstep.
- Customers with access to a connected device would have the convenience of performing certain operations in the privacy of their home at a time convenient to them.
KGFS had already tested Point of Sale (POS) machines as transaction points at branches. While these had worked fine at the branch:
- Costs were relatively high
- Technology was dated
- Functionality and the ability to add new features were complex and limited.
So what else could be used?
The ubiquitous mobile phone
Mobile phones on the other hand are an impressive alternative. With over 500 million mobile phone connections across India today, even in rural markets most extended families have access to a mobile phone. Importantly people are comfortable using them. The social challenge of people having to accept a new technology does not exist. The technology has been around for a while. It is stable, easily available and connectivity across the country has been getting better and less expensive.
Through special applications the mobile phone can replicate almost all branch functions. KGFS appointed agents that already own mobile phones could be up and running access points within days with minimal additional hardware costs. Using biometric authentication, and encrypted data sessions, applications can be made secure and robust. Newly available security solutions even allow remote erasing of data in the event the phone is misplaced or compromised.
Mobile phones do hold a tremendous opportunity for KGFS to expand its reach. In areas like the remote hills of Tehri Garhwal, where Sahastradhara KGFS operates, the challenges of physical access make the case for mobility very strong. No doubt in areas like Sahastradhara mobility will be the key to accessibility!
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!
With a vast majority of the Indian population living in the rural hinterland, its economy and growth are linked to developmental efforts. Crucial to this is in ensuring that the fruits of financial inclusion reaches their doorstep. An article in today’s Economic Times, showcases the work of IFMR Trust and KGFS towards this endeavor.
Click here to read the article.
Last month the Wealth-Management Cross-Functional team had visited 15 households in Thanjavur to pilot the Wealth Management process. A week ago we revisited some of these households with a draft of the Financial Wellbeing Report to see how we could engage in a constructive dialogue with the household on various aspects of their financial lives. One such family was that of Jaya (name changed), a customer enrolled at Andipatti branch of Pudhuaaru KGFS.
The Family – Jaya (40) and her husband Rajan (42) live in a thatched house in Karukkadipatti village. The couple has three children Neetha (16), Vinodini (18) and Pramod (20). While the daughters Neetha (1st Year BSc) and Vinodini (10th Std) are still studying, the eldest son Pramod has just started working in Qatar as a driver. The daughters stay at Jaya’s sister’s house in a nearby village.
Their Activities – Till about 5 years back, Rajan worked in a hotel in Singapore. When he returned, he decided to manage the tea shop business that his father used to run. Rajan manages to make about Rs.1,20,000 a year from the shop. Apart from this the family owns about 1.3 acres of agricultural land and manages a net income of about Rs.35,000 by growing paddy for two seasons and black gram for one. The two cows they have fetch them a net income of Rs.4,000 a year. The family spends about Rs.39,000 a year on routine household expenses. Picture: Rajan (right) interacting with the team.
Goals – Among the list of goals that the household wishes to fulfil, Neetha and Vinodini’s education over the next five years alone will cost the family Rs. 3.6 lakhs (1 lakh = 1,00,000). Other priorities include their marriage (Rs. 5 lakhs each) and expansion of the shop (Rs 20,000).
With this and other information about the household, we set about preparing a Financial Wellbeing Report for them. The report talks about four pathways (Plan-Grow-Protect-Diversify) towards financial wellbeing – all of which try to answer the central question for the customer “How can Wealth Management help improve my financial wellbeing?”
The Advice – The specific advice around protection includes Life Insurance for Jaya (Rs.50,000), Pramod (Rs.5,00,000), Vinodini (Rs.4,20,000) and Neetha (Rs.3,80,000); Accident Insurance for Jaya (Rs.2,00,000), Rajan (Rs.1,75,000), Pramod, Vinodini & Neetha (Rs.5,50,000 each). Insurance for the cow and shop is also suggested upto their current market values. Life Insurance decisions are linked to human capital (Present Value of Lifetime Income net of Own Expenses) of each member.
As regards the surplus generated by the household, the advice was to allocate it in the following proportion: Index Fund – 20%, Gold – 18% and MMMF – 62%. This advice is consistent with the desired features of high returns, diversification from local assets and diversification in assets uncorrelated with human capital. Jaya should also maintain a separate balance of about Rs. 10,000 in the MMMF account to take care of liquidity needs.
The shop being a high TIP (Total Income Potential) asset, the advice is to borrow for its renovation. For all other medium to long-term goals that are 3 to 8 years away, a combination of savings and borrowing is advised.
For a full explanation of Jaya’s Financial wellbeing report please click here.
We would urge all those reading this to share their comments and suggestions on the process and the recommendations in the comments section below. What are we missing?
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Shilpa Sathe of InnerWorlds and Amit Shah of Rural Finance contributed to this post.
As part of its community connect program, Dhanei KGFS had organized a drawing competition for children to let their imagination and creativity loose through colors. It was month of May, peak of summer season where temperature soars, but that was hardly a deterrent to the exuberance of children who braved the heat and reached the venue well before scheduled time. Keeping this in mind Dhanei KGFS conducted the event early morning so that kids can be home before the scorching heat takes over.
Registration process for the competition started at 07:00 AM at the venue of Badakushastali High School with overall 173 children registering for the competition; they were then divided into three categories according to their age and the class in which they were studying.
Student participants
The competition started at 8:00 AM sharp and the theme was “My Village”, allowing students complete liberty to wander through their world of imaginations and draw the best they can. The drawings were collected one hour later and it was a visual treat to look at the panorama of colors on display and the vivid thoughts that children depicted in their drawings.
A drawing master from the school helped to judge the drawings and the results were announced at half past nine. There were three winners from each category and ten consolation prizes were also awarded to children from each category as a token of their participation and their skill. The community connect program was finally concluded at half past ten with the prize distribution ceremony.
Some of the winning entries
Overall it was a heartening experience to engage the community that we are serving through such a program and see the little artists display remarkable creativity.
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Itimayee Pala of Dhanei KGFS contributed to this post.
Livestock rearing is central to the livelihoods and survival of small marginal farmers and landless agricultural laborers across the country. As livestock related activities help to maintain a daily inflow of income for these households, livestock economy is a source of self-insurance for farmers. It provides a diversified source of income and mitigates the uncertainties of seasonal income from their traditional sources like agriculture.
In line with the mission to serve this target group of remote rural customers in Thanjavur district, Pudhuaaru KGFS (PKGFS) launched its ‘Livestock Loan’ product to fund customers who are interested in pursuing dairying activity.
Some of the salient features of this product are:
- Single loan to buy two cattle and two staged disbursements aligned with the lactation cycle to ensure continuous income from dairying activity to the customer.
- Repayment management– Seamless repayment management enables customers to supply milk to a designated milk vendor and the milk vendor remits amount earned by the respective customer to PKGFS. The installment amount will be deducted and the excess amount would be invested in respective customer’s MMMF folio, which can be redeemed as per customer needs.
- Anywhere disbursement – Based on the customer’s convenience, loan can be disbursed either at the branch or in the field (cattle seller’s place) after the necessary due diligence.
First Livestock loan disbursement. From left: Rohit Mukkawar (IFMR Rural Finance product and process team), Manikandan (Wealth Manger), Ravi (Asst Regional Manager – PKGFS ) handing over the loan amount to customer Poongothai & her husband Rajenthiran
The first loan was disbursed at Veeramangudi branch on 25th May, 2010, after the mandatory health checkup and valuation by Dr. Gangadharan, DNE’s veterinarian on the field. The second loan was disbursed shortly afterwards to customer Malarkodi after completing the necessary ground procedures.
Rohit Mukkawar says “The product & process were designed after taking inputs from various sources. Interested & eligible customers are being identified by our wealth managers. ARMs along with the veterinarian will conduct the mandatory health check up & valuation process before disbursing the loan. We look forward for a smooth piloting phase and hope to see the product reach the scale-up stage at the earliest”.
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Bharathi Kannamma of IFMR Rural Finance contributed to this post.
The sight of the mighty Himalayas and the scenic surroundings of the hilly terrain can be a source of respite for sore eyes, but when taken in the context of connectivity (both telecommunications and internet) it presents a critical challenge.
Sahastradhara KGFS (SKGFS) located on the foothills of the Himalayas, faced issues of intermittent network connectivity that interfered with its day-to-day operations, resulting in transaction delays and increase in customer wait-time at its branches.
The hilly terrain not only caused instability in continuous network availability at the SKGFS branches, but also the eventual disruption took a lot of time to correct. The options available from the network providers were limited and costly.
Earlier VSATs (Very Small Aperture Terminal) were used to provide Internet connectivity to the SKGFS branches. However VSATs have their own challenges of latency (delay in transmission) and are prone to disruption due to erratic weather. To top it, the running costs of VSATs were high.
To address these issues, IFMR Rural Finance in partnership with AirJaldi – which used the technology that came out of the University of California, Berkeley – created an interconnected network between the SKGFS headquarters in Jolly Grant and its branches, with Internet being supplied through this network. The average distance between branches is 10 kms with the first branch being 75 kms away from the headoffice in Jolly Grant.
Relaying seamless connectivity
The Jolly Grant network uses a combination of wireless WiFi links, utilizing the publicly available and unlicensed 2.4 and 5.8 GHz frequencies and wired LAN cabling. Relays, the antennas used to transmit and receive communication, are all mounted on low masts and are equipped with battery power backup allowing the network to stay up during power cuts – a frequent occurrence. Two of the relays, which are located in areas where power is very erratic or not available at all, are solar powered.
The network is managed and monitored from a central Network Operation Center (NOC), which utilizes a range of Free/Open Source tools configured to suit the network topology. As a result of this solution, now all SKGFS branches have connectivity bandwidth of 256 Kbps and the Head Office is connected at a speed of 512 Kbps through the NOC. The local SKGFS team has also been trained to handle day-to-day issues of basic maintenance.
The Rural Finance technology team is confident of scaling up this technology to other branches of Dhanei KGFS and Pudhuaaru KGFS as and when required.
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Raman Taneja of IFMR Rural Finance Technology team contributed to this post.
