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.
The vertical take-off of the mobile services industry in India in the past few years has been aided by an aggressive pricing strategy adopted by both handset manufacturers and mobile service providers alike. Significantly, this growth has also enabled rural India to get on the connectivity bandwagon like never before. Today, in many rural parts of the country mobile phone service is an integral part of daily life and is more accessible than electricity, road networks and clean drinking water.
Despite growth in the rural user base, the majority use of the mobile network in many parts of India has continued to be voice based phone calls with minimal data exchange. Data itself is mainly restricted to urban and semi urban areas with text messages (or Short Messaging Service (SMS)) making up a large part of the communication.
Even so, SMS, despite its simplicity remains an efficient but underutilized tool in information dissemination. With the recent spurt in competitive pricing of mobile services including SMS service, and the continued delays in the rollout of next generation data services (3G) – SMS has once again emerged as an extremely effective channel for the delivery of relevant personalized content. Additionally, an ever decreasing cost per SMS has only further bolstered usage.
In India, the challenge to make use of this powerful medium in an effective way gets amplified when taken in the context of rural India where content and language have to be in sync with the needs of the rural mobile user. To leverage this powerful medium, IFMR Rural Finance has deployed an SMS platform (pictured left) that has localization, interactivity and flexibility intrinsic to its functioning. Built with existing hardware, and open-source technologies, the platform is cost-effective, easy to operate and can be rapidly customized to meet the requirements of the end user.
When Sahastradhara KGFS started exploring ways to enhance service delivery they agreed that well informed field staff were an important part of the solution. Comprehensive class room training was already the norm – additional training (given the difficult terrain and accessibility challenges) involved long travel times and was going to be expensive. What the staff needed was a shorter ‘refresher’ flash-card like format. They realized that the SMS platform was a perfect fit.
Under project “Gyan Vardhan” the platform has been launched as a creative supplemental training tool to meet the need for formal information dissemination in between regular class-room training sessions. Designed like a ‘Quiz’, the system offers a fun way for Wealth Managers (WMs) to learn about the latest in products and processes through an SMS based question and answer format using text messages delivered in Hindi.
The quiz is devised to be interactive, with randomized unique questions sent out to each user. Respondents are updated on their score on a regular basis and also get to track the performance of their peers through periodic ranking reports. This instills both a sense of achievement among the WMs and further affirms a commitment to regular participation.
SKGFS – WM Daily update system
This launch marks an important first step for Sahastradhara in its use of mobile telephony to reach out to and better serve customers in the remote rural areas in which it operates. Project “Gyan Vardhan” would keep WMs in the field abreast of the latest product features and processes in a dynamic way, empowering them to give an informed opinion about services when interacting with customers.
Still in its early days, the platform has the potential to be used in other creative ways and deployed across groups. Please write in with suggestions on how this platform can be further built upon and improved. Please drop a comment below.
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Anupama Joshi and Advait Behara contributed to this post.
The Financial Engineering for Low Income Households (FELIH) course, conducted on the 30th of April and the 1st of May for the newly joined Trusters, was the last task of the 2-week long induction exercise. Intended to familiarize the participants with fundamental concepts and tools of finance, the session began with a brief introduction to the core functions of finance, current approaches to delivery of financial services and the conceptual issues in financial inclusion.
Over the two days Bindu Ananth, Amit Shah and Shilpa Sathe elaborated on these topics with a focus on their applications to low-income households, keeping in mind the varied background of participants and the limited time available.
- Amit Shah of IFMR Rural finance takes a session
- Shipa Sathe of InnerWorlds, making a point
The fundamentals consisting of preference theory, human capital, probability distributions and game theory were covered on the first day to ensure that all participants were on common ground. On the second day the focus was on learning how these concepts can be applied to real-life issues being faced by financial institutions today. Other topics covered included pricing an insurance contract and understanding how the Joint liability group behaves as an effective collateral substitute. Nachiket Mor led the discussion on asset allocation and portfolio choice and summed up the teachings of the two days.
The last assignment given to the participants was to develop a financial plan for a low-income household based on a real-life case study of one of the KGFS customers, which brought out innovative ideas on how to improve the customer’s financial well being based on the learning from the two days of training.
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Shilpa Sathe of InnerWorlds team contributed to this post.
The Wealth Management Cross-Functional Team (comprising Amit Shah, Deepti George, Shilpa Sathe, Nitin Chaudhary, Suyash Rai, Bhaskar, Chandrachudan, Viji, Anil, Dave and Bindu) have been working on crystallising the principles of wealth management based on finance theory and driving implementation of these, with the support of KGFS teams and Guru.
An important component of the process re-design was regarding the way we collect customer information in the Customer Management System (CMS). The concern has been that this is a fundamental process whose quality determines the quality of financial advice we give the customer. For example, if we are not aware of an elderly member of the household or a non-resident dependent member, we might grossly under-estimate the liquidity and insurance needs of that household.
This week, the team set about piloting a new process designed to ensure higher-quality customer data. In this pilot process, enrolment is split into two phases. Phase 1 entails the customer coming to the branch and providing very basic demographic information and she gets photographed and biometric Ids taken.
At the end of this brief process, we ask the customer when we can come to his/her house for a more confidential and detailed conversation. This is Phase II enrolment. During this phase, the Wealth Manager sits down with the relevant household members and has a detailed conversation that flows asset by asset (children, house, land, livestock, others). Within each asset, we try to understand ownership, income and expense flows associated with each, riskiness, and finally the goals and aspirations with respect to that particular asset (For ex: I want to renovate my house and put a tiled roof in the next two years or I want to admit my daughter who is currently in the Xth to engineering college). Based on this information, we then generate a Household Financial Well-Being Report that is then the basis of all product discussions and sale to the customer.
- Prof. Viji talking to a customer
- Wealth Manager converses with a customer
This week, the team conducted 15 such detailed household interviews and will go back to the same households in the next few weeks with the detailed plan. As always, the resilience and ambition of our customers humbled and inspired us. Watch this space for updates on the wealth management process re-design and talk to anyone in the team for details.
Recently a quiz competition on Wealth Management and general aspects of KGFS was conducted in Dhanei KGFS, Berhampur. Wealth Managers of all the branches participated in the event and were divided as per their respective branch. After initial screening six teams got short-listed from amongst the 15.
The final round involved the following topics:
- General questions and rapid fire round on products, processes, CBS (Core Banking System), CMS (Customer Management System), Branch information and GK.
- Visual round whereby the WMs were shown photographs of customers of the respective branches and were asked to identify them.
- One case study was given to each team, which they were asked to analyze and present on.
It was very heartening to see the teams answering the questions very well, especially the photographic round where it appeared as if the WMs knew the customers since long. The GK round (comprising questions on Ganjam District, Odisha etc) was a bit disappointing.
The top three teams were:
- Sunapur branch
- Badakushastali branch
- Gandala branch
Itimayee Pala, Training Manager, organized the quiz competition.
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Ashit Mahapatra, CEO, Dhanei KGFS contributed to this post.
A recent ‘Community Connect’ program at Sahastradhara KGFS saw us trudging through to our branch at Chaka, which overlooks the Koteshwar dam on the river Bhagirathi.
Over 160 children had gathered there on Sunday morning to let loose their imagination through colors in the ‘Chitrkala Pratiyogita’ (painting competition). Their eagerness was evident by the fact that most of them reached the venue at 7 AM, two hrs before time! One child travelled 80 km to take part in the event as this was the first time they were having such an event in the area. Sixteen schools in the vicinity participated and fifteen teachers, including two principals, came to encourage and judge the contest. They were very glad that such an event was being held and did not want to miss being part of it.
Artists in unison
The children were divided into various groups based on their age and the theme varied from ‘My green village’ to ‘Environment as our heritage’. It was a challenge to judge while the children waited with baited breath, watching through the broken windows and doors – clearly eager and excited to know the results. The look of elation on their faces after receiving the medals, made us feel like winners! All the participants received a certificate of participation. It was also covered in the local press.
A brief on what Sahastradhara is was told to them and they all nodded vigorously on the fact that one must save for the future.
One child had drawn Sahastradhara branch as part of an ideal village.
The teachers have pledged that they will keep up the momentum and organize more such events. The feisty children unanimously clamored for a sports competition next time!
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Anupama Joshi, CEO, Sahastradhara KGFS 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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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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.
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Ashit Mahapartra, CEO, Dhanei KGFS, contributed to this post.
A training exercise was undertaken recently for the wealth managers (WMs) of Sahastradhara KGFS (from 18th to 20th March) and Dhanei KGFS (from 25th to 27th March). The training involved the wealth managers who had joined recently; and also the WMs who had completed 6 months tenure in KGFS allowing them to refresh their skill-sets.
The trainees were first exposed to assets, liabilities, income and expenditure, and cash-flow of a household and what are the initiatives a household could take in order to improve income, reduce expenses, pay-off high interest borrowings and build assets.
New Inductees during training at Dhanei KGFS
Our focus was mainly on the Wealth Management module for both the new inductees and the refreshers. Discussions were held as to the fears, goals and aspirations of households, and how a Household Diagnostic Report (HDR) is generated out of Customer Management System (CMS). Participants were shown a demo on Life Wealth Envelope (LIWE), showing the comparison of best and worst cases that a household might face and how the worst cases could improve by availing insurance products.
WMs explaining the HDR during the training at Sahastradhara KGFS
A sample Branch Index was also shown to them that helped understand the importance of:
- Collecting comprehensive and accurate data in CMS
- Based on HDR what products need to be prescribed to the household
- Quality of internal controls (Audit)
For the WMs to understand the concept well, an exercise was conducted involving three teams. Each team was given a household data to analyze the financial position and asked to come out with their Household Diagnostic Report (HDR) by drawing pie charts and make recommendations on suitable insurance and investment plans. The teams discussed the entire financial position of the household and as to how the surplus money could be deployed to achieve their goals and aspirations.
We also introduced modules related to Post office products, Public Provident Fund (PPF), National savings certificate (NSC), Kisan Vikas Patra, Time deposits, Recurring deposits, Monthly income scheme, RBI bonds to create awareness on products that are safe, liquid and give a reasonable return. A special module on Mutual Funds was introduced for the trainees to understand the concept of mutual funds and the various categories of it.
An absorbing game was also introduced to emphasize how teamwork plays a very vital role in an organization’s success. The participation was total with everyone realizing the essence of team spirit and togetherness.
Game in progress at Dhanei KGFS
Finally the training ended with an open house where WMs were given space to share their suggestions/feedback.
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Chandrachudan V, Seethalakshmi, Deepti George, Rajesh E of IFMR Rural Finance training team contributed to this post.
