Microfinance sector in India and Equitas entrepreneurship programs

Youth is the Future of every nation & inheritors of the earth tomorrow. When a country has a healthy youth population, you will find the country making headway in terms of overall development and progress.
The world today has transited into a ‘Technology Era’. Technology has enabled progress in all fields and all societies. Technological revolution has changed the face of lives of people bringing healthcare, information and connectivity to even the most remote areas that were hereto isolated.

John Alex, Group Head-Social Initiatives from Equitas, Small Finance Bank & Program Director-Equitas Development Initiatives Trust, our speaker at GMS 2019 in Istanbul as an expert in this field shared his opinion about the microfinance sector in India and programs that Equitas bank provides.

 

  • How is the current microfinance sector running in India? Upsides, downs and potential opportunities for further development?

Microfinance has evolved into a vibrant Industry exhibiting majority and growing into a variety of business models. MFI’s in India exists as Not for Profit entities like Trusts& Societies and for profit institutions like NBFC’s Banks, Cooperative societies, Regional Rural Banks and other larger lenders have played an important role in providing refinance to these MFI’s, many Banks have also leveraged the SHG’s channel either directly or with Government subsidies

With Financial Inclusion emerging as a major policy objective to reach the unreached in the Country, Microfinance has occupied centre stage as a promising conduit for making credit easily available to the unbanked segment of the society. At the same time, the practices followed by certain lenders has subjected the sector to greater scrutiny, which by and large has been welcomed by all stakeholders, in a way the model is now well established and accepted.

 

  • Since the microfinance sector is changing fast, please tell us what is the future of microfinance?

The microfinance sector is changing fast: the supply continues to grow in loans worldwide and a 5% growth in the number of customers in 2017. Services, actors, regulation and technologic innovations are changing for microfinance tomorrow remains an alternative to banking services for more than 2 billion people still excluded from the traditional banking system globally. The banking sector, the increasing role of new actors, the expansion of services offered to clients, but also the importance of control in a maturing industry will be the big topics of microfinance in the next decade.

 

Financial inclusion in 10 years?

The sector of inclusive finance will continue to expand beyond traditional microfinance institutions.
New actors such as mobile operators and distribution networks will increase the offers of financial services and products at lower cost to reach the poorest and most isolated populations. The online banks and the new technologies will also market these large scale offers.
The regulations will be more focused on client protection than institutions, processes or products.
The financial inclusion will become a reality in most regions that are currently excluded, with the exception of a few very isolated locations.

 

Structural changes expected:

Technological advances will cause major structural changes in the sector.
Digital finance and mobile banking allow already a larger number of people to access financial services and products.
Thanks to technological innovations, not only the contribution of financial services is more diversified – offering credit, insurance and savings products – but these new low-cost payment infrastructure also give other services and public facilities more accessible to the poor, such as water pumps or sunlamps.
This type of innovation will rise with the spread of mobile banking services in the developing countries.
Niche actors, such as small financial institutions like Equitas and agent network managers( one stop Banking Outlets), will emerge and try to get a place among the big banks and small customers.
Simple and easily marketable products will be needed because the banks will not be able to train their agents, scattered throughout the country, with specificity of complex products.

 

  • How to increase the impact of microfinance in poor areas?

 

1. Better understand the needs of the poor and study their preferences, their financial behavior.
2. Translate this knowledge into products that are better adapted to their individual needs and affordable. It is also necessary to ensure that the services available to the poor enable them to improve their living conditions.
3. Promote the protection of clients in institutions through a combination of insurance, savings, retirement products and develop commitment to customers to develop financial education.

The changes in the sector of microfinance will be carried by newcomers and organizations specifically targeting customers outside the microenterprise segment.
The arrival of these new actors will undoubtedly provide a broader and more diverse customer base, including the poor but also the less fortunate who are still financially excluded. These organizations work with tighter margins than most MFI , but should be able to manage it thanks to higher volumes.
This process will take some time, but by 2020, we will see some of these new financial actors pushing the MFI to become competitive or further specialize in the niche market of micro loans that they perfectly manage. The result will be a healthier, more diverse market, and especially more financial inclusion.
I think there is a very big opportunity waiting out there.

 

  • What are Equitas Bank entrepreneurship programs covering?

 

Amt in Crores( 1 crore Indian Rupees=142000/-USD)

(Small business loans includes Housing especially affordable housing to over 10000 clients average loan size will be USD 9500/-)

 

 

 

 

 

 

 

 

 

  • Is it easy to approach them? Who can apply? and What administrative procedure needs to be followed?

 

While there is still a huge Demand supply gap, we have loan officers with fixed targets to reach out to those that do not have access to easy credit for want of income proof, we have designed a matrix for them and do the credit assessment based on certain key parameters and extend loans that would otherwise be a distant dream as most of these clients would not have financial proof of income, IT clearance but however have a substantial income flow.

Who can apply: any person above the age of 18years to 55 yrs with proof of KYC and either with an existing business or with proven business acumen especially for young and persons with disability( we financed more than 25000 women with disabilities of whom over 4000 are blind women and recently started loans for Transgenders and have included over 200 in group loans.
Typically the time take for processing a loan is from 5-15 days.
All field staff canvassing for loans have Tablets and tech driven, with options to make online mobile/ internet repayments.
For MFI loans it is unsecured and group guarantee for other bigger loans either with primary or collateral security.
For housing loans- clean title of house.
Mortgage loans.

Loans for purchase of used commercial vehicles for first time users.

 

  • What are yours (Equitas Bank) intentions for International development? In the seance of Central Asia (Caucasus region), Middle-East and Turkey.

 

Well honestly we do not have any on International expansion plans, the Indian market is so big and with such a huge demand -supply gap, we have our hands full and want to make a name for ourselves as a “BANK THAT UNDERSTANDS SMALL & MICRO ENTREPRENEURS BEST” in a Fair and Transparent manner

If you want to hear more, don’t miss his presentation at our Global Microfinance Summit in Istanbul.

 

This will be your unique opportunity to meet the experts from microfinance world.

 

Register here: https://tickets.euro-events.co/index.php?route=product/product&product_id=73

For more info please visit our conference website: https://euro-events.co/3rd-global-microfinance-summit/