i nc lu s i ve f i nanc e i nd i a re port 2014
62
YES LEAP’s SHG lending portfolio is about Rs. 6.5
billion which is planned to grow 2–3 times during 2014–
15 in partnership with 50 or 60 BCs. In the model a
conscious call has been taken that at no point of time BC
and TSP will be the same person as dependency increases.
There is a TSP called Dhruv Technologies which provides
hand-held devices, maintenance and other services.
Though inspired by the ICICI and HDFC partnership
models, there are differences with a larger number of
staff (120 persons for 35 BCs) deployed in support. It
is a new hybrid in which they are selective about the
number of BC partners which is highly restricted. As a
result for one-and-a-half years they do not have NPA and
repayment issues. The bank is expecting that in view of
the new regulations they will soon have NBFC partners
to act as BCs as well. See also Box 3.7.
3.4.3 Branchless Banking by IndusInd Bank
18
IndusInd Bank’s vision for financial inclusion is to
reach out to the financially excluded by providing basic
banking and financial services in a commercially viable
and sustainable manner. It believes in a collaborative
approach since the diversity of the customer segment
requires synergetic efforts to bring local institutions,
technology players, mobile network operators, gov-
ernment institutions, etc., through a partnership/BC
model.
The learnings from FI experience has been that BC
channel is not viable and neither are stand-alone savings
products. It is important to have credit product and to
begin with and add on other products towards viability.
Accordingly, under the partnership/BC model, the bank
approach is a ‘credit led’ model involving players with
the required distribution reach, understanding of the
segment and proven business models for viability. As
of March 2014 IndusInd Bank had an overall outreach
of 1.1 million underserved households in 24 states,
across all delivery models and had opened 2.5 lakh
BSBD accounts through multiple modes. More than 70
per cent of these districts were classified as ‘below average’
or ‘excluded’ in terms of banking penetration in the
B
OX
3.7
SHG-promoting BC
Outreach Financial Services India Pvt. Ltd., formed by investment from SKS and some ex-SKS trust employees, provides financial
services by forming and managing SHGs. The company was incorporated in 2014 in Hyderabad.
Outreach prefers to act as BC of a bank rather than raise the resources to act as an NBFC-MFI. However, they work in the
border districts of Karnataka and Maharashtra exactly like an MFI does adopting a credit-led model and also doing some savings.
Their approach begins with SHG formation in the villages, at own cost, to start credit and savings together. Rs. 300 of start-up
savings per SHG member is required. Apart from insurance contribution and processing fee as a BC, no charges are imposed on
SHG members who are also helped with group processes. There is a disincentive to withdraw group savings and loans are 4–5 times
projected savings.
Lending can commence after doing credit bureau checks required by the bank. In a month’s time the SHGs can receive loans
with weekly repayments. Though loans are to SHGs they are tracked individually. The team is microfinance-driven and focused on
saving and lending.
Loan officers prepare individual KYCs through a thorough process in order to build high-quality data to gain the trust of the
bank; and to prepare to take on the role of credit approval as well in future. For most active banks adopting this credit-led BC
model solves the last mile problem. They are not subject to the MFI act but they still follow similar practices. Outreach gives only
two-year loans of between Rs. 15,000 to 25,000 with a recovery period of two years.
BC commission structures differ from BC to BC depending on the portfolio and territory and vary from 8 per cent to
10 per cent. Outreach does not have an independent lending programme and have formed SHGs only for YES Bank for which it is
the BC. It is operating in extensive geographies. However, Outreach is hesitant to appoint CSPs since for their viability a sufficient
number of villages and collections will be required. Individual bank accounts too will be opened later. It is taking a reverse approach
by starting with SHGs, making them viable and using the surplus to fund technology—biometrics, printing, etc. The target is to
have lady CSPs in one year’s time and for the company to break even in two years.
Source
: Interview with Mr. Surya Kumar, MD & CEO Outreach Financial Services Ltd.
