Reported by: banking|Updated: December 24, 2019
Bengaluru-based IIFL-owned microfinance company Samasta Microfinance has two focus areas – women empowerment and promotion of dairy industry. Venkatesh N, founder and MD of the company, explains how interventions by the company have made crucial difference in the rural landscape:
N. Mohan: Samasta Microfinance has a unique mission – empowering women. Can you give a brief account of the programs that you have devised to make this mission meaningful?
Venkatesh N: At Samasta Microfinance, we know that with financial independence, women can contribute decisively towards the well-being of their families and enrich the quality of their lives at the same time. We therefore are deeply rooted to our core objective of helping women secure a better future for themselves and their families through our accessible micro loan offerings. Our aim is to encourage women who lack access to formal financial channels, by providing them with timely and adequate credit. Apart from financial services, we also offer various non-financial services such as life and hospicash insurance along with financial counselling to our members. With wide range of loans such as water purifier loan, cattle loan and loans for buying induction stove and utensils among others, we are always looking out for ways to improve the lives of our customers.
Can you outline the advantages as well as disadvantages of this singular focus? How has the company been able to overcome the disadvantages, especially through product design and customer education?
At Samasta we believe in the power of change and therefore our core focus remains on our women customers. We provide affordable group and individual loans to meet various needs of our customers. Group loans are primarily offered to fulfil working capital requirements for income generation. There are other group loans as well for meeting additional business requirements, access to education and buying life enhancing products. Individual loans such as dairy/cattle loans and MSME loans are offered to promote livelihood opportunities. We also provide training sessions before loan disbursal to ensure that members understand the product details and repayment structure.
What is the average ticket size of the loans you offer? Can you explain the processes involved in the lending – right from loan origination to sanctioning to repayment?
We have bouquet of products to cater the needs of our customers. These range from Rs2000 to Rs40,000 for group loans under JLG. At the same time, we offer up to Rs200,000 under individual and secured categories. Our average ticket size is Rs26,500. We do area selection focusing on economically viable areas for micro-lending operations and these areas are evaluated basis various parameters such as population, degree of poverty, accessibility, political stability, safety etc. This is followed by an area survey done by our senior officials through a transact drive across the identified area. Consequently, a branch survey is performed to determine whether we can open a branch with a minimum number of customers as required within the target segment for scaling up. This is then followed by a village/street surveys done by the field staff to obtain basic information from prospective customers. Then the branch is opened with an inauguration ceremony and local people are made aware of who we are and what are our loan products.
To what extent are the processes automated? A brief account of the technology platform you have.
We have a completely automated our loan processing workflow to reduce human errors and to put in place a payment system to enable seamless fund transfers resulting in faster loan disbursements and significant reduction in turn-around-time (TAT) with increased sales. Furthermore, we have introduced mobile-based apps with intuitive user interfaces leading to quick enrolment and collection process. We are currently working on introducing a CRM module to enhance customer service and experience. This module will be leveraged as a customer retention tool through cross-sell and other activities targeting existing customers. We have worked on enhancing our Information Security Management System (ISMS) framework to tighten information security and customer data privacy. Our robust MIS platform for effective management decisions will soon include analytics.
In a world that is rapidly embracing the digital way of life, we have adapted to the changing needs of the market and introduced tech-based disbursement process. Digitization has ensured easy accessibility to micro loans in the rural and remote areas of all the 16 states where we operate. With a focus on providing superior customer experience through higher productivity and innovative solutions, we have automated and digitized our operations for faster and secured operations.
How do you devise methods and strategies to counter payments defaults? How effective such methods have been? Is reliance on JLG model a proven strategy?
We have always followed the group lending or the Joint Liability Group (JLG) methodology wherein loan is disbursed to each individual in the group and the group guarantees for loan repayments. For us, the JLG model has resulted in consistent success rate in repayment of loans since the group dynamics create the necessary discipline among the members.
What are the products that you have designed and developed that have made a significant mark on the customers?
We constantly review the process and attempt to reduce the TAT of delivery as we value customer needs and on time delivery. In the last couple of years, we introduced Surabhi, a product, designed to serve customers who are actively involved in dairy related activities. In the last 2 years, we have supported around 15,000 customers in Karnataka, Tamil Nadu and Rajasthan. We are also supporting these customers with our cattle health centers in terms of providing advice on fodder, livestock development related activities like benefits of artificial insemination and other cattle-health related issues. These livestock development health centers are now quite popular as they serve not only our customers, but we have kept it open for all in the village communities.
We also focus on customer financial literacy and have therefore initiated Financial Literacy Centers, an effort that has been recently recognized by SKOCH (Group) Award.
Can you give details of how you prepare your staff for taking up bigger challenges?
At Samasta Microfinance, we focus on 2 critical aspects: (i) use of technology and (ii) continuous learning and development of staff. The senior officials of the company constantly lead from the front when it comes to implementation of technology to make processes error-free and to streamline operations. Internally, we have an online learning platform, good residential training facility at all the regional offices. The training programs are conducted under expert regional trainers, field training is given by field training managers. These efforts result in plenty of skill development and upskill programs and leadership training for junior and mid management by external and internal training experts. This was the key which helped us in establishing the business with young professionals under the guidance of seasoned microfinance professionals. We pride ourselves for being early adopters of technology for collection and acquisition purposes. We have a strong team working on various internal as well as external data analysis and its use for our business. We also have Samasta Connect, a program for employee communication and various other applications for different purposes are now common within the organization.
Can you give an account of your programs that go beyond business like financial literacy drives, programs for women, children and the elderly that have made a real impact?
It is our continuous effort to create value beyond business and therefore our Corporate Social Responsibility (CSR) initiative is so designed so as to create an impact on society with a special focus on women, children, the elderly and marginalized communities. Our flagship CSR projects are focused on financial literacy for rural women, cattle well-being for farmers and skill development for youth. Currently, we have fully functional Financial Literacy Centers (FLCs) in West Bengal, Odisha and Tripura and 2 Livestock development centers (under Project Kamadhenu) in Annedoddi and Hucche Goudana Doddi in Karnataka. Along with this, we are also actively assisting people affected by the cyclone in Odisha and have also provided relief measures to those affected by floods in Karnataka, Maharashtra, Tamil Nadu and Kerala. A part of our CSR initiatives is to actively engage our employees to volunteer towards developmental projects which include holding blood donation camps and tree plantation drives.