The typical clients to the microfinance process are Low-income persons, self-employed, household-based entrepreneurs. In rural areas, small farmers and food processing and petty trade. In urban areas, Shopkeepers, service providers, artisans, street vendors, etc.
There are many micro-financial institutions in India which cover mass population and a number of villages including rural areas. These Institutions face a number of challenges like:
- All most all of the transactions that take place in the field are not automated, hence these result in high transaction costs and non-availability of information to the customers.
- All the transactions that take place in the field have lots of data entry issues and untimely report generation problems.
- The in-automated process leads a number of problems like frauds and errors too.
- The problem of sustainability in the micro-finance is to be tackled with ICT.
In the light of these issues, a highly automated and efficient electronic transaction system is required, which can be brought about by using various commonly available low-end mobile phones. This can help the organizations by providing a single data entry point of an electronic transaction that can link the various offices in the villages and rural areas to a single head office.
Objective:
The solution will involve the development of an ICT mobile application that can manage the electronic data about all the clients and the micro-financing process. The project will involves the development of Mobile Computing technologies for micro-finance institutions operations to facilitate transaction processing, information collection and dissemination of data directly at field level. The major activities that would be managed through the mobile phone are:
- Records and book maintenance
- Loan Request
- Loan disbursement
- Repayment of loans
Preliminary Analysis (SWOT):
STRENGTHS:
1. Use of mobile phones is on a rise and many rural areas have been provided with mobile connectivity.
2. Maintaining e-records cuts down the cost incurred by the MFIs hence providing more sustainability.
3. Transactions and loan disbursements could be done more quickly meeting the immediate demands of people.
4. The system will have a direct impact on the economic status of people.
WEAKNESSES:
1. appointing fewer but trained professionals may pose as a hurdle.
2. Mobile connectivity in a few remote areas.
3. Awareness about mobile usage and developing trust on e-transaction system.
OPPORTUNITIES:
1. A better way for a MFI to maintain sustainability.
2. Better regulation and supervision of the operations and transactions.
3. A more trusted was of mobilizing savings from one MFI to another.
4. The system will cater to the limited management capacity of any MFI.
THREATS:
1. Loss of money or records due to poor mobile network connection in a few areas.
2. People tend to avoid e-transactions and choose paper records as a more trust worthy system.
3. Affordability and maintenance of mobile.
4. Data corruption or loss at head offices.
