CML is a support umbrella organization for.
capacity building, research, collaborative interventions and policy advocacy in the social sector It was established in 2008 under the active support of Tata Social Welfare Trust (TSWT) an allied of Sir Dorabji Tata Trust, Mumbai. CML is centrally located in Guwahati, Assam and presently functions in a project mode under Grameen Sahara, a non-governmental organization based in Assam.The Centre is a result of untiring effort of a select group of like-minded people from diverse fields sharing the concerted vision of providing a platform resource and capacity building organization to cater to the evolving needs of the budding social sector in the north-east.
Activities of CML
1. CML workshops and seminars
2. Research and studies
3. CML on-site training programmes
4. CML training materials
5. Livelihood support and interventions
6. NGO / NGO-MFI Database
RECAP OF THE INTERVIEW
The following is a recap of all the important issues discussed during the interview with Mr. Partho Patwari, head of CML, Guwahati.
Microfinance has a personal touch
Most of the client-lender interactions have a personal touch, without which the microfinance activity would not be so effective. Most often, the MFI representative behaves as a friend to the client before lending him the money. This ‘friend-level’ relationship between MFI representative and client ensures a higher loan repayment probability. In case the process of loan giving, disbursement and repayment become too technology intensive, the personal touch could be lost resulting in lower repayment probability.
Money Transactions through mobile phones
India has a long way to go before actual money transactions can be made over the mobile phone directly. We will need networks to be installed in remote areas and the co-operation of telecom providers. It is not viable to proceed in this direction considering the present scenario.
Client Information Collection and Storage
Initially, MFIs in India used to collect lots of data about clients which they used to store in ledgers, but then they realized that only 5% of this data was being used. Seeing as the loan repayment rate was higher than 95%, they take less data nowadays. The big MFIs keep computerized records of client information; however these make up less than 5% of the total number of MFIs in India. The grassroot level organizations almost always maintain their records on paper.
Concept of Household rather than client
MFIs give loans to a household rather than a single person.
One household cannot take out more than one loan at one time. This policy is followed by most MFIs in India because they feel it makes it too difficult for the people to repay. There have been cases where this role has been flouted by the people due to inadequate identification systems being used by MFIs. Therefore, accurate and reliable identification of clients is a very important issue for MFIs.
Client Data Collection Process (stepwise)
1. The prospective client is asked to fill up a form with basic personal details and background. In many cases, the representative holds an interview with the user and fills in the form himself before letting the client sign.
2. The form filled by the client is then kept along with the records of the MFI
3. This is followed by an assessment of the lender household by the MFI representative. He visits the household and notes down remarks about their standard of living and income. This is done to assess if the household is capable of repaying the loan. Different MFIs have their own assessment processes.
4. The remarks noted down by the MFI representative are kept along with the form filled by the client.
5. When the same client requests for a new loan, only the household assessment is done by the MFI representative if needed.
6. After these steps have been completed, the loan is finally given.
7. After this, the MFI representative holds regular meetings with his client, and the meetings have a personal touch which goes a long way towards increasing the probability of loan repayment.
Other Areas Where Mobile Phones can help
MFIs may have up to 1200 loan repayment collectors receiving money from clients across its area of operation. Accountability is very difficult to enforce here, and the system is dependent on the trustworthiness of the collector. To circumvent this, there could be a system by which each transaction event (not the amount returned) is logged onto a system by the collector at the time of happening. The one monitoring the system would then have an overall picture of what money is changing hands when. This would considerably decrease the risk of malpractice on the part of the collector.
CONCLUSIONS DRAWN
1. Conducting the MFI process with a human touch and at the same time making use of the mobile phones in order to reduce the process cost will be of primary focus.
2. The reliability of the conducting mobile transactions depends on the service provider and network towers, the technicalities of which will be avoided in our further research.
3. Client information storage is required, though there isn’t a pressing need for the same in the current structure.
4. Management of clients as not clients but as families or groups which hold liabilities for the collaterals is an essential factor.
5. The field trips planned in the further plan of action will narrow down our focus to the exact problems that need to be tackled.
GOAL GRID:
FURTHER PLAN OF ACTION
Mr. Partho Patwari , in addition to offering is co-operation in any way needed, has promised to make arrangements with two MFIs based in Guwahati. There will be a guided tour of the microfinance transaction processes happening on site. We will also be allowed to shadow a collector as he goes to visit the clients. The names of the MFIs are -:
1. Rashtriya Gramin Vikas Nidhi, Assam: Based in Guwahati city. Almost all their clients are from urban areas.
2. Grameen Sahara : Based in Chaigaon village. Almost all their clients being from rural areas.
Examining the Microfinance process in a rural as well as urban setting will provide exhaustive data which when compared and contrasted, may lead to better, conclusions.
The above mentioned field research will conclude by the 1st week of March (assuming the MFIs agree for the necessary appointments) following which we will start prototyping and testing the prototypes.
