Presentation Document

Bachelor Thesis

View more presentations from S Nitish Sivaramakrishnan.

Design Process

Final Mobile Interface

Wireframe testig with MFI

Modify Group Application testing





Detail recording application testing



Create New Group Application testing

Wire Frames of the Prototype

Scenario

Major stakeholders:
MFI, MFO, SHGs

Scene: Monday, late evening.

A MFO, Mr. R. Baruah, is preparing to go to sleep to leave for his round within his jurisdiction to collect the "repayments" of the loans on Tuesday. He is set to collect from about 8-10 groups in about 3 hours, so he has a note of the groups to be visited after having made it from the master register at the office and their corresponding time on his notebook. He has to make this list every previous day and also he has to meticulously rule it to make tables for the data.


Scene: Tuesday, early morning

Mr. Baruah has in his inventory, i) a notebook which contains the list of groups for the morning and the evening halves with time and ii) a receipt book which has a carbon paper facility iii) a mobile phone to make calls and for other standard uses.

He could tell the address of the destination from the name of the SHG, so he sets off from his residence (not from the MFI) to reach at the right time, since the time is also mentioned in his notebook. First on the list, a Mrs. M. Boro scheduled to pay 473 x 5, for an initial loan taken of Rs. 5000 based in an area 4 km away from the residence of Mr. Baruah.

He reaches on time as mentioned in the "loan card", 9:40 am. He collects the money, fills in a receipt with her group code and gives her a copy; he also makes an entry into the loan card (which Mrs. Boro has). He has to look into his notebook again to have a look at the next group that he has to visit. Mrs. A. Deka in Panbazar, with visiting time 10:00 am. He puts the money in his bag and then sets off from Mrs. Boro's residence to Panbazar on his bike, and repeats the process, more or less.

On reaching the MFI after the end of half-shift, he would have visited 10 SHGs to collect the loan repayments. He entails the dealings into a daily collection register (he is now writing the records TWICE) which is then transferred to the ledger portfolio. He sets off for another shift in the afternoon and returns at 5 pm to wrap up the documentation part and then he is done for the day and on the same day, prepares a list of groups to visit on Wednesday.

Persona of MFE

Task Flow Diagram

Visit to Grameen Sahara

Loan Disbursement Process
Disbursement is done at branch offices via Bearer /Endorsed cheques. The following table describes the work allocation between MFE and BH in the loan disbursement process.
Disbursement Vouchers are prepared for each disbursement. The Branch Accountant updates the Cash Book or Bank Book for each disbursement. (The case is different where a branch with more than 75 lakhs of outstanding has an accountant owing to large transaction in the branch. That is happening in Chhaygaon Branch.) Any disbursements for Fixed Assets must be recorded in the Fixed Asset Register.

Branch Staff Involved & Main tasks to be performed

MFE
1.Communicate to the client about the loan sanction and loan amount
2.Collect required documents Photo ID (ration card or voter ID card)
3.Trade licence
4.Completion of loan documents (DPN ,Loan Agreement )
5.Prepare Loan Passbook
6.Thorough check of documentation done
7.Upfront charges to collected :loan processing fee, membership fee, and risky fund/insurance fee during disbursement
8.Issue receipt against each cash collection

BH
1.Arrange Fund for disbursement
2.Checks the loan documents
3.Collect upfront fee, membership fee and security fund/ insurance fee from MFE and reconcile against loan to be disbursed
4.Double check documentation
5.Briefly explain to the clients about the loan terms and conditions, credit discipline and eligibility criteria for subsequent loan.
6.Remind members on group responsibility & mutual accountability
7.Ensure documents are signed by the client
8.Disburse loan to the clients to the clients
9.Deposit collected fee and charges in the bank
10.Account for the day’s transactions.
11.File and store the documents at an appropriate location


Loan Repayment







Recovery of loan instalment will be made by the MFE at field level on a weekly basis. Repayment is to be collected by the concerned MFE in cash on issue of a cash receipt duly signed by him/her and the borrower who paid the cash. The money receipt is in two copies, one is to be submitted in the office and original for the client against payment. The MFE also updates the passbook of the client. The repayment collected is deposited in the bank (or branch office if Bank is closed) by concerned MFE. The deposit details should be given to the Branch Head with receipt copies. If in any case client comes to the branch office for depositing the repayment, Branch Head should accept it and issue money receipt against it.


Procedure for Disbursement


Activities
• The loans are disbursed only after they have been sanctioned by the HO.
• As the disbursement takes place via cheque the BH/MFE first goes to the HO before the disbursement to collect the cheques for the sanctioned loan.
• The pre informed members come to the branch office along with the required documents (Id/address proof) and fees (LPF & Insurance premium).
• The MFE collects the fees and documents from the members and executes the loan documents. (Like DPN, Inter se agreement) and issues a receipt for the fees collected.
• MFE handovers all the executed loan documents along with the JLG file containing the loan application form to the BH.
• The BH checks the documents for completion and if the any of them are not complete asks the MFE/client to complete them.


Procedure for Loan Repayment Collection Process


• MFE will go to attend Centre Meeting for repayment collection. He/She shall carry Disbursement and Collection Sheet (DCS).
• All JLG members in a Centre should deposit their weekly instalments to the respective GR before the arrival of MFE
• GR should hand over the total collected amount to the MFE with pass books.
• MFE should count the cash and tally it with total due from DCS.
• If amount collected is tallying with total due, MFE is to update the DCS (member wise) and get it signed by the GR. He/She also has to update the individual Pass Books and give it back to the GL.
• If amount is not tallying with total due mentioned on DCS then ask GR to make up the difference.
• If difference amount gets collected then MFE proceeds further, otherwise follow the delinquency management process.
• MFE is to return to the branch with DCS and cash. He/She should counts the total cash collected for the day and tally total due for the day.
• BH should check the DCS file for the next week meetings and insure that all the staff are completing it on regular basis.
• MFE should double check their DCS before proceeding for repayment collection.

Visit to Nightingale Charitable Society (Microfinance)

Background:

Structure of the Organization:
The organizations structure has a 2 tier hierarchy with the head office and 4 branch offices; there are 25 employees in total in the organization. With the operations officer at the top and followed by the respective branch managers with 4 field officers per branch, the organization is well managed. The head office of nightingale charitable society for Microfinance is situated in chandmari, guwahati. The 4 branch offices are at Ulubari, Chandmari, Beltola and Malegaon.


Mission
To economically empower the low income segment, especially women, by providing access to need-based financial services in a cost-effective manner on a sustainable basis.

Vision
Nightingale as the most trusted Microfinance brand in India, providing access to diverse financial services to one million families by 2018.

Objectives
To form Self-Help Groups (SHGs), Joint Liability Groups (JLGs) etc. and arrange credit facilities to income generating activities through Micro Finance Schemes. To support the poor and the unemployed youths in income generating activities through Micro Finance plans and provision. To impart training to the entrepreneurs.

Achievements:
•The loan recovery rate is above 98 per cent.
•Accountability and transparency are the primary guiding principles of Nightingale Charitable Society since its inception.
•Currently, we have strength of 198 women-run SHGs comprising 1980 members in Nalbari and Kamrup districts of Assam.
•NCS has 200 Joint Liability Groups (JLGs) comprising 1000 members. We have advanced credit among 400 individual members as well.
•Started off from a turnover of 1 lakh in 1997 to 7 crore turnover in 2009.


Process:

The NCS has implemented the JLG or the joint liability group scheme for conducting the microfinance process. The main components under the scheme are:
(1) mobilizing into groups
(2) capacity building
(3) Credit support.

NSC considers only married women in groups of 5 for the joint liability, with one member being the group leader among them who is held responsible for the group.

DISBURSEMENT
The clients interested in taking up loans from the NCS contact the field officer in one of his visits to the localities. The field officer informs the concerned area branch offices about the same. The field officer/ credit officer conducts a 3 day training as a part of the identification process, appraising the clients about the various products, rules and regulations set by NCS. As a part of the NCS identification process, the field officer conducts the Group Record Test (GRT)/ Group Assessment Test. The FO or CO then fills in the Group assessment form and the group training record, and submits them to the Branch manager (BM). Based on the branch manager’s approval the CO then takes the process forward.



When the branch manager approves the group training record, the CO gives the necessary documents and forms that each client needs to fill up to take a loan namely :
(1) JLG agreement paper
(2) Promissory note
(3) Loan application
and gets them filled by the clients and brings it back to the branch office. The branch manager checks and approves all the documents.


The particulars about the client are entered in the client information register and also in the master register where the following fields are listed:
(1) Name
(2) Address
(3) Date and time of collection
(4) amount
(5) group number/code
(6) phone number (if any)

The credit officer then fills in the Fund requisition sheet (FRS) which records the following details:
(1) Group code
(2) name of borrower
(3) area/ address
(4) amount
(5) cheque no.
(6) Cheque number.

Next the clients come to the branch office to collect their loans after the branch office gets the cheques from the bank, the details about the cheques are updates on the FRS which is then approved by the Operations manager.

Separate entries are done on the cheque entry register, and the cheques are disbursed to the clients after they sign the agreement, promissory note and on the master register.

Facts:
1. Loan amounts : 5000, 10000, 15000
2. ROI : 13.25%
3. Only married women are eligible
4. Loans given as cheques only
5. Over 98% repayments
6. 1% risk fund and other charges – is charged per client
7. 900 new clients joined in the month of February, year 2010.

LOAN REPAYMENT
The CO collects the repayments from the group leaders of respective groups, subsequently he makes entries on the receipt booklet and provides the client with a proof of cash received and keeps a copy for himself. The receipt booklet contains the following fields:
(1) group identity
a. name of all members inc group leader
b. area of meeting center location
(2) installment
a. Principal
b.interest
(3) amount
(4) payers sign
(5) collectors sign

The CO collects money from the scheduled groups and returns to the branch office. The CO then fills the entries in the Daily collection register which has the following fields
(1)name of group leader
(2)Group code
(3)Installment
a. principal
b.interest
(4)money receipt number
(5)total payment and the entries go on to the final register.

The CO also makes entries on the loan card which is then verified and approved by the branch manager. The CO then prepares for the next day and leaves to the listed localities from his house.

Facts:
1.Monthly repayment structure (most others have weekly repayment structure)
2.If one person is not able to pay his share, the other group members must pay extra to raise that amount of cash.
3.Every Thursday of 1st week of every month (they follow a system of days in a week so that public holidays etc will not affect their schedule of loan repayment collection)
4.473 collected per month for a 5000 loan (interest rate of 13.52% p.a)
5.No security deposit

Credit Officer:





1.Maintains a receipt book and a personal record book.
2.Each credit officer is given a certain sector to cover. This sector might have many meeting centers for each group; sometimes multiple groups have the same meeting center. With increase in no. of clients, no. of meeting centers will also increase, making it difficult for the CO to keep track of what all groups to visit on any given day.
3.Has a mobile phone
4.Goes to the field from his house at 0930 hrs, returns by 1330hrs and inputs records in main register. Cash is deposited in banks before closing time of 1600hrs.
5.Salary structure : 3000 p.m apart from incentives

Visit to Centre for Microfinance and Livelihood, Guwahati (CML)

ABOUT CML
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.

Working Plan

Time Frame: 2 weeks

As discussed in the telecon conducted on 3rd Feb 2010, our immediate objective is to do user research in the field. To achieve this, we will be visiting the office of ASOMI, an NGO which is the biggest MFI based in Guwahati. This institution currently does not use any technology in conducting its operations, and seems like a good place to start our enquiries.

To visit ASOMI website: http://www.asomi.co.in/index.html

Activities:
1. Observing and documentation of operations at the MFI.
2. Collection of subjective feedback about real problems faced by the operators and clients through shadowing (as discussed in the telecon).
3. Recorded User Interviews and Contextual Enquiries.
4. User Feedback through Questionnaires.
5. Report with data and inferences will be posted on the blog.
URL: http://www.microsmfp.blogspot.com

Additional Activities:
1. Contacting MFIs based in other Indian cities and discussing how they could be of assistance.

Timeline:



Click the image to open a larger view.

Proposal: Design of a microfinance based mobile interface for a low-end mobile

Abstract:
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.