Selling Micro Finance

8/3/2019 Selling Micro Finance

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Selling of Micro-finance

Products



What is Microfinance ?

“ Microfinance is the provision of small financial

services like credit, savings, insurance and

money transfer to poor and low income households in rural and urban areas.”



Financial Services in Rural Areas

Microfinance: Financialservices for poor and low-income people

Rural finance: Financialservices used in rural

areas by people of allincome levels

Agricultural finance:Financing of agriculture-related activities

Financial services for the rural poor : Financial services

for all purposes and from diverse sources tailored to the needs of

poor people in rural areas.

FINANCIAL SECTOR

MICROFINANCE

RURAL FINANCE

AGRICULTURAL

FINANCE



Potential

By 2012 :◦ Indian MFIs are expected to build a portfolio

of $6.27 billion

◦ Would cater to over 48.7 million borrowersfrom present 22million

Interest rates average @ 24-25%

In India repayment rate is 95%



Type of MF organizations

Formal institutions◦ Micro finance institutions like SKS, Share, Spandana and

Basix.

◦ Banks – Regional rural banks, Agriculture developmentbanks etc.

◦ Government

◦ NGOs and cooperatives

◦ Chit fund companies

Informal institutions

◦ Local money lender

◦ Shop keepers



Need of Financial Services

Investment Products:-To cater to the need for increase in wealth

Insurance Products:

-To cater to the need for risk cover

Loan Products :

-To cater to requirements of finance

Remittance Products:

-To help in sending & receiving money



IFMR’s KGFS model

KGFS stands for Kshetriya Gramin FinancialServices

To be located in remote, rural India

Create a blueprint of standardised products and

processes

Demonstrate a sustainable model with profitability asthe key parameter of success

One branch with population per 5-10k village

Use technology as key driver of innovation and useseveral modes of delivery channels like mobile phonesetc



Mission :

“ to maximise financial well being of every individual and

very enterprise by providing complete financial services in

remote rural India”

A New Approach to Rural Finance



Four Pillars of KGFS Approach

Customer Centricity

Convenient FlexibleContinuous

KGFS

Reliable



Business Structure

20 Hubs reporting to HOOperational control of thebranchesNo processing

Thin Front Ends20 branches reporting toa business hubOne for every grampanchayat covering 10k

populationService Area – 4 to 5KMsEnrolment and servicingof clientsFully connected(V-SAT)

Head office

Thin FrontEnd

BusinessHub

BusinessHub

Thin FrontEnd



Sales Structure

Regional Manager

COO

Wealth Manager Jewel Appraiser

Assistant RegionalManager



Product offerings

Asset products Insurance

Group loans

◦ Joint Liability Group ( JLG )

Secured Individual Loans◦ Jewel Loans

Unsecured Individual Loans

◦ Retailer Loans

• Micro-pensions

• Insurance

o Term Life

o Accident

o Weather /Crop

o Livestock

o Catastrophic HealthInsurance

• Mutual Fundso Money Market Mutual Fund

o Micro-SIPs

• Gold Accumulation Plan

Investment products

Others• Remittances

• Payments

• Savings

Third Part Products



To avail of any product / service from KGFS,

customer needs to be an enrolled member of KGFS

The first step in customer enrollment is the KYC process

Lets move on to see what is KYC…….

Sales procedure



KYC PROCESS

KNOW YOUR CUSTOMER – KYC

◦ A legal requirement for enrollment

◦ Is beyond documentary proof / evidence

KYC is a process which helps us in

`KNOWING’ our customer completely before

entering into any kind of contractual relationship

What isKYC ?



KYC – A summary

KYC is thus a 4 step process :

Gathering information from customer

Gathering supporting documentary proof

Verifying the details of the customer

Recording the verification details



Customer enrollment

Take finger prints on Biometric cardreader



Details entered in system



SMART card issued to customer

Card contains data of customer &fingerprints



An enrolled customer with her SMART card



Challenges

Remote rural locations have immenseinfrastructure establishing challenges

Winning confidence of rural population

Shifting customers from traditional moneylenders

Space is being populated by new entrants



Plans for future

Near future:Business Expansion: Targeting 150 branches

across three states in next 12 months

Continuous product innovation (e.g. remittances,

customised insurance)

Wealth manager’s training and certification

Long Term:

Continue to establish KGFS entities/ branches

Assisting others to replicate this model acrossIndia

Serving millions of remote rural individuals and

enterprises



Customers’ Voice…..which motivates

us“I have taken loan for my daughter’s education. She is pursuing her Engineering degree. She is the first in my family to enroll into a college.Thanks to PKGFS , we could fulfill her dreams and our dreams of seeing our daughter as an engineer”

“My husband is working in Dubai as a labourer. My husband comes once in 2 or 3 years. He sends money to his brother and not to me. I am not comfortable visiting a bank without my husband. The officers there are educated city folks. They give us many forms to fill. I feel out of place and am afraid to ask them questions. But PKGFS people are from our villages. They are like my own brother and sister. I don’t feel ashamed to ask them

questions and seek clarifications. I feel more at home. I can take my son along when I visit the branch and he can play there while I finish my work”

“At PKGFS, our boys treat me with genuine dignity. They show no difference.The most powerful person (Village Welfare committee president) and his wife or a dalit lady – have to sit together in the same desks. Everybody is treated with same courtesy. To me that is more important than financial services they

Selling Micro Finance

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