MSC as part of its MoU with the Ministry of Social Affairs conducted an impact evaluation and operations assessment of the PKH conditional cash transfer program. PKH is one of the largest social assistance programs of the government of Indonesia and has been operational since 2007.
The objective of this study was to give a snapshot of the implementation of the program and to evaluate the outcomes of key health-seeking and education indicators of beneficiaries. MSC adopted a modified Regression Discontinuity Design to measure the outcomes in the absence of baseline evaluation data.
The primary data was collected in 15 provinces across 60 sub-districts. The sample consisted of 1467 beneficiaries of PKH, who formed the treatment group and 1437 non-beneficiaries of PKH, who formed the control group of the study.
This blog post is part of a series that covers promising fintechs making a difference to underserved communities and supported by the Financial Inclusion Lab accelerator program. MSC is a partner to the FI Lab, which is a part of CIIE’s Bharat Inclusion Initiative.
Just hours away from booming urban setups, an average agricultural household in India makes a mere INR 6426 (around USD 100) per month: shockingly inadequate but surprisingly common. According to agricultural census of 2015-16, as many as 126 million, or 86% of Indian farmers are small and marginal landholders with a land size of under two hectare. Farmers, especially the smaller ones, lack access to affordable and timely credit, preventing them from enhancing their income – keeping them trapped in a vicious cycle. Could there be a way out?
Today, smallholder farmers are the lowest priority for financial lenders and other service providers in the agriculture sector. The need of the hour is to fill the gap by enabling financing to such farmers at a lower cost.
Smallholder farmers regularly face issues of expensive and untimely financing, high-cost and low-quality agri-inputs, legacy or obsolete harvesting techniques, and an opaque supply chain. This leads to a sub-optimal realization of produce, making them a rare business entity that buys at retail prices and sells at wholesale prices—inverting the fundamental economic model, and leading to consistent net losses. While the Indian government has undertaken several initiatives to improve access to credit, the same could not reach to a majority of smallholder farmers.
Jai Kisan exists to disrupt this landscape by changing the lending ecosystem for smallholders. Jai Kisan is a fintech platform that caters exclusively to farmers by giving them access to finance, and enabling financial health in emerging rural markets.
Born from firsthand experience
Co-founders Arjun (CEO) and Adriel (COO), graduated from Texas A&M University with expertise in investing, structuring, and operations. They got early exposure to solutions, thought leaders, and professors who championed the idea of serving the consumers at the bottom of the socioeconomic pyramid. However, it is when they saw firsthand how access to financial services could enable development in rural emerging markets—and how the rise of the rural consumer is the next big opportunity-that the idea of Jai Kisan was born.
Defeating the credit crunch through a comprehensive fintech platform exclusively for farmers
Jai Kisan is committed to breaking the current informal credit culture that stunts the economic and social growth of farmers. To begin with, it treats farmers as businesses rather than as consumers while facilitating formal credit efficiently. Jai Kisan’s FinTech platform analyzes farmers better, monitors the end use of capital, mitigates production risk, and facilitates repayment.
A unique pitch: Thriving with technology, differential lending
Jai Kisan utilizes a hyper-local credit-scoring assessment based on streams of financial and alternate data. Its credit-scoring platform assesses the risk of farmers quite accurately, enabling financing them at a lower cost. With its unique features and offerings, Jai Kisan aims to differentiate itself from the other players, through an innovative securitization solution that caters to current market needs.
Differentiators of Jai Kisan
Evolution: Unlocking ways to help Jai Kisan expand strategically and extensively
The Centre for Innovation Incubation and Entrepreneurship (CIIE) and MicroSave Consulting (MSC) conducted boot camps and diagnostic sessions to support Jai Kisan to build multiple business skills and identify present and future impediments to their business. Various experts in the field of technology, Corporate Social Responsibility (CSR), and agriculture guided the Jai Kisan team on setting up their IT infrastructure, and mentored and advised the team on improving business plans and building their competitor matrix.
The current model of Jai Kisan requires them to extensively understand the region: including the dynamics of key agriculture value chains, agro-climatic zone, the progressiveness of farmers, existing level of mechanization, and potential demand for equipment financing, before they can begin lending operations. They also need to understand other factors such as credit culture among farmers, a network of input retailers, the existing relationship between key stakeholders, processing or aggregating units, and markets, among others. It needs efficient methods to evaluate the potential of an area and make a go or no-go decision.
The MSC team supported Jai Kisan in assessing the suitability of Barwani district in Madhya Pradesh for geographical expansion of their operations. It was based on a number of factors such as farmers’ outlook towards agriculture; comfort levels in using technology, such as computers, smartphones, and feature phones; and credit behavior of farmers.
MSC also built the capacity of Jai Kisan and equipped them with an assessment template to customize and use in the future for similar assessments while venturing into new geographies.
Advance Mulching TechniqueMSC team with Farmers
The future is flourishing
Jai Kisan plans to scale to 100 operational channel partner locations across Maharashtra, Madhya Pradesh, Karnataka, and Rajasthan by the end of 2019. Further, it aims to invest heavily in building partnerships with credible stakeholders, including input suppliers and buyers. It intends to offer bespoke sustainable financing options across several farm mechanization solutions, enabling many smallholder farmers to reap the benefits in the future.
Follow #TechForAll and #BuildingForBharat to stay updated on fintech start-ups driven to bridge the social, financial and economic inclusion gap.
This blog post is part of a series that covers promising fintechs making a difference to underserved communities and supported by the Financial Inclusion Lab accelerator program. MSC is a partner to the FI Lab, which is a part of CIIE’s Bharat Inclusion Initiative.
Sujit, Shopkeeper,
Maharajganj
Sujit, 25, runs a kirana (grocery) shop at Maharajganj. He inherited the shop from his great grandfather over seven years back, but without legal papers. With expansion on his mind, he seeks capital to purchase products in demand, renovate the shop etc. But lack of credit history and legal ownership documents make Sujit a least preferred customer at banks. Can new-age technology help Sujit?
Small business owners like Sujit need a platform to build their credit history using alternative sources of data – such as cash flow and transactions – and finally enable them to take loans easily and on time.
Micro and Small Enterprises (MSEs) play a vital role in the Indian economy. According to a recent Confederation of Indian Industries (CII) survey, MSEs provided 13.5 to 14.9 million new jobs in the past four years – mostly to unskilled and semi-skilled people from semi-urban and rural areas. This segment is identified by irregular income, lack of credit history in formal financial institutions and lack of physical collaterals – impediments to accessing credit from formal institutions.
Wonderlend Hubs (WLH) utilizes everyday digital footprints and cash flows of an MSE owner to create a credit record. It tracks the repayment capability, business solvency, and credit needs of MSE owners, making them a credit worthy customer in the formal credit market, and facilitating hassle-free and quick credit.
Treading new roads
The WLH team, Ram Ramdas, Founder, Rajesh Iyer, Chief Business Officer and Anusha Jathanna, Co-founder and Head – Platform & Products goes back to Herald Logic, an earlier venture they started together. At that time, they garnered knowledge about big data, machine learning, and human innovation, and observed that credit flow was significantly hampered for a large segment of India due to lack of credit history. This gap steered the idea of WLH – a unique solution that makes finance accessible to “the next 500 million” of India from the MSE and other underserved individual segment.
Ram Ramdas, Founder Rajesh Iyer, Chief Business Officer
The pitch: Building credit history one day at a time
Today, banks find it challenging to assess potential loan customers based on non-standard data without a credit history. Collecting and analyzing relevant data-sets for a small loan ticket size for MSEs is not cost-efficient either. Underwriting and operations are not feasible, making formal credit unviable for MSEs. WLH aims to bridge the credit gap for the under-served segments across the urban, semi-urban, and rural areas of the country. WLH also intends to customize the credit product based on business needs and aspirations.
WLH product range
The evolution: Reaching out to the right target segment
Along with MicroSave Consulting (MSC), the Centre for Innovation Incubation and Entrepreneurship (CIIE) conducted boot camps, diagnostic sessions, and clinics to help the WLH team to tide-over their business, product, and technology bottlenecks and craft sound business strategies.
While WLH wanted to disrupt the credit market for the unserved and under-served segments, identifying the exact target segment was a challenge. The team needed to understand the MSE segment better, their diverse day-to-day business practices, how they sought credit and how the local financial ecosystem influenced their behavior.
These sessions, coupled with MSC’s research, helped WLH gain a better insight into the current business and credit practices, and the demand for credit among MSEs. The team could also assess a merchant’s familiarity with digital financial services, and identify enablers to promote uptake of digital products. Based on the study, WLH gauged their position in the market and how they could design a customized product to maximize business.
A future for Bharat
WLH is a business-to-business-to-consumer (B2B2C) platform aiming to provide fully configurable and scalable managed services to help the new age lenders, aggregators, independent originators, and other fintechs. It will help these institutions to identify customers who can take small ticket size loans and offer tailored credit products to them. The solutions will be available in the form of “The Bharat Credit Stack” – easy to access, easy on the wallet, and bundled API usage plans that target highly customized credit sanctioning.
WLH aspires to be a preferred “credit gateway of Bharat”, where it can use alternate sources of data to generate a credit history for people like Sujit. This will make him a creditworthy customer in the formal credit market.
Along with strategic product partners – “How India Lives” and “121 Mapping” – WLH has also developed Socio-Economic Profiler (SEP), an industry-first, alternate public data-based system. WLH leverages a bevy of conventional and new-age macro-economic data sources backed by machine learning and advanced analytics to build SEP. The SEP will provide indices and scores at pincode levels to predict delinquency. WLH has already done a successful proof of concept (POC) on the SEP and it is in the final stages of client data validation, slated for a market release shortly.
By developing India’s first alternate data credit bureau by 2020, WLH intends to process approximately 20% of the retail and small business loan volumes in India by 2025.
Follow #TechForAll and #BuildingForBharat to stay updated on fintech start-ups driven to bridge the social, financial and economic inclusion gap.
Auditing SHG balance sheets is vital for detecting errors, sloppy disclosure practices and fraud. It is the only way a bank can assure itself of a SHG’s capacity to repay in future. It is the only way members can assure themselves that their savings are really all present and accounted for.
This blog post is part of a series that covers promising fintechs making a difference to underserved communities and supported by the Financial Inclusion Lab accelerator program. MSC is a partner to the FI Lab, which is a part of CIIE’s Bharat Inclusion Initiative.
Yash is a readymade women’s wear shop owner at Krishna Market, Chandigarh, clocking daily sales ranging from INR 10,000 (USD 145) to INR 12,000 (USD 175). Every week, he buys his stock from regular suppliers in Delhi and Ludhiana and also picks a few pieces from other retailers. His average supplier invoice is between INR 30,000 (USD 436) to INR 40,000 (USD 580) – which he pays through a combination of cash and bank transfer, including for the balance amount, after two to three weeks. However, he is still often unable to buy enough stock due to insufficient capital.
This has an adverse impact on his business as his sales are seasonal and managing stocks as per the season is challenging. Is there a better solution for Yash?
Small business owners like Yash do not get adequate support from existing providers like banks and micro finance institutions (MFIs) so, they have to rely on informal financial service providers. A new digital credit platform can address their short-term working capital needs. Read further to find how.
Capital in need is capital indeed
During their Basix years (from 2010 through 2015), both Mohammed Riaz and Nishant Singh partnered to set up various distribution channels for the Indian government. Their experience of dealing with small merchants and microfinance institutions made them realize the acute need for liquidity for mom-and-pop stores, also known as kirana stores, to support the burgeoning consumption-led demand. The founders saw a business opportunity to offer bill discounting to small-town merchants. Further, major changes in the Indian financial landscape such as demonetization, digital India campaign and introduction of Goods and Service Tax (GST) bolstered the idea. That’s when Riaz and Singh put their vision of helping millions of small businesses to practice and thus, Bridge2Capital was born.
Bridge2Capital’s mission is to solve the core problem of small merchants: access to capital to grow their business.
Bridge2Capital facilitates small merchants to avail credit limit through a mobile application-based paperless interface. Within five minutes, a verified merchant can be linked to a formal credit provider, such as a bank or an NBFC, and get a credit limit. Once linked, the merchants can start uploading their purchase invoices into Bridge2Capital’s app without leaving their premises. The infographic below describes the entire process flow of the app in detail. The merchants are then required to repay the amount that Bridge2Capital has paid to their respective suppliers on their behalf, in four weekly instalments within a month.
The pitch: Offering on-the-spot funding for small merchants
By enabling small business owners to avail credit limit from financial institutions through an intuitive mobile app, Bridge2Capital offers several more benefits:
Makes access to capital easier, which helps small merchants do more business and increase income
Provides better business possibilities and encourages livelihood opportunities closer to the community
Impacts the behavioral aspect of small merchants by transforming their business dealings from relationship-based to rule-based
Inculcates discipline in finances to allow merchants to manage their businesses better in a sustainable manner
The evolution: Introducing a novel platform to avail credit
The Centre for Innovation Incubation and Entrepreneurship (CIIE), along with MicroSave Consulting (MSC), conducted clinics, a boot camp, and diagnostic sessions. Subject matter experts from digital credit and marketing departments guided the startup during the sessions. It helped Bridge2Capital gain better understanding of the Indian financial ecosystem and build sound business strategies to complement it. Further, MSC also supported the Bridge2Capital team to streamline its field operations model. Thus, the team was able to craft the app’s business approach and troubleshoot business, product, and technology bottlenecks such as:
Gaining the trust of end-consumers: The merchants still adhere to traditional business models and manually driven systems and processes. Since the Bridge2Capital business proposition is new, small merchants are wary of adopting it. Further, it required the merchants to switch from a cash-dependent business which they were habituated to, to the new age digital mode. The lack of infrastructure or technology was a valid concern but belief in the existing familiar processes was the biggest obstacle.MSC conducted a behavioral research study of small merchants focused on the key barriers that prevented the merchants from adopting the Bridge2Capital app.
Familiarizing them with organized financial lending: Due to prevalent relaxed norms of informal lenders, the merchants had grown to feel that they could utilize the funds for whatever they want, even for personal consumption. The behavioral research study conducted by MSC helped Bridge2Capital better understand merchants’ financial behavior in managing their businesses.
With Bridge2Capital, Yash is able to check and procure stock from multiple suppliers without much trouble. His suppliers now offer him a 5% additional discount as they receive on-the-spot digital payments. With added convenience and discounts, Yash’s business is growing. With a boost in customers and income, he credits Bridge2capital for his better business.
Capitalizing on the future
The business model of Bridge2Capital has been evolving to achieve the best fit with market requirements and financial viability. It has successfully completed beta testing of its technology, with glitch-free and positive ratings of its mobile application by existing customers.
Within the overall market size of over 50 million small merchants pan India, Bridge2Capital intends to reach out to 2 million merchants across 1,500 towns and cities[1]. Today it supports 20 transactions every 30 minutes.Their dream is to support one transaction request a minute.
In a bid to use higher capacity, the company will explore models to achieve a higher conversion of merchants with optimal distribution costs. It aims to create a self-sustaining model that breaks-even at the distribution level – by enhancing user experience on the front end while creating seamless workflows at the backend.
Bridge2Capital will also focus on training and optimizing its field team. The company has chosen its way-forward revenue model and is aligning its teams and systems accordingly.
Post the FI lab support, Bridge2Capital has divided MSC’s recommendations into short-term and long-term actions and has been working towards implementing them to strengthen their business.
In the near future, Bridge2Capital seeks to ensure near-real-time disbursements, real-time reconciliation, and efficient collection processes to safeguard and deliver the “wow” factor to its customers.
This blog post is part of a series that covers promising fintechs making a difference to underserved communities and supported by the Financial Inclusion Lab accelerator program. MSC is a partner to the FI Lab, which is a part of CIIE’s Bharat Inclusion Initiative.
Ram drives an Ola cab from 8am to 8pm across Bengaluru and makes about INR 50,000 each month. After spending on fuel, car maintenance, and the usual family expenses he barely manages to save any money. To add to that there are those medical expenses that come up every few months and Ram inevitably starts looking for a little money to tide these over. Banks and MFIs cannot give Ram one-off micro-loans at a short notice or at an interest rate that he can afford. Friends and family are not always a dependable option. What can be done to solve Ram’s dilemma?
Hardworking Indians like Ram need easy, early access to their salary. Kaarva’s interest-free finance solution does exactly this for them.
Khusbhoo Maheshwari had just graduated from Harvard Business School and Agam Goyal from IIT-Mumbai when they met through an alumni network. They soon discovered that they shared a passion to solve the financial problems of tech-savvy, low-and-middle income (LMI), employed youth.
Recent studies1 estimate that there are 121 million emerging Indian households who can be categorized as low to middle income. They will need INR 218 trillion (USD 335 billion) in credit by 2025. Kaarva’s own research shows that 30 million of these Indians make less than INR 20000 per month (USD 3,600 each year) and need INR 1000 to INR 5000 (USD 15-70) in ‘sachet’ credit from time to time. The problem is real and deep for India’s LMI segment – young people often use up their salary early in the month and then run out of money to pay bills before the next salary comes through. Available alternatives, such as pay-day loans threaten the financial well-being of this segment. Kaarva was born to break the 30-day salary cycle and in effect make salaries available on demand.
Kaarva – the hindi translation for caravan – is a name befitting a company that aims to be a fellow traveler in the financial journey of Indians in the low-income segment.
The pitch: Your salary. Your right.
Our Ola driver Ram has a job that pays a regular salary and a bank account in which it gets deposited. He can raise a request for an advance salary with Kaarva and instantly receive that in his bank account – no fees or hidden charges. What’s more, Kaarva will not prescribe an interest rate or a fee for the loan but will allow Ram to choose the contribution he wishes to voluntarily make to support the service.
Khushboo believes that “Fees are inherently transactional. They give power to the person who sets it and demands compliance from the people who pay it. All companies should ask themselves—if you let your customers choose the price, would they continue to pay you?” –
The process: Radically quick turnarounds with simple technology
All Ram has to do is to download Kaarva’s mobile application. On the chat, he provides his last three income statements, his photo ID card, and a written undertaking that he will replay the salary advance amount the next time he receives his salary. If approved, he will get the money in an hour.
Kaarva is the perfect solution for employers who wish to provide a better financial future for employees.
The evolution: Overcoming roadblocks with support from the Financial Inclusion Lab
Kaarva competed with over 200 applicants to be selected in the first cohort of the Financial Inclusion Lab where boot camps, diagnostic sessions, and clinics helped them think through their business, product, and technology bottlenecks and build sound business strategies for success.
Getting to the right customers
LMI groups in India vary across regions, industries and age groups. There is no set pattern or ‘one-size-fits-all’ formula for success. MicroSave Consulting (MSC) helped Kaarva address its biggest pain-point: identifying the right target customer segment, understanding their needs based on occupation, industry, age, and geography. Kaarva now knows that aggregated cab drivers are the best potential customers for it in the next 6-18 months.
Scaling up at low cost and reshaping customer perception
After nearly a year of operations, Kaarva has on-boarded over 1000 customers. They now need to build a low-risk model to appeal to both, employees and employers, in order to expand. Publishing the app in vernacular languages will help scale up product adoption to millions, at a low cost. Kaarva will also need to shake off the skeptics’ perception of being ‘too good to be true’, owing to its ‘pay what you like’ model.
The future looks bright and fair for all.
“Kaarva is on a mission to help millions of hard-working Indians attain their financial goals. We believe in creating a future where money works for all.” – Agam G
Kaarva aims to make money smarter and work better for people. It means building a society where people work together to support products that help them. After all, it is not people who cannot keep up with bills and expenses; it is the existing systems that hold people down when they are at their most vulnerable. Thankfully, it does not have to stay this way.
“We can create a system built on generosity instead of greed. We can shape a future where people help each other, and companies value people over profits” – Kaarva.
Follow #TechForAll and #BuildingForBharat to stay updated on fintech start-ups driven to bridge the social, financial and economic inclusion gap.
Co-founders Arjun (CEO) and Adriel (COO), graduated from Texas A&M University with expertise in investing, structuring, and operations. They got early exposure to solutions, thought leaders, and professors who championed the idea of serving the consumers at the bottom of the socioeconomic pyramid. However, it is when they saw firsthand how access to financial services could enable development in rural emerging markets—and how the rise of the rural consumer is the next big opportunity-that the idea of Jai Kisan was born.
