This video gives market insights from Kenya: The number of people who have borrowed digital loans, the portfolio quality of these loans as well as the number of people negatively listed on the credit reference bureau
Blog
Overview of digital credit
This video gives an overview of the rapid growth in digital credit and focuses on the Kenyan landscape
Redeeming the pledge on gender equality
In existing products where women have been put at the centre of financial services, they have been conflated with ‘family’, leading to poor adoption. There is an urgent need to consider women as a distinct segment with specific financial services requirements. To enable this, financial services providers need to study the myriad social and behavioural impediments impacting women, and use this knowledge to design customised financial product offerings. An immediate push to bring gender-centricity as a lens and a mindset to the forefront of policy framework and product design can do wonders for financial services providers by adding a customer base of over a billion women, vastly undeserved, women.
A concise version of this paper was published as an op-ed in Mint.
What is statistical credit scoring?
The ability of Financial Institutions (FI) to effectively underwrite microenterprise loans depends on accurate assessment of the loan applicant’s ability and intent to repay. Traditionally, financial institutions use their past knowledge and experience of financing microenterprises to carry out such assessments.
Assessing the most ambitious public financial inclusion drive in history
The Department of Financial Services (DFS) in the Ministry of Finance, MicroSave, and the Bill & Melinda Gates Foundation designed a survey to understand the coverage and quality of Bank Mitrs across a sample of SSAs; and to understand customers’ experience with PMJDY. The study was conducted in November and December 2014 across 41 districts in 9 states. A total of 2,039 BM locations and 8,789 beneficiaries were surveyed. BMs were assessed on dimensions such as availability based on the physical address and contact details provided to DFS by banks, transaction-readiness and branding. The customers were asked questions about their experience on aspects such as first bank account under PMJDY, receipt of RuPaycard and availability of Aadhaar and its linkage in PMJDY account. 69% of Bank Mitrs were physically present at the stated location, 48% were transaction ready and 11% were untraceable. 86% of PMJDY account holders reported that this was their first bank account and 18 % have received Rupay card.
RuPay Sparklin – Do not delete
RuPay offers various benefits
In our previous blog in this series, we presented recent trends in the fintech space in India. In that blog, we also defined the low- and middle-income (LMI) segments and examined the challenges that fintechs and investors face in catering to these segments.
RuPay cards issues against total number
On 26th March 2012, National Payment Corporation of India (NPCI) launched Rupay – India’s own payment gateway network. ‘RuPay’ is a low-cost alternative to other payment gateways, such as MasterCard and VISA. Banks pay lower transaction processing fees as transactions are performed on the domestic payment network. This makes RuPay a viable digital payment solution for the rural, low, and middle-income segments in India. RuPay offers various benefits to its cardholders, such as cash-back on utility bills and ticket bookings, in-built accidental insurance cover, and online payments across e-commerce portals.
To read our report on the fintech landscape in India, click here
To know more about the Financial Inclusion Lab and to apply, click here
Will India be better now?
NPCI has established a domestic payment gateway to turn RuPay into a fully functional card. The payment gateway, ‘RuPay PaySecure’, has been promoted as a solution for various e-commerce portals in India. The gateway aims to nudge domestic consumers to make digital payments. The government provided important support to the RuPay card by bundling it with Basic Savings Bank Deposit Accounts (BSBDAs) opened under the national financial inclusion programme Pradhan Mantri Jan Dhan Yojana (PMJDY). Various stakeholders we interacted with in this research suggested that irrespective of the challenges pertaining to the LMI market, it offers huge potential. These stakeholders include investors, fintechs, and incumbents. Most of them, however, have been taking a cautious approach and waiting to see a proven business model before venturing into this space. A 2017 Deloitte report suggests that in the medium term, fintech players will consolidate their position in urban areas and metro cities, and will extend to the rural and semi-urban space over next 3-5 years.
Challenges on the demand-side
Low awareness among customers
Customers are unaware that:
- They are eligible to apply for a RuPay card in the first place; this lack of awareness thus reduces penetration of RuPay cards;
- The RuPay card PIN becomes invalid after 45 days4 if the card is not used within this period after initial activation;
- A RuPay debit card comes with an in-built accidental cover of INR 100,000 (1424.8 USD)5 . However, to keep the insurance cover in-force, the cardholder needs to carry out at least one transaction every 45 days.6 Customers are largely unaware of this add-on benefit and the associated conditions – thus also reducing the potential use of RuPay cards.
Challenges on the supply-side:
Non-distribution of RuPay cards or PINs by BMs:
- BMs do not receive RuPay card or PINs within stipulated 7-8 working days from the bank branch to which they are linked.
- BMs are unable to inform customers to collect their RuPay cards or PINs. Their phone is either switched off, not reachable or is invalid.
- Some bank branch managers are reluctant to encourage applications for RuPay cards as they fear that cards held by illiterate customers may lead to fraud.