“The number of candidates we hope to retain this time should be much higher,” says Shubham Vineet, vice-president (operations) at Adi Chitragupta Finance (ACFL). The company is small, with an annual ticket size of about Rs 100 crore, but it is the only NBFC-MFI (non-banking financial company-microfinance institution) in Bihar
registered with the Reserve Bank of India.
The big players in this space are the banks. Sa-Dhan (an association of microfinance institutions) data shows that banks have a total loan
outstanding of Rs 80,570 crore, which is 40 per cent of the total micro-credit universe.
This year, ACFL advertised for 60 Grahak Mitras, whose job is to traverse the lanes and by-lanes of towns and villages, reaching out to women self-help groups and persuading them to take small loans. ACFL hopes to retain about half of those recruited this time.
Gyan Mohan, director and CEO of ACFL, and a former executive director at State Bank of India and IDBI Bank, says that despite severe unemployment, boys (few women apply for this work in Bihar) often baulk at taking up these jobs because they are required to travel across villages and semi-urban areas on bikes, and cajole women to take out small loans. They have to be weaned into the job, says Mohan.
One reason for the reticence could also be the risks involved. Confidence tricksters operate at citizen service points, from where people draw their money, and Grahak Mitras are sometimes waylaid by criminals who steal their cash.
At Sameli village in Katihar district, branch head Vishal Kumar explains the details of the loans that ACFL will give out the next day. He makes each woman understand that she has to stand as surety for the loans given to all the members of their group. If one of them defaults, the others have to pitch in to clear her dues. They have to also clarify that their families are aware of the financial responsibility they are taking on. The ticket size of each loan
of Rs 30,000 is divided amongst at least 10 members, so the impact on each woman is not too big.
Kumar seems pleased as he looks at the large number of women craning their necks to listen to him. By the end of the next day, the branch has handed out loans to over a 100 women towards financing work in fisheries, agriculture and rearing cattle.
To cut the risk of cash transactions, instead of the Grahak Mitras collecting the instalment payments from the borrowers, the women are asked to come to the centres to make their payments. Gyan Mohan explains that the scattered movement of the women from their homes to the nearby branch offices of ACFL draws less attention. Of course, the offices have to keep strongrooms to handle the cash.
Similarly, ACFL does not hand out the loans to the women, but deposits the money in their bank accounts.
So the staff also check their bank account numbers for accuracy. The moment a borrower signs on for a loan, their financial details are uploaded to the credit bureaux at the national
level. Apart from creating a credit record for the women, this also ensures that the ticket size does not exceed Rs 1.25 lakh per lender at a time.
The women this correspondent spoke to are not sure exactly how the process works. But they all seem happy with the consequences. “My next loan could be cheaper if I pay off this one,” says Putul Devi of Shihuli village.
According to Sa-Dhan data, in the last quarter of the calendar year 2019, the total disbursement of microfinance was Rs 63,968, which translated into a 22 per cent growth, year-on-year. And while the average ticket size of the NBFCs is Rs 28,719, Tamil Nadu is the largest state for the industry, followed by West Bengal and Bihar.
Yet problems linger. At his office in Patna, Gyan Mohan is working out the details of the postings for the boys ACFL has recruited. He pauses to explain that though the women borrowers can read their mobiles and punch in numbers, they find it tough to write their names in bank withdrawal slips. So they use fingerprints.
Sometimes, this gets them into trouble at the citizen service points, which they use as bank counters, since they often end up offering more than one set of finger prints. There are cases where their entire bank balance is cleaned out. Mohan says the problem could endanger the fledgling small savings culture in these areas. And it also raises the costs of the loans.
Harsh Shrivastava, CEO of Micro Finance
Institutions Network, agrees. According to him, the demand for microfinance loans is expected to be more in towns than in the villages. For the companies, too, the cost of delivery in towns is lower.
Avhanda, a slum near Darbhanga town serviced by ACFL, is an example of this trend. Here, the women push the company representative, Chandra Bhushan, to give them larger loans of about Rs 100,000 each. Reena Devi, a widow, who leads the women’s group, says they want to buy cattle to sell milk to the local sweet shops.
Little wonder that banks, small finance banks and MFIs are pulling out all the stops to reach out to potential customers. A well-attended cricket match in a semi-urban area is just one more place to promote their wares.