By Puneet Gupta, IFMR Rural Finance, with inputs from Darshana Rajendran & Balajee GE
Five years ago on this day, we took a definitive step towards executing against our vision of delivering financial well-being for rural India with the first branch of Pudhuaaru KGFS going live in Karambayam village of Thanjavur district. Karambayam had no bank branch (then and now). The credit cooperative society that used to function in the area was defunct. The nearest bank branch is more than 5 kms away.
In five years, the KGFS branch in Karambayam has enrolled 2076 unique households with multiple members from each household signing up. It has infused credit of Rs. 114 million into this local economy which have been utilised for retiring informal loans, purchase of livestock, expansion of agricultural activities and house repairs among others. The branch has had an on-time repayment rate of over 99%. This branch staffed by three locally hired wealth managers also has in the last five years insured 1846 individual lives (through a term life product), insured 4589 clients against disability and opened pension accounts for 551 clients.
Arguably, Karambayam has come closest to a vision of total financial inclusion across all villages of India.
Our client processes have evolved significantly over the years. My earliest recollection of our client process is of the year 2009, a year after the first branch went live. This was the year when we rolled out our first Household Diagnostic Report, a simple report designed to support our wealth managers to offer financial advice to our customers. The report was basic and recommended insurance values for only the primary income earner of the household. Over the next 4 years, this humble Household Diagnostic Report has metamorphosed into the Financial Wellbeing Report. Our financial advice has become more comprehensive and includes in its purview an analysis of household cash flows for a 100 years, visually demonstrate the impact of planned and unplanned expenditure, help plan retirement, understand the reasons for financial vulnerability of the household, understand growth areas and challenges, identify insurable risks and assign priorities to such risk and help diversify the portfolio of investments that a household makes.
It is not surprising, that with the detailing of our Financial Wellbeing Report, our product suite has undergone a significant change as well. Commencing operations with standardised loan products like the Joint Liability Group loan and Loan against Gold, today, Pudhuaaru KGFS has loans designed for very specific purposes that are backed by activity-specific templates. These loans are designed to be in-sync with the household’s income pattern and are much more efficient than the one-size-fits-all approach that products such as the Joint Liability Group loans offer. From loans to insurance products such as life, accident and asset insurance to international remittance facilities to opening bank accounts, to pension services, the number of products available to the customer right at their village has increased exponentially and so has the list of products in the pipeline.
With so many products and the onus to offer the right advice to customers, it was important that we ensured that documentation and processes don’t slow us down. The customer experience at KGFS was always designed to focus more on a dialogue on implementing a plan than to fill paper. Right from the enrolment process everything is paperless and with the elimination of photocopies and introduction of digital scanning of all documents, has ensured that we don’t ask the customer the same questions every time. Digital recording of the customer’s household data right at the time of enrolment and frequent updating of the data enables instant recall of data at any point of time in the future and enables product offering at the click of a button. With biometric authentication of every financial transaction, all transactions are secure.
We have a long journey ahead in Karambayam and in the 165 other KGFS branches but the experience of the last five years gives us the confidence that we can have a transformative impact in every village that we enter.