The twin calamities
A few weeks ago, Bindu and I visited Dhanei KGFS that serves the districts of Ganjam and Khurda through a network of thirty branches. While we have visited our operations in these districts on several occasions in the past, this time it was to understand the impact of two significant natural calamities – a massive cyclone called Phailin which made its landfall close to Berhampur, the KGFS headquarters, followed by flash floods just a couple of days after the cyclone that inundated vast areas and destroyed plantations and standing crops.
We set out to visit our branches with Manas Ranjan Pani, the Head of Dhanei KGFS. During the drive, he informed us that power had not yet been restored in almost 50% of the branches. Thanks to the elaborate precautionary measures taken by the local administration, the damage to the life and livestock was minimal. However, on the way to our branches, we saw the damage to property and crops was substantial. Standing crop has been damaged, some of the houses and compound walls of several buildings having collapsed, several electricity polls lying on the ground completely uprooted. We also saw brisk activity at several places in trying to erect electricity poles or laying of temporary roads so as to restore some of the infrastructure.
KGFS branch experiences
The first branch we went to was in “Ranajhalli” Panchayat comprising 1986 households and approximately 9000 people. In the branch, we met two bright and young wealth managers – Uma Charan Sahu and Sujata Kumari Dash. While there was no damage to the physical structure of the branch, only the facia and the connectivity tower had to be replaced. Electricity was still not available in the branch and hence there was an off-line process that was put in place.
We were informed by our wealth managers that the people are predominantly engaged in agriculture and allied activities with paddy being the main crop. Several of the households also had lemon orchards and mushroom cultivation. There was also a significant portion of migrant population from this village, living outside. Given the calamities, there was extensive damage to the standing crop, which in turn affected the immediate cash flows of the household, especially in the case of lemon and mushroom farmers. What baffled us was that a vast majority of our customers have still managed to continue servicing their loans even post the two events. Some of those who have not been able to pay their instalments came to the branch to inform of their inability to pay and have sought some time to pay back. When we enquired about the source of income for people in these villages, we were informed that people either are going for daily wage labour mainly in clearing the trees either on roads or in the farms or are getting remittances from their family members residing outside. We were once again reminded about the amazing financial discipline of our clients.
After a brief conversation with the team, we set out for a walk into the village. It was tragic to see paddy fields on either side of the road completely damaged with stagnant water still in the fields. Not too far from the branch, we saw a farm of arecanut trees, with most of the trees having been damaged. We were told that the wind speed reached a peak of 280 KMPH – just short of a super cyclone and the frail trees could not take the intensity of these speeds. We were told that an arecanut tree takes about seven years to grow before it starts yielding returns to the farmer and the income from each tree is about Rs. 1200/- per annum. While we were still recovering from the shock of seeing a completely damaged farm, the owner of the farm – a brave man in mid 40s named Sadanand Samal came in his bicycle. We didn’t know whether to sympathise with him or appreciate his resilience. He seemed to have reconciled to the damage and the loss he has suffered in matter of couple of days. He mentioned that the arecanut trees that have all got destroyed are around 12 years old and he has to plant all of them again, for which he might have to invest around Rs. 400,000/-. His only diversification was his intercropping, where he also grows seasonal vegetables and gets some cash flow.
We then went to another branch located in the village Pandia. The branch is set up to serve around 2180 households in a set of villages, with a population of around 13000. There we met another young team of Ajit Kumar Dalai and Santosh Kumar Swain. This branch was also operating without electricity. The wealth managers shared their experiences in the aftermath of the cyclone and floods, which was very similar to what we heard in the first branch. We were told of a particular customer whose entire stock of fertilizers got damaged as flood waters entered his shop. Fortunately for him, he also trades in steel, which is the only source of his income at this point in time.
Insights for the future
The journey back to the HQ was on how to respond to the financial requirements of our customer households and how do we work with them in re-building their livelihoods and assets. While we are able to insure customers discretely for life, disability, livestock and shop, an event like Phailin requires more comprehensive catastrophic insurance covers for institutions like Dhanei KGFS. We also discussed the need for proactive action to support the small businesses in the region by providing additional credit facilities. There were also important lessons on managing political risk. In certain branches, there were requests for “loan waivers” made by politically connected individuals. The Dhanei team dealt with this by maintaining constant communication with their customers and not getting drawn into negotiations with third-parties.
Back at the HQ later that day, there was a felicitation event organised to recognize the exemplary courage and conviction shown by the team members, some of whom are just a few months old in the organisation. Several of them went above and beyond the call of duty to be available for customers in the branches, in their village enquiring about their safety and security and offering support. We heard stories of how some of our Wealth Managers walked several kilometers to keep the branch open, one of the Wealth Managers reporting for duty despite being injured in the cyclone, people cutting short their personal leave and the leadership team visiting several branches and customers to remind them of our commitment to the region.