Qualcomm Incorporated, through its Qualcomm Wireless Reach initiative; Project Concern International India (PCI), an international health, development and humanitarian assistance organization; Planned Social Concern (PSC), a microfinance institution; and Microware Computing& Consulting, a telecom and software solutions company, recently announced their collaboration on the “Connecting India to Disconnect Poverty” project.
The project uses 3G-connected tablets and an innovative, Android-based, MicroLekha application to improve the efficiency, profitability and transparency of microfinance institutions (MFIs) by automating and streamlining many routine tasks, expediting the loan application and approval process and improving communication with customers. These improvements work to build confidence of borrowers in the lending process and stimulate economic activity of underserved communities.
Microfinance, a means of providing small loans to individuals who lack access to traditional banking services, is a transformative and sustainable approach to alleviating global poverty. Microloans, typically less than Rs 50,000 (US$800), allow low-income borrowers, most of whom are women, the opportunity to develop their own businesses and lift their families out of poverty. While the number and size of MFIs making these loans is on the rise, government regulations in India cap the interest rates that MFIs can charge customers, restrict loan sizes and require extensive reporting. Although these regulations improve the operational discipline of MFIs, when coupled with a MFIs’ already high operational expenses and transaction costs relative to loan values, they further constrain MFI resources and profitability.
Planned Social Concern (PSC) is a Jaipur-based company engaged in promoting the livelihoods of rural women through microfinance loans. PSC has four branch operations and serves nearly 6,000 women.
The project provides3G tablets pre-loaded with the mobile application and 3G mobile broadband connectivity to PSC staff working out of their headquarters in Jaipur, Rajasthan, and multiple field offices. Staff use their tablets, MicroLekha application and 3G connectivity to serve and manage PSC’s 6,000 active customers by instantly accessing a customer’s loan balance and repayment history and updating loan repayments and disbursals.
Additionally, real-time updates of customer repayments also prevent potential fraud and embezzlement by loan officers. And, loan officers can expedite the loan application and approval process by registering new customers on the spot by using the tablet to scan the required documents for loan approval.
The new system also stores documents digitally, which eliminates the need for borrowers to submit paperwork each time they apply for a loan. Further, customers making loan repayments receive transaction receipts and account updates via SMS, ultimately building confidence in the lending process.
The MicroLekha application complies with India’s regulations for microfinance operations, incorporates the mandated “Know Your Customer” requirements and can be customized to support different loan approval processes, loan products, terms and fees.
Some of the results reported by PSC are very encouraging. Access to real-time information on loan repayments and detailed analytical reports empowered PSC to monitor field operations and customer performance, while providing timely guidance to field staff. Electronic documents reduced PSC’s paperwork by 90 percent, reduced transaction costs and saved storage space. Shareholder confidence in PSC has increased and enabled the MFI to obtain additional funding. The PSC said that the use of MicroLekha may lead to greater efficiency and eventually allow it to increase its operations and customer base by more than 25 percent without adding manpower.
The Government of India has launched a universal financial inclusion program called Jan Dhan Yojana which will enable all households in India to gain easy and universal access to financial services. Solutions such as Microlekha will enable MFIs to cost-effectively provide financial services to a wider cross-section of society and enable customers to do business with MFIs in a trustworthy manner.
Advances in mobile technology have already changed access to financial services for the poor. By working with organizations such as Project Concern International, Planned Social Concern and Microware Computing, Qualcomm aims to leverage its expertise in the industry to continue expanding the impact of mobile technology in people’s lives.