Microfinance institutes and organizations play a significant role in the development of India. It acts as an anti-poverty vaccine for the people living in rural areas. It aims to assist economically excluded communities in achieving a greater level of asset creation and income security at the household and community levels.
The utmost significance of microfinance in India is that it dispenses access to capital to small entrepreneurs. Microfinance organizations and institutes in India provide loans, insurance, access to savings accounts.
Moreover, the concept of microfinance focuses on women also by granting them loans. It acts as a tool for the empowerment of poor women as women are becoming independent, they can contribute directly to the well-being of their families, and they can confront all the gender inequalities. These organizations and institutes majorly target the poor rural and urban households and women too.
Also, the Reserve Bank of India imparts no ceiling concerning minimum and maximum amounts to be given as loans. As a result, microfinance plays a significant role in alleviating poverty in society.
Many banks in India have initiated to lend money to microfinance institutions. It works towards the empowerment of women, which is an excellent move towards the development of the country. This is where Inditrade Microfinance excels as a leading player in the microfinance industry.
Under the visionary leadership of Mr Sudip Bandyopadhyay, Director, the company bequests an industrial presence of five years and counting—focused on “Financial Progress” and catering to the underserved and under-serviced population segments.
In an interview with Insights Success, Mr Sudip sheds light on the journey of Inditrade Microfinance, with some facts on the current industry scenario, and his opinions on the future of the company.
Please tell us about Inditrade Microfinance’s professional tenure in the microfinance industry.
Our journey in Microfinance Industry started when we sought RBI approval for a
Microfinance license in mid-2016.
After obtaining the requisite approval in March 2017, we launched our business in Solapur, Maharashtra, on 17th April 2017. Thus, with an industrial presence of five years and counting, Inditrade Capital Ltd. is focused on “Financial Progress” and catering to the underserved and under-serviced segments of the population.
Amongst the other segments, we found that the Microfinance industry offers significant opportunities for not only catering to under-serviced segments of the society but also women empowerment. In the Microfinance business, we only lend to women. 70% of our business is in the three southern states of Tamil Nadu, Karnataka and Kerala, and this geography continues to be our stronghold.
What was the impact of the pandemic on the microfinance industry, and how did Inditrade Microfinance surmount the adversities of the COVID-19?
COVID has definitely impacted the Microfinance industry. However, the industry has seen similar other disturbances during natural calamities (e.g., flood, cyclone etc.) and demonetization.
In the case of natural calamities, our clients may lose their earning assets (like loss of cattle during floods), or the same may get damaged. Fortunately, in the case of COVID, there was no impact on their assets; their lives and livelihood were interrupted, which affected their income.
In the Microfinance business, where 99% of collection happens physically, our representatives visit the clients and collect cash. The lockdowns introduced consequently upon the pandemic was disastrous.
This led to a delay in collecting repayments and corresponding account classification of receivables into NPAs. However, these are mere delays in collection and not necessarily defaults, and the industry has since then bounced back.
We believe that within a few months, the industry would reach a steady state where the asset quality problem will be only to the extent of 1-2% of the book. Pandemic was a challenging time, and we still are extremely careful about our employees’ health, safety, and well-being.
Apart from procuring separate COVID Insurance for all our employees, on top of our existing health insurance, we also arranged company transport as and when we were allowed to operate in compliance with local and state norms.
We continue to educate all our employees about the “dos and don’ts.” Whenever necessary, we supported our employees who were suffering from the infection.
As an industry professional, share your opinion on how emerging technologies like AI and ML are revolutionizing the industry?
Technology is a great enabler. We are fine-tuning our lending mechanism and credit engines with artificial intelligence and machine learning.
This should help us to reduce the possibilities of intentional defaults even further. This will enable us to service the target audience more efficiently and effectively.
What is the microfinance industry’s current scenario, and how do you envision scaling Inditrade Microfinance’s operations eventually?
There is significant scope of expanding Microfinance business in India, and we need many more well-intentioned and principled participants to meet the ever-growing needs of the target audience. The industry is rewarding and facilitates poverty eradication in the true sense.
The last two years have been a lean period for us due to the COVID-19 pandemic. However, in the near future, we plan to significantly scale up our business operations in the existing markets and move into contiguous states in the next fiscal year.
