Most social problems can be completely eradicated if those who are not part of the mainstream are brought into the safety net of financial inclusion championed by organizations with the intent, scope, credentials, and extensive expertise of VFS Capital. Guided by an indomitably compassionate leadership of the Co-founder Kuldip Maity, who is also the Managing Director and Chief Executive Officer, today, a number of Indian states are dotted with…
VFS Capital’s Success Stories
Twenty-five years old, Marufa Bibi, from Basirhat in West Bengal, started her life story like any other ordinary village girl. She got married at an early age. As there were no other means of income, Marufa Bibi assisted her husband in his small tailoring business to earn their livelihood.
She started her entrepreneurship journey in 2018 when she received her first microfinance loan of ₹30,000 from VFS Capital as a Joint Liability Group (JLG) member. Marufa Bibi bought a couple of sewing machines to give a new direction to her business. The credit has given her the confidence to grow her business further. Soon, as an eligible member, she received an individual loan of ₹50,000 from VFS Capital in January 2022.
Marufa has set up her own small tailoring unit in one portion of her home. Now she possesses five sewing machines and has employed four staff to support her business. She pays her employees weekly wages and bears other monthly recurring business expenses such as the cost of threads, electricity bill etc.
The story of Dipa Mondal, a resident of Nadia in West Bengal is no different. She led an ordinary life of a homemaker a few years ago. Her husband, Joydeep, inherited a small shoe store from his father. Joydeep’s business was in adverse shape as the store was in insolvent condition and the stocks were outdated.
Her household lacked financial stability, which was indispensable for strengthening their future. In despair, Dipa decided to do something to support her family. Dipa’s father-in-law advised her to take command of their family business as he knew her potential.
Dipa heard about VFS Capital’s microfinance loan facilities and its convenient support system for enabling women like her. She approached VFS four years ago and received her first credit from the enterprise. Dipa evolved as her husband’s business partner, and her father-in-law guided her to enrich her business knowledge and competence.
She completed the necessary renovation of her shoe store and upgraded the stocks to match modern trends. Her shoe stock includes a wide range from sandals to formal shoes of renowned brands. During the pandemic, her sale declined like most other businesses in her locality. However, she was persistent and did not lose hope. As the COVID restrictions were lifted partially and the schools began to conduct conventional classes, her business attained pace. She sold over 200 pairs of school shoes in February 2022.
Dipa has not only crafted her entrepreneurial success; furthermore, she made her father-in-law proud by fulfilling his dream of efficiently carrying the family business. Now Dipa leads a life with self-esteem, and her family depends on her decision. She is grateful to her father-in-law for mentoring her and to VFS Capital for extending its service in her time of need.
Over the years, VFS Capital has received numerous national and international accolades for its immense contribution to society. Notably, in 2019, Kuldip was adjudged as…
The ‘Champion of Change’
…by a committee headed by former Chief Justice of India, K G Balakrishnan for his exemplary work in aspirational districts of India. The honour was bestowed upon him by the then honourable Vice-President of India, Mr Venkaiah Naidu.
VFS Capital was also awarded the Best Employer Brand award in the 9th Asia’s Best Employer Brand Awards in Singapore. The award platform was hosted by World HRD Congress in collaboration with Employer Branding Institute to celebrate excellence in HR and recognize organizations and individuals who are currently pushing the boundaries of people strategy.
Kuldip’s passion and motivation have driven VFS Capital’s motto of financial inclusion by empowering the masses. He helped VFS become the first MFI in West Bengal to get the status of an NBFC-MFI. Today, he manages 270 branches in 14 states, ensuring his customers derive value from the engagement and has also led the company to adopt technology without losing its customer connect.
VFS Capital Limited is one of the oldest and most reputable microfinance institutions in Eastern India. It started microfinance operations in the year 2006 as the first RBI-registered NBFC-MFI in Eastern India. Since then, the company has grown steadily and touched the lives of many underprivileged and backward sections of society by providing them credit for income-generating activities and helping them to become economically self-sufficient.
The company operates under the Joint Liability Group (JLG) based lending model and lends to women borrowers only. VFS Capital currently caters to around 5 lakhs women borrowers through its network of 270 branches covering more than 20,000 villages across 90 districts in 14 states – West Bengal, Tripura, Bihar, Assam, Jharkhand, Odisha, Sikkim, Madhya Pradesh, Uttarakhand, Chhattisgarh, Meghalaya, Haryana, Uttar Pradesh and Rajasthan.
Although VFS Capital began its MFI business in 2006, its actual journey dates back to 1982, when it started off as a grant-based NGO called, Village Welfare Society (VWS), to mitigate gaps in rural health and education. In 1993-94, the Central government created Rashtriya Mahila Kosh, an initiative that catered to the credit needs of poor women through micro-credit services, and we were among the 12 chosen NGOs to partner with the programme in India.
Kuldip informs, “In 1996-97, the Small Industries Development Bank of India (SIDBI) extended a loan of ₹25 lakhs to us.”
In 2004, to facilitate the changing nature of activities, they became a non-profit called, Village Micro Credit Services. This eventually led to the formation of the current entity Village Financial Services (VFS) Capital in 2006.
Social Empowerment through Financial Inclusion
Sharing his inspiration behind venturing into the financial sector as an NBFC Company, Kuldip says that they are a social enterprise committed to empowering the hapless and the marginalized. “Our business objective is financial inclusion and empowerment.” This aligns perfectly with the fundamental idea that eventually evolved into an immensely successful institution today.
According to him, the USP of VFS Capital lies in adopting a holistic approach than in products. VFS puts maximum focus on handholding the customer towards wider financial inclusion, “Which we believe ensures the long-term sustainability of the business on either side.”
He adds that they do not merely offer loans. They help the borrower to shape and review her business plan; understand the basics of financial accounting through their CAT (Customer Awareness Training) programme; encourage her to be part of the banking system; resort to cashless transactions including digital transactions and take advantage of various government schemes for the poor.
This holistic approach helps borrowers to ensure the best use of money and reduce the prospect of loan default. “Besides, we sensitize women about empowerment issues, bringing about a qualitative change in them and their families related to the standard of living and their own status in the society.”
VFS also emphasizes skill development programmes and raising awareness on health issues. On the occasion of the 75th anniversary of Indian Independence, it launched a fully furnished, specially made Mobile Medical Unit to provide free healthcare services to people living in rural Bengal. Kaydee Foundation, the CSR wing of VFS Capital is responsible for functioning the Mobile Medical Unit and organizing free Healthcare camps in remote areas for rural and underserved communities.
Kuldip informs, “We have also consciously included in our mandate the need for generating awareness about the environment and to protect it. As part of this, planting trees by involving our customers is our yearly routine.”
He believes that the microfinance sector plays a crucial role in promoting inclusive growth by making credit available to the last-mile needy borrowers. “Over the years, we have helped numerous borrowers at the bottom of the pyramid to come out of poverty and lead dignified lives, and we remain committed towards our core objective of serving the poor and improving their quality of lives by providing them a complete range of financial and non-financial services.”
He furthers that VFS’s customers strive to create enterprises that bring alive their dream of being self-reliant, of being masters of their destiny. “We seek to help such enterprise to grow and flourish.” As such enterprises not only create the customers employed, but the customers often employ others. The chain, thus created, helps generate a prosperity cycle that go a long way in…
Creating Sustainable Development
Recollecting their initial challenges, Kuldip says that in the initial days their very first task was to instil confidence among the rural poor, especially women. “They were shy and lacked self-belief. We conducted numerous counselling sessions to ensure that they got the confidence to borrow.” Besides, the availability of low-cost funds and talent pool were also a challenge.
In a nutshell, during this journey, they have faced innumerable challenges and numerous obstacles, “Yet we have been able to overcome them all through sheer hard work, dedication, and an indomitable zeal towards attaining our vision and objectives.”
The cost of finance though continues to be an issue. Offering Microcredit is a specialised and costly exercise and the cost of such lending can only be reduced if MFIs have access to low-cost funds. Having said that, the new regulations have paved the way for increased competitiveness in the sector and also provide a level playing field for all.
Being an experienced leader, Kuldip shares his opinion on how technology is transforming the NBFC sector, and what advancements can be expected in the future. “We consider the advent of digital technology a big boon to the microcredit sector. We are also focusing on complete digitalization and going cashless. However, it is done in a phased manner, keeping in mind the affordability of the process. I am happy to report that our entire disbursement process is now cashless. I am confident that we will complete the digitalization process in an effective manner within the timeframe envisaged. However, I must reiterate that technology cannot replace human connectivity. We are in the business of non-collateralized loans. Our relationship with the borrowers is our collateral. So, we will always follow a touch and tech model.”
A Powerful Future Vision
In his advice to the aspirants who are willing to venture into the field of NBFC niche, Kuldip says that NBFCs are the major engines of growth of the Indian economy by enabling small enterprises access capital. NBFCs have also helped these enterprises to grow their business operations and create employment in the country. The sector holds immense importance in the country and will remain one of the major growth drivers of the economy. The Hon’ble MOS Finance recently underlined the importance of the sector in the context of the Indian economy and also said that the credit demand in the NBFC sector is expected to grow to almost ₹30 lakh crore in the next couple of years.
On envisioning scaling the VFS Capital’s scope and offerings in future, Kuldip shares that they believe there are tremendous opportunities for the MFI sector and they aim to explore these to reach as many underbanked people as possible by expanding their footprint. He adds, “We have a vision of enhancing our coverage to as many states by 2025. Currently, we have 270 branches in 14 states and plans are afoot for more expansion.
“We will primarily focus on MSME and affordable housing segments to grow our non-MFI loan book,” he concludes.
