Bharat Financial Inclusion (earlier known as SKS Microfinance) is planning to rollout two lakh kirana points across its network in 16 states in partnership with leading banks. With the introduction of kirana points, the company’s borrowers can now walk into the nearest kirana store or small merchant stores to make basic financial transactions like repaying loan, deposit into savings account, withdraw from savings account and remit money to other accounts and make bill payments like mobile recharge. In a statement, the company said that it will appoint agents to set up customer service points or lirana points. “Existing kirana stores and other such merchants from local villages fit in the profile of a kirana points. These merchants are from the existing borrower family of Bharat Financial, who have availed microfinance from the company to set up or expand business,” it said.
“We are becoming the first entity in India to launch 100% digital financial inclusion on such a scale,” MR Rao, CEO and MD said. “Kirana points will eliminate, for rural borrowers, the past insurmountable obstacles like PINs, and usher in the most convenient cash-in, cash-out points featuring biometric authentication and friendly neighbourhood guide,” he added. The company said the tailor-made innovation for rural borrowers is based on extensive research among potential users and is ready for ramp up across the country in view of its increasing acceptance among borrowers at Humnabad village in Karnataka, where a kirana point pilot has been running in partnership with a bank.
The company has five lakh borrowers operating small merchant stores. Of these, the company would target to convert two lakh stores into Kirana Points. The technology initiatives will further improve cost efficiencies for the company which claims to have the lowest lending rate of 19.75% among private sector MFIs.
“The technology initiatives will result in 40% improvement in overall efficiency,” Ritesh Chatterjee, chief-operational excellence, said. This will also provide our clients access to banking services – as in rural ATM, utility payments and e-retail system, all within 500 meters of the borrower’s house. “We will strive for a cost to Income ratio of around 30% with the implementation of the Kirana Points project (74.5% in FY14, 61.1% in FY15, 48.3% in FY16 and 50% in FY17),” Rao said. This will help us emerge as one of the top global financial companies with such a distinction. The technology initiative will further improve risk mitigation in view of the drastic fall in cash handling and complete elimination of fraud loans, he added.