Extending reach

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Do not be surprised but here’s a little known truth about microfinance institutions (MFIs) in India. Irrespective of the fact they are deeply involved in the nuances of number crunching, about 45% of the existing MFIs still track and record their accounting and operations in Excel sheets. Some even undertake such arduous tasks manually. Needless to say, all this results in considerable wastage of time and resources, leaves ample room for errors, thereby preventing them from growing rapidly.

In recent times, MFIs are undergoing an image makeover. With integrated management seen as the ultimate goal, MFIs are in the process of building an integrated communications network to improve their agility, profitability and productivity. Various operational centres of MFIs are being networked as connectivity is seen crucial for their overall efficiency.

In such a scenario, automation is expected to play a significant role in their application infrastructure strategy. This would allow them to develop scalable software applications for their internal systems and also complement their Web hosting services. Not surprising, IT majors are vying this as an opportunity for growth.

For instance, IBM has developed a ‘microfinance processing hub.’ Essentially, this is a shared infrastructure and software platform that provides groups of MFIs with a centralised core banking system, data centre, operations management and transaction processing. In the process, MFIs will be able to build in-house software for their integration activity. However, smaller MFIs are yet to develop and depend on IT service companies.

Srikant Appana, assistant vice-president (IT), SKS Microfinance says, “The primary goal of our networked project is intended for resource consolidation and put in place a centralised information system, so that SKS employees can retrieve the financial data from their respective locations.” SKS Microfinance has tied up with Tulip IT and Reliance to support connectivity across all its offices in India. The company has 667 branch and area offices in the country with a sound IT/telecom and networking backbone in place. Presently, SKS is adding 50 new branches every month.