Venkanna, a small-time entrepreneur running a general store at a remote village in Ranibennur district of Karnataka, had dreamt that his supplies at the store would fill up as if he had a magic wand, without him having to engage a middleman. To his rescue is an SMS service that will enable him to text his suppliers, who would stock up his store directly, saving time, money and energy.
The service, to be initiated this month, is made possible by micro-finance firm MicroGraam, which helps connect people in villages to those in urban centres through the use of mobile and internet technologies. The idea is to enable easier exchange of funds, eliminating the middle man, who often cuts into the shopkeeper’s margins.
Rangan Varadan, CEO and founder of MicroGraam and former head of banking and capital market vertical at Infosys, is trying this new experiment. The company is partnering with Infosys along with few NGOs as field partners for a pilot project by which kirana stores can send SMSs to aggregate their total supply. This is expected to bring in 15% to 20% savings for petty shop owners.
The mobile application will enable shop owners to SMS their orders. The orders will be fulfilled through various FMCG companies that will be participating on the platform. The kirana shop-owners will use capital from MicroGraam to purchase the goods in bulk at a lower rate. ?The role of NGO will be to manage the process of order initiation and and distribution of goods to the kirana shops. The discounted rates are passed onto the consumer and shops will be able to purchase enough supplies to meet the full demand of their consumers. We believe that this system has the potential to become an integral part of kirana shop,? says Varadan.
?At MicroGraam, we believe this is a meaningful endeavour. MicroGraam is creating a technology platform with a mobile application that will allow about 250 kirana shops, as part of the pilot programme, in a taluk to aggregate their total supply and order goods in bulk at a lower rate, he says.
MicroGraam was founded in 2010 by Varadan and Sekhar Sarukkai, a serial entrepreneur. The board includes P Balasubramanian, founder & CEO of Theme Work Analytics and Sunil K Kolangra.
According to officials at MicroGraam, the company was established with the intention of applying cutting edge technologies towards establishing financial inclusion among the under-served the population in India. MicroGraam?s focus on providing the lowest overhead enables the investors to minimise the cost of loan origination on small loans of up to R2,000, company officials said.
Borrowers on the MicroGraam platform can obtain loans at interest rates capped at 11% for student loan and 17.5% for micro-enterprise or agricultural-loans (this includes the return to investor as well as all intermediary and MicroGraam fees). In comparison, micro-finance interest rates in rural India range from 24-36%.
So far, MicroGraam has disbursed R2.02 crore to over 1,312 borrowers, according to company estimates. A typical micro loan could range from R5,000 to R30,000. Around 85% of borrowers are farmers who have taken loans to buy seeds, fertilisers, or for activities like organic farming. MicroGraam has also given loans of R15,000-17,000 to students, mostly children of farmers, for pursuing higher education and skill development courses. The repayment is as high as 99%, said Varadan.