Microfinance Institutions: Jagaran Microfin
Jagaran Microfin is one of several microfinance intitutions working alongside banks in providing small ticket loans to the villagers. Jagaran caters only to women clients who usually require loans to run small vending stalls or shops, operate vans, rear poultry, weave, and so on.
Jagaran Microfin provides advances to repeat customers. The first loan value varies from Rs 8,500 to Rs 10,000. The second loan can be for Rs 11,000 to Rs 15,000. The tenor of these loans is for one year. The payments are collected by Relationship Officers (ROs) in weekly instalments of Rs 250 to Rs 500, according to the customer's convenience.
Shri Subir Ghosh, the Branch Manager of Jagaran Microfin, Kalna, and his team of four ROs make daily trips to 4-6 centres as part of their daily collection exercise. A customer need only visit their office in Kalna once at the time of loan approval. From disbursal to collection, all related activities happen at the centre to which the customer belongs through the ROs, to ensure the safety and comfort of the women clientele.
The business process includes a projection meeting with Compulsory Group Training where a group of 10-30 like-minded and similarly placed (circumstances) women is established. KYC requirements like address or identity proofs are collected along with their credit requirement forms.
Loans in the first bracket are called “Saral” loans. The first loan value varies from Rs 8,500 to Rs 10,000. The second loan can be for an amount from Rs 11,000 to Rs 15,000. The tenor of these loans is for one year. Saral loans of the value of Rs 20,000 to 30,000 are available for two years. Education or Shiksha loans for Rs 3,000 to Rs 4,000 are paid up to one year. House repair or Griho loans are taken for amounts of up to Rs 25,000 for one year.
The rate of interest on all loans is around 27.16 to 27.17%. Recovery efforts include close monitoring. The groups are comprised entirely of women and their repayment delinquency is minimal. Therefore, there is practically no NPA. In one or two cases, where the residents have left, the group members would ensure that the payment is done in full to maintain good relations with the MFI.
The Managing Director of Jagaran Microfin, Shri Alok Biswas, and Chairman, Shri Bhabesh Mazumdar, have their offices in Kolkata. The business is run on Bijli software. They have more than 700 members in Bardhaman alone. There are five branches in Nadia, including one at Nabadwip. They borrow from IDBI and SBI and then lend out to the villagers.
Shri Subir Ghosh believes that it is their last mile connectivity, along with the good behavior of the ROs, that encourage members to join their group. Loan disbursal up to 80% of the loan value is done at the centres and except at the time of loan agreement, the customers need not visit their office.
Usually husbands are the guarantors for these loans but the centre is also responsible towards individuals’ repayment behaviour. It is the feeling of group responsibility and loyalty towards their group and the MFI that the customers prefer this over going to banks, despite the higher rates of interest offered by the latter. The women members of Jagaran complain that their queries are not properly answered at the banks but the competition among NBFCs in reaching even the remotest of villages ensures polite and proper behaviour from the ROs. They are confident that even in the middle of the night if they need cash urgently they will be able to get the loan from the MFIs, whereas banks are notorious for their process delays.
When we spoke to LDM about it, he seemed to share the view that the MFIs are at par with, if not better than, the banks at providing financial services to the very needy. The villagers need guidance and counselling with regard to MFIs as many of them have also suffered from various financial frauds and scams marring the state. With the transformation of Bandhan Financial Services in to Bandhan Bank, most villagers are hopeful that the rates of interest will now be lowered without compromising on the promise of easy credit.