The Branch Office of a small MFI is nothing like your local bank’s branch. There are no tellers, advisors, or bank staff to greet you when you walk in - that’s because rarely do clients walk in! Because Field Officers serve clients essentially "at their doorstep", or in their villages, the Branch Office is more of a home base and back-end processing center for staff.
For Vaya specifically, a particular Branch Office may serve a host of villages within a 25 kilometer radius. As a result, for most clients, traveling to the local Branch Office is not something that is feasible, let alone on a biweekly basis.
While 25 kilometers may seem far, MFIs’ reach in rural India is in fact better than that of Indian banks - that is why many MFIs operate as Bank Correspondents. The only entity with a greater reach than MFIs across rural India is the Indian Post Office. According to their website, “India has the largest Postal Network in the world with over 1,54,882 Post Offices (as on 31.03.2014) of which 1,39,182 (89.86%) are in the rural areas.”
After a morning of center meetings, where Field Officers meet with joint liability group members to collect their installments, Field Officers come back to their designated Branch Offices to recount the cash collected, carry out the denomination of the bills by value, and verify accounting records, before finally traveling to the nearest bank to deposit the day’s collections. Field Officers go back to the field in the afternoons to conduct further group meetings and reach out to new customers.
While the transition to everything digital has already begun, installments are still collected in cash at the moment. However, following India’s recent demonetization, MFIs have begun to prioritize cashless payments, i.e. via bank transfers. Through demonetization, certain currency bills were taken out of circulation. Not only did cash become very hard to come by but those who transact primarily in cash, like the rural and urban poor, were the most adversely affected by the sudden lack of liquidity - many of them unable to make their installments. Therefore, by making bank transfers compulsory, MFIs would not only ensure that they receive their loan installments on time, and can continue to disburse new loans to other clients in need, but they can also help build a culture of banking amongst their clients, which may later facilitate delivery of other banking products beyond microcredit (savings, insurance, and more).
Two years ago, the Reserve Bank of India granted eight MFIs licenses to transition into small finance banks, precisely to facilitate the provision of further financial services to the urban poor. The Government of India is complementing the RBI's work through its own initiatives, focusing on getting all Indians to obtain a unique identifier (Aadhaar), a bank account (Jan Dhan), and mobile connectivity, also known as the JAM Trinity.
As I mentioned previously, Field Officers use tablets to record group member attendance, installment collection amounts, and other key details. However, because internet connectivity in rural India is not the most reliable, they also keep handwritten records to complement the digital ones. The application loaded on the Field Officers’ tablets allows for data entry now - independent of connectivity - and upload later, when a good enough connection can be established. Once the data is uploaded, it is readily available, in a matter of minutes, for analysis at the Head Office in Hyderabad.
As network connectivity improves, mobile penetration rises in rural areas, and banking know-how increases amongst rural dwellers, the possibilities for expanding financial services and providing more individuals with the funds they need to grow their businesses will only continue to grow. The MFI Branch Office, and its hardworking Field Officers, is just one of the main pillars in this growing network of support for hard-to-reach, aspiring entrepreneurs.