Selling of Micro-finance Products

What is Microfinance ?
Microfinance is the provision of small financial services like credit, savings, insurance and money transfer to poor and low income households in rural and urban areas.

Financial Services in Rural Areas

Microfinance: Financial
services used in rural areas by people of all income levels services for poor and lowincome people
FINANCIAL SECTOR
RURAL FINANCE

Rural finance: Financial

AGRICULTURAL FINANCE MICROFINANCE

Agricultural finance:

Financing of agriculturerelated activities

Financial services for the rural poor : Financial services for all purposes and from diverse sources tailored to the needs of poor people in rural areas.

Potential

By 2012 :
Indian MFIs are expected to build a portfolio of $6.27 billion Would cater to over 48.7 million borrowers from present 22million

Interest rates average @ 24-25%

In India repayment rate is 95%

Type of MF organizations

Formal institutions Micro finance institutions like SKS, Share, Spandana and Basix. Banks Regional rural banks, Agriculture development banks etc. Government NGOs and cooperatives Chit fund companies Informal institutions Local money lender Shop keepers

Need of Financial Services

Investment Products: -To cater to the need for increase in wealth Insurance Products: -To cater to the need for risk cover Loan Products : -To cater to requirements of finance Remittance Products: -To help in sending & receiving money

IFMRs KGFS model

KGFS stands for Kshetriya Gramin Financial Services To be located in remote, rural India Create a blueprint of standardised products and processes Demonstrate a sustainable model with profitability as the key parameter of success One branch with population per 5-10k village Use technology as key driver of innovation and use several modes of delivery channels like mobile phones etc

A New Approach to Rural Finance

Mission :

to maximise financial well being of every individual and

very enterprise by providing complete financial services in remote rural India

Four Pillars of KGFS Approach

KGFS

Continuous

Convenient

Flexible

Reliable

Customer Centricity

Business Structure
Head office
20 Hubs reporting to HO Operational control of the branches No processing

Business Hub

Business Hub

Thin Front End

Thin Front End

Thin Front Ends 20 branches reporting to a business hub One for every gram panchayat covering 10k population Service Area 4 to 5KMs Enrolment and servicing of clients Fully connected(V-SAT)

Sales Structure
COO

Regional Manager Assistant Regional Manager

Wealth Manager

Jewel Appraiser

Product offerings
Asset products

Insurance

Group loans
Joint Liability Group ( JLG )

Micro-pensions Insurance
o Term Life

Secured Individual Loans

Jewel Loans

o Accident
o Weather /Crop o Livestock o Catastrophic Health Insurance

Unsecured Individual Loans

Retailer Loans

Investment products
Mutual Funds
o o Money Market Mutual Fund Micro-SIPs

Others
Remittances Payments Savings

Gold Accumulation Plan

Third Party Products

Sales procedure
To avail of any product / service from KGFS, customer needs to be an enrolled member of KGFS

The first step in customer enrollment is the KYC process

Lets move on to see what is KYC.

KYC PROCESS
KYC is a process which helps us in
What is KYC ? `KNOWING our customer completely before entering into any kind of contractual relationship

KNOW YOUR CUSTOMER KYC

A legal requirement for enrollment Is beyond documentary proof / evidence

KYC A summary

KYC is thus a 4 step process :

Gathering information from customer

Gathering supporting documentary proof

Verifying the details of the customer Recording the verification details

Customer enrollment

Take finger prints on Biometric card reader

Details entered in system

SMART card issued to customer Card contains data of customer & fingerprints

An enrolled customer with her SMART card

Challenges

Remote rural locations have immense infrastructure establishing challenges Winning confidence of rural population Shifting customers from traditional money lenders Space is being populated by new entrants

Plans for future

Near future:
Business Expansion: Targeting 150 branches across three states in next 12 months Continuous product innovation (e.g. remittances, customised insurance) Wealth managers training and certification

Long Term:
Continue to establish KGFS entities/ branches Assisting others to replicate this model across India Serving millions of remote rural individuals and enterprises

Customers Voice..which motivates us

I have taken loan for my daughters education. She is pursuing her Engineering degree. She is the first in my family to enroll into a college. Thanks to PKGFS , we could fulfill her dreams and our dreams of seeing our daughter as an engineer My husband is working in Dubai as a labourer. My husband comes once in 2 or 3 years. He sends money to his brother and not to me. I am not comfortable visiting a bank without my husband. The officers there are educated city folks. They give us many forms to fill. I feel out of place and am afraid to ask them questions. But PKGFS people are from our villages. They are like my own brother and sister. I dont feel ashamed to ask them questions and seek clarifications. I feel more at home. I can take my son along when I visit the branch and he can play there while I finish my work At PKGFS, our boys treat me with genuine dignity. They show no difference. The most powerful person (Village Welfare committee president) and his wife or a dalit lady have to sit together in the same desks. Everybody is treated with same courtesy. To me that is more important than financial services they