case study - cash collection for saija mfi

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Case Study - Loan Repayment Using

Mobile Money Transfer

Piyush [email protected]


Contents∕ About Saija

∕ Saija’s Objectives

∕ Saija’s Scale-up Challenges

∕ Eko’s Proposed Solution− Cash Collection Service

− Fund Flow Process

− Transaction Analysis

∕ Benefits to Saija

∕ Road Ahead

∕ Saija Customers’ Feedback

∕ Conclusion


Saija Finance Private Limited∕ An NBFC with focus on Microfinance

∕ Started in November, 2007

∕ Headquartered in Patna, BIHAR

∕ Active user base ~16,000 (FY 2011)

∕ Net portfolio outstanding ~ ` 30.4 crores (FY 2011)

∕ Gross Income ~ ` 6.93 crores (FY 2011)

∕ Total branch employees ~ 450

∕ Presence - Bihar, Jharkhand, Chhattisgarh, Delhi, Rajasthan and parts of UP & MP


Saija’s Objectives

∕ Quadruple customers to 60,000+ within 2 years

∕ Embrace innovation in loan collections

∕ Expand portfolio and optimize processes

∕ Minimize provisions for loan losses


Saija’s Scale-up Challenges

⁄ To reduce time spent on ground for cash collectionSaija’s loan officers daily collect cash on the field for loan repayment. Daily frequency of collection increases the time spent by a loan officer on the field significantly, which is a major drain on transactional efficiency and increases operating costs.

⁄ To reduce loan loss risk due to cash transactionsSaija faces particular risks of fraud and pilferage because it operates in areas highly prone to fake currency and cash related crime.

⁄ To access real time transaction information

Due to manual effort required in collecting loan repayments, transaction tracking requires

additional effort to log it into IT system for reconciliation and future reference.


Eko’s Proposed Solution


Cash Collection Service

∕ Eko proposed a loan repayment collection service to Saija leveraging its wide distribution network and technology platform for instant loan repayment collection and a better real-time MIS to ensure higher transactional efficiency

1. Eko created a ‘Utility Account 'for Saija on SimpliBank platform (Eko’s platform)

2. All Saija group leaders deposit their loan installments at nearest Eko counters

3. Depositor & Saija’s accountant receive SMS receipt for every deposit transaction

4. Funds collected from group leaders are settled with Saija the next business day

5. A detailed MIS of all the transactions is shared with Saija on a daily basis

∕ Project location - Patna, Bihar (INDIA)


Fund Flow Process

EKO/-EKO/-

Group Leader

Saija’s Utility A/c(On Eko’s platform)

Saija’s Utility A/c(On Eko’s platform)

Saija’s Accountant

1. Deposits Cash2. Funds Transfer

3. Instant SMS Receipt+

Email MIS

CSPCSP

3. SMS Receipt

Saija’s Bank A/c

4. Fund Transfer (Next Business Day)


Transaction Analysis

July- Sep, 2011

No. of Saija Groups 89

No. of Saija Customers 445

No. of Eko Counters 18

No. of Transactions 1132

Transaction volume ( ` ) 17,38,805


Benefits for Saija∕ 37% Man-hour savings

Saija’s loan officers now save daily time earlier spent for loan recollection. Saved time is now utilized for forming new groups and enhancing existing relationships.

∕ 76% Operating cost savingsDue to direct loan payments by the group leaders through Eko counters, operating costs associated with the loan officers in loan recollection is hugely saved.

∕ Zero risk of cash handling at branchCash risk at Saija’s branch is reduced to zero because of cashless reconciliation of loan repayments and hence the cost of risk insurance is now nil.

∕ For detailed description of servicehttp://accionambassadors.wordpress.com/2011/06/27/introducing-mobile-repayments-in-patna/


Road Ahead

∕ Geographical expansion to other districts in Bihar.

∕ No-Frills savings account to be opened for all members.

∕ Loan disbursal to members through their bank account

∕ Motivate group members to pay their installments individually through mobile linked savings account


Saija Customers’ Feedback

Arun Kumar, Patna

“Earlier we need to wait for staff to pay the installment, now a days we use pay at nearest CSP with instant SMS confirmation on cell phone. With this we are able to save our time in such a way, we pay our installment during lunch or free time when there is less rush at our shop. During payment CSP briefed me about the services provided by EKO e.g. Instant money transfer from one account to other, cash less/risk free transactions, etc. then I opened an EKO account so that I can use these services to my business and other activity “ ….

Prakash Gupta, Patna

“When start collection with EKO , I get profit of my time , now I am free for waiting the FE . Now I leave a burden-free life because Eko give me freedom for pay my repayment in any time not on a fixed time. Over all Eko is a good way for deposit our repayment “ ….


Benefits of Eko

∕ Wide distribution network− Approx. 800 Eko CSPs across Delhi-NCR

− Approx. 500 Eko CSPs across Bihar & Jharkhand

∕ Instant and trustworthy payment processing platform− Mobile based transactions provide instant notification & MIS

− Enabled as BCs of India’s most trusted banks such as SBI & ICICI

− Ability to process large volumes on daily basis

∕ Risk free cash management− Leveraging Eko’s prepaid cash management for funds transfer

− De-risking cash handling risk by leveraging the prepaid cash management at Eko.

case study - cash collection for saija mfi

Economy & Finance