understanding the movement of cash of the privately-led enterprises in dharavi and scope for...
DESCRIPTION
Researchers: Deepti KC, Mudita Tiwari Location: Dharavi, Mumbai, India Project Status: On-going Project Description Dharavi, Asia’s largest slum located in Mumbai, India, is home to a large number of thriving small-scale industries producing goods worth USD 600-650 million a year. Given the high volume of unrecorded transactions in such enterprises, digitization of transactions is essential to achieve inclusive financial growth in India as envisioned by the Reserve Bank of India. Despite introducing different modes for digitization of transactions, such as mobile phones, ATMs, shop-based terminals, agents, POS terminals – cash still remains the predominant mode of transaction among Dharavi’s enterprises. Therefore, before rolling out future innovations for digitization of transactions, it is crucial to recognize systems best suited for client needs by – understanding targeted users’ perception about electronic transaction as a complementary tool in terms of speed convenience, and reliability; what the level of acceptability and trust is amongst users; and if regulatory innovations and existing infrastructure for electronic transactions support the needs of the clients. Furthermore, it is important to evaluate the efficacy of marketing methods used to influence the take-up of various services for e-transactions. The study attempts to use an ethnographic and experimental approach to find answers to these concerns by understanding the movement of cash transactions, for select three types (small, medium and large) of industries in Dharavi. Through the study, behaviors influencing business financial transactions will be observed, penetration of financial mainstream in the study area will be mapped, different stakeholders will be interviewed to understand their knowledge and perception of electronic transaction; and respondents will be helped to open mobile money bank accounts to understand their willingness to take-up e-payment systems. The study aims to determine the social, cultural and commercial factors that influence the decision of using cash versus electronic transaction systems and understand the scope of mobile or electronic payments. Project Page: http://www.ifmrlead.org/cmf/research-projects/financial-inclusion/understanding-movement-cash-privately-led-enterprises-dharavi-scope-electronic-mobile-payments/TRANSCRIPT
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Understanding the movement of cash
of the privately led-enterprises in
Dharavi and scope for electronic or
mobile payments
Centre for Micro Finance, IFMR Research,
Chennai, India
IMTFI, UC Irvine
Background
• Dharavi - largest slum in Asia
• 5,000+ informal businesses
•
• Goods worth USD 600 - 650
million a year
• 3 enterprises
– Leather enterprises
– Consumer goods enterprises
– Papad enterprises (women)
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Objectives of the Study
• Understanding the existing financial transactions for 3
major industries types.
• Determining the social, cultural and business factors
and preferences influencing the decision for using
cash versus e-payment systems
• Understanding the scope, acceptability, and
challenges of implementing e-payment systems
amongst privately led enterprises.
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Enterprise 1 – Leather Enterprise
• Largest, most lucrative
enterprise in Dharavi
• Interviewed 18 leather
business owners:
– Transactions worth USD 748
in past 1 month
– Immigrant business owners,
employees
– Majority own:
• Mobile phones (83%)
• State issued IDs (100%)
• Bank accounts (94%)
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Enterprise 2 – Consumer Goods
• Small (kirana shops) and
medium sized retailers
• Interviewed 52 business
owners:
– Transactions worth USD 1,060
in past 1 month
– Immigrant and local business
owners
– Majority own:
• Mobile phones (73%)
• State issued IDs (94%)
• Bank accounts (87%)
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Enterprise 3 – Consumer Food
(Papad), Women’s Enterprise
• Women operated enterprise
• Interviewed 25 women:
– Transactions worth USD
626 in past 1 month
– Local residents
– Majority own:
• Mobile phones (68%)
• State issued IDs (92%)
• Bank accounts (100%)
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Business Owner – Mode of
Transaction
Leather Shop Papad Leather Shop Papad Leather Shop Papad
Cash Only Cheque Only Cash / Cheque
44% 65% 64%
6% 4% 0%
50% 31% 36%
78%
96% 100%
6% 0% 0%
17%
0% 0%
With Suppliers
With Customers
Business Owner - Reasons for Using
Cash
8 * Sample Size = 100 Business Owners
E-Payment Difficult
Cash is Faster
Cash is Cheaper
Cash Traditionally Used
Business Owner's Preference
Cash is Safer
Cash More Convenient
13%
17%
30%
34%
38%
42%
51%
7%
5%
20%
23%
48%
43%
55%
With Suppliers
With Clients
Business Owner – Dealing with Cash
9 * Sample Size = 100 Business Owners
Cash Transactions
are Safe
Always Carry Cash for
Transactions
Deposit Cash in Bank Account
Pay for Safekeeping
Cash
Aware of Alternatives
to Cash
Difficulties In Cash
Transactions
93%
84%
65%
23% 18%
8%
Clients and Suppliers
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• Interviewed 115 clients and 20 suppliers
• Strong preference for cash transactions (75%)
• Volume of Cash Transactions – Suppliers: USD 2,476 per month
– Clients: USD 98 per month
• Reasons for cash transaction – Cash is convenient (>50%)
– Cash is safer (>90%)
– Business Owner’s preference (>59%)
Banks and Banking Agents
• Abhyudaya Bank Cooperative
Bank Limited
– Client centric approach
– Large cash withdrawals per day
• State Bank of India
– Reputation as Government bank
– Multiple branches & agents network
• Banking Agents
– Agents primarily remit money
– No savings offered via Agents
– Charge INR 25 on INR 1000
remitted
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Findings about E-Transactions
• Cash perceived as convenient, safer option
• Low usage of e-payment systems in businesses
– Strong preference for cash by business owners
– Business owners save on taxation through undocumented
cash transactions
– General mistrust of Banks, e-payment systems
• Access to Financial Institutions / Services – Not an Issue
– 8 ATMs, 2 bank branches, 9 CSPs (in 500 metre stretch)
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Recommendations from
Interviews
• Lack of Information about Financial Services
– Suppliers (55%), Business Owners (65%), Clients (68%),
Banking Agents (76%), Banking Agents (76%)
• Need for information about Financial Services
– Suppliers (65%), Business Owners (65%), Clients (89%)
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Next Steps
1. Address Lack of Knowledge
– Savings at Banks (internet earned)
– Opening No Frills Accounts
– Mobile banking
– Remittances (Banking Agents)
2. Financial Literacy 2D Animation
– In partnership with Neeti Solutions
– Using interactive, engaging, comic
book style approach
– Using first-person representative
stories from field-work
– Extensive piloting and testing
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Comic Book - Example
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Comic Book - Example
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Comic Book - Example
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Comic Book - Example
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Comic Book - Example
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Next Steps
• Future Financial Literacy Materials
– Using representative context is critical
• Focus on women
• Focus on people with advanced financial literacy skills
– Using local language is essential
• Future Financial Literacy Animation Series
– 3D app, that can be downloaded on mobile devices for free
– Easy comprehension using colorful graphics
– Developed in collaboration with local partners
– Open Source for NGO partners / practitioners
– Disseminate to school children
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Thank you!
• Questions?
• Contact – Deepti KC, [email protected]
– Mudita Tiwari, [email protected]
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