Leaving their daily chores, women of Kaniyal village in Gujarat’s Kheda district were today stealing some time for themselves. These few hours were away from their daily struggle of life, taking care of home, children, farm and cattle. There was so much to talk and discuss with the guests from Ahmedabad that these women arrived before time.
Most of them were young and beaming with confidence. There was a smile of accomplishment. When 25-year-old Baraiya Vinaben Chaatrasinh was asked what’s so important about today’s meeting, she said, “I want to ask them if the loan amount could be increased next time. When will they start giving loans for other purposes like buying a smartphone, motorcycle and building a house?”
The Light Microfinance founders Deepak Amin, Rakesh Kumar and Aviral Saini encourage these women to share their thoughts, grievances and opportunities. The three founders try to keep their pulse on the ground with their clients. The visits are like a family get-together where trust is paramount and everyone can talk freely. “We are field persons and love to engage with our clients. The feedback is raw and straight, which we respect and want. It helps us to look for new engagements and new opportunities for expanding to new areas,” says Deepak.
Microfinance in India is playing a vital role in rural women’s empowerment. Despite challenging times like COVID-19, the rural women workforce recorded 9.2% growth in 2021 compared to 2020 and microfinance played a significant role in enabling that. Light Microfinance client Sheetal Ben (25) is one of them.
She says, “My kids are one and 3-years-old, so I wanted an opportunity where I could work from home and not compromise with my daily chores.” She and her companions Kamla, Sajan and Jamili took a loan of Rs 60,000 each to buy milch cattle and supplement household income for their growing needs like children’s education, health, food, etc.
These women attribute this empowerment to Kalpesh Kumar, senior field executive, who introduced them to an opportunity with Light Microfinance. They say he instilled confidence in them and explained the working of microfinance in detail. What attracted them most was doorstep delivery for everything. “The paperwork and instalment collections are all done from within the village or at the doorstep of our house and we don’t have to waste any extra time to visit any office. It’s a big relief,” women added.
Ahmedabad-based Light Microfinance (Light) is a privately held NBFC-MFI registered and regulated by the Reserve Bank of India. Today, it caters to over 3.09 lakh borrowers with a wide array of products. They are serviced through 125 branches across 68 districts of Gujarat, Rajasthan, Madhya Pradesh and Haryana. Backed by three leading European impact investors, Nordic Microfinance Initiative, Incofin and Triple Jump, Light’s footprint is expanding and its gross NPA is lowest among the microfinance industry.
Light’s CEO Rakesh Kumar says, “Motivated employees, customer-centric products, unique credit underwriting and massive technology intervention are key factors for Light’s growth. Our employee and customer selection are very rigorous and those selected get a unique experience with the company. Light is an attractive place for field executives because we provide one of the best compensation, local hiring, growth opportunities and work-life balance. On the back of strong credit underwriting, the company provides higher ticket loans with a convenient EMI size and monthly repayment frequency to its qualified borrowers. Light is typically the preferred lender to its borrowers wherever it operates.”
According to microfinance industry body MFIN (Microfinance Institutions Network), as of Sept 30, 2021, 3.1 crore clients have a loan outstanding from NBFC-MFIs, which is 3.2% higher than clients as of Sept 30, 2020. The aggregate GLP of MFIs is Rs 81,408 Cr as of Sept 30, 2021, including an owned portfolio of Rs 71,010 Cr and managed portfolio (off BS) of Rs 10,398 Cr.
Light’s CFO Aviral Saini says, “In an Industry where weekly repayments account for 43% of the disbursements, Light’s unique service proposition includes hassle free-renewal process and flexibility in repayments. We provide higher ticket loans to customers if they have sufficient cash flow and good credit record”. The company uses AI (Artificial Intelligence) and ML (Machine Learning) for credit underwriting and operational insights like attrition prediction, collection, and loss forecasting. Light Microfinance was one of the first MFIs to build an in-house GPS-enabled end-to-end mobile app in 2014 and the first to adopt cloud for its core loan management software. Light has been investing in innovative and leading-edge technologies and processes since its inception. The company’s growth with one of the best asset qualities in the industry is a result of continuous and long-term investment in technology, systems and people.
The lives of women associated with Light Microfinance have seen a significant improvement that includes building pucca houses, financing children’s education, regular income to support uncertain times like the pandemic, to name a few. The experience of these women with the company has been excellent, according to them. Customers are given top priority at the company. As a result, many borrowers are either repeat customers or are in talks with the company to take another loan once they have finished the current loan.
During the ongoing COVID-19 crisis, the company focused on business fundamentals, technology led interventions and responded to problems proactively. It retained all its employees and provided them with the perks and incentives to keep them motivated when the industry saw shedding of staff.
“It feels like a family at Light and the last two COVID-19 years have strengthened this belief. Since 2020, when the lockdown was announced, I would hear stories of pink slips being handed over from family and friends. But, my family and I had a sound sleep with no fear of job loss,” says Jigar Jodhani, working as an Assistant IT Manager with the company for the last six years. Jigar defines the work environment as exciting with ample opportunities to grow.
Light’s inception story is as intriguing as its journey. Deepak spent a lot of his childhood time in his ancestral village in north Gujarat and has been a witness to financial and livelihood hardships.
From the 1980s to the late ’90s, Deepak worked in Microsoft at the US head office in Seattle. He was closely involved with various international charities and NGOs but felt he wanted to do more where he was directly working in the field with the beneficiaries. He came back to India ready to take the plunge with constructive solutions.
He felt the need to contribute in a scalable manner and adopt a model which is sustainable. Given his role as a technology advisor to Noble laurate Dr Muhammad Yunus’s Grameen Foundation, he felt starting a microfinance company in India would help him to impact lives of economically weaker women directly.
Deepak says, “I wanted a model that was empowering, sustainable and scalable. It should have financial discipline concepts like budgeting, spending judiciously, repaying, etc., which is missing today in this segment. I don’t blame people for lack of financial planning because it’s never taught. We learn it as we grow much later in life. Besides, such concepts are difficult to practice and easy to preach with irregular incomes.” That’s when he got convinced that microfinance was a compelling model to address the needs of the financially excluded segments of India.
Deepak says he is fortunate to have a core founding team in Rakesh and Aviral and a world class management team. The partnership between the three is now over a decade old and the management team at Light Microfinance has one of the best talents in the industry.
Rakesh says, “What I like about Deepak is that he is clear with the company’s roadmap. He brings lots of insights from his all-around experience of setting multiple enterprises particularly in technology, while my engagement is focussed on execution, team building, setting system and processes for scaling.” Rakesh is a postgraduate from the Institute of Rural Management, Anand (IRMA) and is known in the microfinance industry for implementing microcredit lending in Bihar known as Bihar experiment.
Like many Indians, Aviral had returned from Canada with a zeal to do something to build the nation with his business and technology expertise. Aviral says, “My role of being a financial discipline leader was very intriguing for me too. We were technology as well as customer-focused. We believed in prudent spending and our long term vision matched.”
He points out that the company’s core principle never hampered its growth. Difficult times of COVID-19 and lockdown were handled in a humane and financially prudent manner keeping its customer and 1600 employees as the focus. There were no pink slips and salary cuts. The company aligned its philosophy to bridge the supply and demand gap for credit need of customers.
The trio had the advantage of being early movers when they came up with efficient and world-class cost-effective, timely and technology-driven customer focused products. The company aligned its philosophy to bridge the credit and product gap for the customers. The company holds a strong vision of expanding its customer base and reaching more deprived, unserved and underserved societies with innovation.
When asked, ‘How do you see the evolution of microfinance,’ the team shared
Microfinance is still in a developing stage. Since 2010, microfinance has gained huge traction among rural India. The government has realized the sector’s potential and clearly indicated its intent to nurture the sector. It has become an essential tool for financial inclusion and poverty alleviation. The strengthening of the regulatory framework by RBI is making it a more attractive option for investors and lenders while ensuring fair and inclusive treatment of the customers. Simultaneously, efforts are being made to make it a level playing field for all entities in microfinance sector.
The banking license for microfinance was a shot in the arm. In the new microfinance landscape, you can see old players embracing new technologies to expand their footprint, while new players are experimenting with new delivery mechanisms and products. Artificial Intelligence (AI) and Machine Learning (ML) will become essential tools. The fact is that existing companies have not been able to tap even half of the market potential.
The new microfinance lending system announced by RBI could see digitization. Submitting documents using home coordinates, online payment, instalment repayments through payment wallets, etc. Like India, Bharat is also embracing technology and entrepreneurship opportunities with full gusto and microfinance is a key driving force.
