The Secret Eighth Continent

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For those of you who read my first blog post, most of my early misadventures are no longer a problem. The one thing that hasn’t changed is the language issue. But there’s hope!  Last week, I took my first Hindi class with Pallavi Singh. It was really great! I can now expertly spout off numbers, colors, dates, and times.

Since Pallavi insinuated that there are gold star stickers at stake, I have decided to use my blog posts to further my lingual education. Here is the first installment of Rathna’s Hindi Words of The Week:

1)   Shurk vaar: Friday

Shukria means thank you – TGIF is built right into the name! But apparently everyone just says thank you in English these days.

2)   Baingani: Purple

Eggplants are purple, so think baingan bharta, really good Indian eggplant curry.

3)   Sunehra: Gold

Like the color of the stickers I plan to receive.

In other news, last week at Swadhaar, we kicked off a new project. Swadhaar recently joined forces with Ratnakar Bank Ltd (RBL). Yes, yes, I know what you’re thinking – Rathna, they named a bank after you already? Sadly, no. Turns out the name-sharing is just a coincidence.

As part of the portfolio transfer, Swadhaar and RBL have to align their processes for providing financial products to clients. The point of our project is to map out the combined process, and figure out how to make it more efficient.

Here is a rough overview of the current process:

  • Loan officers go into the field to find clients
  • Interested clients form groups, attend information sessions, and submit loan applications while Swadhaar and RBL employees conduct due diligence
  • After a credit check, the bank approves or denies applications
  • Approved loans get disbursed
  • Loan officers collect monthly payments from clients

Along with crunching some numbers and researching regulatory issues related to the process, I spent this week visiting sites and interviewing staff alongside an Accion employee and two outside consultants. They very graciously answered my avalanche of questions, mostly about why microfinance works differently here than in other regions. The most common answer? “Remember, there are a LOT of people in India.”

1)   Space

India’s population is about 1.2 billion, larger than the population of every continent except Asia. Only Africa is even close – the other continents are more like half of India’s size.

The geographical area, though, is much smaller than a continent. As a result, space is tight. This is one of the huge challenges to doing urban microfinance in India. Giving loans to a larger, jointly liable group is good from a risk perspective. But finding a space for a group of 20 women to meet in Mumbai can be really, really hard.

2)   Technology

When I think India, I think tech. So after watching a room full of employees at the bank manually enter and verify data from stacks of hand-completed forms, I was very confused.

I assumed that technology always makes things cheaper, which means that companies should be unendingly hungry to automate. But maybe not. Remember, there are 1.2 BILLION people in India. That’s a huge labor force. As a result, hiring lots of people to enter data manually can actually be cheaper than buying a bunch of iPads and software.

3)   Efficiency

Microfinance is well established in India. There are many providers, even in small areas. So why hasn’t competition already forced the process modifications we are recommending through this project?

One. Point. Two. Billion. People. A huge population means a huge consumer base. There are still untapped regions and socioeconomic strata full of potential customers.  Expanding is easier than optimizing. When the market is fully saturated, we might expect process optimization to become inevitable. But we are not at that point yet.

One more thing. Lots of people mean lots of languages spread across different regions of the country. So even after I become a gold-star decked Hindi master, there will still be a long way to go…

Rathna Ramamurthi is working out of Mumbai, India, with Swadhaar FinServe, an Accion partner and microfinance institution, on process improvements for a joint liability loan product.

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