Doorstep Cash Credit Program

A Project by

&

Mann Deshi Foundation

Contents

1. Introduction

2. EdelGive Foundation & Mann Deshi Foundation partnership

3. Context of the Program

4. Introducing Doorstep Cash Credit Program

5. Key features of Doorstep Cash Credit Program

6. Benefits of the Doorstep Cash Credit Program

7. Locations of the Weekly Markets

8. Staff Team & Operations of the Project

9. Innovative Approach to Doorstep Cash Credit programme with the

partnership of EdelGive Foundation

a. Mobile technology and information service

b. Doorstep banking with the use of Micro ATM device or the Rupay

c. Debit Card facility

10. Assessing the Impact of the program

a) Loan behavior

b) Business performance

c) Personal attitudes and behaviors

11. Rise in the monthly income

12. Loans disbursed October 2014 – September 2015

13. Age distribution of loan recipients

14. Change of profits witnessed in business as result of loan

15. Timelines

16. Challenges & Solutions to doorstep cash credit

17. Meeting the targets

18. Case studies

Introduction

Mann Deshi Foundation was established in 1996, to help to improve the lives of the rural

women through a variety of non-financial services. Mann Deshi Foundation works in the Mann

district of Satara, Maharashtra to enable rural poor women in bettering their lives through

finance, enterprise and knowledge. Mann Deshi Foundation works in conjunction with the Mann

Deshi Mahila Sahakari Bank, providing rural women with services like financial and business

management training, community radio, as well as health and farming programs.

Mann Deshi Mahila Sahakari Bank is a

women's co-operative bank established in

1997 and India's first rural financial

institution to receive a cooperative license

from the Reserve Bank of India. Mann Deshi

is the largest Microfinance bank in

Maharashtra pioneering effective

microfinance, offering its vendors individuals

and group loans, savings, insurance and

pension plans. The financial services to

women are needed because, Mann region is

a drought prone region and people struggle

to earn a sustainable livelihood round the

year, and migration of young men to urban areas is high, and thus women tend to be the

primary bread winners for the family that is left behind.

EdelGive Foundation & Mann Deshi Foundation partnership

In 2013, Mann Deshi Foundation identified the needs of female entrepreneurs participating in

weekly markets gaps in accessing financial institutions and financial services in their locality. Due

to the long travel and work hours involved in selling at different markets, the women do not

have regular access to financial institutions and financial services. In order to address this

problem, Mann Deshi Bank and Mann Deshi Foundation developed Mann Deshi’s Doorstep Cash

Credit Program.

EdelGive Foundation is the funding partner to the Mann Deshi Foundation’s project of ‘Doorstep

Cash Credit Program’, which has more than 2000 women beneficiaries.

Context of the Program

It is estimated that around 30,000 weekly markets operate in India, and vendors often finance

working capital through debt, either short-term loans from moneylenders or wholesalers at

interest rates that range between 1 to 10% per day. Vendors required cash to purchase goods in

the morning on a daily basis and pay the loan back in the evening after selling their goods in the

market, moreover, the women have no time to spend on formalities of conventional loaning

process, and these market vendors were often widows and have young dependents (children).

Thus, they fail to meet the requirement of guarantors imposed by the traditional banks for

conventional loans. In addition to this, many of the vendors are illiterate and hence unable to

use cheque books issued by the bank. Due to their inability to fulfill the conditions of

conventional loan services and inaccessibility of bank, these women entrepreneurs are forced to

take loan from local moneylenders at very high interest rates, which may up to 10% per month.

Introducing Doorstep Cash Credit Program

The need of women vendors is for small but frequent cash credit with an option of flexible

repayment schedules. Cash credit works as

an overdraft limited to twenty thousand,

since it is daily on a rolling basis. Women

vendors can make partial withdrawals and

may utilize the unused amount in the

account next day, if required. The field

officers from the Mann Deshi Bank go to the

markets to disburse the loans and collect the

repayment hence there is no need for these

women to come to the bank. The Bank sets

up stalls in the market where the vendors

work. The bank process women vendor’s

applications in the field itself and disburse

funds at the market itself, which saves a

great deal of time and effort of women vendors. The women vendors who live in one place and

sell off their goods in different places are also able to participate in the weekly market cash

credit scheme.

Key features Doorstep Cash Credit Program

Cash credit delivery in the market itself, so that women vendors can access credit

immediately on arrival in market.

Business Correspondents help in undertaking financial transactions in the field.

Credit limit between the ranges of Rs. 20,000 to Rs. 40,000.

Use of mobile - for transactions and status updates.

Interest rate at reducing balance method.

Benefits of the Doorstep Cash Credit Program

Doorstep Banking

Women vendors can now deposit and withdraw money as per their convenience and at

convenient locations at a much cheaper interest rate as compared to local

moneylenders, with this program. Since the field officers visit the vendors daily, in the

morning to disburse funds and in the evening to collect repayments, this issue of

defaulting doesn’t arise. The results are visible in that, over the course of the twelve-

month period of the project, 100% of disbursed loans were paid back on schedule. As

earlier, due to long working hours women vendors were unable to visit the bank during

its working hours on the loan due date which resulted in them defaulting

Low Interest rates on loans

Doorstep Cash Credit Program eliminates the dependency of market vendors on

moneylenders who were earlier charging unreasonable and exploitative interest rates. It

also enables them to pay interest for the period during which money is in the process of

business. This is not possible in conventional loaning process where the interest

calculation starts from the day of issuing the loan. This also reduced significantly the

effective interest rates, as earlier vendors were in a disadvantageous position as they

were purchasing goods on credit.

Increase in purchasing power

Since this program offered them the opportunity to buy goods by making cash payment,

women vendor’s bargaining power also gets increased, enabling them to negotiate for

more favorable terms. Previously, vendors were buying limited quantities on the credit

basis, now many of them are buying larger volumes of certain goods so as to increase

their income, reduce their purchasing costs (due to economies of scale) and save time.

Diversification of business

Some of the vendors are also purchasing new items for sale and hence expanding their

business, as the benefits of the Doorstep Cash Credit program, ensures regular credit

availability for rural womenfolk involved in various income generating activities such as

vegetable vending, pottery, food catering, photo frame production, watch repairing,

blanket weaving, bag making, livestock rearing, grocery shops, foods processing, broom

& basket making, beauty parlor, poultry, milk production etc.

Locations of the Weekly Markets

Branches Weekly Markets

Mhaswad (4) Piliv, Mhaswad, Akluj, Malshiras

Dahiwadi (2) Natepute, Dahiwadi

Vaduj (7) Ambavade, Kaledhone, Khatav, Kuravali-siddheshwar, Mayani, Pusegaon, Vaduj

Satara (23) Arale, Arfal, Atit, Bhavani Peth, Borkhal, Koregaon, Mangalvar Peth, Moti Chowk, Pal, Pathakhal Matha, Pratapganj Peth, Sadashiv Peth, Rahimatpur, Sadashiv Peth, Satara, Satara road, Shanivar Peth, Shivthar, Songaon, Tarale, Umbraj, Vaduth, Vasole

Gondavale (2) Gondavale Khurd, Gondavale Budruk

Lonand (8) Khandala, Khandala-shiraval, Lonand, Sakharwadi, Nira, Phaltan, Walhe, Watharstation

Staff Team & Operations of the Project

The team consists of a project coordinator, branch managers, loan officers and field officers.

The Project coordinator conducts training of loan and field officers, supervising community

meetings, monitoring the overall program and updating MIS. Branch Managers of all the six

branches involved, have to meet and discuss each loan application, and commit a date to

disbursement of the fund, if loan application is accepted. The branch manager also receives

daily reports from the loan officers as part of the overall monitoring process.

The Loan officer is responsible to verify the information provided by the applicants at her

doorstep. Through standardized tests, the officer also ensures that the applicant has a complete

understanding of the product, such as the method of withdrawing funds, the concept of joint

guarantee, etc. Once the applicant satisfactorily completes the process, the loan officer

forwards the application to the branch manager along with their observations and

recommendations. On the basis of the

recommendations and observations of

the loan officer, BLC (Branch Loan

Committee, represented by the field

officer, the loan officer and the branch

manager) reviews the application and

grants the loan.

The Field officer is the primary point of

contact with the women vendors. The

main responsibility of the field officer is to

select women entrepreneurs and to

conduct financial literacy and awareness

workshops. Field officer visits markets to

create awareness about the product by engaging the women in the discussion related to the

product and distribute pamphlets having all the details related to the product. Field officer

encourages these women to contact Mann Deshi Bank at the toll free contact number printed

on the pamphlets for any further clarification.

Once a customer shows interest either directly to field officer or through phone call, the field

officer meets the customer again and explains the product in detail. The customers are asked to

make groups of three who are equally accountable for the credit taken (i.e. guarantors). With

the help of field officer, the customer drafts the application and the field officer takes their

details and submits the application to the loan officer for scrutiny. Establishing a relationship of

trust with the women vendors is of main task the field officers perform.

Innovative Approach to Doorstep Cash Credit programme with the partnership of EdelGive

a. Mobile technology and information service

Mann Deshi Bank branches and Foundation centers are fully computerized, and the Bank has

integrated mobile banking successfully, for example, all customers receive a text when a new

deposit is made, etc. The Foundation will soon expand on the current offering by using SMS and

voicemail as educational tools to supplement the various courses that it offers. Mann Deshi also

80%

4% 2% 14%

Cash Credit Spending Details

Expanding existing buisiness

Education

Health

Starting buisiness

provides support services including: a toll-free phone number offering business advice and

women can use the number to set up in-person meetings.

b. Doorstep banking with the use of Micro ATM device or the Rupay Debit Card facility

Mann Deshi is launching Rupay Debit card and the women vendors will be getting many

advantages through these Rupay Debit Cards.

- Doorstep banking capability for those in rural areas that do not have access to banking

and financial services

- Lower cost and affordability for all kind of transactions

- Protection of Information

Mann Deshi field officers will use Micro ATM device while operating in the field, and women

vendors can undertake activities like - cash deposits, cash withdrawals, non-financial

transactions, fund transfer between accounts of the same customer within the bank, fund

transfer between accounts of different customers within the bank, balance enquiry, mini-

statement etc.

Assessing the Impact of the program

An impact assessment of the Door step Cash Credit Program was conducted towards the end of

the project. The impact assessment was conducted by preparing structured interviews in Mann

Deshi branch offices Mhaswad and Satara markets.

The data given below shows how the vendors have been benefited since the time they received

the cash credit, in terms of:

a. Loan behavior

b. Business performance

c. Personal attitudes and behaviors

a) Loan behavior

Women vendors have now

various options to spend

their savings, like 80% have

expanded their existing

businesses, 14% started

new ventures, 4% have

spend for the education of

their children and other 2%

spend on the general

health expenses.

50%

4%

46%

Changes in Cash Credit since Cash Credit

Increased Product Variety

Improved Product Quality

No change in Product

50% 42%

8%

Types of Business Expansion

Increased variety

Increased stock amount

Introduced new product

b) Business performance

i) Changes in cash spending

After receiving the cash credit in,

50% of the women vendors has

diversified the variety of

products they sold in the market

and others improved the quality

of the products that they sold in

the markets.

ii) Business expansion

89% of interviewed vendors

indicated that they have

expanded their businesses after

receiving the cash credit

product. Vendors indicated three

types of expansion, as they

increased the variety of products

they sold, which usually meant

more sales. The other two types

of expansion were increasing the

amount sold and others

introduced completely new

products into the business.

c) Personal attitudes and behaviors

The changes in the vendor attitudes and behaviors since joining the program indicate an

overwhelming improvement in the financial health of the family and business.

Attitudes and Behaviors

Significantly Improved

Improved Stayed Constant

Decreased Significantly decreased

Comfort level working with Mann Deshi

44.4% 50.0% 5.6% 0% 0%

Comfort level using bank services

23.1% 53.8% 23.1% 0% 0%

Abil i ty to save money 33.3% 53.3% 13.3% 0% 0%

Choices of running own business

33.3% 58.3% 8.3% 0% 0%

50001 to 10000 36%

Less than 5000 35%

10001 to 15000 16%

15001 to 20000 12%

Above 20000 1%

Income in Rupees Per Month

Support from fellow entrepreneurs

7.1% 71.4% 21.4% 0% 0%

Abil i ty to make better decisions on spending money

21.4% 78.6% 0% 0% 0%

Abil i ty to plan for the future

20.0% 80.0% 0% 0% 0%

Feeling of independence

23.1% 69.2% 7.7% 0% 0%

Feeling of respect from the family

25.0% 75.0% 0% 0% 0%

Rise in the monthly income

Women earning less than ten thousand was 36%, income less than five thousand was 35%, less

than fifteen thousand is 16%, less than twenty thousand is 12% and above twenty thousand is

1%.

Loans disbursed October 2014 – September 2015

The total amount of loans dispersed in 2014-15 was INR 37,500,000, and disbursement for each

month is as follows:

22%

36%

30%

12%

Age distribution of Loan Recipients

20 - 30

31 - 40

41 - 50

51 - 60

Age distribution of loan recipients

The age distribution of the loan

recipients are as follows: 22% loan

recipients are in the 20-30 age

category. 36% are in the 31-40 age

category, 30% are in the 41-50 age

category and 12% are in the 51 – 60

age category.

Change of profits witnessed in business as result of loan

According to the exit survey conducted among 200 vendors who received a loan, all made

changes to their business as a result of the loan received. The most frequent changes were an

increase in the quality of goods purchased and the ability to buy more profitable goods as well

as the ability to buy different types of goods. It is also noteworthy that 19 vendors were able to

start a new business as a result and 7 vendors hired additional employees.

Out of the 200 vendors surveyed, 59 saw a large increase in profits in the 6 months after taking

loan, 139 showed a small increase and one vendor did not report any change. The vendor who

reported a decrease had set up a new business (due to which there is a decrease in the income).

Increased by a large amount

29% Increased by a small amount

69%

Remained the same

1%

Decreased by a small amount

1%

Change in Profits

Timelines

A total of 2016 women used the weekly market cash credit scheme over the twelve-

month period of the project with a 100% repayment record.

160 community meetings were held and information was provided such as the group

guarantee concept, usage of the loan, loan insurance amount, processing fees and co-

borrower charges.

The MIS was implemented and updated by the project coordinator on a monthly basis.

The disbursed loan details such as borrower, date of disbursement are updated on the

day of disbursement itself. The MIS also tracks the amount borrowed or repaid on a

weekly basis to verify that all borrowers are paying back their borrowings on schedule.

This system of verification has ensured no defaults on loans.

A short module was developed to enable vendors to easily see the details of the scheme

as well as the interest payments associated with the various amounts they can borrow

under the limit, and hence the vendors were able to determine how much to withdraw

from the account depending on the interest charge.

A baseline and end line survey were undertaken and participants kept financial diaries

between November 2014 and August 2015.

Challenges & Solutions to doorstep cash credit

During transactions with the women, many challenges that the women faced were identified and solutions to a few problems were found, whereas solutions given to the other problems will take time to settle sustainably.

Challenges faced Solutions offered

1 Lack of awareness – How to use the cash credit program?

Financial literacy module is developed and field officers are trained to provide financial literacy classes to women entrepreneurs

2 Lack of capital for investment Loans were distributed to vendors

3 Base Line form & Weekly Diary filling up is difficult of various towns

One Supervisor & five Field Officers were trained & appointed for documentation purpose.

4 Raw material were purchased on credit, so low quality goods were purchased, and there was no scope of negotiating prices.

Due to the availability of cash on credit, women can now purchase better quality goods with more fair prices.

5 Women needed information of new business

Training from Mann Deshi Business School is arranged to inform new business opportunities for women.

6 Women were not aware of small loans or the processes and if aware, were hesitant to take a loan

Awareness sessions conducted in every town mentioned above helped in discussing such common queries properly

7 Women had lots of doubts & queries on financial services

A 24 hour toll free number clarifies the doubts and queries of the callers

8 Earlier, the women were buying goods on credit with high prices. As a result, they were getting low profits in their business

Mann Deshi B-school helped women expand their market areas and linked with the wholesalers from big cities. Now they are buying their goods on wholesale rates. It saved their time and money, which resulted in increased profit and income

Meeting the targets

Parameters Outcomes / Impacts

Quantitative Parameters

2016 women vendors benefited through the project

31 villages and markets were included in the project

13 field officers were recruited

The database of vendors was updated and maintained quarterly

160 community meetings were held during the year

22 Monitoring meetings were held

A total of 37,500,000 INR was disbursed in loans

Qualitative Parameters

Financial Diaries were maintained regularly.

Based on the results of baseline surveys, Mann Deshi Foundation devised strategies to identify financial inclusion to the most excluded and underserved population. The baseline surveys included information on women’s income, markets in which they were operating, current access to loans etc. It was with the explicit aim of this project to meet the needs of women who could not access conventional loans or who were dependent on money lenders.

From the end line survey conducted with 200 participants: a) Over half of the vendors (102) stated that as a result of the

cash-credit product, they were able to buy new types of goods. b) 120 stated they are now purchasing more profitable goods. c) 15 stated they are growing/making new types of vegetables,

fruits, flowers, food etc. d) 138 stated they are able to buy the same kind of goods but of

higher quality. e) 19 people were able to start new business, 7 stated they were

able to hire more employees, 12 vendors added new stall. f) In response to the question ‘have the amount of goods you

produce or buy to sell per day changed after taking the Mann Deshi loan?’ two respondents claimed they had remained the same, 59 felt they had increased a little with the remaining vendors claiming they had increased profits.

g) 53 stated that their cost price had decreased and 116 vendors can buy more for the same price.

h) 55 vendors are no longer getting their stock from the same supplier as they have sourced a better supplier or can buy from a bigger wholesaler.

i) 130 agree that their sales had increased and 59 vendors felt that their profit had increased. It is also encouraging to see 108 vendors had increased their savings in the past six months, with only five vendors seeing either no change or a decrease in savings.

All 2016 project participants completed financial literacy program and 20% of the vendors have been linked with advanced training through the Mann Deshi Business School. Materials were designed and intensive training was provided to field officers to ensure the uniformity and accuracy of information provided.

Organizational Parameters

13 field officers were recruited for the program and received extensive training, both through the program coordinator and from our training consultant. Three team training programs were conducted with the staff, where loan officers and field officers were also invited to these meetings.

An effective monitoring and evaluation system is operational. Monthly MIS reports are sent to Head Office and daily reports came to the CEO in charge of each branch.

There has been 100% staff retention in the project

Case studies

A. Story of Aanandi

Name: Aanandi Vishnu Jadhav

Business type: Basket Making

Age: 35

Location: Rahimatpur

‘I like the process of repayment to the Mann Deshi bank. When we sell our products and we have

money the field officer comes to the market to get the loan installment so there is no need to

travel to the bank, and there is also no need to go the bank to take loan. We just call to the bank

and the field officer will come to us at the market. As my business increased, my profit has also

increased. I have two daughters, as my profits increased, I can save money for my daughter’s

education. I was also able to afford my daughters computer classes’

Aanandi makes and sell baskets at the market. Aanandi joined the business after she got

married as it was her husband’s family business. Aanandi was afraid to take a bank loan for the

business because she was worried whether she would be able to repay it. Therefore, she was

getting money from moneylenders who were charging her 10% interest per month. Because of

the high interest rate, she borrowed just Rs. 2,000 or Rs. 3,000 at a time to purchase bamboo as

the raw material to make the baskets.

One day at the market Aanandi received Mann Deshi Mahila bank’s pamphlet about loans. She

read the pamphlet and thought of taking a loan, but she still had some concerns about taking

loans. She didn’t know anything about the documentation, process or qualifications for taking a

loan. Aanandi also had no idea about installments or interest rates but thought it might be

worthwhile applying for a loan anyway. Aanandi dialed the number recorded on the pamphlet

and got some information about the loan. At that point she did not have a bank account with

Mann Deshi but she subsequently opened one. When she asked on the phone about getting a

loan the Mann Deshi representative suggested gathering a group of women in her area to

organize a meeting. Aanandi formed a group and a bank field officer arranged to visit them and

gave them all the required information so they were able to apply and receive a loan. When she

got the loan she was able to purchase bamboo in larger quantities and at wholesale rates.

Aanandi also saved time and travel expenses because she was buying in larger quantities.

Aanandi had been working on her own before but now her husband and father-in-law also help

to make the baskets. As a result of that they can make and sell more baskets. Aanandi has taken

and repaid five loans.

Outcome for Aanandi

No longer dependent on moneylenders

Can afford to buy larger quantities of stock at wholesale rates

Increased turnover and increased profits to save for her daughters’ education

B. Story of Pushpa

Name: Pushpa Sanjay Chavan

Business type: Tailoring

Age: 35

Marital Status: Married

Location: Vaduj

Pushpa has been passionate about education since childhood but because of her financial

position she left school and got married at the age of fifteen. Pushpa had a daughter soon after

marrying and then a son one year later. Pushpa was unable to work outside her home because

of her two small children. One day she heard about the Mann Deshi Foundation and its courses.

Pushpa joined a tailoring course run by the Foundation, purchased a sewing machine and

started tailoring and small pouches. Pushpa’s income was approximately Rs. 2,000 per month

from that business. One day Pushpa got information about cash credit loans for business, made

a group with a few friends and took a loan.

Pushpa’s husband warned her against taking a loan, but on the basis of the confidence she had

gained through the courses and her work she decided to take the loan anyway. From that loan

she bought a machine to make purses and also raw materials from Mumbai. Pushpa started to

make purses of various types and designs but didn’t really know anything about sales and

marketing. With the help of Mann Deshi she started to sell the purses at the local market and in

other towns. Now she can earn Rs. 6,000 to Rs. 8,000 per month for purses alone. Now she can

pay back her loan in installments and she is starting to purchase at the wholesale rate. Now she

can save more for her children’s education and to reinvest in her business.