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Mobiletecheasesmicrocredit
http://www.civilsocietyonline.com/pages/Details.aspx?316

AnopensourceapplicationdevelopedbyEkgaonTechnologiesPvtLtdhaseasedaccesstomicrocreditinruralareasandsignificantlybroughtdownthecostoftransactions.
Financialinclusion is the key to sustaining the nations growth story, saysVijay Pratap SinghAditya, CEO of Ekgaon Technologies.The company is all set to launch several
innovationsthisyearinabidtoaddressthechallengesposedtothemicrofinanceindustryunderIndiasrestrictivebankingregime.
Itwasin2002thatAdityaandhisfriend,TapanParikh,hitupontheideaofharnessinginformationandcommunicationtechnologytomeetthefinancialneedsofruralcommunities.
EkgaonsbusinessistodayfocusedontappingmobileandcloudtechnologytobolsterthecapacityofmicrofinanceinstitutionsinruralIndia.
While savings and remittances remain limited to Indias formal banking system, Ekgaon is using technology to bolster the availability and viability of microcredit and other
financialproductsforruralareas.
Webeganfromscratchonmicrofinance.Itwasimportanttounderstandwhatkindoftechnologicalinterventionhadtobemade,saysAditya,anelectricalengineerandalumnusof
theprestigiousIndianInstituteofForestManagement,Bhopal.
In 2002, Ekgaon began implementing CAM, a camera and webbased mobile information services framework for rural areas, and SHG MIS (selfhelp group management
informationsystem)incollaborationwithCovenantCentreforDevelopment,Madurai.Inall,75SHGscovering5,000peopleinDindiguldistrictparticipated.Thefreewebbased
softwareemploysmobiletechnologytoenablemicrofinanceofficerstomonitortransactionsrealtimeinthefield.
Tenyearson,theplatformhasbeenscaledupandabout800,000SHGmembershavebenefittedinTamilNadu,Uttaranchal,UttarPradeshandRajasthan.TheRajasthangovernment
hasplanstobring300,000SHGs,comprisingsixmillionindividuals,undertheSakhDarpanfoldthatusesSHGMIS.Foreachtransaction(loan,mortgage,internalsavings)thathits
theserver,Ekgaonreceivesanominalfeeof4paisefromtheMFIsorNGOs.
Themicrofinanceindustryfacesmanychallenges,thefirstofwhichisthehighcostofdoingbusiness,saysAditya.Thecostisultimatelypassedontotheconsumers.Butwith
freesoftware,MFIscancuttheexpenseofinstallingaserverandhiringstafftorunit.
FinancialinclusionremainsadreamformillionsofruralIndians, saysAditya, because MFIs are barred from taking deposits.They can only grant loans on interest. While the
ReserveBankofIndiaandthefinanceministryareconcernedoverchitfundscams,thegovernmenthasnotallowedusefulproductsorservicestoreachtheaamaadmi,hesays.
Policyconstraintsandabiastowardstheformalbankingsystemforcesunviableproductofferingstoruralcustomers.Firmsengagedasbusinesscorrespondentsfinditextremely
difficulttoserviceruralcustomersandcannotbuildwiderportfoliosduetoregulatoryconstraints.
Moreover,thetenderingprocesstendstofocusonthelowestbidforprovidingservicestoruralcustomerswithoutunderstandingthegroundrealitiesofdeliveringsuchservices.
Lesscompetentbidderswhoareonlyinterestedinenrollingcustomersandnotinservicingthemendupbeingengaged,saysAditya.
MigrantlabourersacrossthecountryspendasmuchasRs150perRs1,000theytransferhome,aMcKinseystudysponsoredbyEkgaonhasrevealed.Thescenarioissettochange
forthebetterwithEkgaonsplanoflaunchingaffordableproductsforlowincomeindividualsandruralcommunities.IthasalreadydevelopedOneFIN,anenterpriseversionofthe
existingMFIsolution.OrganisationsorNGOsneednotbuythesoftwaretheymerelyhavetohostcustomersontheirsites.
Whileregistrationanddatamaintenanceareforfree,atransactionwouldattractanominalfeeofRs3toRs14percustomer,dependingonproductsandtransactions.However,
EkgaonisplanningtochargeMFIsorNGOsaflatfeeofRs2lakhsifthenumberofcustomersismorethan50,000.
OneRemit,tobelaunchedbytheendoftheyear,targetsmigrantlabourerswantingtosendmoneybackhomeindenominationsofRs500andRs1,000.Itisamobilechargecard
whichwillinitiallycostRs10.Weareworkingoutdetailsofthecharges,agentnetwork,etc,saysAditya.Theservicecanbeavailedthroughmobileapplications,IVRSandthe
internet.
Tolaunchtheseproducts,Ekgaonitselfneedsadequatecapital(asregulatedbyRBI,theminimumisRs2crores),whichitisraisingthroughtheprivateequityplayerExhilway
Private Capital Market (EPCM). We have registered with them. We have to raise around Rs 6 crores.Ploughing the profits back into developing new technologies and new
geographies,EkgaonhashadaturnoverofRs1.6croresduring201213andhopestoscaleup.
Aspartofitsglobalfootprint,EkgaonisimplementingasystemfordirectcashtransfersthroughmobilephonesinTanzania.ItalsoplanstoenterotherAfricancountrieslikeKenya
and Uganda. Nearer home, Ekgaon, besides eyeing the Nepal market, is involved in implementing gold mortgage against loans along with Sabaragamuwa Development Bank,
Ratnapura,SriLanka.
AdityareferstothesuccessofKenyasMPesawhichoperatesindependentofthebankingsystemandallowsuserstopaybillsandtransfermoneywithjustafewtapsonamobile
phone.HewonderswhyIndia,despitebeingasoftwaregiant,hasnothingremotelyaseffectiveasMPesa.
Financialinclusionbringsfreedomtoareasnotcoveredbythebankingsystem,Adityaasserts,addingthatitenables greateraccessforruralcustomers,createsawidermarketfor
productsandservices,andspurshighergrossdomesticgrowth.
K.S.Narayanan,NewDelhi
CivilSociety:Business
May,2013

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