Case on

Reimagining Financial Services for the

new Rural India
 Scenario of Microfinance
• The microfinance sector in India has been largely
unfettered by tedious regulation and interference has been
young and dynamic.
• Earlier, the biggest obstacle was the little access to
commercial markets and the forbidding cost of capital
funds. But now this has been partly disappeared due to
the presence of private banks.
• . Concerns have now shifted to growth management
issues such as skilled human resources, flexible product
design, reducing transaction costs, ensuring adequate
management information systems, standard credit
information, better use of advances in technology,
accessing alternative financing, expanding into
underserved areas, and dealing with regulatory hurdles
and political risks. There is an urgent need for structured
long term financing to the sector to fully address these
important issues and smoothly transition into a well
functioning mature industry.
• According to an April 2006 McKinsey India
survey, rural India has the potential to
become a US$500 billion market by the
year 2020
Who are the potential customers?
Farmers

• Agriculture is a primary livelihood for a major portion of households in India and

farmers are the potential consumers who would need to take loans for crop
cultivation, land and water resources development, post cultivation expense like
storage, etc.

Idol Maker

• People who all are in profession of making clay idol for various festival in India,
they can be the potential customer for the small-scale unsecured loan from a
lender. Generally during after April they starts their season which goes on till
Diwali.
• It involves a high cost for buying raw materials, wages and utilities for their work. In
the initial funding can help them better to operate the process smoothly and
financial institution can earn the interest by lending the money.

Fisherman

• States like West Bengal, Andhra Pradesh, Gujrat, Kerala and Maharashtra are the
highest producer of fish in India.
• The people who are associated with the profession of catching the fish generally
faces the money shortage before the fishing season , while they are doing the
repair works for their boats and nets.
• In this scenario Mahindra can design finance loan products which can satisfy the
cycle of needs for them and get a good return during the fishing season itself.
Who are the potential customers?
Handloom Industry

• There are 43lakh people directly involved with production of the industry and this
is the second largest rural industry after agriculture.
• The export of handloom products from India stood at US$ 360. 58 Million in 2016-
17. But the people who all are involved in this industry they face a issue in off
peak time.
• People have to manage the off-peak time with the income from peak time which is
a though for them. They also face a cash crunch before the festival season to buy
the raw material, labour cost etc. to meet the market requirement.
• They generally took loan from local lender and most of them don’t have the
lending license. Here is an business opportunity for Mahindra to penetrate the
market.

Small scale rural transporter

• In rural India mobility is a very big challenge. But now a days there are some auto
rickshaw ,e rickshaw in rural road we can see for small distance mobility.
• Most of them are brought in loan by the owner. For those vehicles the periodic
maintenance cost (changing of tyres, Engine servicing etc.) is high, which is very
though for the owner to manage at a time. Hence there is a chance and scope to
cater in this segment with innovative financial products.
Using technology to make it easy

Individual Loan MFI

How to pay back?

Individual Small
Computer Paytm or
Instalments MFI
centres or BHIM UPI
in Cash
Cyber cafe or Google
Tez
How to make a plan attractive and profitable?
Let’s say that an individual has bought loan of Rs. X
from Mahindra finance and the person will earn his
seasonal income after 6 months wherein he will pay
the full amount.

Loan repayment plan for this individual

Bought • Assuming that individual has bought a loan for 6 months
loan of period.
Rs. X
• If he pays 100%of amount in month 1 or 50% of amount in
Month 1 month 1 and month 2 each then 0% interest will be charged.
instalment
• If he pays 50% of amount in month 1, 25% in month 2 and
25% in month 3 then P% interest will be charged.
Month 2
instalment • Similarly if he spaces out his instalment amount through 6
months period the interest rate will change from P to Q to R
Month 3 instalment
where P<Q<R respective to the number of months he takes
to pay it completely with interest.
• Here the individual will benefit because he will get the
Month 4 instalment amount he needs immediately and he might get it at 0%
interest if he pays the amount in first two months or less
Month 5 instalment
interest if he pays early. Also the institute will benefits as this
ensures less risk for the institute and a customer who would
be interested in taking loan from the institute again as it
Month 6 instalment would lead to increase in trust and loyalty of that person with
the institute.
Future benefits

Inclusion:
Inclusion: Penetration: Diverse
People with
People with portfolio:
This will result
fluctuating cash
fluctuating cash Mahindra will
in more rural
flows would
flows would get
get have more
penetration
credit.
credit. financial products
covering more customized for
rural segments. rural lifestyle.
Future benefits

Brand
Recognition: First mover
Mahindra will gain Holistic Growth:
Due to cash flow advantage:
more popularity Mahindra will
amidst rural the rural people
can fund the have strong hold
population in this field by the
sources that will
help them to time others enter.
develop
Thank You