Pune: Microfinancing has become mainstream today. But just a while ago, microfinancing did not enjoy the status it enjoys today. This could be attributed to the growing pressure on banks to looks for new streams of revenue backed by government’s will to go in for social inclusion and the developing regulatory framework.
While participating in Bankers’ Conclave 2018, in MIT-SOB (the acronym for MIT’s School of Business), Pune, Veena Mankar- Chairman of IDFC and Chairperson of Swadhaar Microfinance said, “When I started banking, retail and microfinance were not something that got us excited. But today, microfinancing has become mainstream.” She further went on to add that the infrastructure buildup in payment systems is making transactions possible.
She also praised the infrastructure that is made available today. “This infrastructure is made possible to reach every household in an affordable manner,” she reiterates. Further, Mankar said, “Microfinance is credit, insurance, savings, payment system and remittances.”
Adding to this, Vikrant Ponkshe, former MD and CEO, Cosmos Bank said, “We should be proud of the infrastructure of NPCI and the adoption of UPI.” He compared NPCI with its counterparts in other countries. Citing the example of m-pesa of Kenya, he said the transaction cost is very high. Hence, it is not sustainable. “The key here will be sustainability.” Ponkshe stressed that there will be different models that will come up but it is important that banks explore other options.
The changing scenario in India makes the country further attractive, stated Manoj Kumar- Managing Director, Arohan. “It is the right time to be in India as there are a lot of opportunities today.” He works closely with people who are in need of financial inclusion but are left out.
Meanwhile, Naveen Kumar- Associate Professor, NIBM who has closely studied various models of various banks, urged there is a need for integration of expertise. According to Mankar, around 120-130 million households can be into microfinance but she believes that this figure could go up further.
Sudipta Roy- Head of Cards, Payments & Personal Loans, ICICI Bank stated that many of the innovations started in the US. “It was mostly developed countries that adopted it.” Commenting on China’s style, Roy stated the Chinese government wanted to push e-payment in a strong way. “While, the US and Europe are old school today, China is most advanced (when it comes to epayments related banking). He thinks this was mainly because China did not have the proliferation of the western banking system. Most banks did not even connect with each other. Hence there was a vacuum crying out for integration. The micropayment system did the rest. China had a mission to plan and execute various systems in place for payments and they achieved it. “Between 2012 and 2016, there was an emergence of messaging platforms which were later integrated with money transfer as well.” He added that this type of tectonic shift took place in India in 18 months.
He also stated that UPI is getting embedded into messaging platform. It is in the testing phase. “Whatsapp is going live (with payment) in India for the first time with UPI.” NPCI and Rupay have built the fastest NACH (National Automated Clearing House), making it possible for it to embed UPI in Whatsapp.