Executive Summary

Bank provides financial services such as deposits, loans, payment services, money transfers, and   account statement of products to the low-income households, and their micro-enterprises and small businesses.



Bank in rural India means setting up of more and more branches in remote places and having large workforce for branch representation and information networking.

Account and customer details needed to be manually carried by the field officers who in turn would look up the document to find the loan payment schedules and details. The physical documents may or may not carry the latest information on payments.

Collection of cash as loan repayment is manual for which a paper-pen based voucher is written and provided to the consumer. This leaves a scope for mismanagement of the cash receipts in the field.

End of the day, the vouchers provide all day transaction information to the main branch where a data is manually keyed into a computer terminal connected to the central database. A possibility of wrong data entry was never ruled out. Cash reconciliation on the other hand would be tallied with the vouchers produced.

This process was highly time-consuming and prone to errors.



Instead of setting up more branches to cover rural India, Bank transformed thousands of their on-field officers into roaming mini-branches, using the simple, handheld, user-friendly POS terminals.

With handhelds at their disposal, collection executives get details of the consumers beforehand, enabling them to plan their time and route appropriately. On providing the unique 'consumer ID', the customer details like the name, address, details of loan taken and the installment due is displayed on the POS terminal LCD.

The executive accepts the installment from the customer and feeds in the details of the cash received in the epos terminal. The same is updated in the central server and the receipt is generated. The operations staff takes out 2 receipts. Gives one to the customer and carries one for filing at the office.

All this information, riding on a GPRS network, is updated on Bank's central servers directly from the device.

Once an executive is back at the branch, the cash collected is deposited with an accountant, who in turn updates the systems. The automated MIS management based on online data flow enables the enterprise to have complete visibility of the cash flow.

Under the Business Facilitator model banks may utilize the services of above listed entities in terms of utility services like application processing for savings products, collection and processing of Loan Application, promotion and nurturing SHGS, Post Sanction monitoring and Recovery Follow-up.

Under the Business Correspondent model banks use the eligible entities for the purpose of utility as well as they are empowered to collect cash on behalf of banks. Products include:

  • Small Value Cash Receipts and Payments
  • Disbursal of small value credit
  • Recovery of principal / Collection of interest
  • Deposit Collection
  • Mini statement
  • Enroll Module
  • Sale of Micro Insurance/mutual fund products /Pension products/Other third party products

Business correspondence model envisages Development agencies as a sort of intermediary banks representing the respective brand name in the Non banked spaces on behalf of the banks. Both Facilitator and correspondents are well paid off for these services. This is indeed a stepping stone in the history of Micro finance. But how far is this initiative proved to be successful is an important question to ponder over.


The Response from the banks

Many private banks have pioneered the project. This is because it is beneficial for both the sides of bank and the NGO. Following points would have pushed through the banks and NGO’s to pioneer the project.

  • Better reach and Increased business for the banks
  • On the other hand NGO’s benefit from a transaction based remuneration for their achievement of social mission


Business Benefits

Armed with wireless online handhelds, this mobile workforce ensures that bank reaches the doorstep of its consumers, living in far-flung villages or semi-urban locations. They also act as mini-branches equipped to conduct financial transactions and instantly update the central servers at the bank's headquarters. This provides business heads - from the controllers of the collection team to senior management - with up-to-date status in real time.

The executive can also create information trails, address business queries, record customer commitments and note relevant information for further follow-ups, undertaken with the customer at his doorstep.

Bank leverages the information captured right from the door-step of a customer to adequately plan business actions and maximize ROI.

The efficiency and performance of the collection teams is also be examined through timely information updates coming in from their devices. An executive's incentive is also automatically measured using the data related to the cash collection being captured by the handheld devices.

Stellar Informatics (P) Ltd. has more than 19 years of experience in software development, with a specialization in banking and financial services.