Solutions for small business owners to receive guidance and business assistance from NGOs and microfinance institutions. Based on social internship done with an NGO in Ahmedabad in 2017

1. DOCC Project
at
ICECD Ahmedabad
Micro-credit Process and Challenges
Pranav Kumar Singh | PGP-16-205
PGDM, Finance, SPJIMR

2. Objective and Scope
Project
Objective
Study of the Micro-credit process and challenges. Finding solutions to the problems
through design thinking techniques
Raw
Material
Suppliers
Competitors
Entrepreneurs
and members
ICECD
faculty
and staff ICECD
senior
management
ICECD
trainers
Banks,
Govt.
Public &
Pvt. MFIs
Potential
Project
Stakeholders
Villages &
other markets
• Recommendations & solutions
• Limitations of study & solutions
• Observations and Findings
• Data Analysis – Quantitative &
Design Thinking Techniques
• Primary Research – Questionnaire
formation, Field visits & interactions
with ICECD faculty
• Finalizing project objective
• Secondary research / Literature
Review
Stakeholders
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

3. Secondary Research
Public Sector banks network
33%
27%
21%
19%
Rural Semi-urban
Urban Metro
Source: RBI: Database of Indian Economy Source: IMF Financial Access Survey Data, 2015
Various initiatives taken in the recent past for Financial Inclusion
1) Pradhan Mantri Jan Dhan Yojana (PMJDY): To provide every household with a
bank account and basic insurance cover. As of June 2016, 221.8 million accounts
(with total balance of INR391.53 billion) have been opened
2) Specialized Payment Banks and Small Finance Banks: RBI granted licenses to 11
payments banks and 10 small finance banks which are expected to become
operational during 2016–17.
3) MUDRA Bank: Launched to fund and promote microfinance institutions (MFI) by
providing loans to small businesses. Loans amounted to INR713.12b, disbursed to
17.3m borrowers
Access
(Saving, remittance,
credit – consumption
and business)
Financial
Inclusion
Awareness
(Utilization of services
with proper know-
how)
Financial exclusion in MSE sector
5% 2%
93%
Instituitional
sources
Non-
institutional
sources
Self-
finance/no-
finance
Extent of financial inclusion in the MSE
sector is very low
Ratio of a country's national debt to its gross domestic product (GDP)
MFIs as partners of Banks
Many banks lend to small borrowers through MFIs in order to meet
their priority sector lending targets
Need for operational Efficiency
MFIs can’t charge more than 10% over the cost of loans taken from
banks while fixing the loan price for small borrowers and hence,
profitability of MFIs depends heavily on their
operational efficiency
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

4. Primary Research
2
3
1
ICECD faculty
Questionnaire
• Personal Information
• Business Information
• Finance Information
• Capital Investments
• Working Capital
• Business Financials
• Experience of Loan through
SHGs, banks, MFIs etc.
• Cashless mode of
transaction
Villages visited:
Baska, Asoj, Jarod, Saij,
Borisana, Kalol
No. of members
interviewed: 40 (23
for data collection)
• Focused group discussions & one-on-
one interviews
• Open ended questions to get their
experiences, problems and
suggestions
ICECD staff interaction on
following topics:
• Evolution of micro-credit
facility
• Their micro-credit process
• Associated Challenges
• Service which requires
frequent follow-ups
• Data maintenance and
degree of automation in
process
Questionnaire
Interactions
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

5. Quantitative Analysis (1/3)
Independent Variable Scale Independent Variable Scale Independent Variable Scale
Age Nominal Loans_availed_Y_N Scale long_process_loan Ordinal
Marital_Status Nominal Loan_amount Scale social_issues_loan Ordinal
Qualification Nominal Repayment_Schedule Scale ignorance_shg Ordinal
Status Nominal Interest Nominal fisc_discipline_SHG Ordinal
Family_size Scale Awareness_fin_sources Nominal training_SHG Ordinal
Earning_members Scale Sources_used Nominal admin_issues Ordinal
Family_income Scale Mortgaged Nominal mistrust_SHG Ordinal
Family_income_ord Nominal Failure_in_EMI_pymnt Nominal exploitation_SHG Ordinal
Family_Savings Nominal loan_purpose Nominal weak_fin_SHG Ordinal
Business_Owned Nominal working_capital Scale fin_assist_SHG Ordinal
Earning_since Nominal first_month_income Scale dom_prob_SHG Ordinal
Running_business_prio Nominal current_month_income Scale health_prob_SHG Ordinal
Business_Nature Nominal aasets_business Nominal Illiteracy_SHG Ordinal
Ownership Nominal assets_value Nominal selection_SHG Ordinal
Spec_skill_training Scale bank_account Nominal politic_interfer_SHG Ordinal
Competitors Scale storage_money Ordinal SHG_members Scale
Initial_Investment Scale doc_loan Ordinal freq_meeting Nominal
Borrowed_Investment Scale legal_iss_loan Ordinal
Self_Investment Nominal follow_up_loan Ordinal
• Dependent Variable – Current Month’s Income
• No. of Independent Variable - 55
• Sample Size - 23
• Method Used – Step-wise Regression
Summary of Analysis
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

6. Design Thinking Techniques - Findings & Observations (2/3)
Empathy Map
1) Neeta Prajapati, Borisana,
Clothes trading: Whats App and
FB user with group mates
1) Maneesha, Kalol, Ladies purse-
making: Husband help for latest
designs through internet
1) Asoj: Fund either through family
borrowings or self but no loans
becoz of fear from quotations
Panna Patel, Saij: They have
couple of queries to be clarified
post-training while doing business
Gujarati will be preferred for info.
gathering and app-usage
SPOC charges for
online app will be acceptable
New business challenges should
be clarified through ICECD
1) Vulnerability due to
competitors doing same
business
1) Current suppliers charge high
and materials can be procured
at lower cost
1) Reluctant to apply for loans due
to fear of repayments,
documentation and follow-ups
Sessions to solve business related
queries and loan process will help
Extremely keen to learn cashless
transactions and online banking
SPOC model is implementable
and is willing to volunteer
Rashidaben, Jarod: Need of
focused training for availing
financial help
DO
FEEL
SAY
THINK
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

7. Design Thinking Techniques (3/3)
IMPORTANCE
DIFFICULTY
Low ROI Strategic
Quick Wins High ROI
SPOC facilitated video
conferencing
Online loan
disbursement and
repayment
Credit score
generation
Market
survey
through
data-
analytics
Database
deployment
Best lender
suggestion
ICECD Mobile App
Self explanatory
video library
FAQs section
Difficulty and Importance Matrix
Pain Points
Key Stakeholders
Design Principles
Functional Benefits
Emotional Benefits
Desirability
Viability
Feasibility
• High processing time for
loans
• Difficult to get quotations
• Lots of doubts & queries
• SHG management issues
• Poor financial literacy
• Market saturation, low sales
• Entrepreneurs and people
needing finance for business
• ICECD faculty, mgmt and
staff
• Banks, MFIs, SHGs
• Potential Entrepreneurs
• AEIOU technique for Look-
Ask-Try
• Webbing and Laddering
(asking why, why else, how)
• Empathy Map for
observation
• Rapid Prototyping of App
• Database for storing details
of loans, training and
members doesn’t exist
• Calling is the only way to
resolve doubts, check loan
application status
• Overcharging by suppliers
• App creation is afforadble
• Internet connectivity
available in rural areas due
to Reliance Jio
• Migration to database is
possible
• Query videos are available
• Good usage of smartphones,
internet among women
entrepreneurs
• Tech knowledge can be
given by training
• Based on future needs app
can be modified
• Easier access to application forms
• Easier resolution of queries
• Automation with database for loans
queries, trainings and member details
• Better connect with suppliers &
customers in the nearby markets
• Easier loan tracking
• No hesitation in clarifying doubts
• Enhanced confidence due to easy
access to solutions, markets, etc
CONCEPT POSTER
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

8. Recommendations (1/3)
ICECD Mobile App
FAQs section to make them
self sufficient in handling
common business and
microcredit issues
Self explanatory video
library for common
concerns and ease in
understanding
SPOC facilitated video
conferencing sessions
with experts for large
audience having with
same problems
Online loan
disbursement and
repayment apart from
cheque payment
Credit score generation to make the loan
sanctioning decision more risk-free through
use of Data Analytics
Credit Scoring
Database
enhancement
by adding
market survey
results
Competitive
interest rates
offered in
banks and their
locations with
user reviews
Graph and
charts for
analyzing data
1
2
3
4
5
6
Database Features
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

9. ICECD Mobile App (2/3)
Query
logged
Received
by ICECD
and
recommen
dations are
found
Replied
through
App or
phone call
Follow-ups
taken as
required
Issues Handled
Query redressal Process
Loan Cycle
Re-apply
for loan
Applying for loan
Tracking loan status
Doubt Clarification
Contacting ICECD
01
02
03
04
05 Applying for Training
06 Video Library illustrating the process
08 Accessing and updating details
09 Holding Video Conference
Future Plan (after database setup)
07 Connecting with Suppliers and Customers
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research
Mock-ups

10. Road Ahead (3/3)
Pilot
Project
Go- Live
Phase
Dry
Run
Final dry run with automated features with app
and system
Final cut-off and go-live to
new system
1) Implementation and Issues: Deployment of app and finding required improvisation
by using it in business operations in selected areas
2) Feasibility study for database deployment and arriving at table structures and
system features
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research
1) Testing: Incorporating the suggested
improvisation and doing sanity testing
2) Database deployment: Installing database
and forming table structures with past data
Migration
& Dry-
run 2
DOCC
Project
1) Requirement gathering
and analysis
2) Design and Coding

11. Limitations
Significant
Elementary level of digital literacy expected among
entrepreneurs
Medium
Consistent manual monitoring of raised queries is
expected until database deployment
Ignorable
Regression for quantitative analysis deals with
sample size of 23 responses
Minor
Further Automation can be done with database
management
Considerable
Village should be enabled with basic level of
Telecom and IT infrastructure
Importance
For better usage of autonomous features like
“connect to supplier” minor understanding of
English language is needed
Analysis Limitations
Recommendations
Objective & Scope Primary Research
Secondary Research

12. Video

13. Thank You

14. Appendix: References
1) Modelling Credit Risk for SMEs: Evidence from the US Market:
https://www.iiiglobal.org/sites/default/files/18modellingcreditrisk.pdf
2) Risk Rating and Credit Scoring for SMEs: http://www.ebrd.com/downloads/news/2_rr.pdf
3) Challenges in Microfinance: an EY perspective: http://www.ey.com/Publication/vwLUAssets/EY_-
_Challenges_in_microfinance/$FILE/ey-challenges-in-microfinance.pdf
4) Evolving landscape of microfinance institutions in India: https://webforms.ey.com/Publication/vwLUAssets/ey-
evolving-landscape-of-microfinance-institutions-in-india/$FILE/ey-evolving-landscape-of-microfinance-institutions-
in-india.pdf

15. Appendix: Mobile App- Loan Application & Tracker Screens
Loan Screen 1 Loan Screen 2 Loan Screen 3 Loan Screen 4 Loan Tracker
Back to recommendation

16. Appendix: Mobile App- Sign-up & Log-in Screens
Back to recommendation

17. My Queries Section Connect with Suppliers FAQ section Contact-us section
Appendix: Mobile App- Other Imp. Functions
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