6 months have passed since the first case of COVID-19 detected in the country and India is currently at No. 2 in the world in terms of the total number of cases. The number is still on the rise despite the measures taken by the government to curb the spread of novel coronavirus. This situation has heavily impacted the economy and people’s lives, millions losing their livelihood. In a post-COVID era, more and more people and small businesses will require access to affordable and personalized loan products to recuperate from the economic impacts due to the pandemic and restore their living.
Now, you may wonder, how can we improve Financial Inclusion in India by providing access to credit? One of the crucial factors for financial inclusion is easy & accessible microcredit for micro-borrowers who otherwise will not receive it from formal lending channels. In such circumstance, digital lenders, last-mile banking service providers will play an important role in making credit available to the traditionally deprived population for the tenet of financial inclusion in India. It can bring the unbanked and underbanked population into the mainstream economic system, allowing them to access banking & financial services at an affordable cost, thus reducing income disparity in the society.
Excess demand for credit
Since the last couple of months, there has been a huge demand for easy & convenient credit facility, not only in urban areas but also in unbanked & underbanked regions of the country amongst New-to-Credit (NTC) customers. This NTC category comprises of ambitious entrepreneurs, employees who receive a salary in cash, freelancers, etc. It is challenging for them to get loans from banks due to the unavailability of credit history as these banks rely on it to approve loans. Where other salaried individuals can avail loans easily from the banks, NTC customers do not even qualify for small ticket size loans. In a post COVID era as well, people will need access to credit or loans to sustain.
“Due to COVID most of the people who had gone to the city from village came back as everything was shut. They wanted to start something of their own but could not as banks were asking for mortgage or they had no credit history, even for a small value loan. At BMS, we helped them by providing affordable loans. I also took the loan to expand my Kirana store to meet the growing demand” – Bablu Kushwaha, BMS Merchant
A real game-changer
This is where lenders like Bharat Money Store come into the picture. By leveraging frugal innovations and modern technology infrastructure, Bharat Money Store backed by IndusInd Bank and Bharat Financial Inclusion Ltd. has created a financial ecosystem via neighbourhood Kirana stores which aids specifically underserved markets. It has helped in improving borrowing capabilities of the rural population, who otherwise find it difficult to benefit from traditional lending sources.
Under BMS Atmanirbhar Bharat Abhiyaan, Bharat Money Store has provided small business and personal loans to the rural population. The aim of this initiative is to conceive economic opportunities for the young rural population to start something of their own and help them get back on their feet making them self-reliant. Digitization of the loan application process by leveraging biometric authentication and Aadhaar KYC has helped borrowers and ensured a fast and timely issuance of credit, directly disbursed to the customer account which makes the process transparent and efficient. Through EWI with the facility of auto-debit, customer can pay-off the loan, making it a contactless process necessary in the post COVID era.
Since June, BMS has disbursed over 30 crores worth loans helping more than 15,000 customers to rebuild their livelihood. Through this initiative, Bharat Money Store is also helping NTC customers to get integrated into our country’s formal credit system by providing small business and personal loans, making them eligible to borrow from banks.
“I used to work in Pune but due to pandemic, I had to move back to my village. I took a loan from Bharat Money Store and started a food stall. If there was no BMS to support me, I would not be able to provide for my family” – Dnyaneshwar, BMS customer
Financial inclusion is crucial to break poverty cycles and reduce inequality; achievements that can only be attained with an extended and varied usage of financial products and services. Through this campaign, BMS is empowering rural India by providing access to safe and flexible microcredit facility along with a variety of other digital banking services, being an enabler and driver of Financial Inclusion in India.