Financial inclusion is becoming a priority agenda for the Indian financial sector. A recent step by the Reserve Bank of India towards this was the formation of ‘Committee on Comprehensive Financial Services for Small Businesses and Low Income Households’ to recommend future actions for sustainable financial inclusion in India. The committee’s report submitted on December 31, 2013, highlighted that 60 per cent of the population in India does not have a functional bank account and 90 per cent of small businesses have no link with the formal financial sector. It proposed steps to include setting up a large number of electronic payment access points.
The proposal includes creating a universal electronic bank account (UEBA) for all Indian citizens over 18 years and providing access to formal credit for low-income households and small businesses by January 2016. It also proposed some major changes in priority sector lending norms. Though the goals are appreciated by all, the methods to achieve them remain highly debated as ever. While the government, financial institutions, banks and economists are working on their action plans, there are many social enterprises in India treading on their own paths to help make financial inclusion a reality.
One such enterprise is Sanchayan Suraksha Solutions Pvt. Ltd. (SSSPL), which means financial security. Founded in 2011 by Avik Kedia, SSSPL is trying to address one of the major challenges in the field of financial inclusion – the challenge to access existing government schemes and financial products. Low-income population lacks access to credible and reputed financial services due to low financial knowledge and lack of a strong distribution platform. SSSPL works by aggregating the right financial products based on customers’ needs, raising awareness in the targeted segment about various financial options available and building a distribution network of customer access points, branded as ‘MoneyPoints’. SSSPL delivers financial products comprising of savings, bank accounts, micro-insurance, micro-pensions and government schemes. The starting price of these products are as low as Rs.100.
Avik Kedia is a Chartered Accountant from West Bengal. In 2009, he started an NGO called Sanchayan Society to further financial literacy agenda by helping the low income groups understand personal finances and financial planning. Sanchayan Society was organizing multiple workshops for urban and rural poor to impart financial literacy. But the lack of access to useful products and services rendered the benefits of this knowledge useless. They felt that they should provide the right financial products to these people and that’s when they set up SSSPL. With a team of five, SSSPL is focused on urban poor and has started building the distribution network in Delhi and NCR region. Avik says, “After a lot of hard work, some people are able to save Rs. 2,000-3,000 in a month. It is their right and they need to save or invest this money. This small sum saved well can open up many opportunities for them in the long run. If they lose the opportunity to save this money, they are not getting anywhere.”
SSSPL was started with two centers in East Delhi in 2011 but shut them down in October 2012 and shifted to the franchisee model. By December 2013, it has set up more than 100 franchisees and has served more than 30,000 low-income people in Delhi. Building this easily accessible network and making it work efficiently needs a lot of convincing in all the phases of the process. “Convincing the retailers that they can earn less and still be happy is difficult. Everyone wants to sell to earn the highest margins. After all, they work on commission. We need to monitor that retailers don’t do this. The idea here is not to sell what one thinks is the best, it is to allow the customer to invest as much as they can, however low it is. You have to convince the customers that they can trust you,” says Avik.
SSSPL is a finalist of the Artha Venture Challenge, committing $50000 in matching equity funding and is finalizing additional $50000 soft loan from a government bank under subsidy scheme. They are looking for match funding of $50000 from investors looking to invest in the financial services sector. “We are in a low margin game which is a time consuming process. Our goal is to add 5 million customers over the next 10 years and build a very large distribution network, of approximately one lakh distribution points, all over the country,” says Avik. He is aware that SSSPL has just warmed up for a marathon and there’s a very long way to go.
Read more stories of social enterprises working in the finance sector here.