CASE OF BHARAT FINANCIAL INCLUSION LIMITED

OPERATIONAL METHODOLOGY, CLIENT SELECTION AND BUILDING PEER PRESSURE THROUGH

SANGAM FORMATION

Microfinance is an effective tool that can help reduce poverty and spread economic opportunity by giving poor
people access to financial services, such as credit and insurance. BFIL distributes small loans that begin at
Rs. 2,000 to Rs. 12,000 (about $44-$260) to poor women so they can start and expand simple businesses and
increase their incomes. Their micro-enterprises range from raising cows and goats in order to sell their milk,
to opening a village tea stall.

BFIL believes that access to basic financial services can significantly augment economic opportunities for
poor families and in turn help improve their lives. BFIL is committed to creating a distribution network across
underserved sections of society in order to provide easy access to the full portfolio of microfinance products
and services. It also looks at using this network to add value to the lives of its members by providing quality
goods and services that members need at less than market rates.

Bharat Financial Inclusion Limited firmly believes that Technology is one of its biggest differentiator in the
industry. For BFIL, Technology is an investment that is adding value to what and how we offer financial
solutions to our customers. Bharat Financial Inclusion Limited is among the first to develop and deploy an
industry standard MF technology platform in-house, delivering superior value to our end customers. The
systems designed and deployed at BFIL have enabled the business to grow to nearly 6.78 Million customers
and are providing the technology foundation to achieve the next phase of growth. BFIL has designed and
deployed a web-based Business Intelligence portal using state-of-art technology and a highly flexible and
scalable platform to support the business growth and operations.

Bharat Financial Inclusion Limited follows the Joint Liability Group (JLG) model. This it does without any bias
of caste or religion. The methodology involves lending to individual women, utilizing five member groups
where all the members of the groups serve as guarantors for each other.

Bharat Financial Inclusion Limited’s approach is to provide financial services at the doorstep of its members
in villages and urban colonies. This system provides convenience and saves time and cost of travel to
mainstream banks and enables Company employees to provide timely service by way of disbursements and
collection facility to its members.

Bharat Financial Inclusion Limited’s loan sizes are designed keeping the cash flows of its members and their
repayment capacity. The weekly collection facility is welcomed by Bharat Financial Inclusion Limited members
considering their daily cash flows, absence of proper saving mechanisms, the time and costs involved in
traveling to the banks to deposit their daily savings. Initially, members are offered small loans to inculcate the
habit of daily savings, credit and center discipline. Interest and loan repayments designed for ease of
understanding and repayment.

In all the processes from village selection, selection of members, training of members, loan disbursal and
instalment collections, Bharat Financial Inclusion Limited follows a well-defined, transparent process in its
operations.
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Details of Bharat Financial Inclusion Limited’s operational methodology are captured below
 Before starting operations, Company employees conduct village surveys to evaluate local conditions like
population, poverty level, road accessibility, political stability and means of livelihood.

After a village is selected, Company employee introduces the Company, its purpose, terms of association, its
methodology, products and services to all the village folk to enable them to take an informed decision. The
attendees to the meeting are encouraged to make enquiries with other existing members and understand
Company’s operations before making decision to become Company’s members/ borrowers.

Women form self-selected five-member groups to serve as guarantors for each other. Experience has shown
that a five-member group is small enough to effectively enforce group peer support and, if necessary, large
enough to cover repayments in case a member needs assistance.

CGT is a two-day process consisting of three-hour-long sessions designed to educate clients on Bharat
Financial Inclusion Limited’s processes and procedures and build a culture of credit discipline. Using
innovative visual and participatory teaching methods, Bharat Financial Inclusion Limited’s employees
introduce clients to the Company’s financial products and delivery methods. CGT also teaches clients about
the importance of collective responsibility, how to select group leaders, how to sign and a pledge that serves
as a verbal commitment of the members towards their Center and their fellow members. During this training
period, Company employees collect quantitative data on each client to ensure the qualification requirements
are met, as well as record base-line information for future analysis. On the second day, clients take a “Group
Recognition Test” conducted by the Branch Manager. On clearing this verbal test, they are officially accepted
as Company members.

A Center can commence operations with a minimum of 4 groups (20 members) and a maximum of 10 groups
(50) members. These Center Meetings are conducted weekly at fixed locations convenient to all the members.
All financial transactions are conducted at the Centre Meetings in the presence of all the members. Meetings
are held early in the morning, to minimize interference with the daily activities of the clients.

A Center Leader and a Deputy Center Leader are selected to facilitate meetings and ensure compliance with
the Company procedures. In addition to financial transactions, members use the weekly meetings to discuss
new loan applications. Centre meetings are conducted with rigid discipline to sustain the environment of credit
discipline created during CGT.

Cash loans are given to the members to be utilized only for Income Generation Activities and not for
consumption. The loans given to the members are verified by the staff of Bharat Financial Inclusion Limited to
check if the same have been utilized for stated purposes only. Members are advised to utilize the loan amount
within a maximum period of 30 days failing which they would be required to return the loan amount to the
Company.

Sangam formation
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Sangam Leader Meetings provide an interactive platform for BFIL members. Thousands of BFIL centre
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(sangam) leader’s help in gathering member feedback on BFIL services and help BFIL better understand their
 needs. Special desks and suggestion boxes are set up at the SLMs where member feedback and issues are
registered and addressed. Surveys on existing products happen at every SLM. These sessions also help
members understand and know BFIL better. The SLMs are a great way to connect with BFIL members and
build brand loyalty. Many of BFIL new initiatives like retail insurance, education and housing loans are an
outcome of feedback and inputs received at SLMs.

ANALYSE THE CASE, IDENTIFY BUSINESS BEST PRACTICES OF BFIS AND RELATE THEM TO YOUR
LEARNINGS OF THE SUBJECT
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