Monday, March 20, 2017

Job Search in Rural Management Domain

Rural management gives career option in both for profit as well as non for profit sectors. A rural management professional can very well be part of the mainstream down the line even though starting career from a rural base. While seeking for job, an unfocused professionals apply for anything and everything in response to the posted vacancies in the job portals. Consequently, the chances of resume being ignored becomes high. To avoid the rejection, it is suggested to have a customized resume and job applications by including the keywords used in the job description that fits with your skills and experience. An updated LinkedIn profile and healthy networking helps in a great way.

I have faced difficulties as a job seeker looking for the right job and even knowing name of various companies/ organization of the rural management domain. It is best to choose a target employers where one would like to work, and focus your efforts on those jobs and employers. I have compiled a list of organizations apt for a rural mangement professional that will assist one in reaching the right and targeted organizations easily. This database collection will come handy to the development professional, current students and alumni of XIMB, XISS, EDI, IRMA, TISS, KSRM, IRM, IIFM, IIHMR, NIAM, GBPSSI, BIMT, NIMT, IISWBM, NIRDPR & TERI University. Please provide feedback for any company and organizations not mentioned here.

Learning of the Day: It is important to negotiate on the salary and consider this as a marathon, not a sprint. Prof. Deepak Malhotra offers 15 pieces of negotiation advice in an informal session for students at the Harvard Business School.

Saturday, March 11, 2017

The Future of Self-Help Groups

SHG Bank Linkage Model pioneered by NABARD served dual purpose of financial inclusion  as well as social empowerment for rural poor women from excluded communities. SHG program had shown to be successful in connecting both unserved as well as under-served customers with financial services.

In the changing financial landscapes, it's merely a question of time before JLG movement overshadows SHG movement. The data on regulated microfinance institutions (MFIs) that submitted their numbers to the Microfinance Institutions Network indicates that over the past year, loan portfolios grew by 84 percent and loan disbursements grew 45 percent (Source). SHGs financed by the bank despite of government schemes like NRLM became stagnant with the growth of MFI sector. The data set (Source) shows decline in SHG financed by banks post 2013 while JLG movement is seeing tremendous growth.

JLG model has led to the establishment of a large microcredit sector in India post 2010. While SHG promoted by NGOs and government agencies are either small in numbers or with high default rates. The reason behind can be explained through: last mile outreach, continuity in service, strategic approach of the movement and market led changes in the society.

Both SHGs and JLGs have distinct credit delivery model. The members are expected to visit the bank and make repayments on their own in SHG model even when a visit to the bank branch leads to travel expenses and loss in daily wages for the client. SHGs have to manage the entire repayment collection process, and maintaining records. This process is reversed in JLG model practiced by MFIs with door-to-door delivery solution of cash disbursement and repayment with proper records.

SHPIs (mostly NGOs) promote SHGs for deepening the impact of their programmes and consolidating their own social agenda. Promoting agencies are solely depend on the funding agencies and aid under any government schemes for cost of formation. SHPIs typically have mandate for capacity building through trainings, credit linkage of the SHGs to banks and their monitoring role vis-a-vis the group discipline that is limited for project duration. Hence, SHPIs were able to sustain the regular and quality customer service to the women members during project period only. Public sector and rural banks have been lending to SHGs only due to government-imposed, priority-sector lending quotas. Once the support from promoter agency ends, the bankers are bit reluctant to provide financial support to SHGs due to fear of default. SHGs are also implementing vehicle for various welfare schemes in rural areas and get funds for it. But most SHGs are running on paper only. The validation and grading exercise to know health of SHGs are avoided by both government machinery and NGOs as this can expose fraud at the ground level. This also led to decay in the quality and credibility of SHGs.

MFIs diversified the geography to cover for political risk post Andhra crisis. Consolidation phase was achieved in the MFI market as crisis has swept away small players and make investors cautious. But the value of acquiring customers went up due to introduction of credit bureaus. The strategy adopted by MFI for acquiring new clients was based on low risk and high pace growth. They concentrated on the regions where the SHG programme was implemented on a large scale with successful result. The new borrowers came by restructuring of already existing JLG and SHG members. The incentives of a loan officer in MFI is based on loan disbursements and recoveries. As a result,they could form JLGs and disburse bigger ticket size loan if they include SHG members with inculcated good credit history in the JLG formation. Also, women prefered JLG model due to availability of credit in increasing amounts without any mandatory savings.

SHGs are gradually becoming the aggregate of individual actions, and rarely works as collective action. The members of SHGs are more inclined towards starting an individual based activity rather than collective based activities. This behavior shows either SHG members have not much awareness about the benefits of coming together or don't have the cohesion among them. A major role behind the screen was played by external market led economy having dynamic individualism and consumerism as its underlying themes. There is tremendous heterogeneity even among the poor SHG members based on parameters of aspirations and entrepreneurism. The break with tradition and affirmative action of state meant the break with established identity-giving authority. The new individuals, freed from the traditional collective, have started to reorient themselves in a new manner. In the booming economy, there are chances of class mobility for entrepreneurial households through remittances and migration. The lines of class division are crossed now more frequently,  the collective identities based on class or caste association are loosening up and leading to ineffective collective action. Hence, theories of collective action are not working as effective now in the rural ecosystem,

This concludes the brief summary of the emerging debate. The popularity of the JLG has eclipsed SHG but its current clients will be shifting to Small Finance Banks to avail savings, credit and other full range of financial services. The affluent clients will drift towards JLG while SHG movement will continue to reach out to vulnerable and marginalized people who own little or no land, are predominantly illiterate, and lack access to formal sources of financing.

Monday, February 13, 2017

Life in ALC India

I have joined at ALC India Limited today. I have moved into consultancy act from programme implementation role. I hope my work will take me places and the initial exposure that was localized in the nature and context will be broadened. Tangible gains go hand in hand with the intangible ones in career of every employee. There will be business relation to establish, field tours to get insight, policy level to conduct and markers to lay for the future. Hoping this life will not be fully devoted to the job and conforming to its mindless dictates.

When I quit the job with Chaitanya, I almost felt I had unfinished business to do. I felt that my reputation with ADS and in peers had been very good. And then you have to start searching for job after a gap, it is tough. It knocked me out for few interviews. I have seen a lot of ups and down with the career even a pink slip. I have emerged stronger after experiencing harsh realities of the lives early on in his career. When you get on a learning path, it is the best time of your life. Every day means something, every lesson provides the clarity you clamour for. Life is not about doing it alone. It's about learning from those who have already achieved great heights, and adding that history to one's own built-up.

"Life is not easy for any of us, but what of that? We must have perseverance and, above all, confidence in ourselves. We must believe that we are gifted for something, and that this thing, at whatever cost, must be attained" - Marie Curie

Friday, January 6, 2017

Way to Cashlite Economy

Market and State are principal agent of development. The welfare prone Indian state is now promoting the digital financial inclusion and cashlite economy.The demonetization narrative and data has been diverted towards digital and cashlite economy. The state appears to have vision of going cashless, notably like South Korea, Denmark, Sweden, and Norway. The cashless economy is an utopia but cashlite economy will happen till 2050. The digital ecosystem in India is demonstrated in the diagram below (Thanks Microsave) :

The issues in move towards cash-lite economy has been discussed in detail here -:

1. Policy Level: RBI has drafted policies (in its Payment System Draft Vision Document) to accelerate the shift towards electronic transactions. This policy will require an integration with National e Governance and Digital India plan for having a significant outreach and affect. The 'Committee on Digital Payments', headed by Ratan P Watal deployed by Ministry of Finance has already delivered report on digital payments. They have suggested fiscal incentives to promote digital transactions and a separate regulator to deal with issues concerning payment. Payments and Settlement Act, 2007 will need revision under fast changing digital ecosystem. Unified Payment Interface (UPI) acting as gamechanger has enabled all bank account holders to send and receive money from their smartphones without the need to enter bank account information or net banking userid/ password. RuPay has gained more than 1/3rd market share in total cards outstanding and 18% share in terms of volume of debit card transactions. RuPay is pioneering step as it has lower integration fee with banks and reduce the outflow of precious forex. There is need for incentivizing and strategizing the consumers to use digital accounts. Digidhan is an initiative for promotion of digital payments with lucky draws for consumer and business entity. Beneficiary of government user will receive DBT, scholarship, pension, social transfers and price subsidies from the state as well as central government.

2. Internet Connectivity: The first question to be asked by marketers on digital India: Is the quality of Internet connectivity good enough to go for consumption online? Current internet penetration in India is 34.8 % of the total population. (source). Connectivity issues and the power scenario in the country often impact transactions in India. The Cost, Speed and Reach are three major factors influencing spread to tier 2 and 3 cities in India. The introduction of 4G in the Indian markets is expected to be the next game changer but the prices of broadband connections as well as data charges for 3G/4G are quite high. Unless 3G/4G comes at par with 2G rates, one can't expect digital initiatives like these scaling up. Also, the failure of digital transactions is highest with 2G connectivity. With improvements in connectivity and reduction in cost, the market is set to explode with innovation.

3. Role of Banks: 24*7 and 365 days banking will come through the change in financial services in India. Promotion of (e-KYC) information previously captured during enrolment for Aadhaar, and available electronically to banks or enrolling institutions will reduce a lot of paperwork and time for the banks. A waiver on debit card fees having no credit risk must be promoted among customers. Instead of Surcharge fees and Convenience fees, promotional discount and incentive on current account with some interests will promote people to move towards digital footprint. The presence of multiple players and increase in e-commerce volumes has helped rationalize payment gateway charges to 2.5-3.0% that used to hover around 4-7%.  Saral Mukherjee on Livemint has correctly argued : Benchmark for the merchant discount rate (MDR) for debit cards should be the NEFT/RTGS/IMPS fees rather than credit card fees. If the IMPS charge for transferring up to Rs1 lakh is Rs5, why should debit card use cost 1% of transaction value? Card-based transactions also leave an audit trail. Since MDR on debit cards is a cap and not a floor, banks could have proactively reduced MDR to spur adoption.

4.  Role of Market: The old existing business models for the merchants must be molded such that digital transaction will reduce their time and cost of conducting business. The move to cashless transaction can originate from the retail consumer but needs to involve wholesalers, distributors and manufacturers in the supply chain. E-commerce firms are doing 70% of business through cash on delivery in India. Cash transaction increases another level of risk to the supply chain in the form of cash handling and higher rates of return of products. There is need to have push for digital payment infrastructure. With easier availability of capital through online lending will be a catalyst for MFIs to digital payments, both as a way to repay the loan, and accept consumer money. The future of rural banking and microfinance is sachet sized cashless transactions! This will reduce costs, minimize ticket sizes and volumes will go up!

5. Last Mile Connectivity:The network of Banking Correspondent agents will be utilized in the cash-lite economy. Agents are working on low profitability due to the low levels of transactions and high operational expenditure. Agent dormancy, or inability to deliver service, has a corrosive effect on trust, which is the bedrock for any system of digital financial services. Any initiative in digital services must pay attention to the business size and frequency that will come through use of micro ATMs, mobile money and mPOS terminals. There is a report by microsave on long road ahead for digital economy for all. The agent must be well prepared to handle behavioural traits like habit of using cash with compelling value proposition, offers and anti-fraud procedures in explaining the digital services to the rural customer.

6. Consumer Protection: More secured online payment systems is the primary concern of the consumer. The failure rates of transfer/payment, grievance settlement, fraud management, integration support and lead time are the evolving areas required for consumer protection in digital economy. Ease of use, honest pricing, individual data protection and cyber security are all required for customized end product and fintech providers will have chance for innovative solution. The financial service providers must be transparent in process of customer recourse, complaint management and dispute resolution.

7. Digital Financial literacy: Digital financial literacy program needs push from government in creating awareness and customer protection. The conception of financial literacy is packed with stereotypes of the poor as ignorant and in need of moral lessons on savings, consumption and credit. The attention must be paid for entertainment and engagement rather than learning module in design of mobile app, advertising and training material. There is need of persona or mascot for digital product that can target the early adopters.

8. Convergence: A digital ecosystem will prosper with the amalgamating schemes and campaigns. According to the EY reportpenetration of POS terminals is only 693 per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people. India’s POS landscape is characterized by a large skew in favor of urban locations-more than 70% of the POS terminals are installed in the top 15 cities contributing to over 75% of the total volumes at POS.There is 12.5% excise duty and 4% special excise duty on swipe machine imported from two manufacturers--Ingenico and Verifone. Manufacturing of Swipe machine must be linked with Make in India campaign. This can be done by promoting India an electronics manufacturing hub. This is what economist Atul Kohli called state-directed development, not simply private sector expansion. There is need for integration with Smart City for piloting schemes such as online payments for home utilities (electricity, water, gas and taxes) and municipal taxes.

9. Role of Development Sector- The development sector is least prepared for the change with digital India. They need to tap into informal sector through pilot scheme and CSR activities. Example, a pilot can be done by altering the flow of wage accounts in the informal sector from cash to digital through community mobilization and focusing on migrant workers. NGO as partner can increase outreach and capacity building of SHGs can be better done through their medium.

According to a 2014 study by Tufts University, The Cost Of Cash In India, cash operations cost the Reserve Bank of India (RBI) and commercial banks about Rs 21,000 crore annually. This shows India as cash intensive, even for a developing country. Internet usage and penetrations, smartphone penetration, e-commerce growth, GST implementation, new banking licenses, tax reforms and the evolving cashless payments landscape will take India towards cash-lite economy. Given the evolutionary stage of the digital market, both old and new business will be bound to make mistakes and business models are likely to evolve. The future lies in identifying business models and incentives for transitioning merchants and consumers to go digital.

Friday, December 30, 2016

Universal Basic Income

Universal Basic Income is an idea whose time has come. Universal basic income will be a form of social security in which all Indian citizens below the poverty line regularly receive an unconditional sum of money from the government. The amount may be as little as Rs2000 - Rs3000 a year, but that's a lot of free money in the bottom rungs of the income pyramid. Poor families are always destabilized due to their lives irregular cash flows and looming expenses. This will act as small cushion for critical times.

Why the time is ripe politically ? Demonetization has also created a disaster effect on Indian economy and market. Hence, NDA government has changed the demonetization narrative from one of fighting black money to bring about pushing for a cashless economy. NDA had prominently highlighted the issue of black money and had promised to bring it back in Lok Sabha election campaign. Universal Basic Income into Jan Dhan Account will be seen as commitment to a political agenda and a smart way to fight poverty.

There are two major school of thoughts under Direct Cash Transfer (DCT) - CCT and UCT. A comprehensive review of the evidence around cash transfers, Berk Ozler of the World Bank suggests that an unconditional cash transfer (UCT) can provide a critical foundation, on which policymakers can layer carefully designed, targeted CCTs to encourage specific outcomes, such as education or health behaviors. Unconditional Cash Transfer (UCTs) consist of cash grants with means testing to ensure funds go to the intended recipients, but without extra requirements on recipient behavior. Universal Basic Income comes into category of Unconditional Cash Transfer. Those who are further interested in the subject, this video does an excellent job:

While the number of Jan Dhan bank accounts opened as per the latest estimates stands at 26.03 Crore, reaching the last-mile user remains a problem and large number of dormant accounts. Only 14.43 crores of them are aadhar seed hence a verification and duplication is tough to avoid. But universal basic income will help banks to reduce current number (23.85%) of zero balance accounts. A 2013 CGAP report actually points that electronic Payments and social cash transfers in India can improve the business case for banks and agents.

Concept of universal basic income is utilized in developed countries currently. The available routine, process-oriented jobs job of people may be automated in a few years’ time due to the digital revolution, artificial intelligence and robotics. Finland has begin paying basic income to unemployed citizens. A recent research paper suggest that even done for short–term unconditional cash transfers (UCT) will create longer-term impacts.

Cash transfers are an effective, low-cost social protection tool, but they don’t on their own move people out of poverty. The cash transfers should not be seen as a substitute for state actions. There is always investment required in improving infrastructure for health services, education, skill training, and other social programs. The policy question remains still to be answered as universal basic income may sound great but questions remain over whether India can afford it. How much money can be termed as a true “basic” income for household? Should it be truly be both unconditional and universal? Can the program be tailored for more gender sensitive in nature? The debate has just begun and can be read at LivemintGlobal dialogue. More time will be needed for individuals to understand how universal basic income will affect institutions, and their relevancy to their daily lives.


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This Blog is meant purely as a personal diary of a rural manager in making. It exists to record information, experiences and opinions about various issues encountered in the line of duty. Any person, institution and organization mentioned here doesn't assume any liability for its contents. This is not a deliberate attempt to defame anyone. And if you have actually read all that is written in the blog and aren't mad at me, then thanks for your time and patience !
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