Vol. II: Shaping Information and Communication ... - IMA,ZLW & IfU

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Micro-finance, or the provision of small savings and loans to the poor, has emerged in the last
two decades as an effective strategy for poverty alleviation in the developmental context.
Building upon the pioneering work of institutions like the Grameen Bank of Bangladesh,
micro-finance institutions (MFIs) worldwide have shown that poor people are creditworthy.
These institutions have reached out to approximately 12.5 million poor customers and yet
more than 500 million poor people across the world are still very much disadvantaged due to
the lack of access to borrowings from commercial banks, as they do not have anything to
offer in terms of collateral security. And funds from various developmental schemes, welfare
or otherwise, still fail to reach the needy because of limitations/drawbacks inherent in the
system like corruption, fraud, misallocation etc.
Swayam Krishi Sangam [SKS] Smart Card project is a Grameen Bank replication MFI that
serves very poor women in the highly drought-prone Deccan region of India designed to help
MFIs meet these challenges.
Project Description
SKS envisions creating a self-sustaining MIS Division that will not only provide Smart Card
solutions to its branches, but also to other Grameen replicators. With this objective in mind,
SKS provides customized turnkey solutions to clients [other MFIs], including the training of
personnel, maintenance, the updating of software for additional financial services etc. In this
way, SKS can not only justify the huge investment of more than $150,000 [Rs. 70,00,000] in
developing the Smart Card solution but also collectively achieve economies of scale along
with other MFIs, which will be large enough to significantly lower hardware costs.
Since SKS delivers very small loans to the poorest of the poor, and since loan officers face
high travel costs to reach remote villagers, SKS needed to operate at higher levels of
efficiency than other MFIs in order to achieve sustainability. Therefore SKS implements
common efficiency-building methods such as streamlining products and introducing a
computerized MIS, to make their operations most cost-effective.
The SKS Management has found that the biggest gains are realized by streamlining the 7 a.m.
to 9:30 a.m. field meetings between loan officers and customers as customers spend the rest
of their day working in the fields. Further recognizing that Loan officers spend the greatest
portion of their meeting time simply recording transactions on collection sheets and customer
passbooks, the management devised the Smart Card method to increase loan officer