The need for microcredit

Self-Help Group (SHG) movement in India constitutes one of the largest microfinance networks in the World. However, SHGs' decentralised nature and theoretical independence from any one promoting agency preludes the ability to aggregate, analyse and monitor their data at a state-wide, regional or national level. Current methods of evaluating SHG credit are ad hoc, consisting only of cursory reviews of ledgers and transaction statements. Controls on internal member accounts are non-existing in many cases. Further, performance monitoring of products and services on economic and social impact parametres is at most tertiary, hence disallowing critical input in improving   services and products for better impacts.The main problem in rural financial services is the non-availability of accurate, timely and needed information for decision making at higher levels. In microfinance sector, due to the lack of information, the SHG members cannot ascertain the financial position (profitability) of their group, the documents required to apply for loans and repayment to portray their strengths.

The Ekgaon case

Ekgaon technologies established on 1st October 2002, provides technology and management support for knowledge management, strategic decision-making and business development. It works towards increasing efficiency of value chain process, enabling access to financial services, technology and strategic consulting for primary producer communities across South Asia. Building upon its earlier work in Management Information Systems (MIS), Ekgaon Technologies works towards development of an integrated framework of field based monitoring, transacting and realtime interaction system for addressing the service gap for both SHGs and JLGs (Joint Liability Groups).

Ekgaon's work is centered around enabling support for rural enterprises building economies of Ekgaon's unique business model, identifing its user group as customer for information based services, that are sometimes very crucial for business/professional decision making and hence for sustainability of the business and livelihoods of the client. While creating cost effective technology systems, Ekgaon ensures that sustainability of services are beyond the system on which it has been built. Ekgaon's thinking in this line has led them to believe in principles of open source and emerging technologies enabled through networked approach.

Considering the current and expected growth of the microfinance market in India (and South Asia) the system targets to reach a large number of existing SHG networks and JLGs being promoted by large number of NGOs/MFIs/Banks. Ekgaon is also making efforts to identify and extend service support to several other decentralised SHGs operating in the region with creative products identified to address their information service requirements.

Developing a self-sustaining communities

Accountability of a system is important to achieve when an institutional access is lacking, like what we see in lack in banking services in rural areas. 'Banking Correspondent' mechanism which has now been encouraged by Reserve Bank of India is an aim to enable financial inclusion. SHG model which preceded 'Banking Correspondent' model has its own inherent institutional strength as a micro-banking institution at village level. A technological solution which aims at strengthening the financial service delivery allowing 'financial independence' of the SHG-Federations would in a long way help in developing self sustaining communities.

Community owned and managed financial institutions allows greater control in the financial behaviour of the microfinance institutions to be able to serve the 'real' need of the communities. Technologies and systems as Ekgaon has developed and implemented across Tamil Nadu and Andhra Pradesh, aim at enabling institutional access of community owned financial institutions with formal financial institutions such as banks, venture capital funds and other financial institutions.

The CAM model

The 'CAM - Mobile Enabled SHG Microfinance Management System' is an innovative development made for the collection of rural SHGs financial information and portrays them on online server to enable the stakeholders to access and retrieve the required financial information, at anytime and anywhere. This enables the rural women to utilise the various services like financial services, banking services, etc. at their doorstep.

CAM enabled mobile Service framework for microfinance is a three-tier document-based architecture for providing remote rural information services for SHGs in Microfinance. The user tier consists of a set of paper forms that people use to record information, perform queries and conduct transactions. The server is a standard web application server, which can reside locally, in a nearby town, or virtually in the Internet ether. The middleware resides on the mobile phone, which plays the role of scanner, user interface, network, cache and pre-processor in the system. The system creates a decentralised management information system, increases efficiency of fund management and reduces credit journey cycle.

Since the data is captured using a mobile phone and sent to the online server, the field staff monitoring the SHGs would supply the computer printed reports to the SHG's which help them to overcome all sorts of difficulties in terms of reports, book-keeping and portfolio management. This also enables the other stakeholders like SHG federations, banks, NGOs, SHPI, MFIs to track their loan repayment online and arrive at the decisions on time.

Ekgaon's success stories

Ekgaon's project 'Enabling financial inclusion and increasing efficiency of Self Help Groups Microcredit Federations' won the first Stockholm Challenge – GKP Award 2007 in the 'economic development' category. The Stockholm Challenge - GKP Award recognises initiatives that leverage Information Communication Technology (ICT) to improve living conditions and increase economic growth in all parts of the world. The award is a new Information Communication Technologies (ICTs) prize promoted by Global Knowledge Partnership (GKP), Malaysia and the Stockholm Challenge, Sweden. It focuses on social inclusion world-wide and champions ICT projects that show clear benefits to people and their communities, wide impact and sustainable business models. Out of 119 entries in the award from across the globe, nine finalists were chosen by the jury; three in the Education category and two in each of Culture, Economic Development and Public Administration.

The award was received by Vijay Pratap Singh Aditya, CEO, Ekgaon from Dr. M S Swaminathan, the eminent Indian Scientist and father of India's Green Revolution. The jury commented that the project demonstrated use of 'Accessible tools that facilitate the self management of communities, an excellent application of technology.' The ceremony included Lim Keng Yaik, Minister for Energy, Water and Communications, Malaysia, Rinalia Abdul Rahim, Executive Director, Global Knowledge Partnership, Malaysia, Walter Fust, Chair of the GKP Executive Committee and Director-General for the Swiss Agency for Development and Cooperation, Switzerland besides over 1750 delegates from 135 countries of the world.

Earlier in the year Ekgaon's co-founder and Director, Tapan S Parikh was awarded 2007 Humanitarian of the Year Award by Technology Review 2007 Young Innovator Award (under 35), USA. The prestigious award shared by leading technology innovator all cross the world recognised Parikh's work in new technology development for enabling access to services using mobiles phones.

Commenting on the increasing amounts of recognition

received by Ekgaon, Vijay Pratap Singh Aditya said, 'ekgaon intends to bridge the rural-urban divide through innovative use of technology for providing services'. He further added, 'We are glad that CAM technology has created platform for banking inclusion for rural population of the world. We are encouraged by wide acceptance of our mobile phone based financial inclusion  platform for enabling microfinance access'. Aditya outlined Ekgaon's vision to work towards development of communities in emerging economies such as South Asia and building communication and information systems for increasing efficiency of business enterprises and value chain process. He stated that Ekgaon is dedicated to provide appropriate and affordable solutions.

Conclusion

Ekgaon technologies' initiatives pertaining to microfinance, rural credit and mobile service framework is enabling financial inclusion at different levels of community engagement and resource coordination. While outlining Ekgaon's expansion of services, Mr. Rohit Magotra, COO, Ekgaon explained that the company is interested to expand its technology implementation across South Asia, particularly in Sri Lanka, Nepal and Bangladesh besides India.