India Microfinance Business News : How did you get involved in microfinance?
Ashish Bazaari : Initially, Bazaari Finance was engaged in financing two-wheelers in the remote and neglected areas of Rajasthan from last 10 years. With our continuous interaction with the people at grass-root level we found that small entrepreneurs were facing problems in accessing micro credit via banks/ private institutions, etc and terms and conditions of local money lenders were not favorable. So we decided to support them through the provision of microcredit services.
IMBN: Can you share your experiences, drivers, and challenges (if any) that you have faced over the last decade at BGFL?
AB: At Bazaari Finance (http://www.bazaarifinance.com) our initiative to enter the microfinance industry has been most rewarding. Serving socially marginalized people, watching them grow their businesses, seeing the increase in education levels of their children and improving their health is an incentive for all our staff. It is true that the microfinance industry has its own inherent risks, but careful planning and committed staff are the key to risk minimization in the service industry.
Our company pursues the twin objectives of ensuring our own financial viability and providing services to socially and economically marginalized persons. Our key drivers are therefore to access the high potential of the microfinance market, raise the standard of living of our clients, substantially grow our business and become a Leader in the microfinance industry.
We face many challenges in meeting these objectives. Some of these challenges include increasing competition; the availability of funds at a reasonable rate; staff and client retention, providing relevant and new services to our clients; implementing appropriate Human Resource strategies; maintaining continuous dialogue with our clients.
IMBN : How is the operating environment in Rajasthan is different from other parts of the country?
AB: Rajasthan has particular geographic, economic and social characteristics which present challenges to the microfinance industry. The State has a low population density and therefore up-scaling is more difficult; economies of scale are harder to achieve and distances between one market and another are characterized by “the tyranny of distance”.
Secondly, the economy of Rajasthan is primarily one of agriculture in a drought prone area. This means that the livelihoods of potential clients are uncertain and incomes are low and unstable. Loan amounts and repayment conditions need to be modified accordingly.
Women are the key target market of the microfinance industry. Women in Rajasthan are particularly conservative and by tradition are more likely to stay in the home than venture out for work or go to the different meetings required by the microfinance industry.
Rajasthan has one of the lowest literacy rates in India. The level of education achieved by potential clients is on average Standard Year 3-5 years. This hinders both awareness and ability to run a business.
Finally most urban centres in Rajasthan are much smaller than counterparts in other parts of India. Consequently market saturation is quicker and up-scaling less effective.
IMBN: What actions are you taking that make Bazaari Finance different in the microfinance industry in India?
AB: We have taken following action to differentiate Bazaari Finance:
Community Cabinets: Bazaari Finance has inaugurated a series of stake holder Community Cabinets. The outcomes from these consultative dialogues are incorporated into our business planning processes. The company has undertaken both client and staff Community Cabinets.
Bazaari Finance Culture: As organization we recognize the opportunity to grow and develop a company culture which produces excellence in client outcomes; high levels of staff satisfaction and leadership in the microfinance industry. We are absolutely committed to our values of Trust, Respect, Equality, Honesty and Service excellence. We are growing a company culture of achievement, client care; leadership, self development and staff support. In everything we do – whether training, Branch visits, special events etc – “we walk the talk”.
Continuous Learning Organization: At Bazaari Finance we believe in “life-long learning” both of the individual and the organization. We actively seek opportunities for our staff to take responsibility for their own learning.
Knowledge Creation and Dissemination Division: The goal of this special division is to objectively assess the work of the Bazaari Finance and provide feedback about the achievements of its objective; identify gaps and opportunities in processes and products and recommend new and creative ways of doing things.
IMBN: What are the initiatives that Bazaari Finance has taken to address Human Resource challenges faced by MFI’s ?
AB: We are in the service industry our success as a business depends on our staff. In particular we know how important it is to nurture our “frontline” staff – those people who interact every day with all our clients. We do this by continuous training, counseling, job enrichment programs (Job rotation; special projects) and consultation processes. We also initiated:
Individual Staff Learning Day: Bazaari Finance has programmed an Individual Learning Day every week for each Field Executive. On this day the Field Executive is mentored individually by the Branch Manager. The Field Executive also accompanies his/her colleagues in the field to exchange learning’s; and participates in off-the-job training.
Team Development Day: Saturday is Group Development Day at Bazaari Finance. It is a non cash handling day. The day starts Day with a Branch Team Meeting. Team meetings may also held at Head Office to discuss the issues and to provide personal development training.
Mentoring and Buddy Program: New staff can benefit greatly from the counsel of more experienced staff members in our organization. Accordingly new Branch Managers are given a Mentor for the first month of their service; new Field Executives who relocate from other geographic localities are given a “buddy” to help them settle in the new location.
IMBN: Tell us more about Good Life Principles of Bazaari Finance?
AB: Bazaari Finance requests that its clients consider following principles of a “Good Life”:
- Encouraging cleanliness and hygiene
- Creating awareness of drug abuse
- Creating awareness of pollution control and encouraging tree planting
- Encouraging education of girls to at least secondary level
- Discouraging child marriage and female infanticide
- Creating awareness of HIV/Aids
Bazaari Finance creates ongoing client awareness about these principles during client training and weekly Centre Meetings. Bazaari Finance has also created a special education awareness campaign on each principle which lasts a whole week and covers all the clients. During each special week our Field Executives show related posters and discuss the principles in detail with their clients
Bazaari Finance believes that with a little effort these fulfilled goals will contribute to a better society and enhanced business outcomes for their clients.
IMBN: Do you believe the microfinance sector needs greater regulation? If yes then does this include a cap on interest rate charged by MFI’s?
AB: The MFI’s are already regulated by different entities as per their set up. However there is a need of single regulator with some proper norms and systems to regulate the MFI’s. The RBI has laid down proper norms for the banks to follow of which there is no chance of any avoidance. In the same way MFI’s should also be regulated.
I don’t think that capping the interest rate to 22-24% will help the sector. Any kind of interest cap will reduce the penetration of MFI’s in remote and neglected areas where cost of operation is quite high.
IMBN: Are you planning to raise capital from Private Equity Investors and IPO in near future?
AB: We are exploring the possibilities to raise capital from both of these sources as this needs a lot of effort, it will take some time.
IMBN: What are some of Bazaari Finance’s initiatives as part of it’s Corporate Social Responsibility?
AB: Bazaari discharges its Corporate Social Responsibility in many ways –
- Core Values: we have a clear set of Values that permeate everything we do both with our clients, in the community and within our company. Our Values are Trust, Respect, Equality, Honesty and Service Excellence
- Mission Statement: the primary focus of our Mission Statement is to provide financial services to socially and economically marginalized persons.
- Code of Conduct: our staff will always act in accordance with our Code of Conduct which clearly sets out the company’s expectations.
- Good Life Principles of Bazaari Finance: These principles, referred to above, are discussed every week, with our clients, at our Centre Meetings and on special National and International Awareness Days.