Connecting guarantors to small entrepreneurs

Bhalchander Vishwanath.

Bhalchander Vishwanath.  

“Rekha Devi earns a living by stitching clothes. As she has only one sewing machine, she is unable to meet the growing demands of her customers… Kajal Devi runs a small hotel with her husband. She wants to grow her business by increasing the size of her hotel… Guria Devi has a dairy farm. She wants to buy some cows and she also wants to repair the thatch cutting machine hence she has applied for a micro loan…”

These are some of the stories about small entrepreneurs featured on, a US 501(c)3 non-profit organisation, founded by Bhalchander Vishwanath. Working with Ajiwika – a Section 25 not-for-profit company promoted by Network for Enterprise Enhancement and Development Support (NEEDS) and operating as a microfinance Institution in Jharkhand – links up guarantors with the financial needs of entrepreneurs.

“I was building software systems for an organisation called PMI in the US. PMI does mortgage guarantees. That is, a mortgage guarantee offered by PMI allows people who cannot put the 20 per cent down payment needed to buy a house, to get a mortgage and achieve the dream of home ownership,” Bala reminisces, during a recent interaction with Business Line.

“In case the borrower is unable to repay the mortgage PMI will cover the losses of the bank up to a certain extent. Having grown up in India, I had noticed on numerous occasions that the poor were borrowing money from their employers, friends, shopkeepers or others to meet their family needs. The amounts they borrowed used to be pretty small, e.g. Rs 500 ($12). This always puzzled me and I sometimes wondered why banks would not lend to them. So it struck me that if one can get a $500,000 mortgage with a guarantee, why cannot we make microloans available to poor entrepreneurs using a guarantee.” builds on the same idea. In case the microfinance institution lending to the poor entrepreneurs defaults on its loan to the bank, then the individual guarantors on the website will cover the losses up to a certain extent, explains Bala. “With the guarantee the bank is more open to making a loan to the microfinance institution which then lends to the entrepreneurs.” And, our conversation moves from Nageswara Rao park to email…

Excerpts from the interview.

Do you see IT enabling your operations, and also saving costs to a great extent?

Yes, IT (information technology) is crucial to automating our operations and keeping costs low. The whole process of connecting individual small entrepreneurs to individual guarantors from around the world happens entirely through our website –

We have also used the latest open source technology such as Ruby on Rails and MySQL. These technologies are free and enable rapid software development. We have used IT extensively throughout our operations and done it a manner such that they are easy to use, highly automated and low on cost.

For example, routine operations like daily database backups are fully automated. We use Amazon S3 cloud based data storage for storing images of individual guarantors and also backing up our database daily. These services are highly affordable, with zero upfront fixed costs. Thus our monthly Amazon bill for storing the images and the daily database backup is less than 10 cents (Rs 4.50).

In what ways have IT companies supported your venture?

We have been fortunate to get the support of IT companies. Cognizant built our website at no cost as they could directly use their expertise in helping the poorest sections of society. Our website may look very simple, but there is a lot which goes on behind the scenes. The website is fairly complex and it took nearly a year to build the initial version of the website. Subsequently, Cognizant continues to help us by enhancing the website.

Netsuite which is a leader in on-demand software has granted us free use of their software for our accounting and financials. Google gives us free Adwords support through the Google Grants program.

Has social media been helpful in your enterprise?

Social media and word of mouth have been very helpful in spreading the word and getting new guarantors. Most of our new guarantors come through referrals of current ones. A lot of the communication also happens through social networks such as facebook and twitter.

Several bloggers have also written about us and that too has been a significant factor in increasing the awareness about us.

Are there IT challenges that you encounter? (e.g. data gathering at the field level)

The challenges we have encountered so far have been largely at the field level. The challenges are of two types – system integration / training, and erratic system availability at the end of the microfinance institutions.

On the system integration / training aspects, we found that many microfinance institutions (MFIs) especially the smaller ones we work with are not yet accustomed to exchanging data or extracts with other institutions. Thus making sure that we get accurate data in a timely manner takes a little more hand-holding.

There are also challenges in the areas of human resources – it is difficult for them to find good IT professionals to work in remote areas like Jharkhand as there is a lot of demand for IT professionals from software companies in India.

System availability at the end of microfinance institutions due to power shutdowns and poor Internet connectivity is also a challenge. In some parts, I believe, the Internet Service Provider also shuts down if the electricity is not available for too long. So much so, even having laptops or power backup at the MFI-end may not solve the problem.

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Printable version | Jul 10, 2020 3:29:39 AM |

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