National Payments Corporation of India (NPCI) today said it has started a pilot project to digitize the transactions in micro finance institutions (MFIs). The process has been initiated to bring payments to the last mile by digitising transactions of Svatantra Microfinance where in RBL Bank will be disbursing loans and HDFC Bank receiving the repayments, a company statement said.
A simple innovative use of the Aadhaar Payment Bridge System (APBS) and USSD-based *99#infrastructure has made this possible, it added. The customer’s Aadhaar numbers are collected and sent to the disbursing bank for onward direct credit to account using APBS. For repayment a string of numbers is being saved as a contact number in the MFI customer’s feature phone during MFI group meetings.
The customer has to dial the contact, enter the amount and Unified Payments Interface (UPI) PIN on the feature phone and the repayment gets done successfully.
“Potential of such a system in MFI sector itself for digitization of payments is as high as 80 million annual disbursements and over 900 million repayment transactions,” NPCI Managing Director and Chief Executive A P Hota said.
There are 268 MFIs catering to over 40 million low income customers with an outstanding portfolio of Rs 53,500 crore and repayment rate of over 99 per cent. Digitizing cash based operations has the potential to bring a host of benefits to MFIs as it mitigates cash carrying risks and improves operational efficiency by saving time for frontline staff, the statement said.
It can aid in the diversification of products offered to consumers and enable the innovation of customer centric offerings based on critical insights sourced from digital data collected over time on customer behaviour, it added.