Insurance services have largely remained as the urban phenomena. FINO understands the value of time and gives a lot of importance to insurance while extending credit facility to the poor segment of the society. As a result of this the Bank coupled a micro insurance product with loan under tie-up with LIC.
MOTIVE:
Insurance Linkage provides protection to the Bank in case of borrowers untimely death.
The insurance premium is recovered from the first loan disbursement made against issuance of insurance certificate.
Borrower gets a life cover of Rs.50000/- at a nominal premium of Rs.200 pa.
FINO Saral
A revolutionary and complete end-to-end Loan Management Solution
Striking Features:
Customized to the Bank specific loan product with an integrated rule engine to do first level eligibility checks.
Capture and validate data provided in respect of guarantors.
Generate ready to print & sign loan application forms along with basic socio-demographic data, photograph etc. printed.
Enable online sanction and loan disbursement via online linkage to FINO server and Banks Core Banking System.
Generate repayment schedule and other MIS for effective monitoring of loan accounts.
FINO Portfolio at a glance:
As a Business Correspondent (BC) FINO successfully took up the challenge to do end-to-end loan operations on behalf of the Bank including right customer selection, documentation, disbursement and continuous follow-up for ensuring recoveries
In a very short span a year, FINO has disbursed among 4000 beneficiaries a sum total of Rs. 3.91 Crores spread across 103 different villages in 5 different states and two metros. Which is a great achievement by FINO and its members. Here is a snapshot.
The Road Ahead:
On 4th Feb, 2010 RBI told to the chiefs of both private and public sector banks that in addition to allowing the underprivileged no-frills accounts without a minimum balance requirement, banks should also provide them loans through an overdraft facility. This was given with the objective of achieving financial inclusion.
Looking at the fast growing MFI segment, doubtlessly there is a huge demand of such small ticket size loans across the country. But the real challenge for team
FINO is to meet this demand in a very cost effective manner. In addition to low cost, scalability and sustainability are two other areas which need thrust & improvisation.
In Indian banking industry, the manner in which goal of financial inclusion is pursued has been disappointing till date. However, this initiative of UBI and FINO has made a difference here by answering many such questions and hopefully the inclusive story wouldnt be a distant dream very soon.
The borrower is not only benefited by availing a loan from a Nationalized Bank which he wouldnt have dreamt before but today, he is actively transacting in his No Frill Account to ensure timely repayment of loan and to create a bigger deposit portfolio. The insurance linkage to loan proved successful with zero selling cost but with added security to his life and liability.
In Micro finance scenario, the MFI rates are around 30%. However, Banks end pricing to beneficiary is ranging from 12 to 18 % which is competitive, as Bank is not charging any processing fees or hidden charges. Bank has worked out the end pricing for the beneficiary keeping in view transaction and monitoring costs to be paid to BC. FINO and Banks have learnt that there is strong need to increase the BC cost to meet the high operational cost incurred in mobilizing and recovering these small ticket size loans.
Till date, out of 21 PSU Banks only UBI has came forward with initiative of small ticket loans under BC model, out of 1 Crore customers base of FINO only 4000 beneficiaries have been availed loan facility by FINOOur journey has just begun & a long way to go!
