The 10 Most Admired Non Banking Financial Companies In 2018

™ www.insightssuccess.in JUNE 2018

THE

10

Most

ADMIRED NON BANKING FINANCIAL COMPANIES IN 2018

Chalk Talk Participation of Non-Banking Financial Companies in the Economic Development

Editor’s View The Revival of Non-Banking Financial Companies.

Amit Gainda, CEO

Empowering Students to Aspire Without Boundaries

Editorial

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BFCs have come to be regarded as important financial intermediaries particularly for the small-scale and retail sectors with the growing importance assigned to financial inclusion. In the multi-tier financial system of India, the importance of NBFCs is much discussed by various committees. They are basically engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by government or local authority or other securities of like marketable nature, leasing, hirepurchase, insurance business, chit business but does not include any institution whose principal business is that of agricultural activity or any industrial activity or sale, purchase or construction of immovable property.

NBFCs are an integral part of the Indian financial system, enhancing competition and diversification in the financial sector, spreading risks specifically at times of financial distress and have been increasingly recognized as complementary of banking system at competitive prices.

NBFCsChannelizing the Financial Resources in Capital Formation

NBFCs usually define securities that can be pledged against the loan. These securities are very liquid, from high quality companies, and highly valued securities. The amount depends on the valuation of securities, margin allowed by the NBFC, and past credit history. The amount of loan is about 50% to 70% of the value of the securities pledged with the NBFC. Hence, if the stock portfolio for these securities is 10 lakh, one can get a loan of 5 lakh to 7 lakh against the stock portfolio. The advantage of loan against securities is that one will be charged interest only on the amount withdrawn from the account and for the span of time the fund is utilized. The other advantage is that no personal guarantor is required for loan against securities.

NBFCs have been playing a very important role both from the macro-economic perspective and the structure of the Indian financial system. NBFCs are the perfect or even better alternatives to the conventional Banks for meeting various financial requirements of a business enterprise. They offer quick and efficient services without making one to go through the complex rigmarole of conventional banking formalities. However to survive and to constantly grow, NBFCs have to focus on their core strengths while improving on weaknesses.

They will have to be very dynamic and constantly endeavor to search for new products and services in order to survive in this ever competitive financial market.

Shweta Priyadarshini Shweta Priyadarshini

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Editor-in-Chief Pooja M. Bansal Senior Editor Shraddha Deshpande Managing Editor Rajarshi Chatterjee Executive Editor Shweta Priyadarshini Contributors Bhavithiran Murugan Ashwini Deshpande Art & Design Director Amol Kamble Co-designer Savita Pandav Picture Editor Alex Noel Art Editor Mayur Koli Visualiser Sapana Shinde Business Development Manager Akansha Garewal Marketing Manager Dhruv Apte Business Development Executives Rutuja, Asif, Tarun Research Analyst David Circulation Manager Vivek Bangade Database Management Prashant Chevale Technology Consultant Swapnil Patil sales@insightssuccess.com

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AVANSE Empowering Students to

Aspire Without Boundaries

08 Cover Story

CXO Standpoint

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Experts View All About TDS On Property Purchase

Editor’s view

46

The Revival of Non-Banking Financial Companies

The Economic Stature

FINANCIAL TALK

The Stature of Non-Banking Financial Companies

Arising with the Financial Technology Ecosystem

Chalk Talk Participation of Non-Banking Financial Companies in the Economic Development

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42

Articles

16 Aris Capital Creating Benchmarks in the Commercial Vehicle Finance Sector

26 Light Microfinance

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Empowering Rural & Semi-Urban Entrepreneurs Through Innovative Financial Services

Jagaran Microfin Delivering Best-inclass Financial Services

30 Margdarshak Driving Financial Inclusion for Equitable Growth

36 SAFL India’s First Dedicated Agriculture Loan Company

44 Shikhar Microfinance A microfinance with a difference

38 SV Creditline Transforming the Face of Rural India with Comprehensive Services

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10 Most Admired

NON BANKING Financial Companies in 2018

An Integral Part of the Indian Financial System, Enhancing Competition and Diversication in the Financial Sector

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on-Banking Financial Companies have emerged in various fields and are playing significant roles in the Indian economy. It is contributing to sustain economy and their role as productive intermediaries has been well recognized and acknowledged. They have expanded in every possible ways across the country and have 13,000 members registered with them. Nearly 600 NBFCs receive public deposits and the finances assets worth 15000 crores annually. NBFCs have set an impact for financial incorporation, micro finance, reasonable housing, vehicle finance, gold loans and infrastructure finance. These financial institutions have become more effective and grow in their business by introducing personalized products, leverage consumer data, design and launch tailored products, reach & expand savvy customer base efficiently, acquire new customers, save costs with digital organization.

In Insights Success Magazine, we have introduced The 10 Most Admired Non-Banking Financial Companies in 2018, in order to assist businesses to choose their right Non-Banking Financial Providers. Assessing the scenario in versatile perceptions our magazine has brought into light the companies, who have flaunted some excellent NonBanking Financial Providers. This examined list will lessen the search of organizations that have perfect non-banking companies.

In this issue, we have specially featured Avanse Financial Services Limited, as cover story. Avanse Financial Services Limited is one of India's fastest growing education finance company committed to facilitating and fulfilling academic dreams of talented young students.

We have listed Aris Capital that provides financing for commercial vehicles in the transport and agricultural industry.

JagaranMicrofin Private Limited that is a subsidiary of GTFS Multi Services Limited providing a wide range of financial services, especially in the backward and rural areas. Light Microfinance which is a private limited company registered as a non-banking finance company (NBFC) with the Reserve Bank of India and delivering micro finance products and services to the world. Margdarshak Financial Services Ltd a non-banking financial company is providing financial services for livelihood strengthening and economic mainstreaming of poor in the States of Uttar Pradesh, Bihar, Haryana and Himachal Pradesh. Sustainable Agro-commercial Finance Ltd is the first NBFC in India providing agri- loans with a wide and diverse range of financing options for almost every need of agricultural activity. Shikhar Microfinance Pvt. Ltd is a nondeposit taking non-banking finance company. It empowers communities by providing financial services and livelihood opportunities to the underprivileged segments of our society. SVCL is one of the largest non-banking financial companies in India which aims to transform the rural sectors of India.

We also have TVS Credit Services Ltd. which commands a strong presence in manufacturing of two-wheelers, auto components and computer peripherals and Aditya Birla Finance Limited is among the leading well-diversified financial services company in India offering end-to-end lending, financing and wealth management solutions to a diversified range of customers across the country.

Our in-house editors have come up with some adroitly written articles such as Participation of non-banking financial companies in the economic development.

Also, we have included articles like All About TDS on Property Purchase written by Abhishek Ranjan Singh, and Financial Services written by Rajesh Nair.

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Cover Story

AVANSE EMPOWERING STUDENTS TO ASPIRE WITHOUT BOUNDARIES

Amit Gainda, CEO

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uality education forms the bedrock of sustainable development of any country.

As India gears to become the workforce powerhouse of the world, enabling structures need to be put in place that ensures world class education for all in the country. Every Indian youth has a right to the best in education. And lack of funds must be the last hindrance to this dream.

Avanse Financial Services, a NonBanking Finance Company (NBFC), regulated by the Reserve Bank of India and envisioned with the aim to fulfill the need for education finance at reasonable terms.

Avanse is an extract of the French word for advance. And that's what Avanse, a new age education finance company. Avanse is a sensitive, advanced private finance company specializing in the niche space of education. Our mother company DHFL is one of India's largest housing finance companies in the private sector, having helped hundreds of thousands of Indians to fulfill their dreams of owning a home. Avanse is from that pedigree. Avanse provides financial assistance through Avanse standalone offices and also through the DHFL network offices. The Company funds students travelling to all key international advanced education destinations including US, UK, Australia etc. The endeavor always has been to bring the best in financing flexibilities to the Indian student market. Avanse started of small and their intention is not to compete in the existing market but create new curves of evolution. Their brand complements the education sector and engages with students and educators to metamorphose financial solutions that are new age and tailored for specific needs.

The Forerunner Mr. Amit Gainda, CEO of Avanse Financial Services is an accomplished leader with over two decades of experience in the banking and financial services industry. Amit deep experience in building businesses from an inception stage, sharp insights in managing complexities of scale and expertise in steering business strategies across various lending portfolios with a focus on ensuring sustained financial performance. Led by his strategic guidance and supported by an able team, Avanse is well poised to further strengthen its position in the education finance segment.

In his earlier role at DHFL, Amit was responsible for managing the SME & Mortgage Loans Assets with comprehensive responsibility across various functional domains of Sales, Product, Credit, and Risk & Collections.

Prior to DHFL, he has worked with Bajaj Finance, GE Money and Citigroup. He is also a Certified Six Sigma Black Belt in the DMAIC methodology.

He has been part of several programs and capability building projects which have enabled him to contribute and won accolades “Certified Global Mortgage Leader” -GE Stamford, “Certified Black Belt Project ‘Project Write Rate’ - Improved operating efficiencies for Mortgages” and “Certified Black Belt Project - ‘Project Catch’ m Young’- Focused on delivering collections efficiencies” in his previous assignments. He holds a degree in Finance Management from IMT Ghaziabad and a Marketing and Finance post graduate diploma from IMI Delhi. He has also completed an Executive Education program in

general management from INSEAD, Singapore and France.

About this Promising Company Headquartered in Mumbai, Avanse is one of India’s fastest growing education finance company, incorporated in 2013 with a socioeconomic objective of making better education affordable to the masses in India. Avanse is committed to facilitating and fulfilling academic dreams of talented young students.

Avanse is an NBFC arm of Wadhwan Global Capital Private Limited (WGC), a diversified financial services conglomerate with an AUM of USD ~22 billion and presence across lending, insurance, protection and strategic investments. Avanse is an associate company of DHFL, which is the flagship company of WGC and a leading financial institution in India.

The International Finance Corporation (IFC), an arm of the World Bank is a key stakeholder with 15% equity stake in Avanse.

Distinctive Services In the education finance domain, Avanse provides loans across two categories: • Education Loan (B2C) – With its new age, flexible and tailored educational financial solutions, Avanse makes higher education affordable and accessible to Indian students and young professionals, thus, enabling them to ‘Aspire without Boundaries’. Avanse has fulfilled higher education dreams of over 10,000+ students across 6000+ courses in 45+ countries. Avanse has recently extended its solutions to help parents fund their child's school fees · Educational Institutional Loan

To be a

Leading Customer

Centric

Diversified NBFC focused on Profitable

GROWTH across

domains

of Consumer, MSME and Commercial

Businesses with leadership

position in Education Loans

(B2B) – Under this category, Avanse provides loans for financing working and growth capital of educational institutes which is requires for their infrastructure expansion

Avanse’s Strategy to Overcome Initial Hiccups The overall education loan market is dominated by PSU banks. According to study by credit bureau Transunion Cibil ~9% of the education loans disbursed by banks have turned into non-performing assets. This challenge was an opportunity for Avanse to quickly establish as a new age, agile player and break through this competitive market while also ensuring quality of business and lower defaults rates. To ensure this, Avanse has undertaken several successful initiatives. Avanse has been at the forefront of creating great value and customizable solutions for customers. To keep defaults low, Avanse has built strong underwriting processes through a well-defined scorecard model by opting for a student led approach. Avanse focuses on the right student profile by incorporating employability potential, co-borrowers credit profile, pedigree of the Institute and the course.

Delivering the Class of Business Avanse has been at the forefront of creating great value for customers by offering features including 100% Funding, Funding beyond tuition fees (covering visa, travel and stay expenses), instant sanctions for select programs and universities and loans without any limit. Avanse has successfully transitioned from “mortgage/collateral driven” education loan to “student led approach” whereby student academics and future employability is taken into consideration for granting loan. Avanse has created customized solution for students based on the country and program of choice. Unlike most financial lenders, Avanse has also funded many unconventional and new age education programs.

Digital and Technology are the critical growth enablers for Avanse across all its businesses. Avanse is enhancing its operational capabilities and processes with an aim to improve customer experience and enhance productivity through technology. Some of the key initiatives include: · Straight through Loan processing with automated score cards · Artificial Intelligence allowing loans to ‘New to Credit’ customers allowing financial access

· Digitization of systems and processes Role of Avanse’s Employees in Its Success Avanse considers its talented employees as its greatest asset in its journey towards success. Avanse has a team of over 250+ talented employees guided by a diverse leadership team with a cumulative 200+ years of experience across leading financial services organizations. The company's growth has been phenomenal with a CAGR of over 150 % over the last 4 years. Avanse has funded over 10,000+ students across 6000+ courses in 1900+ institutes across India and over 45+ countries. Avanse has over 400 partnerships with educational counselors across the country and has funded over 175 institutions covering over 5 lakh students. Avanse is building an organization with a culture based on Governance, Transparency, Meritocracy, Inclusivity and Happiness Quotient. Avanse aspires to build a great company which people can look upto in years to come.

Driving Towards Future Goals One of the largest Education Loan NBFCs in India today, Avanse has embarked on a journey of transforming from an education focused NBFC to a leading Customer Centric Diversified NBFC focused on Profitable Growth across domains of Consumer, MSME and Commercial Businesses.

While Avanse will focus on a profitable growth across these sectors, it will however maintain its leadership position in the Education Finance space. Avanse is expanding its reach across the country and will be scaling up in new segments like school fee funding and funding of a wider range of educational programs. Technology will continue to be a critical enabler across all the businesses.

Advice for the Budding Startups in the Industry India offers tremendous opportunity to individuals who have a strong belief in their entrepreneurial idea and are willing to work towards its successful execution. The crucial aspect of any business is the value one can create for customers without chasing only the top line growth. Initial capital burn is a necessary aspect of business but a successful business is only that which is self-sustaining.

Entry barriers for most businesses are low today and therefore strong customers relationships are not only a great guard against competitive activity but also ensure long term viability and profitability of the business.

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NON BANKING Financial Companies in 2018

Company Name

Management

Brief

Avanse avanse.com

Amit Gainda CEO

Avanse Financial Services Limited is one of India’s fastest growing education finance company committed to facilitating and fulfilling academic dreams of talented young students.

Aditya Birla Finance Limited adityabirlacapital.com

Venkatraman G CEO

Aditya Birla Finance Limited is among the leading welldiversified financial services company in India offering end-toend lending, financing and wealth management solutions to a diversified range of customers across the country.

Aris Capital ariscapital.in

Harsh Poddar Executive Director

Aris Capital, a fast-growing Non-Banking Financial Corporation that focuses on commercial vehicle financing. From light, medium, and heavy commercial vehicle to used and new tractors, the organization stands out to be an expert in lending to retail borrowers in the logistics industry.

Jagaran Microfin Pvt Ltd jagaranmf.com

Jayanta Majumdar MD

JagaranMicrofin Private Limited is a subsidiary of GTFS Multi Services Limited providing a wide range of financial services, especially in the backward and rural areas.

Light Microfinance lightmicrofinance.com

Rakesh Kumar CEO

Light Microfinance aims to become the leading Microfinance products and services provider in India. Light is managed by a passionate, high integrity dynamic team of professionals with a keen focus on tech-enabled delivery of extremely relevant products in a cost-effective and risk-managed manner.

Margdarshak Financial Services margdarshak.org.in

Rahul J. Mittra Founder & CEO

Margdarshak Financial Services Ltd a non-banking financial company is providing financial services for livelihood strengthening and economic mainstreaming of poor in the States of Uttar Pradesh, Bihar, Haryana and Himachal Pradesh.

SAFL safl.in

Arvind Sonmale MD & CEO

Sustainable Agro-commercial Finance Ltd. (SAFL) is the first NBFC in India providing Agri- loans with a wide and diverse range of financing options for almost every need of agricultural activity.

Shikhar Microfinance shikharfin.com

Satyavir Chakrapani MD & CEO

Shikhar Microfinance Pvt. Ltd is a non-deposit taking nonbanking finance company. It empowers communities by providing financial services and livelihood opportunities to the underprivileged segments of our society.

SV Creditline svcl.in

Rakesh Dubey CEO

SVCL is one of the largest non-banking financial companies in India which aims to transform the rural sectors of India.

TVS Credit Services Ltd tvscredit.com

Ajay Srinivasan CEO

have TVS Credit Services Ltd. which commands a strong presence in manufacturing of two-wheelers, auto components and computer peripherals

ARIS CAPITAL An Expert in Providing Commercial Vehicle Finance Harsh V. Poddar

Executive Director

O

ver the last few years, the role of Non Bank Finance Companies in India has only been increasing in reaching out to and servicing the hundreds of millions of unbanked and difficult to reach rural and semi-rural populations. The importance of local financing is continuing to grow in developing economies and emerging markets. Here let us introduce Aris Capital, a fast-growing Non-Banking Financial Corporation that focuses on commercial vehicle financing.

From light, medium, and heavy commercial vehicle to used and new tractors, the organization stands out to be an expert in lending to retail borrowers in the logistics industry.

Aris follows a robust data-driven credit assessment process that takes into account not only the borrower’s creditworthiness, but also factors like work experience, market conditions, and the philosophy of “The Bhodrolok Culture” where Harsh Poddar, Executive Director at Aris Capital, explains, “We are respected people and we provide loans to people who are perceived to be with a good character.”

An Ardent and an Efficient Leader Harsh completed his MBA from Yale University, where he was a Silver Scholar, and has a BSE degree in Engineering and Economics from Duke University. Along with an exceptional academic background, Harsh has also studied Mandarin Chinese at the Beijing Language and Culture University. Entrepreneurship was not just another word in his dictionary. For him, its passion, and that is what ignited him to give foundation to several companies in the USA, Israel, India and China in diverse sectors such as IT, Shipping, Semiconductors, Environmental Engineering, Finance and Oil & Gas.

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Understanding and Improving Customer Service The organization not only follows “Bhodrolok Culture” in its business process, but also applies that in its recruitment process. Even after being in the financial service sector, the company follows a strict hiring policy and cautiously selects its employees. In this business, clients typically come from low-income households who have limited access to formal sources of financing and whose livelihood is directly dependent on the vehicle. The staff of Aris Capital reaches out to every such person who is aiming to start a livelihood by driving a commercial vehicle but is not getting that financial support.

With an aim to create awareness among the economically poor yet hardworking people, Aris Capital reaches out to chai stalls, dhabas (roadside food stall), garages, and truck stops and guides them on the banking and other financial services that they could avail to grow their business. The staff goes through numerous stages and enquires every detail and gives every effort to understand the person who is looking for financial support. Harsh says that “We understand whether the person can benefit from and repay the loan.

We also guide them to repay with honesty.”

Establishing Symbolic Relationship with Unique Strategies Growing number of markets are becoming extremely competitive, and clients are having an ever-widening choice of financial service providers to choose from. With the vast majority of NBFCs functionally confined to offering short-term credit products, the clients are effectively given the option of staying with or leaving their current service provider at the end of every loan cycle. Aris Capital stands out by maintaining a direct relationship with the customers where other companies use brokers to find customers who ™

June 2018

want to take a loan, and they pass on the credit to financiers.

“We don’t believe in brokers; we are a company which does direct lending to customers,” says Harsh.

The organization believes in the importance of educating clients and responds to their questions. It also obtains other critical information that can be fed into future marketing activities. This is particularly important in a competitive market where clients have a large number of choices and therefore want to ask many questions about the service before finally choosing which NBFC to use. Aris Capital believes in developing longterm relationships with its customers and wishes to support their financial growth over many years.

Conducting Awareness Programs for the Customers Mostly in rural areas, customers are unaware of the specific terms and conditions, which are required for them to conduct the loan re-payment process. Aris Capital tries to educate its customers by conducting customerrelationship programs and educative events. Through this process, the customers are enlightened about the

We give our clients complete and accurate information and educate them about the terms of financial services offered by us in a manner that is understandable by them

entire payment criteria and process.

The employees of the company make sure that they meet their customers frequently, hence maintaining a longterm relationship with the customer and creating a bond of understanding and trust.

Values and Factors Attributing to Success With the growth of technology-based opportunities, the company has grown manifold. To enhance service standards and delivery processes, the organization believes that Speed, Energy, and Flexibility are required to build and expand. Aris strives to inculcate mobile banking habits among its customers and field staff using smartphone technology and customized, easy-to-use apps to greatly improve the speed and efficiency of financial transactions.

An Entrepreneur’s Advice to the Youngsters Harsh Poddar states that there is never a perfect time to start something new.

He further states that success and failure are part of life and business, but what is more important are the ambition and will to succeed. It is the unwavering commitment to their vision and a passion for their work that are critical components of an entrepreneur’s value proposition.

Expanding and Securing the Organization Aris Capital provides diversified financing of vehicles such as commercial cargo vehicles, passenger commercial vehicles, tractors, and buses. With local branches in various regions of West Bengal, Jharkhand, Bihar, Odisha, Sikkim and Assam, the organization is among the largest finance providers in Eastern India.

With an ambition towards delivering its services to more number of people, Aris Capital plans to expand aggressively towards north-eastern Indian states in the near future.

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All

b o u t ON

TDS

Abhishek Ranjan Singh MD & Founder ARS Solutions

PROPERTY PURCHASE

ABOUT THE AUTHOR The Author is a Certified and authorized Tax Return Preparer of Income Tax Department of India; currently he is Managing Director and Founder of ARS Solutions.

A

LL ABOUT TDS ON PROPERTY PURCHASE

(Understanding of Notice, Penalty, Late fees and Interest on TDS for Purchase of Immovable Property) - Abhishek Ranjan Singh As per Finance Act of 2013, TDS is applicable on transfer of Immovable property, wherein the consideration of the property exceeds or is equal to ₹ 50 Lakhs. Sec 194 IA of the Income Tax Act, 1961 read with Rule 30, 31 and 31A of Income Tax Rules states that: • For all such transactions with effect from 1st June, 2013

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Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.

• Tax so deducted should be deposited to the Government Account trough e-tax Payment option (Net banking) or any of the authorized bank branches. Any sum so deducted under section 194 IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.

• PAN of seller as well as buyer should be mandatorily furnished in an online Form 26QB for furnishing information regarding the property transaction.

• TDS certificate in Form 16B is required to be issued by June 2018

™

Experts View

the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account.

Major Points of Section 194 IA • Person responsible for Tax Deduction: Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property is liable to deduct tax at source.

• Threshold Limit: No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than 50 Lakhs. It is deductible only wherein the consideration of the property exceeds or is equal to 50 Lakhs.

• Time of deduction: Tax shall be deducted at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

• Rate of TDS: TDS to be deducted @ 1% of the sum paid. Condition of higher rate TDS if the deductee (Seller) does not furnish PAN is not applicable because PAN of buyer as well as seller is mandatorily furnished in Form 26QB. • On transfer of what type of property: Any immovable property (other than agricultural land in rural area), wherein the consideration of the property exceeds or is equal to wherein the consideration of the property exceeds or is equal to 50 Lakhs.

Agricultural Land Meaning Under Section 194IA Ÿ

Agricultural land means agricultural lands in India, It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or It is situated in any area within below given distance measured aerially. A land shall not be treated as Agriculture Land, if:

Population of the Municipality

Distance from Municipal limit or Cantonment Board

More than 10,000 but does not exceed 1,00,000

Within 2 kms.

More than 1,00,000 but does not exceed 10,00,000

Within 6 kms

Exceeding 10,00,000

Within 8 kms

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June 2018

Other Important Points • TDS on which amount: If the amount of property is 70 Lakhs, then buyer doesn’t have to pay tax only on 20 Lakhs but on the entire amount of sale consideration, here it is on 70 Lakhs.

• TAN to pay the TDS: Buyer of the property is exempt to procure Tax Deduction Account Number (TAN) for Tax deduction and payment of TDS under this section.

• TDS on the entire amount or on the payment of each installment: Tax needs to be deducted at the time of payment either it is payment of entire amount or installment. If the payments are being made in installments then at the time every installment payment.

• If some amounts have paid before 1st June 2013: If some amounts have paid to the seller before 1st June 2013 than TDS will be deducted on balance amount.

Either balance amount is less than ₹ 50 Lakhs or more than ₹ 50 Lakhs this rule is applicable if the consideration of the property (Total amount) exceeds or is equal to ₹ 50 Lakhs. No TDS is required to be deducted in respect of installments paid before 1st June, 2013. The provision will also apply in case where the buyer has bought an under construction property prior to this rule coming into effect but the part payment is due after 1st June, 2013. TDS is required to be deducted on all such installments Individually which fall due after 1st June, 2013 but only on principal portion and not on the interest or penalty portion.

• If more than One Buyer or Seller: Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share. For example in case of one buyer and two sellers, two challan and Form 26QB have to be filled in and in case two buyers and two sellers, four challan and Form 26QB have to be filled in for the respective property shares. For application of Section 194-IA total value of the property will consider, not the respective share of buyer and seller. E.g Property purchased by two buyer / seller and property value is 80 Lakhs, So sale consideration respective share of buyer / seller is 40 Lakhs each (below 50 Lakhs) but as per rule total value of the property will consider, so Section 194-IA is applicable.

• Deposit of tax to the credit of the Central Government: Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB. The sum so deducted shall be deposited to the credit of the Central Government by remitting it

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electronically to the Reserve Bank of India or the State Bank of India or to any authorized bank.

• Certificate/statement for tax deducted at source: Every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days from the due date for furnishing the Challan-cum-statement in Form No. 26QB under Rule 31A after generating and downloading the same from the web portal specified by the Director General of Income-tax (System) or the person authorized by him.

• Furnishing of statements by tax deductor to department: Every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorized by him a challan-cum-statement in Form No. 26QB electronically within seven days from the end of the month in which the deduction is made.

Interest on default of TDS payment If TDS is not paid on time to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made. Interest under section 201 of Income Tax Act,1961 will be payable. This Act expressly states that any person liable to deduct TDS on the income distributed, makes default in deduction and / or payment of TDS shall be treated “assesse in default”. Such interest shall be paid before furnishing the Form 26QB. • If TDS has deducted but not paid: In this case one and one-half percent (1.5%) for every month or part of a month on the amount of such TDS from the date on which such TDS was deducted to the date on which such TDS is actually paid.

• If TDS is not deducted: In this case one percent (1%) for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.

Late fee on default in furnishing statement of TDS (26QB) No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite late fees under section 234E. It

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should be filed with challan within a period of seven days from the end of the month in which the deduction is made.

Deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS statement continues. The total fee cannot exceed the amount of TDS deductible for which statement was required to be filed. TDS return cannot be filed without payment of late filing fees. In other words, the late filing fees shall be deposited before filing the TDS return (Form 26QB). It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Penalty on default in furnishing statement of TDS (26QB) No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite penalty under section 271H. It should be filed with challan within a period of seven days from the end of the month in which the deduction is made.

As section 271H which provides that a deductor shall pay penalty of minimum Rs 10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E. Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000/- can be levied if the deductor/collector files an incorrect TDS/TCS return.

TDS return will be filed without payment of Penalty under section 271H. It may be levied on deductor by the assessing officer.

Notice from TDS Reconciliation Analysis and Correction Enabling System TDS Reconciliation Analysis and Correction Enabling System is sending two types of notice. One for demand of interest payment if TDS is already paid but interest is payable and second for demand of TDS and interest payment if TDS is deducted or not deducted but not paid to the credit of the Central Government and TDS return (Form 26QB) not filed.

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REVIVAL NON-BANKING The

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ndia is a country where procuring a loan, is a process which is not just confined to the boundaries of a bank.

Banks with all their corporate glamour and credit rating criteria may intimidate a common citizen of our country, which in most parts, still remains a ‘developing country’. Indians are known worldwide for their creativity when it comes to finding a ‘Jugaad’, a colloquial Hindi term for finding a hack to a challenging situation. And find a ‘Jugaad’ they did. Lending money for absurd interest rates became a blossoming business opportunity. What started off as a means for farmers without a piece of land to set their business off soon became a common substitute for banks among both the rural and urban population of our country.

Through this crude concept of moneylending led to the rise of small financial institutes which were mainly involved in the business of lending loans and advances, something which was already in practice in other parts of the world.

Over time such businesses grew, they were registered under the companies’ act of 1956, India. They expanded the list of services offered. From acquisitions of shares and stocks, purchasing of bonds to the insurance business and the chit fund business, they seemed to have everything covered. It was almost as if they had become a bank without actually becoming one. These businesses came to be known as NonBanking Financial Companies (NBFC’s).

What made them successful?

comparatively easier to accrue a loan from. Such flexible scenarios made such organizations seem lucrative to Indian masses, so much so that it made the people overlook the higher interest rates.

Their flexibility in functioning serves them the advantage of being able to serve a broader range of clientele. For instance multiple NBFC’s are setup with the motive of funding only a particular kind of a business, currently there are NBFC’s dedicated towards helping businesses pertaining to power generation, transport and so many more.

These institutions promote a selfless propaganda and a lot of such organizations have gained tremendous goodwill in market. They differentiate themselves from banks by stressing on their customer oriented approach which again can be attributed to their flexibility. They offer student loans for unconventional courses, travel, businesses and such matters for which banks may be hesitant.

One of life’s greatest ironies is when the very cause of your success becomes the very cause for your setbacks as well.

The flexible and lax approach employed by such institutions without any necessary research or background checks turned out to be a double edged sword. While this strategy was good for customer acquisition, the major drawback was that there was no surety of the loan amounting to any kind of fruition for whosoever may have taken it, leaving the client with loans and no means of repaying it.

Banks tend to scrutinize an applicant thoroughly before issuing a loan. NBFC’s on the other hand, were

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Editor’s view While NBFC’s were affected adversely by such incidents, moneylenders and middlemen seemd to thrive on such situations leading Prime Minister Modi to launch the Pradhan Mantri Mudra Yojana (PMMY) scheme, aimed to freeing young entrepreneurs from the malicious wrath of the said middlemen. This scheme urged young entrepreneurs to go to small financial institutions for monetary aid rather than the illegal operators. This came as a boost to NBFC’s and other micro financial institutions.

The PMMY scheme proved to be a masterstroke. With planned loan facilities, easy paperwork and standardized interest rates, the scheme has already seen more than 12 Crore entrepreneurs benefiting from it.

Are these businesses on the wane?

NBFC’s and MFI’s have an elevated sense of risk attached to it when compared to conventional banking methods.

These institutions generally tend to demand a higher rate of interest when compared to private sector banking facilities.

The lesser popular ones among such institutions are not having a good business year as this year has seen multiple organizations shut down. More than twenty NBFC’s have

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shut operations just in the month of May alone. Worrying numbers, one may say. The Indian banking scenario is currently at a critical juncture with a surge in loan amounts to corporate entities; it was improbable that the NBFC business would go through unscathed and they certainly have borne the brunt of it too.

While it cannot be said the business has entered a period of stagnation with aggressive strategies like the PPMY already in motion, the NBFC and MFI industry definitely has leverage to claw its way back into business. While the Indian banking industry has more deep rooted problems than that of capital generation, the Non-Banking Finance Companies only trim the hedge when it comes to the problems the banking sector faces and hence could take lesser time recuperating from the state of the market. With the big names in the industry already going through pretty much unscathed, NBFC’s are projected to remain a pivotal part of the industry tending to matters regarding financial aid. Especially with Indians and their beloved ‘Jugaad’, it’s tough to see these institutions failing to serve a purpose.

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JAGARAN MICROFIN Delivering Best-in-class Financial Services

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he changing economical ways of financial establishments are giving a new shape to India’s financial situations. MFI plays a vital role in the core development of infrastructure, transport, wealth creation opportunities, employment generation, and financial support for economically weaker sections; they also create a mammoth of contribution to the state exchequer. Moreover, with the banking system noticeably constrained or escalating their lending activities, the NBFCs plays an even more important role now, especially when the government has a strong emphasis on promoting entrepreneurship where India can transpire as a country of job creators instead of being one with the job seekers.

In between these monetary fluctuations, Jagaran Microfin Private Limited, a subsidiary of GTFS Multi Services Limited was established with the distinct aim of providing financial support, especially in the backward and rural areas. The word “Jagaran” has been derived from Sanskrit and it means “a state of wakefulness”. JMPL Started its operation in the year 2010 (November) with 3 branches is now operating across 5 states and 108 branch offices and serving around 2 lacs women borrowers in the states of West Bengal, Bihar, Jharkhand, Orissa and Assam.

The Pillars behind Jagaran Jagaran is a subsidiary company of GTFS Multi Services Limited., who are pioneer in the field of insurance and have taken insurance to the door steps of the large number of population. Jayanta Majumdar, Managing Director of the company, is a Chartered Accountant with nearly 2 decades of experience in various fields of finance and technology. Their Board members are eminent professionals coming from all facets of the business. It is spearheaded by the Executive Chairman Mr. Indrajit Gupta who is the Ex- Dy Managing Director of State Bank of India and ExCEO and Managing Director of SBI Capital Markets Limited. They have Dr. Samir Barua, ex-director of the IIM Ahmedabad and Dipankar Chatterjee a very renowned Chartered Accountant and the past Chairman of EIRC as independent director.

Along with them Dr. Somnath Ghosh (Director) who is a Chartered Accountant with wide experience in taxation and several other nominated directors like Dipak Rudra ,retired

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Jayanta Majumdar Managing Director IAS Officer and the ex-Chairman of UCO Bank and P.K Sarkar Ex-Dy Managing Director of SBI . They have 2 women representative in the Board, Dr. Kakoli Saha, who is a professional member of ISABS, NTL (USA) and International Coaching Federation, USA. She was formerly a panel member of Institute of Banking and Personnel Selection. And Miss Abira Majumdar who is the youngest member of the Board with a sociological research and legal background, she takes keen interest in various philanthropic activities. She is actively involved at Indian Institute of Cerebral Palsy.

A Dedicated Workforce Being the Backbone of Jagaran Most of the employees of Jagaran are from the villages who understand the needs of the rural areas. A continuous training program makes them more knowledgeable about the various compliance requirements and about dos and don’ts of microfinance.

The values of Jagaran are reflected in the way of doing business. ‘Respect to individuals’ and ‘doing the right thing’ are the mantras. They believe in following the best practices in every sphere of their business. The organization has established a very solid corporate governance structure June 2018

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The Clientele Jagaran’s success stories lies in the success of more than 2 Lacs. women who are not simply getting a ‘micro’ loan as they call it, but being there at the right time and providing them necessary support in terms of enhancing their skills, guiding them through financial literacy programs including helping them to open their bank accounts making them a part of Jagaran family.

(Left to Right):The 100th branch opening of Jagaran at Sagar, West Bengal with Sri Bapin Bose(ADGM-Operations),MD,Chairman, Dr.Somnath Ghosh(Director) and Sri Debdulal Ghosal(Operations Head).

that has been well appreciated by the rating agencies. The Board of Directors comprises of the best people from the banking and finance industry. The members on board of Jagaran are highly experienced professionals having diverse knowledge in fields of banking, finance, public administration, accounts and audit.

The resilient structure of Jagaran and the long term relationship it has with the members have been acid tested during the demonetization period and could maintain a very healthy portfolio after all these odds and maintaining a repayment ration of 99.5% as on date.

Services offered by Jagaran Jagaran’s products are designed in such a way that apart from income generation purposes it can also cater to various needs and emergencies of the economically poorest women. Their ticket size varies from Rs.15000 to Rs.40000 and the members can choose any of the amounts based on their requirements. Also, they have products which are specifically designed for various needs such as children’s education or any kind of emergencies etc.

Jagaran is now working on providing loans which would absolutely be based on the analysis of the current and

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future needs. The loan amount shall be pre-determined based on their future cash requirement so that they don't have to bear the interest unnecessarily on the amount which they actually don't need. This will be a game changer in this industry where microfinance customers would be able to customise their products based on their requirements and it would almost be similar to Cash Credit facilities designed according to their future requirements. They have recently introduced a program called ‘Bondhu’ where they provide financial support amount to Rs.500, in case of death of any member or co-borrowers, in order to support them in their last rites.

Our motto is to make an analysis based disbursements, by designing products according to needs

Last few years, Jagaran have been investing in technology immensely.

Today all the field staffs are being provided with mobile phones which are integrated and they can do all the operational activities simply using their phones. That reduced the loan processing time considerably.

However, the company believes in balancing the technology and human relationship. That is why they meet their members every week and interact with them on various issues. Also, Jagaran undertakes various CSR initiatives like different skill development programmes for women, operating 15 primary schools in villages and other health related programmes through out the year.

Future Roadmap In the year 2017-18, Jagaran achieved a growth of 76% in terms of the loan portfolio. They opened 20 new branches last year and are planning to open 40 new branches in the current year and shall start their operation in few new states. Last year their customer base has increased considerably and they will definitely continue to add many new customers in this year. Jagaran’s focus is not to increase the ticket size but to increase the customer base. This year, they are envisaging more growth than last year.

Today, Jagaran is one of the major players in Eastern India in microfinance and they are sure that they will be one of the major players pan India within next 3 years’ time.

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LIGHT MICROFINANCE Empowering Rural & Semi-Urban Entrepreneurs Through Innovative Financial Services

Rakesh Kumar CEO

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n the present economic system of India, Non-Banking Financial Companies have a significant role in providing accessible and affordable financial services. Because of the consistent neglect by the banks of non-salaried Professionals, individuals, traders, transporters and stockbrokers, and the ongoing stress in the public-sector banks due to mounting debt, NBFCs have a lucrative opportunity to expand their presence in the Indian financial sector, more specifically the underserved. The latent credit demand of an emerging India will allow NBFCs to fill the gap, especially where traditional banks have been wary to serve.

With over 60000 satisfied customers across districts in Gujarat and Rajasthan, Light Microfinance aims to become the leading Microfinance products and services provider in India. Light is managed by a passionate, high integrity dynamic team of professionals with a keen focus on tech-enabled delivery of extremely relevant products in a cost-effective and riskmanaged manner.

An Ingenious Leader of Light Microfinance With an unparalleled passion towards building strong dependable teams through right empowerment and enablement of people, Rakesh Kumar, CEO is one of the founders of Light Microfinance. He brings with him invaluable field experience of setting up microfinance operations from the ground up and scaling it to multiple states. He has extensive knowledge of building, coordinating and leading teams, installing systems and setting complete work processes and procedures in large successful organizations.

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Rakesh received his Master’s degree in Rural Management from Institute of Rural Management, Anand (IRMA).

Before joining Light Microfinance, Rakesh worked with SKS Microfinance (now known as BFIL).

He played a key part in its rapid growth by launching and expanding operations in seven states across North India creating a customer base of over 150,000 and a robust portfolio of over INR 100 crores ($25MM). Prior to SKS, Rakesh was engaged in market development for an educational institute and publication house.

Rough Sea made a Skilled Sailor Every organization goes through ups and downs when it is trying to establish itself. Light Microfinance was born out of the conviction that microfinance needs to change and as a starting point, the credit transaction must be reinvented to empower and enable the customer. It is this passion and commitment to innovate, driven by fierce integrity and an aptitude to persevere against the stiffest odds is what has allowed Light Microfinance to come out stronger from two industry shaking macroeconomic crises.

Distinctive Services for Nourishing Financial Needs Light Microfinance aims to become the most valued financial service provider to the rural and semi-urban population.

The company currently focuses on broad-basing its micro-credit business through Joint Liability Group (JLG) model while developing capabilities to bring more products and services to its customers.

In these times of crises, the leadership team stood its ground and made the intent clear to the team through continuous communication and worked hard with the team to chip away the risks created in the ecosystem. Light Microfinance was one of the first MFIs to build an in-house GPS enabled endto-end mobile app in 2014. At the same time, they maintain a keen focus on innovations that are driven by effective capital utilization.

Light has started an operation with the most basic microfinance product i.e. microcredit. The company’s loans are targeted towards income generation activities and can range from Rs. 5,000 to Rs. 60,000 as per customer requirement. The product can be one year or two years long and is repaid in equal monthly installments.

Light Microfinance believes in building customer centric processes and empower its women borrowers through financial literacy inputs delivered as part of the easy and transparent loan application process.

With the aim of giving excellent customer experience, the Company continues to invest in technology for further enabling its rigorously trained manpower.

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Converting Challenges into Opportunities

We develop products, mobilize capital and deploy technology efficiently and innovatively to deliver extremely reliable high touch customer service

The Indian consumer is increasingly adopting digital technology as a way of daily life. To stay relevant in such environment, NBFCs need to rethink their strategy to enhance their product portfolio. Additionally, they need to leverage the vast digital customer data for better customer services. With the launch of the Digital India Programme, NBFCs must find ways to serve the millennial customers through digital means.

With the launch of government-backed schemes such as the Pradhan Mantri Jan-Dhan Yojana, there has been a substantial increase in the number of bank accounts. The government and regulatory bodies have taken decisive steps to increase the number of a bank account by granting in principal licenses to many players to establish banks over the coming time. The introduction of specialized players and systems will truly transform the banking value chain in its entirety, presenting a strategic opportunity for NBFCs to ensure sustainable growth over a long term. The reach of Light Microfinance, along with their strong understanding of the market can help the company to position themselves as a better alternative to the traditional ways of banking.

Looking Into the Future The underserved segment presents a huge opportunity and good returns for committed players who focused on quality delivery backed by right innovation. Light Microfinance wants to become the most preferred financial services provider to the underserved segment and has always focused on bringing more value to its customers.

The organization is already working towards adding few such aspects to its business model to further enhance the household income and a standard of living of its customers through new credit options, healthcare, employment, and skilling initiatives.

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Financial Companies in the Economic Development I n the present economic system, Non-Banking Financial Companies are playing a significant role in providing accessible and affordable financial services. The NBFCs are becoming a vital player in financial inclusions indirectly boosting the economy. These companies majorly focus on the business of loans, acquisition of shares, stocks, bonds, debentures and securities allotted by the government, local authority or by other market securities. NBFCs are engaged in maturity transformation and core banking functions. The operations carried out by the NBFCs merely aid threat to growing market thereby leading to the economic development respectively.

Mobilization of Assets NBFCs allow and provide with the mobilization of resources; funds and capitals. These companies help the mobilization of assets by converting investment into most preferable sets. NBFCs create a balance between intra-regional income and asset distribution. Turning the savings into investment practices, these companies make a wide and strong contribution to the economic development as compared to the traditional bank practices. Such companies work without expecting to gain the maximum profit which clears its idea of economic development and, are also engaged in activities that generate substantial or no revenue. Proper organization of capital will surely help in the development of the trade and industry leading to the economic expansion and progress.

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Providing Long-Term Credits NBFCs play a key role in providing the corporations with funds through equity participation. Unlike other traditional banks, NBFCs offer long-term credit to trade and commerce industry. These companies help to fund large projects and mega infrastructure projects which boost economic development to a great extent. The definition of long-term credit loans is precisely transformed with the emergence of NBFCs. Long-term credit allows sustainable growth and development of economic sector with stable and softening interest rates. NFBCs are also engaging in funding small-scale industries and MSMEs which will create a base for the development and growth of the economy.

Upliftment in the Employment Sector The operations and policies of NBFCs are uplifting the job scenario. More job opportunities are arising with the influence of these companies in the private as well as government sector.

NBFCs help in achieving full employment in the economy by working with the government and investing in the private sectors. Also, the business activities in the private sector provide more employment opportunities and occupation practices due to such non-banking financial companies. These companies go hand-in-hand with the economy where the need for personnel to handle secured operations is high, thereby its

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enhancing the motive to provide more employment. The NBFCs lead to increase in the capital stock which results in employment growth.

Enhancing the Financial Market The NBFCs cater the urban and rural poor companies that have a complementary role in the financial inclusion. Microfinance plays an important role to attain stable financial inclusions. These companies bring the much-needed diversity to the financial market by diversifying the risks, increasing liquidity in the markets thereby promoting financial stability and bringing efficiency to the financial sector. The NBFCs have brought the savings and investment operations together leading to a progressive change in the financial market. These companies highlight the public issues of corporations and provide the funds needed by the start-up companies as capital. The financial market is dependent on the functions that are taken into account by these lending companies.

Nurturing the Standard of Living The non-banking financial companies are highly promoting the living standards of the masses as they are collaborating with the government as well as private sector with their operations. Upliftment in the standard of living will surely make its path towards the economic development.

These companies attract foreign endowments majorly from different

countries and agencies to merely support and become a helping hand to the economic growth and development.

The NBFCs vitally participate in attracting funds from the public and convert it into capital for industrial and other sectors for smooth economic growth. The progressive increase in emerging businesses consequently raising the demand for manpower and creates employment leading to raise the Purchasing Power Parity (PPP) of people and upgrading their living standards.

Future Renovations with NBFCs The future will mark the financial innovations driven by the NBFC sector and will help it to grow in a prudential manner. These companies will surely be the game changer in the developing economy by providing factoring and bill payment service which are of critical importance at the present juncture. NBFCs will play a vital role going forward, in closing the loop as regards financial inclusion for individuals and MSMEs which will become the backbone of the economy.

Further, these companies are planning to attain data and algorithm to fine-tune the marketing campaigns and lower the cost per acquisition resulting in higher margins. NBFCs will surely help the infrastructure companies grow significantly with respect to its capital and ethics. NBFCs will surely provide real-time solutions to a company’s stability and individual progress with the growing economy.

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SAFL:

India’s First Dedicated Agriculture Loan Company Shri Arvind Sonmale MD & CEO

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BFCs over the years have played a vital role in the development of the economy, be it in financial intermediation in rural and semi-urban areas or financing activities that are engines of growth, such as transport, infrastructure, farm and MSMEs. NBFCs growth during the last two years has been quite impressive in spite of the challenging environment and developments like demonetization. Moreover, this has been a healthy growth as reflected in the better asset quality and that too complying with the regulatory framework, which have been harmonized with that for banks and other financial institutions.

The trends emerging in India in terms of newer NBFCs entering various segments are highly encouraging. Sustainable Agrocommercial Finance Ltd. (SAFL) is the first NBFC in India providing Agri- loans with a wide and diverse range of financing options for almost every need of agricultural activity. The NBFC is commonly recognized by its acronym; SAFL (pronounced SAFAL). It is a unique NBFC promoted by Jain Irrigation Systems Limited (JISL). SAFL is focusing its activities on Farm and Farmer only and operates in the rural & semi urban geographies of India.

SAFL was incorporated in February 2011 and SAFL is headquartered in Mumbai with 72 offices across Maharashtra, Karnataka and Madhya Pradesh. It plans to have a pan-India presence in next 5 years. The ethos is to make the individual farmer’s life “SAFAL”. The organizations aim is directed at farmer empowerment, increased agricultural production and rural prosperity. SAFL’s activities are focused on Farm and the Farmer. It has been setup with the objective of serving the small

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farmer and rural constituencies in India in a comprehensive manner.

Artisan behind SAFL Shri Arvind Sonmale, Managing Director & CEO of SAFL is a career Banker having been in the industry for over 42 years. Born in Pune, India in July 1950, Shri Arvind Sonmale completed his Bachelor’s in Civil Engineering in 1971. He started his banking career as a Probationary Officer in State Bank of India (SBI) in July 1975. His 9 plus years with State Bank of India (SBI) took him through various areas of commercial banking responsibilities including that of a Branch Manager of a SBI’s office in Panaji (Goa) and in SBI’s International Division at its apex Central Office in Mumbai.

Services Offered by SAFL The main products financed by the Company include Micro Irrigation Systems (MIS) like drip irrigation and sprinkler irrigation, Agri Projects, Contract Farming, Lift irrigation schemes, Small Business Loans, Solar Pumps & Appliances, Third Party Tieups etc. SAFL only finances products which result in increased farm productivity and improvement in the economic betterment and lifestyle of the farmers.

Strategies to Overcome Initial Hiccups The definition of sustainable agriculture looks at a holistic approach to farming. With sustainable agriculture and water conservation as its main focus, SAFL took up the pilot project for financing agriculture and allied activities in January 2013.

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the drip irrigation facility at highly competitive interest rates. SAFL also worked with the Government authorities to ensure a proper channel of subsidies for the micro-irrigation systems.

The efficiency of water usage under conventional methods of irrigation, which is predominantly practised in Indian agriculture, is very low due to substantial conveyance and distribution losses. Recognizing the fast decline of irrigation water potential and increasing demand for water from different sectors, a number of demand management strategies and programmes have been introduced to save water and increase the existing water use efficiency in Indian agriculture.

One such method introduced in Indian agriculture is micro-irrigation, which includes both drip and sprinkler method of irrigation. Micro-irrigation is proved to be an efficient method in saving water and increasing water use efficiency as compared to the conventional surface method of

irrigation, where water use efficiency is only about 35-40 percent. Around 75% of SAFL’s product portfolio comprises financing of drip irrigation/microirrigation. SAFL’s micro-irrigation initiative has not only conserved water, but also increased the crop yield thereby having a direct impact on the lives of the farmers. In its four and half years of business operations, SAFL has extended loans of over Rs. 545 crores to more than 36000 farmers.

Awards, Achievements and Recognitions SAFL was honored with the “Best NBFC of the Year” award at an eventful function held at Taj Lands End, Mumbai on Wednesday, February 14th 2018. This award was received at the BFSI Event organized by World HRD Congress, presented by ET Now ‘Rise with India’. Shri Arvind Sonmale was honored with the ‘Leadership Award’ at the recently held ‘2nd NBFC100 Tech Summit’ at Bengaluru on 07th December, 2017. The summit was organized by Elets Technomedia and powered by the Banking & Finance Post Magazine, to cover the factors affecting the rapid growth and upcoming opportunities within the NBFCs. He was also a part of the panel discussion as a Key Speaker with other CEOs, MDs and leaders from finance and other sectors all of whom shared their individual views over the growing factors within the NBFC.

“Har Fasal SAFL, Har Pal SAFL” is the hope of every farmer who will be assisted in converting this hope into a reality by SAFL

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SV CREDITLINE Transforming the Face of Rural India with Comprehensive Services Rakesh Dubey CEO

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he Non-Banking Financial Companies (NBFC’s) and Microfinance Institutions (MFI) in India plays a pivotal role in driving the inclusive growth of the country. Independent researchers suggest that with forty-seven million borrowers and around fifteen billion USD as outstanding loans, India was the leader in 2016 in terms of microfinance. Acting as a complementary to banks, NBFC-MFI’s have proved their viability as a business model in today’s diverse market.

One such influential company which also stands to be one of the largest NBFC of India is SV Creditline Limited (SVCL).

Founded in 2010, it has been the pioneer in assisting the economically backward entrepreneurs to align with the mainstream economy. The company is registered as a Non-Banking Finance Company (NBFC-MFI) under Reserve Bank of India and is promoted by Vans Pte. Ltd. and SV Corporation Pvt. Ltd. The corporate office is located at Gurugram, Haryana, along with a major presence in the northern and central territories of the country. In the long term, it plans to have a PAN India presence to cement themselves as a prominent player in the industry.

The customer-centric approach is amply reflected in their product offerings, followed by simplified processes, transparent pricing structure & strong customer service orientation. The products offered by the entity include small credit for income generating activities linked with credit life coverage. The robust management team has the expertise to manage complex operations, identify new markets and formulate business strategies. SVCL Application suite is an innovative web-based application which is designed to perform as lending platform along with analysis, monitoring, accounting, supervision and works towards enabling a paperless environment.

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The Tenacious Leader The guiding force who laid the foundation of this eminent company is Rakesh Dubey and is the CEO of SV Creditline. In his professional career spanning over twenty years, he is a seasoned entrepreneur having a deep background in the microfinance domain along with setting up of MFI’s in the domestic as well as in international locations. Prior to commencing his journey, he has also been the founding team member of CASHPOR and founder of SONATA finance Pvt Ltd. He has completed his master's in business administration and has done a diploma in rural development management. Rakesh is deeply inspired by Prof. Yunus who is a Nobel laureate and is considered as the father of microfinance revolution in Asia.

His business acumen has led him to be a part of various institutions in key roles in the microfinance industry.

Currently, he is the President of MFIN and Board Member of ‘Sa-Dhan’ which is an MFI association recognized as SROs formed by RBI in 2010. Additionally, he is also one of the board members and treasurer of Micro Finance Association of Uttar Pradesh (UPMA).

Key Products – Setting New Benchmarks The entity has been set up with the vision of building a professionally managed and sustainable microfinance institution. The motive is to assist the under-served households by providing an easy access to credit as well as other financial services to make them economically independent. The business also aims to empower the women to help their family by providing opportunities to earn. Some of the mentionable products are: 1) Business Loan

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a) Group Loan The company follows a social collateral model wherein microfinance group lending with joint liability allows asset-poor individuals to replace physical collateral by social collateral. This informal secured borrowing works better in rural areas as compared to urban areas as rural social networks are typically denser, which results in higher social collateral. It also encourages rural people to opt for income generation loans so that they can start their own business. b) Short-Term Individual Loan The organization has designed a short-term loan for individuals who are in urgent need of funds.

The loan tenure is about three months and the fund is disbursed at very low-interest rates taken from the authorized and unauthorized lenders in the market. The process is kept simple and is provided through an online application with all the details about the individual and the loan.

SVCL is working towards uplifting households out of poverty by supporting them in income generation activities through finance intermediation

2) Green Loan SV Creditline has introduced easy finance for e-rickshaw buyers within quick TAT and with easy documentation. With growing awareness about global warming, e-rickshaw has come up as a viable option in densely populated areas. SVCL was swift enough to gauge the issues of the prospective buyers and they introduced the easy finance model which encouraged people to buy the ecofriendly e-rickshaw to enhance their business.

3) Shelter Loan Although this constitutes a very small portion, the organization has introduced housing loan for families who want to build their homes or expand their house pertaining to diverse needs.

Overcoming Challenges and Achieving Success The MFI sector has witnessed a strong growth over the past few years due to the evolving rural sector, however, due to ‘demonetization’ the company had to face a sluggish market as the financial flow was very limited.

The market had dipped to approx. twenty-five percent which was flourishing at sixty-seventy percent in the pre-demonetization era. This restricted process made a deep impact on the overall business; however, the company has managed to overcome the lean period and is on a steady trajectory for the future.

Future Endeavors The organization holds a very optimistic view of the future. In order to expand their reach to the rural community living in remote areas, the entity is working to roll out new business strategies to increase the borrowing power of the people, empower women, and impart knowledge among the weaker section of the society.

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The Stature of Financial Companies A

s per the survey reads India is the second largest populated country in the world. The population consists of rural and urban parts of the country.

According to the Census conducted in 2011, nearly 70% of the country’s population lives in rural areas where, unemployment is an issue. The growing population is very crucial for the country’s economy. As the rural population is so high it's a task to sustain the economy. But with changing times, the rural India has fought back many odds and emerged stronger. Many stories of young entrepreneurs from the rural regions are appreciated and applauded. With limited resources and knowledge, entrepreneurs started running small businesses and are achieving new goals every day. This was possible with the help of Non-Banking Financial Companies (NBFCs).

Non-Banking Financial Companies has flourished in the recent times. NBFCs are financial institutes not holding a business license. The fact that it provides banking services that is not abiding the legal definition of a bank is the reason it catches attention of many. The impact and growth set by NBFC have given rise to organizations ready to invest in it. Establishment of such organizations has majorly helped the economically weaker section of society. Due to the various benefits provided by NBFC, it has become a

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platform for women entrepreneurs to build up their business.

NBFCs is registered under the Companies Act, 1956.It is divided into two main categories which include NBFCs accepting public deposit and NBFCs not accepting public deposit .The services provided by NBFCs are unlimited.

NBFCs include Asset Finance, Investment, Loan, Infrastructure Finance, Systemically Important Core Investment, Infrastructure Debt Fund and Non-Banking Financial Company-Micro Finance Institution.

Protocols to Run the System NBFC must be registered with the Reserve Bank of India (RBI) and have fixed legal authorization to accept deposits from the public. It is obliged to exhibit the Certificate of Registration or a certified copy at the registered office. The registration of NBFC with the RBI solely authorizes it to regulate the business of NBFC.RBI is not responsible for the repayment of deposits approved by NBFCs. NBFCs is strictly forbidden from using the name of RBI in any manner while regulating their business. The Certificate of Registration is an application which is requested by NBFCs. If the Certificate of Registration gets rejected or cancelled by the RBI then it does not authorize to accept June 2018

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The Economic Stature

new deposits or renew existing deposits.

Contributing to Sustain Economy The role of NBFCs is extremely significant to an economy, where a large part of the population still lives in rural areas with little access to financial services and benefits. The role of NBFCs as productive intermediaries has been well recognized and acknowledged. The core strengths of NBFCs lie in powerful customer relationships, sharp grip on regional dynamics and customized services. Lending money against securities and microfinance and have been extending credit to retail customers in under-served areas and to unbanked customers.

NBFCs have benefited many young entrepreneurs to perform without constant pressure in order to make their dreams come true. NBFCs are not just serving young lads but also to women entrepreneurs. Women in rural India are no longer dependable. They have shattered all the barriers of social norms and emerged with flying colors. Be it small businesses like vegetable or fruit vending or setting up a ready-made garment shop. Women are gradually becoming great personalities and inspiring everyone around them. With their successful business, women are supporting their families and contributing towards social welfare.

Escalating with Time NBFCs have emerged in various sectors and are playing important roles

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in the Indian economy. The specific roles of NBFC are developing sectors like transport and infrastructure, help to increase wealth and providing finance to economically weaker section. NBFCs have expanded in every possible ways across the country and have 13,000 members registered with them. Nearly 600 NBFCs receive public deposits and the finances assets worth 15000 crores annually. With these stats NBFCs are providing good quality finance to various sectors.

NBFCs are already known as the game changers, as it has set an impact for financial incorporation, micro finance, reasonable housing, vehicle finance, gold lons and infrastructure finance. NBFCs can play a key role by going forward, in closing the loop as regards financial incorporation for individuals and Micro, Small and Medium Enterprise (MSMEs). NBFCs have reached to various financial products offered by the security industry which are shares, mutual funds and depository services etc.

As NBFCs have specialized performers, in the future the companies are capable of solely changing the banking value chain to enhance the sustainable growth of the economy in rural areas for the long run.

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Shikhar Microfinance A Microfinance with a difference

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hikhar came into being with a vision to build an organization to cater to the people who, due to their social location, did not have access to resources and institutions to fulfill their needs and aspirations. Shikhar wanted to bring to these people, an alternate source of borrowing, to help them develop a sense of entrepreneurship which would free them from the clutches of the loan sharks and local money lenders. The envisioned end result of this was to instill in them a sense of selfreliance, self-confidence, resilience and facilitate these institutionswhich meant to serve them.

At the time of inception, Shikhar actively probed into areas that were “financial blackholes”,Obviously, those living in these areas were mentally and physically scarred and their lives spoke of their traumas. No financial institutions made investments in these black listed areas. However, Mr. Chakrapani knew that his vision for Shikhar had to take shape from these neglected spaces and thus, Shikhar Microfinance began its journey. Shikhar has managed to lay the foundation of urban microfinance in a country where there exist vast disparities in economic levels.

A Benevolent Leader Since his childhood, Mr. Chakrapani was exposed to the grassroots, owing to his father who established numerous schools to ensure all the children received primary and secondary education. It was in these schools that Mr. Chakrapani and his three siblings completed their schooling. Mr. Chakrapani says that he owes his humility to his early school days and he is still connected with his school mates and those with whom he herded animals. It is in the company of these people that he can imagine the impact of microfinance.

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Satyavir Chakrapani Managing Director & Chief Executive Officer He did his masters in History, then finished his degree in law after which he got his Licentiate in Teaching. While working as a consultant, he got introduced to the concept of micro credit and in the following year, the seed of microfinance began to germinate in his mind. Backed up by his strong Gandhian ideals, he enrolled into the Entrepreneurship Development Institute in Gujrat, India, to study Social Entrepreneurship, against the Institution for Development Studies in Colorado. With this experience, he began federating SHGs and helped in designing selffinancing health schemes and self reliant cooperatives in various states.

Apart from leading Shikhar Microfinance, Mr. Chakrapani also takes care of his second brain child, ‘Sewa Ashram’, which aims to rehabilitate the poor and destitute in the NCR. It focusses on enabling the destitute to live and die with dignity. It also runs learning centres in various other slums for under privileged children, enabling them to attend formal schooling.

Over the decade, Shikhar has aided thousands of families to grapple with poverty. It is amazing to see an ordinary man

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like him and his colleagues use ordinary methods, to create extraordinary impact on the lives of the marginalized simultaneously creating opportunities for the investors to gain good returns on their investments.

Distinctive and unique serving style Shikhar has been trying to bridge gaps by making bold moves which can be seen as ‘firsts’ in the Indian microfinance space. Few of these include, introduction of monthly repayment of loans instead of the classical microfinance trend of weekly repayments. Shikhar’s first product, “Redemption Loan”, aimed to liberate people from local moneylenders. Post this, in 2015, while people were struggling to create Jan Dhan accounts, members from Shikhar, went out of their way to physically assist the clients to setup up savings accounts which ensured 100% cashless loan disbursement, amother first! This initiative enabled Shikhar to sail through the demonetization period.

Shikhar has always focused on active “client engagement” wherein clients are facilitated with and assisted on issues related not only to entrepreneurship but also their livelihoods. Seeing that rampant power cuts detered studying and halted household functioning, Shikhar started providing solar products to its clients.

Shikhar also partners with Unilever to directly supply PureIt water filters to its clients as water borne diseases are on a continuous rise.

Shikhar recognizes that a healthy and disease free life saves the client from medical expenses and losing work days which leads to losing wages. Shikhar’s holistic approach to the clients’ needs and aspirations ensures that the client’s

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household cash flow remains intact in dire situations and they don’t fall into a trap of debt. In line with this, a pilot project was conducted recently, in collaboration with Grameen Foundation, on educating the client on usage of bank accounts and inculcating the habit of saving through various bank channels. The project was well accepted by the clients and the outcome of the same would serve as a purpose for enhancing and further strengthening of our financial education model.

Holding true to its values Shikhar serves people who have been denied fundamental opportunities.

There exists a glass ceiling between them and their aspirations which comes in the form of social exclusion in various spheres of life. This is the ceiling that Shikhar aims to shatter.

One value that Shikhar continues to uphold is to see that every human being is made in the same likeness thus making everyone equal and equally able. Keeping this in mind, there exists a relationship of trust and belief between Shikhar, as an organization, and its clients. Shikhar has used this relationship to bridge gaps among

We are a value-based organization—our core values guide and direct all of our actions

communities based on caste, creed and culture, thus a counter culture being created. It also aims to ensure women's economic freedomin the communities that it works with. After ten years of strenuous and devoted efforts,through measured, practical steps, Shikhar is seeing its dreams in action.

Road Ahead The road ahead is paved with challenges for micro finance institutions (MFIs) yet they continue to grow because of a circle of trust among the institution, investors and client households. In this arena, Shikhar has the aim to reach out to 200 thousand household by the year 2022. To fulfil this goal, Shikhar is in conversation with few strategic investors. These partnerships will ensure that Shikhar achieves its goal to serve underserved geographies and households thus ensuring thatall stakeholders maximise their value too.

The future for MFIs in general seems to be moving forward exponentially, because of the very model of business that MFIs follow. There exists a flexibility and agility when it comes to providing services to the underpriviledged demographics. The challenge in dealing with this demographic also ensures that the business model doesn’t remain stagnant, instead has a dynamic growth. A good example of this is how the local cash based economy has recovered after demonetisation. In fact, in the last financial year, there was a 40% growth in investor equity. There is a viable expectation from MFIs and Shikhar is excited to see what is in store for them in the future.

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ARISING WITH THE FINANCIAL TECHNOLOGY ECOSYSTEM

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ver the last year and a half, the financial technology ecosystem has emerged as one of the hottest sectors in India’s internet play. With funding pouring in, even global players like Google and Whatsapp are looking to get a piece of this pie. According to NASSCOM, the Indian fintech market is expected to grow at a CAGR of 22 percent for the next five years. Another KPMG report states that the transaction value for the Indian fintech sector was estimated to be approximately $33 billion in 2016 and is expected to reach $73 billion by 2020. My key observations are as below • Fintech in India is still young Data shows that almost 64 percent of fintech organizations in India have been in business for close to three years now, with median employee strength of 14 people. Furthermore, 61 percent of the founders are under the age of 40 (25 percent less than 30 years of age, and 35 percent between the age of 31-40). Being at a nascent stage, only 7 percent of respondents have seen their companies turn profitable.

incumbents and fintechs have moved from competition to co-opetition and collaboration. Seventy-nine percent of respondents view incumbents as partners while 13 percent are indifferent and only 8 percent of them view them as competitors

deep tech expertise as a key impediment to their growth. All fintechs using Block chain technology highlighted that the availability of coders in the technology is especially low, with many respondents hiring their coders from Russia, Poland, or Silicon Valley.

• Lending is a massive opportunity There’s report which states that Rs 26.5 trillion of the SME debt demand unmet by formal channels presents a huge opportunity for fintech firms.

Further, it highlights that MSMEs often do not have access to formal lending channels, and rely on the informal sector, at interest rates as high as 30 percent. Moreover, smaller businesses also have limited financial history and might not have detailed documentation available at hand, which becomes a major hurdle in the loan disbursement process.

• Proof of concept and early stage funding is still limited Fintech funding in India rose from $300 million in 2016 to $2.7 billion in 2017. This shows that fintechs have shown a 34 percent year-on-year jump.

However, Proof of Concept (PoC) and early-stage funds are limited. As many as 71 percent of pre-revenue and 81 percent at idea stage fintechs noted “severe difficulty” in raising funds.

• Managing burn rate is emerging as a key issue for Indian fintech

· The talent pool is not ready for the According to a data 74 percent of the startups have a burn rate between future $10,000 and $50,000 per annum, with only 7 percent of them being As many as 87 percent founders profitable. identified that employees focused on technology development or coding are • Accelerators and incubators might the core of their workforce. On • India has the second highest global average, 33 percent of total employee actually be supporting in fintech adoption rate with commercialization strength (in Indian fintech) comprises collaboration of coders; this number is as high as 67 percent for idea and pre-revenue stage Fintech hubs, accelerators, and As per a report in EY, the fintech incubators might be playing an startups. However, the current talent adoption index in India is the second pool for Indian fintech is low on future important role due to their ability to highest and 59 percent higher than the tech skills or knowledge. About 71 provide mentorship and access to global average. It shows that investors, corporates, and funding. percent of respondents state lack of

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FINANCIAL TALK

ABOUT THE AUTHOR A career banker with 12 years of experience in Financial Planning. Founder of EarnWealth Solutions Pvt Ltd, a wealth management company in mid 2014.

Successfully set up the Treasures Priority Banking & Wealth Management franchise for DBS Bank Pune. Joined the private life insurance space in 2001 on opening of the sector as an agent with Bajaj Allianz Life Insurance. Joined ICICI Prudential Life Insurance in June 2006 as Sales Manager & established Beed branch.

Moved to Aurangabad and took over a struggling branch and created many records. Joined Tata AIG Life as a branch head in May 2009. Successfully established PCMC branch & built one of the most admired sales teams in TALIC. Got promoted as an Area Manager in June 2010.

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Rajesh Nair Founder

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