Integrating MIS with Microfinance

Some of the challenges faced by Microfinance Institutions (MFIs) in India have revolved around the issues of a lack of trained labor for local level administration, resource mobilization and the cost of services. One way to tackle these problems is through the use of Management Information Systems (MIS) and this is being demonstrated by Equitas, an Indian MFI.

TC-I had previously featured an interview with the founder of Equitas and they were recently featured as a leader in implementing information systems in microfinance, by Greg Chen of CGAP. Some examples of technology being used by Equitas are,

E-Docs. Membership and loan applications are completed manually by branches but are couriered to a central processing center. The documents are then scanned and from there on out, remain paperless. Forms use a series of check boxes which can be read by scanners and coded automatically.  Remaining manual entries (e.g. names) are entered by a dedicated back office processing unit.

Real Time Meeting Monitoring. Within 15 minutes of the end of a group meeting, loan officers send a text message (SMS) by cell phone with three pieces of information: meeting attendance, loan collections, and when the meeting ended.  This information is picked up by Equitas’s system which then compares it with what is expected, and creates a branch-by-branch report.

Equitas also uses SMS to gather real time information on cash management and Optical Readers for back-office operations.  The Equitas model shows the need for MFIs to focus not just on innovation in the lending model, but also on driving efficiency through various stages of the loan process. MIS has played an important role in the growth of traditional financial institutions over the past few decades and there is no reason it should not do the same for MFIs.

The complete article by Greg Chen can be found here.

TC-I FundWatch

Here is a recap of the major investment activity in India’s social venture space and also traditional investment that will directly affect the poor:


  • Chennai based Equitas will secure $12.5 million in funding from two private equity firms over the next few months. The organization intends to use the money to expand its branch office footprint in Southern India.
  • Building upon the increasing interest by both domestic and foreign capital in top tier MFIs, the Ford Foundation and Intellecap have created “Making My MFI Investment Worthy” that will identify and handhold 10 MFIs over the next 2 years to scale them up to where they are attractive to commercial investors.
  • While this story is a little unrelated, Citi — the major US bank — has committed $1.5 million to the Indian School of Business to promote financial inclusion for small investors and enterprise.


  • The Indian government is investing a $2 billion fund for expanding broadband internet to rural India. $1.5 billion should come from the private sector.
  • Intel Capital has invested $2.5 million in a new online education company titled Vriti Infocom.

Maximizing efficiency in Microfinance: Interview with Equitas founder

The Hindu just published a great interview with Mr P.N. Vasudevan of Equitas Micro Finance, a start-up MFI based in Chennai, Tamil Nadu. Vasudevan is an interesting entrepreneur, having spent 20 years in the traditional banking industry working with Cholamandalam Investment and Finance Co Ltd and Development Credit Bank. Reading the interview, its easy to see that he brings a lot of that financial acumen into the microfinance sector, especially in running Equitas:

We have put in place the best software available for MFIs and were the first MFI in the country to start business after the full IT system was in place. Internet-enabled software, combined with centralised processing, ensures that all backend operations are done at the HO, leading to higher efficiencies and also releasing the branch staff fully for customer-facing activities, thus enhancing their productivity.Typical cost of delivering a rupee is about one paisa; and, for collecting, it costs about 8 paise currently. Though we are already the most efficient in our operations, the challenge will be to continuously keep raising the bar on productivity and efficiency and scale up to absorb the cost better

On the same note, here is a SocialEdge interview with Mr. Vasudevan.

Overall, it will be interesting to see how quickly Equitas can grow. Clearly, the competition in the Indian MFI space is growing, and thats never a bad thing for the BOP consumer!