'Over 60% NBFC-MFIs adopted cashless disbursement models'

Demonetisation and the government’s push to adopt digital transactions have helped NBFC-MFIs’ transition to cashless modes.

A study released by Microfinance Institutions Network (MFIN) on adcoption of cash-lite models among microfinance institutions in the country, has revealed that over 60% of NBFC-MFIs have adopted cashless methods for disbursement.

In Q4 of FY 2016-17, 39% of total disbursements were reported to be cash-lite transactions. While NBFC-MFIs are increasingly adopting cashless methods for disbursements, only 5% of cashless repayments point at slower pace of adoption by customers.

The transition of NBFC-MFIs to cashless payment modes has been largely attributed to benefits of risk mitigation and increased operational efficiency that includes improved cash management practices, increased safety and staff productivity.

According to Ratna Vishwanathan, CEO, MFIN, “While many NBFC-MFIs already do a significant share of transactions through cashless modes, many other institutions have initiated pilots to analyse the best suitable methods for them. As the microfinance industry moves towards digitisation, we believe it will lead to achievement of financial inclusion in the true sense through providing seamless and quicker processing of credit to clients along with increasing cost benefits for NBFC-MFIs in the longer term.”

While 88% of the total cashless disbursements were made through NEFT/IMPS by NBFC-MFIs in 2016-17, cheques (50%) and ECS (33%) were the preferred modes of repayments by microfinance clients, the study added.

Other transaction methods that were used by both NBFC-MFIs and clients included, Aadhaar enabled payments, mobile wallet and pre-paid cards.