Dvara KGFS provides daily needs loans to rural clients to ease the impact of the pandemic

CHENNAI: Chennai-based non-bank and micro-finance lender, Dvara KGFS, provided low-cost loans to meet the daily needs of people in remote rural areas during the nationwide lockdown and after, using technology tools digital, two senior said ET.

Many rural households have borne the brunt of the crippling lockdown in March, which directly affected their consumption habits. With little income, a number of families have been pushed to the edge of poverty, with restricted access to basic necessities.

In such an environment, the company reached out to its customers and helped them access liquidity by providing loans for the essentials. By scanning loan documents and promoting digital engagement via WhatsApp, executives said, Dvara has ensured easy cash flow for the purchase of basic necessities to ensure the lockdown does not not affect their day-to-day survival.

“The loan amounts are Rs 1,000, Rs 1,500 and Rs 2,000 and are for basic necessities like toiletries and groceries. For example, the Rs 1,500 pack contains around 30 items which would include things like sugar, toothpaste, sambar powder, rice, garlic, dals and so on,” said LVLN Murty , Deputy General Manager of Dvara KGFS.

About 1,000 people received these loans in September and about 70% of those taking such loans opted for the note size option of Rs 2,000. The repayment schedule was stretched to about 3-6 months, he added.

Joby CO, Managing Director of Dvara KGFS, said that although the loan product cannot be scaled up, it provides valuable insights into rural household consumption and service delivery in rural India.

The essentials loan can be designed as an off-the-shelf product allowing customers to plan their monthly expenses in the future, he said. The company’s algorithms would become adept at assessing who would be able to take out such loans.

He said the kirana (corner) store had gained new importance with the Covid-19 pandemic, adding that there was a need and an opportunity for specialist suppliers and logistics partners to serve rural India. It wouldn’t be entirely possible for aggregators like Swiggy and Dunzo, for example, to service those addresses, he added.

“We are seeing a wave of kirana stores being heavily utilized,” Joby said. “We are also talking to aggregators who are helping kirana stores be more digitized. We have about 10,000 kiranas that we have funded and we are looking to increase that number even further this year.”

Joby said Dvara would focus on small businesses, which made up about 6-7% of its overall loan portfolio last year. This year, the company is looking to increase that number to 20%, with a major focus on retail stores.

Joby said the projection was based on expectations of approximately 5x growth in small kirana store engagement in the current year compared to last year.

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