The mKCC pilot project was launched by PayMate and the participating banks in October 2011 in the Villupuram district in Tamil Nadu. Villupuram has about 18,000 farmers and with an initial target to include 5000 farmers for the pilot, the project exceeded its expectations by quickly registering 7000 farmers into the system. With 159 merchants already in the system, the July 2012 revenues vis-à-vis Oct 2011 has seen a growth rate of 280%; whereas the maximum revenue growth was observed in June 2012, when a 410% jump was recorded.
Mr Ajay Adiseshann, Founder and Managing Director, PayMate India Pvt. Ltd, said: “We wanted to capitalise on the vast reach of mobile phones to benefit people in rural areas, especially farmers. This innovative system of providing more efficient credit delivery to farmers provides them with funds any time conveniently. With 7,000 registered farmers, the NABARD target of 5,000 farmers has been achieved in a very short time – giving enough evidence of the usefulness of the service in rural India. Such an overwhelming response is a testament to the potential of mKCC and shows that this scheme can be beneficial to farmers across India. Making it available nationally and to other cooperative banks is next in the pipeline. There’s more that 5 crore farmers in India and I’m confident that mKCC when launched nationally can make a difference to the farmers of India.”
By eliminating the need for direct cash transactions, farmers can use their money in smaller amounts for purchasing goods and directing their mKCC loans towards suitable agricultural requirements. This saves on transit time to banks which can sometimes take upto a day, safeguards against the danger of carrying large sums for farm purchases over long distances, and even that of wage losses. The farmers also receive instant reports of all transactions and available funds, enabling them to keep a tab on their spending, just by a simple SMS.
A study by the Indian Institute of Banking & Finance highlighted some of the benefits of mKCC to the Farmer Base.
• Total savings of Rs. 7314/- per farmer per year
• Cost saved on travel – Rs. 70-85 per visit
• Opportunity cost saved in form of wages
• Avg. interest saving almost Rs. 1000/- a year.
• mKCC pilot is a huge success
After activation of the registered KCC with Pallavan Grama Bank, the farmer can avail the service for withdrawal or purchase. To withdraw, the customer approaches the Business Correspondent (BC), provides his mobile number and tells the withdrawal amount. An IVR call from PayMate then seeks the customer’s 4-digit PIN number. The account is checked for available balance and cash dispatched in case of sufficient funds. To purchase seeds, fertilizers and other agricultural items, the farmer simply has to tell the shopkeeper about his requirements and confirm his mobile number.
This new method can make redundant the earlier system of the farmers going to the bank to withdraw cash and then making purchases. Eventually, the customers can also make cash deposits to their accounts at BC locations.
Shri G Rangarajan, Chairman, Pallavan Grama Bank, said: “In almost a year of its launch, we have seen the success of KCC on Mobile not only to our farmers, but also to merchants. It saves travel cost and also opportunity cost for the time spent by the farmer in visiting the bank branch. The system also brings interest savings for farmers and discounts on purchases. We have a reduction in transaction cost, incremental business, better use of funds and increase in reach to far-flung villages through mobile-enabled technology. Merchants too benefit with immediate payments and no bad debts. Following the success of mobile enabled KCC, the mobile banking facility has been extended to all our customers along with value added services like Mobile Funds Transfer, Mobile Recharge and DTH Recharge. RBI has also approved our Mobile Banking Services.”