Why Women Self-Help Group Members Make for Good Bank Agents
Recent pilot projects conducted by the Rural Financial Institutions Programme (the RFIP, a cooperation program between GIZ India and NABARD) demonstrated that engaging female community members in village financial services can be more effective than using typical customer service representatives as banking agents. The RFIP supported two Regional Rural Banks to engage members of local Self-Help Groups (groups of 10-20 women who come together to save, lend, help each other financially, and optionally receive bank credit as a group) as banking agents (Customer Service Providers or CSPs) to bring financial services to low-income customers in villages. This proved to be an effective approach that resulted in higher numbers of active accounts handled by CSPs and higher activity rates in savings accounts.
|Activity||Type of CSP|
|% of saving accounts that are active||93%||54%|
|% of non-dormant accounts per CSP||87%||38%|
|# of transactions per month per CSP||448||101|
Data source: Gramin Bank of Aryavart, Uttar Pradesh, as of Sept. 30 2015
Working as agents, the SHG members are trained in several areas:
- Using a handheld device to conduct financial transactions;
- Understanding basic banking procedures, such as KYC, enrolling into a Recurring Deposit, applying for an agricultural loan
- Raising community awareness about financial services
- Enrolling and transacting with customers in 3 to 5 villages;
- Providing customers in these villages with a suite of financial services such as savings accounts, deposit services, remittances, insurance, agricultural credit and loans for purchasing solar lamps.
As of September 2015, 72 SHG members were working as CSPs in Uttar Pradesh and Madhya Pradesh states in India.
Photo Credit: GIZ
The motivation for this project was to improve the last-mile delivery of financial services in rural and underserved areas. RFIP sought to answer four primary questions:
- Is it more cost effective to leverage existing SHG members with their support systems as CSPs rather than to build a new network from scratch?
- Can financially experienced women improve customer take-up and usage rates and have lower attrition rates?
- Does digitizing SHG group transactions through technology help banks gain better information about their customers?
- Does the combination of these actions improve the business case for the banks?
We suspect that a big reason for these successful pilots is that all members of the SHGs are women, while typical CSPs are men. The women CSPs were better placed to attract more first-time women customers, including elderly women (who are usually illiterate or semi-literate) and youth. The women customer service representatives also seemed more amenable and successful at reaching out to potential customers from varying castes, which increases the number of active customers they could serve.
In a survey of customers, both men and women reported preferring a woman SHG member as their CSP. Being more financially experienced and having higher than average education levels was also helpful in increasing their knowledge levels. The bank finds that women CSPs are more motivated to provide liability products to low-income customers at low commission rates while men are more motivated to work with richer customers with more lucrative credit products.
While employing women SHG members as CSPs had benefits for customers and brought more customers into the financial system, it also benefitted the CSPs themselves. Having this job helped them gain employment, sometimes for the first time, and helped them become more respected in their communities. It is also less common for these women to migrate away from their village than men, so the women employed through the Self-Help Groups gained more experience and became more reliable at their jobs over time.
Until now, transactions between SHG members were generally cash-based. Moving forward, Self-Help Groups are working to digitize more transactions to increase the transparency of this program, to help the group members as CSPs perform better at their jobs, to monitor the quality of their work and to reward good performance. The use of PoS devices for these transactions in the villages is gradually proving to be one stepping stone towards digitization of group based transactions and improving record keeping.
Early results from the pilots are promising. The project evaluation, due soon, will shed more light on what explains the improved key performance indicators, client impact as well as the business case for the bank.
For more information about the pilot projects and to see a short video, please visit www.giz.de