The National Payments Corporation of India (NPCI) Wednesday said it has begun a pilot project to digitize transactions in microfinance institutions (MFIs).
Under the program, RBL Bank will be disbursing loans and HDFC Bank will be receiving the loan repayments for the transactions of Svatantra Microfinance using Aadhaar payment bridge system and unstructured supplementary service data (USSD) based *99#. MFIs will ensure that Aadhaar number is properly noted and share the same with the lending bank for validation.
Once the microfinance borrower’s Aadhaar number is validated by the lending bank, loan amount will be directly credited into the Aadhaar-seeded account. Aadhaar-seeded accounts are those where the number is linked with the bank account.
“In numbers, over 80 million disbursements and 1,000 million repayments transactions take place every year in cash mode…Digitizing cash based operations has the potential to bring a host of benefits to MFIs as it mitigates cash carrying risks and improves operational efficiency by saving time for frontline staff,” an NPCI statement noted.
For more on this story visit the following link: National Payments Corporation of India begins pilot project to digitize transactions in microfinance sector
Source: Next Billion