Working On Credit And Investment Products For Rural MSMEs: Sanjeev Kumar

Lack of digital literacy and scepticism around digital financial services are the two major challenges that we face in the rural parts of the country, said Sanjeev Kumar, Co-founder and Chief Executive Officer (CEO), Spice Money in an interview with BW Businessworld. Edited Excerpts: 

Tell us about your company’s plans to build a phygital super app for rural India. 

At Spice Money, we are building a financial marketplace model offering savings, credit and insurance beyond basic banking and payment services and also a travel marketplace offering holistic travel solutions. These services will be disseminated to the masses with the help of the Spice Money super application and will aggregate services across agriculture, insurance, credit, e-commerce and healthcare. 

We aim to build India’s largest platform-as-a-service network with the best last-mile connectivity, revolutionising the way Bharat banks work through our open network-assisted digital distribution (ONADD). 

Why digitalisation is important in rural areas, according to you? 

The use of digital technology in rural and semi-rural India has seen a rise in the face of Covid-19, with rural communities leveraging digital tools to become financially independent. 

Fintech players are introducing innovative technologies suited to the requirements of the rural population. The achievement of India's financial inclusion goals will only be possible if the rural residents score well on financial and digital literacy metrics, besides making the fintech infrastructure more accessible and affordable.  

Which sector according to you needs the most digital push in rural areas, as far as business activities are concerned? 

Rural India has been underserved when it comes to financial services. Access to financial services through digital channels is an area that needs attention in order to meet India’s dream of financial inclusion. However, lack of digital literacy and scepticism around digital financial services are the two major challenges that we face in the rural parts of the country. 

Building awareness of digital solutions and its benefits is the key to overcoming these challenges.  

Our aim has been to alleviate these concerns of rural residents and bring in financial inclusion as well as financial independence to them. With the help of our assisted model and our local Adhikaris, we are able to build trust amongst the rural citizens by handholding them in understanding each and every step, thereby making them comfortable with the digital processes and encouraging them towards tech adoption.  

Do you have any plans for micro, small and medium enterprises (MSMEs) in rural areas? 

The MSMEs are one of the strongest pillars driving India’s economic growth. There are more than 63 million MSMEs in India providing employment to almost 100 million people residing in remote areas. 

Strategic partnerships between the government and fintech players, especially those focussing on rural areas, can help in coping with these challenges. Additionally, it is crucial to set up training programs for the MSME sector to bridge the existing gap. Some countries have already introduced policies encouraging small firms to use online platforms and we should also take necessary actions to accelerate the process. 

The initial results may be limited but it will help in increasing the growth potential for the sector in the long run. We are working on credit and investment products targeted at medium enterprises (MSMEs) in rural areas. Although we are in the pilot phase, we see a lot of opportunities for us to expand our role here. 

What are the major changes you witnessed in the post-Covid-19 pandemic, as far as rural fintechs are concerned? 

The financial services industry has learned a lot from the Covid-19 pandemic. This event definitely served as a catalyst for the greater adoption of digitalisation in financial services. 

We witnessed that there was an increase in adoption as far as technology in financial services is concerned with various rural fintech companies helping to develop customised solutions for people living in rural areas. 

From initially providing solutions related to basic financial services, rural fintechs are now gradually developing solutions for agriculture, insurance, credit and travel bookings and focussing to scale up these solutions in the coming time for the betterment of people. 

Even before the pandemic, there was a push by the government to provide digital services to rural areas by giving economical smartphones and internet services across the length and breadth of our country. 

Post-Covid-19 this resolve has only gotten stronger and now the partnership with rural fintech firms will help to achieve the twin goal of digital and financial inclusion in less time than intended. 

How can rural India be one of the main drivers of the country's growth post-Covid-19? 

Almost 65 per cent of our population lives in the rural areas of our country. If we have to achieve the goal of USD 5 trillion in the coming years, the rural population of the country needs to be equally involved. MSMEs form the backbone of our economy and most of the businesses running in rural areas are MSMEs, as they require less capital to start initially. 

There have been many new schemes and programmes started by the government for the benefit of MSMEs like the credit linked capital subsidy scheme (CLCSS) and credit guarantee scheme for micro and small enterprise (CGTMSE) to ensure sufficient credit access. 

Apart from that agriculture is one of the major sources of income in rural India and contributes a significant amount to our economy as well. The government must make sure that the subsidies and the credit it sends to the people living in these areas reach them on time. 

This is where a partnership with rural fintech firms and banks can be done to ensure that the money is transferred smoothly to the bank accounts of the intended beneficiaries.  

What are the major opportunities Spice Money provides to rural communities? 

With our successful journey of building and offering tailor-made solutions for the rural population, we have been revolutionising the way Bharat banks.  Our constant endeavour towards fostering financial inclusion has driven us to evolve into a holistic technology solutions provider for Bharat on the back of our technological expertise and a strong foothold in the hinterlands of India. 

With innovation being a key component for us, we want to go beyond just payments and offer other products and services such as insurance, credit access, etc keeping the needs of rural entrepreneurs in mind. 

We at Spice Money understand the importance of serving the rural population through solutions that are customised for them as opposed to force-fitting existing urban solutions on them.  

As our Adhikaris are the backbone of our digital units across the length and breadth of our country, we provide zero investment onboarding for our nanoprenuers and also provide them with financial training so that they can serve their rural communities in a better way. 

We align ourselves with the vision of the Jan Dhan-Aadhaar-Mobile (JAM) trinity scheme by our central government helping to include more people in the formal financial system with services offered at their homes. 

What are the challenges faced by the rural population when it comes to doing fair business? 

Access to credit and lack of knowledge are the major challenges faced by the rural population when it comes to starting and doing their own business. Depopulation of rural areas as people is migrating to urban centres in search of a better quality of life and more opportunities. 

With increased government intervention and the help of new technology introduced by fintech firms, this scenario is changing and now people are coming back to rural areas as more opportunities are available.  Another key aspect is the need for training amongst the rural population to equip them with the right set of skills for a better understanding of the business scenario.

What can be expected from Spice Money in 2022? 

Spice Money has established an extensive assisted-digital ecosystem that penetrates 95 per cent of rural pin codes, covering 700 districts and 5,000 blocks, serving over 10 crore households, and is on a path to continue supporting economic development across the country’s rural areas in 2022. 

Currently, we are developing solutions for solving the needs of agriculture, insurance, and credit to name a few and intend to scale up these solutions for the betterment of people living in rural areas.

Last year, the RBI introduced the financial inclusion index to capture the extent of financial inclusion in India. The index comprises three parameters namely access to financial services, usage of services, and quality of services. 

We can humbly say that the products and services that we offer are extensively contributing to all the 3 parameters of the financial inclusion index and are enabling us to foster deeper financial inclusion in the hinterlands of the country.