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Volume 5, Issue 1, September 2017

Digital Transformation: The next Big Leap in Microfinance



Microfinance in India has gone through drastic and dramatic evolution. It had its ups and downs, but the strength has always lied in the noble fact of servicing the poor, underprivileged masses with an aim of upliftment or poor through financial inclusion. Microfinance is operational intensive business and achieving operational excellence is key to success as it eliminates bottlenecks and reduces costs thereby increasing profitability for the business. Till recently, the entire transaction was cash based. About 99% of the disbursements and repayments are dependent on cash. In numbers, over 80 mn disbursements and 1,000 mn repayment transactions take place every year in cash mode. This is the main reason for which the sector was at the receiving end during the demonetization period and was impacted the most in terms of spread and for a long time period and faced a sudden slump in growth. Though several Microfinance Institutions (MFIs) have made forays into digital technologies, they still resort to manual interventions for most frontend cash based transactions of disbursements and repayments. Most of the innovative efforts are around introducing MIS systems, mobile and tablet solutions to bring down manual physical documentation and the time involved in it. This facilities automation of process, better transparency, efficiency, productivity, finally enabling the MFIs to provide faster and better services to the clients. No innovation comes without challenges, and the bottleneck here is the huge cost involved in such technological innovations. Other issues faced are the resistance of members to adopt digital payment methods owing to their lack of financial literacy and technological knowhow. Nevertheless, Digitization definitely is the means to safer, reliable and efficient way of providing services, and our rural hinterlands will not be left behind for long.


  • Microfinance
  • Digitization Evolution of Microfinance
  • Tablet Solution
  • JAM Trinity
  • Demonetization.

How to Cite

Srinivas, V., & Mahal, R. (2017). Digital Transformation: The next Big Leap in Microfinance. PARIDNYA- The MIBM Research Journal, 5(1), 47–56. Retrieved from


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