Empowering rural women entrepreneurs: Devesh Sachdev, Fusion Microfinance

Devesh Sachdev is the Founder and CEO of Fusion Microfinance. Under his leadership, Fusion Microfinance has become one of the fastest growing microfinance institutions in the country. In an Exclusive Interview with Devdiscourse, Sachdev talks about how Fusion Microfinance is helping rural women entrepreneurs and shares insights about the industry.

Devesh Sachdev, Founder and CEO of Fusion Microfinance, the leading Non-Banking Financial Company-Microfinance Institution (NBFC-MFI) in India. NBFC-MFIs are catering to 37 percent of the micro-credit loan market exceeding the share of Banks (33 percent) and SFBs (18 percent) in the country. His organisation has made a positive transformation in more than 1.5 million households of India. 

In an exclusive Interview with Parag Narang, Sr. Sub. Editor, Devdiscourse, Devesh Sachdev shared insights about the NBFC-MFI sector and the vision behind Fusion Microfinance. Edited Excerpts:

Parag Narang: What is the vision behind Fusion Microfinance? 

Devesh Sachdev: Fusion operates with a social vision to transform the lives of women who belong to the rural and semi-urban areas. It is this vision which has enabled Fusion to be the youngest MFI in the 'top ten Micro Finance Institutions in India' working diligently in promoting and supporting women entrepreneurship in rural India. We offer a wide range of financial products and services to the underprivileged women who are unbanked and lack economic opportunities.

Narang: How is it helping the needy to realize their dreams? 

Sachdev: Providing financial services with customized solutions to the unbanked and underprivileged women entrepreneurs in underserved areas to transform their quality of lives is our utmost goal. We have made a positive transformation in more than 1.5 million households of India, 89 percent of which primarily belong to the marginalized communities. Every client of Fusion gets an insurance cover for both herself and her spouse as a risk mitigation strategy. Secondly, by providing income generation loans to economically active women who want to either start a new business or to scale up their existing business by operating on the time tested Grameen Joint Liability Group (JLG) model thereby strengthening the rural economy. Our endeavor has been to raise the financial condition of the clients living below the poverty line by making a positive impact on their lives. For instance, we measured the impact on 3rd cycle customers of Fusion who were able to generate an average annual income of INR 87,453 in FY 2018-19 as compared to INR 54,616 in FY 2016-17 when they got associated with us for the first time, elevating their average annual income by approximately 60 percent.

Narang: What have been your achievements so far?

Sachdev: With the aim to maximize our reach to the hitherto underserved Clients, Fusion has expanded its financial services in 18 states of India with presence in 261 districts through a network of more branches. We are the youngest company to be among the 'top ten Micro Finance Institutions of India' working diligently in promoting and supporting women entrepreneurship in rural landscape serving 1.6 million households. We have cumulatively disbursed close to INR 7500 crores since inception and have opened doors of employment for more than 4,000 rural youth. We have been able to attract marquee investors such as Warburg Pincus.

We were recognized for our efforts in customer capacity building with the ‘Best NBFC – MFI Award’ in the ‘Customer Literacy and Capacity building’ category by the then Minister of State for MSME Giriraj Singh. Fusion has always been at the forefront of increasing its outreach and providing greater financial services accessibility in the rural areas and for its efforts this area the company was conferred with the ‘Champions of Rural Markets 2018’ award by the State Minister S.P Velumani at ‘The Economic Times Rural Strategy Summit 2018’. 

Its people are at the core of what Fusion is and the company strives to be an employee-centric company. Our consistent focus on our employees reflects in the Employee Satisfaction Survey conducted by AON Hewitt which put us up in the top quartile of BFSI. The company has also strongly driven the agenda of digitalization by adopting the latest technology to enable cashless transactions. In fact, we were honored with the prestigious ‘Project of the Year Award 2018’ from the Project Management Institute, India for driving digital empowerment through cashless at the rural level while following the Project Management framework rigorously. Adding to it, Fusion was also awarded the ‘Business World Digital India Award’ by Union Minister for Information and Technology of India, Ravi Shankar Prasad, for ‘best usage of ICT in Rural Development’. We were also featured amongst the ‘The 10 most valuable Non-banking Financial Companies’ list by Insight Success that speaks volumes about the growth and work done by the company.

Narang: What makes Fusion Microfinance grow consistently even as the NBFC sector struggles through a crisis?

Sachdev: Fusion has remained insulated from the NBFC crisis due to its proven track record of high governance and transparency as the microfinance sector has a positive ALM mismatch. Warburg Pincus investing in Fusion was a major validation and its rating upgraded from BBB+ to A post the funding. Fusion’s diversified and high-quality lenders continue to support and repose trust in the brand. 

Narang: How do you view the Budget 2019 from the perspective of NBFCs and MFI industry?

Sachdev: The policy of Sovereign Guarantee which is a cover given by the government of India is a very promising step which will work towards securing the MFI businesses. MFIs are contributing to the Financial Inclusion drive of the government of India through the medium of microfinance by providing doorstep services in the remote spectrum.

Narang: What facilitating initiatives do you expect from the Government for the sector?

Sachdev: The initiatives which we expect from the Government is to promote the digital payment platforms and positive advocacy of the NBFC-MFI sector with a conducive environment that supports adherence to loan repayments by the clients. 

Narang: What other challenges do you see before NBFC-MFI companies?

Sachdev: The challenges which we basically see before NBFC-MFI companies is reaching out adequately to the rural population in the country and develop products specific to the client’s needs. Frequently changing norms and compliance requirements laid down by the government and statutory bodies and to bring a cultural transformation by implementing advance technology baked in the business processes also pose challenges, in addition to the procedures and making clients familiar with those advancements is also an added issue.

Narang: What are the future plans and growth strategy of Fusion Microfinance?

Sachdev: Well, talking about future plans, we will continue with our balanced and responsible growth strategy that adds value to all the stakeholders. With customer-centricity in the heart of everything we do, we make our way up in the top five MFIs of India by driving innovative solutions and taking quality consciousness to the next level while maintaining cost optimization as we expand our scale of operations. We aspire to serve 5 million customers in the next 4 to 5 years through pan India coverage, develop comprehensive risk matrix and data analytics solutions under one roof which will provide deep insights of region-wise, district-wise, branch-wise and customer-wise portfolios to make meaningful decisions, and diversify by seizing new business opportunities in the financial space of the country.

Narang: What is the potential of job creation in the microfinance sector?

Sachdev: MFIs have played a pivotal role in the employment creation by providing direct employment to the youth in rural areas, who have always witnessed dearth of jobs as agriculture is the primary occupation in rural India. This also helps in creating fruitful relationships with the clients as they are able to relate with our field officers who are local youth from their vicinity. Fusion has a strong workforce of 4000+ employees (precisely 4398 employees as on March 19) and we will continue to usher job opportunities in the rural and semi-urban areas as we expand. Furthermore, the client base of MFIs comprises of existing or aspiring women entrepreneurs, who churn out employment opportunities through their ventures.

The social wing of MFI’s takes a huge stride in making the clients financially literate and comfortable with digital payment platforms by means of Digital and Financial Literacy Programs and Workshops. For instance, Fusion covered more than 1.5 million participants in the Financial Literacy Programs in FY 2018-19.

Narang: How do you see the scope of the microfinance industry in India and the international market? 

Sachdev: NBFC-MFIs portfolio has grown by 42 percent as compared to last year, today NBFC-MFIs are catering to 37 percent of the micro-credit loan market exceeding the share of Banks (33 percent) and SFBs (18 percent) in India, as of 31 March 2019. 3.17 crore clients have outstanding loans from NBFC-MFIs in India with presence in 33 states and Union Territories and there is a significant customer base which still lies untapped where the microfinance industry needs to penetrate as this is the most viable medium to reach out to the aspiring women entrepreneurs in the underserved and unserved segments of the country and the same holds true for other developing nations as well.

Narang: What business and client-focused initiatives are being planned by Fusion Microfinance?

Sachdev: When we talk about business-focused initiatives our consistent focus is on innovation and proactive use of technology in driving business goals like Mobile-based platform implemented currently which reduced our TAT by 16 percent, empowering our field officers to do digital onboarding, cashless disbursements, continuous upskilling and training of employees with implementation of need-based learning and development program, and work towards building a ‘Best place to work’ culture in the microfinance sector.

With regards to the client-focused initiatives being done currently includes:

• Reduction of the wing to wing TAT for the customers with on the spot CB check to facilitate instant confirmation of Loan approval in the field itself, the instant return of original KYC documents to the customers thereby significantly eliminating chances of KYC misuse. 
• Generating new avenues of employment for women & youth by providing livelihood training. 
• Digital and financial literacy programs enabling the clients to be a part of the digital wave seamlessly, for instance, e-receipt messages received by clients on their mobile phones. 

Thank you.