Wednesday, October 7, 2015

Can Mudra Loans collections be routed through Bharat Bill Payment System (BPPS)?

          An introduction of Mudra Loans is available at the following links:
01)  MUDRA website
03) Collections Business potential
04) NDTV

          An introduction of Bharat Bill Pay is available at the following links:
a)     The Hindu

          This article highlights the pains in collecting the Mudra Loan instalments.
          Times of India

          In addition, banks are devising flexible repayment mechanism with instalments that can be paid on a weekly basis at some of the banks. "From a collection point of view the challenge is to ensure that a street vendor or a repair shop owner can pay the instalment at his doorstep and does not waste time coming to a bank branch. We are working on ways to address this issue and we may rope in collection agents," the PNB executive said.
          Majority of the Mudra Loan borrowers are unwilling to spend in long queues at bank branches to repay the monthly instalments.
          Conventional payment methods like PDCs(Post Dated Cheques), ECS-Debit (Electronic Clearing Service), ACH-Debit will not work here.  
          The preferred repayment mode will be cash in low denominations.
          The cost to Banks in Mudra Loan repayments in Bank Branches will be high, approximately upto INR150/- per transaction. This cost includes the ‘missed customer’, cost.
          Mudra Loan borrowers prefer simple and safe repayment options.
          The BPPS can be the perfect choice to route Mudra Loan repayments.
          The benefits outweigh the negatives.