SWAVALAMBAN e-SUMMIT (16 Aug 2020)
Ushering the rapid & mass micro-entrepreneurship movement in India
SWAVALAMBAN e-SUMMIT (16 August 2020)
More than ever before, rebuilding livelihoods is exigent and it has become imperative for us to accelerate MISSION SWAVALAMBAN and fuel a rapid movement of nano/micro-entrepreneurship pan-India, with focus on the reverse migrants (due to COVID-19 related employment crisis), unemployed and under-employed segments of the society. Swavalamban e-Summit (16th August) was our bold attempt to foster action-oriented dialogue, deliberations, discourses and deep-dive sessions with a multitude of stakeholders across Government, Banking, Bureaucracy, Corporations and Civil Society, focusing on a singular central goal of transforming micro-enterprise aspirants into empowered entrepreneurs. We aim to enable at least 2000 micro-enterprises aspirants for credit linkages every month going forward and needless to say, to ensure that these enterprises sprout and bloom, requires enormous convergence.
A QUICK RECAP OF THE KEYNOTE SPEECHES & PANEL DISCUSSIONS FROM THE SUMMIT ARE AS FOLLOWS
KEYNOTE SPEECH
Shri Nitin Gadkari (Hon'ble Union Cabinet Minister of Micro, Small and Medium Enterprises)
While emphasising on eradication of poverty as the most important mission of the nation today, Shri Gadkari ji suggested that the approach Mission Swavalamban has taken to nurture skills and provide a vision for enterprise-creation, is the way to make people Aatmanirbhar. Taking severals examples of value-additions to Madhubani paintings (Bihar) to contemporizing metal crafts (Chhattisgarh), of processing orange peels to creating world-class jams (Nagpur) to Banarasi weaves, from Khadi denims to high-altitude honey, from processing Litchis (Bihar) to surplus pineapples (Nagaland), from Goraspak of Wardha to BioCNG from surplus food grains, from locally-made agarbattis to now PPE kits, his speech stressed on the uniqueness of innovative models which people across India practice, which have the potential to be traded at a global platform, if provided with branding support, market knowledge and technology upgradation. This would not only curb urban migration but would also foster holistic village development. Shri Gadkari made an appeal to the nation to join hands in increasing the growth rate of MSMEs from 30% to 50%, from 48% export rate to 60%, from 11 crores jobs created by MSMEs till date to 16 crores and from a turnover of 88000 crore p.a. to 5 lac crore by 2025. We need maximum production with maximum participation of people and a unique model of micro-finance at the last mile, which will fuel the engine of economic growth in villages. How we can center our intervention around the last person in the village, is going to be of primary importance. Regional skills, raw materials and climate favorability should be taken into account to come up with unique value propositions to make people SWAVALAMBI. It is important to register every MSME with the Government for the former to apply for and avail benefits and beneficial information and the Ministry seeks support from the Civil Society in this regard. It is important to bring together all the researches and innovative practices taking place across rural India for knowledge exchange, cooperation, coordination, communication and collaboration among stakeholders. Conversion of this knowledge into wealth for people is where the future lies.
KEYNOTE SPEECH
Shri Mohammad Mustafa (Chairman and Managing Director, Small Industries Development Bank of India)
SIDBI 2.0's vision is to channelize the aspirations of people who wish to start their own enterprises and provide them with the necessary access and awareness throughout their journey. As part of the mission that LetsEndorse is leading, aspirants from focus areas (currently 108 districts in Uttar Pradesh, Bihar, Jharkhand, Odisha and Telangana), through a toll-free number can get connected to our system. After due-profiling and understandingthe aspirants fitment and maturity, they are connected to relevant training programs, their business plans are prepared and vetted and they are connected to banks, thereby making the entire process very comprehensive and end-to-end. Thorough recording and analysis of popular datasets have helped us understand the preferences of people for various business ideas in diverse geographies or from diverse income groups. We are making our best attempts to logically and speedily bring every missed caller's case to a conclusion and enable them to start their own enterprises. SIDBI is completely committed to take this mission ahead even in other states. This approach can also be replicated by other Departments. With a small investment and high control, one can get their business up and running within a small time and can generate a sizeable cash turnaround. Micro-enterprise aspirants should thus strive to stand on their own feet.
To inculcate the spirit of Swavalamban in early ages, with several State Governments, SIDBI has created Swavalamban Clubs in schools and colleges. SIDBI has also launched several convergent enabling platforms like UdyamiMitra, PSB59Minutes and MSME Saksham. SIDBI also aspires to start a SME services platform to enable knowledge harnessing about any business anywhere in the world. Under SIDBI's PRAYAAS Scheme, low-interest collateral-free loans are being provided to enterprise-aspirants. During COVID, to foster medical supplies related enterprises, SIDBI has launched a scheme called SAFE, to proactively provide working capital loans at 5% interest within 48 hours, at a time when not many banks were open to lending.
PANEL DISCUSSION
“Priority sector lending in bringing back livelihoods post-COVID” with Heads of Priority/SME Lending of banks
○ Shri Arun Sharma (General Manager, SME Lending), Punjab National Bank ○ Shri Shriram P. Iyer (General Manager, FIMM Network), State Bank of India
○ Dr. R.K.Singh (General Manager, P&D Vertical), SIDBI
○ Shri Srinivas Bonam (Executive Vice President & Head Inclusive Banking Group), IndusInd Bank
○ In order to drive the national goals, priority sector lending is key for providing gainful livelihoods in current times. There are several progressive schemes across sectors by the Central Government which have great potential of boosting self-employment.
○ Branch-led and branch-less models (PHY-GITAL=Physical+Digital) are being adopted heavily by banks to provide digital lending services with renewed focus on MSME loans for inclusive growth at the base of the pyramid.
○ When it comes to gauging aspirants for suitable credit, banks look for experience, skill training (there are several RSETIs offering free-of-cost training), backward and forward linkages, market potential, primary security (hypothecation), margin money (self-investment), a high cash turnover ratio and insights, conviction and confidence of the aspirant. It is recommended by banks that aspirants start small, take micro-loans instead of excess credit, build their credit scores efficiently and progress towards growth. A number or proxies are now being leveraged to determine the viability of an enterprise loan application in absence of credit history. In a nutshell, the character, capacity, capital and cash-flows of the business are evaluated by banks to determine a candidate's suitability for credit. There is a lot of potential in retail, agro-allied activities, small manufacturing units (like noodles, ice-cream, etc.) to name a few.
○ There is a critical need to mentor and handhold the enterprise aspirants to help them understand business potentials, enabling financial literacy, navigate through schemes and make informed choices. SIDBI has created a Bankability kit and recommends all aspirants to study that from the UdyamiMitra portal. SIDBI has created a constellation of platforms to avail free information.
○ The new National Strategy for financial inclusion requires banks to monitor and report penetration of micro-lending on the basis of gender, age, geography, which will help the banks recalibrate their entire strategy and find lacunae. For example, there has been a lacuna in terms of inadequate investments on building farm infrastructure (for storage, processing and post-harvest processes). While the final guidelines on geographical distribution of PSL corpus is awaited, banks are optimistic that this is a move in the right direction. Reaching the base of the pyramid is in everyone's interest as the gaps and opportunities lie there.
○ Digitisation could play huge role not only in origination (cutting down cost and time) and disbursement (prevalent) processes of micro-loans but also in underwriting, collection and monitoring of businesses. Exception handling shall still be foreseeably manual. Technology can also play a huge role in "New to business" and "New to banking" enthusiasts.
○ The senior representatives extend their encouragement towards new micro-enterprise aspirants and recommends them to manage digital transaction records as much as possible in a separate business account, to keep building the credit score and thus their credibility in the banking system. They also advised the aspirants to keep upgrading their skills and stay updated on the emerging markets, nationally, regionally, locally or hyperlocally. Mission Swavalamban has a significant role to play in creating an AATMANIRBHAR BHARAT.
PANEL DISCUSSION
“CSR for building livelihoods through mass-entrepreneurship” with CSR Leaders
○ Shri Saurabh Singh (CEO, ICICI Foundation) ○ Shri Jacob Ninan (CEO, Axis Bank Foundation)
○ Shri Ashwini Saxena (CEO, JSW Foundation)
○ Shri Suman S (Rural Livelihoods, Dr.Reddy's Foundation)
LIVELIHOOD-GENERATION AND ENHANCEMENT APPROACHES: Axis Bank Foundation works towards reinforcing rural livelihoods in deeper pockets of India with the core focus of enabling a "Farmer as an entrepreneur" through a holistic value-chain development approach. ICICI Foundation through its DIGITAL VILLAGE program, enabled a shift of people towards digital transactions during the COVID-19 period. The bank also runs a couple of RSETIs in Rajasthan and has given rise to micro-enterprises in the agricultural value-chain. The two RSETIs follow a hub and spoke model to enhance the reach. JSW Foundation works towards the concept of circular economy for generating livelihoods (e.g. by tapping into women's natural talent to start tailoring centres which serve the needs of the company and its value-chain). Their mangrove restoration project also connected the local women with livelihoods through nursery development, transplantation, and other maintenance. Entrepreneurship, across production, distribution, servicing, maintenance, according to them, can be nurtured as a very effective CSR tool in current times. It is key to remove critical vulnerabilities in our supply-chains. They are trying to look at "households as a unit" and develop interventions around the same theme to improve financial and social indices. Dr. Reddy's Foundation also works towards improving incomes of farmers by reducing their cost of cultivation, adding value post-harvest and making strong market-linkages. Talking of non-farm based livelihoods, they look at generational aspirations of farmers' families and lead their ways from end-to-end through an integrated model. With their incubation centres, they enable business growth which can offer more job opportunities to others. During COVID, they have been attempting to convert reverse migrants into 0.5 acre vegetable cultivators.
ROLE OF CSR: CSR funds can be channelised in synchronization with the formal credit system, for identifying those with entrepreneurial zeal, determining feasibility of enterprises, for local content development (as an ancillary activity), handholding aspirants to create business models and plans, building value-additions to their models, formalizing their enterprises (for improving business efficiencies) and building convergence among stakeholders. CSR can act as an incubator translating the ideas of people into visible actions. The unit cost of enabling people might be higher, but the social return on investment is significant with a long-lasting impact.
ROLE OF TECHNOLOGY IN ACHIEVING SCALE: There is no doubt about the key role of technology in enabling people, be it training, market knowledge or demand aggregation. Going digital increases penetration and reduces costs. However, a PHY-GITAL model seems more likely to be emerging, where exposure-visits and awareness building would still need high-touch approach. Most rural households have at least one mobile phone.
ON COLLABORATION WITH NGOs: Talking of the role of NGOs, Axis bank Foundation recommends the civil society organisations to maintain their core philosophy, work collaboratively as 'consortiums' and prepare and plan their approaches well, especially with the Governmental projects and schemes, more so in current times. The foundation collaborates with NGOs and always remains open to discussion on newer ideas. ICICI foundation believes that specialised NGOs with niche expertise and relevance can associate with the Foundation. JSW Foundation believes that with time, the roles of NGOs are getting redefined and the foundation appreciates the 'equal' partner bringing competence (technical/local know-how) to the table. They also value organisations which have built significant social capital and have the mettle to organize communities where they operate. The NGOs are vetted following a thorough due-diligence process and are evaluated on the impact outcomes post the project. Transparency, accountability, collaborative action and a rigour of continuous improvement is key to a partnership. Dr. Reddy's Foundation acts as an implementor and works with several local NGOs. Besides whole-hearted action, they also look for focus on evidence of outcomes by NGOs as a differentiator.
PANEL DISCUSSION
“State’s response to re-building COVID affected livelihoods through micro-entrepreneurship”
○ Shri Balamurugan D (2005, IAS), CEO cum State Mission Director, Bihar Rural Livelihoods Promotion Society ○ Smt R. Vimala (2009, IAS), CEO & Head of Maharashtra State Rural Livelihoods Mission
○ Shri Kunal Silku (2011, IAS), Mission Director, Uttar Pradesh Skill Development Mission
○ Shri Sandeep Kumar Sultania (1998, IAS), CEO, Society for Elimination of Rural Poverty, Department of Rural Development, Government of Telangana
BIHAR : Bihar SRLM (JEEVIKA) supports 1 million SHGs in Bihar. The state has seen over 3 million reverse-migrants during COVID-19. Most of them are highly skilled and are capable to start enterprises. More than 2.4 lac families have been added to the SHGs which make them eligible to access credit. SVEP is also aligned to enabling people with credit provision. District Magistrates are provided with INR 50 lacs each for enterprise promotion through cluster approach (say, leather, food processing, tiles making, to name a few) and are getting linked to Governmental contracts. PSUs have also been encouraged to create specialised enterprise clusters. Needless to say, this initiative requires a long-term vision and approach and in association with banks, training providers, KVKs and other entities, a lot can be achieved in the space. Under SRLM, 12 producer companies have been started and initial results have been encouraging. The approach is multi-pronged and consistent efforts are being made.
MAHARASHTRA : The emphasis has always been on institution building and capacity development. The strength of the unit (at state, district, block, cluster levels and community resource persons) led the people to be agile and kickstart their enterprises, be it making >1 crore masks state-wide or setting-up 90000+ nutrition gardens (to ensure access to food) and selling vegetables worth INR 25 crores (during COVID) or accelerating their work as banking correspondents for financial service provision or selling sanitary pads in communities to manage their menstrual hygiene. The key to collective and synchronised action lied in harnessing the strength of people, channelizing their potential, promoting and making them change-makers. Sector-skill councils should proactively guide the livelihood missions in aligning the right courses and curricula for right matching.
UTTAR PRADESH: Over 37 lac people have migrated back to the state and enumerators while their entering the state captured the meta-data of skills, experience and aspirations of people. This real-time mapping enabled several provisions. The partner industry associations of the state gave a commitment to employ 11 lac skilled individuals and the progress was mapped on an MIS portal. Open and mass online job connects were streamlined through a specialized platform called Rozgar Sangam. All Government Outsourcing and contractual vacancies are also posted on this unified portal for registrants. All the self-employment schemes were also converged on this platform and connected the banks to it for credit processing. Through the SevaMitra application, a C-2-C on-demand skilled home service were also initiated. Through RPL (Recognition of Prior Learning) and ABHA application, ease of credit for street vendors was facilitated. Trainers are being sent to villages for RPL operations and trainings are being conducted in village level facilities. More and more emphasis is now on shorter-duration, last mile RPL format. Besides these, SHG members were trained in making masks/sanitizers.
TELANGANA: The self-help group movement has come a long way where collateral-free loans have seen very high repayment rates, which indicates discipline among members. Training in production is surmountable but challenges lie on marketing front. Several districts in the state have launched their own portals for market connects. The state is focusing a lot on promoting the food processing industry, where the primary processing shall be done by SHGs. The focus is also on developing FPOs in each districts. 30000 women have been enrolled in 18 FPOs across the state and in the first year, the turnover has been INR 3 crore. WE Hub helps women entrepreneurs in scaling up the organizations. Besides these, smaller initiatives like nutrition gardens continue to bloom. The paddy production has almost doubled in Telangana as compared to the last year and rice mills are being planned. Same goes for ginning mills for increased cotton produce. A lot of migration has happened from urban to rural Telangana, which has exerted pressure on MNREGA. Skill trainings have slowed down because of the COVID-19 situation. Micro-enterprise creation has become all the more important with special focus on state-specific bounties and rural women and youth. Assured irrigation facilities can turn in-migrants to farming. Continuous efforts are being made to build convergence among various departments, academia, subject-matter experts and others.
PANEL DISCUSSION
“Future of Lending: Removing barriers for an AATMANIRBHAR BHARAT"
○ Moderator: Shri Abhishek Sinha, Co-Founder & CEO, Eko India Financial Services○ Shri Samaresh Parida (Independent Director), IDBI Bank
○ Shri Dipak Gupta (Joint Managing Director), Kotak Mahindra Bank
○ Shri V Satya Venkata Rao (Deputy Managing Director), SIDBI
ROLE OF TECHNOLOGY IN MICRO-LENDING: Of the various parameters which banks consider to determine the viability of a credit investment, technology has already digitised many. However, when it comes to concerns of character, references and physical touch-points have not yet been replaced. Regular monitoring of financial health is a key area where technology could play an interesting role, from both individual as well as group lending perspectives. Technology brings in the necessary speed, scale, accuracy, transparency and unbiased judgements. SIDBI's Vision 2.0 also looks at a holistic Credit Plus approach for enablement of MSMEs from end to end. From operationalisation of PM SVANIDHI Scheme in record time to roll-out of MSME Saksham (for credit awareness), technology has made in-roads. Through sectoral studies, knowledge as an ammunition to entrepreneurs is being provided by SIDBI.
VERNACULARISATION, VOICE, VIDEO AND OTHER TECHNOLOGIES: The most complex technologies with simple and intuitive interfaces can be easily adopted by people, with limited training. Video KYC and calls have bridged the physical gaps and enables banks to process tens of thousands of applications every week. Technologies like these have also been immensely useful in documentation, physical signatures and making re-payments. Voice recognition has been extremely useful for connecting those who cannot type well. With time, artificial intelligence is also making its way into the lending arena. The PM SVANIDHI Scheme and the Standup Mitra Portal (currently in Hindi and English), are getting vernacularized.
ACCOUNT AGGREGATORS AND COMMON DATA FRAMEWORKS: This leads to right information (rightfully) to the banks which enables furthering credit, provided that the privacy of data is taken care of and is not misappropriated. Better knowledge of cashflow builds confidence among bankers and reduces reliance on collateral deposit. Presence of such common data frameworks can accelerate diligence and appraisal process.
ADVICE TO YOUNG ASPIRANTS: Being ambitious is a prerequisite but one should avoid falling the the trap of over-borrowing. Borrow only what one needs and what one can repay thereby maintaining a healthy credit score. Judicious use of funds, discipline and financial sanctity is of utmost importance in ensuring one's creditworthiness throughout their growth journey. It is equally the banker's responsibility to understand the business proposition, risks associated, and help the entrepreneur with the right safeguards. In an India running up to becoming Aatmanirbhar, funds should be easily available at an appropriate interest rate as long as the quality of the business proposal and of the borrower is bankable.
Swavalamban e-Summit culminated with 5 state-specific break-out diagnostic panels where matured enterprise-aspirants made virtual pitches of their enterprise ideas to nominated senior-level bankers. While they received feedback, the audience comprising other aspirants learnt about the process of credit-interview, only to prepare themselves better for the same.
MISSION SWAVALAMBAN
In association with SIDBI (Small Industries Development Bank of India), LetsEndorse has been driving MISSION SWAVALAMBAN in 108 districts (in Uttar Pradesh, Bihar, Jharkhand, Odisha and Telangana) to create and handhold at least 10,000 MSMEs in the first run of the mission. As part of this, through a unique technology-and-touch model, young enterprise aspirants (reverse-migrants/ unemployed/ under-employed) are nurtured with locally-relevant business models, enterprise planning, credit linkages and handholding through a local area (and corporate employee volunteers led) mentor-network.