SKS Microfinance plans to collaborate with three private banks to launch an integrated cash management system (CMS) for 575 of its rural branches. Three hundred of its branches would partner with Axis Bank, 175 branches with ICICI Bank, and 100 branches with HDFC Bank. These branches would “have bank accounts which are integrated to an Internet portal,” said S. Dilli Raj, the chief financial officer of SKS Microfinance, which could enable information on funds and cash availability to be more readily accessible for use in providing financial services.
“As of date there are 1,700 SKS Microfinance branches, which have a surplus cash [equivalent to USD 10,808] per day. The daily average would be equivalent to USD 6.2 million] which we would pull to our head office each day through these banks’ branches,” said Dilli Raj. [2] The MFI plans to implement this new strategy in 175 branches by the end of December this year, and the other 400 by the end of the fiscal year.
About SKS Microfinance:
SKS Microfinance is an expanding microfinance institution (MFI), launched in 1998, that caters to women clients in India. As of March 2009, the MFI currently has 3.5 million active borrowers, a gross loan portfolio of USD 279 million, and total assets of USD 596 million. In terms of financial performance, it has a 3.68% return on assets and 18.72% return on equity.
Bibliography:
[1] Original Source Article: DNA India. “SKS Micro ties up with 3 banks to manage extra cash.” http://www.dnaindia.com/money/report_sks-micro-ties-up-with-3-banks-to-manage-extra-cash_1312610
[2] Silicon India. “SKS Microfinance ties up with banks to implement CMS.” http://www.siliconindia.com/shownews/SKS_Microfinance_ties_up_with_banks_to_implement_CMS-nid-62969.html
[3] SKS Microfinance: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
Original Source Article: Silicon India. “SKS Microfinance ties up with banks to implement CMS.”
“SKS Microfinance ties up with banks to implement CMS.” Bangalore: SKS Microfinance has inked pact with three private banks for deploying an integrated cash management system (CMS) for 575 of its rural branches. The microfinance institution, which has about 1,700 branches, would partner with Axis Bank (300 branches), ICICI Bank (175 branches) and HDFC Bank (100 branches).
‘We plan to implement the CMS in 175 branches by December-end, and the rest would be covered by the end of this fiscal,” said S Dilliraj, Chief Financial Officer, SKS Microfinance.
Explaining the system, Dilliraj said that the microfinance institution would move to the next level of credit process from the real-time gross settlement (RTGS) accounts to the integrated CMS, wherein the 575 branches would have bank accounts which are integrated into an Internet portal. “You just need to log on to the bank Web site to access information on funds availability, etc., for all the branches,” added he.
Besides, push and pull-back of funds would also be enabled through the new system. “Earlier, funds’ transfer from the head office to the branches was a weekly exercise, but now it is possible on a daily basis. Thus float in the system comes down by 50-60 percent. This would ensure higher amount of cash availability in the feed. The integrated CMS is both an efficient and risk mitigation strategy,” said Dilliraj.
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