The second day of Sa-Dhan’s National Financial Inclusion Conference 2015 began withthe felicitation of Microfinance Institutions who have received in-principleapproval from Reserve Bank of India to operate as Small Finance and PaymentBanks. Followed by this were some high quality deliberations and discussions onwhat role Microfinance Institutions can play in Housing for all, changingpattern of Microfinance and more interestingly Financing of Clean Energy.
Moderated by Ashish Kumar Sahu, CEO, Clean Energy Access Network, the discussionthrew light on how India is a country where about 75 million households still lackaccess to modern forms of energy and about 150 million are dependent on solidfuels, kerosene for cooking. Speaking about the challenges faced by MFI’s andservice/product vendors, Shantharam Pai,Finance Director, SKDRPD said, “Sustainabilityis the key. An MFI needs to identify a vendor who has a great product to offeralong with after sale services to win the trust of the end customers andimprove purchase efficiency. The major roadblock is creating awareness amongpeople about products available and financing options. Of course, if we planand train the customers, the blockade can be removed. Secondly, there is stilla fear among people about the desired benefit from a product. They arereluctant to continue if they do not get required advantage”.
Energy is the second highest expense item inrural households and third highest in urban areas. There is an overlap betweenclients that require electricity and those who are financially served by MFIs.However, MFIs are dependent on vendors for the kind of products that theyoffer. Rashmi Sinha, Co-Promoter & Whole Time Director, Saija Microfinanceremarked, “Due diligence of productoffering is required for any MFI to enter into the sector of financing cleanenergy. Repayment of loans totally depends upon the quality of product and aftersale services being provided by vendors”.
Saija Microfinance which is just eight monthsold in Microfinancing of clean energy also believes that field officers aredoing a commendable job. They have maintained relationships with people whichmake it easy to sell products to them.
“The keyrecommendation to tap the potential of MFIs to enhance access to finance forclean energy technologies is that we just do not sell, but train our customers.This will help generate awareness.
Weneed to design a program that fits well with the structure of MFIs. It must betake into consideration that MFIs work closely with small, medium and largesize companies. Hence, we need to work out a model that can be best suited tochannelize the whole process of financing”, added Harish Anchan, Managing Director – Envirofit.Envirofit, a social enterprise into designing durable and affordable cook-stovesthat has been in the market since 2008 and has achieved a milestone of 1million cook-stoves supplied till now.
There are still someareas where financing option is not available despite the demand for products.Given the ticket size of some of these products like solar lanterns, cook-stoves,MFIs can play an important role to leverage this market by creating financing optionsfor end users who are typically in the low income segment.