Utilising microfinance to full capacity

By Rashika Fazali

A by-product of the Daya Group of Companies, Bimputh Finance PLC strongly follows in the footsteps of Nobel Prize Winner Professor Muhammad Yunus who developed the award winning concept of microfinance.

Bimputh Finance was established in the latter part of 2007 as a small operation. Since then, they have expanded their business to 13 branches spanning from Sevanagala, Ampara, Dehiattakandiya and to other eastern areas with a dedicated staff of 115. However, the three branches located in Jaffna, Panadura and Negombo mainly deal with microfinance.      

Speaking to Bimputh Finance CEO and Director D.T. Kingsley Bernard, he stated that they believe in helping the low-income people with a motto that proves it: ‘the strength of the rural economy’.

Following are the excerpts from the interview:

Q: How did the idea to start a finance company come to be?

A: Our chairman Daya Gamage was confronted with a lot of difficulties in obtaining loans from banks. With that experience, in the initial stages of business, he has had an idea of setting up a financial institution which would give loans to small and medium entrepreneurs with less consideration at their collateral and repayment ability, going purely on the basis of whether these projects were viable and whether they could be retained.

Q: What kind of financial business does Bimputh Finance deal with?

A: Since we are a fully fledged financial institution, we are allowed to give loans, leases and take deposits. We have leasing and hire purchasing facilities as well as the authority to change foreign money. However, if you compare our institution with a bank, we cannot take current accounts. Other than the current accounts, we can maintain all the other aspects.

Q: Who is your clientele composed of?

A: Altogether we have a clientele of around 15,000 out of which 10,000 clients fall under the microfinance category. Not all 10,000 are given loans at the moment. There are a set of people who are in the waiting list.

We target the people who are not in a position to obtain loans from the bank. We have given loans to small and medium scale entrepreneurs especially in the eastern province, in the Sevanagala area and to the small farmers.

Q: How much is your loan portfolio?

A:We have a loan portfolio of about Rs. 650 million out which Rs. 150 million is allocated for microfinance.  

Q: For whom is microfinance? And how does microfinance work?

A:Microfinance was introduced in Bangladesh for women who were willing to set up their own businesses – self-employment. It is a scientific program which is linked with peace because if you have money, you have peace.

But why women? They are more responsible than men. They run the family very well and when they take a loan they are under the obligation to repay it. In third world countries, 99% of activities are done by women.

These microfinance loans start at the level of Rs. 25,000 in the first year, Rs. 50,000 in the second year and Rs. 100,000 in the last year. After that they become small entrepreneurs.

In obtaining this loan, we don’t look at their collateral. We look at the person’s capability of repaying and whether she is worthy of getting a loan as we don’t give loans for consumptions like weddings, etc. Our need is for us to know where they live, about their husbands and the kind of self-employment project they will be involved in.

Our rapport with the micro entrepreneurs is quite close because we meet them every week. Our officers go to their houses and look at their business operations. These officers also go to the village, collect the people from the vicinity and advise them. The repayment for the loan is weekly as well.

At these weekly meetings, we also mark attendance which should be more than 65% for these people to get the second loans.

Q: Tell us about a few success stories.

A: There was one lady who started her business with a loan of Rs. 3,500 to make 50 string hoppers a day. Today, she makes 10,000 string hoppers a day with a net profit of Rs. 10,000 earning herself Rs. 300,000 per month. Her husband has also joined her and now delivers string hoppers with a three-wheeler.

There was another lady who sold illicit spirits, but wanted to change her life and business. Today, she’s doing a service to the country by selling only food.

Q: Has there ever been a failure in repayments?

A: There have been occasions. When it comes to microfinance, we have none. But in other loans, we have a non-repayment rate of 15% to 18%.

Q: What is different about Bimputh Finance?

A: Other than microfinance, we also have our own ATMs in Sevanagala, Ampara and Pepiliyana where we take the technology to the household.

Although we have the license, we are not into leasing very much. Yet, we try to concentrate leasing facilities for the small people like the three-wheeler drivers. Our main business strategy is to help the downtrodden people in the country while maintaining our business. We look for the low-income people because microfinance is for them.

Q: What are your future plans?

A: We are hoping to expand our microfinance operations to the rest of the branches. We are also planning to establish two new branches, one in Galle very soon and the other we haven’t decided as yet, and they will also deal with microfinance. In addition, we have plans to further develop all our branches.

We are also in the process of increasing our co-capital as per the requirement of the Central Bank where all finance companies have to increase their co-capital to Rs. 300 million. With this, we are hoping to increase our businesses in the areas where we see opportunities which will help the rural people.