Creditcare Network Limited - Driving financial inclusion in India through API's

India’s leading microfinance institution Satin Creditcare Network Limited (SCNL) is focused on financially empowering people who are not part of the mainstream economic system by providing them with collateral-free, microcredit facilities.

With operations in 24 states and union-territories in India, their focus is improving financial inclusion in rural and semi-urban areas to drive socio-economic progress in low-income communities. SCNL has also extended credit to more than 3 million economically active women throughout the country.

SCNL also offers a range of business loans to small-and-medium-sized enterprises, as well as customized loans that allow the construction of clean energy, better mobility, safe water and sanitation facilities.

The overall process for loan disbursement (including borrower onboarding into SCNL’s system) was manually-driven and time-consuming. The checks and controls required at each stage meant that it took SCNL around 8-10 days to onboard borrowers and disburse loans.

Cash was the most popular mode of disbursement, translating into high operating costs, high cost of funds and greater security risk.

SCNL aimed to streamline the onboarding process and ensure speed and efficiency on loan disbursements, as borrowers were often heavily-dependent on the receipt of credit to address immediate needs.

A comprehensive solution was thus developed and implemented by SCNL with banking partner HSBC embedded a number of products and services via API into SCNL loan disbursement process. SCNL was able to embed and self test these API’s using HSBC’s API Developer.

SCNL introduced an in-house LMS (Loan Management System).

• Traditionally, physical applications were filled in by SCNL community service officers (CSOs), who assisted borrowers. As part of the transformation, each representative was assigned an electronic tablet with an in-built borrower onboarding platform and application synced with the LMS. Captured borrower details now flow into SCNL’s systems in real-time.
• Each entry automatically triggers a beneficiary validation request for the borrower’s account details to HSBC. This allows beneficiary name and account status to be validated before disbursement. The validation response is received by SCNL on a near-real time basis. This was imperative since SCNL wanted to shift from cash to electronic disbursements.
• Next, the data is shared with the credit bureau, with the response shared back with SCNL in minutes. Borrower details are also automatically matched against SCNL’s existing data repository, which allows them to make decisions on borrower’s credit using various rules-based scenarios.
• Data on the loans to be disbursed from circa 250K SCNL’s loan application centres across India flows into an internal centralised system.
• After this, a bulk payment request sent to HSBC initiates the loan disbursement to their respective borrower. Payments are processed electronically at half-hour intervals, with status of payment processing provided.
• Additionally, SCNL is able to track payment status in real-time to the point of the borrower receiving the loan.
• Real time access to account balances provides SCNL with visibility over their overall intraday balances, which is critical for the microfinance institution (MFI).
• SCNL was able to self service and speedily deploy the solution due to HSBC’s API Developer portal and sandbox.

Thus, the end-to-end loan disbursement process is now fully automated. SCNL has not only created a superior customer experience, and driven greater efficiency across their organization through automation, but also helped deliver on the Indian government’s goals of promoting digitization, cashless payments, and financial inclusion in the country’s traditionally cash-based economy.

For this solution SCNL won Treasury Management International (TMI) Gold Award for Best API Project