What We Do

Sarala provides microcredit to women from poor and under privileged families in rural and urban areas. It operates through its branches. The usual branch would consist a front room that would serve as the office. In addition there would be 2 or 3 rooms for Credit Officers (COs) to stay. A kitchen and bathroom(s) would also be present. On an average the initial sunk spend for a branch is about INR 100,000. Staff complement in a branch is usually 3-5 COs apart from the branch manager. COs are provided with bicycles/motorcycles to move around. Branches are connected to HO through a desk top computer affixed with cellular toggles. Here is a snap shot of activities at branches:


Group Formation:

  • The first step is target area selection. Area selection is initiated by Branch Manager (BM) and Credit Officer (CO) is directed to visit that place for area selection. The three major points considered for area selection are: (i) Number of poor households in the area, (ii) Occupation of poor household members and (iii) Availability/ non-availability of constant flow of income.
  • CO meets all the people willing to take loan from the organization on a mutually agreed date where he explains to them about the organization, loan products and the terms and conditions. Based on the willingness expressed, groups are formed.
  • CO then visits the houses of all members, collects the KYC documents and fills in the loan application forms. After verifying the loan application form and making an assessment of the repayment ability of the applicant, CO shortlists the members for the proposed group and recommends the same to the BM for loan sanction.

Loan Appraisal:

  • Loan Appraisal process starts with the judgment of creditworthiness of the proposed borrowers by Branch Manager (BM). For this, the BM visits the borrower‟ residence personally and cross-checks the information given in the loan application form.
  • Post verification, Branch Manager derives the final list of members who would be given loan and sends the loan proposals to Head Office for verification by the Credit Bureau (Equifax).
  • Based on the clearance from Credit Bureau, the Branch Manager issues the sanction letters to the borrowers.
  • CO proposes the loan amount to be sanctioned to the BM and BM is the final approving authority in this regard.

Loan Disbursement:

  • Loan would be disbursed on 4th or 5th week of Group formation. From group formation to disbursement, the attendance of members in the group is monitored. In case any further verification is required, Branch Manager gets it done within this period.
  • At the time of loan disbursement, 1% processing fee on disbursement and insurance charge (risk Fund) on actual would be collected from the borrower.
  • Loan is disbursed in the form of transfers to Bank accounts or in cash at the Branch office in presence of all Credit Officers. Loan agreements stating the terms and conditions of the disbursement are signed by the borrower. Each member is provided with individual passbook and repayment schedule for tracking of future repayments. Going forward, Sarala intends to maximize disbursals through Bank Accounts.
  • Post disbursement, Loan Disbursement Master Roll, containing the full details of loans disbursed and signed by the members, is updated by CO. This document is a consolidation of all loans given by all COs in a day & duly signed by BM at the day-end.

Collection Process:

  • The collections are made at the group meetings. At every bi-weekly meeting, CO will collect the installment amount from borrowers and update respective pass books and CO Register.
  • After collection from 4 to 5 groups in a day, the credit officer hands over the money to the Cashier of the Branch (who plays the dual role as Cashier and Credit Officer and rotates in every three months) and after consolidating all the money collected by the Credit Officers in a day, the disbursement is made after 2 P.M at the Branch Office.
  • Cash collected in excess after disbursement for the day is deposited to the branch bank account on the same day or next day and the collection details are updated in the EMI (Equated Monthly Instalment) register maintained at the branch level and in the online software SMART. The Head Office takes responsibility for arranging to meet the shortfall, if any, for disbursement.
Sit with group every week
Collect repayments & record
Deposit collections at branch

Sarala Management Information Systems

Sarala currently operates with 3 systems:

1. SMART : Sarala has a user friendly and dedicated web-based softwarecalled SMART (developed by the Company with the help of Versicle Solutions) for loan processing and tracking microfinance operations.. It has been installed at all the branches and head office. All the branches have internet connectivity. All transactions at the branch level are entered in the software and can be instantly accessed from the Head Office.

The following operations are being done through the software:

  • Loan Application, Approval, Disbursement
  • Loan Repayment Scheduling
  • Collection Entry
  • Loan Status (Active, Closed, Cancelled, Waive Off) Maintenance

The software can generate various consolidated reports including portfolio at risk (PAR), operational progress and daily demand and collection.

2. Erecon : In addition to loan MIS, branch also use reporting software called Erecon which updates on a daily basis.In this system daily general ledger totals are entered as a day end process at branch level.

3. Tally : It’s an accounting software used at the head office, where data from Erecon is transferred to configure accounting reports. All the financial reports are generated from Tally like Balance sheet, profit & Loss A/c.

Branches are connected to Head Office servers through the Internet via cellular network.

While the system may be adequate in the short run with periodic fixes to both hardware and software, Sarala plans to upgrade and implement an integrated software system that would provide:

  • Cost-efficiency - Perhaps Cloud deployment/ SaaS model, low cost of ownership, high STP levels
  • Innovation - Easy product configuration and launch, powerful customer analytics
  • Multichannel - Efficient multichannel distribution of banking services and products
  • Flexibility - - Supports various group types, individual rates, standard payment channels
  • Scalability - Preserves transaction and query performance when growth is fast
  • Operational resilience - Nonstop 24/7 business, scalable data centers with SLAs and controls
  • Business security - Biometrics, customer mnemonics