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Why digital financial inclusion is still an unfinished project : Vikas Bali, CEO, Intellecap speaks to Hindu Business Line
November 25, Mumbai – Recently Vikas Bali , CEO, Intellecap was interviewed by Hindu Business Line for an article titled ‘Why digital financial inclusion is still an unfinished project ‘ on how the biggest challenge in the adoption of digital payments has been the lack of awareness and trust.
Gajraj, a farmer from Madhya Pradesh, has started using digital payment platforms. Nearly 75 per cent of his financial transactions are done either through online bank transactions or via applications such as Google Pay and Paytm. The only time he uses cash is to pay the daily wage labourers working on his farm. “Most of these daily labourers working for me are illiterate or do not have access to smartphones, that is why they are much more comfortable receiving and spending money in cash,” he says.
Daya Ram, a farmer from a village near Bhopal, Madhya Pradesh, says he doesn’t use digital payment apps or other online services because “I don’t know how to read too well….and, therefore, I am hesitant”.
Ram and labourers working for Gajraj are two examples of the challenges being faced when it comes to the financial inclusion of India’s rural population.
Recently, global social-policy data analytics firm IDinsight, set out to explore the obstacles faced by migrant communities, particularly women workers in the apparel manufacturing industry, in using digital payment services for sending remittances. The women were trained in using the BHIM app to send remittances via mobile phones. However, there were obstacles to onboard these workers, including lack of access to smartphones, reliable internet, and phone-banking account linkages, among others.
Sonakshi Sharma a Senior Manager at IDinsight, says: “Our findings illustrate that the migrant workers we studied are particularly vulnerable to these issues. However, it would be hard for us to extrapolate this to other populations.”
A number of policy initiatives have been taken over the last six years to drive financial inclusion through digital platforms. Pawan Bakhshi, India Lead of Financial Services for the Poor, at Bill and Melinda Gates Foundation, says: “India’s journey towards the accelerated induction of members of poor and marginalised communities into formal financial inclusion began with Aadhaar…..With the coming of Aadhaar, E-KYC has driven down the cost by almost 99 per cent, therefore, technology and the digital age have reduced the costs of entry into the system.”
A recent report facilitated by USAID titled, ‘India Digital Financial Inclusion’, found that since 2014, key events have occurred in the Digital Financial Services ecosysem in India to further drive digital financial inclusion. This includes the PMJDY drive and onboarding over 330 million new bank account holders into the formal system; Jan Dhan, Aadhaar, and the induction of UPI and mobile wallets into the ecosystem have contributed in creating financial infrastructure. However, the report also emphasises that despite the establishment of infrastructure, payment services also face the ‘last-mile problem’, where certain obstacles unique to certain sections of the population still exist.
For instance, migrant worker Arun Sharma – who hails from Bihar and works in construction sites in the Delhi NCR region – lost his proof of identity years ago. Now, he is unable to use digital payment services or set up a bank accountto transfer remittances to his family. Instead, he prefers to take cash with him when he visits his family every two years or transfer money to his brother-in-law’s bank account using an over-the-counter agent. “Someone told me I need the sarpanch’s signature to get my Aadhaar made again, and also that since I am not from here, I can’t make it here in Delhi..I am not too sure, I haven’t looked into it too deeply,” says Sharma.
IDinsight provides training for organisations working with migrant workers to support the members of these communities to onboard them onto digital payment systems. Kiran, a migrant worker, says: “My employers (Shahi Exports) helped me create my account a year ago when I joined; since then I have been doing most of my
digital transactions using Phonepe and send digital remittances using my phone as well.”
USAID also partnered with organisations such as Intellecap to conduct pilot activities in rural and urban settings. Intellecap implemented pilot activities in Maharashtra, Odisha, and Jharkhand, where the adoption of digital payment services across three value chains – dairy, food and beverages and poultry – was studied.
One of the biggest concerns cited by these entrepreneurs is access to cash. Vikas Bali, CEO of Intellecap, says: “The immediate feeling for the participants was that once they had money in their mobile phones, how can they convert this money back into cash? Establishing trust within these communities, making them believe that they can convert mobile money to cash whenever they want through the BC network or Kirana stores, is critical.”
For Daya Ram, the hesitancy to use digital payment services is not just related to his illiteracy; he is also afraid about the safety of his money on these applications. “I have not used these services ever before, I don’t know what I will do if I lose my money on these applications..Who will I go to?”
Security and trust
Industry leaders in this ecosystem also recognise security and trust to be a probem. Karthik Raghupathy, V-P, Strategy and Business Development, PhonePe, says the biggest challenge in the adoption of digital payments has been the lack of awareness and trust. First-time users often think that digital payments are complicated and are also worried about the safety of transactions. PhonePe has undertaken a massive user awareness exercise to highlight the safety of digital payments as well as the ease of using digital payments for everyday use cases. Vikas further adds: “While the digital ecosystem is progressively creating new alternatives and solutions to make these financial products more inclusive and easily adaptable for all sections of the population, a new challenge that can emerge is what will happen in a scenario when transactions fail – especially in case of new users. If transactions fail for a multitude of reasons, such as net connectivity, mistakes in using an app etc, we need to understand how that pushes back the progress that we have made so far. If people lose confidence in digital transactions because of such issues, it will be much harder for us to convince them to adopt these payment systems again.”
6 start-ups shaking up the circular fashion space at LFW 2020’s Circular Changemakers
Monday, November 9th – Intellecap Circular Apparel Innovation Factory in partnership with Circular Design Challenge an initiative of R|Elan, United Nations Environment Programme and Lakmé Fashion Week, presented the second edition of Circular Changemakers 2020, in a digital-first format, on Day 2 of Sustainable Fashion Day of LFW, where circular startups presented and showcased their ideas.
The coverage was basis a talk with the finalists of the second edition of Circular Changemakers by LFW 2020 about the concepts behind their unique start-ups and how they are planning to change the industry with their own perspective of Circular Fashion via this platform.
Six start-ups recently presented their ideas promoting circular fashion in the second edition of the Circular Changemakers which started in 2019.
Presented by Intellecap’s Circular Apparel Innovation Factory (CAIF) in partnership with Circular Design Challenge, an initiative of R|Elan, United Nations Environment Programme and Lakmé Fashion Week, the programme took place on Day 2 of Sustainable Fashion Day at LFW 2020. Infinichains, BigThinx, Phabio, Twirl Store, Desi Hangover and Paiwand Studio were chosen to present their business models to an esteemed panel after having gone through a rigorous online enterprise bootcamp to fine tune their business models, financial models and presentations.
The investor & strategic partner panel comprised industry experts namely, Disha Gandhi, Associate Director, Aavishkaar Capital, Marieke Lenders, Head – Reweave Program, Enviu, Vineet Gautam, CEO, Bestseller India and Pinar Ademoglu, Investment Director, Sagana Capital. The changemakers undertook a rigorous bootcamp by CAIF which focused on three modules, Capital Raising, Business & Financial Modelling and Investor Pitch Preparation, delivered by industry experts.
Darshana Gajare, Lead Sustainable Fashion at IMG Reliance, said, “This year, we have a very promising cohort of enterprises doing some incredible work across the value chain”: Our vision is to enable strategic partnerships, through the online bootcamp curated by CAIF, we could already see great synergies for these start-ups to work together,” while Vikas Bali, CEO, Intellecap, chimed in, “Circular Changemakers Program is a great example of a platform that can provide both investment support and facilitate strategic collaborations for innovators with circular solutions to help them scale.”
Each of these enterprises works at different segments of the value chain aiming to make fashion truly circular. A talk with the Circular Changemakers sheds light on their prospective business models, their utility in different avenues of the fashion space along with their aspirations of leveraging this platform to propagate their business in the industry.
Launched in 2018 as an upcycling textile studio by Ashita Singhal, Paiwand believes in adding value by repurposing waste garments. With willingness to help designers who lacked time and resources to repurpose waste materials, Ashita explored weaving with textile waste to produce upcycled yardages for apparel, which later led to her winning an International Business Grant of US $ 25,000 by Laureate International Universities Network, USA to support her social enterprise, Paiwand Studio.
“Following a B2B model, we collaborate with design houses and fashion brands and help them upcycle their textile waste through various handcrafted techniques like handloom weaving, patchwork, knitting, embroidery and felting,” says Ashita, continuing, “We then sell the fabric back to the fashion houses at a higher price so that they can create an exclusive upcycled sustainable product range for their respective clientele, opening up a revenue channel for brands collaborating with them.” In their B2C model, Paiwand designs upcycled range of products including apparel, home textiles and accessories retailed through multi-designer stores and online platforms.
Twirl store works to solve the endless issues of excess and unwanted clothing. Sujata Chatterjee, Founder of the start-up, avers, “At Twirl.store, customers are urged to send their unwanted clothes, and in return are rewarded with points which they can redeem to buy new things from our online portal www.twirl.store. All the unwanted clothes that Twirl receives are either donated or upcycled to form fabrics for new collection.”
Adding to this, the start-up employs rural women to upcycle the fabric, thus giving them a source of livelihood. Their offerings include bags, accessories, gift items etc. retailed through omnichannel portals. “We also hope that after being a Lakmé Fashion Week’s Circular Changemaker, more people will join the Twirl Circle and actively send unwanted clothing as well as embrace our handcrafted, upcycled products,” says Sujata.
BigThinx was Chandralika Hazarika and Shivang Desai’s idea to aid customers who face issues during online shopping due to incorrect sizing, leading to returns and further losses incurred by businesses. Chandralika says, “Realising the problem, we started working on our AI-based products in 2017,” while Shivang elucidates, “The business model is a Software as a Service (SaaS) B2B model working with products that include 3D body scanning to help one find the perfect size in any clothing from any fashion brand, and personalised digital avatars to try on any clothing virtually and see how it looks, fits and drapes before purchasing.”
Chandralika & Shivang, Founders, BigThinx
These products are API based and can easily integrate into any existing website or app, or even in-store via interactive displays. Consumers can carry out body scans or create avatars to instantly find their size and browse inventory of thousands of items with just a click of a button. Retailers benefit from an average 20 per cent increase in order values, 40 per cent decrease in product returns and up to 250 per cent greater conversion rates. “Our suite of products – mobile body scanning, digital twins, virtual showrooms, and virtual fashion shows – significantly contribute towards reducing emissions and apparel waste and saving freshwater,” says Chandralika.
Inspired by the craftsmanship of the artisan communities across small villages of India, Hitesh Kenjali along with Abha Agarwal and Omkar Pandharkame launched this start-up in 2017, to share each of their expertise globally. “Our business model is extremely simple, and glocal as we say – Handcrafted in India for the world,” expresses Hitesh, while Abha adds, “We attempt to tell the story of our shoemakers, based in a small village in Karnataka. We deliver conscious fashion for your feet.”
Hitesh Kenjali, Abha Agarwal and Omkar Pandharkame, Founders, Desi Hangover
The start-up upcycles leather in the production village, treated using natural ingredients like turmeric and the barks of the Sal tree, and later used to handcraft ‘Desis’. Their mission was to develop rural craft clusters through social innovation, ensuring secure and sustainable livelihood for artisans in India.
Omkar maintains, “Through LFW’s platform, we wish to send across a global uniform message to fellow brands, customers, and anyone else concerned – that fashion can be healthy, harmless, and yet beautiful.”
After working closely with Shreyaskar Choudhary from Pratibha Syntex about challenges in the textile industry around traceability and sustainability reporting to brands, Parth Patil, Ravi Agrawal and Jitesh Shetty launched the blockchain start-up InfiniChains®. “We provide a traceability dashboard to the brands that allows them to visualise the supply chain for sourced products, check claims associated with them and inspect the origin of the raw materials,” explains Parth, while Jitesh says, “We charge the brand an annual licensing fee for the use of our platform that is proportional with the volume of products they are tracking on our system.”
Parth Patil, Co-Founder, Infinichains
For the suppliers and vendors of the brands, there’s no cost to use the system and they get their own dashboards and login from where they can submit data for the supply chain stages they are responsible for and also get visibility into their upstream supply chain. Through LFW, the start-up wants to work with prospective partners to understand the challenges that stand in the way of rapid adoption of sustainability practices and engage brands by sharing their expertise and technology to become 100 per cent sustainable.
Sukanya Dikshit started Phabio with the zeal to curb the environmental impacts posed by single use plastics by working on a cutting-edge technology for low cost production of an exact replacement of plastic. This material is a biopolymer known as PHA (polyhydroxyalkanoates) and is made from microorganisms using waste organic byproducts from various food and beverage industries. It is 100 per cent naturally biodegradable under home and marine composting conditions. Their business model involves direct sales of bioplastic resins to product manufacturers and also, licensing of the technology to third parties interested in taking up production.
Founders of Phabio
“We want to help the world reimagine and redefine plastics with us. Not everything that is plastic needs to remain in the nature forever and the Circular Changemaker programme is a hopeful start,” Sukanya says.
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The Travel Report – 4500 KM and Back – A Travelogue by Vineet Rai, Founder and Chairman, Aavishkaar Group
Vineet Rai, Founder and Chairman, Aavishkaar Group recently undertook a road journey , travelling across states and traversing over 4500 Kms. The thoughts penned down are from this travelogue.
Some of you have repeatedly asked me to pen down my thoughts on the journey I took. Here is my note on what I did , What I saw and What did I make out of the travel.
I have been driving on India roads for long. I have a reasonable experience of driving around the globe including most of Europe and USA. Shri Atal Bihari Vajpayee brought in the idea of really high quality road infrastructure, the effort slowed down marginally in between but post 2014 the work on National Highways will make all Indians proud.
During my 4500 KM drive, I drove on multiple National and State highways and they are as good as anything I have seen in Germany, France and Holland or USA.
As we drove from Mumbai and stopped for breakfast, it was clear that roadside activities are pretty much back to normal and the roadside vendors sales was almost at the same level as it was Pre-Covid days. Now this is not uniform and one must see this response from the road side vendor with a pinch of salt but the fact is return to normal seems not abnormal anymore.
As we moved further and further away from Mumbai it seemed the fear of Covid 19 vanished. Almost 100 KM from Maharashtra -MP border the Visarjan ( The deity/ goddess is taken to a pond or river and she is let go to re-emerge next year) festivities were getting very public and in your face.
As I drove into MP, and it was the day after Dussehra ( festival of victory of Good over Evil), the festivities hit a crescendo and we were caught into massive visarjan traffic jams in Sagar ( erstwhile education power house ) and Damoh ( Small city in MP State) where we were jammed for hours as 30 -40 tractor trolleys carrying idols for visarjan along with 1000’s of devotees blocked our way.
We drove into Varanasi and Google map took us to the newly being laid Six lane highway from Varanasi to Gazipur & Gorakhpur. The highway was an amazing contributor to infrastructure development coming through in Purvanchal.
Those uninitiated with Eastern UP, Varanasi and east of UP is far behind in development even within UP ( Which is agrarian state). The incumbent government has unleashed some serious infrastructure development backed by some outstanding work done by local Member of Parliament Manoj Sinha who despite the good work lost the elections recently. Good work does not necessarily get your votes is clear.
What used to take two hours from Varanasi was achieved in 40 minutes and this is when the road was only 70% complete. I am excited to see the progress and change on the ground.
Reached my village and found that the only one wearing the mask was Mr. Covid. Rest of Village folks did not even remember corona except occasional mention from the hard lockdown and how it was difficult in the past. My take away from the ground is that while Covid 19 has not gone but its debilitating fear from the hinterland has completely gone. The economic activity is back to normal and there is no real fear amongst people.
I visited Chief Medical Officer of Gazipur. Aavishkaar Foundation had provided support to the CMO office with Mask, PPE Kits, and Medical Equipment’s. He was grateful and thankful. He also had suffered from Covid and was very careful with both mask and gloves in place. He did tell me that Gazipur district reports 10-15 case daily but things are under control. He do understand that people are not fearful and hence careless but suggests that this may be largely because of very low mortality rate and quick recovery in most cases except where co-morbidity is high. It seems the fear of the disease from the mind of people have receded.
Driving to Diara – Also known as Floating Sands of Ganges … My ancestral lands. I would be sharing a video that would show case some fun stuff I did during my visit including driving to the floating sand islands or Diara with River Ganges flowing on both sides. The rivulet on my side of approach had dried down so I could drive to the island. Pristine, beautiful and peaceful and it was amazing to be served bati-chokha ( the traditional food on your land by the loyal collogues who live and manage the lands). I had the urge to give some work out to my father’s old gun so few shots in the air were also fired for fun sake
I was supposed to drive to Samastipur but had to cancel that as Bihar Elections were on and that means a big black vehicle would be stopped and searched by police quiet regularly for Cash, Liquor or any other contraband. A 6 hour ride may become a 12 hour ride one way and So I dropped the idea. Instead drove to Prayagraj ( Erstwhile Allahabad) passed the Sangam, the holy place where the Ganga, Jamuna and Saraswati meet and drove via Kanpur to Noida . Road construction work made life difficult to drive from Prayagraj to Kanpur but beyond Kanpur it was an exceptional drive again.
My drive time from Mumbai to Gazipur was 22 hour nonstop despite the visarjan Jam in Sagar and Damoh. My drive from Noida to Mumbai was another 22 hours and we drove through Agra and made two stops as my father was with me. Overall 4500 KM were driven in driving time of around 52 hours which again reflect not just our driving stamina but the exceptional condition of Indian roads
My Conclusion – Covid 19 exist and would remain so but Hinterland in India has moved on. There are many factors but the most important one is the acceptance and adjustment to the fear of Covid. My other take away is that unlike cities where vertical construction and interdependence of social hierarchy with each other ( Rich and Maids) means you are interacting with far more people on a normal day than a person living in rural India does. Also the chances of you interacting with someone you do not know at all in Urban India is exceptionally high compared to Rural India and that explains lower transmission.
What was quite obvious is that social distancing is way of life in Rural India. The other observation is that most dense parts of rural India are sparse compared to least dense part of urban India and that explains why despite lack of masks the rural spread of Covid appears to be much less . One can always explain all what I said by saying there are no tests being done and hence we do not really know if any of what I am saying makes sense.
My prediction is that most of the non-Metro India would be back to normalcy as soon as train start and small trade picks up. Agriculture is doing well, Microfinance has stumbled as people earning capacity is hit, but my reading is that in three months’ time Microfinance would make a roaring comeback as people see business return.
Finally there is stress in Urban India on earnings but Rural India is not as stressed and is able to deal with the pandemic much better.