RD FD – A TECHNOLOGICAL BOON TO MICROFINANCE

MICROFINANCE, if described in simple words is the offering of microloans to those sections of our society who are looked down upon by the so called  higher classes . This concept  came into existence in the late 1970’s . It was mainly built with the motto of curbing out poverty from a nation. Microfinance mainly captured the market of developing countries like INDIA .  Initially , banks were not supposed to provide microloans  because of the fact that the people applying for loans used to have no or very little assets . But now-a-days , commercial banks like the gramin banks have come up in rural areas to provide the  under-priviledged classes of the society indirectly proceeding towards rural development.

Now came into existence the software built to fulfill the tasks of these institutions or organizations . RD FD  is one such software instituted to perform different tasks involved in managing a microfinance organization. RD  stands for recurring deposit and FD stands for fixed deposit . The various features of this software which makes it a technological boon for a microfinance organization are as follows:

• This software enables options for  members’ registration and agents’ registration online.
• The software is responsible for any kind of accounts transactions such as account opening , renewal of an account , closure of any account etc.
• If the divisional manager or a branch manager wants to block a member or an agent , he can also do that with the help of RD FD software.
• Pre - maturity closing of an account.
• It acts as an instalment master.
• It creates a daily collection report and saves it the data in the data storage.
• If any account gets matured that maturity report is also placed in the software.
• Due renewal report is also generated through this software.
• It calculates commission of each agent and generates commission report.
• RD FD software maintains member and agent login details.
• Which customer is enrolled under which agent – this information is also generated and stored through this software.
• Cheque printing , bond printing , web based manual printing are fulfilled with the help of the above mentioned software.
• SMS and e-mail integration are important features of this.
• Alerts and reminders through smss and e-mails are an added advantage.
• It controls branch management of every microfinance business .

 

• If any of the loaned person fails to give the loaned amount on time  , this software automatically generates penalty statement in the name of the customer.
• The all in all account reports are retrieved from the data storage by this software without any internal errors and with efficiency.
• As every coin has it two sides – the bad side and the good side . Same is the case with RD FD Software . Its negative point is that for a small microfinance firm it is very difficult to buy this microfinance software because it is very costly.

IMPORTANCE OF MICROFINANCE SOFTWARE IN THE BANKING SECTOR

Microfinance is basically understood to ensure the financial security of small entrepreneurs and small businesses which can not reach up to the level of taking credit from large institutions like banks because of high rate of transaction charges and unable to fulfill their clauses. The main target of microfinancial institutions is to eradicate poverty.

Initially, banks didn’t used to provide microfinances due to the reason that micro-entrepreneurs lack capital  and at times the small or no assets of  small-scale businesses. But now-a-days we see that commercial banks have grown up for this purpose. Like gramin (rural areas) banks in rural areas provide loans to farmers and cultivators for buying new machineries, fertilizers, etc. so that they can cultivate their land and earn their livelihood in a better way.

For these banks to operate in a better way, microfinance software is the only option . Microfinance Software is specially designed to serve the purpose of  microfinance. In banks providing microfinance to small scale industries microfinance software plays a vital role. The following are the various ways in which a microfinance software assists a bank, giving microfinance:

•  The software helps banks to store data about members registration
• Moreover,it gives the details about Branch management which includes division of different branches of a bank and allocation of their resources.
• Third comes the product management. There comes various schemes or plans for various customers. Microfinance Software determines the terms and conditions of each scheme or plan. Under this we find service tax calculation according to the loan amount,grading loans, survey field creation,assessment of registration fee.
• Microfinance software helps the users of banks to change their passwords whenever they want, helps them with all the valuable information they want regarding the sanctioned loan or its customers.
• Loan processing, an important function of microfinancial software , enables a bank to decide whether a customer applying for the loan is capable  of paying it back or not.
• Loan Disbursement is the terminology that describes the process of automatic generation of monthly/ quarterly  instalment dates as soon as the loan is being sanctioned by the bank to the customer.
• One more task of the software which makes it inevitable for the commercial banks to do without it is the allocation of capital or funds between different branches and the head office.
• After the loan disbursement comes the time for loan recovery from the customers. Here, it shows the date-wise collection sheet of the instalments, how many times the customers fail to pay the EMI on time,etc.

 Thus, from all the above-mentioned points its clearly visible that a microfinance software not only helps the banks to keep a track of its loaned customer but also helps banks in multiple other ways.