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.