Indian Journal of Finance

Open Access Open Access  Restricted Access Subscription Access

A Study of ICT Adoption and its Impact on Selected MFIs of Gujarat


Affiliations
1 Institute of Management, Nirma University, S.G. Highway, Ahmedabad - 382 481, Gujarat, India

   Subscribe/Renew Journal


The microfinance sector is considered as an important vehicle for financial inclusion in developing countries, including India. Despite significant efforts by various microfinance institutions (MFIs) and Government of India, microfinance penetration has grown little over 50% of the Indian population. Information and communication technology (ICT) has changed the scope and functioning of the microfinance industry and can play a catalytic role in its pursuits of social objective and sustainability. This paper presented a brief overview of the microfinance sector in India. It focused on the role of ICT in strengthening MFIs' operations. The Government of India’s role in digital enablement was also discussed. Primary research was also conducted with the aim to study the adoption of ICT and measure its impact on the performance of selected MFIs of Gujarat State. It was found that ICT has been largely adopted by the MFIs and it was found to be beneficial for the core functions of the selected MFIs. However, there were some constraints in the adoption of ICT that need to be addressed.

Keywords

Financial Inclusion, ICT, Microfinance, MFI, JAM.
User
Subscription Login to verify subscription
Notifications
Font Size

  • Adebayo, I. P., Ademola, B. J., Olufemi, K., & Chidozie, E. N. (2017). Information and communication technology infusion model for microfinance bank in the Nigeria. International Journal of Finance and Banking Research, 3(4), 57 – 69.

  • Arora, M., & Singh, S. (2015). An evaluation of the non performing assets of public and private sector banks under the SHG bank linkage programme.Indian Journal of Finance, 9(6),41–50 . doi:10.17010/ijf/2015/v9i6/71161

  • Cecchini, S., & Scott, C. (2003). Can information and communications technology applications contribute to poverty reduction ? Lessons from rural India. Information Technology for Development, 10(2), 73 – 84.

  • Das, S., & Patnaik, B. C. M. (2015). Microfinance in Eastern India : The role played by regional rural banks. Indian Journal of Finance, 9(11), 45 – 59. doi:10.17010/ijf/2015/v9i11/81133

  • Dewan, S., & Kraemer, K. L. (2000). Information technology and productivity: Evidence from country-level data. Management Science, 46(4), 548 – 562.

  • Dewan, S., & Riggins, F. J. (2005). The digital divide : Current and future research directions. Journal of the Association for Information Systems, 6(12), 298 – 337.

  • Hwang, B. – H., & Tellez – Merchan, C. (2016). The proliferation of digital credit deployments. Washington D.C. : CGAP.

  • Ivatury, G. (2006). Using technology to build inclusive financial systems. Focus Note, No. 32. Retrieved from https://www.cgap.org/sites/default/files/CGAP-Focus-Note-Using-Technology-to-Build-InclusiveFinancial-Systems-Jan-2006.pdf

  • Kauffman, R. J., & Riggins, F. J. (2012). Information and communication technology and the sustainability of microfinance. Electronic Commerce Research and Applications, 11(5), 450 – 468.

  • Kavita & Suman. (2019). Determinants of financial inclusion in India : Aliterature review. Indian Journal of Finance, 13(11), 53 – 61. doi:10.17010/ijf/2019/v13i11/148417

  • Littlefield, E., Morduch, J., & Hashemi, S. (2003). Is microfinance an effective strategy to reach the millennium development goals? Focus Note, No.24. Retrieved from https://www.cgap.org/sites/default/files/CGAP-Focus-Note-Is-Microfinance-an-Effective-Strategyto-Reach-the-Millennium-Development-Goals-Jan-2003.pdf

  • Louis, P., Seret, A., & Baesens, B. (2013). Financial efficiency and social impact of microfinance institutions using self-organizing maps. World Development, 46, 197 – 210.

  • Microfinance Institutions Network (MFIN). (2016). Micrometer report. Gurugram, Haryana : MFIN.

  • Mishra, B. L., & Chowbwy, M. (2015). Impact assessment of technology adoption in microfinance in India. Centre for Microfinance Research, Bankers Institute of Rural Development, Chandragupt Institute of Management, Patna. Retrieved from http://birdlucknow.in/wp-content/uploads/2015/10/Tecnologyfull-report.pdf

  • Morduch, J., & Rutherford, S. (2005). Microfinance : Analytical issues for India. In, P. Basu (ed.), India’s financial sector: Issues, challenges and policy options. Oxford, U.K. Oxford University Press.

  • Nair, T., & Tankha, A. (2013). Microfinance India : State of the sector report 2013. India : SAGE Publications India.

  • Nourse, T. H. (2001). The missing parts of microfinance: Services for consumption and insurance. SAIS Review, 21(1), 61 – 69.

  • Parikh, T. S. (2006, May). Rural microfinance service delivery: Gaps, inefficiencies and emerging solutions. In, Information and Communication Technologies and Development, 2006. ICTD'06. International Conference on Information Communications and Technologies and Development (pp. 223 – 232). IEEE.

  • Patel, R., Patel, M., & Patel, N. (2018a.). Impact of microfinance on women empowerment: A study of rural Gujarat. Indian Journal of Finance, 12(8), 22 – 35. doi:10.17010/ijf/2018/v12i8/130742

  • Patel, R., Patel, M., & Patel, N. (2018b.). Impact of microfinance on poor women : Lessons from North Gujarat. Prabandhan: Indian Journal of Management,11(2),14–29 . D O I : 10.17010/pijom/2018/v11i2/121393

  • Paytm. (2018, July 5). AshaKiran partners with Grameen Foundation to enable rural women & youth with selfemployment opportunities (Paytm blog post). Retrieved from https://blog.paytm.com/paytmashakiran-partners-with-grameen-foundation-to-enable-rural-women-youth-with-self-employment16654ce1a351

  • Rangan, V. K., Quelch, J. A., Herrero, G., & Barton, B. (eds.). (2007). Business solutions for the global poor : Creating social and economic value.John Wiley & Sons.

  • Reddy, Y. V. (1999). Future of rural banking. Prof. G. Ram Reddy Third Endowment Lecture, Hyderabad, India, December 4, 1999. Retrieved from https://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=39 Reserve Bank of India. (2005). Report on rural credit and micro finance. Retrieved from http://www.cab.org.in/FILCPortal/Lists/Policy%20Initiatives/Attachments/2/khancommitee.pdf

  • Riggins, F., & Weber, D. (2016). Exploring the impact of information and communication technology (ICT) on intermediation market structure in the microfinance industry. The African Journal of Information Systems, 8(3), 1 – 19.

  • Rise of cashless economy. NBFC - MFIs go high on e-payments. (2017, August 29). The Banking & Finance Post. Retrieved from https://bfsi.eletsonline.com/rise-of-cashless-economy-nbfc-mfis-go-high-on-epayments/

  • Ruthven, O. (2002). Money mosaics: Financial choice and strategy in a West Delhi squatter settlement. Journal of International Development, 14(2), 249 – 271.

  • Serrano - Cinca, C., & Gutiérrez-Nieto, B. (2014). Microfinance, the long tail and mission drift. International Business Review, 23(1), 181 – 194.

  • Silva, S. (2002). Quantum leap : Microcredit boosted by technology. Microenterprise Americas Magazine, December 26, 33 – 35.

  • Singh, V., & Padhi, P. (2015). Information and communication technology in microfinance sector : Case study of three Indian MFIs.IIM Kozhikode Society & Management Review, 4(2), 106 – 123.

  • Sravani, M. (2013). Role of technology in microfinance sector in India. International Journal of Social Science & Interdisciplinary Research, 2 (9), 107 – 111.

  • Total deposits in Jan Dhan accounts set to cross Rs 90,000 crore. (2019, February 10). Business Today. Retrieved from https://www.businesstoday.in/current/economy-politics/total-deposits-in-jan-dhan-accounts-set-tocross-rs-90000-crore/story/318407.html

  • Transunion CIBIL Limited. (n.d.).CIBIL micro finance report. Retrieved from https://www.transunioncibil.com/product/cibil-microfinance-report

  • Warschauer, M. (2004). Technology and social inclusion: Rethinking the digital divide. London, United Kingdom : MITPress.

  • Wenner, M. D. (1995). Group credit : Ameans to improve information transfer and loan repayment performance. The Journal of Development Studies, 32(2), 263 – 281.

  • Woller, G. (2002). From market failure to marketing failure: Market orientation as the key to deep outreach in microfinance. Journal of International Development, 14(3), 305 – 324.


Abstract Views: 188

PDF Views: 0




  • A Study of ICT Adoption and its Impact on Selected MFIs of Gujarat

Abstract Views: 188  |  PDF Views: 0

Authors

Nityesh Bhatt
Institute of Management, Nirma University, S.G. Highway, Ahmedabad - 382 481, Gujarat, India
Ritesh Patel
Institute of Management, Nirma University, S.G. Highway, Ahmedabad - 382 481, Gujarat, India
Amandeep Kaur
Institute of Management, Nirma University, S.G. Highway, Ahmedabad - 382 481, Gujarat, India

Abstract


The microfinance sector is considered as an important vehicle for financial inclusion in developing countries, including India. Despite significant efforts by various microfinance institutions (MFIs) and Government of India, microfinance penetration has grown little over 50% of the Indian population. Information and communication technology (ICT) has changed the scope and functioning of the microfinance industry and can play a catalytic role in its pursuits of social objective and sustainability. This paper presented a brief overview of the microfinance sector in India. It focused on the role of ICT in strengthening MFIs' operations. The Government of India’s role in digital enablement was also discussed. Primary research was also conducted with the aim to study the adoption of ICT and measure its impact on the performance of selected MFIs of Gujarat State. It was found that ICT has been largely adopted by the MFIs and it was found to be beneficial for the core functions of the selected MFIs. However, there were some constraints in the adoption of ICT that need to be addressed.

Keywords


Financial Inclusion, ICT, Microfinance, MFI, JAM.

References





DOI: https://doi.org/10.17010/ijf%2F2020%2Fv14i2%2F150553