How Financial Services are Helping Women Entrepreneurs

Over the past several years, India has seen a favorable cultural change. Statistics show that the number of female entrepreneurs in the nation is significantly rising, with women owning about 10% of all Indian start-up unicorns.

As women-driven startups continue to grow, they are also laying the foundation for next generations of would-be female entrepreneurs. Financial institutions like ARTH are assisting women in achieving their business objectives by offering them multiple financial solutions including small business loans and insurance.

An increasing number of non-banking financial institutions (NBFCs) like ARTH now offer business loans without collateral, with low interest rates and flexible repayment plans.

Need for Women-Owned Small Business Financing

More women will be able to establish their own enterprises if they are assisted with customized loans for female entrepreneurs. It also aids in financial market diversification. The lack of funding that once prevented many women from achieving their dreams of starting their own businesses is no longer an issue.

Giving women access to small-business loans helps them realize their goals and motivates others to follow in their footsteps. By preserving the health and activity of financial institutions, it also benefits the economy.

In general, no one should give up on the idea of starting their own business due to a lack of resources. And that’s exactly the objective that these small-business loans for women seek to achieve. Many financial services for women’s microbusinesses provide a variety of these programmes, ensuring that the businesswomen have a large pool to choose from and obtain the best rates possible.

Specifications of Small Business Loans for Women

These loans’ main selling point is that they are only available to female entrepreneurs who are aiming to launch new businesses or grow current ones. These loans are made available to them at fair and alluring interest rates, with a quicker rate of acceptance, and are hassle-free. The target group also benefits from the small loans’ exclusivity as they are spared from having to contend with other business owners seeking larger loans.

The features of entrepreneurship in a business setting predominately made up of males are changing as more and more women attain economic independence and economic empowerment. Pro-women laws and a social paradigm shift are also boosting women’s businesses in India.

While obtaining a loan through a bank or an MSME fintech company like ARTH is a wise choice, many female business owners still rely on shady sources of funding. This is changing slowly and gradually, as more lenders now provide easier, speedier lending options without a collateral, when certain banks’ tight borrowing criteria may be deterrents, especially for first-time business owners with poor credit records. Here are several ways in which a business loan could help female business owners.

Economic Independence

Unlike equity investors, banks and non-bank lenders don’t care how a business owner runs her company. For women, this is the key advantage of a business loan.

Women can handle their enterprises independently of their friends’ and families’ help by securing an unsecured business loan. Also, they are saved from the hassle of providing a mortgage on their gold jewellery or other asset in order to get credit from local moneylenders.

Individualized Tenure

The vast majority of small micro finance companies provide specialized term business loans with amounts ranging from a few thousand rupees to many crores. Businesswomen can choose from a number of flexible repayment alternatives, allowing them to make EMI payments when it suits them and their company’s cash flow.

Internet Resources

A sizeable share of the Indian financial industry is under the hands of traditional lenders. But the loan application processing time with these lenders is lengthier. They also have stringent requirements for document processing and tight borrowing rules.

New age small finance companies offer digital finance fully accessible through internet, which is a quick and safe way to finance a business, especially for first-time female company owners with a pressing need for capital but no credit history or assets to use as security.

Develop a Credit Record

If female company owners just need a little amount of funding, taking out a business loan is a great way to improve their credit ratings. The profile of the business and its credit rating are both enhanced by higher commercial credibility through a loan and its repayment on time. In the future, this may make it easier for the female entrepreneur to borrow money for bigger sums and at lower interest rates.

Tax Advantages

There are also certain tax advantages associated with business borrowing. Tax deductions are available for the interest that borrowers pay on the principal sum. The reason for this is that since the money is utilized for business purposes, the interest that is paid to the lender each month as part of the payment is viewed as a cost. The principal that is returned, though, cannot be accounted for as a cost.

Conclusion

Due to encouragement from the government and regulatory bodies, some of the best small business lenders now provide financing to women business owners with specialized repayment terms and lower interest rates.

Obtaining financial independence is another benefit of a business loan for women, in addition to enabling them run a business that they are passionate about.

Women don’t have to give up their valuable gold jewellery if they need to offset any business shortfalls by taking out an unsecured loan.

Thus, it is for a large number of reasons that financial services companies in India like ARTH are becoming increasingly popular by providing business loans to micro, small, and medium-sized firms.

Women entrepreneurs who need loans to expand their businesses can apply for collateral-free loans at ARTH, even if they have no property or assets. A business loan from the firm, one of India’s top NBFCs, may be approved with a minimum amount of paperwork. Many MSMEs choose ARTH because of its rapid application procedures and affordable interest rates.

March 24, 2023April 7, 2023

Fintech’s Effect on Indian MSMEs

Manufacturing companies, particularly Micro, Small & Medium Businesses or micro MSME fintech companies, will lead the effort for India to achieve true self-sufficiency and make “Atmanirbhar Bharat” a reality. But first, we need to smooth out the wrinkles and clear the bottlenecks off their route.

Lack of easy access to finance and liquidity is a startling constraint that messes up the supply chain. Prior to production, MSMEs spend in labour and raw materials, and as a result, they must provide their customers 30 to 60 days of credit. If consumers don’t make their payments on time, this might delay the execution of future orders.

A study claims that “MSMEs in India constitute for 99 percent of all firms, encompassing 63 million MSMEs across sectors and geographic regions.” The article went on to say that a survey by Ernst & Young of 1000 MSME entrepreneurs revealed that “70% of them were negatively affected during Covid-19 because of decreased orders, loss in business, raw material availability and liquidity issues,” essentially explaining why it is even more important for this sector to have accessible and reliable sources of credit and financing.

Consequently, the most urgent task is democratizing trade receivable reduction in the Indian B2B ecosystem and producing sustainable liquidity and value throughout the supply chain.

The Present Need

The main issue is how to develop new financial products for MSMEs and other participants in the production/supply chain based on various data points and how to broaden the range of financial products available to them. The majority of financing by banks and NBFCs is predicated on collateral, and it is here where MSMEs struggle and fall behind. How can we continue to innovate and promote MSMEs’ access to credit? Is it possible to grant loans to MSMEs based on indicators like current assets?

In the recent years, platforms for the Trade Receivables Discounting System (TReDS) have expanded dramatically. Their expansion and influence, however, have been constrained by a number of problems that they deal with. In the recent years, platforms for the Trade Receivables Discounting System (TReDS) have expanded dramatically. Their expansion and influence, however, have been constrained by a number of problems that they deal with. Issues involve not being a vendor-first platform, limitations on the kinds of anchors that may be onboarded, a lack of substantial incentives for anchors to utilize the platform, and a restriction on the types of financing options to banks alone.

The development of successful transaction finance solutions for their habitats by several new-age enterprises working with new-age lenders and financial services companies in India like ARTH has also gained traction, ensuring cash availability for respective stakeholders.

There is a need for a new financial platform to democratize transaction-based finance for all parties involved.

Model Being Suggested

In that vein, the new platform must function on a few key focuses: prioritizing MSMEs, expanding anchor coverage, obtaining funding from institutions and individuals, utilizing embedded finance using transactional data and recourse from anchors, and exploiting transaction data using GST e-invoicing.

Unlike the majority of the present platforms, the new platform should first feature transactions started by suppliers and largely driven to meet their financial needs. Apart from huge firms, it is crucial to make sure that additional sectors of the economy and different business sizes are included by the programme. The democratization of this product and, consequently, the total value chain will be impacted if the eligibility requirements for corporates are loosened to accommodate mid-sized corporates and rapid growth start-ups that may be losing money but have solid balance sheets.

The platform also has to accept funding from all lending institutions (banks and NBFCs), other investment firms (mutual funds, insurance companies, pension funds, small micro finance companies etc.), corporate bonds, including those issued by the anchor corporation itself, and retail investors. Lowering the hurdle for corporations and increasing liquidity by bringing on more financiers will provide suppliers access to greater money.

Moreover, anchors have the option to opt in and offer specific transaction-based information about their suppliers, their own financial information, and a strong remedy for making payments on time. Access to transaction data practically in real time may also be made possible via connections with the government’s e-invoicing portal.

To provide a seamless onboarding process for vendors, the platform should make use of the Account Aggregator architecture.

The Fine Print

The anchor will have first dibs on utilizing their corporate treasury to finance the deal under the proposed plan. This is done in an effort to entice the anchor to take part in the transaction. We think a big part of the reason for other platforms’ modest growth has been the anchor corporate’s lack of incentive. Nevertheless, this scenario is constrained by the cash provided by the anchor/treasury buyer’s team and can include a significant amount of lending partners.

When the anchor/buyer is unable to take part, the participating lenders can fund the invoices by placing a bid on it, allowing the vendor to pick the best offer and be paid for the transaction in full transparency. With the new platform’s features, the supply chain will see exponential value creation since suppliers and buyers will start using it more frequently.

Final Words

Using technology to enhance the provision of financial services via micro enterprise financing was once fintech’s main goal. MSME Fintechs are now beginning to alter how individuals and companies interact with money, though. What fintech first provided and what it’s set to deliver in the following 10 years will drastically differ from one another. The latent potential of MSMEs is being recognised by the fintech sector, and it is looking into new possibilities to create solutions that might transform India’s small business sector.

March 13, 2023April 7, 2023

Mobile banking Made Easy

Mobile banking is a term that is usually referred to the use of mobile devices in order to access and manage your banking accounts and conduct various financial transactions. These days there are a number of mobile applications that offer a secure and convenient way to manage your finances at the click of a button and without the need to visit a bank branch. With the mobile banking app, you can access your banking accounts, check balances, transfer money, and pay bills all from the comfort of your house and without the added fuss of long waiting queues.

Mobile banking is a service that provides customers with the advantage of accessing their accounts and performing various financial activities. To access your account, you must first download the bank’s mobile application from an authorized app store and create a user profile. Once all the above steps are completed you can take advantage of a range of banking services and features on your smartphone.

Advantages of mobile banking:

A mobile application allows the customer to conduct a whole range of banking operations and transactions.
You would only need two primary things: an internet connection and a mobile device.
You become a free agent and can conduct banking transactions at any time and place.
Through messages you are regularly updated about the activities being carried out in your account so that any irregularities that you find can be immediately reported.
Mobile banking can be accessed on a 24-hour basis and financial transactions can take place anytime.
Mobile banking is highly effective in lowering the cost arising from transactions.
Mobile banking offers clarity and transparency regarding financial transactions.

Benefits of mobile banking:

There is a huge number of benefits that you can have with the service of mobile banking. Let us discuss a limited number of them:

Mobile banking applications allow you to access and operate your banking accounts and conduct financial operations sitting anywhere in this wide world and at any time of the day.
We forget the transactions and how we spend money but our phones do not. With these mobile applications, we can easily keep track of our daily expenses.
You can use this powerful app to transfer funds, make payments, add beneficiaries and track your expenses.
These apps also offer a wide range of services including the ability to book train or flight tickets, recharge phones, and pay utility bills.
They are made keeping you the user at the centre and further can be customized to meet your specific needs.
You can set up reminders to ensure that payments are made on time.

How to use a mobile application?

Let’s delve into the processes that have to be undertaken in order to effectively use the application:

First, go to the application store on your smartphone and search for the mobile banking app and then further download it.
Once you have installed the application, open it and log in using your account number and create a strong password to protect against digital theft or fraud.
Your mobile banking application is now ready to use for your online banking transactions.

Mobile banking services are a boon to our mankind but as with every good thing, there comes a problematic turn. One must be careful about the limitations posed by this service. The accessibility of mobile banking is highly dependent on the strength of the internet and the type of devices that one uses. Another thing to be careful about would be the internet scams that have become quite prevalent. Unsafe and careless ways of using the mobile banking system can easily lead to phishing scams.

Conclusion

It has significantly changed our lives. Banking has faced a prominent evolutionary path from traditional banking to neo-banking. New-age banks are without any physical location and are present entirely online. They provide money transfers, lending, digital payment solutions, and much more. Neo banks have taken business banking by storm because they make financial operations seamless and automated. Mobile banking can do it all. From retrieving account balances to electronic bill payments to checking the list of latest transactions.

March 13, 2023April 7, 2023

How UPI Autopay Works

In this 21st-century world, the sweeping revolution that has transpired has been in the field of technology. Its reach has penetrated into society’s various crevices, leading to better connectivity between individuals segregated by time and space. It has been estimated that during the unfolding of this century less than 7% of the population had access to the internet but present statistics show that more than half of the population is on the Net. This unprecedented growth of tech can be attributed to the burgeoning of the smartphone industry so much so that presently every discrete household possesses one at most. Smartphones have facilitated the swift electronic transfer of data across the globe, resulting in major changes in how we conduct our lives. It has changed the way we search for knowledge since earlier a research scholar or any person for that matter had to visit various libraries and look through innumerable books for illustrations on a topic.

Secondly, connectivity has become all-powerful with the opening up of social media applications for instance WhatsApp, Facebook, Instagram, and the like. But behold, the innovation is not limited to acquiring knowledge at a click or connecting with old friends while sipping coffee thousands of miles away but the innumerable digital services that have arrived with the enhancement of technology. The demand for digital services has grown by heaps and bounds, especially during the pandemic.

Digital services affect each part of our lives starting from the way we eat to the way we pay our bills. These services have made our life in this postmodern era way easier and more comfortable. Irrespective of our physical location, digital financial services are important for improving our economic position. A few examples of digital financial services are e-commerce purchases, in-shop transactions, lending, saving, and insurance. One such service that has made financial transactions feasible from the comfort of our homes is the usage of Unified Payments Interface (UPI) which is a part of digital financial services in India. With the innovation of UPI, a digital payment service, one can pay from any geographical location while shopping, traveling, or any other bill payments with the ease of a click.

UPI transactions are sought after as they provide wide access to banking services using facilities like the smartphone whose broad outreach has been discussed. Technically, UPI is a bill payment system that allows people to link their bank account with the smartphone app and start hassle-free online payment. It is a safe and secure application that has been developed by the National Corporation of India (NPCI) as they partnered with the Reserve Bank of India (RBI) and the Indian Banks Association. As a new user, the prerequisites that you need are a smartphone, an active bank account, and your mobile number which must be active and linked to the said bank account.

One needs to download the UPI application from either the google application store or the iOS App store and then link the bank and account number by clicking the option, ‘Add/Link/Manage Bank Account.’ After linking your bank account, the next step would be to generate the UPI-PIN. UPI has become a unique platform because of numerous reasons, a few of which include the immediate safe and secure transfer of money via any mobile device, negates the hassle of cash on delivery, and provides a seamless single-click payment. The foremost aim of the UPI application is to promote a cashless economy through digital transactions. With its advent, customers can relax and sit back and not be concerned about carrying any physical form of money.

UPI Autopay is a new service introduced under UPI 2.0 which would enable customers to seamlessly pay recurring payments like EMIs, Digital subscriptions, Insurance Premiums, Investments, and so on. UPI Autopay is a payment service which assists people in paying their recurring bill payments automatically on a predetermined date. This facility allows users to permit e-mandate for facilitating payments such as OTT Subscriptions, utility bills, EMIs, mutual funds, and insurance premiums. It will aid users in setting their in-app purchases on auto debit mode. This feature would benefit customers as timely fees would keep penalties at bay, secondly, subscribers can customize bill payment options (such as monthly or quarterly), and thirdly they have the option to revoke pause, or modify payments with a click. UPI automatic payment liberates the individual in making his /her own financial decisions. Moreover, this service also benefits companies with timely payments. The digitalization of payments such as financial investments, bill payments, and OTT platforms is rapidly increasing the demand for recurring-based payments in India. Now with this automatic pay facility, the company aims towards the enhancement of customers’ convenience so that people can enjoy seamless services without any disruption.

Women are not only the central caregivers but can play a significant role in our ever-growing economy. A woman can not only take charge of the children but the nation itself. She is doubly marginalized- financially bereft of any support and pushed into a society where patriarchy dictates the rules. The marginalized section of society has hardly any resources to meet its day-to-day needs. in 2017, as many as 190 million people over the age of 15 does not have a bank account. Arth Digital is an impact-led fintech company, that provides flexible and affordable financial services with a focus on extending collateral-free business credit to micro MSMEs across India because the main aim of our company is on making Micro Financial services accessible to the marginalized section of the population. We provide financial services and livelihood support to unbanked and underserved micro-entrepreneurs with a special focus on women-owned businesses from the remotest corners of the country.

March 13, 2023April 7, 2023

Digital Payment Services for micro-loans for small businesses

Gone are the days when the traditional method of cash payments was the sole modus operandi of the exchange of products and services in the economy. In this 21st century, digitization of money and payment services has brought a revolution in the way markets operate and it has become imperative to understand how this digitization works regarding making payments. In recent years, after the proclamation of demonetization, India has taken a revolutionary turn towards “becoming a cashless economy” which has shoved the country onto the road of becoming a developed nation. The initiative for the Digital India movement has led to a gigantic shift in the way individuals deal with money, purchases, and payments. Digital payments involve transactions that occur via a digital or online platform where the concept of physical cash diminishes. In other words, both parties that are involved, the giver and the receiver, operate on electronic mediums to exchange funds. The government of India has undertaken numerous measures to promote and encourage digital systems, for instance, their aim is to build an economy that is “Faceless, Paperless and Cashless”.

Benefits of Digital Payment Services

Since bank accounts are linked with the respective smartphones of an individual, one can directly process payments from their banks. Digital payment services permit merchants to sell their products or services to customers belonging to different nations.
It provides the user with the ease of carrying out transactions on a daily basis by providing them with an option that is safe, secure, and convenient. Therefore, customers feel unrestrained from carrying physical cash.
Added is the benefit of paying from any place without having to be physically present for the process of payment to the merchant. Digital payments have an option of Digital wallets, which assists the user in paying in a seamless and convenient way.
Going Digital is advantageous to the customers as they can avail of discounts provided to them on various purchases. For instance, the government declared a waiver of service tax on credit and debit card transactions up to 2,000. Such schemes by the government aid people in becoming more digital-friendly.
As the traditional system of cash transactions had a few disadvantages, one of them is the fear of losing cash or receiving fake notes. The system of digital payments has erased them from the user’s mind.

Micro-loans for small businesses

Small-scale businesses which are fueling the growth of our country have to be financed by the micro-credit system. Now, what is a micro-credit/micro-loan system in India? Micro credit is the finance that includes providing an individual with a low-margin loan in order to help them become entrepreneurs and establish small-scale businesses. The individuals who can benefit from the ambit of micro-credit belong to low-income families. This loan scheme is based on the idea that skilled persons, living in developing nations who have been cast aside and not included in their respective banking systems, can be given a chance. They might be able to seize the opportunity of obtaining access to the mainstream economy.

Micro enterprise financing has played a pivotal role in the conduct and expansion of financial services to the underserved and unbanked sector of the population. According to the World Bank, a third of the world’s poor exists in India surviving on meager resources. It has contributed to a significant eradication of poverty and has enhanced the standard of living of people with limited resources. A large portion of the country’s population still lacks access to financial and banking services. Micro-credit institutions supplement the banking sector by not only giving loans but providing other financial services such as savings.

How digital payments help the micro enterprises

Approximately, ninety percent of formal and informal enterprises are small and medium scaled businesses. They include shops and small stores providing services to populations in the remotest corners of the nation and they drive the growth of employment creation, service delivery, income generation, and poverty eradication.

The government is trying to initiate ways to increase digital penetration by planning to offer retailers subsidies to digitalize their operations and assist small businesses to go digital. Some of the small-scale businesses are hesitant to adopt card-swiping machines because they are afraid that the banks would charge them some percent of the profit.

Roles of digital payments in helping small businesses

They can benefit as more customers are preferring online payment options rather than the traditional method of cash transfer.
Online presence of small businesses is becoming critical for increasing their customer and revenue base. Client experience is an essential part of businesses and hence digital businesses are trying to focus on digitalizing their payment systems.
Many small businesses are local in nature but thanks to the boom of the internet they are able to expand their reach on a global platform.
Accepting digital payments can effectively reduce expenses like bank charges, and maintenance of physical payment devices and enhance the seamless checkout experience.

Final words

The digitization of small-scale businesses has improved their growth. The digital payment system has enhanced their growth by providing them with a global outreach. This has led to improving their standard of living and breaking the cycle of poverty. Micro credit financing has led to the enormous growth of small-scale businesses through a modest lending scheme covering individuals with low income and zero collateral. The digital payment gateway in micro credit financing has led to improved timely payments and spread the ambit of lending as more and more people with a digital connection can avail of its benefit.

March 3, 2023April 7, 2023

ARTH: A Micro MSME Fintech

ARTH is an impact-driven fintech startup that provides access to financial and livelihood -enhancing services to micro-businesses, especially women led businesses in India. The fintech collaborates to develop more inclusive and sustainable growth prospects for the underprivileged.

By building an environment that makes it possible for micro-customers to get flexible and affordable digital financial services, ARTH seeks to re-imagine how consumers find financial services. Services in the remotest parts of the country. To promote new, expanding businesses, particularly those run by women, it provides services as part of its financial inclusion programs.

Our Vision

Our vision is to become a provider of choice in financial services for the micro-entrepreneurs in India; recognized for impact through a technology-led approach. Our obligations extend beyond only providing financial assistance; we also take the responsibility to assist our customers with financial literacy programs to help them learn how to manage their finances.

Our Objectives

Micro-enterprise Financing
Livelihood Enhancing Service Support
Hyper-Local Economy Employment

Whom are we serving?

Rural Micro-Entrepreneurs: Our goal is to assist rural enterprise entrepreneurs with customized and fair-priced financial services. To reach and aid last-mile rural micro-entrepreneurs in India, we have flexi-microcredit &income-generating payment solutions.
Urban Micro-Entrepreneurs: We offer quick, simple, and reasonable loans for urban micro-business owners to increase sales as well as working capital loans for managing inventory and cash flow.

Our Services

ARTH provides access to credit, embedded insurance and other financial services in some of India’s rural and urban markets. ARTH gives individuals the tools they need to launch their own enterprises, generate employment, and have a sustainable livelihood.

Solutions for Flexible Working Capital

We offer customer-friendly solutions because we believe everyone should have access to short-term micro-credit without having to deal with complicated paperwork.

Micro Insurance Protection

In collaboration with like-minded insurance companies that are committed to helping the underserved, we provide insurance coverage to our customers and their homes.

Due to the fact that the majority of those who are poverty-stricken or have little resources do not make enough money to conduct business with traditional financial institutions, organizations like ARTH play an important role in providing access to micro credit and other financial services, thus driving financial inclusion.

Financial Inclusion

The process of providing banking and financial services to every member of society without any kind of prejudice is known as financial inclusion. Without taking into account a person’s income or savings, it essentially seeks to involve everyone in society by providing them with basic financial services. Financial inclusion is primarily concerned with giving trustworthy financial assistance to those in the economically disadvantaged parts of society without discrimination. It aims to offer financial solutions devoid of any indications of inequity. It is also dedicated to transparency while providing financial support without any additional fees or unexpected charges. Due to the fact that the majority of those who are poverty-stricken or have little resources do not make enough money to conduct business with traditional financial institutions, organizations like ARTH play an important role in providing access to micro credit and other financial services, thus driving financial inclusion.

Objectives for Financial Inclusion

Financial inclusion aims to assist people in obtaining affordable financial services and products, such as deposits, loans, insurance, payment services, and fund transfer services.
To meet the needs of the underprivileged, it seeks to build appropriate financial institutions. These organizations ought to follow precise rules and uphold the high standards already present in the financial sector.
Financial inclusion attempts to establish and maintain financial sustainability so that those who are less fortunate have a reliable source of the money they so much need.
The goal of financial inclusion is to make the financially deprived groups in society more aware of the advantages of financial services.
Financial inclusion aims to develop financial products that are suited for the society’s less fortunate members.
Financial inclusion aims to raise people’s level of financial literacy and awareness across the country.
The goal of financial inclusion is to provide digital financial solutions for the nation’s economically disadvantaged citizens.

The Importance of Financial Inclusion

Having access to financial services helps the most vulnerable members of society escape poverty and lessen social inequality.
Financial inclusion benefits not only people and families, but also entire communities, and it can stimulate economic growth.
Financial inclusion aims to empower and enable individuals and communities:
- Giving people the skills and resources they need to manage and save their money.
- Supplying people with the knowledge and abilities to make smart financial decisions.
Individuals can gain a variety of advantages from involvement in the financial system, such as:
- Having the ability to launch and expand a business that offers opportunities for people to improve their long-term prospects, such as through microfinance programs.
- The ability to support children’s education, allowing for the birth of a new era of well-informed and educated people.
- The capacity to deal with uncertainties that call for ad hoc payments and unanticipated expenses, or “financial shocks”.
Possibilities are enabled and communities as a whole are empowered by financial inclusion, which includes having access to an account, savings, and payment system (whatever that may be). It also encourages:
- Investment in the community creates jobs, and research has shown that having a job improves one’s status, income, and outlook on life. Together, these factors stimulate economies.
- Equality both among families and the community.

Final words

In addition to aiming to improve people’s lives, ARTH also aims to improve the local economy’s fundamental framework. Every time ARTH provides a loan, someone is allowed to expand their enterprise and provide greater opportunities for both themselves and others. It is capable of influencing a family’s or a community’s whole future for the better.

March 2, 2023April 7, 2023

Business Loan Terms | How to Pick the Right Financing Term

Naturally, the large range of term durations can be highly scary to micro-business owners, particularly first-time business loan borrowers. Before deciding on the best enterprise loan term for you, you should be capable of answering a few critical questions:

How much extra operating cash does your enterprise require?

What are you looking to buy (equipment, shop/plot, inventory, etc.)?

Though terms of the loan are critical, you cannot choose the ideal loan for micro-enterprises unless you have answered this question.

Before beginning the loan application process, it is critical to establish your ideal loan duration. This blog post will describe how business loan terms operate so that you can choose the best loan term for you.

Then, we’ll describe the circumstances under which various rates and terms are most appropriate. By the conclusion of this post, you ought to be able to choose a business finance loan term that you can confidently handle.

How Do Commercial Loan Terms Work?

The term of a micro business loan is the time between when the loan is closed (the Closing Date) and when it is cancelled or repaid.

When you receive a mortgage on your home, for example, the loan is typically for 30 years. This implies that your loan payments will be stretched out over the course of 30 years, making it a long-term personal loan. Business loan durations are seldom 30 years long, but the premise remains the same.

Keep in mind that the “loan payback time” or “borrowing period” of a business loan may also be mentioned. Loan terms relate to the duration of the repayment period.

What are Short-Term, Medium-Term, and Long-Term Business Loans?

If you’re a micro-enterprise owner looking for a micro business loan, you’ve certainly heard the terms short-term, medium-term, and long-term. What’s less apparent is exactly what that entails and how to choose a term that meets your enterprise’s financial requirements. If you don’t choose the correct term length, you risk jeopardizing your enterprise’s financial future.

As previously said, selecting a micro-enterprise loan begins with establishing how the cash will be used. However, you should also consider two other essential factors:

Potential interest expenses
Flow of funds

To take into account interest charges, you must first understand how different enterprise loan terms affect interest expenditures. After we’ve clearly explained this, we’ll go through how cash flow plays a role in this.

Short-Term Loans

As previously said, these loans are often returned within a year, rendering them excellent for firms who want a capital injection to help with an emergency need and anticipate repaying the funds soon. For instance, suppose you own a retail store and need to buy seasonal goods. It’s summer, and cash flow is a touch slow, but you believe your back-to-school and winter seasons will be robust. A short-term loan might help you expand your inventory for the busy times ahead. Another advantage of short-term loans is that they can help you develop credit and qualify for larger, longer-term loans in the future. You were accepted for a limited line of credit at first, which gradually rose as you paid it off and demonstrated you were a good risk, much as with your first personal credit card. Likewise, a short-term loan is a fantastic method to get to know a lender. Short-term loans have a higher approval rate since they are more likely to be repaid. Depending on your credentials, they may not need to be backed up by collateral.

Medium-Term Loans

Medium or intermediate-tenure loans often have a term of one to three years and are typically utilized for costs such as computer systems or other investments that will last only a few years, rather than long-term assets such as property. These things, such as equipment, machinery, or commercial vehicles, are referred to as capital expenditures and are not incurred daily. The loan amounts are often higher than for short-term loans, and the approval procedure is significantly more demanding. Medium-term loans are almost often backed by property and a secured loan.

Long-Term Loans

Long-term loans typically bloom in three to 10 years; however, longer terms can be arranged. These loans are always backed by collateral, which might be a company’s building, equipment, inventory, or a combination of the three. They are typically the most difficult to qualify for, and they may come up with terms for how the organization must conduct itself in the future. These are referred to as restrictive covenants. The most typical limitation is that the firm may not borrow money from another lender during the term of the loan, although you will almost certainly be expected to present continuing financial statements and other business information.

As a rule of thumb, experts advise connecting the term of the loan to the estimated life of the purpose for which it is intended. In other words, a significant trade printer in need of a new invention of printing may choose to finance the acquisition with a long-term loan. A considerable down payment on the loan, often 20% to 25% or more, is normally required. Keep in mind that business loans are sometimes arranged with balloon payments at the end, which means you pay back the interest and principal at an agreed-upon rate every month for the first few years, then refund the remainder in one massive payment at the end.

Choosing the Best Business Loan Term

Finding the best micro business loan term is a balancing act. If you select a term that is too lengthy, you will pay more in interest than you need to. However, if you choose a loan period that is too short, your payments may become unmanageable.

If you have difficulties repaying your business finance loan, you may jeopardize your enterprise’s credit score as well as your ability to qualify for future funding choices.

We recommend returning to the questions we began this post with to simplify the application and identify your best loan term:

How much extra operating cash does your enterprise require?

What is the money needed for (equipment, shop/plot, inventory, etc.)?

Answer these questions, then cut down your list of enterprise funding possibilities and compare the conditions they offer. Following that, determining your suitable loan term will be a lot easy.

March 2, 2023April 7, 2023

What is financial inclusion and how it helps?

What are digital payments?

Basic capital markets make it simple to meet day-to-day necessities, save for long-term goals, and manage a business. However, almost two billion individuals globally lack access to basic financial instruments. Financial inclusion plans try to alter that, and technology allows for a large-scale influence.

Below, we’ll go through what financial inclusion is, how it operates, and the many forms of financial inclusion.

What Is Financial Inclusion?

Financial inclusion is a movement that seeks to provide individuals and companies with inexpensive and efficient financial services in India. Services range from basic financial transactions such as bank accounts to credit and insurance.

Three critical features of modern financial inclusion:

Accessibility to digital financial systems for all
Transactions that are safe and secure, that allow consumers and businesses to operate confidently.
Everyone may participate in the economy at a reasonable cost (make and accept payments, get loans, save for future goals, help the community, and more)

What is the Process of Financial Inclusion?

Simply, financial inclusion operates by facilitating consumers’ access to essential financial services at a cheap and accessible cost. These persons are members of “financially excluded” groups. These people are most likely to reside in low-income areas or developing nations. Women make up more than half of them.

Understanding financial inclusion may be the simplest when looking at the challenges that financial inclusion solves.

Individuals who do not have a bank or transaction account frequently turn to “alternative financial services.” These services may charge more fees than regulated institutions and often do not provide the same level of consumer protection (deposit insurance and protection from fraud and errors, for example). Living without the need for a bank account necessitates time-consuming footwork to obtain cash and pay payments in person. Accounts also give a secure location to save for the future. With technology, users may bank, pay, and get reimbursed from anywhere at a minimal cost. Because these accounts are regarded as a “gateway” to certain other financial services, their significance is stressed.

Limited credit availability: Borrowing is simple if you have a good credit score. However, some people have poor or no credit, and certain countries do not utilize credit ratings. Borrowers who do not have easy access to loans must rely on informal lenders, who may demand exorbitant (or predatory) interest rates and fees.

The informal economy: Cash is king in many parts of the world, particularly in rural regions. Businesses are reluctant to accept card or electronic payments, and cash storage (rather than putting it in a bank account) is dangerous. Businesses have difficulty acquiring assets for growth and may have a restricted choice of trade partners — suppliers who take cash and consumers who pay in cash.

Financial Inclusion Types

Financial inclusion methods can help low-income individuals and new enterprises into the mainstream economy on favorable terms.

Technology plays an important role in everything from giving information to delivering items to individuals, particularly for communities that have historically been excluded from the financial system.

Other methods of financial inclusion emphasize the following areas:

Financial literacy: Educating individuals about financial matters, to some extent, helps them utilize higher-quality goods and make better judgments. Financial literacy assists people in understanding fundamental financial concepts (such as compound interest), avoiding errors, and developing a savings culture.
Quality finance: The quality finance sector is difficult to come by, particularly in rural locations. However, even with inadequate infrastructure, technology may assist in making services available. As long as a cellular connection (and maybe a battery backup) is available, mobile phones can assist consumers and enterprises in conducting business.
Mobile wallets: Technology is a key component of widespread financial inclusion. Mobile wallets are a viable alternative to currency, which is wasteful, dangerous to transport and keep, and hard to trace. A simple mobile wallet can store money and do tiny peer-to-peer transfers. However, more advanced systems allow for a wider range of bill payments and business-to-business payments.
Distrust: Individuals and companies must have faith in providers for financial inclusion to be effective. If valid consumer protection does not currently exist, it must be established and communicated to the public. Financial firms including financial services companies in India (banks, lenders, and insurance companies) must also be upfront about costs to avoid costly surprises for clients.
Affordability: Banks are renowned for charging high fees. A monthly fee or overdraft penalty can deplete an account and rise to even additional costs for people who do not have extra money to spare. Likewise, technology is the most likely answer, as new consumers may join the service at little or no variable costs to a mobile wallet service. Prepaid debit cards are yet another option, and some offer FDIC protection on monies in an account.
Eligibility: Credit is difficult to obtain unless you have a strong credit score, readily documented income, or collateral to secure a loan. As a result, a large portion of the world’s population is unable to borrow. However, many financial inclusion efforts aim to establish and expand credit reporting organizations. Furthermore, microlending gives small enterprises globally access to money at a low cost.
Insurance: When calamity comes, the financially excluded are rarely adequately insured. To address this, insurers are providing streamlined, user-friendly options. Again, technology is crucial to assisting insurers in providing low-income consumers on a wide scale.

Why is Financial Inclusion Important?

People might face catastrophic financial troubles if they do not have access to fundamental banking services. They may be unable to receive some payments, must pay higher rates for essential utilities such as energy, and are unable to make purchases owing to a lack of simple payment methods.

Contemplate how much modern commerce is handled online, and then consider how somebody without a bank account or credit card might go about purchasing something online.

Obtaining financial services is vital for both individuals and businesses since it allows them to store money, manage payments and cash flows, accumulate savings, access loans, and make investments. Such accessibility is also necessary for obtaining assets and establishing financial stability.

Greater financial inclusion for small companies is crucial because it may assist to create more employment and raise the standard of living in a community.

Fintech’s Ascension

Financial technology, sometimes known as fintech, has played a significant role in promoting financial inclusion. Not only has it dramatically expanded access to financial services, but it has also significantly decreased the expense of many financial services in India.

Companies that provide online peer-to-peer lending have extended access to loans and credit for persons with less-than-perfect credit. Robo-advisers, which charge fees far lower than personal financial advisors, are now able to give competent investment advice to a greater number of people at a lower, more affordable cost.

Key Takeaways

Financial inclusion is a movement aimed at ensuring that individuals and companies have access to inexpensive and effective financial services.

One major goal is obtaining consumers and companies a bank account, often known as a transaction account since it serves as a doorway to other services.

Financial inclusion is a top priority for organizations like the World Bank and FINCA.

March 2, 2023April 7, 2023

Bharat Bill Payment System in Brief

Technology has made everything available at an individual’s fingertips. There are so many innovations in the contemporary era that have made life so much easier and more comfortable. One such innovation is the usage of online payments with the help of smartphones, credit and debit cards, and various other sources. We all use the Unified Payments Interface (UPI) for daily payments while shopping, traveling, recharging, bill payments, etc. Just one click and we can pay all our bills by staying at home.

In addition to this, the Government of India has launched an integrated bill payment system in India, the Bharat Bill Payment System (BBPS), which offers interoperable and accessible bill payment service to customers across the cities and villages of India with certainty, reliability, and safety of transactions through a network of agents of the registered member as Agent Institutions (AI), enabling multiple payment modes and providing instant confirmation of payment. National Payments Corporation of India (NPCI) functions as the authorized Bharat Bill Payment Central Unit (BBPCU) that is responsible for setting up business standards as well as the rules and procedures for technical and business requirements for all the participants. NPCI as the BBPCU is also responsible for clearing and settlement activities related to transactions routed through BBPS. The existing bill aggregators and banks work together as Operating Units to provide this interoperable bill payment system irrespective of which unit has onboarded a particular biller.

BBPS is a one-stop solution for all your bill payments. You can pay bills for electricity, gas, water, telecom, insurance, education, loan repayments, municipal taxes, Fastag recharge, and various others anytime and anywhere. You can pay your bills online or through physical payment. For online payment log in at any bank or non-bank application such as net banking, app, or wallet with the Bharat Bill Pay icon or B icon under Bill Pay or Bill Payments tab. Then, the consumer has to select the category and the biller for which the bill has to be paid, and on the basis of input of key parameters, the consumer will get his/her bill details. Verify and recheck the amount to be paid and pay through net banking, wallet, UPI, card, etc. whichever option is accepted at the particular site or app.

The consumer gets an instant confirmation on the mobile screen or web with a Be-assured logo. For physical payments connect with any of the nearest Bharat Bill Pay agent outlets, bank branches, or any Bharat Bill Pay service point. Mention the name and the type of the biller. Then verify and recheck the amount to be paid and you can pay through cash, card, etc. whichever is accepted at the particular agent outlet, branch, Aadhar Payments, etc. The agent outlet or branch then initiates the final payment for the bill. The consumer gets an instant confirmation of the bill paid through a physical bill receipt with a Be-assured mark. Physical payment is more popular in rural areas due to the unavailability of smartphones in every household. There are various modes of payment in Bharat Bill Pay like Internet Banking, UPI, Credit Cards, Debit Cards, Prepaid Cards, Cash, IMPS, NEFT, AEPS, USSD, Wallet, Account Transfer, Bharat QR, etc.

These payment modes can be used through a number of payment channels such as Bank Branch, ATMs, KIOSK, Business Correspondent, Agents, Mobile Banking (Pre-Login), Mobile Banking (Post Login), Internet Banking (Pre-Login) and Internet Banking (Post Login). The consumer can make payments using any of these modes and channels. The BBPS is a reliable service with a high degree of trust and security as well as transparent pricing with instant payment confirmation. It has a unified grievance handling system in case there is any issue related to any of the payments that are made. Two kinds of complaints can be raised for BBPS transactions — Transaction based complaints and Service based complaints. The consumers can register complaints at the BBPS portal or they can contact the 24×7 phone numbers from any landline or mobile number. The toll-free numbers for the same are 1800–200–1947 and 1800–22–1070. These BBPS services are available every day and all days of the week throughout the year, including all public holidays.

Advantages of BBPS for Rural Community

Digitally-savvy urban consumers have the easiest of payment experiences but only a small percentage of bill payments happen digitally. On the other hand, bill payments in rural areas remain a very tedious chore. We can only imagine how a villager has to wait for hours for a bus or any other mode of transport and spend most of his time in travelling to visit the nearest taluka office to pay an electricity bill of only Rupees 50. He/She has to spend more amount than the bill for travelling and other expenses on his way so this becomes a disadvantage for the villager. Sometimes it may also happen that due to some reason the consumer is unable to visit the office for payment and has to pay more amount as late fees which is a total loss for him/her. This and various other reasons can hinder bill payments and create trouble for the villager. The Bharat Bill Payment System (BBPS) has been designed as a system that can address such issues and launched mainly for the people in rural areas in order for them to take authority of a unified system and make most advantage of it.

The platform of BBPS makes digital transactions easier for people living in rural areas by providing a single place to pay for all the government utility payments. It functions as a central switch where once a biller connects into BBPS, he/she can accept bill payments from any BBPS customer touch point. For example, a bill payer from Shillong will be able to pay his/her utility bills even if he/she is on a vacation in Maharashtra, by visiting a nearby BBPS centre and paying a nominal service fee. With new payment banks and many other organizations planning to join the BBPS network, the nearest bill payment centre may soon be your kirana store, your mobile recharge shop, your bank or even your nearest post office. This amazing initiative by the Government of India has saved a lot of time of the people in rural areas. This system has made the lives of the villagers simple and less complicated. The time and money saved by the necessitous consumers can definitely be made use of, somewhere else.

BBPS has unleashed major changes across the ecosystem. For the poverty-stricken customers, the increased number of payment touch points and the ability to pay a wide range of bills using any mode of payment including cash has brought in a new age of convenience. The universe of billers will also expand due to BBPS. Anyone who has a bill that needs to be collected including microfinance institutions, educational institutions, newspaper vendors, the milkman and various others can become billers in the BBPS system. These are the segments where bill collection is the most inefficient. By joining the BBPS network such billers can ensure timely collections while providing a convenient mode of payment for customers in the rural areas who don’t have enough knowledge and understanding about technology. For many billers, BBPS can help move bill collection from an expensive and high-touch process involving multiple follow-ups into a cost effective and low-touch process. The BBPS has made it convenient and as easy as a pie for both the consumers as well as the billers.

Arth Digital: ARTH has powered millions of budding micro-entrepreneurs across India by giving them access to financial and livelihood support services.

March 2, 2023March 10, 2023

Indian Digital Payments: Definition, Approaches, and Importance

What are digital payments?

Online or digital transactions that don’t include a real money exchange are known as “digital payment services.” The payer and the payee, respectively, employ electronic means to exchange money in this case.

To promote and support digital payment services across the nation, the Indian government has been implementing a number of actions. The goal of the “Digital India” programme is for the government to establish a “digitally empowered” “Faceless, Paperless, Cashless” economy. Digital payments come in a variety of forms and execution strategies.

Please be advised that digital payments are made both in person and online. For instance, it counts as a digital payment if you make an Amazon purchase and pay using UPI. Similar to the previous example, if you make a purchase at your neighbourhood Kirana store and decide to pay with UPI rather than cash, it is also a digital payment.

What other types of digital payments are there?

We now have 10 different digital payment options accessible in India as a result of the implementation of Cashless India. Some techniques have been around for over ten years, while others have only lately gained popularity.

Banking Cards

As a substitute to cash payments, Indians frequently utilise banking cards, debit/credit cards, or prepaid debit cards. In 1981, Andhra Bank issued the nation of India’s first credit card.

Cards are favoured for a variety of reasons, including mobility, ease, security, and safety. The only digital payment method that is used often for both online and offline purchases is this one. Nowadays, several card transaction management-specific applications, such as Cred, Square, etc., are being released.

Supplemental Service Data in an Unstructured Format (USSD)

For those portions of India’s population without access to reliable banking and internet services, USSD was introduced. USSD enables mobile banking transactions to be conducted without a requirement for an internet connection by simply dialling *99# on any required feature phone.

Customers may use this number to access services including balance inquiries, mini statements, and interbank account to account financial transfers throughout all Telecom Service Providers (TSPs). The USSD service is available in 12 languages, including Hindi and English, from about 51 major banks.

System for Payments with Aadhaar (AEPS)

Initiated to take use of Aadhar’s presence and reach, AEPS is a bank-led digital payment scheme. Customers can transfer money across two Aadhaar-linked bank accounts using this technology by using their Aadhaar-linked accounts. According to NPCI data, AEPS had surpassed 205 million as of February 2020.

AEPS does not necessitate performing any physical tasks, such as going to a bank, using a debit or credit card, or signing paperwork. With the use of a Business Correspondent (also known as a Bank Mitra) and Aadhaar verification, this bank-led strategy enables online currencies at PoS (Point of Sale / Micro ATM) terminals. At BC Points, cash withdrawals cost about Rs. 15 in AePS fees.

Mobile Wallets

Mobile wallets are a sort of wallet where you may handle money but in a digital medium, as the name implies. Customers frequently connect their bank accounts or credit cards to the wallet to enable safe online transactions. Adding funds to a mobile wallet and then transferring funds using that amount seems to be another way to use wallets.

These days, several banks have introduced their wallets. Famous private firms have also made their presence known in the digital wallet market. Paytm, Free charge, Mobikwik, mRupee, Vodafone M-Pesa, Airtel Money, Jio Money, SBI Buddy, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, and others are some examples of widely utilised ones.

Banking on mobile

The term “mobile banking” describes the practise of carrying out transactions and other banking functions via mobile devices, often through the bank’s mobile application. Today, the majority of banks provide mobile banking applications that can be used on PCs, as well as on portable devices like smartphones and tablets.

Thanks to its simplicity, convenience, and speed, mobile banking is seen as the industry’s best financial services future. Mobile banking applications provide access to several digital payment methods on a single platform, including IMPS, NEFT, RTGS, IMPS, investment, financial records, bill payments, etc. Banks themselves want clients to adopt digital since it streamlines operations for them as well.

What advantages can digital payments offer?

Ensuring economic equality becomes a major concern in a nation like India where discrepancies can be extreme. To increase access to financial resources, our government began advocating for the Cashless Economy and Digital India. There are several advantages to using digital payments.

Comfort and simplicity

The seamless experience that digital payments offer to clients is one of its most important benefits. Online payments are a favoured choice because of the decreased reliance on currency, quick transfer times, and simplicity of transactions. Cash and checks are common forms of payment, and they contribute to other considerations including risk, steps, and physical presence. With digital payment, you may easily send and receive money from any location in the globe.

Economic development

When customers experience the simplicity, ease-of-use, and security of online payments, they engage in more online business. This indicates that an increasing number of individuals are at ease making purchases online, making investments online, and moving money through electronic methods. The expansion of internet commerce and money transportation both help the economy grow. Because of this, new internet businesses are starting up every day, and a growing number of them are turning a profit.

Protection and effective tracking

It takes time and effort to handle and trade with cash. Along with the chance of losing money, carrying cash about and keeping it secure may be a bother. One may easily keep their money secure online by using digital payments. Thanks to UPI, net banking, and mobile wallets, you can make and receive payments with just your cell phone nowadays. A consumer may track his funds using the majority of digital payment channels’ frequent updates, alerts, and statements.

Conclusion

In India, the trend toward digital payments isn’t going away. Online payments are anticipated to increase dramatically as financial accessibility and financial awareness become more and more prevalent. As a company owner and professional, now is the time to embrace digital payments and provide your clients the ability to trade safely online.