Fostering diversity and flexibility
SRFS fosters DIVERSITY and FLEXIBILITY – experience showed that the strategy of ‘one size fits all’ does not respond to the diversity of needs in the informal sector.
Tatkal Loans :Analysis of General Purpose Loans (GPL) portfolio constituting 95% of loan portfolio of SRFS revealed that while the product met diverse needs like funding livelihood assets, agricultural inputs with longer tenures. The uniform approval process of 2–3 weeks failed to meet the time-sensitive needs of these clients, leading to their exclusion. However these loans were not meeting requirements of urgent loans for meeting working capital for small businesses engaged in fast-moving commodities, that required quicker disbursal.
Recognizing this gap, SRFS created a dedicated vertical, Tatkal Loans, to serve clients requiring quick and short-term financing. Unlike traditional GPLs, Tadkal Loans are tailored for individuals who are not members of Self-Help Groups (SHGs) and lack family connections within SHGs whose credit performance could provide insights. To mitigate risk, SRFS adopted external credit scoring, relying on agencies such as CRIF Highmark to assess applicants’ creditworthiness. The size of loans is Rs. 10,000 to Rs. 30,000 with a short repayment period of 4-8 weeks.
Implementing the Tatkal model necessitated a strategic overhaul. Processes were streamlined to ensure rapid loan approval and disbursal. Additionally, staff were trained to manage the unique challenges of the Tadkal model, equipping them to address both the speed of delivery and the associated credit risks effectively.
Through Tatkal Loans, SRFS enhanced its ability to support a broader and more diverse clientele, reinforcing its commitment to financial inclusion and responsiveness to client needs.
The TIREN Vertical: Recognizing the growing demand for larger loans ranging from ₹2 to ₹3 lakh to support livelihood activities, SRFS decided to address this gap through a new approach. SHGs, which typically handled loans averaging ₹45,000 even after several years, were reluctant to shoulder the higher risks of such large loans. To meet this demand, SRFS created a new vertical, Tiny Rural Enterprises (TIREN), and in June 2024, established a dedicated for-profit company called TIREN to manage these loans.
The targeted clients of TIREN loans, while not SHG members themselves, often belonged to families with strong repayment histories in SHG borrowing. SRFS assumed this positive credit culture would extend to the new clients. However, since SHGs had no role in monitoring these larger loans or ensuring repayment, SRFS introduced a more hands-on approach to mitigate risks and ensure success.
A key feature of the TIRE model is personalized engagement. SRFS staff conduct pre-loan visits to provide training in management and technical skills, funded through CSR contributions, ensuring clients are equipped to utilize the loans effectively. Post-loan visits are also made to monitor utilization, address challenges, and offer solutions, fostering a strong personal relationship between SRFS and its clients. This proactive approach serves as an early warning system for potential loan stress and builds trust that replicates the support previously provided by SHGs.
Additionally, TIREN clients are organized into Support Groups of 4–5 members who meet periodically to exchange experiences, share learnings, and establish mutual support networks. This initiative strengthens peer relationships, enhances accountability, and promotes collective problem-solving.
Through TIREN, SRFS not only fills a critical financing gap but also ensures that clients receive the guidance and support needed to succeed in their livelihood ventures.