Dvara KGFS: Empowering Rural India With Inclusive Financial Solutions

Introduction To Dvara KGFS

Financial inclusion remains a critical challenge in India’s rural landscape, where access to credit, savings, and insurance products is often limited. Dvara Kshetriya Gramin Financial Services Private Limited (Dvara KGFS Pvt. Ltd.), established in 2008 by Dvara Trust, is dedicated to bridging this gap by providing essential financial services to underserved communities. Founded by Ms. Bindu Ananth and Mr. Nachiket Mor, the company aims to empower rural individuals and enterprises by offering a diverse range of lending and savings solutions. Positioned as a rural wealth manager, Dvara KGFS extends both secured and unsecured loans, primarily focusing on Joint Liability Group (JLG) loans and unsecured enterprise loans. These financial offerings enable small businesses and individuals to access credit tailored to their needs, fostering economic growth in remote areas.

With a strong focus on technology-driven financial solutions, Dvara KGFS follows a unique branch-based model called Kshetriya Gramin Financial Services (KGFS), which translates to “Regional Rural Financial Services.” This model ensures last-mile connectivity by providing financial products through a well-structured network of branches in rural locations. The company further enhances accessibility through digital initiatives, mobile branches, and strategic partnerships, making financial services more inclusive and efficient. By integrating technology with a customer-centric approach, Dvara KGFS continues to drive financial empowerment, supporting rural communities in achieving long-term financial stability.

Board Of Directors Dvara KGFS

As per the information available, the Board of Directors of Dvara Kshetriya Gramin Financial Services Pvt. Ltd. comprises the following members:

Nominee Directors:

• Pranav Kumar
• John Fischer
• Lone Søndergaard

Independent Directors:

• Anisha Motwani
• Gowri Thyagarajan
• Raman Uberoi
• Hemant Adarkar

Additionally, Ms. Bindu Ananth serves as the Chairperson of Dvara KGFS.

Please note that board compositions can change over time. For the most current information, please refer to the company's official website.

Source: Dvara¹

Products Offered By Dvara KGFS

Dvara KGFS offers a comprehensive suite of financial products designed to meet the diverse needs of rural communities. Their offerings encompass credit, insurance, and investment products, each tailored to promote financial well-being and inclusion. Below is a detailed overview of the products provided by Dvara KGFS:

Credit Products:

1. Joint Liability Group (JLG) Loans: These are group-based loans aimed at providing financial assistance to individuals who may not have access to traditional banking services. By forming groups, members mutually guarantee each other's loans, fostering a sense of collective responsibility and ensuring better repayment rates. This approach enables borrowers to undertake income-generating activities, thereby improving their livelihoods.

2. Micro Enterprise Loans: Targeted at small business owners and entrepreneurs in rural areas, these loans offer the necessary capital to start or expand micro-enterprises. By supporting local businesses, Dvara KGFS contributes to economic development and job creation within these communities.

3. Consumer Loans: Designed to meet personal financial needs, consumer loans provide individuals with funds for various purposes, such as education, medical expenses, or household improvements. These loans help enhance the quality of life for borrowers and their families.

4. Gold Loans: By leveraging gold assets, individuals can access immediate funds through gold loans. This product offers a quick and secure way for customers to meet urgent financial requirements without selling their valuable assets.

5. Two-Wheeler Loans: Aimed at facilitating mobility, two-wheeler loans enable individuals to purchase motorcycles or scooters. Improved transportation can lead to better employment opportunities and access to essential services.

Insurance Products:

1. Life Insurance: Dvara KGFS offers life insurance products to provide financial security to families in the event of the policyholder's untimely demise. This ensures that dependents have a safety net during challenging times.

2. Health Insurance: Health insurance plans cover medical expenses, reducing the financial burden on families during health crises. Access to quality healthcare without the stress of high costs contributes to overall well-being.

3. Livestock Insurance: For rural communities dependent on livestock for their livelihood, this insurance product offers protection against the loss of animals due to unforeseen events. It helps maintain the economic stability of households engaged in animal husbandry.

Investment Products:

1. Pension Plans: To ensure financial security during retirement, Dvara KGFS provides pension plans that encourage individuals to save systematically over time. This promotes long-term financial planning and independence in later years.

2. Savings Accounts: By facilitating access to formal savings accounts, Dvara KGFS encourages the habit of saving among rural populations. Regular savings can help individuals manage future expenses and emergencies more effectively.

Through these diverse financial products, Dvara KGFS aims to empower rural communities by providing them with the tools and resources necessary for financial growth and resilience.

Source: Dvara²

Also Read: Aye Finance: The Go-To MSME Loan Provider For Small Business Success

Innovation And Technology At Dvara KGFS

Dvara KGFS leverages technology and innovation to provide comprehensive financial services to underserved rural communities in India. By integrating advanced digital tools into its operations, the company enhances accessibility, efficiency, and customer experience.

A key component of Dvara KGFS's technological strategy is the implementation of an omnichannel approach, which includes:

• KGFS Digital: A network of digital agents operating in various villages, delivering a range of financial products and services directly to clients.
• KGFS Direct: An inside sales channel that offers existing clients digital access to diverse financial products and services through cross-selling and up-selling techniques.
• MyKGFS WhatsApp: A self-service chatbot that enables users to perform various services, including digital EMI payments, via WhatsApp.
• KGFS Branch on Wheel: A mobile branch service that brings financial services to customers' doorsteps in remote rural villages.
• KGFS Partnerships: Collaborations with fintech companies through a Business Correspondent Partnership model to originate business and provide enhanced products and services to customers.

These initiatives demonstrate Dvara KGFS's commitment to continuous innovation and improvement, aiming to surpass expectations and maintain a sustainable competitive differentiation in the marketplace. By leveraging technology, Dvara KGFS catalyzes social and financial transformation among underserved populations in India.

Key Strengths Of Dvara KGFS

1. Experienced Leadership And Strong Management

Dvara KGFS is led by a team with over 20 years of experience in rural financing. The board includes well-known experts like Ms. Bindu Ananth and Mr. Samir Shah, along with other professionals from the financial sector. The management team has worked extensively in microfinance and non-banking finance, helping the company improve its processes and services. Their deep understanding of rural customers' financial needs has strengthened the company’s ability to serve them effectively.

2. Strong Capital Base With Regular Funding Support

The company has consistently raised funds to support its growth, even during difficult times like the pandemic. As of June 30, 2024, its net worth was INR 388 crore, and its Tier I capital adequacy ratio stood at 16.1% (compared to 17.2% on March 31, 2024). The company’s on-book debt level (gearing) was 4.7 times, up from 4.3 times a year earlier, while the adjusted gearing was 5.5 times as of March 31, 2024, compared to 4.5 times the previous year.

Dvara Trust is the largest shareholder, owning 31.53% of the company, followed by Accion Africa-Asia Investment Company (23.3%) and Leapfrog Financial Inclusion India (II) Ltd (21.5%). The company is expected to maintain a stable capital position in the future, aiming to keep its adjusted gearing around 5 times. However, if its debt level increases significantly, it could impact its financial strength.

3. Diversified Funding Sources

Dvara KGFS secures funding from over 50 financial institutions, including banks, small finance banks, NBFCs, and both domestic and foreign lenders. It also raises funds through partnerships with NBFCs and banks via business correspondence and co-lending arrangements. Additionally, the company actively raises capital through securitization (selling loan assets to investors) through Securitised Debt Instruments (SDIs).

As of June 30, 2024, the company had INR 203 crore in securitized assets, down from INR 357 crore in March 2023. Its funding mix includes:

• Term loans (36.3%)
• Secured debentures (25.6%)
• Securitization (10.9%)
• External Commercial Borrowings (ECBs) (19.2%)

In the first quarter of FY 2024, the company’s average borrowing cost was 14.5%, slightly higher than 14.3% in FY 2024 and 13.3% in FY 2023. Moving forward, Dvara KGFS aims to secure more funding from banks and international lenders to reduce borrowing costs and expand its access to global financial markets.

Source: CRISIL Ratings³

Financial Snapshot Of Dvara KGFS

Source: CRISIL Ratings³

To arrange the capital, Dvara Kshetriya Gramin Financial Services Private Limited (Dvara KGFS) also offers Corporate Bonds and Securitised Debt Instruments (SDIs). These opportunities from the company are secured and are rated by credit rating agencies. On Grip Invest, investors invested in CARE ‘BBB+’ rated LoanX opportunity of the company that offered fixed returns of up to 14.1%. To invest in similar, rated, regulated, and secured fixed-income opportunities, sign up for Grip Invest today and start earning fixed returns:

References:

1. Dvara KGFS, accessed from: https://www.dvarakgfs.com/about-dvara
2. Dvara KGFS, accessed from: https://www.dvarakgfs.com/product-philosophy
3. CRISIL Ratings, accessed from: https://tinyurl.com/CRISIL-Dvara

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