Chennai: Smart Cards are emerging as a solution for microfinance institutions (MFIs) to easily keep accounts and record loan transactions, however small the repayments may be.

Mahasemam Trust, a microfinance institution with about 1 lakh customers, is one of the first to employ the technology to ease the tedious process of collection of repayments for micro-loans.

"We have obtained Smart Cards made by the company Modular Corp. The cards would be given to members who have availed of micro-loans from us," N. Sethuraman, founder of Mahasemam Trust said at the launch on Saturday. Field officers will have hand-held devices when they visit customers to collect loan payments. This information is updated on the card as well as the hand held devices. The information stored will be downloaded on a daily basis to a central server.

Modular's Group Chairman Ibrahim Hussain said, "The Smart Card with an embedded chip provides a secure user identity and account information. More applications such as insurance or health information can be upgraded in the future."

Targets

The Mahasemam Trust hopes to increase its customer base to 3 lakh and loan disbursement to Rs. 300 crore in this fiscal. At present, it has about 50,000 customers in Chennai, Tiruvallur and Kancheepuram and another 50,000 in Madurai and surrounding districts.

The Trust works on the Grameen model. Loans are given to groups of women to develop a trade. The group assesses which individuals require the loans.

"First we train a group of women on how they can avail of loans and use them effectively. This group is our security. If an individual doesn't pay the loan, the group is liable," explains Mr. Sethuraman. He says that 50 per cent of the women who had taken loans have come out of poverty within five years as they did not need to depend on moneylenders who indulge in usury.

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