How Muthoot Fincorp eased loan collection with QR Code system

Muthoot Fincorp, an NBFC, is the flagship company of Muthoot Pappachan Group and is registered with the Reserve Bank of India. It has 3800 branches across India, with an average walk in of 50,000 customers per day.

The company has a varied mix of retail offerings catering to the needs of customers like gold loans, housing loans, business loans, foreign exchange, wealth management services and insurance services.    

The challenge

Around 4 lakh customers repay under various segment of loans in Muthoot Fincorp on a daily basis. The collection of these payments and accounting the same in the books were a hectic task for the collection agents as well as the branch staff.

“The branches were not able to close the day’s business on regular basis, as the money did not come from the agents on time. As a result, the staff in the branch was not able to update the accounts in the evening,” says P Jaya Krishnan, AVP-IT, Muthoot Fincorp.

When the branch staff came the next day in the morning to update the book of accounts, the interest rates would have changed. As a result, the help of the operation team was required to make the desired changes.

Read more: How Indiabulls automated the loan disbursal process to improve staff productivity

Jayakrishnan also explains that it lead to a lot of frauds and manipulation as the money was lying unaccounted at the branch.

Overall, the productivity of the branch came down. Since the time taken for these activities were huge, they were not able to contribute more towards business improvement.

Jayakrishnan and his IT team championed this move and introduced a QR Code based mobile collection system for the ease of payment collection.

The solution

The new system has a mobile based collection system to increase efficiency and save time. All collection agents for Muthoot Mahila Mitra (MFL’s Microfinance arm), small and medium enterprise loans (SME) for Muthoot Fincorp comes under the QR code based system of collections. “Mobile handheld devices are provided to the field agents across all branches, and we have deployed 1,500 tablets on the field,” says Jayakrishnan.  

In the morning, the collection agents take a print out of all group’s QR code information and go to a center where the groups assemble. They scan the QR code and will know the details of the customer, along with the money which needs to be remitted. On accepting the amount, the collection agent scans the QR code with the application.

Immediately, “A message goes to the customer saying that the amount is credited. At the same time, the branch will get a voucher saying that the amount has been collected from the concerned person,” says Jayakrishnan.

Finally, when the collection agent visits the branch in the evening to deposit the amount, the branch staff log into the web portal and check the amount which has to be deposited.  Before the adoption of this application, the collection staff needed to enter each customer’s details from a single center to the collection book and also into the system.

 The benefits

With this project Muthoot Fincorp has reaped benefits. “The collection staff needs to spend only 4 -5 minutes in a center for the collection process and we are collecting more than Rs 2 crore per day through this application,” says Jayakrishnan.

Second, previously, collection agent had to give a full list of names of people from whom the money was collected and they needed to update each person’s account, which was time consuming. Now everything can be done with the touch of a button. “Our productivity has improved by 50 percent,” says Jayakrishnan.  

With this initiative, Muthoot Fincorp, has added another feather in its cap!