Understanding the Movement of Cash of the Privately-led Enterprises in Dharavi and Scope for Electronic or Mobile Payments

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Understanding the movement of cash

of the privately led-enterprises in

Dharavi and scope for electronic or

mobile payments

Centre for Micro Finance, IFMR Research,

Chennai, India

IMTFI, UC Irvine

Background

• Dharavi - largest slum in Asia

• 5,000+ informal businesses

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• Goods worth USD 600 - 650

million a year

• 3 enterprises

– Leather enterprises

– Consumer goods enterprises

– Papad enterprises (women)

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Objectives of the Study

• Understanding the existing financial transactions for 3

major industries types.

• Determining the social, cultural and business factors

and preferences influencing the decision for using

cash versus e-payment systems

• Understanding the scope, acceptability, and

challenges of implementing e-payment systems

amongst privately led enterprises.

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Enterprise 1 – Leather Enterprise

• Largest, most lucrative

enterprise in Dharavi

• Interviewed 18 leather

business owners:

– Transactions worth USD 748

in past 1 month

– Immigrant business owners,

employees

– Majority own:

• Mobile phones (83%)

• State issued IDs (100%)

• Bank accounts (94%)

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Enterprise 2 – Consumer Goods

• Small (kirana shops) and

medium sized retailers

• Interviewed 52 business

owners:

– Transactions worth USD 1,060

in past 1 month

– Immigrant and local business

owners

– Majority own:




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Enterprise 3 – Consumer Food

(Papad), Women’s Enterprise

• Women operated enterprise

• Interviewed 25 women:

– Transactions worth USD

626 in past 1 month

– Local residents

– Majority own:




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Business Owner – Mode of

Transaction

Leather Shop Papad Leather Shop Papad Leather Shop Papad

Cash Only Cheque Only Cash / Cheque

44% 65% 64%

6% 4% 0%

50% 31% 36%

78%

96% 100%

6% 0% 0%

17%

0% 0%

With Suppliers

With Customers

Business Owner - Reasons for Using

Cash

8 * Sample Size = 100 Business Owners

E-Payment Difficult

Cash is Faster

Cash is Cheaper

Cash Traditionally Used

Business Owner's Preference

Cash is Safer

Cash More Convenient

13%

17%

30%

34%

38%

42%

51%

7%

5%

20%

23%

48%

43%

55%

With Suppliers

With Clients

Business Owner – Dealing with Cash

9 * Sample Size = 100 Business Owners

Cash Transactions

are Safe

Always Carry Cash for

Transactions

Deposit Cash in Bank Account

Pay for Safekeeping

Cash

Aware of Alternatives

to Cash

Difficulties In Cash

Transactions

93%

84%

65%

23% 18%

8%

Clients and Suppliers

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• Interviewed 115 clients and 20 suppliers

• Strong preference for cash transactions (75%)

• Volume of Cash Transactions – Suppliers: USD 2,476 per month

– Clients: USD 98 per month

• Reasons for cash transaction – Cash is convenient (>50%)

– Cash is safer (>90%)

– Business Owner’s preference (>59%)

Banks and Banking Agents

• Abhyudaya Bank Cooperative

Bank Limited

– Client centric approach

– Large cash withdrawals per day

• State Bank of India

– Reputation as Government bank

– Multiple branches & agents network

• Banking Agents

– Agents primarily remit money

– No savings offered via Agents

– Charge INR 25 on INR 1000

remitted

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Findings about E-Transactions

• Cash perceived as convenient, safer option

• Low usage of e-payment systems in businesses

– Strong preference for cash by business owners

– Business owners save on taxation through undocumented

cash transactions

– General mistrust of Banks, e-payment systems

• Access to Financial Institutions / Services – Not an Issue

– 8 ATMs, 2 bank branches, 9 CSPs (in 500 metre stretch)

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Recommendations from

Interviews

• Lack of Information about Financial Services

– Suppliers (55%), Business Owners (65%), Clients (68%),

Banking Agents (76%), Banking Agents (76%)

• Need for information about Financial Services

– Suppliers (65%), Business Owners (65%), Clients (89%)

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Next Steps

1. Address Lack of Knowledge

– Savings at Banks (internet earned)

– Opening No Frills Accounts

– Mobile banking

– Remittances (Banking Agents)

2. Financial Literacy 2D Animation

– In partnership with Neeti Solutions

– Using interactive, engaging, comic

book style approach

– Using first-person representative

stories from field-work

– Extensive piloting and testing

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Comic Book - Example

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Next Steps

• Future Financial Literacy Materials

– Using representative context is critical

• Focus on women

• Focus on people with advanced financial literacy skills

– Using local language is essential

• Future Financial Literacy Animation Series

– 3D app, that can be downloaded on mobile devices for free

– Easy comprehension using colorful graphics

– Developed in collaboration with local partners

– Open Source for NGO partners / practitioners

– Disseminate to school children

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Thank you!

• Questions?

• Contact – Deepti KC, [email protected]

– Mudita Tiwari, [email protected]

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mailto:[email protected]

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Understanding the Movement of Cash of the Privately-led Enterprises in Dharavi and Scope for Electronic or Mobile Payments

Economy & Finance

Understanding the Movement of Cash of the Privately-led Enterprises in Dharavi and Scope for Electronic or Mobile Payments