The challenge

Hindustan Unilever Limited (HUL) operates a major CSR programme called Project Shakti to deliver financial empowerment and create livelihood opportunities for rural women. Shakti means ‘power’ or ‘empowered’, and the programme’s success has brought a new level of respect for many women, who are known as Shakti ‘Ammas’, or ‘mothers’, especially in communities where the norm was traditionally for men to be responsible for any sort of commercial enterprise.

As part of this programme, around 120,000 female micro-entrepreneurs (Shakti Ammas) have been trained in the basics of distribution management and HUL products. Shakti Ammas operate across 18 states in India and receive incentive payments. However, there were two issues regarding these payments:

• They were made largely via the HUL distribution network, rather than to the Shakti Ammas directly. Shakti Ammas were unable to identify their earnings from this programme. There was also a risk of leakage in the payment channel.
• Where payments were being made to bank accounts, there was uncertainty, not only over the time taken to complete the payments (depending on the payment system used) but also as to whether the bank accounts were actually in the name of the Shakti Ammas.

The Indian government has recently revolutionised the banking infrastructure with Jan Dhan (Pradhan Mantri Jan Dhan Yojana (PMJDY)), a financial inclusion programme run by the Indian government) accounts, whereby almost all Indians now have bank accounts. HUL treasury decided to capitalise on this opportunity and identified the following objectives:

• Validate the database of Shakti Ammas bank accounts to ensure they receive payments into bank accounts in their own name.
• Maximise straight through processing and payments through a consistent electronic mode.

The solution

In order to validate HUL’s database of Shakti Ammas bank accounts, HSBC used it to execute penny test payments to approximately 60,000 payees using India’s Immediate Payment Service (IMPS). One of the features of the system is that when sending a confirmation to the remitting bank, it includes the full name of the account holder who is being paid.

HSBC then provided the database of full names returned by IMPS to HUL treasury for their audit team to cross check with HUL’s existing database. Where the names did not match, the Shakti Ammas were contacted and advised to open a bank account in their own name.

HUL also directly contacted the Shakti Ammas to advise them of the new payment method and the intended benefits. This led to further opening of bank accounts by those Shakti Ammas who were previously paid through the distribution network.

Once the data cleansing process was complete and after a pilot run in March 2019, HUL started making regular monthly direct payment runs to the Shakti Ammas using the IMPS system.

Best practice and innovation

Automation: the electronic payment run is completely automated and far more efficient and reliable than the previous process.

Direct benefit transfer: reduced costs and leakage risk.

Innovation: using IMPS not only for payments, but also as a method of data validation.

Scalability: the solution can be readily scaled to cover additional Shakti Ammas, as well as other similar HUL activities involving large number of small value payments.

Key benefits

• Certainty of payment.
• Consistent process.
• First time successful remittance rates close to 100%.
• Scalable solution.