Banking on M-banking
The Business Correspondent model is the new buzzword in the field of technology-driven innovative banking services. Will it help usher in greater economic security for the poor?
More than half our population lives in rural and semi-urban areas and falls in the category of 'unbanked and under-banked' people. These people are mostly financially excluded, leading insecure lives, without any access to basic banking services.
The central government and the Reserve Bank of India have therefore been promoting the idea of 'Financial Inclusion' (FI) for large segments of our population through the use of IT-based, e-governance initiatives since a few years now.
In a recently held meeting regarding FI in June 2010, Union Finance Minister Pranab Mukherjee announced that all habitations with more than 2,000 people should be able to access basic banking services by March 2012. For achieving this, a techno-centric 'Business Correspondent' (BC) model, which has been briefly tried earlier, was upheld.
Within this model, banks can outsource their facilities through agents (i.e. BCs) who would conduct branchless banking on their behalf in the remotest of villages, using tools like biometric cards or mobile phones that deliver services based on GPRS technology.
Through this model, banking facilities are meant to reach the 'last man' located at the 'bottom of the pyramid'.
Eko Aspire Foundation (Eko), formed in 2007, is one such BC working with the State Bank of India (SBI). It provides 'banking touch-points' (customer service points) to people living in underdeveloped areas where banks or ATMs are not found for many kilometres at a stretch. The Customer Service Provider (CSP) is probably a local shop-owner who uses a mobile phone to assist in opening the concerned person's bank account.
Eko's service points spread across Delhi, Bihar and Jharkhand. In NCR, they are found operating all the way from Khera Dabar (about an hour from Najafgarh) to Khora village (close to Noida) and at many other places like Uttam Nagar, Dakshinpuri etc that fall in between.
"Most people own a mobile hand-set these days and visit their local grocery store, chemist, travel agent or telephone recharge shop regularly. To cut investment costs, a system of mobile banking has been built on existing infrastructure, making it so much easier for people to deposit, withdraw and transfer money by just opening a mini-savings account with us, nearly free-of-cost, at any of these local shops that additionally serve as our service points," said Anand Raman, Chief Marketing Officer, Eko India Financial Services Private Limited.
To verify the 'hassle-free, account-in-five-minutes' claim by Eko, this reporter visited the SBI-Eko counter in Uttam Nagar. The CSP, a shop-owner and travel agent by profession, requested for submission of one document as proof of identity and an easy one-page form to fill. Within minutes of submitting the documents, a confirmatory SMS from SBI-Eko beeped loudly on my phone, confirming a new, functional mobile bank account. The process was as simple as they made it sound.
Deepesh Nogia, a student, who came to the same shop to deposit money in his mobile account, told Hardnews, "The best thing about this kind of banking is that I can deposit small sums of pocket money like Rs 20 or Rs 50 daily and easily withdraw it too. No bank would entertain deposits of such small amounts," he added.
Kamla, a 40-year-old flower seller at Uttam Nagar's shukarbazar (Friday market), shared this view. She said, "In my experience of selling flowers for over 17 years, it is only after opening a mobile banking account that I could save as much as Rs 40,000 over time. That became possible when I was able to save as little as Rs 10, sometimes twice or thrice daily."
"These savings made it possible for me to marry off my daughter. And once during a medical emergency, I rushed to the shop-owner, also the CSP, and could easily withdraw Rs 15,000 using my mobile at an unearthly hour. Which regular bank would have done that for me?" she asked.
Vijay Bhola, a roadside vendor by profession, spoke about the utility of mobile banking services in his life. "There is a possibility of quick deposit and withdrawal of money as per need. That is something one cannot do in conventional banks because of limited banking hours. Moreover, one also has to waste one's own productive working hours and spend money on public transport to reach a bank far away, only to stand in long queues before the money transaction actually takes place," he said.
All his family members have a mobile bank account that has maximised their savings and also made mobile-based cash transactions among family members possible. "The cost of transaction on a mobile phone is much less than what it is in any ordinary bank and it will only reduce further as we scale up our operations," said Raman.
In a recently launched pilot project in Sheikhpura district of Bihar, the state government along with Eko-SBI, Norway-India Partnership Initiative and the United Nations Office for Project Services has introduced a 'mobile money transfer system' to pay the Accredited Social Health Activists (ASHA) workers instantly by transferring money to their mobile mini-bank account.
"ASHA workers present at a demo were delighted to see money being transferred to their mobile accounts in less than three minutes, when in the past they have had to wait for months," Raman added.
The BC model has been the buzzword in the field of banking and use of innovative technology. The model proposes to pull disadvantaged people out of their financial crisis.
"The government and the RBI have tried to reach out to the poor through regional banks, small banks etc but nothing has worked well. The BC model has provided a new framework for functioning and has the potential to work better because it is not dependent on a physical system of service delivery, such as block or panchayat offices that face issues of corruption, transparency and reliability," said Manish Khera, Chief Executive Officer, Financial Information Network Operations (FINO).
FINO is one of the largest service providers in this field with a presence in 21 states and 208 districts, with over 14 million users. It has more than 60 per cent share in the current biometric card market in the country.
"The biometric, fingerprint-based cards used in the BC model enables transparent and efficient fund transfers like in the case of government schemes like Rashtriya Swasthya Bima Yojana," said Arif Rizvi, FINO. The organisation also offers services like FINO-tijori (for savings), FINO-saral (for micro-loans), FINO-sure (insurance), FINO-tatkaal (for remittance) etc.
"Today we have about 12,000 BCs and 14,000 Business Facilitators with the SBI, who are helping in delivering wages or pensions straight into the account of the person they are intended for," said LP Rai, Deputy General Manager (Rural Business Technology), SBI, Mumbai.
"This technology ensures that government money actually reaches the pocket of the last person in the remotest of locations," said Anirban Roy, executive director of Delhi-based BC SEED that collaborates with a number of banks, including SBI, in providing basic banking services. SEED is engaging with lakhs of people across the country, including in disturbed areas like Dantewada.
To give momentum to the process of FI so that banks are encouraged to invest in this process, two funds called Financial Inclusion Fund and Financial Inclusion Technology Fund have been put aside for this purpose. The funds are being governed through the National Bank for Agriculture and Rural Development (NABARD) since 2007.
The overall amount set aside was Rs 500 crore for each fund set, now augmented by Rs 100 crore more per set. The amount is to be pitched in by the government of India, RBI and NABARD in a certain ratio.
Medical practitioners too are banking on the GPRS platform for promoting e-health through Internet and mobile-image-based diagnosis. In a one-of-its-kind initiative geared towards providing good eye care facilities in rural areas, Narayana Nethralaya (NN) Postgraduate Institute of Ophthamology, Bangalore, is promoting image-based diagnosis of a major vision disorder called Retinopathy of Prematurity (ROP) on i-phones of doctors located far away. The CARE TeleOphthalmology software devised by i2iTeleSolutions bridges this gap between doctors and patients.
"Statistically, ROP is the biggest cause of blindness in the developing world in a large number of pre-term and low-birth babies. What we do is that we train local technicians and doctors at NN for free so that they can diagnose the problem in time and save children from preventable blindness," said Dr Anand Vinekar, Project Coordinator and Pediatric Retinal Surgeon at NN. The institute's work has spread to seven districts of Karnataka.
"There are more experiments going on in telemedicine like in the field of telephathology, teledentistry and teleradiology. There are challenges within this technology like ensuring that the image transfer is complete and secured, but it's an effective way of reaching out to people cut off from any kind of healthcare facilities," he added.