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?
Hardnews Bureau 

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."