The Hindu Business Line : Bank on mobiles, car batteries for financial inclusion

Banking for all: A representative from FINO (Financial Information and Network Operations) Ltd enrolling a customer for a public sector bank at Neemrana in Rajasthan, using a biometric reader.

A.J. Vinayak

Mangalore, Dec. 21 What common role did mobile phones, car batteries and fingerprint identification devices play during 2007, apart from their regular uses? They were used in providing banking activities in rural areas.

Does this answer sound absurd? But it is true.

In their efforts to take banking activities to rural areas, many banks initiated innovative steps during the year. The process of implementing financial inclusion programme in rural areas made good progress with many banks using IT (information technology) tools for this purpose.

In the annual policy for 2007-08, the RBI urged the banks to scale up IT initiatives for financial inclusion speedily while ensuring that solutions are highly secure, amenable to audit, and follow widely accepted open standards to ensure eventual inter-operability among the different systems.

Tech solutions

Apart from lacking banking facilities, most part of rural India also lacks other infrastructure such as a good electricity connection. Considering this, some of the technology solutions were made ready to operate with car batteries. With a majority of people in rural India still remaining illiterate, the technology solutions made provisions to use fingerprints for the authentication of the customers, eliminating the complex process of authentication through PINs and passwords. The voice-guidance system in the technology was made ready to give instructions in local languages. Based on the above factors, some banks formulated their own operating models for implementing financial inclusion programme.

NO-frills accounts

The process of financial inclusion began with identification of un-banked areas and opening of ‘no-frills’ accounts. Some banks made use of complex technologies to devise simple gadgets to carry forward the task of financial inclusion.

Biometric techniques, which were hitherto limited to developing gadgets for certain sections of urban population, were used in almost all the gadgets for rural banking activities. Some banks even went ahead to put biometric ATMs into operation.

Apart from biometric tools, telecommunication tools also played a significant role in taking banking activities to the un-banked rural areas.

Considering the fact that it is difficult to access telecom network in some areas, the gadgets were so designed that they can be used even in offline mode to use them in the places where they get connectivity.

However, most banks decided to put these operating models on a pilot basis. The reason was simple: They wanted to see the performance of these operating models before coming out with a concrete plan in this matter. Multiple vendors were chosen by some banks to get the best out of their models.

Some of the banks that went in for technology solutions to implement financial inclusion included Corporation Bank, State Bank of India, ICICI Bank, State Bank of Hyderabad, Union Bank of India, Andhra Bank, Axis Bank, Canara Bank, Punjab National Bank, and Dena Bank.

Rural banking thrust

Business correspondents, who were assigned the duty of carrying out banking activities in un-banked areas, differed from one bank to another. While some banks thought it fit to assign the duty to a local villager, identified by it, some others thought of using the services of NGOs in this matter. State Bank of India went on to have a tie-up with the Department of Posts to carry out banking activities in rural areas.

Going by the current trend, it is visible that IT has enabled banking transactions in a smooth way in rural areas. If the experiences of some bankers are any indication, the ratio of deposits is more in rural areas compared to other transactions. Based on that experience, some bankers have begun the task of introducing more relevant products to boost other transactions also.

It can be said that the year 2007 brought a smile on the face of some of those who were not banked till now. Let us hope the initiative will gain momentum in the years to come.

More Stories on : Banking | Credit Market | Rural Development

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page