A wave of financial literacy initiatives sweeping through India. From teaching basics of banking and finance in schools in Karnataka to credit counseling cells in un-banked villages of the northeast from mobiles vans in Porbandar education people about the benefits of mutual fund investments to college students in Mumbai explaining the virtues of financial planning to not so financially savvy people, it’s happening. And the objective is to bring the un-banked population into the banking fold. From the Reserve Bank of India (RBI) to status governments from banks mutual funds, micro finance companies and mobile handset makers to technology driven start ups almost everyone has jumped onto the bandwagon financial inclusion over the last few years.
The major barriers to financial exclusion, as RBI governor had said in speech were lack of access to banking services poor physical and social infrastructure and lack of understanding and knowledge among others. Overcoming those barriers is a challenge to financial inclusion. For majority of participants despite the challenges of financial inclusion there is no denying the fact that a fortune lies at the bottom of the pyramid.
While RBI, some banks and a few government backed organizations are taking the conventional route to financial inclusion, a host of companies are trying unconventional ways to bring more people into the main stream a financial services.
Sahyog Micro Finance Foundation an arm of Oxygen Services that in into single point recharge, bill payments and ticketing services, is a case in point. Sahyog recently tied up with the banking major SBI for providing Kiosk based limited banking facilities to the un-banked and under banked masses at Oxygen outlets, Under the mini-banking model a kiosk owner would require an internet enabled PC, a low cost biometric reader, a webcam and a printer to help customers perform basic banking transactions such as depositing and withdrawing cash, getting loans, transferring money to another SBI account and getting account statements. The Kiosk owner logs on to SBI’s core banking server from the Oxigen outlets and helps customers carry out banking transactions after biometric authentication process has established their identity.
Sahyog’s mini-banking service which does not require ATMs or swipe cards comes under RBI’s business correspondent (BC) initiative. Under the initiative the central bank has even allowed involving owners and paan bidi shops and PCOs as agents of a bank to help take banking services to the un-banked.
One of the main ideas behind the BC initiatives is to take basic banking services to the masses at a lower cost. We are setting up retail (banking) points which are economical and easy to use. And our conviction is that we will deliver the promise the SBI is making to its customers.
As of now according to RBI guidelines customers can transfer money within the same bank. However, banks and other stakeholders are pushing to allow customers to send and receive money from other banks as well.
Industry players are hopeful this could happen soon. Their confidence emanates from RBI’s track record of recognizing the strength of technology early and using it to take banking to the masses. Over the years the central bank has allowed host of new applications some of which have the potential to serve RBI’s objectives of financial inclusion.
A substantial portion of the payment transactions through mobiles is done for re charge. Since people are comfortable with their phones. The push is now to make them deposits withdraw and send money from their banking accounts using the same handset that has proved to be reliable. Initially we want to keep things simple and not push to sell financial products at this moment.
While Nokia Money is talking to other banks to offer similar facilities its R&D division is working on newer applications for mobile banking. Since a large portion of the rural cellular market is on entry level handsets the Finnish giant is working on simple SMS – based services customized to Indian users that should work on low cost Nokia phones.