Technology to take banks to the last rural mile
It is said that India lives in its villages. Isn't it strange then that only 5% of them have proper banking services and that there's only 1 branch per 14,000 persons? Especially when the people belonging to these very villages contribute significantly to the GDP!
Agreed, the regular banking model is not always feasible in rural areas. But with the kind of technology available today, I am sure that new realistic mechanisms can be created/ adopted which, far from burdening a bank's balance sheet, will indeed strengthen it.
One method would be to have banks tie up with village post offices and issue biometric smart cards to rural customers. And how would customers be served? The friendly village postman carries a Point of Transaction device, which the customer uses to swipe his card. This is as good as a signature and illiteracy is no longer a barrier.
Similarly, other ways and means of financial inclusion can be worked out. Banks can appoint business correspondents. Or have a van equipped with a computer and other paraphernalia double up as a bank, where villagers can borrow loans and deposit money. Considering the ubiquity of the cell phone, introduction of mobile banking in local languages would be a good idea. Banks can collaborate with microfinance organizations to improve their reach..... The list goes on.
Until now, banks have viewed the rural side of their business as a regulatory obligation. What is required is a changed mindset, and the will and enthusiasm to introduce new measures and implement them.
Banks have already taken small steps in this direction; isn't it now time for confident strides?
Agreed, the regular banking model is not always feasible in rural areas. But with the kind of technology available today, I am sure that new realistic mechanisms can be created/ adopted which, far from burdening a bank's balance sheet, will indeed strengthen it.
One method would be to have banks tie up with village post offices and issue biometric smart cards to rural customers. And how would customers be served? The friendly village postman carries a Point of Transaction device, which the customer uses to swipe his card. This is as good as a signature and illiteracy is no longer a barrier.
Similarly, other ways and means of financial inclusion can be worked out. Banks can appoint business correspondents. Or have a van equipped with a computer and other paraphernalia double up as a bank, where villagers can borrow loans and deposit money. Considering the ubiquity of the cell phone, introduction of mobile banking in local languages would be a good idea. Banks can collaborate with microfinance organizations to improve their reach..... The list goes on.
Until now, banks have viewed the rural side of their business as a regulatory obligation. What is required is a changed mindset, and the will and enthusiasm to introduce new measures and implement them.
Banks have already taken small steps in this direction; isn't it now time for confident strides?
Comments
Thats Right.Banks shall give a thought on the various ways and means of financial inclusion in rural parts of india.Despite the fact that intense competition and innovation in the telecommunications sector in the last decade has catapulted India in to the fastest and largest growing mobile phones market,an estimate of 8 million rural indians who own mobile phones do not have access to banks.So,Banks have the greater responsibility of fostering the financial inclusion in rural areas with the help of technology and innovation..
Posted by: Venkataramanan | September 6, 2011 11:51 AM