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This map shows the millions of households lacking bank accounts. These phones could be used to extend loans and savings accounts to the poor families who now lack access to the financial system

The company does face some emerging local competition. In Bangalore, JiGrahak Mobility Solutions has developed a popular bill-paying and banking platform, but it’s sticking to the upper end of the market; its service requires the Internet connections available on higher-end phones. In Delhi, Eko India Financial Services is partnering with a local bank to bring no-frills bank accounts to the rural poor in a pilot project limited to 5,000 people. And Obopay India–the Indian branch of a U.S. firm–is working on developing a mobile microfinance platform in partnership with Grameen Solutions, one of the organizations created by the Bangladeshi microfinancier Muhammad Yunus, winner of the 2006 Nobel Peace Prize. (It is not connected with Grameen Koota in Bangalore: grameen means “rural” or “of the village.”) Obopay’s initiative, called “Bank a Billion,” was scheduled for a rollout in Mumbai and Bangladesh by early November, says Vijay ­Balakrishnan, chief marketing officer for Obopay India, which hopes to enroll a million people in those two regions within 18 months. In Obopay’s scheme, the purchase price of a cell phone would be built into a Grameen microloan; bill-paying software would be incorporated into the SIM card; and the borrower would open a no-frills bank account.

Cash and Cows
The difficulty with such efforts is that it’s not clear how hundreds of millions of poor rural people doing mobile banking would actually deposit and withdraw cash, even if they used their phones for transfers. No nation has yet convinced its citizens to forsake cash-stuffed wallets and convenient ATMs. Sabira Khanam, for example, sells her saris for cash. And she makes cash deposits in a conventional bank account (though from there, she will be able to receive and repay microloans electronically under the Grameen Koota/mChek project). “Today, cell-phone companies by themselves cannot provide the things that banks provide,” says Harvard’s Chu. “At the end of the day, if this is to be an effective platform, you have to have physical delivery or access to the funds.”

In India, some existing programs could help bridge the gap. Prodded by government mandates, state-owned banks such as Punjab National Bank, State Bank of India, and Corporation Bank have established outreach programs in recent years. An array of branchless-banking efforts–stand-alone kiosks, portable terminals manned by village representatives, and banking services delivered through a Kinko’s-like retail franchise run by a firm called Comat–have appeared in some of India’s 638,000 villages.

One such effort has taken hold in Kasaghatta, a village about 70 kilometers north of Bangalore. Reached by a few kilometers of bumpy dirt road, Kasaghatta does not appear on national maps. Extended families share concrete or thatched houses; women in brightly colored saris scrub pots and lead cows down red-earth alleys; men haul steel buckets of fresh milk to waiting delivery trucks; roosters skitter about. The rocky hills that characterize southern India’s Deccan Plateau dot the horizon.

If you need anything in Kasaghatta, the person to see is ­Muniyamma Ramanjanappa. A calm and kindly grandmother in her 40s, she manages the village school and serves as its teacher for the primary grades. She’s also the government’s point of contact on health programs for women and children. Government-issued supplies and medicines, as well as financial assistance to local mothers, are routed through her. She frequently travels seven kilometers by bus to the nearest branch of the state-run Corporation Bank, which disburses government benefits. Through her relationship with the tellers, she has become the bank’s “correspondent” to Kasaghatta. The bank issued her a machine–manu­factured by the Bangalore startup Integra ­Microsystems–that in 2007 brought banking to the village for the first time. Villagers who visit Muniyamma can now use smart cards and thumbprint authentication to deposit and withdraw cash. Muniyamma keeps the cash in a strongbox, reconciles accounts via a wireless connection to the bank (established over her cell phone), and gives out printed receipts for each transaction.

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Credits: Michael Rubenstein, Tommy McCall, David Talbot

Tagged: Communications, Business, software, mobile, cell phones, India, e-banking, mobile banking, microfinance

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