Remote E-Banking in India

Kasaghatta, India: It’s a 90-minute walk from this southern Indian village–one of 730,000 in India–to Doddabenavengala, the nearest town with a bank branch. Until a few months ago, Karehanumaiah, a 55-year-old agricultural laborer, had no bank account, which also meant he had no access to formal credit. (He would have to pay 10 percent monthly interest to informal lenders to, say, borrow $45 to buy a goat.) But that all changed in recent months.

In this video, Karehanumaiah uses a desktop terminal to deposit 150 rupees (about $3.50) into his new account at Corporation Bank, with help from Muniyamma Ramanjanappa, a village resident who conducts these transactions in her concrete house as a bank representative. First, a smart card and a thumbprint scan prove his identity. Next, Ramanjanappa updates the bank balance information on his smart card by connecting the terminal to the bank database with a cell phone. Finally, Karehanumaiah hands Ramanjanappa the cash and gets a receipt for his deposit (which brings his balance up to 160 rupees). To their left is Ram Sirupurapu, executive director of Integra Microsystems, the maker of the terminal. Ramanjanappa makes weekly trips to the Doddabenavengala branch with the cash. And now that Karehanumaiah has a bank account, he can borrow money from the bank at rates of between 8.5 and 13 percent annually–far less than in the informal system–and gain a toehold into the formal economy.

Ninety percent of India’s rural residents lack bank accounts, and a variety of technologies are being applied to the problem. Other efforts include using cell phones to make payments and execute bank transactions in a nation that is enrolling a staggering eight million new cell-phone accounts monthly, many of them in rural areas.