New Delhi: Shyama Kumari has a new-found sense of confidence. The 20-year-old college goer taught part-time at a local school for two years and saved Rs8,000, which she has put in a bank account. Her banker? The local drug store.
Small beginnings: Both Shyama Kumari and her father have a mobile bank account with a local medico
Kumari isn’t the only one who banks in a shop and shops in a bank. Around 1,400 people in her neighbourhood, Uttam Nagar—a lower middle class colony in West Delhi—have, through shops that include grocers and chemists, opened accounts that now have between Rs20 and Rs 14,000.
Uttam Nagar is home to India’s first experiment of some scale in what is called mobile phone banking that allows customers to transact with their bank through their cellular phones. Advocates of the technology cheer the possibilities both from the view of potential customers untouched by the banking system yet and from the perspective of banks for whom such a channel reduces costs by as much as half.
The Uttam Nagar project is the brainchild of Eko India Financial Services Pvt. Ltd—a New-Delhi-based tech start-up—and Centurion Bank of Punjab Ltd (CBoP)—that was taken over by HDFC Bank Ltd late in May—that enables customers to open a no-frills savings account on cellphones running on Bharti Airtel Ltd, India’s biggest mobile phone services firm.
Kumari opened her minimum-balance account in March with Sumit Gupta, who runs Gupta Medicos, a medical store in Uttam Nagar. Gupta, who doubles up as an Eko relationship officer, canvases and services customers and is also the only Eko distributor in the area responsible for Eko Cash Points, or retailers where all the transactions take place.
For Kumari’s father Ravindar Prasad, a beverages seller who also has an account with ICICI Bank Ltd, the Eko effort is transformational. “I was very sceptical about this and had the maximum number of questions, but when I opened my account, I felt there is nothing better than this. At ICICI, I need a minimum balance of Rs5,000 and I need to go to the bank branch or ATM (automated teller machine) to withdraw. This is very good for small amounts and I can bank as and when I please,” Prasad said. He has Rs1,000 in his account with CBoP.
Such small amounts add up and Eko has mobilized Rs4.5 lakh from nearly 1,400 accounts since February. “We are riding on the successful mobile story of India and want to leverage the behaviour of the pre-paid phone recharge model, thereby innovating the way banking is done for low income persons,” said Abhishek Sinha, chief executive officer of Eko. Sinha declined to give details of the service costs between his firm and CBoP.