New Delhi: Sumit Gupta has been selling medicines for the past 10 years. Over a decade he has learnt to provide additional services like selling LIC policies, SIM cards and payment of phone bills. So when EKO, a micro finance star-up, asked him to sign up as a cash point for them he readily agreed. “People can deposit and withdraw money at my shop. Banking has become very convenient for them,” says Gupta.
The project was launched two weeks ago. Eko has tied up with Centurion Bank of Punjab, now taken over by HDFC, to open no frills savings account for the under privileged. The company says all one needs is a cell phone and a proof of identity. “The transaction is initiated on the cell phone through a specific string that gets sent through the cellular network to our servers. The server creates the transaction and sends back messages to both the service point and the member. At that point cash exchange will happen,” says Matteo Chiampo, Chief Product Architect at Eko.
The cash is collected every day and deposited in Eko’s omnibus account with Centurion Bank of Punjab. Here’s how it’s profitable. In accordance with the Reserve Bank of India’s guidelines the bank gives EKO 7% interest per annum on the money it deposits. This interest payout is divided between the cash points that collect the money and EKO.
EKO insist there are one million potential customers just in New Delhi who have no bank account and are still savers. The company has tied up with Airtel and talks are on with ICICI and
Citibank as well. But it’s getting the customer that is proving to be a challenge. Chiampo says “You go and talk to rickshaw puller, daily wage laborer who are waiting at the metro station. Very hard to convince them on the first step. They push back and they say wow! A bank. A bank really never talked to us before. Actually they seem like they don’t really want us that much.”
Mobile banking is touted as the cheapest source of banking costing between Rs2-3 per transaction.. EKO says if the pilot project goes as planned they will soon scale it up to providing credit for the customers as well.