Kothlapur, Medak, Andhra Pradesh: Armed with a rectangular black box only slightly larger than a cordless phone handset and a flip-open cellphone, Rebka is the new custodian of hope for the 2,000 people living in Kothlapur, a village in Medak district, 55km north-west of Hyderabad.
Backyard banking: Rebka (right), who helps set up zero-balance accounts at SBI for Kothlapur residents, runs biometric identification checks on customers before handing over the money due to them. Harikrishna Katragadda / Mint
Not least because Rebka, who prefers to be identified by just one name, is an active member of the local self-help group Velugu Gramaikhya Sangham, or because she is a “motivator” for other members of the group. (The Telugu name of the group roughly translates as velugu village unity association, with velugu meaning light.)
The 32-year-old helps set up zero-balance accounts at State Bank of India (SBI) for Kothlapur villagers to receive pensions and payments under social security schemes such as the National Rural Employment Guarantee Scheme, or NREGS, which promises 100 days of work a year to at least one adult from each poor rural family.
After setting up the accounts, which free customers from having to maintain a mandatory minimum balance, Rebka lets villagers withdraw money at any time of the day or night, unlike bank branches that follow strict business hours.
“Sometimes they (villagers) come home at 6.45 or 7 at night to collect pension or NREGS wages due to them,” Rebka says, while looking for a Re1 coin to give to Neerudi Pentayya, a Kothlapur resident who has come to collect Rs286 in wages for three days of work.
Rebka serves as a banker in the backyard for Kothlapur. SBI, the country’s largest lender, is one of the banks with which the Union government has tied up to disburse payments under various social security schemes, including NREGS wages.
SBI has worked out a simple process that allows beneficiaries such as Pentayya to open a zero-balance account, into which the bank credits money due to them, that it gets from the Union government. The money in the account is then handed over to them in the village, through bank-in-the-backyard functionaries such as Rebka.
Though their banking needs are rudimentary at best, villagers are happy about their SBI accounts because the facility helps them avoid a 5km trek to the Sangareddy post office to collect their pension or NREGS wages. “It ends up taking most of the day and even then we may not get our money,” says 70-year-old Pentayya.
Villagers would fret over whether the official disbursing payments was on duty the day they made the trip to Sangareddy and worried about whether their pension or NREGS payments had arrived with no error from the Union government’s coffers in New Delhi to the post office.
In Kothlapur, Rebka disburses around Rs50,000 every month to pension beneficiaries and those employed under NREGS.
Also See Kothlapur (Map)
The little black box that Rebka carries around is a biometric device that matches the fingerprints of customers and communicates wirelessly with her cellphone, which, in turn, is linked to the SBI servers that hold information about the account holder and the account. The money is then debited from the beneficiary’s account.
Backyard banking: SBI issues photo identification cards and collects fingerprints to run checks to ensure that the right beneficiaries get the money. Rebka uses a cellphone to take a picture of Ratnamma for a photo ID. Harikrishna Katragadda / Mint
The entire transaction takes just a few minutes in real time. The biometric device, which matches fingerprints with originals collected and stored in the SBI database at the time the account is opened, ensures that the payment is indeed going to the beneficiary for whom it is intended.
For her services, Rebka gets 0.5-1% of the money she disburses, same as Zero Mass Foundation, a non-governmental organization that is authorized by the Reserve Bank of India, or RBI, to deliver services on behalf of a bank. Zero Mass Foundation, in turn, ties up with local self-help groups, and their members such as Rebka, for last-mile reach.
The initiative was started in November 2006, and SBI has so far opened 1.77 million such accounts across 1,183 villages in eight districts of Andhra Pradesh. In Medak district alone, the bank has opened at least 450,000 so-called SBI Tiny accounts.
India’s banks are trying to deliver banking services to low-income groups. Given that only 59% of Indian adults have bank accounts, the opportunities are enormous. In rural areas, just 39% of the adult population has bank accounts. Coverage is worse when it comes to accessing loans. The credit market is small, with the number of loan accounts constituting only 14% of the adult population. In rural areas, the coverage is 9.5%.
Backyard banking: Ratnamma collects her NREGS wages and an SBI receipt at the panchayat office at Kothlapur. Harikrishna Katragadda / Mint
For SBI, the rural banking initiative is not quite a profitable venture, at least not yet. For the bank, it is an obligation under central bank guidelines aimed at making banking services available to sections of society that had been previously perceived as unbankable.
In more recent years, with urban customers over-leveraging themselves and business opportunities getting limited in the face of intense competition, commercial banks in India have been increasingly taking the rural route. By 2012, through its various so-called financial inclusion initiatives, SBI hopes to reach out to 100,000 unbanked villages across the nation.
Profits, if any, are in the future, but the costs are now and real. For instance, the apparatus and the cellphone that Rebka carries cost Rs22,500, add to that the commission she and Zero Mass Foundation receive.
Asked when such initiatives would become profitable, Rama Chandra Reddy, deputy general manager (rural business unit) at SBI in Hyderabad, replies: “When at least 40-50% of these accounts become active and people actually start using them for depositing and withdrawing money.” He expects this to happen within a year.