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IBM, Indian tech firm devise smart card for poor

IBM, Indian tech firm devise smart card for poor
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First Published: Thu, Mar 08 2007. 03 54 PM IST
Updated: Thu, Mar 08 2007. 03 54 PM IST
AFP
Bangalore: US giant IBM and an Indian technology firm said on 7 March that they had devised a smart card to help poor entrepreneurs access credit from institutions that lend to the “unbanked.”
Small traders who have borrowed from microfinance institutions such as Bangalore-based Janalakshmi social services will be able to take part in fruit and vegetable auctions using the card, without having to take loans from greedy moneylenders, the companies said.
A technology platform developed by IBM and Financial Information Network and Operations, a unit of India’s second-largest bank ICICI, will hold customer accounts of microfinance companies.
The system would be accessed by customers using a fingerprint-enabled smart card, which will serve as both proof of identity and an electronic passbook, the two companies said in a joint statement in Bangalore.
Financial Information Network said it plans to approach 200 microlenders based in India and abroad with the technology, enabling them to offer not only credit but also investment, remittances and insurance services to the poor.
The system will cut costs, reduce paperwork, boost efficiency and create a database of unbanked poor, helping up in bringing them into the mainstream, it said.
“We have a large number of customers with very large transaction volumes and small ticket sizes,” said Ramesh Ramanathan, who heads Janalakshmi Social Services.
“Our audit and control systems need to match the volumes, and our transaction costs need to be low enough to enable low-cost delivery,” he said.
“None of this will be possible without technology.”
Microfinance was popularized by Bangladesh’s “banker to the poor” Muhammad Yunus and his Grameen Bank who won the Nobel Peace Prize last year for helping millions escape poverty through a system of small-scale loans.
In India, a nation of 1.1billion people, “the microfinance sector has seen a tremendous upsurge in recent times,” said Manish Khera, who heads Financial Information Network.
“There is a huge potential in this domain and we see ourselves branching out to serve many more unbanked geographies,” he said.
The country is home to 400 million people who have no access to traditional banking services, according to estimates.
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First Published: Thu, Mar 08 2007. 03 54 PM IST
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