NEW DELHI: It took all of 15 years for ATMs (Automated Teller Machine) to reach Mizoram, after they were launched in India by HSBC bank in 1987. But today, four villages in this state boast of being at the helm of a rural banking initiative, which uses the mobile phone instead of the ATM to connect banks to their rural customer base.
In a pilot project initiated by the State Bank of India in November in three states, Mizoram, Uttarakhand and Andhra Pradesh, over 5,000 people are using biometric smart cards. These store the user’s thumb-print information. Thanks to one such card, Helen Laltluangi, a resident of Sihphir village in Mizoram, can now simply turn up at the house of Rochhungi, who also doubles up as a cash dispenser.
Rochhungi, a 51-year-old widow, is a customer service provider, a link between the bank and the consumer. Helen swipes her card on Rochhungi’s mobile phone—a typical Nokia 3310, except that it has a biometric sensor. The phone uses radio waves to read the signals from the card. These signals are sent via General Packet Radio Service to a main server. Within seconds, the consumer’s details are verified and the money is debited from the account. Rochhungi then hands over the money to the customer. A Little World, a private limited company, is providing the technological know-how for the project.
“The project has been well received till now,” said A. M. S. Daniel, the project director in Mizoram for Zero-Mass Foundation, a not-for-profit trust, and one of the cornerstones of the project. “In Sihphir alone, we’ve already registered 602 customers.”
According to Daniel, over 2,600 transactions have already been made, thanks to over 1,200 customers in Mizoram, who have swiped, credited and debited about Rs4.5 lakh. While it’s making life easier for the villagers, it’s also making extra money for people such as Rochhungi. “It’s a good source of income for us, Rs2,500 a month, plus a commission for every new customer that we add,” she said. “This is in addition to my business of horticulture.” Laltluangi is ecstatic. “Going to the bank, and withdrawing money is not a convenience here. It’s like going on a trek,” said the 39-year-old schoolteacher. The nearest branch is 20km away, in Aizawl, said Laltluangi, and “Rochhungi’s house is a mere 2km away.”
The cash management, card printing, server maintenance are handled by the foundation and the technology partner. “There’s no way that money can be debited or credited without the SBI servers in Mumbai knowing about it,” said Daniel. The foundation has a pre-paid account with the bank. The foundation selects and trains the local cash dispensers, and makes sure they have enough cash on hand.
“We choose local community leaders... train them and put them on the job,” said Vaidyanath Yerraguntla, Daniel’s counterpart in Andhra Pradesh.
M. C. Jeishi, assistant general manager, SBI, who is based out of Aizawl, said the project is a spin-off of RBI’s Financial Inclusion Project. Under this, RBI has asked banks to reach out to people who’ve not yet benefitted —primarily in areas where it’s difficult to maintain branches and ATMs.
“The Northeast makes a good starting point as bank penetration is extremely low,” said Jeishi. “With a system like (this), we save substantially on transportation costs, setting up ATMs and maintaining them.”
The foundation is also launching a new project in Warangal this week, in which the state government can disburse pension grants using the same system. Five other banks—UTI Bank, Andhra Bank, State Bank of Hyderabad, Union Bank of India and Andhra Pradesh Grameen Vikas Bank are involved