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A small tweak in technology has changed the way women members of self-help groups (SHGs) in 50 villages of two blocks in Unnao district of Uttar Pradesh carry out banking transactions. Now, SHG members and joint signatories do not need to visit a bank branch every time they need to deposit or withdraw cash.

Under a pilot project of the National Bank for Agriculture and Rural Development (Nabard) in the district, women SHG members were appointed as business correspondents or Bank Sakhis, armed with micro automated teller machines (ATMs) that were dual authentication-enabled.

This essentially means that if SHG members need credit, the joint signatories do not need to visit the bank branch to withdraw cash. They can use the micro ATMs to authorize payment, which is then electronically transferred to the respective bank accounts of members.

“The Bank Sakhi experiment has proved to be very successful in empowering women and bringing convenience to SHG members. We will soon issue guidelines for regional rural banks to adopt the model in other districts and it will be up to them to embrace it as they are the most important stakeholders in the entire process as they extend such credit facility to SHGs," said Subrata Gupta, chief general manager, department of financial inclusion and banking technology, Nabard.

Micro ATMs are portable gadgets that can be used to authenticate banking transactions from remote locations using biometric or card-based technology. An SHG is a group of women or men who collectively make periodic contributions to a bank and create a corpus from which group members, who are small entrepreneurs, can then borrow to sustain their businesses.

Under the Nabard-SHG bank linkage programme, SHGs with a track record of savings can avail loans from banks, including regional rural banks (RRBs), to extend credit to their members.

According to Nabard data, there are 7.43 million savings-linked SHGs across the country with a portfolio of 9,897.42 crore, and an aggregated loan outstanding of 42,927.52 crore as on 31 March 2014.

The Bank Sakhi programme was started in May 2013 in Unnao by Nabard under its Rural Financial Institutions Programme, along with German International Cooperation (GIZ) in India, a German federal government enterprise. Subsequently, the Bank Sakhi programme was started in Dewas and Indore districts of Madhya Pradesh in mid-2014. The aim of the programme was to enable women SHG members to become the customer service point for all villagers.

In Uttar Pradesh, the Gramin Bank of Aryavart was the connected RRB, while in Madhya Pradesh, it was the Narmada Jhabua Gramin Bank.

However, the dual-authentication technology has been deployed only in Unnao as yet, since starting in February 2015, and is soon expected to be implemented by the bank across other districts.

“Within this financial year, we will upscale the project to another 50-60 villages in Barabanki and Hardoi districts," said J.S. Ravi Kumar, chairman, Gramin Bank of Aryavart. He added that since the technology has been helpful, other banking correspondents apart from Bank Sakhis will also be given micro ATMs with dual-authentication technology.

“We realized that SHG signatory members still needed to visit bank branches to collect money or deposit. It is then that we took up the challenge of introducing the technology," said Vineet Mathur, chief technology officer, Bartronics India Ltd, the technology service provider.

Every individual member’s savings accounts were then mapped and linked to the cash credit loan account of their SHG, which enabled joint signatories of SHGs to disburse loans electronically to members’ savings accounts. And, members could also pay back electronically, all through a micro ATM.

“The other problem that was solved in the process was that of members maintaining registers to note transactions. It was only when the SHG signatories visited a bank branch that the bank could record transactions. Now it has real-time records," added Mathur.

“This project creates a win-win situation for all stakeholders by creating an ecosystem whereby a woman SHG member working as an agent helps SHG members open individual accounts and facilitates all transactions between the group and its members through a micro ATM. This ensures funds remain with the bank longer, individual members’ transaction history is created, transaction levels and balances in accounts improve," said Amit Arora, technical lead and head, financial inclusion, GIZ in India.

The other advantages of the system have been that since the money remains in electronic mode, the risk of cash getting spent on unproductive expenditure has reduced and the accounts, both of SHG members and the group, earn more interest. “SHG members can now withdraw as and when the need arises," Arora said.

The digitization of transactions is expected to bring in transparency in the way SHGs operate and has also increased trust among SHG members as every transaction can be undertaken in their presence.

“Block-level SHG federations have entered into a memorandum of understanding with the technology provider (Bartronics) for training of new Bank Sakhis by old Bank Sakhis for capacity building," said Kumar.

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