FINO takes banks to poor man's door

B D Narayankar

M MALAIAH, a resident of Shanigram in Karimnagar district of Andhra Pradesh, about 180 km north of Hyderabad, a couple of years ago used to visit a long-distance bank to collect his National Rural Employment Guarantee Scheme (NREGS) wages.

He does visit the bank anymore. Instead, the bank visits him for payments. This was possible with the use of credit card-sized biometric smartcard, a revolutionary invention from the house of Financial Information Network and Operations (FINO).

However, Malaiah still traverses miles to deposit his hard-earned money. There, however, is good news awaiting villagers like him. Exactly a month from now, Malaiah will not have to visit a far-off bank to deposit money. Instead, he can to do it at his doorstep. Thanks to FINO, ICCI Bank and International Finance Corporation (IFC), who are to install the micro deposit machines, which look something like ATMs.

"Poor people find it difficult to go to banks and make a deposit. These machines solve that problem, as they will be available at locations where they live," said Manish Khera, chief executive officer of FINO, which had also launched biometric smartcards in the Indian market earlier.

Referring to the product being made by the US-based automated teller machines (ATMs) maker NCR Corp on design architecture of FINO, he said: "Using their smartcards and these machines people can make deposits at any time and get a receipt at the point of transaction without any paperwork."

The machines look somewhat like ATMs but are much smaller. "They can be placed in ordinary kirana (grocery) shops and require no special construction that ATMs require," Khera said.

Set up in 2006 with a seed capital of Rs. 800 million ($20 million), FINO counts among its promoters India’s largest private commercial bank, the ICICI Bank, and the World Bank’s private lending arm IFC.

The company is working with various banks, micro-finance institutions, insurance firms and the government to extend banking services to the poor in both urban and rural areas.

One of the solutions developed by it is a personalized biometric smart card that is provided to each customer to act as a digital passbook for transactions.

"We already have 1.6 million customers using our smart cards solution and that figure should go up to four million by the end of March 2009," Khera said. "Our target is to reach 25 million in five years."

The company has estimated at 300-500 million the number of people in India who either do not bank or have no access to such financial services.

"The risks for banks have gone up as they are now using non-employees as agents to extend their reach.

This is where technology solutions are needed to ensure safety and security of transactions, for both banks and their customers," Khera said.

At Chandni Chowk, the capital’s old quarters and an important commercial centre, the company’s smart cards have helped more than 1,500 vendors and hawkers to open accounts with Union Bank, the official said, giving an example.

"Union Bank is now using FINO’s business correspondents and their technology to enroll vegetable vendors, migrant workers and daily wage earners to open savings accounts."

The areas cover Mumbai, Tamil Nadu, Uttar Pradesh, Chandigarh and New Delhi, he said, adding Punjab National Bank has also launched a similar scheme with FINO in New Delhi for migrant workers and daily wage earners.

This apart, in Andhra Pradesh, smart cards are used for government pensions and for disbursing wages in five districts under the National Rural Employment Guarantee Programme (NREGP).