Kirana store as neighbourhood bank

Written by Saritha Rai | Bangalore | Updated: Aug 15 2014, 14:45pm hrs
BankOutside Manjunatha Stores
Prime Minister Narendra Modi is expected to touch upon a much-anticipated financial inclusion plan in his Independence Day address on Friday. In a small kirana outlet called Manjunatha Stores, in the swarming BTM Layout neighbourhood in Bangalore, one can already hear a bit of its echo.

Pushcart vendors, tailors, domestic help and drivers from the modest surroundings walk into the store to open a savings account and then deposit money, make withdrawals and transfer cash evidence that Indias banking revolution is silently underway.

More than 30 such outlets have opened in Karnataka, Telangana and West Bengal and new ones are scheduled to open within a month in Delhi, Tamil Nadu and Kerala. These are part of the countrys first chain of entirely Aadhaar-enabled, mobile-based, paperless banking facilities.

I can go to my bank even if I finish work after 8 in the night, says Rajeshwari Sarwade, 29, a self-employed tailor who lives two streets away from the Kiran store. Sarwade, who buys her daily needs like atta, onions and toothpaste there, says she finds the facility convenient both in terms of distance and time. She does not have to take time off during her busy work hours as the store is open from 9 am to 10.15 pm.

No bank can match such a location, timings and personalised service.

The bank-in-a-kirana-store model is bringing financial inclusion nearer to the doors of the underprivileged like Sarwade in a country where about half the 1.3 billion people have no access to banking. The simple low-cost banking solution has its backend based on the Aadhaar platform and is mounted on an Android phone. The solution has been created by Bangalore-based Novopay, a company backed by Silicon Valley venture capitalist Vinod Khoslas Khosla Labs.

India has seen nothing like it before, and the nearest global comparison is with the successful M-pesa, a mobile-based money transfer and microfinance service in Kenya.

When my field team first approached grocery stores to open Novopay outlets, they laughed and said, that is not possible, you are joking, says Gautam Bandyopadhyay, chief operating officer of Novopay. He says now he cannot cope with the demand for the facilities from small retailers countrywide.

Novopays outlets will double in number by September and continue to scale up rapidly. They are a godsend for those like Firoj Jahan, who says she is intimidated by the idea of going to a bank. It is crowded, there are many forms to fill up, and I cannot go there alone, says the 42-year-old housewife. Jahan was perfectly at ease when she recently opened a bank account with her grocer, Manjunatha, and is already making deposits and withdrawals at the micro ATM. She feels confident and comfortable at the store, says her husband Kaleem Ahmed, who runs an Urdu language tuition class.

Companies like Novopay, whose banking solution is linked to the online biometric authentication of the Aadhaar programme at its backend, could help push the financial inclusion agenda by going around such challenges. Bandyopadhyay says his company aims to open a million such outlets countrywide.

Manjunatha H R, the owner of the grocery, has helped open 114 bank accounts in the few weeks since the facility was launched jointly with the state-owned Bank of India. He gets a micro commission for each new account and transaction. An Aaadhar card holder can fill the banks single-page account opening form and attach two passport size photos. The process generally takes two days. Many are not literate and use their thumbprint to open the account, says Manjunatha.

The banking paraphernalia required for this micro ATM: a smart phone, a small biometric fingerprint reader and a tiny printer. All of these are so compact that the store owner has started taking it to the neighbourhood mosque and self-help groups to recruit new customers.

To deposit or withdraw cash, customers only need to provide their Aadhaar numbers. The store owner authenticates their identity by scanning a fingerprint before depositing or withdrawing cash. Any sum from Rs 100 to Rs 10,000 can be handled in a single transaction. Each transaction is tracked at Novopays NOC (Network Operations Centre) in Bangalore.