It was pure happenstance. Here I was, playing the reporter, accompanying the energetic DM of Purnea (Bihar), Dr N Saravana Kumar, to the Baisi block?a 40-minute drive from Purnea town?trying to get a good story of the management of Samastipur floods of 2007 and the recent changes in Bihar, and where should I end up but at a function where the DM was to ?inaugurate? a new customer service point (CSP) operated by SBI?s new banking correspondent, Om Prakash Yadav. It was a great opportunity to see the banking correspondent model in action in a block that is believed to be the least literate in Bihar.
A small shamiana was in place with over a dozen locals in attendance. Om Prakash, a local in his 20s, was confident but a little stiff with all the attention. The manager of the SBI Baisi branch and other SBI officials were there, as was the SDO of Baisi, Md Moeezuddin, and Birendra Singh, the manager operation, Bihar & Jharkhand of Zero Mass Foundation, one of SBI?s partners in implementing the banking correspondent model.
The technology was indeed impressive. It had two little parts?a mobile phone and a slightly-bigger-than-a-palm combined thermal printer & fingerprint reader. The two were connected by Bluetooth?naturally. Every transaction using the specialised software is recorded in Zero Mass?s own server and at a special server at SBI, the latter being integrated into SBI?s main CBS data once a day at 5 pm.
We saw the technology in action after the ribbon-cutting of the CSP?a typical garage-type shop space about 12 feet by 10 feet in size. A new account opening was supposed to be a matter of few seconds. A bearded Muslim man, seemingly in his 50s, stepped up. He already had his one-page account opening form filled up along with the photocopy of an ID. The form itself had been photographed on the mobile. Om Prakash unlocked the software with his own fingerprint and, guided by prompts in Hindi on the mobile, took the fingerprints of the three fingers of the man?s left hand. He then asked him to say something for voice recognition?as back up, in case something happens to his fingers. The man was brief??Abul? was his one-word response. A photo of his was clicked on the mobile as well. The entire time, a couple of curious twelve-year-olds were trying to come close to the table for a close-up view and were being chased away by the adults. Abul was promised an account card?a single laminated card with his photo and account info?in a few weeks. It would arrive from Mumbai, prepared by ?A Little World?, the technology partner.
A few such cards were already on display as was a lady card-holder who had come ? husband and a pre-teen son in tow?for a withdrawal. She had deposited R10,000 earlier and wanted to withdraw R5,000 today. As she put her index finger on the reader, her account information, complete with her picture, flashed on the mobile phone and she got her cash as well as a statement saying she has a balance of R5,030. A system of receipts printed in Hindi is in the works.
What is in it for Om Prakash? As initial encouragement, SBI is paying him R2,000 per month. He also gets a commission of 0.5% per deposit and 0.25% per withdrawal. He can accept deposits and give withdrawals, up to a daily limit of R10,000 either way per customer. The current arrangement is for him to work on this activity from 9 am to 5 pm. He is, of course, perfectly mobile and can travel within a specified area to carry out transactions. Nor does he have banking hours. He can virtually practice ?anywhere, anytime? banking within an area. The cash amount with him is insured.
The DM was quick to connect the initiative to major government projects. Indira Awaas Yojana, which involves the government paying out R45,000 per recipient and a project rife with corruption (and not just in Bihar), seem to be an obvious beneficiary. The MGNREGA beneficiaries, currently using post offices, could now have another option.
The new system is not totally free from leakage either. We came to hear of a banking correspondent who charges R50 per withdrawal. Also, at the bank level, SBI is yet to settle down to a completely profitable banking correspondent model and continues to experiment with the incentives.
Mr Dinakar, the SBI Baisi branch manager, however, has set a target of at least 2,000 new accounts for his branch and is counting on the banking correspondent model contributing heavily to it. So is the district administration, for which it can help solve several cash disbursement-related headaches.
The author teaches finance at the Indian School of Business, Hyderabad