In a new twist to the microfinance story, which was all about lending, Sub-K iTransactions ? part of the Vijay Mahajan-promoted Basix Group ? is now working towards savings in rural households and urban slums.
The company is the first to adopt a branchless banking model with a mobile-based technology on a real-time basis, along with biometric authentication in the rural households with income less than R1,000. And this is made possible through micro-ATM counters, thereby leading to decongestion at banks.
Sub-K iTransactions MD and CEO Amit Mehta says the micro-ATM counters address the core issue of financial inclusion in banking services and give access to other digitised services, such as government payments, prepaid top-ups and utility payments. Sub K, which means less than R1,000, would help people access services within a distance of 1,000 metre with transaction values under R1,000.
This service is enabled through a network of basic convenience outlets (BCOs) that are operated by the company agents. Through this micro-banking model, Sub-K is hopeful of achieving a turnover of R100 crore by 2014 from the expected R40 crore in the current fiscal.
In remote villages, Sub-K identifies and appoints sub-agents or BCOs, who are provided with a mobile phone, printing and an authentication device that directly connects with a server in the bank and approves transactions for customers using a patented process.
Each customer transaction is recorded at the bank and a proper receipt is issued on the spot. The BCOs are connected to banks and open no-frills accounts for the users for free for depositing, saving and withdrawing cash. For each transaction, the sub-agent is also given a small commission to sustain the ecosystem.
?We are working to promote savings to scale up social commerce in the rural sector,? explains Mehta. After a year of piloting in six states, the company is planning to scale up this model, targeting 20 lakh customers across 15 states with 5,000 to 8,000 business correspondents (BCs) by the end of this fiscal.
The BCO owner, who is mostly a provision store owner, gets an assured income of about R2,000 per month, which is about 25% of his store earnings, he says.
Accepting that it is a herculean task as awareness is relatively low, Mehta says: ?We have tied up with six banks ? Syndicate, Axis, Ratnakar, Citi, ING Vysya, and ICICI ? for this no-frills accounts.? He adds that four to five more banks would be added as partners soon.
The next move is to look at intra-operability. ?We are in talks with banks for intra-operability as this is a fool-proof system with secured technology,? he says. Working on a mobile-based technology with voice and fingerprint-based biometric authentication, it will soon be integrated with the UID server over a period of time.
The company is in talks with PE players. ?We are looking to raise long-term debt of R10-15 crore in 16-18 months. With a equity-debt ratio of 1:2, we are looking at an operational breakeven this year and at achieving complete breakeven in the next two to three years,? he adds. The company recently raised R9 crore from Michael and Susan Dell Foundation to fund its expansion plans.
