A Lot In A Little

Thirty seven-year-old Anwar, a migrant from Aligarh, has been making his living ironing clothes in the New Seemapur slum in East Delhi for the past 10 years. Last Thursday, the father of three, who earns about Rs 200-300 a week, made his first deposit in a bank account. “I have more responsibilities now because I have children,” he says. “I need to keep my money safe for them. This savings account is a good way to make sure they will be taken care of.”
Anwar is one of the nearly 1,500 urban labourers who have joined a technology-assisted financial inclusion programme started by Basix, which describes itself as a livelihood promotion institution. The project, in collaboration with Axis Bank, provides basic, no-frills banking services to poor migrant workers. Basix and Axis Bank have also started a pilot remittance project to help migrant labourers in East Delhi transfer money quickly to dependents in Muzaffarpur in Bihar.

Hundreds of thousands of people make their way into India’s over-burdened metropolises every day to find a livelihood for themselves and the large families they leave behind in their native villages, which mostly remain outbacks of under-development. A majority of these desperate hopefuls manage to find only subsistence employment that consigns them to living out an urban nightmare. They have no access to services and amenities. These remain reserved only for those fortunate enough to have their existence documented through photo identity papers, ration cards, salary slips, bank statements or home ownership records. If the country’s biggest companies and banks are now reaching out to the acutely impoverished, they are doing so after decades of neglect, and thanks in most part to management gurus such as C.K. Prahalad, who divined a fortune at the bottom of the pyramid.

No Frills PleaseBasix : and Axis Bank are conducting their experiment in financial inclusion in the eastern part of Delhi, home to the capital’s largest slum. The area is populated largely with immigrant workers from remote hamlets in Bihar and Uttar Pradesh. “Most of the people who have enrolled for the pilot project are those who make a living as rag pickers, rickshaw pullers, house maids and auto rickshaw drivers,” says Preeti Sahai, who spearheads Basix’s programmes in Delhi. “These people earn very little and, until now, did not have a way to save.”
The initiative uses the ‘business correspondent model’ that the Reserve Bank of India created a couple of years ago to make banking services reach the lowest strata of society. Indian Grameen Services, a not-for-profit arm of Basix, acts as a business correspondent for Axis Bank, which essentially means it becomes an agent for the bank to source business. Basix helps workers in Delhi open no-frills, zero-balance accounts to begin saving and sending money home.

Photographs as well as biometric signatures (fingerprints) are used as primary identification for customers. Basix’s field agents carry a laptop, a fingerprint scanner and a digital camera to record these details. The new client is then issued a smart card that stores the account number, bank balance and biometric information. Usually, the prints of the index finger, ring finger and thumb are collected. But occasionally, even that is difficult. As labourers, they have worn out palms and fingers; some even have cuts that distort the print. “In such extreme cases, say, about two or three out of 1,500, we have actually used their toe-prints,”’ says Sahai.
Basix field staff physically verify addresses and job details of prospective customers. The staff then fill out the account opening forms for the bank. Basix agents keep making rounds of their respective localities so that customers can meet them to transact business. There is also a local branch office. The field agents carry three devices — a mobile phone and a mini receipt printer. These devices have smart-card sensors and a smart-card scanner with a biometric fingerprint reader to authenticate the ownership of a card as the person who wishes to make the transaction.

Easy Does ItThe accounts opened in Delhi can be linked with up to five dependents’ accounts in Muzaffarpur, says Raja Mukherjee, assistant vice-president for retail at Axis Bank, who monitors the pilot at the bank’s end. Mukherjee says the accounts are linked to Axis’ core banking platform through a software programme developed by Mumbai-based technology company A Little World (ALW). Dependents are not required to go to an Axis branch to withdraw money. If an amount is remitted from Delhi, Basix’s field staff reaches the recipient’s home with a fingerprint reader. A text message is then sent to the bank’s server, which authorises the transaction, not unlike the way a credit card transaction is authorised by banks. Once this is done, Basix staff hand over the money to the beneficiary.

This system of transferring money also works out cheaper for senders. Basix charges 2 per cent of the amount sent as transfer fee. Informal couriers, who rarely guarantee safe transmission of money, charge between 5 and 10 per cent. Another popular option, the postal money order, costs 5 per cent of sum sent, besides taking a long time to reach.Axis and Basix hope to ramp up the project to include thousands of people, products and areas. “The prospects of expanding it [the project] are huge,” says Axis’ Mukherjee. “But we have to first check the robustness of the technology.” Sahai says Basix intends to introduce products such as loans and mutual funds soon. “We will graduate to investment plans in 8-9 months,” she says. Basix is already talking to some mutual funds to structure products that will take small investments. She hopes to sell systematic investment plans to these low-income groups soon.

The customers appear ready. Sixty-year-old Gayatri migrated from a village near Aligarh when she was just six. She earns roughly Rs 60 per day selling bread pakodas, not far from where Anwar irons clothes. Her husband passed away four months ago and she is eligible for a widow’s pension. She wants to deposit that money in her new savings account, along with the Rs 10 she saves every day. “If I can save after meeting my needs, that will be good for me,” says Gayatri. “I also feel this is a good way of keeping my money safe for my children when I die.” Even small savings come with big needs.