Banking on technology - Nepali Times

DEWAN RAI

Rupa Thapa (pictured), 66, of Pagnath village, has put her thumb imprint on legal documents many times. But this time, instead of inking her thumb she was pressing it on a scanner.

"Fingerprint authenticated," says the machine in metallic English. Rupa giggles at the automated response. Instantly, machine operator hands her Rs 1,800 along with a receipt.

Rupa says she will buy food for the family with the money.
Rupa Thapa was the first person in Dailekh to receive a Smart Card under 'Sajilo Banking Sewa' launched by Siddhartha Bank aimed at bringing in Nepal's remote areas into the banking net. As a pilot project, the cards have been distributed to people under the UN's World Food Programme (WFP) cash-and-food in Dailekh.

WFP beneficiaries receive family food rations as well as Rs 90 per day for up to 80 days of labour on community roads, irrigation canals and drinking water projects. Siddhartha Bank is involved and has benefitted 484 households in Pagnath VDC alone.

"E-banking has reduced the security risk in cash distribution in rural areas," explains Moti Prasad Thapa, of the WFP's Nepalganj office. "It avoids wasteful spending of the villagers and helps them to develop a saving habit."

The wages of cardholders are directly deposited into their account from where they can access it by presenting their card to the local agent for verification. The accounts have been opened in the name of women to make sure the money is used properly.

The Smart Card works as a passbook and cardholders can avail all banking facilities through it. Later, Siddhartha will also allow depositers to also collect remittances, pay utility bills and disburse credit and micro-insurance.

A banker travelling to the village carries a portable battery-charged Point of Sale machine linked to bank's online network through mobile telephone service to make transactions. Smart Cards are similar to debit cards, but they use fingerprint for identification instead of personal identification codes, which makes it safer than debit and ATM cards.
"Rural customers in future can enjoy modern banking services from their nearest locality through branchless banking service," says Siddhartha Bank CEO Surender Bhandari (see interview).

According to the Rural Microfinance Development Centre in Kathmandu only a quarter of the population has access to financial services. Siddartha Bank's Easy Banking service has shown that with right technology and little innovation, banks can tap the wealth in the rural market and ease the liquidity crisis.

Says Jhank Narayan Shrestha of Nepal Rastra Bank's initiative to extend banking to rural areas: "Leapfrogging technology can help us bring banking services to the people."

Read also:
Back to the village
Nepali Times spoke to Surender Bhandari, the CEO of Siddhartha Bank, about the challenges and rewards of extending financial services to rural Nepal.

1. B2B
When there is a will there is a way. These days out in the open market many kinds of so-called 'microfinance institutions' (MFIs) are poking their noses to effectively provide banking and credit services. In general, they tend to use the empirical methods developed over the past more or less three decades of time to deliver the loans, taking in turn little or nonexistent collateral something. These loans include group lending and liability depending upon the gradual availabilities of savings while increasing the loan volumes, and creating the perennial access to future loans if there is the implicit guarantee of the full recuperation of the said loans of the past trade-offs.

For once, these microfinances are the expanding activities everywhere where such banking appropriate tools are providing services to the low-income households thereby helping them to finance their income-providing activities, to build new assets to promote their future innovative collateral services.

Whereas, microcredit is specifically destined to tiny-loans where the participants are nonsalaried borrowers dependent on the bond created amongst those who begin practically from scratch without any collateral income. The microcredit borrowers depend entirely upon their infallible trust in each others capacity to cope with the variable situations if they encounter. But their force of conviction to honor their debt within the time frame is like holding the last trumps for a successful deal.

As of microfinance, it refers to the microcredit and banking activities starting right from savings, money transfers, insurance comprising of some other financial products targeted at low-income households.

Over the past decade, some of the MFIs have developed some other range of products to serve the clients such as pensioners and low-income salaried workers. Those who search explicitly microcredit loans as cash for meeting the immediate expenses for education fees for students, medical expenses including some important events relevant to weddings as well as funerals.

It is obvious that all financial services meant for credit providing ain't always appropriate for all people at all times.

Hence, the different governments concerned with such microeconomic policy first search the sustainability of products so that the populace do not get involved in a fraudulent and never ending debt-ridden imbroglio.

Last but not least, we must not just gimmick up the shortcomings of global free market. Despite all loss of jobs and closing down of factories in rich countries, big transfer of skills and wealth has been operated in favor of the developing countries and at the same time very fast trends toward creation of jobs are taking place, especially in the lines of Eco-friendly and bio-diversified activity all over the world. And many INGOs are participating in different lines of activity to help the locals to improve their lot right from scratch.

It is a good way to 'dip a toe in the water' of overall life experiences.

That is all to the good, albeit for a second wind we have got to cope with the bitter and protracted obstacle course.

For more information log on to: http://www.seriosity.com and http://www.ibm.com/gio

Posted on: 10 JULY 2011 | 2:44 PM NST