India Employs Mobile Tellers to Extend Banking Services in Rural Areas

As part of India’s ambitious financial inclusion initiatives, mobile tellers equipped with wirelessly connected devices are being deployed across the country’s vast rural area to serve those un- and under-served.

The Reserve Bank of India, the country’s central bank, began the push for banking correspondents about five years ago. After slow initial growth, the central bank predicts the ranks of correspondents will more than double, to 126,000, by March. The Reserve Bank has ordered commercial banks to set up correspondents in every village with more than 2,000 people and has assigned each of those villages to one bank or another.

Swati Yashwant, a 29-year-old mother of one, is part of a growing legion of roving tellers intent on providing bank accounts to the nearly 50 percent of India’s 300 million households that do not have them. Using a laptop computer, wireless modem and fingerprint scanner, Ms. Yashwant opens accounts, takes deposits and processes money transfers for farmers and migrant workers in this small town 70 miles south of Mumbai, India’s financial capital.

Economists and policy makers say mobile agents like Ms. Yashwant — who also are employed in countries like Brazil, Mexico and Kenya — represent one of the most promising ways to help the rural poor save and protect their money. Many people in India who do not have bank accounts, for instance, buy gold necklaces or simply keep cash in their unlocked homes.

These mobile tellers are agents (business respondents) rather than bank employees, but receive a commission for each transaction.

For India’s banks, it is a relatively inexpensive way to recruit customers. While about 70 percent of India’s population is dispersed among more than 600,000 villages, the entire country has only 33,500 bank branches. Correspondents like Ms. Yashwant have set up 74 million bank accounts in India.

To ensure security and reduce risks, the amount of each transaction cannot be more than 10,000 rupees (about $212). In reality, many transactions are small and no more than a dollar or two.