News

India uses 'human ATMs' to reach unbanked population

October 2, 2011

According to the Bend Bulletin, India is using "human ATMs" to reach its unbanked rural population.

Swati Yashwant, 29, is part of a growing number of traveling bank tellers working to provide bank accounts to the nearly 50 percent of the 300 million households without one. Yashwant opens accounts, takes deposits and processes money transfers for farmers and migrant workers using a laptop computer, wireless modem and fingerprint scanner.

Yashwant is one of an estimated 60,000 “banking correspondents” who are not bank employees but earn commissions from banks for each transaction, according to the article.

The Reserve Bank of India started the initiative for banking correspondents about five years ago, and the central bank expects the ranks of correspondents will be more than 126,000 by March 2012. 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.

About 70 percent of India’s population is dispersed among more than 600,000 villages, but the entire country only has about 33,500 bank branches.

“If you used the traditional high-cost banking system, you will never reach these people,” said Jayant Sinha, managing director of the India office of Omidyar Network, a philanthropic investment firm set up by Pierre Omidyar, the founder of eBay.

The accounts set up by the banking correspondents earn 4 percent annual interest, and there are no maintenance fees, or charges for deposits or withdrawals.

For more information on this topic, visit our trends/statistics research center.