Empowerment from an ATM

Dec 4th, 2006 | By | Category: International

On the business section of Saturday’s Financial Times I found this story:

Citigroup gives Indian poor a hand with thumbprint ATMs

Citigroup is rolling out a network of biometric automatic cash machines aimed at illiterate Indian slum dwellers, using the latest technology to woo the millions of “unbanked” poor.

The machines will recognise account holders’ thumbprints, eliminating the need for a personal identification number, and will have colour-coded screen instructions and voiceovers to guide them through transactions.

Citigroup has already installed two biometric automatic teller machines; one near a slum district in Bandra, a neighbourhood of India‘s financial capital Mumbai, and the other in Hyderabad, south-east India.

It says it aims to expand the network to 25-35 machines within 18 months with a target customer base of about 50,000.

“This is the first time we have used biometric technology for this segment of customers,” said PS Jayakumar, a Citigroup business manager in India.

“We see this as having the potential for global application in countries that are similar to India.”

The venture by the world’s largest financial group comes as banks start to appreciate the enormous market potential of India’s lower income groups and also begin to target the poor in big emerging market countries such as Brazil and Indonesia.

Though India‘s population exceeds 1bn, Citigroup estimates that there are only about 300m bank accounts in the country.

However, loan repayment rates among the poorest borrowers in micro-finance schemes are about 98 per cent – among the highest in the banking sector.

ICICI, India‘s largest private sector bank, is leading the push towards banking the country’s poor with a rural banking scheme using biometric cards and portable devices to allow illiterate farmers to perform transactions in remote areas.

Until now, most micro-finance initiatives aimed at the lower income groups had emphasised lending, rather than savings accounts, leading low-income earners to keep most of their money under their mattresses.

Ventures catering for India‘s poorest are likely to remain marginal earners for the banks for many years.

Mr Jayakumar said Citigroup aimed to make a profit but he gave no timeframe. “It’s not a philanthropic exercise,” he said. “For it to be sustainable, we should break even and make a little bit of money.”

Krishnan Sitaraman, head of financial sector ratings at Crisil, the domestic credit agency, said Citigroup’s biometric ATM network would not be easy to replicate beyond India‘s urban areas because of the lack of electricity and other facilities in rural areas. “The technology is reasonably advanced but in terms of the reach, I wouldn’t think it would very substantial in the context of India,” said Mr Sitaraman.

As dull and prosaic as it sounds, giving banking facilities to the poor can have a life-changing effect. The huge success of the micro-credit schemes in Bangladesh, leading to a Nobel Prize for Mohammed Yunus, showed what a difference even the most modest loans could make.


Promoting a culture of saving, through assuring people that their cash is readily available, and giving people a place in the formal economy can be more empowering and liberating than numerous acts of charity and aid.

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