FINO: Leveraging Technology for Financial Inclusion

            
 
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Case Details:

Case Code : FINC082
Case Length : 17 pages
Period : 2007-2013
Pub. Date : 2013
Teaching Note : Not Available
Organization : Financial Information Network and Operations Private Limited (FINO)
Industry : Business Correspondent
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Background Note

In July 2007, KC Chakraborty, the then Chairman and Managing Director of Punjab National Bank , said, "60% of the Indian population is away from the reach of the banking sector. 80% of the people are unaware of the insurance industry. While financial penetration is as low as 2%..."6 As of August 2010, the number of unbanked Indians was estimated to be more than 400 million.7 As the majority of the downtrodden lacked guarantors and official proofs of residence, they could not open accounts with banks in the normal fashion. In rural and remote regions, banks also faced several impediments such as absence of reach, distance from the category, and steep costs of physical infrastructure to service such customers.8

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Also, the lesser amounts of money involved in transactions by these individuals led to smaller revenues for bank branches. Several prospective borrowers did not have basic documents like land deeds, ration cards, electricity bills, or voter ID cards. Bankers seldom gave loans to individuals that they failed to document.

Technology could be employed to furnish a simple mechanism of recognition for the poor, illiterate, and the partially literate.9 The market potential for micro credit in India as of 2006 was calculated to exceed Rs.500 billion.10 As of 2006, though Indian banks had fruitfully employed technology to tap the urban market, they still had a lot of ground to cover in terms of providing their services in rural areas. At that time, OP Bhatt, Chairman of State Bank of India (SBI ), had stated, "Technology is a hitch in the rural areas due to poor facilities like power cuts and connectivity issues. This aspect needs to be worked upon. As technology gets obsolete in time, there is a need to come up with innovative technologies."11

Excerpts - Next Page>>


6] Mahalakshmi Hariharan, "Banks Scout for Novel Ways to Reach out to the Poor," www.dnaindia.com, July 12, 2007.
7] T.V.Mahalingam, "The Last Milers," http://businesstoday.intoday.in, August 8, 2010.
8] Rasheeda Bhagat, "Reaching out to Under-Banked," www.thehindubusinessline.com, September 7, 2010.
9] "FINO Ltd.Put it in your Pocket," www.globalsmart.com, April 9, 2007.
10] Rajiv Bhuva, "Meeting Rural India's Financial Needs," http://business.outlookindia.com, November 20, 2006.
11] Mahalakshmi Hariharan, "Banks are Embracing Newer Technologies," www.dnaindia.com, January 16, 2007.


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