Mobile Bank Deposit Cards

All governments and banks the world over are talking of Financial Inclusion. But unfortunately, Financial Inclusion mostly seems to mean enabling people to open bank accounts but no serious efforts are underway to ensure that common people get access to bank credit too - they continue to be targeted mostly for their deposit potential.

The poor, salaried class, lower middle class, and small entrepreneurs put their money in banks that constitute over 60% to 65% of the deposits in the banking system and the government deposits are around 15% to 20%. The rich, corporates, multinational and other businesses hardly make up 20% of the deposits in banks as they invest their money in business rather than depositing in banks.

However, over 80% of loans given by banks are to the business sector, the rich and the middle classe (who benefit even from some portions of priority sector allocations obtained in the name of housing and vehicle loans).


The lower middle class and the poor self-employed, who could easily constitute over 75% of the population, and operate in the category of Micro and Small Enterprises, are unable to access even 10% of the bank loans and are exposed to the mercy of loan sharks, even for their very rudimentary business needs. They are unable to grow and prosper due to the very exorbitant interest rates charged.

Pro-Rich Attitude and Systems
Daily Repayment: The entire banking system seems to be structured to serve big business and corporate sector that prefer a monthly or quarterly repayment schedule. However most petty and small businesses with small margins operate on a daily basis and for them payments of monthly instalments become difficult.


With the Internet and existing mobile technology, it should be possible to evolve a mechanism to make deposits in banks on a daily basis through Mobile Bank Deposit Cards, without visiting banks and thus saving daily transaction time and costs.

Daily Deposits: Most micro and informal businesses in India make on an average a profit of Rs. 5,000 to Rs. 25,000 and above every month. These profits are made in small amounts on a daily basis and retained by the concerned persons and not deposited anywhere. Most also do not have bank accounts.

But around 50% or more of their expenses like rent, schools fees, payments for utilities like electricity and water bills etc. are required to be made mostly in the first week of every month. Hence significant sums remain with them through the month with the possibility of some emergency diversions that could lead to difficulties at the time of monthly payments.


The proposed Mobile Bank Deposit Cards could also be used to deposit their daily earnings and extra working capital funds apart from repayment of loans if any.

Creation of Financial Histories: More important, if these small business enterprises can have a facility of depositing their profits and their residue from working capital on a daily basis in banks, then apart from earning interest, they will also be able to develop a financial history with banks that could lead to banks developing confidence in their financial status and encourage banks to start lending to these sections also.

This does not happen now as most do not have any official financial histories with banks or other financial institutions despite earning handsomely.


Benefits to Banks: Hawkers, petty businessmen and small entrepreneurs constitute at least 10% to 15% of the population. The majority of them do not have bank linkages. Interactions have revealed that most of them make their profits on a day to day basis and their average earnings range from 5,000 to 25,000 per month and above. These funds could run into lakhs of crores monthly that are now totally outside the banking system but could be easily tapped if systems could be put in place to facilitate easy daily deposits where the clients are not required to personally visit banks to make their deposits and overheads for deposit collections could be minimised. The Clients could use the existing debit card facilities for easy retrieval of funds when required.


Mobile Bank Deposit Cards:
The Mobile Bank Deposit Cards is proposed as a simple and convenient arrangement to facilitate daily deposits in banks by clients without visiting the bank and with minimal costs and time investment. The five main parties involved could be:
1. The Bank (could be any bank)
2.Mobile Service Provider - mobile networks of any and all mobile service providers could be utilised for transmission and processing required for this Scheme.
3. Mobile Service Provider or any other entity with a retail network for marketing the Mobile Bank Deposit Cards on behalf of the Bank concerned.
4. The Retail Vendor - who procures the Mobile Bank Deposit Cards from the Bank or any of the networks authorized by the concerned Bank to sell it to the Clients.
5. The Client (who wants to deposit money in his / her Bank account using the Mobile Bank Deposit Cards).

Any of these parties could involve other parties to facilitate their roles.


The Process:
1. The Bank or any of its authorised entities would produce Mobile Bank Deposit Cards of different monetary denominations (for example Rs. 50 /100/ 500 etc. in India) with specific individual codes.
2. These Mobile Bank Deposit Cards would be made available to Mobile service providers or any other networks with retail outlets like supermarkets, petrol pumps, etc. to be called Marketing Chains. Banks could also make them available to retails vendors directly.
3. The banks and these Marketing Chains / retail vendors could enter into different arrangements for financial transfers of the funds equal to the value of the cards that could be either at the time of making the cards available to the chains / retailers or at the time when the card is used.
4. Marketing Chains and retailers could charge a mutually agreed upon, predetermined service fee.
5. The client would be able to purchase the Mobile Bank Deposit Card from any of the outlets.




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