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[INDIA] Citibank Aims at Country's Poor

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  • madchinaman
    Citibank aims at India s poor In a drive to get illiterate, low income city dwellers to deposit their savings, the company has installed biometric ATMs that
    Message 1 of 1 , Dec 13, 2006
      Citibank aims at India's poor
      In a drive to get illiterate, low income city dwellers to deposit
      their savings, the company has installed biometric ATMs that use
      thumbprints for verification.
      By Joe Leahy, Financial Times

      MUMBAI, INDIA — Citigroup Inc. is rolling out a network of biometric
      automated teller machines aimed at illiterate Indian slum dwellers,
      using the latest technology to woo the millions of "unbanked" poor.

      The machines will recognize account holders' thumbprints, eliminating
      the need for a personal identification number, and will have color-
      coded screen instructions and voice-overs to guide them through

      Citigroup has already installed two biometric ATMs. One is near a
      slum in Bandra, a neighborhood of India's financial capital, Mumbai,
      and the other is in Hyderabad, in southeast India.

      It says it aims to expand the network to 25 to 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 manager in India.

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

      The venture 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 1 billion, Citigroup estimates that
      there are only about 300 million bank accounts in the country.

      However, loan repayment rates among the poorest borrowers in micro-
      finance schemes are about 98% — among the highest in the banking

      ICICI Bank Ltd., India's largest private sector bank, is leading the
      push for the country's poor with a rural 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 emphasized lending, rather than savings accounts, leading
      low-income earners to keep most of their money under their mattresses.

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

      Jayakumar said Citigroup aimed to make a profit but he gave no
      timeframe. "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 in rural areas.

      "The technology is reasonably advanced but in terms of the reach, I
      wouldn't think it would be very substantial in the context of India,"
      he said.
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