[INDIA] Citibank Aims at Country's Poor
- 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,"