Remitting money from the kirana store in the neighbourhood or allowing cash withdrawal from your bank account through a text message has become possible, with private sector lenders starting to offer these services.
YES Bank is partnering retail stores to allow customers in remitting money through these shops. "Curiosity killed the cat. In our case, curiosity gave us a new business strategy," Anand Bajaj, executive vice-president and chief innovation officer at YES Bank, told Business Standard.
On his way to work each morning, Bajaj noticed long queues outside bank branches. He found migrant workers were waiting for hours for the bank to open, to send money to their families in villages. Sometimes, they had to skip work and lose a day's wag,e as it took several hours before they reached the counter. "We wanted to get into this business immediately. My gut feel was, people want convenience. But someone told me it was not possible unless we have 10,000 branches," said Bajaj.
The bank decided to follow the model adopted by telecom operators. "I had seen such queues outside public phone booths when not many people were using mobile phones. But, now, almost everyone uses a mobile phone and even kirana stores offer recharge coupons. Just like telecom players shared tower infrastructure to expand their reach, we decided to share other banks' branch infrastructure," said Bajaj.
The bank helps kirana shop owners to get internet access in their system and offers them a credit limit of Rs 50,000-100,000. The shopkeeper takes the money from the customer and debits his limit and the cash gets transferred to the receiver's account. YES Bank charges one per cent to the customer for sending the money and the retailer gets 80 per cent of that fee as his commission.
In November, through this model, Rs 610 crore was remitted, involving 1.3 million transactions, 350,000 customers and 16,438 branches. The bank currently has 12,000 approved shops, of which around 7,000 are already active.
Another private sector lender, Federal Bank, has launched a pilot project to allow its customers to authorise others to withdraw cash from their account through a text message.
For instance, a person in Mumbai wants to send cash to his kin or friend in Delhi. The receiver has to go to a Federal Bank ATM and type the sender's mobile number and the amount of money he wants to withdraw.
The sender in Mumbai will get a text message in his phone and the moment he sanctions the transaction, the ATM will dispense cash to the receiver in Delhi.
"We have found many of our high net worth clients ask their domestic help to withdraw money from their accounts. Typically, they will have to give their ATM card and password to the domestic help for withdrawing cash from ATMs. Hence, there is a risk. This service will ensure the risk of password theft is reduced significantly. It is still running on a pilot basis," said K P Sunny, chief information officer at Federal Bank.