Great News hasn’t stopped yet pouring in for us. FINO which recently received the Global Financial Times “ Banking at the Bottom of the pyramid” Award. Congratulations are pouring from all ends including Hon’ble Minister of State for Finance Shri Namo Narain Meena

After having announced the accomplishment of financially including 1.5 Crore Indians, thereby becoming the largest entity among technology service providers in Financial Inclusion space, FINO organized a conference at Stein Auditorium, Habitat World at IHC, Lodhi Road, New Delhi with Hon’ble Minister of State for Finance, Shri Namo Narain Meena as guest of honor and Deputy Governor, RBI – Dr. K.C Chakrabarty. The conference aims at bringing forth important views and perspectives of all stakeholders in Financial Inclusion segment to generate a meaningful debate, that will help lay down a roadmap to achieve the goal of financial inclusion.

Keynote Address Hon’ble Minister of State for Finance, Govt of India, Shri Namo Narain Meena delivered the keynote address congratulating FINO on their achievement and laid emphasis on Financial Inclusion, Financial Proficiency, sustainable growth and development of the economy.

Welcome Address The welcome address was delivered by FINO, CEO – Manish Khera.

Other Speakers
• FINO chairman - Nachiket Mor,
• IBA chairman- M V Nair
• Reserve Deputy Governor RBI- Dr K C Chakrabarty.

As part of the program, a film on FINO was screened followed by the launch of a book on FINO authored by Mr. Manish Khera.

Says Manish Khera - CEO, FINO, “The huge potential with 500 million unbanked population in India and the support and vision of various banks, insurance and government agencies has enabled FINO to capture 1.5 Crore customers with affordable cost and end-to-end technology system. As a nation we need to continuously challenge ourselves in areas of inclusion and acceptance. Financial literacy is the key to financial inclusion.”

Explaining FINO’s journey, CFO – Rishi Gupta, said since its inception in 2006, FINO has meticulously reached out to the non-banking sectors of the country and has played a pivotal role in strengthening the banking radar of the country. With an army of 11,000 agents (bandhus), FINO reaches clients in more than 21 States, 266 districts and 100,000 villages across the country.

That’s not all we are currently acquiring incrementally over 50,000 customers per day with an average three million transactions per month. By 2011, FINO aims to reach 3 Crore Indians. The company aims to take banking to bottom of the pyramid pan-India. In addition FINO has also been recognized as the world’s largest agent network with more than 11,000 BCs by CGAP.

Recently, FINO has also been chosen as one of the Asia partners to implement the financial education for branchless banking program of Microfinance Opportunities (MFO) and the MasterCard Foundation. Through the partnership, will increase client’s awareness of formal financial services, strengthen demand for and active usage of savings products, promote asset-building and reduce over-indebtedness from local money lenders through various financial literacy programs.

The above 2 pics put across an extremely proud moment for every FINOite.

FINO has been awarded the most coveted Financial Times Sustainable Banking award in the “Banking at the Bottom of the Pyramid” category with 156 entrants from 110 institutions across 44 countries. The awards, organized by the Financial Times and International Finance Corporation (IFC) were announced at a ceremony in London on 3rd June attended by more than 250 senior bankers and industry leaders in the area of sustainability from all over the world.

FINO was bestowed with the “Banking at the Bottom of the Pyramid” following a stringent multi-layered selection process involving a high-level judging panel comprising leading experts in sustainable finance. FINO was the only organization selected from India in this category for providing branchless banking solutions to the unbanked people and bringing a remarkable change in the lives and financial habits of the unreached through its well established BC model.

FINO’s top management first reactions on getting the coveted award

Mr Manish Khera, CEO,FINO Ltd

Extremely delighted on receiving the award, Mr. Manish Khera, said “The award emphasizes the growing importance of sustainability in banking for wider society. Winning it provides welcome international recognition and encouragement for our pioneering role within the banking sector and our successful, transparent and sustainable banking model which has playing a paramount and significant role in Rashtriya Swasthya Bima Yojana, NREGA and other such government initiated programme for financial Inclusion . This recognition will only make us endeavor to raise the bar and do better with every passing year. As a nation we need to continuously challenge ourselves in areas of inclusion and acceptance. Financial literacy is the key to financial inclusion.”

Mr Rishi Gupta, CFO , FINO Ltd

“We are delighted to receive this award. The award stands a testimony to our commitment to financial inclusion of people at the Bottom of the Pyramid. I sincerely appreciate the efforts being put by all financial institutions and banks which are contributing to the mission of financial inclusion along with FINO and have helped it take banking to more than 1.5 crore customers at the base of the pyramid. I hope the collective efforts and energy will make this mission to achieve financial inclusion a resounding success.”

A very proud moment for us at FINO. 3 cheers for us !!

After reaching the 1.5 cr mark as its customer base FINO ltd CEO Mr Manish Khera sent a thank you email to all the FINO employees. Below is the email. It is a very proud moment for all the FINOites and citizens of the country .Below is the excerpts of the email.

“Dear All,
It gives me immense pleasure in sharing with you all that we, TEAM FINO have crossed 15 mn customer base yesterday. Congratulations to all of you for another feather in your cap!!

To put it in perspective, there are an estimated 60 mn BPL households in the country. Since the two large schemes we run (RSBY and NREGS) are both focused on households (infact in RSBY we issue one card per household; even in NREGS the entitlement of 100 days is per household), we have covered 25% of the BPL families in the country.

And we are adding nearly a million customers per month. If you remember, we completed 10 mn customers on January 27, 2010. This year. We are at 15 mn now. In a span of 4.5 months!!! So the day would not be far off when we would have covered the entire BPL families in the country.

We recently got recognition for what we have achieved and the pace at we have achieved and are growing in the form of the FT/IFC award as being the company making the most impact on bottom of pyramid customers, globally.
We all can be proud of our achievement.

We are hosting a function in Delhi on June 15th to celebrate this occasion. The Chief Guest in the function is the Finance Minister, Mr Pranab Mukherjee. The function would also have Deputy Governor RBI, Dr KC Chakraborty and IBA head, Mr M V Nair. It’s a big occasion for us to have such high dignitaries attend our event. A first for us. And while some of us would get the limelight, I wanted to thank each one of you for the hard work that all you have contributed in taking FINO to where it is today.

I am sure in times to come we all would achieve many such milestones and when we look back, this achievement would stand dwarfed. Most important, we all would look back and feel satisfied that not only did we achieve big, we also had fun in the journey and enjoyed each milestone.

Regards
Manish”
CEO FINO Ltd

“For the first time in the history of the world 1.5cr people will rise out of poverty & its our pride that we are not only living in such times but are also associated with it by contributing to this phenomena” Dr K. C. Chakrabarty, Deputy Governor RBI

Union Finance minister Mr Pranab Mukherjee adds “ BHARAT NIRMAN has made a substantial contribution to the up-gradation of rural infrastructure through its various programmes”

The above statements by such high profile people clearly speaks of the magnitude of the work being undertaken and we at FINO are proud to be a part of the scheme of things. This also defines the mood that is there with in FINO and we are not stopping at that. This is a great milestone for us. In order to celebrate our success of reaching 1.5cr people we are hosting a function in Delhi on June 15th. Below are the event details

Event Details

Venue:
Stein Auditorium,
Habitat World,
IHC Lodhi road,
New Delhi-110003

Date: 15th June 2010
Time: 1pm - 1:45pm followed by lunch
Chief Guest: Union Finance Minister, Mr Pranab Mukherjee.

Guest of Honor :Deputy Governor RBI, Dr KC Chakraborty

RSVP:
1. Amarjeet Kaur :(amarjeet.kaur@fino.co.in)
2. Kanika Tiwari : (Kanika.tiwari@fino.co.in)

We are delighted to have such dignitaries as part of our event. Well keep you posted on all the happenings around the event. Cya and Happy reading Koshish blog

A quick glimpse of events that FINO participated across India recently

• First NREGS disbursement in Karnataka, March 2010

On 20th March 2010, FINO became the first service provider in Karnataka to do NREGS disbursements through smart cards as part of Electronic Benefit Transfer (EBT) scheme under One District One Bank model. The first disbursements were done at Yalivala village in Kundagol taluk of Dharwad Dist where the pilot project is being implemented along with Axis Bank.
The occasion was graced by Rural Employment & Panchayat Raj Minister, Mr. Jagadish Shettar. Lead Bank manager G S Basavarajappa, Dharwad ZP-CEO Shikha S, local MLA S I Chikkanagoudar, , and officials from Axis Bank were also present. As an extension to the function, the FINO technology and its benefits were explained and demonstrated in detail to the villagers.
“The initiative would solve the problems like delayed payment of wages and intervention by middlemen under the NREGS scheme.” – Jagadish Shettar, Rural Employment & Panchayat Raj Minister.

• FINO at RBI Platinum Jubilee Celebration, Bangalore, March 2010
FINO participated in the RBI Platinum Jubilee Celebrations at Bangalore on March 22nd chaired by RBI Governor and Deputy Governor. The discussion was focused on the “Importance of financial literacy in Rural Areas” and educating them from school level itself.
A wide range of FINO’s enabling technologies like Mobile enrolment kits; Laptop enrolment kits, client database etc were kept on display at FINO’s stall during the event. FINO’s MDM machine was also a special attraction at the stall. Overall the stall got a good response from the bankers and other reputed industry people including The Regional Director-RBI, GM and CGM, SBI and other senior level people from industry bodies and banks like SLBC, NABARD, Corp Bank, ING Vysya, PNB, Axis Bank, State Bank of Mysore etc

• Rural Development Summit @ CII Summit in New Delhi, April 2010
FINO participated at the CII summit held at New Delhi in April 2010. The overall theme for the summit was India @ 75: Economy, Infrastructure and Governance and the event was held under the 2nd rural development summit.

Mr Nirmal Bansal , Director Business Development & Government Initiatives ,FINO and was a one of the Panelists during the panel discussion on the topic “Opportunities and scope of replication of innovative practices that benefit communities and service providers in bringing about financial inclusion.”

The session was chaired by Mr. Vijay Mahajan, Chairman, BASIX. The other panelists included Mr. Ajay Desai, Chief Financial Inclusion Officer, YES Bank, Mr. Jitendra ‘Sonny’ Sannon, Executive Director, TransNet FZC, Mr. Hemant Kaul, Managing Director & Chief Executive Officer, Bajaj Allianz General Insurance Company Ltd.

March 2010 marked the launch of Fino MITRA, end to end mobile banking solutions for the Fino customer. Currently the services are offered for Mumbai customers. The products supported through this capability are savings, loans and remittances.

• Mobile banking registration on POT with 4 digit security PIN
• Text/Voice alerts language preference can be selected on the POT
• Customer initiated account inquiry via : IVR [Phone Banking], text sms and JAVA application

Advantages of FINO Mitra and its capability
• Mobile channel will be available 365 days, 24 hours, 7 days a week
• For Fino customers it is empowerment in terms of accessing their bank account anytime, anywhere on the move.
• For the Bandhus, the model can be used to divert routine customer transactions and inquiries
• Strengthens customer trust since he is receiving a direct communication from Fino on his mobile
• The model offers tremendous capability as a channel in terms of support for scale up for high volume transactions at the least possible cost
• The model has been specifically customized to suit the base of the pyramid customers

Fino’s Shivaji Nagar Branch was a hub of activity, when all the bandhus and branch managers from Mumbai were given training on Fino – Mitra at one go

Registration of first 5 customers for FINO – Mitra services

FINO organized a learning Fiesta at their Sanpada, Navi Mumbai office on April 14, 2010. The fiesta was attended by actress Sushmita Mukherjee of Karamchand Fame who was among the speakers. Speaking on financial inclusion she said that “ As a nation we need to continuously challenge ourselves in areas of inclusion and acceptance . Financial literacy is the key to financial inclusion It is up to the leaders to set the goals.”

She was as a part of the FINO organized 2 week learning Fiesta. This fiesta is being joined by industry experts and academicians to share their views on various areas related to management.

FINO recently covered 13 million customers and has become the largest entity among technology service providers in Financial Inclusion.

Progress

Business Correspondent

Network:

• The entities provide a new dimension to the Indian banking system by acting as BCs for regulated financial entities. Surprisingly this did not happen due to some reasons, consequent of which it transformed its role from a technology provider to a BC.
• Today FINO is the largest BC in India with over 5,000 physical points (Bandhus) all across the country. Bandhus are a very critical part of the delivery chain and customer experience. Hence invests aggressively in their training, insurance benefits and having a code of conduct for them to ensure lower risk and better customer experience.

Insurance Segment:
• FINO is working with ICICI-Lombard to enroll Below- Poverty-Line households under the Rashtriya Swasthya Bima Yojana (RSBY), phase two in the states of Uttar Pradesh and Haryana. It has enrolled about 1.8 million households using its solution of managing data in a paperless format & smart-card technology.
• Using this technology, more than 5.4million households, in 26 states of India, have so far been given Smart-cards. Six prominent states (Bihar, Haryana, Jharkhand, Kerala, Punjab and Uttar Pradesh) has already implemented RSBY scheme which was implemented in the year 2008 through different implementation and technology partners.
• Maximum percentage of BPL families was enrolled in to the dairy in states of Maharashtra and Gujarat.

Innovations:

• MDM
o MDM is the equivalent of a low cost machine that enables cash deposits. These MDMs are already working in some prominent areas where banks are not present.
o This model of operation eliminates the need for human agents to serve customers.
o The low cost of MDM make it financially viable and the fact that it is fully automated suits the ‘any-time banking’ requirements of the target population.

• MITRA (Mobile Information and Transaction)
o MITRA a new product is a Mobile enabled banking solution designed especially for rural populations. It is now fully functional and already implemented in few locations. Using this solution agents and customers can both utilize their mobile phones to access banking facilities.

Market Environment and its impact:

With the resilient Indian economy back on an upward trajectory after a brief slowdown period, we are expecting government’s recent initiatives to bring rewarding and sustainable growth in escalating and deepening achievements in the financial-inclusion space. Both the government and the financial institutions in the country have taken steps in formalization of scaling-up process of initiatives like no frills savings accounts, NREGA and RSBY.

Role of Government:
• Government’s proposal, for allocation of Rs.390.0 billion for the year 2009-10 for the flagship NREGA programme, which marks an increase of 144% over 2008-09 and an amount of Rs.3.5 billion for RSBY in 2009-10 – a 40% increase over the previous allocation, clearly demonstrates the success of these schemes in the previous year and also shows the keen interest of government to use these mechanisms for inclusive economic growth.

Technology: Boon or Bane?
• Technology-driven implementation, biometrics-enabled authorization system and successful public-private partnerships have been the key enablers in channelizing the benefits of these schemes to low income households.
• This has also enhanced the absorptive capacity of the actual beneficiary of the scheme in a more transparent and efficient way.
• This has demonstrated the viability of biometrics-enabled smart-cards as the way forward for speedy implementations of future schemes by government and international bodies like the World Bank and the Millennium Challenge Corporation (MCC).

Goals:
• In order to achieve ‘Financial Inclusion’ as a goal, Government of India has set aside Rs. 1.0 billion in the current budget for setting up at least one Point-of-sale (PoS) for banking services in each of the unbanked blocks of the country. This kind of policy support from the government provides strong encouragement for initiatives that are aimed at making the poor, viably and sustainably bankable.
• This support allows to step deeper into unbanked territories increase our reach to provide our technology and services for the mission of achieving universal financial inclusion.

Conclusion:
• Government of India has a vision and strong commitment towards enabling financial inclusion to all unbanked and under banked populations. This is reflected through a series of policy initiatives and incentives.
• On one hand there is a positive environment and government support for financial inclusion, which of’ course is a welcome move but on the other hand new stakeholders particularly BCs who have proven their importance in a short time span of three years are still being debated.
• There is a very large untapped market in the financial inclusion space.
• A rare combination of business acumen and social responsibility allows FINO to stand apart from the others.
• It also plays an even more crucial role in financial inclusion in the coming years.

Poverty reduction funds:

The Government has set up two funds
• Financial Inclusion Fund (FIF)
• Financial Inclusion Technology Fund (FITF)

Both funds are mainly for poverty reduction and investment in Information technologies to facilitate availability of services to micro-customers. The new approach of marrying a low cost BC with a larger entity is being considered to be self-sustainable and therefore has not been considered to be eligible for support under these funds.

Setbacks:

This thought process is unfortunately depriving the new BC model of much needed financial support merely because they dove-tail into mainstream organizations. Denying the BC model access to such policy incentives in my view is hampering the growth of this model, particularly since the mainstream players continue to regard this customer base as not immediately profitable and are also unwilling to financially invest in growing it to an adequate degree.

Looking at the enormity of the task it is imperative that we all put our collective might behind the task. The current model is being rolled out aggressively by a few banks in the country but urgently needs many other banks to step in and to overcome their hesitation.

Any new model is always prone risks.

Let’s take the words of the Deputy Governor of RBI Dr. K. C. Chakravorty,

“It is for the first time in the history of the world that 2 billion people will rise out of the poverty. It is our privilege that we are not only living in such times and are also associated with it by contributing to this phenomenon”.

India has over 400 million unbanked individuals residing in both urban and rural areas of the Country. FINO caters to the set of customers by acting as a formal channel linking them to large and well regulated financial entities in India and beyond her borders.

The four tenets anchored are:

• Customer needs the full bouquet of financial services:
o The belief is that while the entire policy focus has been on loans, there is a need to pay attention to other products as well. If a person is given an avenue to save, he / she would be able to save enough for the foreseeable events in life and would not necessarily have to borrow to meet those requirements.
o On the other hand, for catastrophic events in a person’s life, the right product is perhaps insurance and not loans or savings.
o Since many people in this segment migrate from their place of birth to where employment opportunities are better, they have a need to remit money home to their families.

• Reduce cost to serve:
o The delivery of these products are at an affordable cost, primarily taking out physical infrastructure in the entire delivery chain to reduce costs and substituting it with a combination of technology and very thin physical front ends.

• Complete end-to-end technology and services: The complete cycle of acquiring and servicing a customer, particularly under the Business Correspondent (BC) framework:
o Field level mechanisms to contact the customer and complete his / her KYC and other formalities as per underlying product.
o Back-end facilities to process the product solicitations.
o Technology frame-work to handle the large volumes.
o Issuance of the tokens needed to do transactions.
o Identifying and training a large field force (BCs) to carry out customer transactions; a very key element from a bank’s risk perspective.
o Robust front-end and back-end technology infrastructure to manage and host a large number of transactions and accounts.

• Technology that is scalable and robust:
o The biggest beneficiaries of the model have been the large government schemes – National Rural Employment Guarantee (NREG) and Social Security Pension (SSP) schemes which were struggling to pay to the rightful beneficiaries their dues.
o The technology can be leveraged to deliver wages to the workers covered under the pay-for-work program of NREGS in a timely manner, also reducing duplicate and fraudulent registrations.
o The scheme has also benefitted the pensioners who are now assured of their benefits right at their door-step through simplified processes at the front-end keeping the complexity of the technology at the back-end.

FINO has architected a system which leverages technology to not only capture all the details but also approve / reject claims as per WHO approved packages which could be used to deliver cash-less benefit to customers from hospitals. Bima Yojna (RSBY) is also facilitated in the country. The scheme envisages insuring nearly 60 million Below Poverty Line (BPL) households in the country. The scheme has opened up a health insurance market of Rs.40 billion annually through various insurance companies and service providers. 1.8 million Families are under the scheme.

Insurance
Two key products in micro insurance are
• Life
• Health.

New technology architecture is developed for life insurance which is offered through channel finger-prints of both the insured person and the beneficiary are captured on the card thus ensuring smooth service beneficiary in the eventuality of insured person.

Banking
RBI propounded the BC in 2006 to make financial services accessible to the large number of people who are unbanked, generally poor and rely on informal financial setups in rural and urban short span of three years this model has demonstrated its relevance and utility on the ground.
While there are many approaches underlying proponents of the model namely servicing the customer in his / her village have it finally offers only the ones that clears the reach of the BC model inclusion in general, in the remotest nook and corners of the country.

Ongoing debates:
• On the insurance side while there has been a rapid roll-out of the product anchored by the government’s RSBY scheme, there is need for a greater focus on the quality of the service providers.
• Varying levels of quality at the service provider end has led to a slower roll-out in some of the states as also fewer transactions post roll-out which effectively amounts to a virtual denial of service to the end customer even though the insurer has received payment from the Government.
• The scheme itself also suffers from a lack of clarity on the guidelines regarding continuity after the first year, thus making it difficult for the service provider to build a long term business model.

Satisfied model or what?

Acceptability of the BC model by prominent financial institutions in India particularly traditional banking companies is a clear cut pointer towards ushering in a new banking paradigm in India through this model.
However, the model of using a highly capitalized and regulated mainstream financial entity with customer ownership and delivering basic savings and insurance services through a low cost BC model using technology as a risk mitigant is unfortunately being confused with choosing the “right” technology to access these customers by poorly capitalized entities for mobilizing deposits on their own balance sheets.

Protection for rich and the poor now same:
The savings of the poor deserve as much risk protection as that of the rich, if not more, and that this principal has nothing to do with the choice of technology being deployed.
It may instead worthwhile to explore whether these entities could act as BCs of large banks themselves, using a similar technological architecture instead of accepting deposits on their own balance sheets.