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Kesari Rana, an engineer in Uttar Pradesh’s Lucknow, found herself in a tough situation in May when the country was dealing with the worst of the COVID-19 second wave. She had to send money to her parents, residents of a village in Kondagaon district of Chhattisgarh, for hospitalisation and treatment of her brother who had taken seriously ill.

The problem was that even though Kesari’s parents had a bank account, there was no cash withdrawal facility that could dispense money, on-demand. The nearest bank and ATM were at least 37 km away. The distance could have been covered in a couple of hours, but Kesari, her parents, and her brother were racing against time; they needed money, and they needed it fast.

Kesari’s isn’t the only story that highlights how inadequate, dispersed, and hard-to-access banking facilities are in India’s rural areas.

Despite the presence of 43 registered gramin banks that operate 21,864 branches across the country, as per the Department of Financial Services, rural areas continue to remain underserved. The thinking now is that opening more and more bank branches isn’t the solution — there has to be an infusion of existing infrastructure with technology that can enable banking.

A good example of this would be Bharat Financial Inclusion Ltd, (BFIL) owned by IndusInd Bank, and its Bharat Money Stores initiative.

Bharat Money Stores are one-stop banking and financial services hubs that help people in rural areas access banking services. These Stores are actually small merchant and kirana shops that, using state-of-the-art technology, convert small businesses into banking outlets, providing services such as bank account opening, cash withdrawals and deposits, fixed and recurring deposits opening, utility bill payments, mobile and DTH recharges, money transfers, and loans.

“We conducted a survey via BFIL and found that people in rural areas travelled long distances and stood in queues for long periods of time at bank branches usually located 10-15 km away — and all this just to deposit or withdraw some money. Most of these people who travel even have to forgo their day’s earnings just visiting bank branches for transactions. That is a problem we aim to solve,” Ritesh Chatterjee, Chief Distribution Officer and Head of Bharat Money Stores, tells YS.

The Stores perfectly fit the rural banking landscape in India — kirana stores are abundantly found in the smallest of villages, and people often know the store owners personally, which is a huge advantage when it comes to gaining the trust of customers.

The trust factor also plays an important role in helping people buy more financial products and open bank accounts, which the vendors are equipped to handle deftly thanks to the training they’re provided during the onboarding process.

The transactions conducted by Bharat Money Stores are enabled by IndusInd’s proprietary software, APIs, and product suites. The front-end applications used by merchants were built in-house by BFIL, and use biometric technology to verify and authenticate transactions, the company says.

To date, BFIL has around 65,000 partner merchants across 10 states, including Maharashtra, Odisha, Uttar Pradesh, Chhattisgarh, Karnataka, and Jharkhand, covering 27,500 villages so far.

The financial enterprise has set its sights on opening over three lakh Bharat Money Stores, across 1.80 lakh villages, in the next two years.

The business of rural banking

While customers of any bank can access services at the Stores, new accounts, as well as fixed and recurring accounts are opened with IndusInd. With increased penetration in previously unchartered territories, this gives IndusInd a huge advantage when it comes to tapping new customers.

Getting started is easy — once a vendor is onboarded on the platform, they are trained by Bharat Money Officers to carry out transactions, access bank account information, etc. A series of simulations and dummy transactions are conducted to ensure vendors become familiar with the application.

The training is carried out in a plethora of languages to ensure accessibility and thorough understanding.

Store owners enjoy commissions for extending banking services via the Bharat Money Stores platform, and also get easy access to credit in case they require working capital to scale their business.

Tapping new clients isn’t an expensive affair for Bharat Money Stores, which gets direct access to customers because of Bharat Financial Inclusion’s penetration and understanding of the market.

BFIL specialises in microfinance, and offers small, collateral-free loans to women for income generation purposes — and since the brand name is known to most people where the Stores are, the unit manages to keep its customer acquisition costs to a minimum.

“As rightly said by Dr Amartya Sen, poverty must be seen as deprivation of basic capabilities rather than merely as lowness of income. To achieve overall economic development, financial inclusion is a necessary step towards inclusive growth, which uplifts the poor, unbanked and underserved population,” Ritesh says.

Bharat Financial Inclusion Ltd’s solution to boost banking in rural areas is quite quaint — it’s a simple plug-and-play solution that does not require heavy investment in physical infrastructure.

The model has proved that it works: during the harder months of the pandemic, the Stores saw a 300 percent growth in bank withdrawals because of the direct beneficiary transfer scheme. Utility bill payments also shot up 33 percent.

Because of the response and acceptance Bharat Money Stores have received in rural areas, BFIL plans to add new services such as insurance buying and assisted ecommerce in the near future.

Over 1.27 crore transactions valued at around Rs 4,369.18 crore have been processed totally by the Stores so far. The platform has 42.6 lakh users — and these numbers are set to rise as more Indians in the interiors of the country open bank accounts.