June 24

pankaj agarwal

Financial Inclusion in India: Interview with Anurag Gupta from A Little World

Financial inclusion has long been a challenge in India, where bank transactions are mainly urban based and people living in rural areas rarely even have a bank account. Financial inclusion is the delivery of banking services at affordable costs to vast sections of disadvantaged and low-income groups. The Reserve Bank of India’s initiative to reach rural India by extending banking services through Non-Governmental Organizations (NGOs), Micro Finance Institutions (MFIs) and other Civil Society Organizations (CSOs) has been a welcome step forward.

A Little World, a Mumbai based organization is one such organization working to connect rural India with mainstream financial institutions. In less than ten years, A Little World has expanded into more than 20 states in the country and developed partnerships to run the banking operations of over 25 banks. Recently, the company was awarded the The Sankalp 2009 High Impact Award for Highly Scalable Social Models at the Sankalp Social Enterprise and Investment Forum.

During my internship here in the company, I recently had a chance to speak to Anurag Gupta, Innovator, Founder and Chief Technology Officer of the company and also the Director of the company’s Zero Mass Foundation. us a little bit about yourself – where do you come from, your educational/professional background.

Anurag Gupta: I come from the state of Uttar Pradesh in India and studied architecture from the School of Planning and Architecture, Delhi. Can you provide us with some background on A Little World?

Anurag Gupta: A Little World is operating micro-banks in rural and remote areas of India, which have traditionally struggled with financial inclusion. We are spread in over 20 states working with local governments and 25 Banks, including State Bank of India, the largest in this regard, to carry out transactions and other financial activities in those areas. As a business correspondent for these banks, we enroll new customers and follow up on transactions by utilizing Bank-in-a-Box methodology. The enrollments and transactions are authenticated by using a finger print scanner, which also serves as a printer for the receipt of transaction details. The operators, 98% of which are women, also have a smart-card-enabled mobile phone with them to type in the details of the transaction. GPRS technology is used to communicate between the mobile phone and the finger print scanner. At present, we have 8,200 outlets in the country with 24,000 trained women operators running them. What ideas led to it’s inception? What was your inspiration to start this venture?

Anurag Gupta: There was a clear need for a domestic payment system that was affordable despite the amount involved in the transaction. Credit cards, for example, have this inherent challenge because it is infeasible for all the parties involved to approve transactions at very low amounts. In 2003 we started mCheck which is a mobile payment platform that could make and receive payments securely and instantly over any distance. After the adoption of this technology by the State Bank of India, Airtel, and others, we sold off this business model in 2006. On the 7th of November 2007, we created the first outlet for Zero Mass Foundation in Mizoram to work as an implementer of the Social Service Payment System. What’s the biggest challenge you face as a Director?

Anurag Gupta: It has always been difficult to raise investments to scale a business model like ours. Dr, Sayed AR Zaidi,former head of the Philosophy department at University of Delhi and one of our investors, has been the soul of the company although he exited the company after we sold mCheck. Without his support all this time, the company would not have been in existence. What’s the one thing you never would have imagined when you started the company, but is obvious to you today?

Anurag Gupta: When we started in 2000, the proliferation of the mobile phone as a tool we could utilize was definitely not at the levels that it is today. We never thought our company would be based around the cell phone to this extent and that now we would be creating a whole eco-system around it. At the inception, we were visioning a model based on stand-alone terminals rather than using mobile phones. Now, the thought only of the terminals seems so obsolete. What was the most important thing you read in college relating to your work today?

Anurag Gupta: As an architectural graduate, I realized that we need to think openly in three dimensions. It is more flexible and gives you a much better understanding of a challenge. Also, the company and its operations are an architectural model in itself and so the principles are applied in an organization context as well. What does Base of the Pyramid mean to you?

Anurag Gupta: For me, Base of Pyramid means the kind of people we are serving – the underprivileged and poorest in the income pyramid. A 95 year old widow with a mere pension of INR 200 month, a physically handicapped staying below the poverty line and millions others. Our business model is based on improving the quality of their lives and making it as sustainable as possible in the process. Where do you see the company to be in next 18-24 months?

Anurag Gupta: We vision to make this company the largest microbanking organization in the world. We hope to reach a level of 100,000 outlets serving a base of over 50 million customers in the process.