IBM, Indian Tech Firm Devise Smart Card for the Poor
Wednesday, March 28, 2007
US giant IBM and an Indian technology firm said Wednesday they had devised a smart card to help poor entrepreneurs access credit from institutions that lend to the “unbanked.”
Small traders who have borrowed from microfinance institutions such as Bangalore-based Janalakshmi Social Services will be able to take part in fruit and vegetable auctions using the card, without having to take loans from greedy moneylenders, the companies said.
A technology platform developed by IBM and Financial Information Network and Operations, a unit of India’s second-largest bank ICICI, will hold customer accounts of microfinance companies.
The system would be accessed by customers using a fingerprint-enabled smart card, which will serve as both proof of identity and an electronic passbook, the two companies said in a joint statement in Bangalore.
Financial Information Network said it plans to approach 200 microlenders based in India and abroad with the technology, enabling them to offer the poor not only credit but also investment, remittances and insurance services.
The system will cut costs, reduce paperwork, boost efficiency and create a database of unbanked poor, helping bring them into the mainstream, it said.
“We have a large number of customers with very large transaction volumes and small ticket sizes,” said Ramesh Ramanathan, who heads Janalakshmi Social Services.
“Our audit and control systems need to match the volumes, and our transaction costs need to be low enough to enable low-cost delivery,” he said. “None of this will be possible without technology.”
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