Don’t Worry, There’s an App for Remittances
According to the 2010 Index of Global Philanthropy and Remittances, India is one of the largest recipients of remittances accounting for a large portion of the country’s GDP. That percentage is about to rise even more. State Bank of India (SBI) and its competitor ICICI Bank (formerly known as Industrial Credit and Investment Corporation of India) have developed mobile remittance programs from Canada to India.
ICICI Bank, India’s private sector bank with a subsidiary in Canada, currently serves both Indians and non-Indians in Canada. It recently announced its partnership with Vodafone Essar. The bank has been re-conceptualizing their brand and position by implementing “deposit mobilization through a network of deposit brokers, residential mortgages, corporate lending through tapping companies with India linkages.” This focus is now receiving a growing interest from Canadian companies who plan on furthering their business in India.
SBI moved to Canada in 1977 with a motto to serve all Indians. Currently serving 75% Indians in Canada, the bank has thrived on personal remittance business. Sunil Tandon, president and CEO of SBI Canada noted that personal remittances today stand at $184 million and are growing at an average of 16% annually. Remittances to India increased from $6,720 million to $9,320 million in a year. But sending money home is about to change for non-residential Indians (NRIs) as SBI signed their joint venture with the mobile operator Bharti Airtel. “We are now working on introducing online request for remittances. Once that is enabled, commission charges would come down and the process would become faster and our business will grow further” Tandon states. SBI plans on expanding the remittance business by allowing remittance transfers to Sri Lanka, Bangladesh, and Nepal.
What does this mean? These initiatives take mobile banking services to a different playing field. Vodafone serves over 1.5 million and Airtel represent 5,101 towns and more than 500,000 villages. This is revolutionary, especially because the National Sample Survey data indicates that 51.4% of nearly 89.3 million farmer households do not have access to any credit, and only 13% hold loans from the banks in the income bracket of less that Rs 50,000, equivalent to $100. Mobile remittance could allow these farmers to obtain a line of credit that they previously did not have.