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Cellphone Banking Helping To Fight Poverty In India
Posted by
Soulskill
on Sat Oct 25, 2008 11:40 AM
from the will-it-work-here-too? dept.
from the will-it-work-here-too? dept.
An anonymous reader writes "Technology Review is running an in-depth story about the way cellphone banking is transforming the lives of many poor people in India. By enabling users to manage a legitimate bank account and finance micro-loans, cellphones are a major force of social and economic change. It's perhaps not surprising, given that despite widespread poverty, India has the world's fastest-growing cellphone market and the second largest number of cellphone users (after China). The article mentions one Indian start-up, mChek, that is thriving as a result. There's also an excellent video report."
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Submission: Cellphone Banking Pulling Indians Out of Poverty by Anonymous Coward
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Super security (Score:4, Funny)
This mcheck service is super secure. From their FAQ [mchek.com]:
Who else will get my Credit Card information?
mChek will NEVER disclose your Credit Card information to anybody, including to you.
(Emphasis mine)
Re:Super security (Score:4, Insightful)
Parent
Re: (Score:2, Insightful)
Of course it makes sense. You get your card. The number is on it. Bank staff shouldn't be able to even access it, unless you give it to them.
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You linked to the wrong section of the FAQ. I believe that you meant http://www.mchek.com//popUp_faq.htm#a7 [mchek.com]
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Poverty (Score:5, Insightful)
Cell phones are like computers and the internet rolled into one for those poor people in India.
I bet in the next ten years, markets in India and Africa are going to be the hotspot for 3.5/4G wireless internet service through cell handsets. I imagine that their governments will encourage the building of cell infrastructure because they can see how cell access is helping people become upwardly mobile.
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The more benevolent, stable, governments will, but the last thing that the kleptocracies and dictators want is upward mobility for their people. It might give them an actual voice in their government. Still, this is good knews for the poor in many countries.
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I don't really think they care about upward mobility... more about "How can we either a) make ourselves look better to the world or b) make more money in taxes?"
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One of my friends just went back home to his (hoping to be fiance) so that he could ask for her hand in marriage. 16 hour flights both ways so he could beg the elders to have her hand. He's an engineer, she's a med student. They've both been in the US for 6+ years and all the elders kept getting hung up on is that his family is of a lower caste.
In the end he ended up getting the thumbs down, they're still dating but the marriage is postponed.
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Re:Poverty (Score:4, Insightful)
Parent
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Sorry to hear that (Score:1)
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Yep, we are all "in" the caste system here. Everyday, when I wake up my grandfather asks me if I've been "in" the caste system. On most days I do and I can answer honestly. But on some days, I'm late to the office and I have to lie to my grandfather. Of course, my office has its own caste system so I make up during the day.
Does it make you feel better about yourself when you open your mouth to blab about stuff that you have no clue about? Let me guess
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The real question is: are you reacting like this because you are tired of being oppressed or because you feel guilty about privileges you received solely from your birth?
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Re:Poverty (Score:4, Insightful)
Ah, an American. Of course, America has no caste system as everyone treats everyone else as an equal all the time.
Parent
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and you're saying that means someone has to be stuck with their station in life over here in the USA like they are in India? a person in USA can't be born in poverty and go to being president? can't be engineer? can't marry someone because of ethnic background or income or other social standing? hah, world of difference.
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despite widespread poverty (Score:3)
despite widespread poverty, India has the world's fastest-growing cellphone market
I'm guessing that cellphonr technology must be a lot more affordable in India than it is in the U.S.A. Can anyone tell us what cellphone costs are in India, and, if I'm right, why someone can't offer a similar price structure in the United States?
Re: (Score:3, Informative)
About a year back voice connectivity and edge data cost about 350 INR a month. At present exchange rates it is 8 USD a month. Significantly lower. However one must remember that real-estate and labour costs are much lower in India.
Re: (Score:3, Interesting)
Well India has got so many cellphone users because:
1. People may be poor but the cellphone compnies arent :) Here are a few mobile operators:
TATA
Airtel
Reliance
Vodaphone
and the list goes on. Reliance operates the world's biggest CDMA network. These companies have the financial capability to lay there own fiber network accross India and opera PAN india mobile networks.
2. Competition: Well, unlike other countries, there is a lot of competition among these mobile operators. They will install a mobile tower in t
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why someone can't offer a similar price structure in the United States?
Greed.
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Mobile is the way to go (Score:3, Informative)
I know the mCheck people and they are doing great work. They face 2 major challenges :
1. Getting more and more mobile operators and banks on board.
2. Keeping their cost low. IIRC, each transaction costs them about Rs. 2-3 which is quite high if you think of transaction size of Rs. 20-30
However, mobile penetration is ever-increasing in India. It is one of fastest growing telecom markets in the world. And I've been told of places in India where there is no electricity but the people have mobile phones. (There is an awesome story about how they charge their batteries, but that for some other time).
So mobile is the way to go not just for for democratization of information but also for economic liberation of the people.
Cheers !!!
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Duh... (Score:5, Informative)
Of course China and India have the largest cell phone populations in the world... They have more then 1 third of the worlds population between them.
(Know why more people are using cell phones and not land lines? It's a shit load easier to throw up towers then to run cables. And a shit load easier to guard against people stealing the metal for raw materials.)
Cell phones are great for poor people, especially farmers. They can ring up potential buyers before travelling a day to market. (They might travel south instead of north.)
I've also read that they are used to send money back home for people (from the country side who live) in cities. They buy cell phone credit, then they ring a fellow in the home village and tell him the voucher number, and he types it into his phone and gets the credit, and then gives that amount of money (minus a small fee) to the family.
Innovation comes, so often, from necessity.
Re:Duh... (Score:4, Insightful)
Exactly, which is why statements such as "the second largest number of cellphone users (after China)" are mostly useless at conveying information.
Tell us what the number of cellphones per capita is and in comparison to the rest of the world. Then you'll be telling us something useful...
Parent
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never mind the phones... (Score:5, Funny)
extreme p2p lending (Score:2)
P2P lending will be the way all banking is done in the future. The task of millions of computers automatically distributing tiny amounts of money among themselves seems to require immense amounts of data storage & transaction processing, there's no reason the software can't be done.
India, fiat money, and fraud (Score:2)
I hate to sound cynical, but here's what's really going on.
You see, the poor people of India have been ripped off so many times that the use of gold for savings and financial transactions is deeply embedded into their culture. That drives the central bankers of the world, and especially in India absolutely batshit crazy, because it deprives them of the opportunity to water down peoples money and keep the difference for themselves while saddling the poor with inflation and debt. This wasn't so unbearable a
Where's the stupid comment? (Score:1, Troll)
I keep waiting for the Slashdot trolls to come out with their standard response to India stories - "Why are they doing when they cant feed themselves" Incidentally when I worked in Europe I never saw a beggar (guess the dole works). Not so in Toronto and Austin. Austin beggars are passive except on Guadalupe where they can give the pushiest Indian beggar good competition. But the funniest beggar I saw was the one sitting outside the McDonalds in downtown Toronto with a 'Change please' sign. Whenever he had
Iqbal Quadir Long Now talk (Score:3, Interesting)
There was a Long Now Foundation talk covering the early stages of this story by Iqbal Quadir. (He was the guy who had the idea that the Grameen bank could fund cellphone purchase in small rural areas). Here's their written summary of the talk: Iqbal Quadir, "Technology Empowers the Poorest" [longnow.org] (If you poke around on the site you can find the video of it, or listen to the mp3):
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I was just about to mention this. And he beat the Indians to it - he started this in Bangladesh. I just watched Iqbal's talk [ted.com] at TED a few days ago.
Microloans = Too much banking regulation (Score:3, Interesting)
The only places in the world you see the need for microloans are in countries where there is too much bank regulation.
Here is what the Index of Economic Freedom [heritage.org] says about Indian banking:
India's 28 state-owned banks control about 75 percent of loans and deposits, and 29 private banks and 31 foreign banks make up the rest. The government owns nearly all of the approximately 600 rural and cooperative banks and most other financial institutions. Banks must lend to "priority" borrowers. Foreign ownership of banks and insurance companies is restricted.
That's why there is microlending in India, the banking system is almost totally an inefficient government monopoly.
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85% of population in India do not have any bank accounts.
Which goes to show, Indian banking regulations are not serving their people, but making it too hard for the common people to join the banking system.
In the US, my dogs get credit card offers in the mail! (OK, maybe we've gone too far, but you get the idea...)
Re:Food, water, shelter not necessary. Nokia 6220! (Score:4, Insightful)
India does not work that way. It is a chaotic system, with a lot of entropy, and has lot of redundancy built in. Normally, you would expect a country/society/country to move bottom to top. i.e. improve life in terms of health, economy and education, then move on to develop better means to accelerate the progress. But it has not work in India. There are lots of social, economical, religious factions and factors why India can not operate that way. It is a country of conflicting priorities.
The result is that we have successful space programs, successful telecommunication infrastructure while still a lot people die of hunger. But somehow, we have still managed to get better - though not in very rapid/efficient way. There are less % of people below poverty line (even if you do not believe government numbers), life expectancy has improved. At the same time, villages are breaking up and cities are clogged.
So, its erratic, and it does not make sense. But we still have just launched our moon mission. Go figure.
Parent
Re:Food, water, shelter not necessary. Nokia 6220! (Score:4, Insightful)
Somehow, I think that the person whose life is on the line if they don't spend their money on the right things is probably more qualified than you when it comes to knowing what decisions they have to make to keep them alive.
Parent
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Well then it's a good thing we have people like you who can tell poor Indians that they're too stupid to make their own decis
What fucking decision? If me and my family are starving and someone offers us a loan, I take it. No decision or choice to make here. Never mind that the terms may stipulate ridiculous interest etc. and that the plan of the loaning company is to exploit us until we can no longer pay. Survive today, work out tomorrow when tomorrow comes.
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Food and water are necessary of course. I haven't heard of any recent famines in India. I suspect that "shelter" as defined in India is different though. I bet they don't have car dependant McMansion neighborhoods there. Do you have any idea what a waste of resources that is? Over there, at least for a young person, it's probably socially acceptable and safe to board up in a rooming house on a cot or something. You probably have smaller apartments, denser cities, and I bet their public transportation
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Food and water are necessary of course. I haven't heard of any recent famines in India.
You guess correctly. India hasn't had a famine in recent memory. The last one was in the 70's I think.
I suspect that "shelter" as defined in India is different though. I bet they don't have car dependant McMansion neighborhoods there.
You are mostly correct, but it depends on whether you are talking about urban or rural places. But generally people walk or take the bus. Railways form an important part of Indian life. More people=less space for each person. Everyone generally lives with their families/friends, and it is rare for people to live alone.
You probably have smaller apartments, denser cities, and I bet their public transportation doesn't suck.
The major cities (Bombay, Delhi) have excellent public transport. Over 80% of people us
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But judging from your post, I'm guessing you wouldn't know anything about investments.
Re:Food, water, shelter not necessary. Nokia 6220! (Score:4, Insightful)
Parent
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That really depends on how they do things. One of the big tricks is to give the loan, then sell the debt; because the amount owed, after interest, is so much greater than the initial value, they can actually make a pretty decent margin without ever collecting a dime from the people they loan to... and if they can't sell it immediately then they can pick up some free money in the meantime.
The only snag comes when too many people are doing that and the people who invest in debt decide to stop buying... then a
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Don't worry, the EU and Asian zone bankers are all over it too. Wouldn't want anybody to miss out on the blatant ethics violations.