ICICI Bank to make 100 villages cashless & digital in 3 months

Against the backdrop of the demoentization drive, ICICI Bank, the country’s largest private sector bank, will make 100 villages cashless and adopt digital modes of payment within 100 days. The bank will be training 10,000 villagers in using digital methods of transaction and will also offer them vocational training.

The bank’s managing director and CEO Chanda Kochhar said that it was encouraged by the success of making the village of Akodara in Sabarkantha district go digital.

– Adults in these villages will be able to open bank accounts using Aadhaar-based eKYC through tablets and make cashless payments at retail stores through an SMS and USSD mobile app.
–  The SMS banking app will be available in regional languages and function on feature phones. The bank will also set up end-to-end merchant infrastructure that will enable the retailers in the village to accept mobile based payments.
– Point-of-Sale (POS) machines will also be set up at seed and fertiliser outlets for cashless transactions using Rupay cards.
– ICICI Bank will facilitate formation of Self Help Groups (SHGs) and offer loans to the members. Additionally, ICICI Bank will also extend credit facilities to the trained villagers in the form of Kisan credit cards, two wheeler loans and farm equipment loans among others.

The bank said that it will be taking a village’s predominant economic activity into account and develop digital solutions for payment. For example, in Akodara, it created an end-to-end measuring, tracking and payment solution for the milk cooperative society and its members. Akodara has 250 households. 1,036 adults from the total 1,191 have savings accounts, as indicated by this FirstPost story.

MediaNama’s take

Any effort by a bank or institution to undertake financial literacy is always welcome as it helps people become less cash dependent as they start to embrace digital methods of payment. However, a majority of Indian villages have low or no Internet connectivity, which is crucial for digital transactions.

ICICI Bank has developed a USSD-based payments solution for these villages and currently the government has waived off all charges for USSD based mobile banking. However, the FirstPost story notes that people do not use the application for every purchase:

When we spoke to a young lady about the cash payment (the second transaction), she replied, “I’m buying a Rs 5 chocolate bar for my child. I am not going to use an SMS for such a small transaction, am I?”

People in the village are aware that they are being charged for using the USSD application. But to truly bring parity between payments, the cost of digital transactions must be the same as cash i.e. nothing at all. The appeal of cash lies in the fact that it is a simple instrument that can be understood by everyone and there is no need to remember how to use a complicated USSD method of payment. Additionally, charges on USSD must be waived off permanently else people will revert to cash for transactions.