G2P takes off--in India
Last week, I attended the CGAP/IFC conference entitled Next generation access to Financial Services. A wide range of increasingly well known models of mobile and branchless banking were discussed, especially on Day 2. Day 3 focused more on regulatory frameworks for this and issues such as AML/CFT.
One session (no.6) discussed financial services and social protection through government-to-person payment (G2P) schemes, the integration between which is an area of growing interest (see briefing note and research paper which I completed for DFID last year on the issue). At this session, Laura Cuda of VISA International set out Visa’s approach to this burgeoning area, including the provision of VISA-branded basic bank accounts (as in ABSA/ Allpay’s Sekulula account used to pay grant recipients in South Africa) and pre-paid cards (now used extensively in the US and elsewhere for benefit payouts). David Ferrand of FSD Kenya described the Social Protection Challenge Fund in that country, and how it is seeking to promote more innovative approaches to the delivery of the pilot social protection schemes in that country with its diversity of areas—both on-grid (in terms of power and wireless coverage) and way off-grid in every sense. As an example of a G2P scheme which is considering the payment aspects from the outset, the Kenyan example is well worth watching.
However, as so often happens at large conferences, one of the most interesting meetings took place on the sidelines. Senior officials from Reserve Bank of India gave a presentation to a small audience at CGAP on how they have catalyzed a technology-enabled process for the payment of social transfers. To date, this has been piloted in one state, Andhra Pradesh, over the past three months or so. 50 000 beneficiaries are now able to receive their benefits in their villages during the month by using a smart card at the local business correspondents of five participating Indian banks. These correspondents, appointed under the 2006 RBI regulation enabling this, are equipped with wireless communications devices. According to the RBI presenters, the early success of this approach is likely to mean that this approach will be rolled out to 20 million plus beneficiaries. If so, this would be transformational branchless banking indeed!
