DripFin means Drip Finance ala Drip Irrigation (i.e. small scientific value added productive measures)

Archive for July, 2009

Boost to Financial Inclusion in India – The Half Million POS Terminals


Latin America has a wide Business Correspondent Banking Network where cash can be deposited/disbursed at merchant establishments.


The Khan committee reported recommended the Business Correspondent Banking Model for India and the RBI issued guidelines to that effect.


However, POS machines were not permitted to disburse cash leading to experimentation with various technologies like RFID/NFC/Smart cards/Mobile phones. Several companies emerged and offered innovative solutions, however some concerns were common – customer adaptability issues, cost etc



A week ago, the RBI deputy governor had mentioned about new guidelines for business correspondents/facilitators: RBI has now permitted cash withdrawals at POS terminals. This for now provides a proven, scalable alternative to RFID/NFC/Smart cards/Mobile phones .This will give a boost to financial inclusion.


Consider this:


  • Wide Network : The total no of POS machines in India is ~ 0.5 million with Interoperability.


  • Low Capex: Each POS machine costs onetime ~ Rs 7500 ( $ 175), against Rs. 100,000+ ($ 2250) monthly for an ATM + Rental of the premises


  • Cost per customer: Inexpensive Rs 15 magnetic strip cards.


  • RBI has permitted the merchant to earn a fee on each transaction