What do you call an Indian with a small piece of land, a few pieces of jewelry and a job that only pays about $80 per month? 

While many Westerners would say “poor,” Emory University marketing scholar Jagdish Sheth says “opportunity.” 

During a discussion on financial inclusion at the university’s annual India summit, Dr. Sheth urged banks to revamp how they view Indian consumers at the “bottom of the pyramid,” noting that though many people may live on $2 a day, but that doesn’t mean they don’t have any money.

The Western method of using income to measure wealth doesn’t bear out in India, he said. An educated software engineer in Bangalore might have a high salary, but his net worth may not match that of the “poor” farmer with no bank account who sold his land to a developer and parked much of his savings in his wife’s gold jewelry. 

An economic “caste system” blinds many to the sleeping giant that is India’s rural population, which could hold more than $2 trillion worth of gold, Dr. Sheth said, an amount greater than India’s entire 2011 gross domestic product. 

“These are not oppressed people. I think we, as educated, elite class exercise our elitism over them. We look upon them as if they should behave like we behave,” said Dr. Sheth, a chaired marketing professor who sits on the Wipro Technologies Ltd. board of directors. 

His remarks came during a panel addressing ways to boost access to banking services among the so-called “poor.” 

According to Dr. Sheth, the answer is simple – though it might not develop as a Wells Fargo with a drive-through ATM on every corner. 

Instead of using a traditional branch model or insisting on creating an American-style credit score for each person, banking services should be delivered by mobile phones, which are used by more than 900 million Indians and see no disparity in access based on age, gender or income level. 

“If I was a public policy maker interested in creating unorganized into organized [economic activity], I would go after that,” Dr. Sheth said. 

Only 35.6 percent of Indians have accounts at formal financial institutions, and only 4 percent use mobile phones to send or receive money or pay bills with mobile devices, said Atisha Kumar, financial sector specialist at the World Bank, during her presentation at the summit. 

That compares with 68 percent of mobile payment users in Kenya, said Ms. Kumar, who presented recent research surveying 3,518 people in India for the bank’s Global Findex, a recently developed financial inclusion database encompassing 148 economies.  

According to Dr. Sheth, the problem is not the technology; it’s the banks, which unlike the retail and life insurance industries, have failed to change the way they reach out to India’s rural consumers.

“We always think about them as poor – they’re wealthy – now how can you make them more wealthy?  If you think from that perspective, suddenly your mind changes,” he said. 

K.V. Eapen, a senior adviser at the International Monetary Fund, agreed that every effort should be made to boost banking penetration in India. 

“The formal financial sector needs to grow; it’s part of development. It needs to actually spread across the country, and that, of course, is something that nobody can really argue against,” he said at the summit. 

But like Dr. Sheth, Mr. Eapen said equating low access to formal banking with no access to financing is giving an incomplete picture. Businesses, especially in entrepreneurially minded states like Gujarat and Kerala, have always been able to tap cash through family networks, the merchant class or indigenous “chit funds,” which lend based on assets rather than income. 

Some of these informal institutions could soon be considered banks, thanks to reforms to the Reserve Bank of India‘s guidelines governing their formation, according to Mr. Eapen. 

But some startups aren’t waiting around for the definitions to change. 

InVenture, a startup that emerged from CEO and founder Shivani Siroya‘s interviews of 750 micro borrowers while working with the United Nations, is using mobile technology to help Indian entrepreneurs graduate into the traditional banking sector. 

Insight, the company’s solution for basic phones, allows users to track their expenses and sales through SMS, or text messaging. That data is compiled and can be relayed to financial institutions with a basic credit score that includes a demographic profile encompassing 27 characteristics that correlate to the borrower’s repayment ability. 

Data can help allay the fears of lenders, which currently gauge risk through personal recommendations or value judgments, Ms. Siroya said. Less perceived risk should equal more loans, which should boost the economy. 

“In India, there are 33 million micro borrowers, but most of them don’t have access to that next step of expansion capital, so they’re unable to grow their businesses, and most importantly they’re unable to be a source for job creation in their communities,” Ms. Siroya told Global Atlanta at last year’s GeorgiaForward forum, where she was a keynote speaker. 

Traditional banks are also adapting their technologies to reach rural consumers, according to representatives at Atlanta-based NCR Corp.‘s Mumbai office. 

NCR, the market leader for ATMs in India, is deploying new machines in smaller cities and rural areas that are connected to the banks through GSM mobile signals, allowing access in areas fixed-line telephone infrastructure has not yet reached. 

Some models can read the biometric data of users depositing and withdrawing cash and checking their balances. Others offer instructions in up to 20 Indian languages, allowing deployment across India’s diverse regions. Pictographs and voice prompts are available for the illiterate and visually impaired, Rakesh Auyala, a spokesman at NCR India, told Global Atlanta during a 2012 interview. 

“It’s customized in a way that makes it friendly for the rural population,” Mr. Auyala said of the machines, which eliminate middlemen sometimes used for depositing money. 

He added that the ATMs will be sending data back to the banks, which will use it to build credit profiles for the users. 

The fourth annual Emory India Summit was held Feb. 21-22 and included a variety of discussions on literature, retail, racism, technology, entrepreneurship and financial inclusion, among other topics. 

The financial inclusion panel was moderated by Govind Hariharan, executive director of the India China America Institute, which has been researching financial inclusion issues in its three countries of focus over the last year. 

For more on the ICA Institute’s recent programs, click here

For a World Bank infographic on the world’s 2.5 billion people without access to a bank account, click here.


As managing editor of Global Atlanta, Trevor has spent 15+ years reporting on Atlanta’s ties with the world. An avid traveler, he has undertaken trips to 30+ countries to uncover stories on the perils...