At Narendra Modi’s event in Wembley this reporter sat next to a British born Gujurati living in Hamsptead, North London, who not only kindly translated but shared his chocolate bar. Nish Kotecha is a Board Member and Director of the London Chamber of Commerce, the oldest and largest trade institution in the UK and a graduate of the LSE. He is an expert in economics and pioneer in financial literacy, bringing personal banking to the bottom of the demographic pyramid in India. He runs a “Business Correspondent” enterprise across India. With his international background in investment banking and corporate finance, Kotecha was inspired by CK Prahalad (author of Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits) during the time they were both trustees of TIE, a not for profit organisation promoting entrepreneurship around the world, and he began to examine the tools to alleviate poverty in India.
Banks were only able to give credit to people with collateral and informal providers gave unsecured loans to the few with good credit. Kotecha concluded that “money lenders” would never make a dent into poverty, charities did not have enough social dollars to make a difference and the ceiling for commercial micro lending was 50,000 Rupees thus moving up the ladder of financial progress might take up to 15 years for a rural person. Kotecha expanded the definition of micro finance to financial inclusion when he realised the customer needed more products: the first essential was a bank account to help save, second was a remittance facility enabled by the branch network and the recent RUPAY debit card, third were insurance products, fourth was credit and simultaneously introduction/education to financial services for people who had previously no access. All this was impractical for big banks to offer, in response the Reserve Bank of India allowed the creation ‘Business Correspondents’ to make financial inclusion available to all, over and above the world of microfinance. This was necessary to generate sustainable, equitable growth for the 60% of Indians who did not have access to a bank account, credit card, insurance and loans. Financial inclusion brings these millions into a modern economy. If financial inclusion is the goal then developing financial literacy is the route, Kotecha believed it would be virtually impossible for India to grow into a modern economy without broad-based financial inclusion. Technology has helped the objective along; the AADHAR card gives everyone the identification they need to open a bank account.
In 2010 on behalf of the State Bank of India, Kotecha opened the first agent branch of Geosansar in Hyderabad offering savings accounts to low income and semi-urban customers. Today Geosansar have over 500 branches, 600 employees across 9 states and have enrolled some 3 million bank accounts. It is a cash business, customers remit an average of between 4,500 to 5,000 rupees and up to 20,000 in cash. Throughout the day each Geosansar branch employee pays the cash into the Bank branches; the business model is that Geosansar then receive a commission on most transactions.
Kotecha is a rare person, not only is he passionate about providing banking to the unbanked and the ethics of financial services, he never stops having new ideas, this month he has introduced pensions as part of Geosansar’s package. His marketing model is two-fold, at grass roots his team stomp the streets introducing his concept; second he partners with overseas Brands manufacturing in India, New Look, George, Marks and Spencer factory teams have all been financially educated; over 24,000 people have been provided access to bank accounts through this scheme. His aim as the pioneer of “Financial Inclusion in the supply chain” ” is to make “India’s financial services the most comprehensive in the world, serving the entire community”.
Kotecha is a great admirer of Prime Minister Narendra Modi, his ‘Pradhan Mantri Jan Dhan Yojana’, delivered in New Delhi in August 2014, really changed things. The declaration of the beginning of the end of financial untouchability in India, was an implementation idea unprecedented in scale in economic history. Between January 2014 and January 2015 the Government goal was to open 75 million new bank accounts but during this period the reality exceeded the goal with 115 million opened. Kotecha reckons that India is now between 2/3 and 3/4 towards every adult having a bank account, he is clearly relieved this will put an end to exploitive money lenders and other informal financial services. Kotecha points out another Government objective in that bank accounts will eradicate leakage from Direct Benefit Transfers. However it is still not without difficulties, Kotecha says “The pipes are still clogged, there is a lack of vision among practioners as to what Financial Inclusion can become. Modi’s Government is starting to articulate what the end product looks like but the steps to get there are not yet defined, it is exciting. We have to move away from the NGO world and make Financial Inclusion commercially viable and attractive to all the actors in the chain to make it sustainable”.