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Cellphone Banking Helping To Fight Poverty In India

Soulskill posted more than 5 years ago | from the will-it-work-here-too? dept.

Cellphones 76

An anonymous reader writes "Technology Review is running an in-depth story about the way cellphone banking is transforming the lives of many poor people in India. By enabling users to manage a legitimate bank account and finance micro-loans, cellphones are a major force of social and economic change. It's perhaps not surprising, given that despite widespread poverty, India has the world's fastest-growing cellphone market and the second largest number of cellphone users (after China). The article mentions one Indian start-up, mChek, that is thriving as a result. There's also an excellent video report."

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76 comments

stupid tags (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#25510021)

Are the tags supposed to be a fucked-up piled-up cluster of crap?

Super security (3, Funny)

hansraj (458504) | more than 5 years ago | (#25510047)

This mcheck service is super secure. From their FAQ [mchek.com] :

Who else will get my Credit Card information?

mChek will NEVER disclose your Credit Card information to anybody, including to you.

(Emphasis mine)

Re:Super security (4, Insightful)

Lonedar (897073) | more than 5 years ago | (#25510085)

Well, that kinda makes sense. There shouldn't be a way of obtaining the card information short of reading it off the actual credit card.

Re:Super security (2, Insightful)

MrNaz (730548) | more than 5 years ago | (#25510161)

Of course it makes sense. You get your card. The number is on it. Bank staff shouldn't be able to even access it, unless you give it to them.

Re:Super security (1)

argiedot (1035754) | more than 4 years ago | (#25510889)

Oh, it's a startup, I never realised. Anyway, I think they're pretty damn awesome. I've never before had the experience where I purchase something on my phone, get an SMS and I get to go to the damn concert if I show the people at the door the SMS and the card. Don't know if these are standard elsewhere, but I still think it's freaking awesome.

Re:Super security (2, Interesting)

flyingsquid (813711) | more than 4 years ago | (#25510903)

You know, perhaps to stimulate this form of banking, we could allow people to buy up the various loans, then bundle them into securities, and sell the securities off on the market. Think of the tremendous impact we could have on the economy of the developing world.

Poverty (4, Insightful)

TubeSteak (669689) | more than 5 years ago | (#25510059)

Cell phones are like computers and the internet rolled into one for those poor people in India.

I bet in the next ten years, markets in India and Africa are going to be the hotspot for 3.5/4G wireless internet service through cell handsets. I imagine that their governments will encourage the building of cell infrastructure because they can see how cell access is helping people become upwardly mobile.

Re:Poverty (2, Insightful)

Anonymous Coward | more than 5 years ago | (#25510105)

The more benevolent, stable, governments will, but the last thing that the kleptocracies and dictators want is upward mobility for their people. It might give them an actual voice in their government. Still, this is good knews for the poor in many countries.

Re:Poverty (1)

PunkOfLinux (870955) | more than 5 years ago | (#25510115)

I don't really think they care about upward mobility... more about "How can we either a) make ourselves look better to the world or b) make more money in taxes?"

Re:Poverty (0, Troll)

thomasw_lrd (1203850) | more than 5 years ago | (#25510187)

Last I checked India was still in the caste system, where upward mobility is not encouraged and not really possible.

Re:Poverty (0, Offtopic)

JustOK (667959) | more than 4 years ago | (#25510435)

mebbe they'll outsource the caste system once their economy gets better.

Re:Poverty (-1, Troll)

Anonymous Coward | more than 4 years ago | (#25510601)

Indians stink like a motherfucker. Probably because everybody outsources their stink to India.

No problem (0)

jawahar (541989) | more than 5 years ago | (#25516227)

Whenever you come across anybody from India ask him "What is your Caste?"

Re:Poverty (1)

0100010001010011 (652467) | more than 4 years ago | (#25510471)

One of my friends just went back home to his (hoping to be fiance) so that he could ask for her hand in marriage. 16 hour flights both ways so he could beg the elders to have her hand. He's an engineer, she's a med student. They've both been in the US for 6+ years and all the elders kept getting hung up on is that his family is of a lower caste.

In the end he ended up getting the thumbs down, they're still dating but the marriage is postponed.

Re:Poverty (1)

thomasw_lrd (1203850) | more than 4 years ago | (#25511053)

See that is interesting. I had read that the govt. had suspended the caste system, but it didn't really go over well with the people. I guess I would be pissed off if my govt told me that what I was working on for the last thousand years was now null and void.

Re:Poverty (3, Insightful)

TheRaven64 (641858) | more than 4 years ago | (#25512473)

Part of the problem, I'm told, is the way in which they abolished it. They took the affirmative action idea to extremes and instituted caste quotas for various professions. The main effect of this was to create a large, visible, set of people from the lower castes who conformed to stereotypes - insufficiently educated to perform their jobs - and cause resentment amongst the people from the other casts who were displaced in favour of someone who wasn't qualified. Unfortunately, a caste system isn't something you can abolish quickly.

Re:Poverty (1)

thomasw_lrd (1203850) | more than 5 years ago | (#25514999)

This is something that I agree with. In my opinion, it would take generations to do away with such a system. I know in Little Rock we have abolished segregation for over 50 years, and we are still having problems with it even now.

Democracy != Meritocracy (0)

Anonymous Coward | more than 5 years ago | (#25515949)

India is democracy and not meritocracy like Taiwan.
If merit is the criteria, India should never get Independence from British.
Govt must implement Reservations in Temples, Judiciary and in Defense services.
A) 50% of Temple Priests/Supreme Court Judges/Defense Staff must be from OBC communities.
B) 35% Temple Priests/Supreme Court Judges/Defense Staff must be from Dalits and Tribals.
C) Remaining Temple Priests/Supreme Court Judges/Defense Staff must be from other castes.
Otherwise India will disintegrate into 3000+ separate Kingdoms.

Casteism aka Racism (0)

Anonymous Coward | more than 5 years ago | (#25581325)

How internet can help fixing Casteism in India?

Sorry to hear that (1)

jawahar (541989) | more than 5 years ago | (#25516171)

In India parents have been covertly brainwashing their children to coerce other children as per Caste hierarchies since 1500 BC.

Re:Poverty (3, Insightful)

homer_s (799572) | more than 4 years ago | (#25510581)

Last I checked India was still in the caste system

Yep, we are all "in" the caste system here. Everyday, when I wake up my grandfather asks me if I've been "in" the caste system. On most days I do and I can answer honestly. But on some days, I'm late to the office and I have to lie to my grandfather. Of course, my office has its own caste system so I make up during the day.

Does it make you feel better about yourself when you open your mouth to blab about stuff that you have no clue about? Let me guess, you:
  • Saw a 30 min documentary about India
  • Read an article about India in 'Pickle connosueir monthly'.
  • Spoke to an Indian person while buying a sandwich at Subway.
  • Spent 15 days in India.

And you thought that that qualifies you to speak about a complex social problem that has existed for 1000s of years.

Re:Poverty (-1, Troll)

rubycodez (864176) | more than 4 years ago | (#25510703)

no, we read interviews of lower caste people and how they got treated like crap by higher castes. We most certainly are qualified to speak of it.

your system sucks, I'm very sorry we do business with your country.

Re:Poverty (4, Insightful)

Anonymous Coward | more than 4 years ago | (#25512479)

Ah, an American. Of course, America has no caste system as everyone treats everyone else as an equal all the time.

Re:Poverty (1)

rubycodez (864176) | more than 5 years ago | (#25514257)

and you're saying that means someone has to be stuck with their station in life over here in the USA like they are in India? a person in USA can't be born in poverty and go to being president? can't be engineer? can't marry someone because of ethnic background or income or other social standing? hah, world of difference.

Re:Poverty (0)

Anonymous Coward | more than 5 years ago | (#25514511)

What you said would come true IF AND ONLY IF Obama becomes the president of USA. Till then, you can shut your trap.

These things have already come true in India.

http://en.wikipedia.org/wiki/K._R._Narayanan

http://en.wikipedia.org/wiki/Abdul_kalam

Till 1964, southern states in USA were segregated. All the things you said were true in the south. I am sure what you said about India are true in some parts of US as well.

No one stops a person from becoming an engineer in India - you fucking moron. Stop pulling stuff out of your ass.

Re:Poverty (1)

iggymanz (596061) | more than 5 years ago | (#25514959)

oh, no other U.S. presidents were born poor? Yes, U.S. south and some areas of the north were bad in this matter, and change was made. one of your examples doesn't hold, born middle class. Engineers I've worked with from India have told me of the problems there regarding caste, one does get born with silver spoon in one's mouth.

Upgrade all Castes to separate Religions. (0)

Anonymous Coward | more than 5 years ago | (#25516015)

Govt must notify every Caste as a separate Religion.
This will abolish Casteism and prevent Conversions in India.

Re:Poverty (0)

Anonymous Coward | more than 4 years ago | (#25510961)

And you thought that that qualifies you to speak about a complex social problem that has existed for 1000s of years.

Frankly, when it comes to non-technical and intangible "problems" that have been around 1000s of years, yes.

It's not hard to be qualified to speak about a stupid social convention.

Re:Poverty (1)

thomasw_lrd (1203850) | more than 4 years ago | (#25511035)

You are absolutely correct. That is why I posted my comment in such a manner. You are right I am not qualified, I blame it on my western education. My government thanks that two semesters in high school and college is enough to learn about foreign cultures, whereas I know that it is not. Please pardon my misspeak. I was not trying to bait you, but just making an honest (as I've been taught) opinion.

Casteism = Slavery (0)

Anonymous Coward | more than 5 years ago | (#25516127)

Casteism = Racism aka Socio-economic Collusion in India since 12th Century.

Re:Poverty (1)

Zerth (26112) | more than 4 years ago | (#25512443)

The real question is: are you reacting like this because you are tired of being oppressed or because you feel guilty about privileges you received solely from your birth?

Re:Poverty (0)

Anonymous Coward | more than 5 years ago | (#25513773)

How about educated Indians just tired of BS from non-Indians? Most Indians who write here are the ones who earnt their privilege with hardwork. Just like India earnt the nuke technology and the space and rocketeering program. India is a country with limited resources and a large population. You would have no idea what it is to be in such a place. Otherwise you wouldnt make small BS talk like this.

Let me try give you an analogy to help you understand. The privileged Indians you refer to are as privileged as children of detroit auto workers. The unprivileged are about as unprivileged as hobos. You might say that its discrimination, but you are comparing 10 cents with 1 cent and drawing your conclusions.

Go figure.

Re:Poverty (0)

Anonymous Coward | more than 5 years ago | (#25514769)

Or one might compare, say, farmers to computer workers. One group works hard and rarely gets anywhere, while the other, due to luck of the economy, gets much more.

He still may see a group of haves and a group of have-nots, even if the haves possess only as much as his have-nots.

Re:Poverty (0, Troll)

iggymanz (596061) | more than 5 years ago | (#25514983)

oh, person can't speak against complex social problem like slavery or a caste system, because it's existed for thousands of years and that venerates it? sounds like "son of a dot-head" talk to me.

Re:Poverty (0)

Anonymous Coward | more than 4 years ago | (#25511315)

You are right that is it not encouraged, but it is possible.

I am from India, born there and have spent 25 years there before moving to the US. So I can say I have some idea about how it works.

After 1991, when India started opening doors to rest of the world, things have changed. Money has started flowing in. Initially, it was only the riches who became richer, but money has started trickling down, though painfully slow. But at least, the middle class has started seeing some of it. Eventually, some of the left should get all the way down one way or other.

The point is, after all, money works. It is the only solution to this problem, given how most of the Indians have their head buried in the sand when it comes to caste system. I have been born in the 'privileged' caste, and I hated it, I still hate it. But I am sure I would not have achieved the same had I been of 'lower' caste.

Anyway, if India overcomes this problem, it will be in spite of the government, in spite of the bureaucracy and in spite of the gods.

Re:Poverty (1)

Yvanhoe (564877) | more than 4 years ago | (#25510525)

You would be already surprised by the low cost of cell phone communication there...

despite widespread poverty (2)

frovingslosh (582462) | more than 5 years ago | (#25510129)

despite widespread poverty, India has the world's fastest-growing cellphone market

I'm guessing that cellphonr technology must be a lot more affordable in India than it is in the U.S.A. Can anyone tell us what cellphone costs are in India, and, if I'm right, why someone can't offer a similar price structure in the United States?

Re:despite widespread poverty (2, Informative)

MarkKnopfler (472229) | more than 5 years ago | (#25510155)

About a year back voice connectivity and edge data cost about 350 INR a month. At present exchange rates it is 8 USD a month. Significantly lower. However one must remember that real-estate and labour costs are much lower in India.

Re:despite widespread poverty (0, Troll)

Threni (635302) | more than 5 years ago | (#25510163)

> why someone can't offer a similar price structure in the United States?

Companies charge what the market will bear. There's no single value for what a one minute phone call costs. There's enough difference in cost of electricity, oil to drive around to fix broken transmitters, disposible income of the people paying for the calls etc. In the UK stolen phones end up in the third world because they have cheap calls but expensive phones. In the UK handsets are generally free with a 12/18 month contract (so you get 2 new phones every 2 or 3 years) but the calls are expensive.

At least in India there's some chance of the customer having some chance of understanding what the fuck the guy in the service centre is saying. Whenever I phone customer service it's like I'm tuning into some Bollywood soap opera on a short wave radio set - a mixture of childs vocabulary and grown up jargon.

Re:despite widespread poverty (3, Interesting)

Anonymous Coward | more than 5 years ago | (#25510265)

Well India has got so many cellphone users because:

1. People may be poor but the cellphone compnies arent :) Here are a few mobile operators:

TATA
Airtel
Reliance
Vodaphone

and the list goes on. Reliance operates the world's biggest CDMA network. These companies have the financial capability to lay there own fiber network accross India and opera PAN india mobile networks.

2. Competition: Well, unlike other countries, there is a lot of competition among these mobile operators. They will install a mobile tower in the most remote location of India if they can acquire a few more customers.

3. Openness : People are used to buying mobile phones and SIM separatelly. Most people will have more than one companies SIM. It's cheap afterall, you can get a new SIM for just around 100 Rs ( 2 dollars ). So open GSM system has helped the mobile network grow a lot.

4. Culture: Japan is mobile crazy, so is India. Don's ask me why, but almost everyone wants a mobile phone. It's not fashion, it's considered a requrement in India.

Re:despite widespread poverty (1)

jagdish (981925) | more than 4 years ago | (#25513097)

why someone can't offer a similar price structure in the United States?

Greed.

Re:despite widespread poverty (0)

Anonymous Coward | more than 5 years ago | (#25515205)

Firstly,Cell phones are not bound to a particular provider.You can switch easily.
2.Incoming calls and mesages are free.
3.STD calls(one state to another) are around 1 buck a minute.
4.Most plans have free local talk time.I got around 600 minutes a month.
5.SMSes vary a lot.some states have unlimited sms,others have around 1 buck an sms or more.
6.student plans have more free smses than non student plans.
7.calls to same carrier number are even cheaper including STD rates.
8.GPRS is around 300 per month and unlimited.
9.EDGE is around 500 per month.
10.THere is no 3G in India yet.

Re:despite widespread poverty (1)

abjbhat (1203056) | more than 5 years ago | (#25515425)

Plenty of variations depending on the operator but, incoming calls are always free. Here's what I pay- Local SMS/Text - 0.10INR National SMS/Text - 0.50 INR Local calls - .50 INR(Mobile) - 1 INR (Landline) National calls - 1.50INR (Mobile/Landline) Unlimited Data - 99 INR/week (Gprs like speeds) Some more reductions if its past 9 pm, but anyway...that's cheap enough!

Mobile is the way to go (3, Informative)

prayag (1252246) | more than 5 years ago | (#25510177)

I know the mCheck people and they are doing great work. They face 2 major challenges :

1. Getting more and more mobile operators and banks on board.

2. Keeping their cost low. IIRC, each transaction costs them about Rs. 2-3 which is quite high if you think of transaction size of Rs. 20-30

However, mobile penetration is ever-increasing in India. It is one of fastest growing telecom markets in the world. And I've been told of places in India where there is no electricity but the people have mobile phones. (There is an awesome story about how they charge their batteries, but that for some other time).

So mobile is the way to go not just for for democratization of information but also for economic liberation of the people.

Cheers !!!

Re:Mobile is the way to go (1)

thomasw_lrd (1203850) | more than 5 years ago | (#25510205)

Now that is actually interesting. I would like to know how they charge their phones?

Duh... (5, Informative)

apathy maybe (922212) | more than 5 years ago | (#25510197)

Of course China and India have the largest cell phone populations in the world... They have more then 1 third of the worlds population between them.

(Know why more people are using cell phones and not land lines? It's a shit load easier to throw up towers then to run cables. And a shit load easier to guard against people stealing the metal for raw materials.)

Cell phones are great for poor people, especially farmers. They can ring up potential buyers before travelling a day to market. (They might travel south instead of north.)
I've also read that they are used to send money back home for people (from the country side who live) in cities. They buy cell phone credit, then they ring a fellow in the home village and tell him the voucher number, and he types it into his phone and gets the credit, and then gives that amount of money (minus a small fee) to the family.

Innovation comes, so often, from necessity.

Re:Duh... (3, Insightful)

amccaf1 (813772) | more than 5 years ago | (#25510237)

Of course China and India have the largest cell phone populations in the world... They have more then 1 third of the worlds population between them.

Exactly, which is why statements such as "the second largest number of cellphone users (after China)" are mostly useless at conveying information.

Tell us what the number of cellphones per capita is and in comparison to the rest of the world. Then you'll be telling us something useful...

Re:Duh... (1)

prayag (1252246) | more than 4 years ago | (#25510419)

Tell us what the number of cellphones per capita is and in comparison to the rest of the world. Then you'll be telling us something useful...

Mobile penetration in India stands at about 15-17% and growing at a rate of about 20%, IIRC.

Re:Duh... (1)

purplehead (921098) | more than 5 years ago | (#25516585)

Its the ratio of people who have access to banks vs. the number of people who have mobile phones that matters.

never mind the phones... (5, Funny)

owlnation (858981) | more than 4 years ago | (#25510651)

... in India, they still have banks!!! They're RICH!!!

The Economist had a similar article to this (0)

Anonymous Coward | more than 4 years ago | (#25511005)

last year on Ethiopia.

Food, water, shelter not necessary. Nokia 6220! (0, Flamebait)

syousef (465911) | more than 4 years ago | (#25511031)

This is ridiculous. You're arguing that selling people phones so that they can take out more loans when they can't afford to eat or shelter themselves is good for these people. Give me a break. These "microloans" aren't charity. They're good for the lenders, not the poor. The reality is that the phones are just one more expense to pay off, and the interest on the micro-loan is yet another.

Re:Food, water, shelter not necessary. Nokia 6220! (0)

Anonymous Coward | more than 4 years ago | (#25511339)

Microloans are supposed to let poor families invest in something yielding them significantly greater good. Irresponsible loaners might not inquire what exactly the loan was going for, nor may they put up a reasonable plan for repaying.

Re:Food, water, shelter not necessary. Nokia 6220! (3, Insightful)

stevejsmith (614145) | more than 4 years ago | (#25511649)

An "irresponsible lender" who makes loans nobody can pay back isn't really doing himself any favors, you know.

Re:Food, water, shelter not necessary. Nokia 6220! (0)

Miseph (979059) | more than 4 years ago | (#25512271)

That really depends on how they do things. One of the big tricks is to give the loan, then sell the debt; because the amount owed, after interest, is so much greater than the initial value, they can actually make a pretty decent margin without ever collecting a dime from the people they loan to... and if they can't sell it immediately then they can pick up some free money in the meantime.

The only snag comes when too many people are doing that and the people who invest in debt decide to stop buying... then all the little guys get stuck with debts which can't be paid, and when those fall through it starts running chain reactions that make other weak loans falter and weakens the loans that are strong. Usually a few percent can default without any real effect, but too many at once can cause a snowball that will crush the entire system.

That had better sound familiar.

Re:Food, water, shelter not necessary. Nokia 6220! (1)

deimtee (762122) | more than 5 years ago | (#25513265)

Some US bankers are intrigued by your ideas and would like to subscribe to your newsletter.

Re:Food, water, shelter not necessary. Nokia 6220! (1)

Miseph (979059) | more than 5 years ago | (#25521737)

Don't worry, the EU and Asian zone bankers are all over it too. Wouldn't want anybody to miss out on the blatant ethics violations.

Re:Food, water, shelter not necessary. Nokia 6220! (4, Insightful)

Anonymous Coward | more than 4 years ago | (#25511419)

It does not make sense to you, because you are thinking of progress only in traditional way.

India does not work that way. It is a chaotic system, with a lot of entropy, and has lot of redundancy built in. Normally, you would expect a country/society/country to move bottom to top. i.e. improve life in terms of health, economy and education, then move on to develop better means to accelerate the progress. But it has not work in India. There are lots of social, economical, religious factions and factors why India can not operate that way. It is a country of conflicting priorities.

The result is that we have successful space programs, successful telecommunication infrastructure while still a lot people die of hunger. But somehow, we have still managed to get better - though not in very rapid/efficient way. There are less % of people below poverty line (even if you do not believe government numbers), life expectancy has improved. At the same time, villages are breaking up and cities are clogged.

So, its erratic, and it does not make sense. But we still have just launched our moon mission. Go figure.

Re:Food, water, shelter not necessary. Nokia 6220! (3, Insightful)

stevejsmith (614145) | more than 4 years ago | (#25511639)

Well then it's a good thing we have people like you who can tell poor Indians that they're too stupid to make their own decisions.

Somehow, I think that the person whose life is on the line if they don't spend their money on the right things is probably more qualified than you when it comes to knowing what decisions they have to make to keep them alive.

Re:Food, water, shelter not necessary. Nokia 6220! (1)

syousef (465911) | more than 5 years ago | (#25516891)

Well then it's a good thing we have people like you who can tell poor Indians that they're too stupid to make their own decis

What fucking decision? If me and my family are starving and someone offers us a loan, I take it. No decision or choice to make here. Never mind that the terms may stipulate ridiculous interest etc. and that the plan of the loaning company is to exploit us until we can no longer pay. Survive today, work out tomorrow when tomorrow comes.

Re:Food, water, shelter not necessary. Nokia 6220! (0)

istartedi (132515) | more than 4 years ago | (#25511963)

Food and water are necessary of course. I haven't heard of any recent famines in India. I suspect that "shelter" as defined in India is different though. I bet they don't have car dependant McMansion neighborhoods there. Do you have any idea what a waste of resources that is? Over there, at least for a young person, it's probably socially acceptable and safe to board up in a rooming house on a cot or something. You probably have smaller apartments, denser cities, and I bet their public transportation doesn't suck. That frees up resources for phones. It's all a question of how society decides to allocate resources. Different strokes for different folks.

Re:Food, water, shelter not necessary. Nokia 6220! (1)

jagdish (981925) | more than 5 years ago | (#25513289)

Food and water are necessary of course. I haven't heard of any recent famines in India.

You guess correctly. India hasn't had a famine in recent memory. The last one was in the 70's I think.

I suspect that "shelter" as defined in India is different though. I bet they don't have car dependant McMansion neighborhoods there.

You are mostly correct, but it depends on whether you are talking about urban or rural places. But generally people walk or take the bus. Railways form an important part of Indian life. More people=less space for each person. Everyone generally lives with their families/friends, and it is rare for people to live alone.

You probably have smaller apartments, denser cities, and I bet their public transportation doesn't suck.

The major cities (Bombay, Delhi) have excellent public transport. Over 80% of people use them everyday.

Re:Food, water, shelter not necessary. Nokia 6220! (1)

jagdish (981925) | more than 5 years ago | (#25513165)

Cheap phones in India cost less than $100. It is a valuable investment especially if you use the phone for conducting business. Farmers can get updates on the best areas to sell their fruits and vegetables, women are empowered to start more small scale businesses.

But judging from your post, I'm guessing you wouldn't know anything about investments.

extreme p2p lending (1)

heroine (1220) | more than 4 years ago | (#25511351)

P2P lending will be the way all banking is done in the future. The task of millions of computers automatically distributing tiny amounts of money among themselves seems to require immense amounts of data storage & transaction processing, there's no reason the software can't be done.

India, fiat money, and fraud (1)

argoff (142580) | more than 4 years ago | (#25511667)

I hate to sound cynical, but here's what's really going on.
You see, the poor people of India have been ripped off so many times that the use of gold for savings and financial transactions is deeply embedded into their culture. That drives the central bankers of the world, and especially in India absolutely batshit crazy, because it deprives them of the opportunity to water down peoples money and keep the difference for themselves while saddling the poor with inflation and debt. This wasn't so unbearable as long as India was just some destitute pit-stop. However, now that the economy is industrializing and growing, the mere thought that people might actually get to keep the value of their earnings is causing them to desperately seek any kind of "solution". Micro-loans, cell phone transactions, free college level "economics" courses for everybody in India, massive public relations campaigns, you name it - they are desperate to get India away from gold.

You see, it's not just about money, but control. By using gold, it would force all new investment capital in the economy to come from savers and producers instead of central bankers and their backed governments - that just print it up.

Re:India, fiat money, and fraud (1)

Anonymous Coward | more than 5 years ago | (#25516537)

I hate to sound cynical, but here's what's really going on. You see, the poor people of India have been ripped off so many times that the use of gold for savings and financial transactions is deeply embedded into their culture. That drives the central bankers of the world, and especially in India absolutely batshit crazy, because it deprives them of the opportunity to water down peoples money and keep the difference for themselves while saddling the poor with inflation and debt. This wasn't so unbearable as long as India was just some destitute pit-stop. However, now that the economy is industrializing and growing, the mere thought that people might actually get to keep the value of their earnings is causing them to desperately seek any kind of "solution". Micro-loans, cell phone transactions, free college level "economics" courses for everybody in India, massive public relations campaigns, you name it - they are desperate to get India away from gold.

You see, it's not just about money, but control. By using gold, it would force all new investment capital in the economy to come from savers and producers instead of central bankers and their backed governments - that just print it up.

So do you actually think it would be safe for any person living in a Bombay slum to be carrying gold? Is it actually practical to use gold to pay for everyday goods and services? These micro-finance systems are aimed at 1) providing a safe alternative to carrying cash and 2) an alternative to incumbent banking facilities that are either out of reach or simply too expensive and not suited to large amounts of very low value transactions

Where's the stupid comment? (0, Troll)

ghoul (157158) | more than 4 years ago | (#25511909)

I keep waiting for the Slashdot trolls to come out with their standard response to India stories - "Why are they doing when they cant feed themselves" Incidentally when I worked in Europe I never saw a beggar (guess the dole works). Not so in Toronto and Austin. Austin beggars are passive except on Guadalupe where they can give the pushiest Indian beggar good competition. But the funniest beggar I saw was the one sitting outside the McDonalds in downtown Toronto with a 'Change please' sign. Whenever he had enough change he would go in and get a burger and come back outside (rinse,lather,repeat). So yeah there are people who cant afford to eat in the US and Canada too - thats what happens in capitalist countries and India is capitalist too.

banks given control of mobile banking in India (0)

Anonymous Coward | more than 4 years ago | (#25512687)

The Reserve Bank of India published Mobile Banking Guidelines earlier this month effectively requiring customers to have a proper bank account before they can use mobile banking. The mobile operators have been blocked. It will be interesting to see how that affects takeup of mobile banking in India.

Check it at http://rbi.org.in/scripts/NotificationUser.aspx?Id=4524&Mode=0/ [rbi.org.in]

Iqbal Quadir Long Now talk (2, Interesting)

doom (14564) | more than 5 years ago | (#25513369)

There was a Long Now Foundation talk covering the early stages of this story by Iqbal Quadir. (He was the guy who had the idea that the Grameen bank could fund cellphone purchase in small rural areas). Here's their written summary of the talk: Iqbal Quadir, "Technology Empowers the Poorest" [longnow.org] (If you poke around on the site you can find the video of it, or listen to the mp3):

[...] a remarkable invention of another Bangladeshi, Mohammad Yunus, who developed micro-financing (and later won a Nobel prize for this invention). In Yunus' scheme a woman who owned virtually nothing could get a loan of $200 to purchase a cow. She would then sell the surplus milk of the cow to pay back the loan, earn both milk and an income for her family, and maybe buy another cow. Ordinarily, no bank would have lent her this trifling amount because she had no collateral, no education, and the costs of overseeing such a small loan with small gains, would have been prohibitive. Grameen Bank, Yunus' creation, discovered that these illiterate peasants were actually more likely to repay these small loans, and were very happy to pay good interest rates, and so that in aggregate, these micro-loans were more profitable than loaning to large industrial players.

Quadir proceeded to ask, what if the women could rent a cell phone instead of a cow? Grameen Bank could make a micro-loan to the poor for the purchase a cell phone, which they then could sell/rent minutes to the rest of the village. The enterprising phone-renter would benefit and more importantly, the entire village would benefit from the connectivity. It did not really matter if the minutes were expensive, because when you have no connection, you are willing to pay dearly for it. Quadir started off his GrameenPhone with 5 cell towers, and eventually GrameenPhone erected 5,000 towers.

Re:Iqbal Quadir Long Now talk (1)

Beetle B. (516615) | more than 5 years ago | (#25514817)

I was just about to mention this. And he beat the Indians to it - he started this in Bangladesh. I just watched Iqbal's talk [ted.com] at TED a few days ago.

Microloans = Too much banking regulation (2, Interesting)

TheSync (5291) | more than 5 years ago | (#25514567)

The only places in the world you see the need for microloans are in countries where there is too much bank regulation.

Here is what the Index of Economic Freedom [heritage.org] says about Indian banking:

India's 28 state-owned banks control about 75 percent of loans and deposits, and 29 private banks and 31 foreign banks make up the rest. The government owns nearly all of the approximately 600 rural and cooperative banks and most other financial institutions. Banks must lend to "priority" borrowers. Foreign ownership of banks and insurance companies is restricted.

That's why there is microlending in India, the banking system is almost totally an inefficient government monopoly.

85% of population (1)

jawahar (541989) | more than 5 years ago | (#25517749)

85% of population in India do not have any bank accounts. http://in.rediff.com/money/2005/dec/01guest3.htm [rediff.com]

Re:85% of population (1)

TheSync (5291) | more than 5 years ago | (#25530457)

85% of population in India do not have any bank accounts.

Which goes to show, Indian banking regulations are not serving their people, but making it too hard for the common people to join the banking system.

In the US, my dogs get credit card offers in the mail! (OK, maybe we've gone too far, but you get the idea...)

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