When was the last time you took a proper look at the humble, ubiquitous point-of-sale (PoS) machine? The one on which your plastic gets swiped every time you pay for goodies at malls or munchies at eateries. You might well not remember, but the machine has now got a makeover, and helps banks reach out to the universe of the under-banked as a ‘micro-ATM’ in its new avatar.

In Tamil Nadu, Karur-based Laxmi Vilas Bank (LVB) has opened 1,025 new no-frills accounts over the past three months using these micro-ATM PoS machines. What is the big deal? After all, LVB opens regular accounts at a strike rate of nearly a 1,000 a day. Well, the new accounts are of people who were not considered bankable so far.

LVB’s business correspondents (BC) carry the machine with them, which includes a fingerprint reader (all digits on your hands are read for security). Once all the verification is done, an account is opened within a week. You can deposit or withdraw money in a LVB branch using the micro-ATM. The BC is the runner with the cash — from the customer to the bank, and the other way around. But what if the BC runs away with the cash?

BCs are people who have a standing in the community — like village headmasters or postmen. “They get paid about Rs 6,000 a month to do the job. Not everybody can become a BC. They have to keep a certain amount of money with us as security. In any case, these are small transactions of about Rs 300 or 500 per head,” says P.R. Somasundaram, managing director of LVB. “We have covered 33 of the 50 villages we have permission for across Tamil Nadu. It is just a start,” he adds. The micro-ATM plot is set to get bigger.

In October, a committee headed by A.P. Hota, managing director of the National Payment Corporation of India (NPCI), and with members drawn from the Reserve Bank of India (RBI), Unique Identification Authority of India (UIDAI), Indian Banks’ Association (IBA) and senior bankers will sit down to hammer out a plan to make micro-ATM a pan-bank platform.

Financial Inclusion Network & Operations (Fino), a third-party service provider, has gone live with the micro-ATM technology in January 2011. It partnered with ICICI Bank in Hazaribagh district, and with United Bank of India (UBI) in Deoghar district, both in Jharkhand. Says Rajeev Arora, director of central operations and technology of Fino: “The technology is still in the pilot stage with ICICI Bank and UBI. Wide acceptance will take time. More accurate data will be available with NPCI, which certifies micro-ATM devices.”

What’s The Trigger
The latest RBI data puts the number of borrowal accounts at 119 million at March-end 2011, up 7.8 per cent from 110 million a year ago. The number of depositor accounts for the same period is much higher — 735 million, up from 662 million a year ago. Moreover, there are many people who have multiple credit and deposit accounts, which amounts to duplication of data.

Small borrowal accounts (with credit limit up to Rs 2 lakh) comprised 86.5 per cent of the total number of accounts (87 per cent in 2009), but had a measly share of 10.8 per cent in outstanding credit (12.3 per cent in 2009). Those who have the lion’s share of bank accounts get bird feed by way of credit. All of this is a poor statistic for a country of over a billion heads.