Citibank's biometric ATM backed microfinance initiative

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Citibank's biometric ATM backed microfinance initiative

For long, banks have been lenders to their rural customers. Now they have announced some rather unique ways in microfinancing to get them to deposit savings, reports CNBC-TV18.

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For long, banks have been lenders to their rural customers. Now they have announced some rather unique ways in microfinancing to get them to deposit savings, reports CNBC-TV18. 

Citibank has launched the Pragati saving account for its micro finance customers. This account is similar to a no frills account and does not require any minimum balance.

The bank will provide services through a biometric ATM that will also speak to customers in Hindi, Marathi, Tamil, Telugu.

"As the customers start saving, there will be ability to sweep this money into deposits so that they earn better interest than the conventional saving account. As we start getting imprints of customers in terms of deposit behaviour we may be able to set them overdraft facilities as opposed to convention loan," says PS Jayakumar, Business Manager - Global Consumer Group, Citigroup India.

What's unusual about the Citi product is that it is offering micro savings, while most banks offer micro loans.

Incidentally,  ICICI Bank also has a micro saving product in Orissa for farmers. Other banks like Andhra Bank and Bank of India also offer biometric ATM facility to their micro finance customers. In fact banks see this untapped segment not as philantrophy but as sound business, at a time when cheap deposits are hard to come by.