Emerging Trends and Challenges
Edited by Suresh Sundaresan
Chapter 4: Cell Phones for Delivering Micro-loans
Anand Shrivastav I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to Swaraj [freedom] for the hungry and spiritually starving millions? Then you will ﬁnd your doubts and your self melt away. (Mahatma Gandhi)1 INTRODUCTION AND BACKGROUND Cutting-edge technology can provide a transformational role in delivering ﬁnancial, health, and educational services to the poor. This chapter focuses on India and the potential for providing ﬁnancial services to the poor through mobile phone technology. Such a delivery has the potential to cut signiﬁcantly the transactions costs of accessing small loans and this can lead to an improvement in the overall welfare of the poorer sections of society who are currently unable to access ﬁnancial services from the organized banking sector and credit markets. To provide the reader with a backdrop, it is ﬁrst useful to review some background data on India. Demography and Economy2 India is a large country with an area of 3.3 million square kilometers. The population of India has exceeded 1.1 billion, and is showing a year-onyear growth rate of about 2 percent. Of...
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