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EKO raises Series A funding, to further strengthen rural presence
By Eureka Bharali, SiliconIndia
Bangalore: Banking correspondents have become the new preferred way for Public sector banks to allow banking facility in the remote rural areas and venture capital firms too have started showing their interest in this socially viable business model. Eko, a cellphone based banking correspondent have recently absorbed an undisclosed amount of Series A funding from the U.S. based social fund 4G Capital. The capital is received return of a 30 percent stake in the company.
"We source customers, get them a no-frills savings account and also enable deposits, withdrawals and remittances for them. Currently, there are close to 900 outlets (grocers, pharmacies, stationery shops, small cyber cafes, telecom shops) across Delhi-NCR, 6 districts of Bihar and 1 district of Jharkhand. These outlets have bank and Eko branding and customers can walk-in and get themselves a bank account in a matter of a few minutes," Sinha says. The outlets serve as "human ATM" points where customers can securely do deposits, withdrawals and remittances. The cell-phone in the hands of the customers and the retailer acts as debit card and point of sale device respectively. The customer's experience at an Eko counter is very similar to a customer getting a mobile connection and doing talk-time recharge at similar outlets.
The idea for Eko came in while Abhishek was already a part of his earlier telecom VAS solution start-up Six DEE. He wanted to materialize the way the financial inclusion of villages could be done through the most common gadget mobiles. Though there has been a lack of awareness among the rural people to approach a banking correspondent, yet the company still has managed to process more than 15,000 financial transactions every day. Earlier this year, State Bank of India (SBI) appointed EKO as its Business Corrspondent and launched no-frills savings account SBI Mini Savings Bank Account for those who earn less than Rs, 5,000 a month. Few month ago, EKO launched P2P Interbank Mobile Payments supported by seven banks: State Bank of India, ICICI Bank, Union Bank of India, Bank of India, Yes Bank, Axis Bank and HDFC Bank. The companys business model basically works on the commission per transaction which is further divided between itself and the outlets in the 30:70 ratio.
With the received amount, the company wants to further strengthen its presence in the Delhi-NCR and Bihar from the current 900 shops to 20,000 outlets by the end of the year. "These are agri-dominated areas and a high number of migrants enter Delhi NCR from Bihar and Jharkhand. Hence, there is an increasing demand for simple ways to send any amount of money back home," Sinha asserts the importance of expanding in these areas. They are also planning to increase their service portfolio with inclusion of micro insurance and recurring deposits. According to the Reserve Bank of India data, out of the 600,000 villages with a population of 2,000 or more, only 30,000 have access to banking services. A huge market awaits Eko.
