INDIA BUSINESS WORLD OCTOBER (1st - 20th) 2007
The Month that was ...
ENAM PICKS 10% STAKE IN MICRO-BANKING SUPPORT COMPANY A.LITTLE.WORLD
ENAM Financial has picked up 10% in A.Little.World, a company which works for financial inclusion by taking banking to rural areas that are currently underserved or inaccessible through the branch banking route. The seven-year-old firm also received investment from Coronet Capital, a wholly-owned subsidiary of Legatum, around five months ago. Legatum Capital, a privately owned international investment firm by Christopher Chandler, holds 13% in the firm. The amount of investment was not disclosed.
A.Little.World is currently working on a pilot with NXP Semiconductors to use low-cost technology solutions to facilitate movement of bank credit, deposits, insurance payments, utility payments and disbursal of pension and social security funds from the governments into villages, where people have no access to bank branches. The pilot project was carried out in 280 villages, in partnership with six nationalised banks and one regional rural bank, Andhra Grameen Vikas Bank, and a private sector player, Development Credit Bank.
"Our goal is to expand this to reach 6, 50, 000 villages," said A.Little.World founder and CEO Anurag Gupta. The company works on the technology implementation and technology solutions, while reaching out to villages through a non-profit firm, Zero MicroFinance Savings & Support Foundation. Zero acts as a business correspondent, which works with self-help groups and local entrepreneurs to set up operators in villages, who can use the low cost technology solution to conduct banking transactions.
The low-cost solution uses a mobile phone equipped with a secure communication technology, Near Field Communication (NFC), a biometric fingerprint authenticator, a contactless smart card, and a printer. The entire solution is estimated to cost around Rs 25,000 with costs expected to come down further to about Rs 17,000 in a year's time. NFC has been developed by NXP Semiconductor and is available on select mobile phone models from Nokia, Motorala, Siemens BenQ and Samsung. Earlier, A.Little.World had initiated a project for fare collection in Mumbai buses using the contactless smart cards. The project, branded GO-Mumbai, was sold to Kaizen Automation in May 2006. The other investor in A.Little.World, Legatum invested $25 million into Share Microfin, the country's largest MFI earlier this year.
Legatum Capital has investments of over $1 billion in the Indian stock market. Most of these investments are in the financial sector. It has stakes in ICICI Bank, HDFC, HDFC Bank, UTI Bank and others. Legatum's investment in the MFI space is not a part of its philanthropic efforts. The company views microfinance differently from CSR or corporate philanthropic activities.
Overseas players who have made significant investments in the Indian microfinance space include Dutch institution FMO the Netherlands-based Tridos, the World Bank arm International Finance Corporation, the US-based Accion, KfW from Germany and the UK-based CDC.
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