Historically, rural India used to suffer from a severe deficiency in power and connectivity infrastructure, shortage of skilled workforce and paucity of funds for investment in technology.
Mass electrification initiatives and availability of leased lines in the rural landscape definitely brought out some changes and small banks were able to implement core banking systems and deploy ATMs for the exclusive use of their customers.
Yet, despite this modernization, small banks continued to operate in proprietary silos, completely excluded from participating in the national financial ecosystem.
This is primarily because small banks could not become direct members of the National Financial Switch (NFS) as they were not members of RTGS and could not afford to become one.
In order to connect with NFS, small banks needed to invest heavily in their own Data Centre equipped with their own Electronic Fund transfer (EFT) switches in a secure PCI-DSS environment and hire highly trained personnel to manage the entire infrastructure. This prohibitive capex meant that small banks were not interoperable, and their customers remained largely under-banked.
But one company is bringing about significant change in this space. Pune-based Sarvatra Technologies, founded in 2000, has been playing a vital role in digitizing small co-operative and rural banks across the country.
“Our Platform as a Service (PaaS) offering provides infrastructure on a shared basis to these small banks, operating on a pay-per-use basis. Possessing own Data Centre and payments infrastructure was difficult for banks due to the huge capex involved in owning and managing the required infrastructure. We provided the entire infrastructure, required for a bank to centralize its system and to participate in the national payment network, as a managed service,” says Mandar Agashe, Founder and Vice Chairman of the company.
Interoperability was another key challenge for co-operative banks in the country as mon-members of NFS were not interoperable with other banks.
In 2010, NPCI allowed Sarvatra EFT Switch to be the first EFT switch by an ASP (Application Service Provider) to connect directly to NFS.
“This homegrown RuPay network, in our opinion, is the single most impactful technological development that has enabled even the smallest of banks to participate in the national financial ecosystem, thereby contributing hugely towards achieving the financial inclusion goals of India. In fact, Sarvatra has the honour of being the first ASP in India to connect directly to NFS and to get a sub-member bank live on RuPay Debit platform,” adds Agashe.
The company has been able to on-board 500+ co-operative banks on to the digital platform through NFS till date. “They (Sarvatra) are bringing sub-member banks on other NPCI platforms like IMPS, UPI, AePS and Bharat BillPay. The company not only on boards Urban Cooperative banks but also State Co-operative Banks and District Central Cooperative Banks which is helping in financial inclusion,” quotes NPCI’s website.
Sarvatra today manages almost 50 percent and 30 percent of the total transaction volume that is generated on UPI and IMPS respectively across the country.