Farmers can swipe for seed

Radio frequency identification service by Bharti, SBI allows cashless buying.

It is a mobile phone with a difference. It comes with a card embedded with a radio frequency identification technology by which banks can store an array of data: saving accounts, loans taken and repayment schedules. And, of course, all the details now put on a piece of paper called the Kisan credit card.

Bharti Airtel has tied up with the State Bank of India for a pilot project that could dramatically transform the face of rural banking. Launched a few months ago by creating bank accounts with data on a radio frequency identification card instead of in a pass book, the project hopes to superannuate the Kisan credit card.

Being tried in nine villages in Pithoragarh (Uttaranchal), Medak (Andhra Pradesh) and Mizoram, its proponents say commercial launch could be just a year away.

Banks issue Kisan credit cards to farmers who can take cheap loans and repay them flexibily depending on their crop pattern. However, at the moment, the card is a piece of paper.

Now all this data can be loaded on a mobile phone card and the radio frequency identification technology allows this data to be retrieved remotely.

The farmer can, thus, walk into a fertiliser shop in his village and buy on credit. The fertiliser shop needs a near-field communication phone--say, a Nokia 3230 with special features created on a technology platform developed jointly by Phillips and Sony--which doubles up as card swipe machine once the seller's phone is within 20 centimetres reach. The transaction debits the buyer's account and sends the data to the bank.

"The transaction is cashless and, like the credit cards we use, banks can charge a merchant transaction service fees. Plus the bank gets real-time data and can keep tabs on what the farmer is using the loan for. Simply, the bank has complete control over the loan," says an Bharti Airtel executive.

A State Bank of India executive said he could comment on the project only next month.

For Bharti Airtel this is an effective way of adding new mobile subscribers in villages. Bharti Airtel also sees this model working in micro-credit.