Bhagwan Chowdhry

Bhagwan Chowdhry


Introduces the Financial Access at Birth (FAB) Campaign

Half the world's population has little or no access to financial services such as a bank account, credit or insurance according to UCLA Anderson Professor Bhagwan Chowdhry. He estimates this population at some 3 billion people around the world. But Professor Chowdhry has initiated a campaign called Financial Access at Birth (FAB) to bring formal financial access to the world's poor.

The FAB program would create an electronic bank account with a balance of $100 for every child born in the world. The money to create this program and fund these accounts would be contributed by governments, corporations, aid organizations and private donors. FAB accounts could also be used by governments and aid agencies to deliver funds for essential services such as healthcare and education, or to distribute aid in the event of an earthquake or other disaster.

To receive FAB accounts, parents must register their children. "Many children go unregistered," said Professor Chowdhry. "But $100 means a lot to the world's poor, so this gives parents an incentive." At registration, children could also receive physical examinations, vaccinations or other services, according to Chowdhry.

Children will be required to keep the $100 in their account until age 16, at which time the principal and interest could be enough to start a small business or pay for higher education. "After 20 years of the FAB program, all young adults in the world will have financial access," said Chowdhry. "And that means their parents will have access as well."

An immediate benefit of the FAB program is that it will enable poor families to save. "Poor people have no place to save because banks are not interested in such small amounts," said Professor Chowdhry. "If they put money away at home, it's not safe because of the temptation to spend it. This is extremely important because saving is the only form of insurance for poor people. Once we have enough FAB accounts, banks will become interested."

Professor Chowdhry has created a Web site and enlisted a number of prominent academics and entrepreneurs to refine and extend the FAB idea. Still in its early stages, the campaign is receiving increasing media coverage and support from organizations such as the Center for Financial Inclusion and prominent figures such as UCLA Anderson Dean Judy Olian. "The idea is profound in its scope and ingenious in its simplicity," said Dean Olian.

The program will include every child in the world, regardless of economic status. "We don't want to create a bureaucracy to decide who gets the money and who doesn't," explained Chowdhry. "It is better to allow people who don't need the money to opt out."

How much will a FAB account for every newborn cost? Chowdhry said that an average of 134,000,000 children are born every year. "Let's assume that 25 percent of parents opt out of the program," he said. "So 75 percent of parents take the money. That's about 100 million children times $100. That's $10 billion dollars worldwide, which is a big amount but I don't think this a number that we can't afford."

Chowdhry has proposed that countries contribute to the program in proportion to their GDPs. "The total world GDP is $50 trillion dollars," he said. "To get $10 billion dollars, every country has to contribute one-fiftieth of one percent of its GDP. The U.S. would contribute less than $3 billion dollars. India would contribute about $200 million.

Professor Chowdhry hopes to launch a FAB organization soon. He envisions creating a board of directors and asking teams of UCLA Anderson students to help select a country where the idea can be tested. Or perhaps hosting a competition in which teams of students from around the world develop proposals for implementing the FAB idea.

"You need to start with a small country," said Chowdhry. "Say we picked Rwanda or Haiti. I would have students look at the infrastructure. How many clinics are there? Is mobile banking available? How many births are registered and what is the mechanism for doing that? This kind of information will allow us to create an implementation plan."

Once a country is chosen, a budget can be developed and funding arranged. "I don't think it will be difficult to raise the funds for a small country," he said. "We could look for support from corporations, charitable foundations and private donations. While we make it work for one country, we will learn how to do it for all countries."

Chowdhry acknowledges that implementing the FAB Campaign around the world will be a large and complex undertaking that will require cooperation between governments, corporations and aid organizations. "It's a big project that will require a lot of people," he said. "We need banks, financial institutions, technology and telcom companies and charitable organizations."

Chowdhry says that the huge scope of the FAB Campaign will appeal to potential partners, some of whom are already working on parts of the campaign such as mobile banking, vaccinating newborn children and targeting relief aid to people in need. And he notes that saving is a concept that is valued in every culture around the world -- thus making the FAB Campaign a cause that could be embraced globally.

On the FAB Web site, Chowdhry proposes launching the first FAB accounts on November 11, 2011 (11/11/11). Those wanting to support this effort are invited to visit the site and sign the campaign.