Beruflich Dokumente
Kultur Dokumente
Index
Introduction Rural Finance An Understanding Finance Presence in Rural India The Challenges Enabling Measures Banking Strategy - Long Term Impact Case Studies Going Forward Next Steps Annexure I
Introduction
In India, over 65% of the population resides in villages. And approx, 70% of the villagers do not have bank accounts. But Finance is not completely absent. Just the sources of supply are informal like moneylenders Moneylenders are said to control one third of all rural loans, and wield considerable strength, given their personal acquaintance with the local population and omnipresent distribution network.
Financial aids for the poor clusters in rural areas today are in the following forms: Nationalized Banks Private Banks Credit Societies Co-operative Banks Informal loans (Money Lenders)
List of all RRB Banks across India see Annexure I, at the end of the presentation
ICICI has gone further in tying up with large corporate majors having significant presence rural India and providing loans/banking services to their distributors/traders and also it is working in tandem with postal department.
Case Study I
Community Banks/Societies
Banking for specific communities : Community based banks are success stories in India. Rickshaw Bank is started in 2004 and the central idea is the issue of an assetbased loan to the rickshaw puller for which installments are repayable on a daily repayment plan with one-year duration. Full and timely repayment leads to ownership of the rickshaw being handed over to the puller. This concept is in contradiction to the existing practice in which an equivalent amount of a daily rental fee is paid to rent the vehicle, possibly for the lifetime of activity, with no scope for ownership. Usha Bank is started by a sex worker and it is with the purpose of providing economic security to Sex workers. Although sex workers earn in cash, they have little control over their assets. Most of their income is used to pay off power brokers within the industry, bribe local cops and provide sustenance to their families. This makes them vulnerable to extortion by moneylenders. Perpetually in debt, it is not uncommon for prostitutes to pay annual interest rates as high as 1500 percent.
The challenges
Challenges
Some of the major challenges which intermediaries (Local Financial Institutions) face today in India are: The supply dilemma: The exclusion of large numbers of the rural population from the formal banking sector may be for several reasons from the supply side:
Persons are un-bankable in the evaluation/perception of bankers The loan amount is too small to invite attention of the bankers The person is bankable on a credit appraisal approach but supporting the accounts and expanding branch network is not feasible and viable
Challenges
The supply dilemma:
High transaction costs particularly in dealing with a large number of small accounts Lack of collateral security Inability to evaluate and monitor cash flow cycles and repayment capacities due to information asymmetry, lack of data base and absence of credit history of people with small means Human resources related constraints both in terms of inadequacy of manpower and lack of proper orientation/expertise Adverse security situation prevailing in some parts of slums and other such localities
Challenges
The deman dilemma: There are several reasons for the rural poor remaining excluded from the formal banking sector:
High transaction costs at the client level due to expenses such as travel costs, wage losses, incidental expenses Lack of awareness and lack of social capital Non-availability of ideal products Hassles related to documentation and procedures in the formal system Easy availability of timely and doorstep services from money lenders/informal sources Prior experience of rejection by/indifference of the formal banking system.
Enabling measures
Technology Application
There are three broad types of technologies that have been identified to drive the growth of financial services. Pro-poor new information and communication technology, primarily low-cost cell phones ATMs and other point of sales devices
Smart plastic
Activation of transfer of funds for the purpose of micro-savings Cash deposits and withdrawal,
The Corporation Bank adopted a branchless banking model in August 2007. The bank opted for a branchless banking model based on Business Correspondents [BCs] and use of a small hand held device. This technology enabled bank to reach out the villagers by offering them savings and loan products at their door steps there by saving of customers time and cost of travel to branch. The bank is able to reach out to the hitherto unreached segments and mop up rural savings at lower transaction costs.
Bihar Madhya Bihar Gramin Bank Bihar Kshetriya Gramin Bank Uttar Bihar Kshetriya Gramin Bank Kosi Kshetriya Gramin Bank Samastipur Kshetriya Gramin Bank
Punjab * Punjab Gramin Bank * Faridkot-Bhatinda Kshetriya Gramin Bank * Malwa Gramin Bank
* Kalinga Gram a Bank * Utkal Gram a Bank * Baitarani Gram a Bank * Neelachal Gram a Bank * Rushikul a Gram a Bank
Thank you