LOW-COST BANKING MODEL FOR RURAL AREAS

B K Batra
B_K_Batra
B K Batra
Deputy Managing Director,
IDBI Bank,

The IDBI Bank is the youngest new-generation public sector universal bank, with its operations driven by a cutting edge core banking information technology platform, says B K Batra, Deputy Managing Director, IDBI Bank, in an interview with Arpit Gupta of Elets News Network (ENN)

With the advent of smarter mobile devices, digital banking is making in-roads into customer homes and places of business. How is IDBI transforming the world of payments and commerce?
We are consciously moving transactions from branch and ATM to internet banking and mobile banking. The percentage has been going up every quarter. It is continuously being done in such a manner that transaction cost comes down and overall costs get moderated. IDBI Bank has one of the best internet banking platforms. We have already initiated mobile banking and are going to introduce all exciting features in a short while. We are also going to make improvements in internet banking, so that it is at par with the best available in the industry.

Do you think the country can cut down its cash transactions, given that cash continues to be the prime medium of transactions in the country today?
low_cost_bankingIn Indian context, there will always be a mix. There are a lot of people who have all these facilities yet they would like to visit a branch. They would like to spend some time in bank branch, and mostly this tendency is visible in the senior citizens’ category or the customers who want some advice or the customer who wants to do some transactions in the shape of cross-selling. Such customers want to visit the branch, understand the intricacies and then only conclude the transactions. But, there is a trend and we are part of that trend where more and more transactions are moving to ‘alternate channels’, as we call them. A large number of transactions are shifting now to ATMs. Besides, more and more noncash transactions are moving to internet banking and mobile banking channels.

Rural areas have their own challenges. How do you operate in far-flung areas and what role does technology play in serving customers?
In remote areas, we operate either through the branches which have connectivity through VSAT or through Business Correspondents (BCs), who also have similar connectivity. We are soon going to open some low-cost model branches in interiors of India. We call them ‘Kiosk Banking Branches’, which will be outsourced in a way, because we will not create permanent infrastructure there. The infrastructure will be set up by well-established corporate and they will operate on our behalf. We will give them transaction cost, so it will be an OPEX model, where the CAPEX will be low. Although OPEX will be a little high, but the facility will be available to the catchment area of that particular kiosk. So, this is another way of moving transactions to an alternate channel in a low-cost fashion and also widening the coverage in rural and village areas.

What is your view about the Unified Payments Interface (UPI)?
We would like to take advantage of the Unified Payments Interface facility, as it will boost digital money transfers. UPI seeks to make money transfers easy, quick and hassle-free. We are studying the concept and we are going to become a member of it. Our board has already approved it. We would like to take mileage of technology and UPI facility for the benefit of our customers.

bk_batraWhat has been the contribution of IDBI Bank in Pradhan Mantri Mudra Yojana (PMMY) scheme of the Government of India?
The IDBI Bank has taken proactive initiatives to launch the scheme and to facilitate, handhold and provide necessary guidance to start new ventures to SCs/STs and women entrepreneurs to realise their entrepreneurial dreams and uplift their economic and social status. We have achieved significant success in the implementation of PMMY scheme, which has helped 1.67 lakh small entrepreneurs realise their dream. We are hopeful of replicating a similar success in the ‘Stand Up India’ programme.

We are soon going to open some low-cost model branches in interiors of India. The infrastructure will be set up by well-established corporate and they will operate on our behalf

The IDBI Bank has become the first state run lender to open an international banking unit at the International Financial Services Centre (IFSC) in GIFT city of Gujarat. How will this IFSC unit enhance the bank’s global financing business?
The IDBI Bank has become the first public sector bank to open its IFSC Banking Unit (IBU) at India’s first and only International Financial Services Centre (IFSC) at Gujarat International Finance Tec-City (GIFT). As part of IDBI Bank’s strategy to cash in on the emerging global opportunities, we have set up our IFSC Banking Unit at GIFT city and we are confident that it will significantly enhance our global financing business. The IDBI Bank’s GIFT branch will provide full range of corporate banking services and will meet foreign currency funding needs of its vast Indian clientele. Through its GIFT branch, the IDBI Bank aims to foster greater trade and cross-border transactions between India and the rest of the world.

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