Magazine 63

Tech Link Between BANKS AND UNBANKED

The IDBI Bank looks upon the ongoing financial inclusion drive as an opportunity to reach out to the hitherto unbanked population using the Business Correspondents, thus saving expenses on setting up of brick & mortar branches, SKV Srinivasan , Executive Director, IDBI Bank, tells Arpit Gupta of Elets News Network (ENN)

SKV SrinivasanExecutive Director, IDBI Bank

SKV Srinivasan
Executive Director, IDBI Bank

How do you view the importance of financial inclusion in the backdrop of the fact that India has embarked on an inclusive economy agenda?

The Government has set out on a national mission for inclusive growth of all sections of the society and chosen financial inclusion as the first element to push the inclusive agenda. Under this mission, providing banking and financial services will act as a catalyst for the inclusive growth of the excluded sections, so as to make them part of the country’s economic growth story.

Is it a national mission, a humanitarian mission or business expansion?

The IDBI Bank appreciating the objective of the national mission is also looking at it as a business opportunity to reach out to the hitherto unbanked population by providing banking and financial services using the Business Correspondent (BC) model, thereby saving capital expenditure on setting up of brick & mortar branches for expansion.

In India, only 40 per cent of the population has a bank account, 10 per cent life insurance cover and only 0.06 per cent non-life insurance cover. What is your Bank’s vision for financial inclusion?

Technology was a constraint for the bank to aggressively expand in rural areas to cater to this 60 per cent excluded population. But now with the GPRS technology and the Business Correspondent model, it has become possible for the banks to provide banking and financial services to the excluded populace of India. The IDBI Bank has earnestly taken up financial inclusion as a business opportunity, though there are many challenges. It is implementing financial inclusion in the villages allocated to the bank and has established a robust technology platform to extend other banking and insurance products. I would say that though Bank has not been able to overcome all the challenges and hurdles, yet we have succeeded in penetrating the remote unbanked areas and today people have at least started having small savings in their accounts. The Bank will further strengthen the relationship by offering other banking and insurance products.

MFIs, RRBs have been trying to reach out to the rural population since long. But I believe that the one deciding factor that had been missing all these years is technology

How has been the progress of the IDBI bank in the field of financial inclusion?

The Bank has implemented financial inclusion in all the Sub- Service Areas (SSAs) allotted to us. Apart from opening about 20 lakh savings bank accounts, we have introduced various other products such as Fixed Deposit, Recurring Deposit, Education Loan and Micro-Insurance.

We have also conducted more than 250 financial literacy-cum-training programmes in the allotted villages in Maharashtra, Madhya Pradesh and Chhattisgarh, using street plays as a technique for imparting knowledge on banking services for rural population. Pursuant to the issuance of guidelines by the Ministry of Rural Development, we have also, in association with the Government of Maharashtra, established a Rural Self Employment Training Institute (R-SETI) at Satara which aims at imparting employment-oriented training to the rural youth.

How do you rate the contribution of your bank to social banking?

The IDBI Bank has undertaken various projects under its social banking initiatives. The Bank had tied up with Tata Institute of Social Sciences (TISS) and appointed 15 graduates as IDBI Fellows to work in villages and provide inputs on socio-economic conditions of the villages, so as to structure suitable banking and financial products. The IDBI Bank secured projects of the Government of Chhattisgarh for distribution of MNREGA wages to about one lakh beneficiaries and distribution of old age pension to about 25,000 pensioners of Raipur Nagar Nigam, both through the BC model. Besides, the Bank has also signed a Memorandum of Understanding (MoU) with TISS for undertaking developmental activities in the Ladakh region (Jammu & Kashmir), including adoption of a village and developing it as a model village, and other capacity building initiatives and improvement of basic services like Healthcare, Education, Sanitation, Drinking Water, etc. It has also tied up with Syngenta Foundation India (SFI) with the aim to promote Agri-Entrepreneurship for Sustainable Agriculture. The Bank provides loans in the form of Kisan Credit Cards (KCC) to farmers, as well.

Despite policy support from both the Government and RBI, much some gaping gaps remain. What do you think needs to be done to speed up the process?

The awareness among the banks about the business potential available in the rural areas has helped change the mindset and now all the banks are enthusiastically implementing financial inclusion. With the Government’s objective to distribute all the benefits, which are now more than Rs one lakh crore through Aadhaar-linked bank accounts, rural economy is likely to witness vibrancy in the coming years.

Most of the state governments have also now decided to distribute various benefits through bank accounts. With the Central Government-RBI making efforts to overcome the difficulties faced by the banks in connectivity/ approach – ability etc., the national objective of inclusive growth through financial inclusion could be easily achieved.

In the past, attempts were made to promote financial inclusion through MFIs, RRBs, etc. Do you think the renewed thrust on financial inclusion will be able to deliver?

MFIs, RRBs have been trying to reach out to the rural population since long. But I believe that the one deciding factor that had been missing all these years is technology. Technology has the ability to reach a vast majority of population in a time-bound manner at lesser costs. Technology has also helped the bankers to explore the business potential in the rural areas. The current initiative of financial inclusion through the BC model will definitely bear fruit.

How has the launch of Pradhan Mantri Jan-Dhan Yojana (PMJDY) helped in furthering inclusive growth?

I would say that the PMJDY scheme has given a big boost to the efforts of the Government and the banks towards financial inclusion. Before the launch of PMJDY, the entire banking industry had opened about 26 crore basic savings bank accounts during the preceding five years, with deposits of Rs 31,000 crore in them. Under the PMJDY scheme alone, the banking industry has opened about 19 crore accounts with Rs 27,000 crore of deposits in them. The IDBI Bank has opened over 10 lakh accounts under the scheme. Launch of other successive schemes like Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Mudra Yojana, etc. has further invigorated the banking fraternity in extending a helping hand to the excluded population.

How is the Bank leveraging the power of mobile phones and mobile Internet for achieving its goals of financial inclusion?

Mobile technology-based service delivery initiatives are being leveraged by the Bank to deliver banking services to the unbanked population in rural and semi-urban areas across the country. IDBI Bank is actively participating with service providers and channel partners to build an ecosystem using mobile technology & handsets, to provide services like cash in, cash out, money transfer etc. through various pilot projects with our channel partners.

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