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Inclusive Banking in Rural India

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p10“Coupled with Aadhar enabled services will bring in a massive change in the way services and banking works in rural India,” says Abhishek Pandit, Director – Business Services,AISECT. In Conversation with Sunil Kumar .

With microfinance and inclusive banking, are you seeing a silent revolution happening in rural India?

For inclusive banking the revolution is currently on. It is a matter of time when all villages will have banking facilities with Kiosk banking or correspondence banking and each of them will be having the facility of inter bank transfer. Coupled with Aadhar enabled services, this will bring in a massive change in the way services and banking works in rural India. With this revolution, insurance companies, PFRDA and other financial services service providers will ride on this channel to reach the masses at a very low unit cost of transaction.

In your opinion what are the broad challenges to financial inclusion?
Financial awareness of the products in the excluded segment of the society, availability of a viable and sustainable distribution model to reach out to the unreached, availability of specialized products for this segment (example: simple single insurance policy which is a combination of life health and non life) are some of the major challenges.

As you are working as Business Correspondent, how does it help underprivileged and unbanked people where the literacy is also very minimal?
The beauty of working as a Business Correspondent is that the customers need not be literate. The banking accounts can be opened without signatures and only with biometric authentication. All they need to know is why they need to open the account and the advantages of dealing with financial solutions and services. The advantages are humongous; it’s like asking a financially literate person why he needs a bank account, insurance policy, pension, etc.

What kind of response do you think for mobile banking solutions and Kiosks seeing from rural areas?
Kiosk banking has picked up leaps andbounces in the last couple of years. The fact that the kiosk is a fixed asset and the consumer can see that kiosk everyday and is aware that he can go there everyday provides him confidence on banking from there. Mobile bankinghas provided easy banking solution to the consumer on a device which he carries with him everyday.

What kind of growth are you expecting from rural and semiurban areas?
The number of kiosk that will be opened will continue to grow exponentially in the near future. This once in place, the number of financial transactions apart from banking will also increase multifold.

Are you worried by the qualityof loans being given to the rural  areas?
Not at all. The underwriting is done by the bank and the Business Correspondent merely collects the application form. On the other hand the default ratio in villages is lower compared to urban areas.

How will IT help to expand the services to rural India, given the country’s poor technology infrastructure?
A mobile phone is also an IT product and has penetrated well into rural India. There is no reason why financial inclusion cannot go there.

What are the other services you are providing in financial inclusion and in which other states?
We provide PFRDA products, Business Correspondence services, PAN card, insurance services, financial consulting etc. across thecountry.

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