July 2013

Inclusive Banking in Rural India

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Abhishek Pandit
Director-Business Services, All India Society for
Electronics & Computer Technology (AISECT)

“Coupled with Aadhar enabled services this system will bring in a massive change in the way services and banking works in rural India,” says Abhishek Pandit, In conversation with Sunil Kumar

With microfinance and inclusive banking, are you seeing a silent revolution happening in rural India?
At present major villages in India are witnessing a revolution in inclusive banking. We are hopeful that in coming future every village will  be connected with banking facilities. Villages will also have the facility of inter-bank transfers under kiosk or correspondence banking system. This will be coupled with Aadhar enabled services which will bring a massive change in the way services and banking works in rural India. With this revolution, insurance companies, PFRDA and other financial 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?
The major challenge is the lack of financial awareness of the products in the excluded segment of the society. The availability of a viable and sustainable distribution model to reach out to the unreached, availability of specialised products for this segment ie (simple single insurance policy which is a combination of life health and non life) remains the other challenges to the financial inclusion.

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. And once it is in place, the number of financial transactions apart from banking will also increase multifold.

As you are working as Business Correspondent, how does it help the 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 to be literate. The banking accounts can be opened without signatures and only with biometric  authentication. The customer only needs to know the reason that why they need to open an account and the advantages of dealing with financial solutions and services.

What kind of response do you expect from mobile banking solutions and Kiosks from rural areas?
Kiosk banking has picked up leaps and bounds in the last couple of years. Moreover it is a fixed asset and consumer can see it every day. It is easily accessible for the consumers as they can go and avail the services everyday. Mobile banking has provided easy banking solution to the consumer as they can carry the device with them on daily basis.

Are you worried by the quality of loans being given to the rural areas?
We are not at all worried about it. 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 as compared to the 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 the country.

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