Banking on the Unbanked : Nachiket Mor, Executive Director, ICICI Bank

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Both the Indian financial and the e-Governance sector are passing through interesting times. The banks are exploring newer niches to expand their services to newer clients day by day. In this background, ICICI Bank has initiated a host of services to cater to the rural population of India. Apart from offering access to financial, agricultural and health-care services, it is now coming up with a network of rural Internet kiosks across states. With a strong commercial focus, innovation and technology is the key to their social objectives.

In an interview with egov, Nachiket Mor, Executive Director, ICICI Bank, elaborates its projects aiming to transform the rural face of India.

What role do you think ICICI Bank has in the implementation of National e-Governance Plan of India?

e-Governance allows greater transparency and involvement of citizens in governing processes through use of information and technology. When combined with a host of essential services such as access to financial services, health care, market information and linkages, it promises to transform the overall quality-of-life of citizens, especially for the rural poor. It is with this conviction that we have been actively promoting Rural Internet kiosks as our distribution channels in various parts of the country.

ICICI Bank is in the process of rolling out about 3,000 Rural Internet kiosks at the national level that would cater to the financial needs of the rural populace across Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Maharashtra, Gujarat, Uttar Pradesh and Rajasthan. Efforts are on to deepen the coverage in these states and also extend it to rest of the country. In addition to customised financial product suite, ICICI Bank would offer a range of services through these Rural Internet kiosks and e-Governance would feature prominently among them.

Can you elaborate on some of the key e-Government projects ICICI has been involved in? What is the role of ICICI in these projects?

ICICI Bank has participated in a number of e-Government projects with various state governments of India. e-Seva in Andhra Pradesh, Akshaya in Kerala and e-Mitra in Rajasthan are some these prominent initiatives. These projects have enabled people within the respective domain to register public grievances, apply for land record copies, certificates, permits, affidavits etc.

In such partnerships, ICICI Bank brings cost-efficient technology solutions that enable interactions between government and the rural populace. Each of these projects benefits from the various financial and non-financial services that ICICI Bank has pulled together. This has been possible through our collaborations with solution providers such as n-Logue, Drishtee and COMAT on one hand and with corporates like EID Parry Ltd. and Indian Oil Corporation Ltd. on the other. The network of Rural Internet kiosks acts as a single window for provision of these services to the rural customers. We plan to significantly scale up the number of kiosks, which would in-turn provide the government with many such ready platforms to roll out e-Governance services.

Other Public Sector and Private Banks are doing a number of projects in the PPP model with various government agencies. How do you compare your engagement with respect to competitors?

It is good news that public sector and private banks have come together in their effort to reach out to the ‘unbanked sections of the society’. To bring all sections of the population into the formal financial set up and mainstream economic process, no amount of effort is too much. There is a need for more such collaborative efforts between private and public players.

Meanwhile, where ICICI Bank is concerned, all our rural initiatives, in addition to the social aspect, have a strong commercial focus. Innovation and technology are key elements of our business strategy. Initiatives like the Rural Internet kiosks speak for us. The aspect that probably sets us apart is that the kiosks are in the process of transforming into one-stop shop for multiple service delivery. In addition to the products and services already discussed, more sophisticated ones like online commodity trading, agricultural help line, online agro-commodity based information and live market prices would soon be introduced through the kiosks.

Through our experience in setting up and running Rural Internet kiosks across several states in the country, we have developed competencies in the area of bringing partners from various sectors onto one platform. We have tied up and are in the process of partnering with corporates in the field of agri-inputs, FMCG, petroleum products, healthcare, education and many more.  Such tie-ups would allow kiosk operators to sell multiple products and services, thereby enhancing the viability of this channel. This has led to sustainable rural ventures that assure easy and affordable access to a complete suite of financial products for all our rural customers.

Most rural areas of India are poorly served and have a dire need for financial services. What are your service offerings for the rural masses?

While it is believed that access to financial services could be an important link in the process of poverty reduction and economic growth, it is true that most people lack access to financial services in India and this problem is more acute in rural areas. In response to this state of affairs, ICICI Bank has initiated a separate group called ‘Rural, Micro-banking and Agri Business Group’ that works towards our vision to provide increased access to all financial services in rural India.

We offer a range of retail and wholesale financial products that cater to the rural masses in all the important sectors like infrastructure, horticulture, food processing, dairy, poultry, seeds, fertiliser, agrochemicals and marketing federations. Our wide-ranging customer base includes farmers, agri business traders/processors and rural non-agri segment.

Our bouquet of products has been designed keeping in mind the divergent financial needs of these customer segments. While direct farmer financing and farm equipment financing address credit requirement of the farmers and agri-entrepreneurs, traders as well as processors can avail working capital loans and commodity based financing. To help farmers tide over cashflow problems or meet immediate need for liquidity, we also offer products like jewel loans. Microfinance is another one of our significant offering,  especially for the rural non-agri customer segments. We have reached out to over a million households through our partner NGOs and Microfinance institutions throughout India. Savings, investments products like bonds, mutual funds etc. along with insurance products are also part of our product suite for rural households.

Rural Internet kiosks in Jhalawar, Rajasthan, India

ICICI Bank is in the process of rolling out about 3,000 Rural Internet kiosks at the national level that would cater to the financial needs of the rural populace.

We also believe that access to financial services has to do equally with distribution channel accessibility and convenience. We have a combination of branch and non-branch channels like rural branches, branches at major agricultural markets, credit franchisees, rural Internet kiosks and microfinance institutions that enable us penetrate into the rural areas that were hitherto left out.

What challenges are you facing to implement your services in e-Governance projects?

The challenges that we face while rolling out rural Internet kiosks are quite broad in nature. They are more to do with issues like absence of requisite infrastructure, connectivity, identification of right partners and entrepreneurs and lack of products/ services customised to online format.

As far as e-Governance projects are concerned, though the broader issues remain the same, there are specific concerns that call our attention. As of now, e-Governance services that are being provided through our kiosks mostly involved applications for land record copies, ration cards, certificates, permits, affidavits and registration of public grievances.

It is obvious that considering the huge scope for using kiosk as a platform to offer a range of e-Governance services, we still have a long way to go. Only when we bring in online access to many more services like Income Tax, Passport, Visa, Immigration, MCA 21, National Citizen ID, Central Excise, Property registration, Administration etc., as intended in the National e-Governance Action Plan, we can consider ourselves successful. For this to happen all the concerned departments need to organise and align themselves to make their services accessible through Internet.

What policy reforms would you like to see to encourage higher involvement of financial institutions in e-Governance projects?

Any institution and more so financial institutions need to perceive a long-term commercial viability for playing a pro-active role in e-Governance projects.

ICICI Bank’s involvement in rural Internet kiosk is driven by our commitment to transform them into cost-effective and scalable service delivery channels that make provision of all financial services even in the remotest areas possible. In order to encourage similar initiatives from other financial institutions, the Government will have to invest in rural infrastructure.

On the other hand, the regulation will have to allow for financial services to be offered through non-branch channels such as kiosks. Friendly regulation for offering savings and investments products through non-branch channels would go a long way in increasing the effectiveness of these Internet kiosks.

Payment of transaction fee charged for availing the bank’s payment gateway is not seen as a viable option in e-Government projects, especially for rural areas. How do you propose to resolve this issue?

Technology and innovation have enabled low cost distribution channels like kiosks and ATMs. Moreover, the number and volumes of transactions would further drive the costs down. A payment gateway that offers only limited number of services would of course have difficulty in sustaining its operations. This problem can be easily overcome by offering multiple applications through the kiosks. People willingly pay for easy access to financial products, agricultural extension, health, education and many such services. There is opportunity for off-line application such as the use of the computer for word processing, desktop publishing, computer education and entertainment (photography, games and movies) as well. Value added services like online commodity trading, helpline to address farming related queries, online agro-commodity based information and live mandi prices through price tickers would further add to the kitty of kiosk operators.

What are the partnerships ICICI bank is entering into, for offering its services in semi-urban and rural areas?

Internet service providers, public-private partnerships and agribusiness corporates are promoting an infrastructure of village-level kiosks across the country. Several participants have been engaged in this task. ITC, n-Logue, Drishtee, COMAT and Development Alternatives (Tara Haat) have built Internet kiosks using technologies such as Wireless in Local Loop (WILL) and VSAT Terminals. ICICI Bank has partnered with some of these organisations for the creation of a large number of such kiosks. In partnership with these kiosk network owners, ICICI Bank finances individual entrepreneurs (usually high-school graduates) who own and operate the kiosk. Partnerships with corporates like Bharti Tele Ventures, Indian Oil Corporation, EID Parry, Hindustan Lever and Hewlett Packard lead to varied portfolio of products and services. Agricultural universities, health care institutions and extension service providers are also part of our collaborative efforts to bring advisory and support services to rural households.

ICICI Bank has launched its Social Initiatives Programme. What are your objectives under this programme?

The Social Initiatives Group was formed in the year 2000 and is a not-for-profit department within the bank and works with a mission to “identify and support initiatives designed to improve the capacity of the poorest of the poor to participate in the larger economy.” This mission translates into our work in the areas of Early Child Health, Elementary Education and Micro Financial Services, corresponding to three fundamental capacities of health, education and access to money. The SIG has a sectoral focus and is not guided by immediate profit consideration of the bank.

In Early Child Health, a focus on impacting indicators of chronic undernutrition, in particular, low birth weight and stunting in three year olds, the SIG’s health practice works on strategies to strengthen the abilities of households and health systems to improve maternal and child health in India.

Agri Input Store in Baramati, Maharashtra, India

In Elementary Education, improving the quality of elementary schooling (3 -14 years) received by poor children in India is the focus of the SIG’s education practice. It works to strengthen institutions and systems involved in aspects of pedagogy, curriculum development, school organisation and evaluation.

The SIG’s micro finance practice aims to reduce household level vulnerabilities by maximising the access of the poor to a range of convenient and relevant basic financial services. It works with commercial teams of banks and other financial services companies to innovate on cost effective delivery channels as well as appropriate products.

The SIG’s assistance in each of these sectors is focused on advancing the status of knowledge and practice by supporting much needed research and innovation as well as developing the institutions required to mainstream this work. In its approach, the SIG aims to combine micro level contextual perspectives with macro level imperatives attempting to address issues of effectiveness, relevance as well as scale. The SIG works in partnership with non-governmental organisations, researchers, academia, state and central governments as well as the corporate sector.

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