BANKING IN THE HINTERLAND
BY
MATHEW JOSEPH
ASST GENERAL MANAGER
ANDHRA BANK
HEAD OFFICE::HYDERABAD
ANDHRA BANK
• The Rural Scene in India
• Deposit & Credit Schemes Offered By Banks
• Communication of Rural Banking Products & Communication through IT & through Rural Institutes
• Financial Inclusion
• New Initiatives
DISCUSSION OUTLINE
ANDHRA BANK
OBJECTIVES
1. Poverty Reduction 2. Benefit of Globalization to Grass Root Rural
Enterprises
• WHY THESE OBJECTIVES :• INDIA GLOBAL AVERAGE
70% Rural 30% Rural30% Urban 70% Urban
ANDHRA BANK
RURAL BANKING
• A recent World Bank-NCAER Survey on rural access to finance indicates -
• 70% of the rural poor do not have a Bank Account and 87% have no access to Credit from formal source.
• India has an extensive Banking Infrastructure comprising over 46,000 Rural & Semi Urban Branches of Commercial Banks over 14,000 branches of RRBs, around 12,000 branches of DCCBs and nearly 1,00,000 cooperatives credit societies at the village level.
ANDHRA BANK
RURAL SCENE IN INDIA
There is at least one retail credit outlet on averageFor about 5,000 rural people, which translates intoone outlet for every 1,000-house holds.
• 30% of population still lives below poverty line.• Indebtedness is the main feature.
Rural poverty is linked to unemployment, underemployment, low levels of productivity, severedemographic pressures and illiteracy.
RURAL SCENE IN INDIA
ANDHRA BANK
ANDHRA BANK
Out of 6,34,321 villages in India, only 9,000 villages have more than one branch. As on March 2006 each bank branch is catering services to 12 villages.
The population per rural branch declined from 2,01,854 in 1969 to 16,000 at present (as on March 2006).
The proportion of borrowings of rural house holds from institutional sources increased from 7% in 1951 to more than 60% at present.
RURAL SCENE IN INDIA
ANDHRA BANK
Despite large network of branches, majority of rural poor remained outside banking purview.
Rural poor need credit frequently and mostly in small quantities for consumption purposes.
In India, almost 27.09 percent of the rural population and more than 23.62 percent of the urban population are below the poverty line.
RURAL SCENE IN INDIA
ANDHRA BANK
Population Group Number of Branches
Percentage
RURAL 30,587 44%
SEMI-URBAN 15,484 22%
URBAN 12,101 17%
METRO 11,260 17%
TOTAL 69,382 100%
BRANCH NETWORK
ANDHRA BANK
INDIAN BANKING SYSTEM
RURAL BANKING
The share of bank finance in the sphere of rural credit has considerably increased since 1950s, agriculture and allied activities being the focal point therein. Credit expansion has been streamlined to accelerate its flow in to the priority sector.
ANDHRA BANK
• Current Deposits• Insurance Linked
Current Deposits• Savings Bank• Insurance linked
savings accounts• Insurance linked
savings to kids
VARIOUS DEPOSIT SCHEMES OFFERING BY BANKS
• Non Res. Ord. Act.• Non Res. Ext. Rup.
Ac• Fixed Deposit• Cumulative Deposit• Recurring Deposit• FCNR (B)• Resident Foreign
Currency (Dom.Ac)
ANDHRA BANK
• Kisan Credit Card• Kisan Vehicle
Loans• Kisan Produce
Loans• Agriclinics• Rural Godowns
AGRICULTURAL SCHEMES
• Farm Mechanization• Land Purchase
scheme• SHG Credit Card-life
& health cover to SHGs
• Artisan Card• Laghu Udyami
Credit Card (LUCC)• Swarojgari card
etc.,
ANDHRA BANK
RETAIL BANKING
Personal Loans Consumer Loans Automobile Loans Clean Loans Mortgage Loans Educational Loans Housing Loans Loans Ag. Share & Securities Gold Loans
ANDHRA BANK
The share of bank finance in the sphere of rural credit has considerably increased since 1950s, agriculture and allied activities being the focal point therein.
Credit expansion has been streamlined to accelerate its flow in to the priority sector.
RURAL MARKETING
ANDHRA BANK
Today’s banking is not simple selling Every customer has different need Every customer has multiple needs The customer needs are ever changing The competition is global Traditional sources of income is coming down Importance of Profit is increasing rapidly
WHY MARKETING ?
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
In the present era of aggressive banking publicity plays a dual role of building up the corporate image of the Banks.
Making people aware of various schemes of the organisation.
Banks are committed to the upliftment of the rural masses by building awareness about the services rendered and various products of the banks.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Hoardings / wall
PaintingsBanners
To keep hoardings/wall paintings / banners at strategic places / in the local centers /in major service area villages. Boards / wall paintings in front of MRO / MDO offices/ in village shandies etc.
Creation of fixed assets– for the benefit of community
To give T.Vs, Water coolers, Fans to the village temples / SHGs / to keep in community halls etc.,. And also water storage tanks for village community / Community bore wells etc., may be sponsored. Books to the village library, Cement linings around trees to use as “Ratch Banda”
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Arranging workshops / Seminars /camps /
melas / village fairs.
Banks to arrange workshops / seminars / village fairs etc., in selected places by inviting eminent personalities / Agrl.Scientists etc., In the workshops our schemes / services are to explained.
Campaigns throughburrah kathas /Playlets etc., in service area villages.
Banks to select popular – burrahkatha / play let groups of local area and send them to branches to give their performance along with our bank schemes in selected service area villages.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Paintings on the RTCbuses plying in the ruralareas
Rear of buses preferablyin vernacular languages.
To give advertisements of our bank schemes by way of paintings on RTC buses plying in rural areas.
Advertisements in TV – in Rythu Mithra programme etc., and Radio.
To give advertisements in T.V / Radio about our schemes especially in Farmer’s / rural programmes.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Others – give away itemsfor distribution amonglarge number of people.
Small gift items may be distributed among the selected customers
Shelter for bus stops
Bank may sponsor for construction of bus shelters at bus stops of major centers of service area villages. And our bank schemes to be displayed on the bus shelters.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Tree plantation / providingtree guards with provisionfor people to sit.
To arrange for tree plantation in community areas and provide tree guards with advertisement of our bank schemes.
Erection of cycle / rickshaw / auto stands.
In some major centers of the service area / local areas of the branches, bank may sponsor erection of cycle / rickshaw / auto stands, with advertisement of our schemes.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Advertisements in RuralCinema theatres.
Advertisements about our schemes may be given in cinema theatres of the service area.
Providing lamp posts / islands to decorate important junctions.
Bank may sponsor lamp posts / islands to decorate important junctions in Gram Panchayat / Municipalities, with advertisements of our bank schemes.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Community T.V.Preferable in villagecommunity halls.
Bank may sponsor T.V sets to temples / community halls of selected places to the benefit of community at large and use the item as advertisement of our bank.
Sponsor schools by providing black boards / slates/books/ scholarships / drinking water etc.,
Bank may Sponsor schools by providing black boards / slates/books/ scholarships /drinking water etc.,
Meritorius students may be encouraged by providing books / scholorships etc.,
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Sponsor village dispensaries/ hospitals / veterinary
hospitalsby giving medicines /utilities.
Bank may sponsor village dispensaries / hospitals / veterinary hospitals by giving medicines /utilities.
Sponsor Telephone booths./Milk booths / Milk Collection centers.
Bank may sponsor telephone booths / Milk boohts / collection centers with our bank schemes advertisements.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Organise / participate in vegetable / animal / flower shows.
Bank branches may organize / participate in vegetable / animal / flower shows, with gifts to the best farmers and our bank schemes may be advertised in the shows.
Sponsor deserving farmers for seminars / talks and use them for rural awareness.
Bank may sponsor selected farmers for seminars / talks at district / state level and use them for rural awareness and recovery of loans.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Participate / sponsor in village fairs / melas by taking stall etc.,
Bank branches may Participate / sponsor in village fairs / melas and arranging our bank stalls in the melas for advertisement of our bank schemes.
Provide drinking water facilities / Hand pumps / water coolers etc.,
Bank branches may arrange to provide drinking water facilities / Hand pumps / water coolers at strategic centers / village mundies / fairs / shandies with advertisement of our bank services / products.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Arranging Farmer’s meets by
inviting subject matterSpecialists /
Agrl.scientists.
Banks to arrange Farmer’s meets in selected places of service area villages by inviting subject matter specialists /Agrl.scientists.
Training programmes ( Field visits to farmers)
Arranging field visits / training programmes to the farmers / rural youth on various rural activities.
ANDHRA BANK
COMMUNICATION OF RURAL PRODUCTS
Sponsoring medical / Veterinary camps in ruralareas.
Banks may sponsor medical / Veterinary camps in rural areas.
Construction of cement lining around trees in Villages, so as to use as “Ratch Banda” to use as Common place for the farmers.
Banks may sponsor for Construction of cement lining around trees in Villages, so as to use as “Ratch Banda” to use as Common place for the farmers.
ANDHRA BANK
Buyer & Seller meets in rural
areas.
Bank may arrange buyer & seller meets for various products of farmers and SHGs.
Sponsoring Self Help Group (SHG) members for workshops / seminars.
Bank may sponsor Self Help Group (SHG) members for workshops / seminars.
COMMUNICATION OF RURAL PRODUCTS
ANDHRA BANK
RURAL PEOPLE EXCLUDED FROM BANKING PRODUCTS
Poor people with little (or) no assets. People living in remote rural/tribal areas. People in lower end segment. Labourers. People living in semi-urban / urban slums. Tenant farmers (Oral tenancy), sharecroppers,
marginal farmers with smaller holdings. SC/ST/Minority people with little means. Destitute etc.
ANDHRA BANK
INDIAN POPULATION vis-à-vis BANK ACCOUNTS
Total population as per 2001 census 102.70 crs
Of which 19 years & above 54.10 crs
No. of Current Accounts in the banks as on 31.03.06
1.66 crs
No. of SB Accounts in the banks as on 31.03.06
30.43 crs
Total No. of Accounts 32.09 crs
No.of Accounts per 100 population 31
No.of Accounts per 100 adult Population 59
ANDHRA BANK
1. Opening of Savings Bank accounts (N0-frills accounts – with zero balance).
2. Issue of General Purpose Credit Card (GCC).
3. Defaulters cleansing Mechanism.4. Strengthening SHG Lending.5. Appointment of Business Facilitators /
Business Correspondents.
FINANCIAL INCLUSION - FEATURES
ANDHRA BANK
FINANCIAL INCLUSION - FEATURES
6. IT Connectivity.7. Insurance Products.8. Coverage of Tenant Farmers / share
croppers.9. Mapping indebtedness of the farmers and
to identify the unindebted farmers etc.
ANDHRA BANK
INSURANCE FOR RURAL POOR
• One of the most important components of financial services inclusion.
• Most of the poor people not covered under insurance.
• To cover the members of SHGs, small & marginal farmers who have taken loans from banks .
• As a social security measure, Govt. may examine to cover the poorest of the poor under life insurance, accidental insurance, health insurance – group policies.
ANDHRA BANK
RURAL AREAS FINANCIAL INCLUSION
• 100% coverage of accounts
• Covering the people with insurance products like crop insurance,life & health cover to SHGs
• Payment of pensions at villages through smart cards
• Provide credit to all through GCC
ANDHRA BANK
RURAL AREAS FINANCIAL INCLUSION
Inclusion through infrastructures:• Provide drinking water• Provide education• Pucca house /family• Good roads
For achieving all the above Banks, Government ,local rural panchayats have to work together.
ANDHRA BANK
RURAL AREAS FINANCIAL INCLUSION - IT
Installation of ATMs in rural areas .
Introduction of Mobile ATMs
ANDHRA BANK
RURAL BANKING – IT PRODUCTS
Introduction of "Rural Kiosks"
The rural kiosks will provide variety of services like accepting electricity bills, house taxes, up dated market information, birth certificates, land records, internet services etc.,.
Opening of satellite offices.
ANDHRA BANK
COMMUNICATION via RURAL INSTITUTES
• Banks are educating the poor through rural institutes
• Various banks have institutes at different Districts/States
• Women are also being trained
• Some banks are offering at free of cost.
ANDHRA BANK
Training Activities
1. Tailoring 2. Embroidery
3. Saree painting 4. Saree printing
5. Soft toys making 6. Quilts bags making
7. Jam/Juices making 8. Agarbathi Making
9. Cosmetics making 10.Detergents making
11.Candles making 12.Adda Leaf plate making
13.Papad making on machine 14.Hawai chappals making
15.Laces making etc
16. Articles with jute, Banana, Palm fiber
COMMUNICATION via RURAL INSTITUTES
ANDHRA BANK
COMMUNICATION via RURAL INSTITUTES
• All the rural people to be educated through banks institutes
• For each 50-100 villages one Institute
• Identify the activities & train the people accordingly to settle in their lives.
• Proposed to start a state level training institute funded by 5 banks,AP State Govt. & NABARD
ANDHRA BANK
NEW INITIATIVES
• Entire banking system,State Govts to evolve in improving the financial inclusion.
• Education for all concepts are to be implemented wholeheartedly.
• Cooperative sector& RRBs which are connected with rural & poor mass to come forward for this social responsibility.
ANDHRA BANK
NEW INITIATIVES
• Present Kisan cards will be replaced by the High Tech smart Cards, which will be accepted in more agro -input merchant establishments in rural & semi urban areas.
• Banks has to bring out credit cards in association with fertilizer, pesticide, & seed companies
• Companies should offer discounts to Farmers for encouragement of using cards.
ANDHRA BANK
• More Off -site ATMs to be installed
• To facilitate transfer of funds,
• Payment of utility bills,
• Ordering of Agro inputs
• Banks to offer infrastucture loan products to Local people's Organizations (LPO)- Infrastucture like roads, schools, electricity, tanks, storage godowns etc.
NEW INITIATIVES
ANDHRA BANK
NEW INITIATIVES
• Rural Kiosks-access banking services through internet or cell phones.
• Marketing outlets to offer the deposit and loan products through POS (Point of Sale) terminals installed in such outlets and
connected online with the Banks.
ANDHRA BANK
NEW INITIATIVES
• Each village to identify the teachers, post offices, NGOs, VVV (Village Volunteer Vahini) Clubs, etc., to use them as Business Facilitators & Correspondents.
• Model Village Concept to be adopted by the Banks to cater the needs of all households in that village.
• Banks to establish Rural Development Institutes in the Districts through out
the country to give capacity building trainings.