Bankers see future in villages

Financial inclusion will fast become a business opportunity, provided banks are able to reach out to the masses in a cost-effective way and offer a package deal of deposits, loans, insurance and mutual funds.

Financial inclusion will fast become a business opportunity, provided banks are able to reach out to the masses in a cost-effective way and offer a package deal of deposits, loans, insurance and mutual funds.

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This was the consensus among leading bankers who attended Mint’s Annual Banking Conclave in Mumbai on Wednesday to discuss “Inclusion Through Competition”.

“In course of time, this stipulation might become meaningless because many of the businesses we do in rural areas under this segment are going to become more and more profitable,” said State Bank of India managing director R. Sridharan.

ICICI Bank Ltd CEO and MD Chanda Kochhar said her bank is chasing financial inclusion not because of a social obligation but because of the future potential of the rural market.

“We believe the entire rural India is in a way going to be the next driver of growth,” she said.

Naina Lal Kidwai, HSBC Ltd country head, India, said the banking sector as a whole will have to find a profitable delivery
model if inclusion has to be successful.

“The challenge for us is how can we as a banking sector deliver a low-cost model which makes doing business at the grass roots profitable,” she said.

Standard Chartered regional CEO (India and South Asia) Neeraj Swaroop said, “There has to be an incentive of sorts to make this happen faster than what the natural market forces will allow to happen.”

MV Nair, chairman of Indian Banks’ Association said the key challenge in giving access to those who are excluded is the last mile delivery.