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THE ECONOMIC TIMES
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17.10.07
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| Indian Bank awaits RBI nod for single-person banking outlets |
STATE-OWNED Indian Bank plans to try out a new format to expand its
reach in rural areas, as it sees a huge potential in these markets
long under-served by the formal banking sector. The Chennai-headquartered
bank's plan is to have a network of kiosks, each with a single
person armed with a laptop connected to net and a safety locker
to handle cash. It is awaiting the banking regulator's approval,
a senior official said.
Mr A Subramanian, executive director, Indian Bank said the format
was ideal for rural areas - "It's almost like a milk booth".
The kiosks demanded low investments, and could be rolled out
fast. Once RBI gives its approval, the bank would set up 250
such kiosks in the first phase, he said. "We believe kiosks
would help us a great deal in extending banking services to
the rural population," he said. Over 40% of India's population
still don't have access to banking services, but businesses
are increasingly realising that serving this segment could actually
be profitable.
Management guru CK Prahlad, in his Fortune at the Bottom of
the Pyramid, has argued that low income markets - comprising
the world's four billion poorest - present a prodigious opportunity
for businesses. However, products aimed at this market must
be designed and delivered differently - for example, in single-serve
packages, he says.
Low cost kiosks are a banker's version of singleserve packages.
Local language-enabled, biometric ATMs - which can also read
out instructions instead of just displaying them - are often
seen as the low cost way to reach out to rural poor who cannot
read or write. "But, in rural areas, people are still not used
to ATMs. They will be much more comfortable dealing with people,"
Mr Subramanian said.
Indian Bank has over 20,000 employees, many of whom were moved
to marketing and monitoring from core operations following the
implementation of core banking solution. As of date, 1,253 branches
including 271 rural branches and 72 extension counters have
been brought under CBS. "So, finding people for these kiosks
is not an issue," he said.
The bank has already tasted success in reaching out to the unbanked
segment. It was the first bank to set up a branch at Mumbai's
Dharavi, Asia's largest slum. Now, other banks are following
suit. It is also setting up special branches of Microsate for
micro credit in metro and urban centres. It has six branches,
and is opening six more shortly.
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