Tuesday, January 10, 2006


According to K.V.Kamath CEO of ICICI, India's second largest bank, and largest private bank, the urban market for them is getting saturated, and so they are looking towards the rural market for growth. Kamath’s hypothesis is that rising urban incomes will also stimulate rural aspirations; and ‘‘as rural aspirations grow, it will be important to meet them by helping to create rural wealth’’.

One of the challenges in doing so is the operating costs. Indian banks, on an average, operate at a tenth the cost of foreign banks, and for rural banking they will have to cut costs by a fourth further.

Creating such a structure meant getting past social and infrastructure bottlenecks such as illiteracy, lack of electricity and telecom connectivity. So a solar-powered ATM, operating on wireless technology which uses biometric identification instead of the standard PIN cards was one of the solutions.

But trust modern day Indian companies to come up with innovative solutions. ICICI Bank is likely to pursue a better and lower cost alternative more aggressively in the form of point-of-sale terminal attached to the local bania store. This involves the same biometric identification, but since the bania uses and deposits cash extensively, it will marry his financing needs with that of the bank customer.

The business potential for this is huge: it is common knowledge that unorganized enterprises and rural folk pay usurious interest rates to money lenders. Also, in the absence of funding, there is large-scale wastage especially in the process of getting agri-produce from farms to markets. (Excerpted from The Indian Express.)

APJ Abdul Kalaam must be happy man if reads this, since he too has a similar vision called the PUARA i.e. providing urban aminites in rural areas, as part of his Vision 2020 for India.


Zaki M said...

Sitting in US, yet focussing on Indian developments...
Great going!!

The Bhandari's said...

:) nice