BTL Presentations, Below the Line BTL ppt | RC&M India Experiential Marketing Firm

UnderstandingThe Finance Industry

in Rural India

Finance Presence in Rural India

Finance presence in Rural areas today; is in the following forms:

– Nationalized Banks– Private Banks– Credit Societies– Co-operative Banks– Informal loans (Money Lenders)

Finance Presence in Rural India

Regional Rural Banks and Co-operative Banks form approximately 66% by presence in count although they account only 5.6% of the total business

Rural Finance Penetration in India

The above reflects that even though the finance institutions are present to a certain extent in Rural areas; perhaps due to lack of awareness & basic financial literacy, the institutions are not deriving the optimum business, despite the high potential.

Rural Finance Branch/offices Network

• As per the D&B research in 2009-10; of all private sector branches, 13% are in Rural India

• Branch network of Scheduled commercial banks is 40% in Rural India; of the total SCB branches

Finance PresenceGeographic Segmentations

Reserve Bank of India

Public Sector Banks (28)

RRBs (88)LABs (4)

Private Banks (22)

Foreign Banks (30)

Rural

Semi Urban

Urban

Metro

Total

19275

12776

11336

10501

11498

2612

607

63

1052

2468

2504

2245

0

2

50

227

53908 14780 8269 279

Total

31825

17858

14497

13306

77236

• Besides, there are cooperative banks with more than 12000 branches & over 1 lakh primary credit societies linked with cooperative banks

• The above numbers are only indicative of the overall finance presence region wise - but do not show current picture

*As in 2005

Rural Finance Growth & Potential

Rural Finance Potential

• As per a research conducted by RBI in 2009-10, 59% of the adult population in the country has bank accounts and 41% don’t

• In Rural areas, the coverage of banks is 39% against 60% in Urban areas

• There is only one bank for a population of 13,000

• Commercial bank branches cover only 7% of the Rural sector. The large market is still untapped

• Estimated demand for credit in rural India is Rs. 1,33,000 Cr.

• The banking system issued 87.83 million KCCs as on November 30, 2009

Rural Finance GrowthGrowth in Mobile Banking Subscribers

Population with Bank

Mobile Subscriber Base

Registered M-Banking Customers

Active M-Banking Customers

Units (Millions) Framework of Mobile Banking

• India’s Mobile Phone user base, as on 2009-10, consists of 347 million users, including 73 million Rural users

• As per one of the surveys, by 2012 - mobile banking active user base to reach 2% up from the current 0.2%

• Mobile-linked no-frills bank accounts are created for rural inhabitants in India

Rural Consumer Finance Preferences

Finance Preference in a Rural Household

• The financial inclusion in a Rural Household usually follows this preference order:-– Savings Account – Fixed Deposit– Agriculture Credit– Insurance– Auto Loan – Mutual Funds

• Savings & Fixed Deposits are highly preferred - which is the most trusted saving source in Rural• Agri Credit & Insurance are amongst their most important need• Auto Loan is a luxury requirement• Mutual Fund Investment is only when all the above have been secured & they feel financially stable• Therefore for most Rural Households, it’s a journey from “needs” to “luxury”

As per a survey conduced by PHDCCI in December 2010, more than 37% of the people in Rural India showed preference in Fixed Deposits investment

37%

14%17%

6%9%

2%

15%

Rural Finance Preference Breakup

PHDCCI, December 2010

2 Peak seasons are observed• The peak season is March; which may be because banks increase the loan disbursement towards the end

of the year to meet their specific target• The other peak time observed is in the period between July and September. Most agricultural activities

seem to flourish during the monsoon season, which is usually July to September. These bank branches may be helping farmers meet their demand for finance

Rural Finance – Disbursement Trends

IFMR collected month wise loan disbursement data from 20 bank branches out of which :12 RRB branches - Andhra Pradesh Grameen Vikas Bank, Andhra Pragati Grameena Bank8 Commercial Bank branches - State Bank of Hyderabad, State Bank of India, Andhra Bank, Canara Bank, Syndicate Bank, Central Bank of India

IFMR Survey, 2011

Rural Finance Agency wise & Region wise Penetration

Name of Agency Loan Disbursed by banks/FI to MFI during the year (Amount Rs. Lakhs)

No. of Micro Finance Institutions (MFIs)

Commercial Banks 803860.64 645

RRB 2413.61 46

Cooperative Banks - -

SIDBI 266575.10 88

Total 1072849.35 779

* The actual number of MFIs would be less as some MFIs have availed loan from more than one bank

Rural Finance – Agency wise Disbursement Break up

Region

Commercial Banks RRB Banks Cooperative Banks Total

No. of SHGs Loan Amount No. of SHGs Loan Amount No. of SHGs Loan Amount No. of SHGs Loan Amount

Northern Region 15076 15482.63 11070 7936.94 11229 7213.76 37375 30633.33

North Eastern Region 16652 12537.25 21365 11215.22 11290 4964.52 49307 28716.99

Eastern Region 156918 85155.62 77573 53962.25 42955 14900.78 277446 154018.65

Central Region 34108 28638.02 37713 30201.9 6025 4369.96 77846 63209.88

Western Region 67304 36802.6 19876 4513.5 61950 23381.44 149130 64697.54

Southern Region 687463 799402.43 209200 225490.25 99055 79161.29 995718 1104053.97

Total 977521 978018.55 376797 333320.06 232504 133991.75 1586822 1445330.36

Rural Finance – Region wise & Agency wise Disbursement Break up

• Unlike common belief, the Southern region dominates with maximum amount of loan disbursed by commercial banks , followed by Eastern region

• North Eastern region has minimum loan disbursed by commercial banks

(Amount in Rs. Lakhs)

Rural Finance – Trend in Disbursement MFIs & SHG Bank Linkage

Loan Disbursements in MFIs is higher as compared to SHG-bank linkage. Overall the trend reflects the increasing loan demands & disbursements in rural India

Some of the Renowned Micro Finance Institutions

Uttar Pradesh

• Cashpor Micro Credit (CMC)

• Sonata Finance

Tamil Nadu

• Grama Vidiyal Micro• Equitas Micro Finance • Sarvodaya Nano

Finance

Kerala

• ESAF Microfinance & Investments Pvt. Ltd (EMFIL)

• Gandhi Smaraka Grama Seva Kendram

Assam

• Rashtriya Gramin Vikas Nidhi

• ASOMI

Orissa

• Gram Utthan

Andhra Pradesh

• SKS Microfinance Ltd (SKSMPL)

• Spandana Sphoorty Financial Ltd (SSFL)

• Asmitha Microfin Ltd (AML)

West Bengal

• Bandhan Financial • Sahara Uttarayan

Karnataka

• Shri Kshetra Dharmasthala,Rural Development Project (SKDRDP)

• BSS Microfinance • Grameen Financial

Services

Initiatives in Rural Finance

• HDFC – HDFC Bank has targeted mandis to expand rural reach by opening additional branches – It has tied up with the Postal Department to explore the vast network potential of the latter – HDFC is also offering loans at reasonable rates to rural people

• ICICI Bank – ICICI Bank has increased its focus further on rural and semi urban areas by providing customized financial support to

farmers, traders, commission agents, small processors etc. – After its tie-up with Bank of Rajasthan, it has increased its reach in rural as BoR has a total of 463 branches – 40% are

located in rural and semi-urban areas– ICICI also has tie dup with NGO's and other community-based societies in order to train and equip them to deliver

products and has already transformed hundreds of them into Micro-Finance Institutions (MFIs)– Has set up a model in which channel partners are appointed at different franchisees and kiosks– Channel partners are the local people who provide banking services which are usually obtained in regular branches– They operate like a full-fledged bank and are available in small centers, sharing profits and losses with ICICI

• RBI– Project Financial Literacy : includes financial education to the rural people through various mediums. These include

films, games, cartoons etc. which could appeal to the rural audience. Its main objective is to spread financial information about the central bank and general banking concepts to target groups such as women, self help groups etc.

• SBI – Instead of spending too much on setting up office s, the firm minimized the documents required for loan provisions;

like - no income statement provision is required for loan processing

Initiatives in Rural Finance

Future Trends

• As per the World Bank Report, it is estimated that in next 5 years, 65% of the Rural people will have excess to MFIs.

• Many Pvt. Banks and Foreign Banks would enter this business segment, because of very low NPAs.

• It is estimated that 5 % of the people below the poverty line will get reduced in the next 5 years

Thank You