Rural Banking- Business
Models

Advertising
techniques play a major role in figuring out the increase of monetary services
enterprise. Various marketing techniques followed by the predominant financial
carrier providers like banks.

The
marketing and distribution strategies of banks are one-of-a-kind in urban and
rural areas because of diverse demographic and socio-economic nature of these
markets. Private Banks are in most cases concentrated in urban regions due to
better income, higher infrastructure, better investor base and awareness of
five commercial activities in the urban areas of the country. The distribution
channels used by such banks encompass financial institution branches, ATMs, net
banking, telephone banking, direct promoting dealers, name centres, and many
others. The distribution networks advanced by using public banks in urban as
well as rural areas are a end result of policy measures due to which the range
of public area bank branches is better as compared to private or overseas
banks. Non-public zone banks also are penetrating into the agricultural regions
by using the use of the non-department shipping structures just like the
commercial enterprise Facilitator (BF) model or business Correspondent (BC)
model proposed with the aid of RBI in 2006.

underneath
the BF version, banks make use of the network of intermediaries which includes
the NGOs, put up workplaces for banking services together with creating
cognizance and educating on the monetary merchandise, amassing and processing
facts of borrowers, promoting banking products and financial offerings to rural
families, and so forth. The activities in a business Correspondent version
consist of all those of the BF model and in addition consist of disbursing
small cost credit score, and so on. Intermediaries underneath these models have
knowledge about the neighbourhood populace and offer remarks approximately the
requirements of the neighbourhood population .because the nearby populace has
believe in those intermediaries it’s miles possible to move-promote various
products. Cross-promoting helps in consumer retention, reduces client
acquisition fees. It also advantages the consumer thru truthful expenses for
the products, simpler processing and customized merchandise. The use of such
non branching shipping channels has been very less. However, with growing
earning inside the semi city and rural regions, there’s further scope for
personal banks to adopt such non branching shipping models.

 similarly to the department and non-department
transport systems followed respectively via public and personal zone banks,
banks also use easy-to-use coins doling out and collecting machines similar to
ATMs that have working instructions in vernacular languages too. Banks have
additionally initiated credit score plus offerings inclusive of setting up of
rural schooling centres for small organisations, farmers clubs, expertise
centres, credit counselling centres for educating the semi-city and rural
populace with recognize to minimizing yield danger and fee threat in
agriculture. This, further, leads to lower lending quotes and decrease credit
hazard.

Distribution Channels-
Banks

 

 

 

Building Bank Networks in
Rural areas

RBI
has undertaken several projects to increase bank networks in rural areas that
are summarized below:

From
2006 onwards, RBI permitted placing new branches condition to 50% of such
branches being opened in unbanked areas.

In
2006, rural regional Banks (RRB’s) had been allowed to marketplace mutual fund
units based at the approval from their Board of administrators. these RRB’s,
can input into distribution agreements with private or overseas mutual fund
houses for marketing their schemes primarily based on phrases and conditions
targeted through RBI.

 

 

 

 

Business Correspondent
Model

Business
correspondents are retail agents engaged by banks for providing banking
services at locations other than bank branch/ATM. BC’s are enabled to provide
low cost services.

Functions
of BC’s

·        
Identifications of
Borrowers.

·        
Collection of small value
deposit.

·        
Disbursal of small value
credit.

·        
Recovery of principal.

·        
Creating awareness about
savings and other products.

What
more Business Correspondent can do?

·        
Educating the
under-banked and unbanked population about the importance of banking,
investment options, deposit schemes, interest rates.

·        
Providing Banking
assistance in process such as opening bank accounts, fixed/recurring deposits.

·        
Recovering the
instalments for loans, EMI’s, payments and fees from customers.

·        
Disburse of small amounts
of loans.

 

 

 

 

How Business Correspondent
Model Helps?

·        
Helps in maintaining
better assets in banks.

·        
Maximize the customer
base by reaching out to the customers.

·        
Popularise the concept of
doorstep banking.

·        
An alternative to
physical branches.

·        
 

Kiosk Banking Model

The
Kiosk banking model is an initiative taken by the RBI for those living in the
village areas and deprived of basic banking services due to non-availability of
bank branch in their locality. In such circumstances the person is not needed
to go to bank, instead the bank comes to village where the person can make
transactions.

The
idea behind the functioning of kiosk is that it should be supported by the
banks in private, public and cooperative sectors. These acts as links between
deposits, withdrawals, remittances, insurances and overdraft services.

 

Functions

It
provides internet based, bio-metrically enabled banking service to the rural
customers through business correspondent model.

Through
this alternate channel, customers can do online, real time banking transaction
at his place without the help bank.

SBI Kiosk Banking

 

 

 

 

 

 

 

Is Technology a solution?

A
significant problem regarding implementation of banking models for rural
banking is lack of consistency in service delivery by its outsourcing partners.
Though 278 million accounts have been opened under the Pradhan Mantri Jan Dhan Yojna, 30% of the accounts lie dormant.
Agent inactivity and lack of product knowledge adds to the problem.

How can Technology helps?

One
of the ways IoT can help would be to track the agents as they venture out on
their daily, weekly, or monthly client visits. IoT sensors can be placed on
their vehicles, bicycles, motorbikes, or vans. Data captured on travelled
times, duration of the visit, and the number of breaks taken are important
parameters that can be used to ascertain the accuracy of the agent’s claims
about visiting clients and dispensing services.

Sensors
attached to the micro-ATMs carried by the agents, along with the account usage
data, can be verified with the location data to determine whether customers
actually can access and use their accounts as needed. This is useful in
detecting fraud such as misappropriation during loan disbursement, cash
withdrawals, or deposits.

With
IoT, banks can test new business models by partnering with innovative ecosystem
partners. For instance, data analytics companies, such as Satsure and Stesalit,
use data from IoT sensors, along with the satellite data, to conduct precision
farming, climate forecasting and remote crop monitoring analytics. Banks can
partner with such companies to assess farming conditions in different regions
on a periodical basis.

The
opportunities for IoT and banking are just begin to emerge. The impact that IoT
will bring to this sector is enormous.