Changing Landscape of Banking

and Financial services in Rural India

Manoj Rawat
Group Executive Vice President &
Head Agribusiness & Rural Banking
RBL Bank, Mumbai
9th Annual Rural Marketing Forum: [email protected]
The1 Era of Digitalisation Manoj Rawat
Financial Ecosystem in India

RBI

Public Sector Banks: 27 Co-operatives: 68 ATMs: 195000+

Digital Wallets
Private Banks: 30
Payment Banks: 11

Foreign Bank: 40 Small Banks: 10

NBFCs: 12000+
208 Deposit taking NBFC
RRBs: 196 On Tab Banking

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Manoj Rawat
Financial Ecosystem in India

Public Sector Banks: 27

NBFCs: 12000+
Private Banks: 30 (Out of which Deposit
taking NBFC: 208)

* Payment Banks: 11
Foreign Banks: 40

RRBs: 196 * Small Banks: 10

Co-operative ** On-Tab Banking

Banks: 68

ATMs: 195000+ Digital Wallets

* New license
3 **Under Discussion
Manoj Rawat
 Size of Pyramid
• 60% of 1.2 billion population is unbanked or underbanked.
• Potential Market- 40% Priority Sector Lending
- 30 lakh Crore established market – 20 K Crore Agri + 10 K Cr Micro & others

Medium + Large
5%

Semi medium 10%

Small 18%

Marginal 67%

Source: RBI report, Mckinsey report “ Reimagining banking in India

Source: NABARD Report

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Manoj Rawat
 Rural Banking is a Massive Opportunity

Agri Banking Farm Equipment Rural Housing Payment & Micro Banking MSME
Remittance

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Rural Banking Manoj Rawat
The Rural Ecosystem
Food processing School Primary Healthcare Social credit to Institutional Credit
Panchayats
MFI Loans

Grading Drinking Retail Credit

Sorting of Irrigation water
produce facility solutions
Gobar Gas
plant

Insurance & Village Farm

wealth Mechanisatio
products n dealers

Dairy Loan

Crop Loan
Personal loan Agri ware
Rural Housing Energy Education for marriage houses &
Solutions loans
Cold storages

Agri Clinics &

Pesticide Local Mandi traders Infra (Rural roads, & Financing Industrial Soil testing
Dealers
6 Electrification etc.) training Institutes labs
(Skill Building) Manoj Rawat
Rural Banking Umbrella

Rural Branch

Payment , Small Education/

Agriculture Rural Micro
Remittance & Enterprise Housing/
Loans Vehicles banking
CASA Credit Gold Loan

Corporate Tie-ups Banking Partners

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Manoj Rawat
Status of Financial Inclusion- India
Financial Inclusion Progress of all Banks including RRBs
April13-March
Particulars Mar-10 Mar-13 March 2014
2014

Banking Outlets in Villages – Branches 33,378 40,837 46,126 5,289

Banking Outlets in Villages – Branchless Mode 34,316 2,27,617 3,37,678 1,10,061

Banking Outlets in Villages –Total 67,694 2,68,454 3,83,804 1,15,350

Urban Locations covered through BCs 447 27,143 60,730 33,587

Number of Bank Branches-

Scheduled Commercial Bank Trend of ATMs
1,81,398 1,90,859
127,343 On-site Off-site 1,60,055
117,847
106,389

94729
92337
98,341 1,14,014

76676
84,986 90,147 95,686

55760 58254
47545 48141

96130
89061
83379
Mar-12 Mar-13 Mar-14 Mar-15 Oct'15

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

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Manoj Rawat
Challenges in Rural Banking

Dependencies on
Natural Resources

Long Production Cycles

Vulnerable to Multiple
Risks
Sub division of Land
and small ticket size

High Operating Cost

Shift from Agriculture to

Non-Farm Activities

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Manoj Rawat
New Methods of Delivery of Banking services

Mobile Banking
ATM Mobile Apps

Internet Banking Call Centers

Bank

Phone Banking POS Terminals

Kiosk Banking TAB Banking

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Manoj Rawat
Impact of New Banking Licenses

Enhanced Competition Increased use of Technology

Product Innovation
Focus on Volumes rather than margin

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Manoj Rawat
Digital Inclusion
Readiness Enablers
Consumer's rapid
E-KYC-Aadhar Enabled
adaptation of Digitization

Supporting Mobile Demographic Dividend creates

Platforms Large digital Savvy segment

Distribution Models beyond Govt. Initiatives ex. PMJDY, DBT

Brick & Mortar Offers Growth Opportunities

Multilingual & Voice Mobile Penetration &

based interaction Smart phone Usage

Emerging disruptive models

Regulatory Support
PPIs, POS, Kiosk, payment Banks

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Manoj Rawat
Digital Inclusion-New Opportunities

Leveraging Social, Mobile capabilities, cloud computing, SaaS by banks to

drive customer interaction

Technology-enabled transformation to improve revenue generation, operational

efficiency and risk management

lower cost-to-serve capabilities coupled with technology-driven transformation

of operating and distribution models, banks can now reach new customers in
new markets

Mining of Big Data can open up new revenue verticals for the banks and help
better risk measurement along with effective identification of sales

By tapping social networks, banks can access customers’ social profiles,

and thereby deepen their insights into individual customer behaviour

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Manoj Rawat
Digital India Plan

Banks as Partners in Digital India Plan

Digital infrastructure Governance and Digital

Providing digital services on demand empowerment
identities to people On real-time and
Universal access to accessible platform All documents
bank accounts & Financial and certificates
phones across the transactions to be available on
country electronic & cloud
Safe and secure cyber cashless
space

3 Pillars of Digital India Plan

Connecting all the Gram Panchayats (GPs) through broadband network by 2019

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Manoj Rawat
On-Tap & Differentiated Bank Licence

A differentiated licence will allow a bank to offer products only in

select verticals, such as project financing, or focus only on a
certain banking service, like in the case of payment banks.

The RBI has made it clear that new banks under the ‘on-tap’
licensing mode cannot ignore the rural areas of the country by
stipulating that at least 25 per cent of their branches should be in
unbanked rural centres and they shall comply with the priority
sector lending targets and sub-targets as applicable to the existing
domestic scheduled commercial banks.

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Manoj Rawat
Can Digital Banking Propel Financial inclusion ?

Digital Banking Intervention

Brick and mortar businesses are proving

Trough internet Banking, Mobile banking,
to be an uneconomical proposition for
IVRS, USSD, phone Banking etc.
banks in rural or remote areas

There are distribution challenges due to India has a vast reach of Telecomm
Localised constraints having 82% teledensity on Pan-India Basis

Conventional banking models are not

ATMs, Mobile Money, Digital wallet,
feasible for low ticket size of transactions,
Retail stores, Multifunctional Kiosks
deposits, loans, etc. in such regions
Updates, Alerts, Product information,
There is a lack of awareness of financial
Account information, security measures
products
through SMS, App alerts, voice message

There is a high requirement of skilled Transform to Do-it-Yourself

and trained manpower mode of operation

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Manoj Rawat
 To conclude….

1 2 Socio-economic Also achieve

Sustained Profits 1. Financial Inclusion
growth of our
from Rural 2. Food Security
customers
business

1. New Banks will open up new opportunities.

2. Rural Banking will propel the next phase of growth in Indian Banking

3. Create sustained revenue stream for the banks

20 % 80%
Planning Execution

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Manoj Rawat
 Thank you

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Manoj Rawat