BANKING IN THE HINTERLAND BY MATHEW JOSEPH ASST GENERAL MANAGER ANDHRA BANK

ANDHRA BANK BANKING IN THE HINTERLAND BY MATHEW JOSEPH ASST GENERAL MANAGER ANDHRA BANK HEAD OFFICE::HYDERABAD

ANDHRA BANK COMMUNICATION FOR RURAL PRODUCTS & RURAL MARKET ACCESS DATE : 14th February, 2007

ANDHRA BANK DISCUSSION OUTLINE • The Rural Scene in India • Deposit & Credit Schemes Offered By Banks • Communication of Rural Banking Products & Communication through IT & through Rural Institutes • Financial Inclusion • New Initiatives

ANDHRA BANK RURAL SCENE

ANDHRA BANK RURAL BANKING OBJECTIVES • Poverty Reduction • Benefit of Globalization to Grass Root Rural Enterprises • WHY THESE OBJECTIVES : • INDIA GLOBAL AVERAGE 70% Rural 30% Rural 30% Urban 70% Urban

ANDHRA BANK RURAL SCENE IN INDIA • A recent World Bank-NCAER Survey on rural access to finance indicates - • 70% of the rural poor do not have a Bank Account and 87% have no access to Credit from formal source. • India has an extensive Banking Infrastructure comprising over 46,000 Rural & Semi Urban Branches of Commercial Banks over 14,000 branches of RRBs, around 12,000 branches of DCCBs and nearly 1,00,000 cooperatives credit societies at the village level.

ANDHRA BANK RURAL SCENE IN INDIA There is at least one retail credit outlet on average For about 5,000 rural people, which translates into one outlet for every 1,000-house holds. • 30% of population still lives below poverty line. • Indebtedness is the main feature. Rural poverty is linked to unemployment, under employment, low levels of productivity, severe demographic pressures and illiteracy.

ANDHRA BANK RURAL SCENE IN INDIA Out of 6,34,321 villages in India, only 9,000 villages have more than one branch. As on March 2006 each bank branch is catering services to 12 villages. The population per rural branch declined from 2,01,854 in 1969 to 16,000 at present (as on March 2006). The proportion of borrowings of rural house holds from institutional sources increased from 7% in 1951 to more than 60% at present.

ANDHRA BANK RURAL SCENE IN INDIA Despite large network of branches, majority of rural poor remained outside banking purview. Rural poor need credit frequently and mostly in small quantities for consumption purposes. In India, almost 27.09 percent of the rural population and more than 23.62 percent of the urban population are below the poverty line.

ANDHRA BANK BRANCH NETWORK

ANDHRA BANK INDIAN BANKING SYSTEM RURAL BANKING The share of bank finance in the sphere of rural credit has considerably increased since 1950s, agriculture and allied activities being the focal point therein. Credit expansion has been streamlined to accelerate its flow in to the priority sector.

ANDHRA BANK DEPOSIT & CREDIT SCHEMES

ANDHRA BANK VARIOUS DEPOSIT SCHEMES OFFERING BY BANKS • Current Deposits • Insurance Linked Current Deposits • Savings Bank • Insurance linked savings accounts • Insurance linked savings to kids • Non Res. Ord. Act. • Non Res. Ext. Rup. Ac • Fixed Deposit • Cumulative Deposit • Recurring Deposit • FCNR (B) • Resident Foreign Currency (Dom.Ac)

ANDHRA BANK AGRICULTURAL SCHEMES • Kisan Credit Card • Kisan Vehicle Loans • Kisan Produce Loans • Agriclinics • Rural Godowns • Farm Mechanization • Land Purchase scheme • SHG Credit Card-life & health cover to SHGs • Artisan Card • Laghu Udyami Credit Card (LUCC) • Swarojgari card etc.,

ANDHRA BANK RETAIL BANKING • Personal Loans • Consumer Loans • Automobile Loans • Clean Loans • Mortgage Loans • Educational Loans • Housing Loans • Loans Ag. Share & Securities • Gold Loans

ANDHRA BANK RURAL MARKETING The share of bank finance in the sphere of rural credit has considerably increased since 1950s, agriculture and allied activities being the focal point therein. Credit expansion has been streamlined to accelerate its flow in to the priority sector.

ANDHRA BANK WHY MARKETING ? • Today’s banking is not simple selling • Every customer has different need • Every customer has multiple needs • The customer needs are ever changing • The competition is global • Traditional sources of income is coming down • Importance of Profit is increasing rapidly

ANDHRA BANK COMUNICATION PROCESS

ANDHRA BANK COMMUNICATION OF RURAL PRODUCTS • In the present era of aggressive banking publicity plays a dual role of building up the corporate image of the Banks. • Making people aware of various schemes of the organisation. • Banks are committed to the upliftment of the rural masses by building awareness about the services rendered and various products of the banks.

ANDHRA BANK COMMUNICATION OF RURAL PRODUCTS

ANDHRA BANK RURAL PEOPLE EXCLUDED FROM BANKING PRODUCTS • Poor people with little (or) no assets. • People living in remote rural/tribal areas. • People in lower end segment. • Labourers. • People living in semi-urban / urban slums. • Tenant farmers (Oral tenancy), sharecroppers, marginal farmers with smaller holdings. • SC/ST/Minority people with little means. • Destitute etc.

ANDHRA BANK INDIAN POPULATION vis-à-vis BANK ACCOUNTS

ANDHRA BANK FINANCIAL INCLUSION

ANDHRA BANK FINANCIAL INCLUSION - FEATURES • Opening of Savings Bank accounts (N0-frills accounts – with zero balance). • Issue of General Purpose Credit Card (GCC). • Defaulters cleansing Mechanism. • Strengthening SHG Lending. • Appointment of Business Facilitators / Business Correspondents.

ANDHRA BANK FINANCIAL INCLUSION - FEATURES 6. IT Connectivity. 7. Insurance Products. 8. Coverage of Tenant Farmers / share croppers. 9. Mapping indebtedness of the farmers and to identify the unindebted farmers etc.

ANDHRA BANK INSURANCE FOR RURAL POOR • One of the most important components of financial services inclusion. • Most of the poor people not covered under insurance. • To cover the members of SHGs, small & marginal farmers who have taken loans from banks . • As a social security measure, Govt. may examine to cover the poorest of the poor under life insurance, accidental insurance, health insurance – group policies.

ANDHRA BANK RURAL AREAS FINANCIAL INCLUSION • 100% coverage of accounts • Covering the people with insurance products like crop insurance,life & health cover to SHGs • Payment of pensions at villages through smart cards • Provide credit to all through GCC

ANDHRA BANK RURAL AREAS FINANCIAL INCLUSION Inclusion through infrastructures: • Provide drinking water • Provide education • Pucca house /family • Good roads For achieving all the above Banks, Government ,local rural panchayats have to work together.

ANDHRA BANK RURAL AREAS FINANCIAL INCLUSION - IT Installation of ATMs in rural areas . Introduction of Mobile ATMs

ANDHRA BANK RURAL BANKING – IT PRODUCTS Introduction of "Rural Kiosks" • The rural kiosks will provide variety of services like accepting electricity bills, house taxes, up dated market information, birth certificates, land records, internet services etc.,. • Opening of satellite offices.

ANDHRA BANK COMMUNICATION via RURAL INSTITUTES • Banks are educating the poor through rural institutes • Various banks have institutes at different Districts/States • Women are also being trained • Some banks are offering at free of cost.

ANDHRA BANK COMMUNICATION via RURAL INSTITUTES • Training Activities • Tailoring 2. Embroidery • 3. Saree painting 4. Saree printing • 5. Soft toys making 6. Quilts bags making • 7. Jam/Juices making 8. Agarbathi Making • 9. Cosmetics making 10.Detergents making • 11.Candles making 12.Adda Leaf plate making • 13.Papad making on machine 14.Hawai chappals making • 15.Laces making etc • 16. Articles with jute, Banana, Palm fiber

ANDHRA BANK COMMUNICATION via RURAL INSTITUTES • All the rural people to be educated through banks institutes • For each 50-100 villages one Institute • Identify the activities & train the people accordingly to settle in their lives. • Proposed to start a state level training institute funded by 5 banks,AP State Govt. & NABARD

ANDHRA BANK NEW INITIATIVES

ANDHRA BANK NEW INITIATIVES • Entire banking system,State Govts to evolve in improving the financial inclusion. • Education for all concepts are to be implemented wholeheartedly. • Cooperative sector& RRBs which are connected with rural & poor mass to come forward for this social responsibility.

ANDHRA BANK NEW INITIATIVES • Present Kisan cards will be replaced by the High Tech smart Cards, which will be accepted in more agro -input merchant establishments in rural & semi urban areas. • Banks has to bring out credit cards in association with fertilizer, pesticide, & seed companies • Companies should offer discounts to Farmers for encouragement of using cards.

ANDHRA BANK NEW INITIATIVES • More Off -site ATMs to be installed • To facilitate transfer of funds, • Payment of utility bills, • Ordering of Agro inputs • Banks to offer infrastucture loan products to Local people's Organizations (LPO)- Infrastucture like roads, schools, electricity, tanks, storage godowns etc.

ANDHRA BANK NEW INITIATIVES • Rural Kiosks-access banking services through internet or cell phones. • Marketing outlets to offer the deposit and loan products through POS (Point of Sale) terminals installed in such outlets and connected online with the Banks.

BANKING IN THE HINTERLAND BY MATHEW JOSEPH ASST GENERAL MANAGER ANDHRA BANK