The third quarter results for the Indian banking industry were in line with our expectations with the Net interest Income growing by 12% and flat growth in PAT on year on year basis for banks in KRC Universe.38% from 34% y-o-y basis.
The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking. which may lead to large savings, large number of banking services to be provided are day-by-day increasingmore than 90% of the savings come from the house hold sector.
NABARD ensures the credit growth to rural sector About 500 -600 million people in India do not still have bank accounts
Focus on non-farm rural business Reach out to the needy through Easy and affordable financial services through the best Expand network throughExclusive focused attention to the financial inclusion of unbanked rural area
on national mission on financial inclusion replicating the successful plots Undertake a massive programme for
operators as the agents of the business correspondents, helps in building rural entrepreneurs
for wage disbursement with finger print authentication and local language interfacethat is people friendly and empowers the poorest labour to assert his/ her rights. for signatures and handheld devices and other innovate technology needs to be explored.
(agriculture, SME & government securities).
1. STRATEGIES BY RETAIL BANK TO VENTURE IN RURAL MARKETA PRESENTATION
4. INDIAN BANKING SECTOR• Focus on Customer service• The hardening of bond yields will have negative impact on Q4FY10 results of banks especially PSU banks.• Focus on KYC Norms• Structural improvement in the CASA.• New players in the banking sector .• At end-March 2010, 50.6 million no-frills accounts were opened by the banking system.
5. RETAIL BANKING IN INDIA
6. KEY FACTORS DRIVING THE GROWTH OF RETAIL BANKING• Focus on understanding customer needs or preferences• Customer-specific products or offerings on a regular basis• Improved processes and bundled product offering• Any where, any time banking• Faster service• Customer-driven strategies
7. SCOPE FOR RETAIL BANKING IN INDIA• Increase in economic activity• Increase in the purchasing power.• India has 200 million households and 400 million middleclass population• Nuclear family concept is gaining much importance
8. STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS• Constant product innovation• Quality service and quickness in delivery• Introduction of new delivery channels• Tapping of unexploited potential• Infrastructure outsourcing• Detail market research• Cross-selling of products Future
9. RURAL BANKING –THE CURRENT STATUS
10. THE CURRENT STATUS• Started since the establishment of banking sector in India.• Mainly focus upon Agro sector• There are 32,528 rural bank offices and 20,771 semi-urban bank offices in the country• SBI and NABARD• Rural population of about 780 million has limited access .• Current demand for credit in rural India is around Rs. 1, 50,000 Cr.• Commercial bank branches cover only 7 % of rural sector and large market is still untapped.
11. SUGGESTIONS &RECOMMENDATIONS
12. MARKET SEGMENTATION• Geographic segmentation. ▫ Rural market• Demographic segmentation. ▫ Male – Female ▫ 18 – 60 years ▫ Literate & Illiterate• Psychographic Segmentation. ▫ People looking for savings• Behavioural segmentation. ▫ Loans ▫ Financial help.
13. NEED OF THE RURAL MARKET
14. PORTER’S FIVE FORCE MODEL Bargaining power of customers Threat of new entrantsSwitching to another product is simple High fixed costsCustomers are price Government sensitive restrictions or legislationCustomized products Industry rivalry Improving product differentiation Creatively using channel of Bargaining power distribution Threat of of suppliers High Exit Barriers substitute product The product is Microfinanceextremely important institution to buyers SHG’s There are no substitutes
15. WHAT IS NEEDED FROM THE BANKS?• More financial inclusion• Micro credit / SHG’s• Use of technology• Alternate Distribution channels• To extend banking services at customers convenience• Improvement in service levels in rural area
16. WHAT IS NEEDED FROM THE GOVERNMENT?• An authority for Rural Banking• Road map• Establish open standard for technology to be used• Financial literacy and credit counselling.• Strategic action plan for remittance facility for both inter banking/ intra bank and post office
17. STEPS TO BE TAKEN• Expand reach ▫ Tie up with India post. ▫ Partner with NGO/ MFI.• Kiosk banking.....Offer convenience ▫ Banking services at mini branch. ▫ Making kiosk. ▫ The bio metric authentication. ▫ Improved business.
18. STEPS TO BE TAKEN• Educate customers• Be cost effective ▫ Low cost ATM. ▫ Costs just 1/ 10th that of the traditional ATM. ▫ Transfer of funds from NREGA. ▫ e – governance model• Innovate and adopt technology ▫ Smart cards, biometrics scanning ▫ Improve the service delivery.
19. STEPS TO BE TAKEN• Focus on microfinance ▫ 40% in priority sector lending ▫ MFI lending provides 10-14 % return as against 6-7 % in government instruments