Long Term Plans for Agriculture NITI Aayog Ropes in States
While launching its banking services in New Delhi, Samit Ghosh, Managing Director, Ujjivan Small Finance Bank spoke to R&M on its rural footprint
You are focussing on serving unserved, underserved and rural customers. RBI mandates that at least 25 percent of bank’s branches have to be in the unbanked rural areas. So, would you be Just FulfillInG tHE 25 pErCEnt criteria or would go beyond that?
We started as an urban microfinance institution. After that we expanded to the semi-urban areas. Today, our customer base is equally divided into urban, semi-urban and in rural areas. Already one third of our customers are based in the rural areas which are served from the semi-urban branches. But, we are required by as per RBI guidelines, 25 percent of our branches would be in the unbanked rural areas. Those are pure rural branches.
Would you go through business correspondence moDEl or tHrouGH Full flEDGED bank branches?
No, we are going to rural customers directly with full fledged rural branches. The Reserve Bank of India (RBI) has liberalised the branch authorisation policy and also widened the role of bank boards, making them responsible for complying with the new guidelines. The RBI removed the restriction on tier-I branches, which was earlier linked to the number of branches opened in the unbanked areas. With new guidelines in place we are in a position to go for full-fledged bank brances model and adopt business correspondence if required.
The small banks subsidiaries are being merged with their parent banks in the current scenario, and they charging account holders for their services. Whereas, you are providing all customer services with zero fee. So how would you run the bank?
We don’t have minimum balance requirement. Our strategy is to encourage customers to open more and more bank accounts for all the transactions.In our study, we found that the minimum balance charge is the point of big resistance with the customers. But, if you make the process of transacting with the bank very easy, then people will transact and keep balances in the accounts. That’s our strategy. Let’s see how it works.
Samit Ghosh, MD and Ittira Davis, COO of Ujjivan SFB unveiling the debit card