Professional Documents
Culture Documents
Consumer finance Robust industrial investment outlook Increasing internationalisation of India Rural banking
Access to finance
Demographic patterns
Agriculture
32%
20%
Rapid growth of services sector Leveraging high quality education and vast talent pool Sublimating Indias knowledge capital to create economic value
FY2002 50 3
FY2010 Estimate 98 10
33 1
Rising affluence and growth of the consuming class NCAER data for top 24 cities in India shows migration to higher income levels growing at over 40% per annum
Middle income Rs. 90,000-5,00,000 per household p.a. High income > Rs. 5,00,000 per household p.a.
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FY2005E
Rural 16 0.3
Urban
35 3.6
Rural
28 1.2
17 0.7
43% of households in middle and high income groups from rural India in 2005 Their number has grown by 79% from 1996-2005
Figures for 2005 are estimated Middle income Rs. 90,000-5,00,000 per household p.a. High income > Rs. 5,00,000 per household p.a.
China
Brazil
8
23
30
36
26
35
35
26
37
35
25
16
29
Spread from large cities to second and third tier urban centres
Increasing affordability
Decline in interest rates and rising incomes have allowed younger to take loans for acquiring assets
Key transformational trends Increased deployment of technology De - leveraging & organic capital generation Constantly improving quality standards
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Inward remittances of about US$ 22 bn Seeks strong India linkage and ethnic familiarity Demands world class service Potential for credit and liability products and transaction services
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agriculture constitutes only 20% of Indias GDP, rural economy (agri + non-agri) constitutes about 50% of GDP1 population of about 780 million2 with limited access to financial services
Population per bank branch: 22,793 Informal credit in India amounts to US$ 82bn3 A high proportion of agricultural lending is from informal sources3
Rural
1. Source: CERG (Consumer & Economic Research Group) 2. Source: Tata Statistical Outline 3. Source: Mckinsey Global Institute May 2006
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Special needs
Doorstep banking Flexibility in timings Low value and high volume of transactions Limited background information and proof of income Require simple processes with minimum documentation
High costs of delivery through traditional channels High transaction costs Dependence on documentation and financial history Inflexible procedures
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Multiple products
Low-income customers require full range of services: credit, transaction banking, investment and risk mitigation
Multiple channels
Using a combination of channels to completely cover selected areas To reduce average operating costs
Rapid-scale up
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District cluster branch Crop cluster branch ATM Franchisee Kiosk (every circle represents 8 kiosks) MFI Branch Post Office Channel
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Reliance on branch channel and human intervention Relatively high unit cost of delivery given small transaction sizes
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Acquire product knowledge and comprehensive product suite Build distribution expertise
Manage new products and associated risks Operate in increasingly complex environment
Deploy technology effectively to ensure return on investment Develop a flexible model that allows for rapid scale-up at optimal cost
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In summary
Driven by consumer finance, demographics, industrial resurgence, increasing internationalisation and deeper penetration of financial services
New channel architecture Building partner relationships for outreach Full suite of products and services
Is essential to meet the larger objective of supporting economic growth Builds a new engine for stakeholder value creation
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Thank you
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