icici bank in micro- finance: breaking the barriers nachiket mor, executive director, icici bank san...
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ICICI Bank in Micro-finance: Breaking the barriers
Nachiket Mor, Executive Director, ICICI BankSan Francisco, December 13, 2004
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About ICICI GroupAbout ICICI Group
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
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The ICICI Group today
Largest private sector bank in IndiaLargest private sector bank in India
Largest consumer credit provider in IndiaLargest consumer credit provider in India
Largest private sector life and general insurer in IndiaLargest private sector life and general insurer in India
Building a global presenceBuilding a global presence
Over 10 million retail customer accountsOver 10 million retail customer accounts
Asset base of Rs 1327.80 bnAsset base of Rs 1327.80 bn
Profit after Tax of Rs 16.37 bn for FY04Profit after Tax of Rs 16.37 bn for FY04
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Technology-enabled delivery
Branches
m-Banking
ATMsInternet Banking
Call Center
s
Multi-channel delivery model
Successful migration to technology channels such as ATMs, Internet, mobile banking and call centers Only 27% of transaction carried out at branches ICICI Bank’s annual technology operating expense per
customer estimated to be 5-10% of global banks
Successful migration to technology channels such as ATMs, Internet, mobile banking and call centers Only 27% of transaction carried out at branches ICICI Bank’s annual technology operating expense per
customer estimated to be 5-10% of global banks
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Share of transactions in
March 2000
Share of transactions in
March 2000ChannelChannel
2%2%Internet & mobileInternet & mobile
3%3%ATMsATMs
94%94%BranchesBranches
Call centreCall centre 1%1%
Share of transactions in
May 2004
Share of transactions in
May 2004
17%17%
46%46%
27%27%
10%10%
Transforming channel usage
India’s largest online trading site with about 460,000 customers and 43% of NSE’s online trading volume
India’s largest online trading site with about 460,000 customers and 43% of NSE’s online trading volume
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About ICICI BankAbout ICICI Bank
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
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What is micro finance…
The provision of thrift, credit & other financial services of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards.
Micro credit
Insurance and Investments
Savings
Transfer Payment
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Institutional micro-finance is important for poor people…
SavingsStore excess liquidity for future use
Obtain returns on investments
Keep savings secure and confidential
Avoid negative returns on savings
CreditExpand and diversify enterprises
Helps to reduce risk, improve management, raise productivity
Lower cost than credit from informal moneylenders
Helps increase household income
…and helps smoothen cash flows across time
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About ICICI BankAbout ICICI Bank
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
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Indian banking system has achieved a formidable outreach in rural areas 49% (32,538) of all scheduled commercial
bank branches are rural 31% (131.1 million) of the total deposit
accounts are in rural India 43% (22.4 million) of total credit accounts
are in rural India Number of people per branch has reduced
from 64,000 in June 1969 to 15,000 in June 1997 (all India average)
Source: BSR, March 31, 2001, Table 1.3, RBIDeolalkar, G.H., “The Indian Banking Sector: On the road to progress”, A Study of
Financial Markets
Rural banking in India: progress made
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But large gaps persist in reaching out to the poor… For the rural population of 741.0 million
Population per branch: 22,793 Penetration of savings accounts is below 18%
As against 104% in urban and semi-urban areas
Number of villages per branch: 19 High dependence on informal sources
36% of rural credit from informal sources Dependence even higher for lower income
households: 78%Source:BSR, March 31, 2001, Table 1.3, RBICensus, 2001Mahajan, Vijay”A framework for building a sustainable rural financial system (RFS) for India”, BASIX, www.basixindia.com
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Doorstep banking
Flexibility in timings
Timely availability of services
Low value and high volume transactions
Require simple processes with minimum documentation
High cost of service delivery
Timings and procedures: Rigid and inflexible
High transaction cost for the customers
Expansion of branch network expensive and time taking
Customer needsCustomer needs Present statusPresent status
Banking with the poor is challenging…
…and conventional banking may not be poised to meet these demands
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About ICICI BankAbout ICICI Bank
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
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Identification of potential growth areas…
Urban India is a third of Indian
population
Urban Middle to High income segment is highly competitive
Buyers’ market
…provided compelling reasons to look at low income clients
Underserved market of 741 million
Credit demand estimated at Rs.450.0 billion
Tremendous potential for all financial services
Urban Markets Urban Markets Low Income Markets
Low Income Markets
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Profitable business opportunities exist…
…setting the path for scale up
Market size and potential of low income clients
Market size and potential of low income clients
Low delinquency in pilot phase
Low delinquency in pilot phase
Creating bigger customers for future
Creating bigger customers for future
VisionTo be the largest provider of financial services in India with a ubiquitous presence; while becoming the major banking sector partner in impacting the economic development process in the country
VisionTo be the largest provider of financial services in India with a ubiquitous presence; while becoming the major banking sector partner in impacting the economic development process in the country
Stepping stone to the entire rural market
Stepping stone to the entire rural market
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Conventional Rural Banking
Conventional Rural Banking
Branch based
Branch based
Manpowerintensive
Manpowerintensive
Channeldriven
Channeldriven
Single Product focus
Single Product focus
Our strategyOur strategy Entrepreneur based
Entrepreneur based
Technology
intensive
Technology
intensive
Customerdriven
Customerdriven
Multiple Product
approach
Multiple Product
approach
An innovative strategy was evolved…
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For unraveling the Bottom of the Pyramid (BOP)
Low IncomeLow Income
Middle Middle ClassClass
Middle Middle ClassClass
Rich/ Rich/ SMESME
…through the right channels* Micro Finance Institutions
Franchisees
MFIs
Kiosks
Corporates
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About ICICI BankAbout ICICI Bank
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
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Micro Finance Institutions
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Existing micro finance models lacked scalability
SHG-Bank LinkageSHG-Bank Linkage
BankBank
SHGSHG
BranchBranch
Bank-MFI LinkageBank-MFI Linkage
MFIMFI
BankBank
Ind./SHG/JLGInd./SHG/JLG
•Bank on lends to MFIs based on their capital
•Bank on lends to MFIs based on their capital
•Branches assess credibility of individual SHG and monitor repayment process
•Group formation by NGOs
•Branches assess credibility of individual SHG and monitor repayment process
•Group formation by NGOs
NGO
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…which would leverage pre existing networks
…which would leverage pre existing networks
ICICI Bank realises the potential of the numerous MFIs and NGOs working in different regions of the country Leveraging their potential may be the
solution for expanding in new areas rather than expanding own network
ICICI Bank has been providing Term Loans to MFIs but scale is limited due to the risk absorption capacity of the MFIs
New structures were required…
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Partnership Model: Joining Hands to Scale up
23
Bank
Extends loan to MFIs
Create charge on capital for the loan to MFI
Bank
Extends loan to MFIs
Create charge on capital for the loan to MFI
MFI
Extends loan to clients
Create charge on capital for the loan to clients
MFI
Extends loan to clients
Create charge on capital for the loan to clients
ClientsClients Double counting of capital by bank and MFI
Sub-optimal lending structure
Lower flow of resources from banks
Higher pricing than warranted by riskiness of portfolio
Traditional Model of lending to MFIs…
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…Led to the paradox…
Banking system capable of providing large quantum of wholesale finance to the ultimate clients
Banking System
MFIs / NGOs
ClientsA burgeoning segment with effective demand for finance
Grass-root agencies capable of providing origination and supervision support in a cost-effective manner
…of supply being a small fraction of demand for finance
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We decided to resolve the paradox…
Need for a structure that Uses capital parsimoniously Permits all the costs of the operation to
be recovered in a commercially viable manner and incentivises growth
Preserves the incentives of the originator (of the portfolio) to maintain portfolio performance Careful selection of borrowers Ongoing supervision and information
management…through a structure that is capable of massive scaling up
…through a structure that is capable of massive scaling up
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…And evolved the Partnership Model
Provider of loan funds, mezzanine equity and technology
Lends directly to clients with risk-sharing by NGO/MFI
Decides pricing and risk sharing by NGO/MFI based on historical data
Undertakes loan origination, monitoring and collection
MFI provided OD limit by Bank equivalent to amount of risk sharing, which is drawn in event of default upto specified limit
Transfer of economic capital from Bank to MFI
Structure separates risk of the MFI from risk of the portfolio
Banks MFIs
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Model 1
ClientsClientsBankBank NGONGO
Lends 100
No liability No consideration
ROI payable
Mobilisesclients
Capital allocation Against UL
On 100
Efficient use of capital Y
Incentive alignment N
Not constrainedby NGO
b/s
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Model 2
ROI+service fee
ClientsClientsCapital Allocationon 100
r.t MFI rating
On-lends 100
CapitalAllocation
r.t UL on 100 s.t constraint of capital
on MFI b/s
BankBank MFIMFILends 100
ROI
Efficient use of capital N
Incentive alignment Y
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Partnership Model
ClientsClients
Lends 100
not constrained by MFI b/s
BankBank MFIMFI
Provides OD limit as a% of 100 advanced
Commitment feeon OD and penalrate in the EoDK allocation
AgainstPortfolio (100) and
OD limit to MFI (x% of 100)
Servicefee
Applicable ROI
Origination &supervision
Efficient use of capital Y
Incentive alignment YOD limit provides MFI the ability to share risk & catalyse lending without corresponding increases in its equity
capital
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The Partnership Model–key differentiators Intermediary assumes fraction of the
credit risk (to the extent of risk sharing), leading to reduction in capital required
Bank prices on basis of underlying asset rather than rating of intermediary Transition from ‘lending to organisation’ to
‘asset-based lending’ ROE of intermediary significantly improves
with portfolio quality remaining unchanged Scope for leverage of 10-12 times compared
to 2-3 times previously
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Partnership Model: A Win-Win proposition Marries the core competence of
NGOs/MFIs with that of banks Social mobilization skills with finance Lending directly to the borrowers through
innovative channels Model overcomes constraints of
NGOs: Complete dependence on donor funding
MFIs: Capital Adequacy requirements
A sustainable solution for Micro-finance
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Securitization: Creating a Secondary Market for Micro-
finance
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Credit Enhancement
Credit Enhancement
StructureStructure
Securitization ICICI Bank identifies portfolio
based on fulfillment of minimum criteria and past portfolio performance
MFI continues to collect receivables from the borrowers
MFI equity leverage reduced enabling it to originate further assets
MFI provides ICICI a credit enhancement in the form of a FLDG
FLDG is based on expected losses in the loan portfolio
Detailed study of past portfolio data conducted to arrive at expected loss rates
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ParametersParameters
EnablersEnablers
Securitization: Pricing Advantage of
differentiating between the financial and operational risk of the MFI
Credit Enhancement improves rating of portfolio and enables a highly competitive pricing
Past portfolio performance and expected loss rates
Quality of the governance, management, operating and management information systems of the MFI
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On-tap securitization
ICICI Bank provides the MFI an Advance Purchase Consideration Limit with which the MFI can build assets
Once created assets are assigned to ICICI Bank
MFI can continue to build assets and assign to ICICI Bank on a a regular basis
MFIs are able to scale up their outreach while maintaining a healthy debt-equity ratio
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Showing the way…
Potential of creating a large secondary market in India for micro-finance receivables Over 300 commercial and co-operative
banks with substantial ‘priority sector’ requirements
Mutual Funds perceiving the assets as AAA securities
Bonds may be issued against the securitized assets of micro-finance….by creating linkages for MFIs to capital
markets
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Sectoral initiatives to deepen the market
The entity would provide quasi equity, credit wraps and technical & financial services to MFIs
The entity would provide quasi equity, credit wraps and technical & financial services to MFIs
Creating intermediary Financial Institution to provide assistance to Indian MFIs
Enabling access of MFIs to mainstream capital/ debt markets
Enhance resource flows from commercial banking sector
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ICICI’s achievements in this field…
ParticularsParticulars SHG / JLG positionSep ‘04
SHG / JLG positionSep ‘04
Villages covered 8,781
Groups financed 39,740
No of Clients 456,712
…made possible through wide acceptance of the new models by MFIs
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…and commitment to scale up!
100000
30000020000
0
400000
500000
600000
700000
800000
Mar’02
Mar’03
Mar’04
Mar’05
920,000
175,39072,980
244,570
Number of clients
900000
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Developing synergies through Corporate Partnerships…
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CorporateEmployees
CorporateEmployees
Working closely with the Corporate / its Foundation
Low wage employees /contract labourers remain uncovered by formal banking channels
Large village communities existing near corporates establishments
Self Help Groups
Exploring Micro-Credit with Corporates…
Corporate Foundation
Corporate Foundation
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…Implemented Through a Partnership
ICICI BankICICI Bank• Provides
developmental expertise
• Recommends proven intervention strategies
• Identifies NGOs to serve as resource partners
• Can provide credit for micro-financial services
CorporateCorporate• Funds the
program at their chosen location
• Builds capacity in their organization to manage program on an ongoing basis
• Scales up over time to increase impact
GIVE FoundationGIVE Foundation• Corporate
philanthropy services acts as advisor in process
• Facilitates relationship between company and NGO
• Helps build detailed implementation plan and budget
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In summary…
BeneficiaryBeneficiary
SHG
Entrepreneurs
Contract Labourers
LowWage labour
Educated Unemployed
MicrocreditMicrocredit
KiosksKiosks
Housing Loan
Housing Loan
InsuranceInsurance
Provide access toProvide access to
Household assetsHousehold assets
2 wheeler loans2 wheeler loans
Corporate Partnership
Corporate Partnership
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Internet Kiosks
Bridging digital divide through…
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And creating an alternate channel…
Desire to reach audiences not accessible through Micro financeLower cost of setupFaster pace of outreach
Desire to reach audiences not accessible through Micro financeLower cost of setupFaster pace of outreach
Internet Kiosks – Harnessing technology for rural reach
Internet Kiosks – Harnessing technology for rural reach
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Internet Kiosks…
Connects rural India to the world
Internet KioskInternet Kiosk
Connectivity
STD/PCO: •Enabling voice communication
Printer & Other Accessories : Enabling desk top publishing and other similar work
Kiosk Operator:•Entrepreneur•Provides commercial services
Multimedia PC with Power
backup
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Concept of a kiosk
Shared Services PointIncludes village economy in the services
distribution Enhances local economy’s access to financial
servicesFinancial viability achieved at reasonable cost
to consumerSet up in partnership with Government, NGOs,
Corporate
Entrepreneur driven model
Invests some capital in the businessFunctions as the ICICI Bank Franchisee in the
village
Delivery of Financial as well as non-Financial services
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Kiosks can offer financial services
Savings and Remittances
Life & General Insurance
Stocks, Bonds and MFs Credit
Commodity Derivatives Payment Gateway
Agri-Extension Tele-medicine
Education E-Governance
Communications Entertainment
as well as non-financial (partner services)
Financial ProductsFinancial Products Non Financial ProductsNon Financial Products
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The drivers of Rural Internet Kiosks
entrepreneurs & multi-service delivery
The film
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•Unfamiliarity with computers
•No experience in managing business
•Insufficient funds to start business
•Unfamiliarity with computers
•No experience in managing business
•Insufficient funds to start business
•Inadequate products & services
•No Internet Connectivity
•New backend required
•Inadequate products & services
•No Internet Connectivity
•New backend required
Unfamiliarity with products New channel Customer Customer
ProcessProcess
Entrepreneur
Entrepreneur
Challenges faced
and how they were resolved
52
•Success contingent on Entrepreneur
•Sustained marketing, sales support crucial
•Success contingent on Entrepreneur
•Sustained marketing, sales support crucial
•Implementation partners’ buy-in essential
•Connectivity is the key
•Implementation partners’ buy-in essential
•Connectivity is the key
Prefer convenience of Kiosks Demand for high value products Customer Customer
ProcessProcess
Entrepreneur
Entrepreneur
Learnings from the channel
Service and convenience wins hands down
53
•Over 10,000 kiosks over the next year
•Our services will be offered in 2000+
•Over 10,000 kiosks over the next year
•Our services will be offered in 2000+
•Extends outreach at low cost
•Individual lending models
•New products: remittance linked credit
•Extends outreach at low cost
•Individual lending models
•New products: remittance linked credit
Financial advisory services Credit history available Customer Customer
Microfinance
Microfinance
NetworkNetwork
Implications for future
convenience, flexibility, a complete financial solution
54
ICICI Bank’s kiosk network is increasing…
State TotalMaharastra 94
Kerala 36
Tamil Nadu 224
Andhra Pradesh 539
Uttar Pradesh 21
Gujarat 8
Karnataka 27
Grand Total 949
Kiosks offer low cost distribution capabilities for our products and
services, reaching out to the rural population
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Agri-input dealers
Fuel-outlet owners
Auto dealers
CA/ Business
• Personal balance sheet scoring model
• Risk sharing by franchisee
• Dealing in retail assets – home, 2 wheeler, auto loans
•Insurance cross sell
• Personal balance sheet scoring model
• Risk sharing by franchisee
• Dealing in retail assets – home, 2 wheeler, auto loans
•Insurance cross sell
Franchisee rolesFranchisee roles
Origination
Credit scoring
Documentation
Collections
1234
Channel conceptChannel conceptChannel partnersChannel partners
Credit franchisee- adapting structured finance for rural segment
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Disability
…and meeting complete financial needs
Life Cycle Events
Death
Property
Covariant
Health
Certain Highly Uncertain
Degree of Uncertainty
Very Large
Small
Relative Loss / Cost
Disability
Savings, credit and
investments
Insurance
Savings offering only
partial coverage
*Framework by Accion
Moving beyond credit…
57
Through comprehensive product suiteInsurance (Ins) – Life
and General
Investments – Mutual Funds designed for Rural
Channels
Home InsHome InsWeather InsWeather Ins
Tractor InsTractor InsAccident InsAccident Ins
KiosksKiosks
Micro Micro FinancFinanc
ee
Life InsLife Ins
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Parameters Covered
Precipitation Rain Snow Hail
TemperatureWindSunshine
Nature of losses
Production lossRevenue lossAsset lossLoss of livelihood
Offering weather insurance for losses due to vagaries of weather…
Cover is provided for deviations from the optimum range required
59
Critical Illness: An innovation for BOP Major concern at time of illness – loss of
immediate income rather than cure Cure not even mandatory in all cases
Kidney failure – continue to operate on one kidney
However convalescence period means zero income - disaster in a rural, non savings oriented society
Product tides family over this crisis by providing financial support during this period
Payout made on mere diagnosis and does not require money to be spent on treatment
Traditional health product allowing treatment also available for higher cost
60
Securing rural lives through Insurance
Life Insurance
0.2 mn members of Micro-credit Foundation of India covered by ICICI Pru/ ICICI Lombard
0.2 mn members of Micro-credit Foundation of India covered by ICICI Pru/ ICICI Lombard
62.5 mn rural customers insured by ICICI Lombard covering mainly Personal accident as well as emerging products such as Weather and Health Insurance
62.5 mn rural customers insured by ICICI Lombard covering mainly Personal accident as well as emerging products such as Weather and Health Insurance
General Insurance
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About ICICI BankAbout ICICI Bank
Agenda
ICICI Bank & Micro-financeICICI Bank & Micro-finance
New Revolutionary ChannelsNew Revolutionary Channels
Micro-finance in IndiaMicro-finance in India
What is Micro-financeWhat is Micro-finance
Going AheadGoing Ahead
62
Very Few MFIsEconomically BackwardLow level of micro credit penetration
Very Few MFIsEconomically BackwardLow level of micro credit penetration
Scaling up access to BOP markets…
Large no. of MFIsEconomically VibrantHigh micro credit penetration
Large no. of MFIsEconomically VibrantHigh micro credit penetration
…Requires reduction of geographic asymmetries and increasing depth of outreach…
…Requires reduction of geographic asymmetries and increasing depth of outreach…
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And meeting finance needs of urban India also…
India’s urban population is 285 million
27.8% of India’s population is in urban areas
11% of world’s urban population is in India
3 of the 10 largest cities in the world are located in India
35 cities have population of more than one million each
Urban poor increased from 60 to 76 mn during 1974-94
64
Productivity Frontier(Financial and technological innovation)
Limitedservices tolimitedcustomers Credit Bureau
Technological innovation
Allied Interventions
Multiple delivery channels
Scaling up would require exploring new horizons
65
Establishing Credit Bureaus…Maintains individual client histories
Credit decision based on scoring models – risk based lending
Moving from group based lending to individual based lending model
Tracking clients through life cycle and offering customised solutions to meet life cycle needs
…would enable systematic expansion and deepening of the BOP markets
66
Pollinating the countryside with entrepreneurs…
Identification of potential entrepreneurs willing to partner with ICICI Bank
Identification of potential entrepreneurs willing to partner with ICICI Bank
Training the entrepreneur on processes and assessing their capabilities
Training the entrepreneur on processes and assessing their capabilities
Providing funds, know how & support for initiating operations
Providing funds, know how & support for initiating operations
Putting in place a fool proof system & robust processes for service delivery
Putting in place a fool proof system & robust processes for service delivery
Providing the entrepreneur technical & financial support for delivering service
Providing the entrepreneur technical & financial support for delivering service
Entrepreneurs
Training
Infrastructure
Processes
Service Delivery
…for establishing MFIs, kiosks or becoming franchises in order to expand outreach to under served areas
67
Uncoupling of bank and front-line service operationsAppointing authorized agents Opening accounts through agentsEnabling (card-based) transactions through agents, merchant outlets, ATMs
Lack of bank branchesNo incentive to increase outreachCustomer perspective
Unable to fulfill KYC guidelinesNeed for interacting with multiple institutions
Need Need
VisionVision
Implementing hybrid agent-linked models…
68
Agents loads value onto customers card by transfer from agent account and collects cash
Direct Card Load
Indirect Card load
Collections
Payments
Value transferred to customer card from the customer’s bank account at branch
Merchants transfers value from their own card to the agent and receive cash in return
Value transfer from one customer to another in payment for services rendered
…To provide universal access to finance
Regulator support required for implementing the pilot project
69
Allied Interventions – Mass Retailing
CompanyCompany• Piggy rides on
the MFIs distribution channel
• Ability to customise products
• Cost effective reach to the under served segments of society
MFIMFI• Procures bulk
goods and commodities from companies at discount
• Bundles with micro loans to members
• Transforms into a logistic agency
ClientsClients• Access to goods
which were not available earlier
• Procures goods at a discount to the market rate
• Repayment in easy installments
MFI becomes a channelising agency for distribution of all kinds of goods and services required by the members
MFI becomes a channelising agency for distribution of all kinds of goods and services required by the members
70
Allied Interventions – Livestock Productivity
Spandana
NDDB
ICICI Bank Ltd.
Extensio
n
Facilitating fodder availability
Sourcing high yielding breed
Co-ordination for artifical insemination
Training for selection of good breeds
Facilitation
Majority of micro loans are for
purchase of livestock
71
Allied Interventions -- Nutrition
Integrating microfinance with nutritional communication / interventions could lead to improved health outcomes for the community
Presence of over 1 mn micro finance groups of women provides an opportunity for focussed behavior change communication vis-à-vis nutrition practices
72
Reducing the cost of cash handling Supporting development of a Low Cost
ATM – will cost around $1000 Use of Internet banking Exploring the use of mobile phone/card-
based technologies
Tobacco Board Case
Leveraging technology to reduce transaction costs
73
The Road Ahead…
Leveraging strong delivery capabilities to provide all financial services like insurance, savings, micro-investments, etc to the BOP markets
1000 Franchises1000 Franchises
40,000 internet kiosks40,000 internet kiosks
40 million clients40 million clients
630,000 villages630,000 villages
200 MFI partners200 MFI partners
74
Disadvantaged
Population
Towards a larger dream…
Buy - out of loan portfolios of MFIs
On tap securitisation of loan portfolios
Partnership with MFIs/NGOs to deliver micro credit
KiosksFranchises
MFI/NGO/Kiosks
Commercial Banks/ Regulatory Authorities
Leveraging strong delivery capabilities to provide other services like insurance, savings, micro-investments, etc
Creation of Wealth
...For All!
75
Thank You
76
Kisan Loan Card
Tobacco farmer issued a card
Limit set on card on the basis of inputs availed by farmer & production needs
Farmer has access to funds through cash dispenser
Excess funds instantly swept to deposit account of farmer
Tobacco sale proceeds offset against the loan availed
77
Expected Benefits to Stakeholders
Benefits to Tobacco Growers•Instant cash availability •Anytime access to money•Easy registration and renewal•Card acceptance in the future can be scaled up to other merchants
Benefits to Tobacco Board•Increased operational efficiency in loan disbursement and recovery•Reduced paper work•Potential savings at the time of fund remittance to farmers
78
Teba Bank
Retail bank targeting low income households in rural and small town southern Africa
Developed a low cost handheld mobile Point-of-sale (PoS) device to be placed with an agent Wireless device with built-in GSM modem,
card reader and micro printer Customer can use his debit card at this
terminal to deposit cash, withdraw cash, seek balance enquiry and transfer funds
Physical cash is deposited/disbursed by the agent The agent’s account is debited/credited
simultaneously.
A typical agent would be the local grocer