A Brief Background Of

Professionals Bank of India Ltd

SALIENT FEATURES OF PBOI LTD. : Mid Sized Bank in the country. A unique differentiated positioning strategy. Focused on emerging sectors of economy. Investments in innovative business processes . Consistent customer service. Rapid growth.

THE PRESENT SCENARIO : 57.2 % growth in Profit after Taxes. A two prolonged strategy. A bank with pan India presence. 150+ branches across India and 200 ATMs. An Inclusive and Social Banking Group institutionalized. Branch led Community Programs, for educating the local community.

THE FUTURE PLANS OF PBOI Roll out a Financial Inclusion strategy in order to : comprehensively cater to financially excluded segment. maintain profitability insignificant dilution of Risk profile. create a competitive advantage. Meet its PSL subcategories targets fully through its FI plan by FY 2012.

THE KEY DRIVERS OF THE STRATEGY SHOULD INCLUDE: Roll-out of the Strategy Quality of the portfolio Full fledged technology Driven Strategy Comprehensive Product offerings Credit Products Manageable Manpower Deployment and Cost Partnerships A marketing Strategy

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WHAT IS FINANCIAL INCLUSION ?

FINANCIAL INCLUSION

Financial Inclusion means ensuring access to costeffective appropriate financial services and products in a fair and transparent manner to all sections of the society, including to vulnerable, poor, unbanked, remotest villages at an affordable cost.

REASONS FOR FINANCIAL EXCLUSION For Rural Exclusion: Underdeveloped Infrastructure The opportunities cost for Rural Customers travelling to a branch Irregularity of Income For Urban Exclusion: Irregularity of Income Lack of time to visit bank branches Illiteracy Common Reasons: Socio-cultural factors (illiteracy, language and mistrust & unfamiliarity with financial products, lack of sufficient KYC/credit history/profile High costs associated with low value transactions and a limited rural product suit

BUSINESS STRATEGY FOR PBoI Ltd.

Target customers

Rural

Urban

Villages with population<2000

Villages with population>2000

Self employed

Paid employed

salaried

wages

OUR HYBRID STRATEGY FOR RURAL FINANCIAL INCLUSION

Banking Correspondents Bank SHGs/NGOs/ Kisan Manadalis Rural Customers

FUNCTIONING OF THE RURAL FINANCIAL INCLUSION STRATEGY For villages with population< 2000, financial inclusion only through: banking Correspondent model. providing loans through SHGs and NGOs. Bank on wheels. For villages with population> 2000 and highly developed (semi urban), financial inclusion through: Banking Correspondents SHGs/NGOs Rented brick and mortar branches, if needed Monitoring process:A structured reporting format will be made available to the branches and BCs for meaningful compilation and analysis of data. Similar structured data compilation exercise at the central level, to ensure that outcome of the financial inclusion is up to the mark.

STRATEGY FOR URBAN FINANCIAL INCLUSION

Bank S Free financial advice Low cost micro finance Paperless services No Frill accounts E R V I C E S

Own branches

NGOs

Client Unions

Customers

Extent counters on bus stops, railway stations,

Public agencies

FUNCTIONING OF THE URBAN FINANCIAL INCLUSION STRATEGY I. Segmentation of the Urban excluded population in two categories: 1. Paid employed a) Salaried (are financially included people) b) Wages (Construction workers, Market hamalis, coolies etc..,) 2. Self employed (Rickshaw pullers, street vendors, Hair dressors etc..,) II. Implementation of the segmentation:1. Develop a protocol for segmentation & get information from City Development Plans. 2. Register new clients as per the segments. 3. Develop and operate through customized products based on needs. III. For Financial Inclusion, we will need to:1. Work with client associations in consultation with NGOs, public agencies and other local institutions. 2. Garner support from client associations in preparing the Data Base. 3. Plan our activities to be implemented after the work hours of segments, with a predefined schedule, and 4. Development of documentation procedures for the same.

SALIENT FEATURES OF THE STRATEGY Harnessing the local Knowledge Technology in intermediation Internet banking A six-digit code toll-free number to the customers for day-to-day inquiries Convenient operating time, suitable to the excluded segment Tailored according to the income and consumption pattern of the target segment a) No frill AccountsEligibility- pensioners, agriculture labors, employees of unorganized sector, students, self-employed person, member of SHGs, rural folk etc. ( Zero minimum balance requirements will be there) b) Systems like ATMs, mobile banks, Kiosks, Biometric cards Customized Product Design- according to the changing needs of the customers, like:- Daily and weekly loans to purchase vegetables from wholesale mandis and daily saving facilities to the Vendors (Self employed) - Consumption and health loans, by nature of their work, micro savings to address the \ issues of low income groups (wage earning segment) Creating synergy with various players like Govt. agencies, NGOs etc.

HURDLES TO FINANCIAL INCLUSION

High Operating Cost. Cost of Loan Losses Difficulty in Reaching to The Masses High Risk of NPAs High Cost of Service Delivery Lack of Knowledge and awareness of The Financial Products and Services Available Poor Response from the customers Greater in-reach and out-reach of the unorganized money lenders

OVERCOMING THE HURDLES TO FINANCIAL INCLUSION THROUGH Increased Bank-SHG Linkages, technology for connectivity Adaption of Policies for managing SHGs to manage High Risk Use of Technology, Subsidies/Import duty exemptions on POS Devices, use of Wireless and Mobile Technology to reduce Cost of Service Delivery The low cost of BCs are comparatively, compared to cost of brick and mortar branches. Bank costs: Technology infrastructure A/C maintenance Transaction Risk management Other- administrative BC costs: Biometric hand-held devices( -INR 25,000 purchase -INR 9000 rent) Smart Cards-INR 112 per card Mobile Handset, connectivity Other-operational-manpower, administrative

The Delivery of Financial Education through Government sponsored publicity campaigns through all media, Partnership in Education cum-Promotion campaigns by banks, Loan melas, exhibitions at colleges, Kisan mandlis, e-chopals etc.,

CONCLUSION
Bright Future of Sustainable Financial Inclusion along with greater profits, because:1. Declining poverty 2. Increasing discretionary incomes of households 3. Innovative financial inclusion techniques 4. Growth of Entrepreneurship across the country 5. increasing liberalization and higher economic growth 6. The trend of increasing commercialization of agriculture and rural activities

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