Innovation in Rural Banking in India – Business Correspondents

Just visualize this scene. An interior place – say a village in India. An illiterate looked villager comes to a person, who pulls over a mobile phone, and a biometric scanner from a bag, punches few numbers and hands over some money to the villager and walks away.

rural bank

It’s no more an astonishing scene in villages these days. This is a good initiative taken by Reserve bank of India on bringing the unbanked population into the fold of banking.

The tech savvy person who gave the money to the villager is called the bank business correspondent. They help take banking to the door-to-door step of people in interior places India. They help mostly illiterate Indian villagers understand the basics of banking.

Many business correspondents manage two or sometimes even more jobs, but some make a living from doorstep banking.

State bank of India is the pioneer in this great initiative. Just assume in a span of two years, a single business correspondent can have 7200 customers. Yadav, for from Madhya Pradesh for example. This 40 year old was part of non-medical staff in a private hospital. Two years ago he has come across a SBI add for business correspondent, After a few phone calls, he is in a training session of how to open accounts, and operate biometric machine he is one the job. Right now, he has 7200 customers as mentioned.

It seems the job is not so difficult. Though the villagers cannot understand the banking initially it would easy for both the correspondent and the villager down the line.

Right now we have nearly 2,00,000 business consultants serving from fewbanks. This going to turn up in a great way coming further.




Marketing with Green and Social responsibility

These days most of the company’s advertising campaigns have one “strategy” in common – ‘go green’. Definitely going green is one of the key differentiating factor for any company, but a company should understand what actually “green” is about.

Think Green

  • The grand ideas such as saving the rainforest, or slowing down the melting of polar ice caps can be tagged as green, but it is more important that how a company will connect it to customers, mainly with respect to connecting sustainability with brand equity.
  • When a company communicates it sustainability as green it should focus on sustainability, it should focus on it core principle rather than its other issues. Gillette, Pampers and Duracell are changing the way they advertise ‘green’. For example Pampers marketing its dippers saying that absorbency is better, it was chlorine free and perfume free etc.
  • Another initiative is by Unilever’s ‘Project Sunlight’. 70% of Unilever’s carbon footprint is related to consumer use. Through films (mainly 4 minute videos) it hopes to spark and motivate consumers to change the way they consume. Though there has been a tough debate on whether this would really work to change the insights of people, the answer is ‘yes’ by many marketing gurus
  • In this line, the FMCG giant P&G are putting sustainability at the center of marketing efforts in line with environment, waste and social responsibility.

Indian Defence Strategies – Time to focus

Points highlighted by PM in Combined Commanders Conference lately has some points of concern with respect to national security.

India has to tackle to following challenges

  • Defence acquisitions in light of economic slow down.
  • There are changes in strategies followed by US and China in Asia Pacific region.
  • Recent global crisis has made US gain more control on economies of Asia.
  • There is a significant rise of China in terms of security and economic aspects.

Agni missile

The above issues require our armed forces to regulate strategies accordingly. We have to learn from the mistakes of the Russian and American arms race. Indian and Chinese are in similar situation like that of Russia and US before in terms of defence and arms.

What India has to do?

  • Strengthen nuclear areas and second-strike capabilities (to withstand nuclear attacks)
  • Concentrate on raising elite forces to undertake special operations that can be to strike on terrorist camps or protect national boundaries.
  • Improve in-house technology drive by private sector as partners cutting down defence import bills like that of US – style military industrial complex (an understanding between the national armed forces and bureaucracies). The recent comments by former Army chief General V P Malik mentioning that “India has fractured the policy-making on national security matters and it is guided by bureaucrats who are totally unaware of defence matters” a serious concern at this point.
  • Finally, in the era of globalization, it is very important to note that no security strategy can succeed without an appropriate foreign policy. Pakistan for than matter has maintained a good relationship with US and China to support its defence capabilities.
  • But with the growing global terrorism and China military strength, its very a right time for India to cultivate a good cooperative understanding with US, Japan, Vietnam, Indonesia and Australia.

Go Rural!!

Many of the Indian companies that are in various sectors such as automobiles, banking, consumer goods and food processing have – “Go Rural” as primary strategy. Its time, these companies have realized that there is a great scope of market growth in the suburbans.

Rural India

Some facts:

  • Rural India is 7800 small towns and 6.4 lakh villages with 75% of purchasing power.
  • Rural India contributes 55 per cent of the manufacturing GDP
  • Rural factories account for 70 per cent of all new manufacturing jobs
  • Rural consumption per person has increased by 19 per cent yearly between 2009 and 2012; two percentage points higher than its urban peers.

Accenture research reveals that making real profits in India’s rural markets is possible, even in the short term. The key: Companies must build and maintain efficient sales and distribution networks tailored to rural India’s unique characteristics.

Amul brand is a classic example with its presence of 4000 villages that has less than 5000 in population.

Mahindra and Mahindra is one of the company has been growing its market in financial business and has its presence in 2 lakh villages.

Also with rural consumers increasing their interest for better products and high-standard services, FMCG companies like Dabur and HUL have increased their efforts in rural sectors.

Impact of Recession in India


There are 3 companies that did very well in US, while others went down, in spite of recession during 2008 melt down. Walmart, Dunkin, Best Buy. Whatever their strategy is, it is evident that they could sail through and still make good profits because of their focus, and anchoring to their values. Their technology and innovation has helped them.

Now that India is going through the similar phase, the companies should focus on certain things:

  • Consumerization:
    • Evolving an enterprise technology from consumer products to professional areas. Ex: Smart phone that is a consumer product can be innovated, specialized to Doctors, military etc.
    • Axis bank launched services for elderly, it is more than just opening accounts for them, but it is also paying bills for them, managing emergency services at hospitals.

The four sectors that majorly hit as of now :

  • Automobile: Cars being luxury products, they are hit first.
  • This has impact on loans, credit cards, thus Financial institutes.
  • Holiday sector
  • Consumer durables


  •  Rural India is still not much impacted by recession, as there are no conversations about job loss yet. Rural India mainly depends on monsoon and the impact of bad market condition is relatively low. A good monsoon means good purchasing power. As major part of GDP is still based on rural India, it is still not worst and we have time to cope up soon.
  • No recession holds more than 11 months as per the statistics of past 10 recessions in the world. Putting aside the logic behind, how is it, we have hope that it is getting over soon.

Roti Kapda Makaan aur Education!!


No wonder education should be a basic need after ‘roti kapda aur makaan’. It is a simple logic that ones investment in Education is his/hers beautiful future, the countries future.

More than fifty percent of our countries population is below the age of 25 and soon one fifth of the worlds working age population will be in our country.  As per Federation of Indian Chambers of Commerce and Industry (FICCI) in New Delhi, in few years, one in four graduates in the world might come out of Indian colleges, with 20 Indian universities already among the global top 200.


The Industry and services sectors in India would require a gross incremental workforce of 250 million by 2030, which means the Indian education sector needs to gear up.

With these stats, it is evident that India has a huge potential to overcome many of the economic problems, grow into a developed country soon with youth performing well. Education is the foundation for this.

However we have to overcome few challenges

  • Research and innovation in technology is one of the outputs from a good education. Why? – Apple products are manufactured in China, but US gets the benefits, Reason – Technology is owned by US.
  • Not to compare our competencies with other countries, but the India’s research output as global share of scientific publications was a nearly 3.7 percent in 2012 whereas China’s share was 21 percent in 2007. The patents contributed by India are also less than 0.5%.
  • Unawareness of importance of education, the static old fashioned education systems are some of the major challenges, major chunk of children as child labour


  • Foreign Participation: Exchange of students and faculty in higher education. Collaborations between foreign and Indian educational institutions
  • Creating centers of excellence in various institutes and governed properly.
  • Improving the sector of  Faculty members -Teachers, Professors. The education should be “Value Oriented”. That comes only from a ‘valued’ teaches

Well most of the above three resolutions are already started implanted by our government; the focus should not be diverted.


Aircraft carrier INS Vikramaditya will join Indian Navy today. This aircraft carrier is described as a game changer in Naval circles.  Reason?..

A country’s geostrategic influence occurs primarily by its Navy. Say, for example, US, for the matter, plays a dominant role in Middle East, South East Asia and elsewhere because of its high capabilities in its Navy force – with 11 carrier battle groups. China in South China Sea, is dominant because of it strong Chinese Navy presence.


India is geographically centered in Indian Ocean Region (IOR).  40% of Indian offshore oil production comes from Indian Ocean. 2/3 rd  world’s oil traffic goes through Indian Ocean making India’s geographic position prominent. Strong presence of Navy in these areas of IOR gives New Delhi with one of the powerful tool – “Foreign policy”.

  • India can’t leave China to increase its footprint in Indian Ocean Region (IOR)
  • South East Asian countries look for help for the Indian Naval presence that will counter Chinese Influence.
  • 77% of China’s oil imports too pass through IOR
  • If India has to have a heavyweight in IOR, it should have intent and ability to provide humanitarian assistance in case of natural disasters and protect the shipping lines like how US Navy generally does.

Some facts on INS Vikramaditya

  • To start with Indian Amy, as always has the lion share in defence budget, this time of 49%. Air force, 28%.  Though Navy is allocated 18% of the defence budget it is already an increased one.
  • Unfortunately this carrier does not have protection against air attacks(neither air missiles nor close in weapons), however it has ability to become invisible on radar through its electronic warfare systems.
  • The Military build-up at Andaman and Nicobar gives India a key geostrategic edge.

Indian B-Schools need “quality” faculty

There is an acute shortage of ‘quality’ faculty in Indian B schools. Elite institutes like IIM’s for some programmes are no exception to this challenge.

The word ‘quality’ means:

  • Industry oriented faculty
  • Exposure to global standards

Though the top B-Schools like IIM’s SP Jain, FMS and XLRI have fairly healthy student ‘quality’ faculty ratio of 9:1, getting quality faculty is difficult to tap from the existing small pool.


Main hindrances:

  • As per AICTE regulations, all permanent members should have mandatory PhD’s making it difficult to attract any high quality industry-oriented members from Industries. There are many capable executives who can provide a good education to the B-Schools
  • Not learning from Global top business schools. Many global business schools like University of Chicago’s Booth school of Business allow two types of professors, one having PhD’s and others clinical professors (without PhD’s) with outstanding corporate exposure
  • The environment is not encouraging for the graduates to pursue doctoral programs. The stipend is relatively less compared to a fresh MBA graduate entering into industry
  • Even the doctoral programmes offered in India from top institutes are struggling to attract good students, causing a decline in global rankings of these institutes. These campuses are marketing Infrastructure. No, these have to concentrate on research in the institutes to provide high quality doctoral programmes


  • Research in doctoral programmes and they should be strong enough to attract good students
  • Start hiring outstanding corporate executives
  • Get faculty from global schools

Is mandatory CSR good?

P Chidambaram strongly feels that 2 per cent of the larger companies profit on CSR activities will have a multiplier effects in bringing much greater help. All companies with sizable business will be part of the CSR radar. This would apply to companies with a turnover of Rs. 1,000 crore and more, or networth of Rs 500 crore and more, or a net profit of Rs 5 crore and more. The new rules would be applicable from fiscal 2014 -15


However, there is still some strong debate on this, negating this mandate of CSR activities.

  • Mandatory CSR is contradictory.  Laws can only set minimum standards; but driving for an positive action is difficult for Law. For example, it will be difficult for any company to mandate to “build excellent school” or be “generous to the community”
  • The proposal would be an enforcement nightmare, still weakening an already bad situation where many laws are poorly enforced in India and further undermining respect for law. Interestingly, this CSR proposal even includes a loophole. If the 2 percent allocation is not made in a given fiscal year, the CSR committee has to submit an explanation to avoid being penalized. There is no discussion of what explanations would be legally valid, opening up much room for corruption and extortion.