Correspondent network & CSPs can play key role in spreading banking services in rural areas

Historically, financial institutions (such as commercial banks or agricultural or rural development banks) have shied away from or been unable to provide sustainable services in rural regions. Due to this exclusion, rural communities are prevented from unleashing their capabilities. In rural areas, financial literacy is commonly low. This makes it difficult for individuals and companies to develop efficient risk management plans. "This is where the business correspondent network and Customer Service Points (CSPs) come into play," says Ajeet Kumar Singh, MD, CEO, and Founder, SAVE Solutions in an exclusive interview with Bizz Buzz

How banking correspondent networks are providing last-mile banking services to customers of rural India?

The rural population in India lacks access to structured credit sources because of a lack of information, awareness, and even documentation. Additionally, the physical distances and linguistic disparities present a greater challenge for this group of people. Rural residents are informed about the value of having bank accounts and loans during community meetings organized by banking correspondent networks. These business correspondent networks closely collaborate with underprivileged groups with the 'Doorstep Banking Service' to close this gap and bring the rural population inside the purview of organized finance. Doorstep Banking Services are provided through Doorstep Banking Agents (DSAs) engaged through Business Correspondents, this includes both non-financial as well as financial services.

What is the importance of a formal financial system to bring the unbanked rural Indian population to provide easy access to the financial needs of rural India?

Historically, financial institutions (such as commercial banks or agricultural or rural development banks) have shied away from or been unable to provide sustainable services in rural regions. Due to this exclusion, rural communities are prevented from unleashing their capabilities. In rural areas, financial literacy is commonly low. This makes it difficult for individuals and companies to develop efficient risk management plans. This is where the business correspondent network and Customer Service Points (CSPs) come into play. This model allows deep penetration into the hinterlands of India. The Business Correspondent (BC) has a number of tasks to perform such as promoting the importance of banking, investment options, deposit schemes, and interest rates to the unbanked population; providing banking assistance in processes such as opening bank accounts, fixed/recurring deposits, and collecting money to deposit in own or beneficiary accounts. This is only possible with a network closely linked to a specific area since it provides both the related banks and the clients with greater protection. Therefore, if correctly implemented, this concept could aid in the financial inclusion of rural populations.

Brief us about the birth of Save Solutions?

SAVE (Society for Advancement of Village Economy), an NGO Entity was envisaged to provide last-mile banking services to the unbanked and the underbanked people in the rural segment of India. SAVE became a circle business correspondent of State Bank of India and after that on the basis of the performance State Bank of India gave the status of National Business Correspondent to SAVE in 2012. SAVE Solutions is a registered entity under Company's Act 2013. SAVE made this transition in 2014 for creating an enabling environment for CSP network expansion and improvement in service quality.

SAVE is currently operating with 4 PSU Banks and 2 RRB Banks namely State Bank of India, Bank of India, Bank of Baroda, Punjab National Bank, Baroda UP Bank and Jharkhand Rajya Gramin Bank respectively. Acquiring 100 per cent subsidiary of Karmayogee Finance in 2014, the subsidiary company was renamed as SAVE Financial Services. This business has helped offer internal lending to SAVE's CSPs along with MSME loans. Additionally, it also offers LAP products.

What are the financial institutions that you have partnered with?

CSPs are instrumental in building the bridge that connects banks with remote customers. SAVE Solutions' CSPs were activated since 2010 with State Bank of India as its first partner. Today, we provide the CSP networks for Bank of Baroda, Bank of India, and Punjab National Bank as well and are looking to on board more PSU partners. These banks are not only leveraging the CSP network for banking and lending services, but also for recovery and collections. This is due to the micro-level engagement that these personnel enjoy with the end-customers, thereby winning their trust and aiding the banks in the process. Furthermore, CSPs are also involved in first-level borrower identification, post which the banks step in for providing their services.

This is possible with a well-evolved in-house IT architecture with Integrated MIS operating through SAP ERP, along with high-quality human resources. This mechanism delivers better fund management systems and smooth operations across the country; and continuous monitoring along with initial handholding support with a very quick grievances resolution mechanism. All the Customer Service Points (CSPs) or Kiosk personnel are provided computer trainings, and cash management system training to improve client enrolment and service delivery, as well as their incomes. Recently we have tied-up with SBI in Co-Lending Loan Business and AT-BC Business.

What are the industries that you cater to?

Save Solutions provides a bouquet of financial services and products all under one roof. Not only does it provide last mile banking facilities and all Banking Liability Products through its CSP network, but it also offers a varied range of loan products including Micro Finance through JLG model, Loan against Property, Business Loans, Co- Lending, 2/3-Wheeler Loans, Housing Loans. The company's robust IT platform enables majorly paperless operations.

What are company's future plans?

We plan to add more products to our portfolio in the coming year. Our discussions with other PSU banks are in process and we are planning to introduce agriculture loan and co-lending with other PSU banks. In addition, we have also taken the initiative to expand the asset business and housing loans through our existing channel. We aim to be registered with the India Stock Exchange by 2025.