SFBs, cooperative banks driving financial inclusion in rural and semi-urban areas: AU SFB’s Shekhawat

AU Small Finance Bank (AU SFB) is making significant strides in rural and semi-urban India through its innovative banking initiative, Swadesh banking. In an exclusive interview with Bizz Buzz, Shoorveer Shekhawat, Head of Swadesh Banking, Government Business & Wholesale Deposits, AU SFB, discusses the vital role of Small Finance Banks (SFBs) in empowering rural communities. Shekhawat emphasizes the transformative impact of SFBs and cooperative banks in bridging the financial gap, reaching unbanked regions, and supporting microfinance and small businesses. By providing essential banking services and fostering financial inclusion, these institutions are driving sustainable economic growth in rural India

How rural banking is contributing to the Indian economy?

India, predominantly a rural country, has two-thirds of its population and 70 per cent of its workforce residing in rural areas, with the rural economy contributing 46 per cent of the national income. Despite increasing urbanization, over half of India's population is expected to remain rural by 2050, making the growth and development of rural areas crucial for the country's overall progress and inclusive development. Agriculture is the backbone of the rural economy, directly engaging about 65 per cent of the population and employing around 55 per cent of the workforce.

To address the financial needs of rural communities, Regional Rural Banks (RRBs) were established in 1975. These banks focus on providing banking services to marginalized sections, including small and marginal farmers, agricultural laborers, artisans, and small traders. RRBs have become vital in rejuvenating rural India by offering credit through formal, transparent channels, reducing reliance on informal moneylenders.

Additionally, Small Finance Banks (SFBs) and cooperative banks are emerging as significant agents of change in rural and semi-urban areas. These institutions enhance financial inclusion by reaching unbanked regions, promoting digital banking, and supporting microfinance and small businesses. Collectively, they are transforming the rural banking landscape, empowering individuals and communities, and driving sustainable economic growth in rural India.

How small finance banks contribute to rural development and businesses?

Small finance banks (SFBs) plays a vital role in ensuring inclusive growth and reducing economic disparities. SFBs are designed to cater specifically to the financial needs of underserved populations, including those in rural areas. It contributes to rural development through financial inclusion, credit accessibility, agricultural financing, and empowerment of rural entrepreneurs. For instance:

Small finance banks have emerged as champions of financial inclusion, particularly in rural areas. They have established a robust network of branches in remote locations, making formal banking services accessible to people who were previously underserved or excluded from the banking system.

Access to credit is a crucial factor in stimulating economic growth and promoting rural development. Small Finance Banks understand the financial needs of rural individuals and small businesses and provide tailored credit products to meet their requirements.

Agriculture is the backbone of rural economies, and providing financial support to farmers is essential for rural development. Small finance banks recognize the importance of agriculture and offer specialized agricultural financing solutions.

Empowering rural entrepreneurs’ offer small business loans, self-employment loans, and skill development programs to help rural entrepreneurs establish and grow their ventures. This support not only creates employment opportunities in rural areas but also fosters local economic development, reducing the migration of

Small finance banks have leveraged technology to bridge the digital divide in rural areas. They provide digital banking services, mobile banking apps, and internet banking facilities to ensure that individuals in remote locations can access and manage their financial transactions conveniently.

What is AU small finance bank’s Swadesh banking service?

Swadesh banking is an innovative initiative aimed at redefining the banking experience in rural and semi urban India. It is designed to offer 360-degree comprehensive financial solutions to farmers, self-employed individuals, and micro-enterprises in rural India. It includes the rural branches, banking outlets, financial and digital inclusion units, and specialized lending units for small and marginal farmers. It also aims to streamline operations and deliver more efficient and targeted services to our esteemed rural customers.

Presently AU SFB’s Swadesh banking operates in 446 touch-points, 176 bank branches and 270 in unbanked areas. Swadesh banking has a deposit book size of Rs 10,300 crore. To rapidly scale up the deposits, AU SFB’s incremental penetration has been majorly focused on retail deposits in rural and semi urban markets.

What are the exclusive products of AU SFB’s Swadesh banking?

The AU Kisan savings account is tailored for farmers, featuring the AU Swadesh savings and current accounts.

The AU Swadesh savings account offers a RuPay platinum debit card with enhanced insurance, purchase protection, and higher withdrawal limits. Customers can maintain flexible balances through either their savings account or fixed deposits, enjoy paperless banking, and access various services like lockers, mutual funds, and insurance. The AU Swadesh current account requires either five transactions totalling Rs 25,000 monthly or a minimum balance of Rs 10,000. It offers a free cash deposit limit of 15 times the previous month's balance, 150 free cheque leaves, and a visa platinum business debit card with high transaction limits and cashback.

AU SFB has also created a dedicated vertical to support the financing needs of Small and Marginal Farmers (SMFs) and conducts awareness programs for farmers on the bank's loan offerings.

Could you please share some crucial data points on Swadesh banking?

AU SFB has significantly invested in user-friendly digital platforms, focusing on enhancing accessibility in rural areas. Its mobile banking app, internet portals, and video banking services have improved the convenience of banking operations while maintaining a personal touch. Over the past year, AU SFB opened more than 48,000 accounts and made over 59,000 video banking calls in rural and semi-urban markets.

AU SFB has become a transformative force in driving social change at the grassroots level. The bank has surpassed regulatory requirements with 94 per cent of its lending in priority sectors, 61.2 per cent of loans under Rs 25 lakhs, and 2,414 touch-points in unbanked rural areas, leading the way in financial inclusion. The upcoming merger with Fincare will further strengthen AU’s presence and impact in rural and microfinance sectors.