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Rural market heads share the initiatives adopted by their companies to reach the rural customers:


In the recent times there has been a rise in the penetration for finance products among rural customers. BFSI companies have also introduced customized products to fit the needs of rural customers. Banking Frontiers spoke with one bank and two insurance companies about their products, digital initiatives and geographical expansion plans for rural customers.

Microfinance Penetration

The microfinance industry has an outreach in almost 600 districts of India. In terms of geographic spread, 76% of the loan portfolio is rural and 24% urban. Fincare Small Finance Bank’s rural banking business operations run in rural regions across 15 states and account for 90% of the total customer base.

Soham Shukla, COO – Rural Banking at Fincare SFB shares the details about the product offerings for the rural customers: “Fincare offers a range of deposit, loan, payment solutions banking to all customers, including the rural ones. These products are designed specifically to meet the specific life cycle needs. Under Loans, the bank offers microloans to JLG clients with loan ticket sizes up to Rs55,000. Whereas, under deposits, the bank offers zero AMB saving account and recurring deposit (RD) with minimum contribution starting from Rs500 per month.”

Insurance Penetration

SBI General Insurance is focused on strengthening insurance penetration across India and Bharat alike. To strengthen penetration in the rural markets, the company has formed a separate rural and microinsurance vertical in April 2020. FY22 was the first full-fledged year of operation and in this short period, the general insurer has successfully been able to issue over 2.7 lakh insurance policies, with 99.55% of the insurance covers offered through digital channels.

Priya Kumar, Head – Emerging Business, Rural & Agriculture at SBI General Insurance. says: “Aligning with our focus on digital, we believe in expanding on tech-driven models, given that it is cost-efficient, scalable, and sustainable at the same time.”

She further added: “Motor insurance and health insurance are 2 products that have gained precedence, pan India. When it comes to health insurance, low ticket size and sachet insurance are becoming more popular in the rural markets, and on the other hand, in motor insurance, cover for 2-wheeled tractors and intermediate commercial vehicle models are witnessing high demand.”

For Bharti AXA Life Insurance, 40% business comes from tier 3 & 4 towns. Pankaj Gupta, Chief Technology Officer at Bharti AXA Life Insurance shares: “These towns are growing at a faster pace than urban areas in terms of the sum assured purchased by the customer. The customers in these markets customer largely focus on guaranteed products and while the urban customer focuses on the mix of guaranteed and market-linked products.” Both insurers have found their respective growth formula.

Leading Channels

Fincare SFB has a network of branches in proximity to the rural centres where the client education and disbursement activity gets done combined with a mobile field force that visits the rural centre for business development, centre meeting, and collection activity to offer banking services at the doorstep. Further, the bank has alternate channels offering banking products and solutions in non-operating geographies via business correspondents and increasing footprint with community banking services.

Soham reveals: “The future of the bank is to increase the connectivity. Our bank is highly focused on increasing the outreach of community banking platform to cater the requirement of doorstep banking for rural households – essentially, a family banking relationship for all. The bank is also engaged in increasing its footprints with new branch expansion. It is rapidly moving toward digital to provide better and quick service to clients.”

Bharti AXA Life Insurance is focusing on agency and 3rd party partners for connecting with rural customers, while SBI General Insurance primarily focuses on digital penetration in rural areas. The latter plans to expand its footprint and serve customers across these regions through partners who are equipped with reach and digital capabilities.

The present distribution network at SBI General is supported by Common Service Centres (CSC) and Business Correspondents (BC). Together, they have over 3 million digital touch-points, allowing them access across the country. Priya added: “We also plan to broaden our presence through newer channels such as Farmer Producer Organizations (FPOs) and agri-techs to increase our reach to a larger number of members of the farming community.”

In sum, there is a diversity of channels to expand the number of rural customer relationships, or to quote Muhammad Ali, the champion boxer, “different strokes for different folks.”

Rural Digital Initiatives

Here is a look at the key rural initiatives of each of the 3 organizations.

Bharti AXA Life Insurance has launched specific point-of-sale products, with guaranteed income and a low-ticket size for rural customers. The life insurance company has reinvented its data organization and administration with a longer-term goal of democratizing data. The company has spent the previous fiscal year laying the groundwork for achieving this long-term goal. Data pipelines have been enabled for applications across the enterprise to feed into an Enterprise Data Lake (EDL).

It has designed a 360-degree views of customers and sellers to enhance consumer interactions and offer relevant information to sellers at every touchpoint, leapfrogging the customer and seller experience. A customer de-duplication engine powered by AI and machine learning has been developed, which efficiently identifies current customers at the point of onboarding, allowing enhanced risk assessment through unique client identification.

Pankaj provides additional details: “Using the data lake, multiple business intelligence models have been set up, and projects are underway to develop pipelines for the analytic models’ outputs to be looped back to endpoints (such as sales, service, and underwriting executives) for consumption and execution.”

SBI General Insurance has been developing end-to-end digital products and solutions for its rural customers. Priya says: “We believe that building simple or uncomplicated products and having a simplified purchase experience and process is crucial when it comes to engaging with customers in the rural market. We have introduced multiple digital initiatives for easy and quick access to relevant insurance solutions.”

Fincare SFB has an integrated e-KYC-enabled tab-based LOS module to offer microloans at the doorstep. A digital servicing module records EMI collections on a real-time basis. A digital platform assists customers in insurance claims and settlement for group micro insurance products. Enhanced LOS system helps open instant saving accounts and recurring deposits. The bank has integrated DBT feature in LOS with real-time Aadhar seeding to assist borrowers in availing government benefits and subsidies.

Soham shares more details: “We have introduced a green pin service for instant reset of ATM pin in 3-easy steps by visiting the nearest bank branch. AEPS allows cash-in, cash-out, fund transfer, balance enquiry, mini statement, etc.

We have enabled digital payment gateways to increase the footprint of cashless EMI payments/transactions in operating geographies.” Clearly all 3 companies are deploying a variety of digital solutions to offer a variety of services to rural customers.

Geographical Expansion

All 3 organizations are actively pursuing a wider geographic expansion. Bharti AXA Life Insurance commits to investing in expansion in rural markets where the life insurer is currently not present. The company has reach among 640 districts in India, of which it is physically present in 230 districts.

Pankaj shares the geographical expansion plans: “We have identified the next 100 districts to enhance our presence and footprint. We look at a mix of quantitative and qualitative inputs to identify the potential markets. Quantitatively, we look at the insurance penetration and presence of other insurers, insurable population, household income, and market potential for life insurance.”

Priya commented: “Our focus on deepening and our penetration in rural markets will span across the length and breadth of the country. We can reach customers across the country and provide them need-based insurance products and services.”

Fincare plans to add 200 new branches in rural business and expand community banking outreach to 6 states from the current 3 states in FY’23. The bank refers to credit bureaus and pincode based socio-demographic analysis to identify the potential markets and risk penetration. It also conducts periodic studies to identify the market trends, customer segmentation, behavior, competitors, presence/product offerings and digital literacy, etc.

Clearly, the unserved and underserved citizens can look forward to be a part of the mainstream financial services, thanks to the efforts being undertaken.

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