Successful OutReach Model

The State Bank of India has built strong partnerships at the front end and resilient institutional infrastructure at the back end to achieve the next phase of bank's business correspondent out reach of universal coverage between 2011 to 2015. SBI is also sufficiently geared to to scale up the efforts for financial inclusion throughout the country. It plans to reach all the financially excluded villages where there is absence of banking facility either through a branch or a BC in next five years. We have 16-17000 BCs as of now which are being expanded every month .

The bank has also deployed various technologies and has experienced their pros and cons. Similarly, the BCs represent a variety of institutions and individuals. The experience has been quite useful for learning about what needs to be done.We have invested Rs 100 crore in relevant technologies which will be doubled in next two years ..

The key challenge at this stage of the model's evolution is to find a sustainable model, which is profitable for all the stakeholders involved, while being useful for the clients. Many BCs and customer service points (CSPs) are finding it difficult to sustain themselves and this is direct impediment to scaling up the model. At scale all losses will get magnified. With this challenge in view the bank has launched a nationwide project to improve the viability of this model and scale it nationally.

The bank is working on a comprehensive BC model, addressing all the challenges it has faced thus far, focusing on the effectiveness and viability of the BC and the bank.The model is being developed in partnership with agencies like IFMR Finance Foundation(IFF), High Mark Credit Information Services and Rural Technology and Business Incubator(RTBI) of IIT -Chennai Every Village in India will have an SBI CSP

This effort plans to have a CSP in every financially excluded village, so that the service is accessible to every customer. The focus will be on a ``kirana' shop to play the role of CSP . Retailers are best suited for providing these services, and they don't need to fully depend on this channel for viability because they have other sources of income as well. This will effectively mean that a CSP will be available at a walking distance from all clients and thuis CSP will be available for transactions most of the day. The CSPs and BCs would be dynamically incentivised on every milestone they reach in terms of clients acquired revenue generated, products used , loans orginated and successful recovery of defaulters Low cost reliable and user friendly technology

The project will focus on technology with low capital and operating experience, with high reliability. For example, a large part of the roll out will be with applications using low-end mobile phones. One of the key technologies integrated for this channel the voice based technology, which uses voice biometrics to authenticate a customer and voice recognition to enable the customer to carry out a transcation entirely based on a voice conversation even in local language/dialect. Other mobile based technologies will be given preferences. This greatly reduces the expenses of CSP.

Availing loans from SBI

Besides the basic banking services like savings account, fixed deposit, recurring deposit etc most of CSPs will also provide loans , local payments,(interbank and intra-bank) remittances, bill payments , government payments, mobile and DTH top-ups and other products that are useful for the clients.

Cross selling of third party products like insurance would also be encouraged. While this would make its attractive for a rural person to have a bank account and carry out transactions, the transcation history would enable credit rating for the customer. A major emphasis will be given on local payments and remittances. Fees will be charged for most of services being used by the clients, based on what the clients find useful to pay for.


Extensive training and support top the CSP and BC will be provided. The bank will develop a comprehensive training infrastructure to develop the channel, leveraging its existing infrastructure of rural training institutes, The bank is also developing a comprehensive, real-time monotoring system for tracking the progress of the network.

Multi-channel focus

The project would focus on reaching scale through three different channels

a) One of the channels for appointing a bank's BC is to partner will small NGO-MFIs who would set up a wide a network of CSPs across villages and offer the various services along with the group-based loan product. The key advantages of this channel are in terms of their local knowledge and their ability to provide group loans.

b) The second channel would be to use telecom service providers(TSPS) as BCs The TSPs woul;d have to select some of their best retailers as CSPs in order to reach with financial services into rural India

c) The third channel will be through BCS formed by technology companies. Over the last couple of years, they have built a vast network of CSPs and this will be deepened and strengthened.

I am sure going ahead the SBI's business correspondent out reach model will be profitable while expanding the bank's network manifold in short span of time.

Original Source: Financial Express