KIRANA store owners may emerge as the new bankers for rural India with commercial banks lining up to enlist them as business facilitators to increase their reach. The local grocery storekeeper has good information about the financial well-being of the houses he serves and has emerged as the most viable among a number of options to help increase financial inclusion. "Kirana stores look like a very viable option," said S C Sinha, executive director, Oriental Bank of Commerce, adding the bank had got the required approvals.
The proposal of using local storekeeper has been around for a while, but regulatory frame work for appointing banking correspondents came only in November 2009. The RBI has allowed banks to explore tie ups with local operators such as kirana stores, medical shop owners and public call office operators, agents selling small savings schemes, petrol pump owners and retired teachers to further the cause of financial inclusion.
The real push has come from the government which is putting pressure on state-owned banks to achieve greater financial inclusion and even wants to include it in the criteria used for evaluating their performance. Indian Bank is even considering a separate company for using kirana stores to extend its reach in rural areas, its chairman and managing director TM Bhasin said.
Other state-owned banks such as Bank of Baroda and Oriental Bank are also in the process of firming up agreements with kirana store owners. Kirana store owners are already in the business of giving small domestic loans and will have the wherewithal to help banks with the know-your-customer (KYC) norms. This will also curtail the role of money lenders by giving easy and direct to credit to those at the bottom of pyramid.
Norms allow a kirana store acting as a banking facilitator to disburse loans up to Rs 25,000 per borrower for which they will get a fee from the bank. The final liability for the loan will, however, rest with the bank only. They can also recover the same amount besides selling other financial products such as micro insurance, mutual fund and pension products.
The appeal of the kirana store model is in its scalability and pan-India possibility. "We are exploring the Kirana store model, as it has a large presence all across the country," said MD Mallya, CMD, Bank of Baroda. Punjab National bank, the second largest public sector bank, wants to explore other options as well. "The basic principle is that you need to find the right kind of people, who are ready to adopt the new tech-nology," said chief-general manager PNB, RIS Sidhu.
