Banks Strategies for Financial Inclusion A. Rajan Country Head-Operations HDFC Bank Ltd

Agenda for Discussion Typical Challenges in Financial Inclusion Support from Micro Finance & Self Help Groups Information Communication & Technology Mobile Banking Biometrics ATMs Rural Employment Opportunities

Challenges of Financial Inclusion Illiteracy Remote Locations Cost of servicing small sized transactions Telecommunication Reach of Technology

Micro Finance & Self Help Groups –Reach remote unbanked areas/non branch locations through SHG Lending Programme –SHG Clients being serviced with Loan & Savings Products –Door step banking (disbursement of loans and collection of installments) to all the SHGs using Service Providers (SP) as our Business Correspondents.

Information Communication & Technology Cash Terminals – Card based transactions –Hub and spoke model with co-operative banks –Cash Deposit and withdrawals –PIN based cards Hand Held Devices – Biometrics enabled –Offline devices for remote locations –Biometrics for customer authentication –Transactions record on the spot

Mobile Banking – Catalyst for Microfinance Current Usage –Currently only for A/C Related Enquiry –Use of Mobile Phones for Financial Transactions Opportunities - Microfinance –Exploration with Technology Partners –Funds Transfer using Mobile Phones – SMS Based –Mobile to Mobile funds transfer ( Futuristic ) –Stringent KYC norms of Telecom cos. to be leveraged Challenges –Security on mobile devices –Transaction encryption

Biometric ATMs ATMs with Biometric solution Biometrics as authentication mechanism Illustrative ATM screens for illiterate customers Challenges –ATMs efficiency and maintenance in Rural conditions –Biometrics efficiency in Rural condition

Rural BPOs –Migration of non-core image based activities to Rural BPOs to create employment opportunities to rural youths. –Enable rural youths to gainfully use their education in their own environment. –Reduce rural youth’s migration to crowded cities causing frustration caused by infrastructural inadequacies there. –Contribute to rural development enabling educated youth to support their family business in their spare time. –Extra income enables Rural youths live a life of dignity and escape clutches of economic poverty.

Opportunities Improved Communications Technology reaching out to the Rural Areas. Huge Business Opportunities Stickiness of Rural Customers Mass Banking – Very Large volumes Low Establishment Cost

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