ICICI Bank to penetrate rural sector through mandis, kiosks

ICICI Bank is planning to set up mandi branches, kiosks, franchisees and partner microfinance institutions and non-government organisations to boost its rural finance business.

In association with corporates, microfinance institutions and local authorities, the bank is developing supply-chain solutions in the agriculture sector.

ICICI Bank has divided the rural market into R1, R2, R3 and R4 categories for identifying the rural markets. R1 and R2 represent the rich farmers, while R3 and R4 represents the poor landless labourers.

"ICICI Bank plans to increase its points of delivery five times - from 3,500 to 17,500 by March 2006," said ICICI Bank executive director Nachiket Mor.

He said the total demand for microfinance was around Rs 45,000 crore, while the supply was just about Rs 2,000 crore.

The bank will support over 200 microfinance institutions (MFIs) in creating an asset base of Rs 2,00,000 crore and also rollout "penetration strategy" to cover 60 districts in the country.

Currently, the bank has partnered with 45 MFI/NGOs across India and runs a asset base of Rs 430 crore with a total client base of 1 lakh households.

The bank's agriculture finance portfolio as on March 18, 2005 stands at Rs 6,373 crore.

ICICI Bank has designed products for all customer segments and for all components of the value chain.

ICICI Bank will also provide loans against gold jewellery in these areas. The bank's advances against gold stands at round Rs 200 crore.

ICICI Bank, through its insurance subsidiary ICICI Lombard, also provides insurance products in the rural markets. It has designed products on the basis of crop cycles, temperature and rainfall data. It has covered over 1,50,000 lives in health insurance and over 1,90,000 lives covered for loan care with an asset cover for Rs 600 crore.

The bank sold 7,800 policies in Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Madhya Pradesh and Rajasthan and has paid out Rs 3.2 lakhs as claims.

Speaking about it other rural initiative, Mor said ICICI Bank in partnership with Grameen Foundation, USA and Citigroup is in the process of forming non banking company (NBFC), Grameen Capital India (GCI).

This entity will provide credit enhancement to micro finance portfolios and enable MFIs to access mainstream capital markets. It would also provide financial advisory services to help more MFIs leverage domestic debt/capital.