ICICI 'touch point' every 10 km

Bank plans saturation retail coverage in rural India.

ICICI Bank wants to paint India's rural landscape maroon. It is through a "no white spaces" strategy, ensuring an ICICI Bank "touch point" within 5-10 km from customers in hinterland.

Each touch point will be a full-service banking centre, offering services ranging from routine banking transactions to trading in shares and commodities, availing of loans and buying life and general insurance policies "" the services urban customers enjoy at bank branches.

"The touch points will not be just referral points. A person entering a touch point will come out having availed of all the services he wants," says Nachiket Mor, deputy managing director of ICICI Bank.

The touch points will be managed and operated by local entrepreneurs, be it pharmacists or tractor dealers. "These local entrepreneurs personally know and understand the credit-worthiness of prospective customers," Mor points out.

ICICI Bank plans to cover 400,000 of over 600,000 Indian villages through its hub and spoke hybrid channel architecture. The bank has already implemented 50 per cent of the strategy in over 50 districts in Maharashtra, Gujarat, Uttar Pradesh and south India.

It plans to complete the implementation in these districts and cover 50 per cent of 200 more districts by the end of the current year.

The touch points strategy eliminates fixed costs involved in maintaining own branches and the recurring costs are only a fraction of the fixed costs entailed in having branch presence. Also ICICI Bank cannot have branches in all the 400,000 villages where its wants to do business.

"If we want to open a branch each at the four lakh villages, we will require commercial space and an average of six employees per branch, which translates into a staff strength of 2.4 million. This is simply not viable," says Mor.

ICICI Bank will open at the most one or two branches at the district centre and serve the villages through the touch points. The branches would be more of processing centres for the respective districts.

The district branches will act as credit and processing hubs for the business generated in the respective clusters.

The non-branch channels will include credit franchisees, a network of originator franchisees, rural internet kiosks, a network of micro-finance institutions and non-government organisations (NGOs) and technology-based initiatives like biometric (fingerprint) enabled ATMs. The credit franchisees will also be sharing the business risk with the bank.

ICICI Bank is working with technology partners like IIT Chennai for developing ATMs which can dispense even soiled notes and automated cash dispensers which would allow customers to see the bundles and decide which one they want to have.