Nachiket Mor seeks more room for rural banking

ICICI Bank executive director Nachiket Mor today accused the banking regulator of being focused on the banking needs of the urban customers and ignoring the rural masses.

"The regulations that govern Indian banking system are designed keeping an urban customer in mind. This is evident from delivery channels like cheque truncation, which is more favourable for an urban literate customer," said Mor, while speaking at a national conference on rural markets organised by the Confederation of Indian Industry (CII).

He said the regulatory exclusion is underscored by the fact that more than 100 per cent of the urban population in the country is banked as against that of 15 per cent in rural areas.

Speaking on conventional rural models adopted by domestic banks, Mor said contract farming and supply chains have not been successful formulae to tap the critical mass in rural areas.

In a bid to search for more innovative products for its rural clientele, ICICI Bank has undertaken five pilot projects to roll out rural-friendly biometric smart cards.

The success of these pilot projects will influence the bank's decision to introduce smart cards, Mor said. So far, ICICI Bank has a rural exposure of Rs 5,500 crore, of which microfinance constitutes Rs 1,000 crore, covering 12 lakh customers.

This is growing by 70-80 per cent every year.

Banks found it easy to enter rural areas in the initial phase. Given that banking is a highly regulated sector here, penetration is now proving to be a greater challenge, Mor opined.