SBI to up rural presence through facilitators

The State Bank of India (SBI), which has just launched two new products, the SBI Reverse Mortgage Loan and the SBI Home Cash in Gujarat is now looking to further consolidate its presence in rural areas through the business facilitator and business correspondent model which enables greater financial inclusion and outreach to Gujarat by the end of the year.

Under the guidelines of the RBI, banks are permitted the use of services of non-governmental organisations/self-help groups (NGOs/ SHGs), micro finance institutions and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and correspondent models.

A business facilitator can identify borrowers, collection and preliminary processing of loan applications, marketing products, follow-up for recovery among other jobs whereas a business correspondent can undertake activities like disbursal of small value credit, recovery of principal/collection of interest, collection of small value deposits among others.

Under the business facilitator model, SBI has already signed a Memorandum of Understanding (MoU) with India Post to act as a facilitator for 35 post offices in a pilot project at Surendranagar, Anand and Bharuch districts in Gujarat.

It has also signed up with the Gujarat Agro Industries Corporation (GAIC) to market the bank's products in 500 outlets of the 1,200 outlets in the state. Further, the SBI is looking at milk unions as facilitators.

For the banking correspondent model, the bank is presently undertaking a pilot project called SBI Tiny Technology where the correspondent can use his/her cellphone to record transactions on a central server in Mumbai.

The project is being piloted at Arunachal Pradesh and Uttar Pradesh and is likely to be brought to Gujarat by the end of the year. Under the model, SBI also plans to target fair price shops in the state which are currently in the process of being upgraded to village malls.

SBI is looking to expand aggressively in Gujarat. H C Pattnaik, Chief General Manager, SBI said the bank proposes to open around 115 new branches and outlets at shopping malls and integrated townships over the next 12 months.

Also, during the present financial year, the State Bank of Saurashtra (SBS) with its 460 branches and a total business of over Rs 28,000 crore is expected to be merged with the SBI.

Under the SBI Reverse Mortgage Loan, allowing senior citizens to mortgage their residential property, the minimum amount of loan available is Rs 3 lakh and maximum of Rs 1 crore where the fixed interest rate is 10.50 per cent with a reset clause every five years.

SBI Home Cash is a product to meet any personal fund requirements. The minimum limit is of Rs 25,000 and the maximum is Rs 10 lakh to the extent of difference between 75 per cent of the market value of the house and outstanding in home loan.

As of June this year, deposits of SBI in Gujarat registered a growth of 25.20 per cent as against the All Scheduled Commercial Banks' (ASCB) growth of 16.77 per cent.