New Delhi: The buffalo could be ICICI Bank's vehicle to leadership in rural lending.
The bank that has become the leader in retail banking, expects to do a repeat by providing loans for non-farm activities in rural areas.
State Bank of India and Punjab National Bank, among others, have a head start, so ICICI Bank intends to outdo them in new loans.
"We have financed over six lakh buffaloes. Cattle feed companies are very eager to sell them," Nachiket Mor, Executive Director, ICICI Bank, said.
"Also, when six lakh cows and buffaloes are producing milk, who is going to supply this milk to cities? So, there is a whole supply chain infrastructure there," Mor added.
The idea behind setting up such linkages is to not only lend but ensure that the borrowers have the means to repay. So ICICI Bank is talking to eight companies that will supply inputs to farmers and help market their produce.
Loans for cattle and poultry purchases, lending to artisans, financing private rural schools against the security of school fees, are some of the innovative schemes.
"The non-agri portion of rural India is bigger than the agri portion of rural India. That's where we are hoping the next big growth numbers will come from," Mor said.
And those numbers can be reached only by cutting down the cost of lending, which ICICI Bank has done by roping in NGOs and self-help groups. Not just more borrowers, the bank wants each of them to borrow more as well?from an average of Rs 10,000 now to Rs 45,000.
The bank claims that it has a net return of around 2 per cent on its rural business. And it is hoping that new products, which reduce risk for members, will help maintain it at that level.
But, it is a recent entrant into the rural financing sphere and whether or not it can make money out of rural India, is something to be seen.
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