ICICI Bank: Challenges in Rural Banking Challenges: Risk management challenges due to information asymmetry problems Accessibility (geographic

phic accessibility and easiness to deal with) No collateral, Low value and cash intensive nature of the business Staff training and motivation

Client Profile: Staff: Gaps: Against rural population of 741.0 million, 500 million people un-served Population per branch: 22,793 Penetration of savings accounts is below 18% As against 103% in urban and semi-urban areas Number of villages per branch: 19 High dependence on informal sources 38.9% of rural credit from informal sources Dependence even higher for lower income households: 78% Lack of trained staff Lack of motivated staff Difficult to incentivize staff 75% population lives in rural areas: geographical access difficult Informal activities: need access at flexible times Illiteracy: difficult to deal with traditional services Low value of transactions Lack of collateral

Recommendations: 1. As Haats has a good penetration in rural India ICICI should provide loans to the farmers via enterprises such as ITCs e-Choupal network that would enable the farmer to buy crop inputs and that are to be paid off when the farmer would sell the crop. 2. By bringing in technologies that can enable remote transaction delivery model through the use of smart cards and mobile devices can help MFIs to be able to increase penetration locally and provide expanded coverage, thereby reducing unit costs. 3. Initiated partnerships with training institutions and provide high level training in banking and finance to MFI practitioners.