Foreign Banks in Rural Areas…

• Many foreign banks including HSBC & STANDARD CHARTERED planning to enter in semi urban and rural areas.
• China-Banking giant HSBC plans to open a bank in rural community in cental china.
• It is the first foreign financial institution doing this job.
• This is because Chinese government pushes to develop the financial industry in its agricultural hinterland.

• BARCLAYS BANK is trying to put ground its feet in Indian banking system so it needs full rural push also for greater success & to unlock value.
• Indian government is also working on development of banking sector in rural areas.
• But then also there is potential market in rural areas for foreign banks.

The following points are to be considered by a foreign banks entering in Indian rural markets…

1. Understanding the psychology of the people of rural India.
2. Studying the needs of Indian rural population.
3. Use of local language and not English.
4. Setting up branches not based on population but on possible transactions.
5. Competitive schemes to beat unorganized financial system. ( Shrofs, Lalas, Zamindars etc. )
6. The documentation should be easy.
7. Online commodity services should be provided.
8. Microfinance facility must be available.
9. They should give positive empowerment and support to rural ecosystem.
10. They should play an active role in rural economy.
11. Making tie ups with initiatives like ITC e choupal.
12. Also in an earlier Article called FAR-OUT FINANCE our friend Rishi has put light on one good principle in rural financing, i assert that such principles should be applied to help the rural populace as they will curb the menace of shroffs etc. and give more business to banks!

These steps will enable foreign banks not only to get success but also to reduce NPA.