The India story has suddenly taken off.

The signs were there. Till about 2000, corporate growth was tepid. The knowledge revolution started in 1994-95, but people were sceptical. Still, you could see the momentum building up. From then till about 2000, corporate India grew at 5-6 per cent a year and it restructured. We didn’t know how things would turn out.

That’s why you focused on retail.

That’s when we said we need to change direction and have something to keep us going for the next two years. We saw consumer credit as the opportunity that would give us the momentum. Initially, our consumer credit grew at 50 per cent compounded on a small base. We’ve grown bigger, but our businesses are still growing 35-45 per cent.

Around 2001, for the first time, corporate India started becoming competitive. By 2003, it was apparent this competitiveness was here to stay. Corporate India is happening. If it grows, banks grow. In order to build domestic scale, the next big opportunity is rural, which we are now articulating.

Public sector banks have not been able to service rural lending adequately. Yet, you are talking about it as a growth area…

We are doing everything differently, like we did with consumer credit. We need to see where that market is greater and how we can build it up. A key difference in our strategy is rural branches. Other branches are seen as deposit-mobilising outlets. In rural areas, we are basically looking to lend.

It’s a myth you need branches to lend, as has been borne out by the consumer credit experience. We have to work with partners, otherwise costs become prohibitive. There’s an array of partners. In fact, you have more partners in rural India than in urban India.

How’s that?

For example, micro-credit institutions. They are organised, and they have well-defined operating systems and policies. They will work on technology platforms we are comfortable with. So, all the normal banking depth that we seek is available. We are working on selecting the technology and making it available to micro-credit institutions.

Your biggest competitor in that market is the local moneylender. He might be charging more interest than you, but he has precise information about the credit-worthiness of people.

That’s why we believe that micro-credit institutions at the local and district level become important, as this kind of information becomes available. Such institutions are just one set of partners. Let me articulate two more. The second is companies that are already present in rural India as a seed supplier, fertiliser supplier, recently as a contract farming partner buying output, equipment supplier — pumps, tractors — and so on. So, for instance, through a poultry seed manufacturer. we reach the poultry farmer.

Who is the intermediary?

The feed supplier. We are looking beyond lending here. To continue with this example, good cattle feed can increase milk output. Today, the problem is the chicken and egg one. Farmers don’t have money to buy the feed. So, you work with the feed supplier to provide credit to him to buy the feed. If his output goes up, wealth creation takes place, and he’s able to repay the loan. A major part of lending has to be for productive wealth creation. That’s what we are aiming it at.

Then, we also facilitate price discovery. A big problem a farmer faces is he doesn’t have access to information. So, we use technology to take that information to the village. We put a ticker tape there. Before going to the mandi, the farmer can find out what’s a fair price for his produce. If he’s not getting a fair deal, he can store it in a warehouse. We will provide finance to him against his warehouse receipt. It’s possible because we are working through an agent.

We are finding opportunity wherever we look. But none of these opportunities have come the traditional way of opening a branch and waiting for the customer to come in. We are working with a franchisee model, like we did in consumer credit. The regulator now allows it. So, the difference is that we have come up with non-standard solutions. The standard solution is a branch. We will have a few branches, but that is not a scaleable solution. The franchisee model is.

Does the non-branch model help you keep your costs low?

In rural India, at least on the technology front, we will have to work at one-tenth the cost of working in urban India, as the loan size is much smaller. If we want to make it work, we have to have non-standard physical solutions and low-cost technology solutions.

Is agriculture going to be the growth area?

Clearly, for a very simple reason: it’s an unserved market. In an unserved market, if you don’t have triple-digit growth, it’s not…

Triple-digit, compounded?

On a small base, you will have to grow at that pace. Worst-case scenario, in high double digits. Otherwise, you are not going anywhere. If you have to be meaningful in this country, you have to scale up.