‘After consumer credit, rural lending is the next big opportunity’

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.

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.

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