Page 41 - BANKING FINANCE JULY 2016

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ARTICLE

possibility of recovery under OTS is very high when com-
pared to that of large advances.

Dr. Raghuram G Rajan,Governor, RBI, has spoken that
"..the sanctity of the debt contract has been continuously
eroded in India in recent years, not by small borrower but
by the large borrower and our country has many sick com-
panies but not "sick" promoters.

Increase in exercise of Delegated Authority: Urbanization:

If small size advances are focused, in addition to the above India is also witnessing a growing trend of urbanization.
advantages, delegated authority will automatically be ex- By 2030, urban population is estimated to rise to 631 mil-
ercised by the field functionaries whereby Turn Around Time lion recording an annual increase of 2.6% as against an
(TAT) is reduced and customer relationship will be en- annual rise of 1.1% in the overall population . This would
hanced. mean that 41.8% of the population would be living in ur-
ban agglomerations as against 31% today. This would open
Other advantages: up huge business opportunities for banks in housing, con-
sumption, education needs and so on.
F There are loan portfolio diversification benefits from
investing in a larger number of small loans. Industrialization:

F 'Character' approach in assessing the loan proposal and The Government has the commendable aim of making
physical proximity of the applicant to the bank gives more in India (Make in India). This means improving the
the bank greater familiarity with the applicant's busi- efficiency of producing in India, whether agricultural com-
ness and greater ease in monitoring the loan. modities, mining , manufacturing or services. "Make in
India" will typically mean more openness, as we create an
F Accelerated and consistent growth of advances. environment that makes our firms able to compete with
the rest of the world and encourage foreign producers to
Scope and Opportunities for Small Size advances: come and take advantage of our environment to create jobs
in India.
Following are some of the themes , as per Mr. S. S.
Mundra, Deputy Governor, RBI during his keynote address Financial Inclusion:
which would define the Indian economy and Indian bank-
ing sector in the days to come and which denotes the avail- The launch of PMJDY scheme with a focus on linking each
ability of ample scope and opportunities for bankers in lend- household with a bank account has received extreme posi-
ing small size advances. tive response. It is just a stepping stone and the scheme
has opened enormous avenues for the bankers on both
Demography: assets and liabilities side. Financial Inclusion is a profitable
business proposition and not as a matter of compliance.
Much has been talked about the demographic dividend that 'Indradanush' has also laid importance and has
India possesses. 68% of India population would be within stipulated financial inclusion (growth/diversification) as one
the working age range (15 - 64) until 2030. Life expectancy of the KPIs.
of the Indian population is also slated to increase to about
70 years by 2030. While on the one hand the numbers
present sustained opportunity for the banks in terms of new
stream of customers, it also presents challenges which are
in the form of diverse behavior patterns that customers in
different age groups display. The banks would need to con-
tinuously foretell the customers' preferences and focus their
strategies on meeting them proactively.

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