Physical bank branches will continue to play key role in rural areas

Physical bank branches will continue to play an important role in rural areas, despite the adoption of digital transactions seeing a significant jump in these areas in the last 18 months, say bankers.
 

“Rural is becoming digital but it needs a physical presence. Rural will always remain a little bit physical,” IndusInd Bank Managing director and Chief Executive Officer Sumant Kathpalia said during a panel discussion at the Financial Inclusion Summit organised by The Economic Times. He was speaking on the topic - Taking Digital Banking to Rural India.

Kathpalia said in the last 18 months there has been a massive digital transformation in rural India. He said his bank is now able to disburse the loan in seven minutes as against seven days earlier.
 

According to him, the next generation of rural India is mobile-ready.
 

“Don't believe that rural areas are backward. The penetration of the internet is 33 per cent and that of smartphones is 37 per cent in rural India,” he said.
 

Kotak Mahindra Bank Joint Managing Director Dipak Gupta said although retail customers have adopted phygital very fast, the non-retail customers are still dealing in cash.
 

“It is the non-retail, which is the mom and pop shop part of it, where they have to deal a lot more with cash and that piece is not going to go away overnight. A lot of physical pieces are required to service the mom and pop shops,” he said.
 

National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer Dilip Asbe said India would remain phygital as far as the rural economy is concerned.
 

“What it means is it is going to be a combination of the self-service which is using the JAM (Jan Dhan Yojana, Aadhaar and Mobile number) trinity and also physical touchpoints which is using the business correspondent,” he said.
 

NPCI has enhanced its cybersecurity protection framework and is also building up the capacity of its system to deal with any surge in the number of transactions in the future.
 

“Recently, we have scaled up our UPI infrastructure to a billion a day architecture. It means that we are at 100 million financial transactions and 100 million non-financial transactions, so we upgraded that to a billion a day architecture,” he added. PTI HV