Birla Fin Services goes rural

Aditya Birla Financial Services, the financial arm of the Aditya Birla Group, is planning to tap the rural market to penetrate the cash surplus, inadequately served market.

Ajay Srinivasan, chief executive-financial services, Aditya Birla Group, said, “Since last year, our focus on the rural market has increased substantially as we look at it as a promising untapped customer segment. We are using a hub and spoke model to reach out to various segments of rural customers.”

The company, which has achieved growth in most of the financial segments, is also planning to have a third-party distribution vertical within those areas to sell regular products.

The company’s market share in life insurance and mutual fund businesses have grown faster than other private sector players in the country.

The company has also got approval from the capital markets regulator for foraying into the private equity business and is launching its maiden PE fund in the current quarter, eyeing Rs 1,200 crore to begin with.

Under the hub and spoke model, the company will open branches (hubs) in various places, which will tie up with the local bodies (spoke) to expand their networking.

For example, the MF business had 74 branches in December 2007 that has risen to 116 in December 2008. Similarly, the number of branches of the life insurance subsidiary increased to 600 in December 2008 from 137 in December 2007.

The insurance company is using the hub and spoke model whereby 8-10 bima kendras are tagged to one of the direct selling branches.

Both the life insurance and mutual fund businesses among Top 5 in the private sector in the country, with the life business achieving a market share of 8.5% (amongst private sector players) and the mutual fund business 8.7%.

Company has a plan for launching offshore fund that will provide an opportunity to overseas investors to put money in Indian equity segment.