HDFC Bank to roll out e-distribution network, cover 50K more villages

HDFC Bank will start on-boarding agents of its corporate business correspondents digitally who can extend services to semi-urban and rural areas, a move that will help the lender achieve its priority sector (PSL) lending targets.

Christened Smart Saathi, it is a digital distribution platform that leverages technology and brings in ease for business correspondents and agents. With this, they can deliver a host of banking products and services to customers, especially in semi urban and rural areas.

“Right now, HDFC Bank’s services are available in 150,000 villages. With the launch of Smart Saathi, we aim to cover 200,000 villages over the next 12-15 months. Around 70 per cent of the rural economy is in these villages,” said Smita Bhagat, group head-alternate banking channels and partnerships, HDFC Bank.

“At this point in time, a large part of the lending which is being done from this channel, qualifies for priority sector lending. It is our key objective to bring in a lot of PSL through this channel. Since it is largely the distribution in semi urban and rural areas, it will help us in scaling PSL loans,” Bhagat told Business Standard.

There are 40-45 banking services like account opening, fixed deposits, loans that could be offered through the digital platform.

Smart Saathi will enrol agents of business correspondents like Common Services Centers. India Post Payments Bank has also partnered with HDFC Bank for distribution of banking products and services in semi-urban and rural areas. HDFC Bank’s deep learning of semi-urban and rural ecosystem has been utilized to develop the platform, which will not only provide an access for the distribution of all banking products but will also enable the agent to service customers better, the bank said.

In the run-up to the merger with HDFC, the Reserve Bank of India has given three years to HDFC Bank to comply with the priority sector lending norms.

According to RBI norms, commercial banks need to extend 40% of the adjusted net bank credit (ANBC) of the previous year towards the priority sector.

RBI has allowed HDFC Bank to consider one-third of the outstanding HDFC loans in the first year of the merger. The remaining two-thirds of the portfolio of HDFC Limited will be considered over a period of next two years equally. Effectively, HDFC Bank has to comply with the first year’s target, one year after the effective date of merger which is likely to be in June or July this year.