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Among banking licence aspirants, Srei Infrastructure is optimistic on its rural business and is targeting around 65 per cent of new branches in rural areas. The company’s chairman and managing director, Hemant Kanoria, spoke to Clifford Alvares on the company’s rural game plan and growth prospects. Excerpts:
What is the your game plan for a banking licence?
We see a good potential in the rural market. We have around 28,000 rural centres that we can use to set up branches in the rural areas or we can also convert some of them into branches. We already have invested in a lot of infrastructure which is IT enabled and connected. Also, when going rural, the costs can go very high. Our focus will be to keep costs low and to cater to the rural market in a cost-effective manner.
Is there enough room for growth in rural areas?
There's a huge opportunity in rural areas provided you keep costs low. A lot of income in the past couple of year's has been generated in the rural areas. Chit funds are mobilising a lot of money. Banking penetration is low, and much of the rural market is unbanked. There's a lot of potential for mobilising deposits and increasing lending in the rural market.
What is the rural branch strength you are looking at?
We are planning to have around 68-70% of our branches in the rural areas. We will convert some of our centres in a slow and systematic manner or add a branch near the centre and so the progress will be slow initially. We are planning to have a larger rural presence and then have some urban presence rather than the other way round.
What are the geographical areas will you focus on?
We will start off in eastern and northern regions, and then gradually expand our presence all over the country.
What is your branding strategy?
Branding is something we are looking at. We do have a business plan in place, but it's a little to premature to comment on that.
Most analysts see statutory liquidity requirements to be a problem initially. What's your assessment?
We have reviewed it and we don't see that to be a problem.
