The Hindu Business Line : SBI on `Tiny' drive in rural areas

STATE Bank of India is looking to expand the reach of its retail products such as personal loans, life and medical insurance to rural areas, through its latest initiative `SBI Tiny.'

Tiny is the bank's no-frills savings account for the rural areas, under which depositors can open accounts with zero balance and deposit amounts as small as Rs 5.

Announcing the launch of Tiny at Bahirgaon, a village 55 km from Aurangabad, Mr Ashok Kini, Managing Director and Group Executive, National Banking Group, said, "SBI Tiny is not a product, but a strategic initiative by SBI. Through this deposit scheme, we want villagers to develop a relationship with the bank. Once they have a savings account, they can create assets by taking credit and then move on to other relationships such as insurance."

"We are talking to insurance companies for products specific to rural areas. We are speaking to both SBI Life and other insurance companies," Mr Kini said. To begin with it would be life insurance and medical insurance which covers initial hospitalisation charges, he said.

The pilot project has been launched in Bahirgaon, a model village with a population of 2,082. The aim is to see that every villager becomes an account holder with the bank, Mr Kini said. In the next three months or so, the bank will, hopefully, begin its relationship with the deposit holders.

The bank would also consider specialised loan products to cover rural areas. Retail loans such as personal loans had not penetrated in these areas, because villagers were not familiar with the concept of borrowing money for consumption, said an official from the bank.

For Tiny, SBI has introduced the concept of SBI Mitras, people who would assist the villagers in opening accounts and also collect deposit from them through deposit boxes. Branch managers in areas where Tiny is offered would be given decentralised decision-making powers. This is taking bank out of banking and entering the community, Mr Kini said.

SBI plans to open 60-70 new branches in 2006 and many of these would be in rural areas.

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