Nabard cell to help tackle rural poverty

The National Bank for Agriculture and Rural Development (Nabard) has launched a dedicated ‘Ajeevika” cell to help alleviating poverty in rural hinterlands. The cell aims at enabling women get better access to financial resources at affordable rates and facilitate establishment of sustainable livelihoods.

A dedicated team of officials from Nabard will run the cell. The cell will work in close coordination with the Ministry of Rural Development for furthering the goals of the National Rural Livelihood Mission (NRLM).

To start with, the unit will focus on about 600 backward and extremism-affected blocks in 150 districts of the country to be identified by Ministry of Rural Development.

The Ajeevika cell will facilitate convergence of a wide variety of approaches and best practices to mobilise poor households into self-help groups (SHGs) as also livelihood development approaches such as “Wadi” in adivasi communities to ensure establishment of sustainable livelihoods.

The cell will also attempt to address supply- and demand-side constraints, besides bridging capacity gaps of the poor communities and strengthening existing livelihood sectors such as agriculture, allied activities and also establish micro-enterprise.

kram@thehindu.co.in

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Banks allowed to run ads on ATM screens

Banks are likely to make the most of the time you spend in front of their ATMs. They may use the ATM screens for advertising.

The Finance Ministry has issued a notification allowing them to advertise either their own products and services or those of broking firms, mutual funds, insurance companies and pension funds on the ATM screen.

Going by the notification, banks can squeeze in an advertisement during the seconds (after keying in the amount to be withdrawn, the machine takes a few seconds — 10-20 seconds — to process the request) you wait before the ATM to withdraw cash.

The notification

The notification reads: In exercise of the powers conferred by the Banking Regulation Act, the Central Government hereby specifies “display of financial products conforming to the regulatory framework as provided by the RBI, SEBI, IRDA and PFRDA, on the Automated Teller Machines” as a form of business in which it is lawful for a banking company to engage.

Banks can bring down the cost per transaction by generating some revenue through advertisements, say bankers.

“Thanks to the five free ATM transactions per month norm at other bank ATMs, other banks' customers are using our ATMs for transactions.

“If we can showcase our products and services to them through advertisements, we can expand our customer base,” said a senior public sector bank official.

Some precautions

Before embarking on advertising on ATMs, banks have to take certain precautions.

Given that an advertisement will appear during the few idle seconds when the cash withdrawal request is being processed, bankers say there should be a clear header at the top end of the ATM screen indicating that the transaction is being processed.

Else, seeing the advertisement come on the screen, there are chances that the customer could presume that his transaction has failed. Further, if the customer is riveted to an advertisement, he may even forget to collect cash.

Following the notification, banks have approached the Reserve Bank of India about the precautions that need to be taken for advertising on ATMs.

As per National Payment Corporation of India's data, the 77 banks that are connected to its National Financial Switch collectively had a network of 91,324 ATMs.

The number of cash withdrawals and the number of balance enquiries accounted for 74 per cent and 24 per cent respectively of the total volume of 15.67 crore transactions in February.

kram@thehindu.co.in

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Home insurance gets least priority

With the growing number of homes in the middle-income and high-end segments, the home insurance segment is gradually gaining awareness across the country.

But traditionally, buyers' interest in choosing the best of homes with elegant interiors, isn't matched by the interest in securing there purchase.

“The home insurance sector is at a nascent stage, as compared with other insurance sectors in the country,” says Mr Mukesh Kumar, Head - Strategy, HDFC ERGO. According to him, housing finance companies are playing an important role in evolving the home insurance companies in India.

“Increasing incidents of house burglary, better awareness, and higher disposable income are contributing to the growth of the home insurance segment,” says Mr Subrahmanyam B, Senior Vice-President and Head - Health, Commercial Lines and Reinsurance, Bharti AXA General Insurance.

UNTAPPED POTENTIAL

However, home insurance contributes to only around 1 per cent of the total business written by general insurance companies today, which shows the huge untapped potential of this segment, adds Mr T. A. Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance.

Home insurance is given little priority. While customers choose the best appliance, or décor for their home, when it comes to securing it, there is a perceptible indifference, he adds.

He explains that housing loans have led to growth in home insurance purely at the banks' insistence, and most customers leave the insurance decision to them. On a standalone basis, home insurance has few takers, says Mr Ramalingam.

Ms Roopa Shankar, a partner in a Bangalore-based wealth management firm, has a similar view. She gets several enquiries from customers on home insurance but the lengthy process of listing out of household items and valuing them puts them off. “They never return with filled-up forms,” she adds. This is despite the fact that premiums for home insurance are fairly low, points out Ms Shankar.

It is no surprise that home insurance doesn't contribute much to the overall business of general insurance companies.

But what is heartening to know is that these companies are seeing a growth in this segment. For Bharti AXA, the segment has shown 100 per cent growth in 2011, while for ICICI Lombard and Bajaj Allianz GI, growth is at 25 per cent and 20 per cent respectively.

Much of this growth comes from metro cities. “Currently, home insurance is doing well in metros and Class-A cities. The segment is gradually growing in the Class-B and C cities,” says Mr Neelesh Garg, Executive Director, ICICI Lombard GIC.

NATURAL CALAMITIES

He explains that the increase in the rate of occurrence of natural calamities, such as flood, earthquake and tsunami, has resulted in a growing need to protect homes.

So, home insurance is picking up in areas prone to natural calamities and among the high net worth individuals segment where there is potential for greater loss, he says.

Mr Kumar of HDFC ERGO adds that finance companies making home insurance mandatory for home loans has contributed to a 25 per cent growth in home insurance in the last financial year when home insurance premium touched Rs 150 crore. The latest growth curve shows the home insurance premium touching the Rs 150-crore mark, registering a growth of 25 per cent in the last financial year; and if the situation prevails, this pattern is expected to continue,” he says.

Besides growing awareness, according to Mr Subrahmanyam of Bharti AXA GI, increased demand for individual mediclaim policies has stimulated growth for this segment also. “There is an increase in the number of intermediaries focusing specifically on this segment, as commissions are fairly attractive,” he says.

Bharti AXA plans to target intermediaries catering to this segment exclusively, and also develop a dedicated sales force. “We also plan to cross-sell home insurance products to our existing motor and health insurance customers,” says Mr Subrahmanyam.

For ICICI Lombard, the focus would be on multi-channel distribution, including online transactions. “We will use the online medium extensively for selling a home insurance policy. Along with the ease of buying a policy in no time, online buying also gives a transparent view to the customer on policy coverage, exclusion, premium and the claims process,” points out Mr Garg.

Mr Ramalingam emphasises the need for simple and easy-to-understand variants. For instance, Bajaj Allianz's ‘Easy House Holders' policy covers home and assets from fire and related dangers, burglary and theft, breakdown of domestic appliances, electronic equipments and baggage. The plan is available as a kit, and offers three choices depending on the sum assured. We feel home insurance would do well due to the convenience and simplicity aspect.

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RBS to offer philanthropy services in India

The Royal Bank of Scotland (RBS) India will soon provide philanthropy services as a part of its wealth management segment in the country.

“We have started providing philanthropy services under wealth management in Britain from 2005. As India is one of our key international markets, we will soon provide this service to our clients under our wealth management portfolio,” RBS executive director for philanthropy services, wealth management division, Ms Maya Prabhu, said here.

Rising level of prosperity and family-run businesses here provide a lot of opportunities in this space, she said.

According to the bank, the blueprint for providing such services in India will be ready by this June-July.

Ms Prabhu said education and health among others will get the priority. But, though education and health are “the themes which have seen larger interest” as a part of philanthropy services here, it will be client-specific, she said, adding that family-run foundations are very active in the education space in the country.

Earlier this month, RBS sold some of its businesses like cash equities, equity capital markets and mergers and acquisition here and in 11 other countries in the Asia-Pacific to the Malaysia-based CIMB Group for around £75 million ($120 million).

The bank will continue in debt financing, risk management and transaction services business, and is awaiting the RBI nod to sell its retail banking arm in the country to HSBC since mid-2010.

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Development Credit Bank Q4 net jumps 52% on lower NPAs

Development Credit Bank (DCB) today reported 52% rise in net profit at Rs 17.3 crore in the fourth quarter ended March 31 as against Rs 11.4 crore in the year-ago period on the back of lower provisioning and overall reduction in costs.

"We have seen all-round improvement in our performance in Q4 as well as during the entire fiscal, driven by lower provisioning, reduction in overall cost and better quality of our loan books," DCB Bank Managing Director and CEO Murali M Natrajan told PTI over phone from Bangalore.

During the quarter under review, the bank's gross NPA ratio came down to 4.40% at Rs 7 crore from 5.85% or Rs 11 crore. Its net NPA ratio improved to 0.57% from 0.96%.

For the full year, the bank, which primarily focuses on MSMEs, SMEs and retail mortgages, saw its net profit more than doubling to Rs 55.1 crore from Rs 21.4 crore, driven by lower provisioning which massively came down to Rs 29 crore from Rs 65 crore.

On the bad loan front, Natarajan said, for the bank, which had quit unsecured loan portfolio in 2009, the stress came from some corporate loans during the quarter, but did not specify the sectors.

Going forward, Natarajan said he sees more pressure on the margins at least in the next two quarters and muted pick up in advances at around 3-4%. However, he sounded bullish for the full fiscal (FY13), saying the loan book will grow by 22-24%.

The lender saw its cost of funds going up to 7.57% from 7.16% in Q4, bringing down its NIM to 3.12% from 3.15%. For the full fiscal, NIM was 3.25% as against 3.13% last fiscal.

Source: Business Standard

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