Commercial banks in India increasingly targeting low-income borrowers
Monday, April 7, 2014
In the past, banks had stayed away from offering micro-loans in rural areas because of the high operational costs involved; if at all they were seen in action in the rural areas, it was seen as part of their commitments to meet their priority lending targets.
Since the government at the Centre prioritised its focus on financial inclusion in the last couple of years, cosmetical banks have started using the ’business correspondent’ route to re-enter the segment.
Business correspondents are agents of banks operating in far-flung areas of the country, where only MFIs used to operate earlier.
So, the domestic micro-lending industry in the country is now witnessing resurgence in interest from commercial banks in targeting low-income borrowers.