MICROCAPITAL BRIEF: Reliance Capital to Serve as Banking Correspondent for State Bank of India

Reliance Capital Limited (R-Cap), the financial services branch of Reliance Group, reportedly has partnered with the State Bank of India (SBI), a state-owned financial services provider, to function as its banking correspondent (BC). BCs may offer services including opening accounts, mobilizing deposits, accepting remittances, making remittance payouts and accepting loan proposals on behalf of the bank. Companies can also offer their own financial products at these outlets, which are often located within other organizations such as offices or educational institutions. Mr Vikrant Gugnani, director of R-Cap subsidiary Reliance Money, reportedly plans to increase the current 30 “kiosk branches” to 500 by the end of 2012. These kiosks reportedly manage approximately 20,000 transactions monthly and earn between INR 15 (USD 0.26) and INR 20 (USD 0.35) per transaction. There reportedly are also plans to introduce mobile banking.

Indian companies are reportedly opting to serve as BCs partially to learn about banking to be ready to set up their own banks if the relevant regulations are changed to allow it. For example, many potential BCs offer loan services to clients but are not allowed to take deposits, a key function of banks. Banks also benefit from such arrangements by more easily reaching small-ticket clients and expanding to different regions.

By Charlotte Newman, Research Associate

About State Bank of India
The State Bank of India (SBI), founded in 1955 by an act of Parliament, provides investment, consumer, commercial, retail and private banking services, as well as asset management, pension, mortgage and credit card services. For the fiscal year 2011, SBI reported total deposits of INR 933,933 crore (USD 185 billion), net profit of INR 8265 crore (USD 1.64 billion), return on assets of 0.71 percent and return on equity of 12.84 percent.

Sources and Additional Resources:

LiveMint: “Firms Take Business Correspondent Route to Gain Banking Expertise,” http://www.livemint.com/2012/06/11222548/Firmstakebusinesscorrespond.html?atype=tp

MicroCapital.org story, June 21, 2012, “MICROCAPITAL BRIEF: Number of No-Frills Bank Accounts in India Surpasses 100m,” https://www.microcapital.org/microcapital-brief-number-of-no-frills-bank-accounts-in-india-surpasses-100m/

MicroCapital.org story, May 16, 2012, “MICROCAPITAL BRIEF: Wincor Nixdorf Deploys Automated Teller Machines (ATMs) in Bangladesh,” https://www.microcapital.org/microcapital-brief-wincor-nixdorf-deploys-automated-teller-machines-atms-in-bangladesh/

MicroCapital Universe Profile: State Bank of India
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=State+Bank+of+India

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