Productisation of services
BANK WATCH BY SAJJAD BAZAZ
J&K Bank’s eco-friendly schemes providing customers with alternatives to use cleaner sources of energy for domestic consumption.
Banking in some form or the other has always been there from the ancient times and today it is considered as the backbone of modern economy. It is only through an efficient banking system that business, trade or commerce can be conducted on large-scale. Overall, it has become a major instrument for socio-economic transformation aiming at minimum rich-poor disparity.
Looking back at the banking system in India, we find that it had an urban and selective group outlook, responding mostly to the credit requirements of a few big industrialists and affluent businessmen. But after nationalisation of banks in July 1969, we witnessed a radical change in banking policy and banks were vested with new social obligations. Over a period of time, the banks of a ‘particular section’ became the banks of the ‘general public’. Today banking is an instrument of social change.
Even as the focus was ruralisation of banks, there is still a vast population in rural and remote locations which remains outside the ambit of formal banking system. This concern gave birth to financial inclusion concept so that banking services are extended to far flung areas. Under this mission, saving bank accounts (no-frill) are opened with zero balance. Not only this, microfinance activities were encouraged to force the banks to lend to poor. Despite this, unbanked areas still remains a concern and the Reserve Bank of India last week even declared J&K an unbanked state.
Meanwhile, structure of banking products and services has undergone a sea change. Changing customer needs and preferences has forced the banks to evolve a process where innovation in the area of product development has become order of the day. We have now an environment where efficient money management alone is not enough for the banks. In fact, banks have to simultaneously manage customers and their expectations efficiently. Owing to multiple options available in the market, present day customers are demanding more for less. In such scenario attracting and retaining customers requires an ongoing process of identifying the customer needs and subsequently develop new and value added products to keep the customers in good humour.
Over the last several years now, the banking sector in the J&K State has taken significant strides to achieve profitability and competitiveness to cater to the increasing demand for banking services. However, the growth in banking services has been limited to a minority of the total population of the state, as the banks operating here have not been able to reach deeper into the rural segments, where most of the population is deprived of even basic banking services. Financial exclusion has been predominant in rural areas of the state primarily due to poor infrastructure resulting in lesser access. This along with financial illiteracy, burdensome documentation and procedures insisted by formal sources of credit, lack of customized financial products leads to exclusion. The extent and reasons for exclusion are many.
However, it is J&K Bank having a vast presence in the state where its branches are even at Line of Control, which launched its mission ‘Reaching out to all’ so that unbanked segment of population is brought under the ambit of formal banking system. While considering the huge positive impact on generation of livelihoods, financial empowerment to the rural masses and poverty alleviation, the bank in the past few years has rapidly adopted customized business models for bringing unbanked areas into the banking fold so that larger socio-economic objective of inclusive growth through financial inclusion is achieved.
As far as productisation of services is concerned, we have not witnessed the development of products by the banks operating in J&K state as per the needs of the customers. The products designed by them for rest of the customers in India are not matching the requirements of various sectors of economy. In light of this scenario, J&K Bank has been proactive in tailoring new products and services and at the same time has restructured some old products to match the present day requirement of its customers. It is not profitability alone but the customer convenience, which has been kept in mind while developing or restructuring the products and services.
As far as J&K’s various sectors of economy like horticulture, agriculture, industrial and artisan sectors, are concerned, J&K Bank has laid a special focus to tap the potential, which remained unexplored for want of finances. In addition to this, over the last few years, the bank has introduced a number of eco-friendly products with the objective of providing customers with alternatives to use cleaner sources of energy for domestic consumption. Last week the bank introduced yet another special scheme for financing LPG connections for all ration card holders (both Below Poverty Line and Above Poverty Line). Introduced under the name of “Aan Poshe Teli, Yeli Wan Poshe” (You Will Get Your Bread Only if the Forests Last) – a famous saying of revered saint Sheikh Noor-ud-Din Noorani (r.a)-(Alamdar-e-Kashmir), the scheme is primarily for people below poverty line residing in rural and remote areas of the state. It aims at inducing them to switch over to cleaner sources of energy rather than the traditionally used fuels like firewood/kerosene oil/ dung cakes, etc.
Under the scheme only family head or earning hand of the family is entitled for the said scheme, i.e one person per family only is eligible to get loan under the scheme. It is mandatory that the applicant should be an account holder of the Bank. Besides the facility has also been kept open for those persons who are already availing loan facility from the bank with satisfactory conduct and dealing. The scheme covers the cost of supplying a regulator, two cylinders, accessories and a burner stove.
The maximum amount of loan to be available under the scheme is Rs 4,500 at 10 per cent rate of interest with monthly rest, payable within four years.
The loan is granted against guarantee of one person. Besides, gas stove and other accessories shall remain hypothecated to the bank. Notably, the security deposit (against supply of two cylinders & one regulator) will remain pledged the J&K Bank. The scheme has an in-built Personal Accident Cover of Rs.5 lacs (in case of death) and medical expenses of Rs 1 lac per person for bodily injury to customer and third parties arising out of use of LPG Cylinder at the customers registered premises or property damage at the customer’s registered premises. The premium for insurance cover shall be borne by the Gas Companies.
Last year, the Bank introduced solar schemes to finance the end users for installing solar home systems in their homes. The Bank launched a scheme for financing solar energy home lighting systems in co-ordination with Tata BP Solar last year. Under the scheme, loan facility is extended for purchase and installation of Solar Home Lighting System of Tata BP Solar India Limited. Against the market price of Rs.15,080/- the bank shall be giving maximum loan amount of Rs.13,000. In case of any price variation, the customer has to bear margin of 15 per cent of the invoice price of the system. The loan is to be repaid within five years in easy monthly installments.
The bank has also a tie-up with Indian Renewable Energy Development Agency Limited (IREDA)-Government of India Enterprise, to participate in the implementation of the scheme on “Accelerated Development & Deployment of Solar Water Heating Systems in Domestic, Industrial and Commercial Sectors” in J&K State. The main objective of the scheme is to promote the widespread use of solar water heaters through a combination of financial and promotional incentives in the state. The main incentive for the users of solar water heaters is the interest subsidy, cash incentive to motivators, support for organizing seminars / symposia /workshops/business meets/exhibitions, training programmes, publicity and awareness campaign, technology upgradation etc. The bank provides loan for purchase of solar water heaters the quantum of which is linked to the net monthly/salary income of the borrower - 20 times net monthly salary/income of the borrower. Generally, the quantum of loan is 85 per cent of the total cost of the solar water heating system.
Lastupdate on : Sun, 14 Feb 2010 21:30:00 Makkah time
Lastupdate on : Sun, 14 Feb 2010 18:30:00 GMT
Lastupdate on : Mon, 15 Feb 2010 00:00:00 IST
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