Rural Services Delivery An ICT Solution

1. Rural Services Delivery – An ICT Solution S.S. Satchidananda (sssatchidananda@iiitb.ac.in) Research Director, CBIT,IIITB, Bangalore, INDIA

2. Outline Opportunity: Serving Rural India thru ICT Problem: Inadequacies and Inefficiencies in the Delivery of financial services in rural areas CBIT Solution Elements of the new Model Major Tasks Opportunities & Benefits

3. Background 70% of Indian population in rural areas 4% Agricultural growth key to overall GDP growth of 7- 8% Increasing credit flows to rural areas critical for capital formation in agriculture Lack of adequate success till date in delivery of credit to rural people

4. Challenges Slowdown in the flow of investment credit from 20 % growth in 70s to 10 percent in 2000 Declining share of Small Farmers in rural credit Increasing the share of banks in credit Reducing the cost of credit (Transaction +risk cost) Cutting the delays & excessive documentation Improving governance in banks

5. Current Stage Huge credit gaps, High transaction cost, Delays Systemic Issues Data Inadequacy/unavailability Knowledge Gap about Rural People and Economy Documentation difficulties Bureaucratic delays Lack of Accountability High transaction costs Access cost

6. Elements of the Model Imaginative use of ICT services (shared information and delivery infrastructure) Entrepreneur-based Operations (Outsourcing data collection and unbundling credit processes) Human interface (local credit rating) Secure, un-intimidating human-aided interface (software support) Pro-active Delivery of Services (analytics)

7. Major Tasks Translation of the model into action People Issues (Change management) Process issues (Data ownership, authentication) Technology (Affordability, sustainability, scalability) Stakeholder commitment (Support from Banks & Government)

8. Opportunities for IT companies IT Deployment in Rural India Well-researched Model Technical & domain support - Testing & Perfecting the Solution, Certification and Integration with Core Banking Solutions

9. UNIQUE FEATURES Comprehensive coverage Outsourcing model Online transactions Leveraging technology for value creation Business model based on entrepreneurship New institutions like rural credit rating Local language interface Voice support for transactions Common information infrastructure Reduction of digital divide

10. End User Benefits Better (faster, easier) and larger credit delivery to Rural India Reduction in “Digital Divide” Business for Banks and IT Companies Greater rural productivity & income

11. Current Status of the Pilot Project funding by Microsoft -led consortium Technology Solution in place Major Stakeholders ( Banks, Technology Companies, NGOs) on board Location: Backward group of 12 villages in Honavar, Karnataka Expected trial run: June 2005

12. Summary ICT for Rural India – an alternative solution Common Information Infrastructure & shared delivery system Reduction in transaction costs & delivery time Improvement in Quality of Services Increasing availability of services Academics, IT Industry, Banks and Government Synergy

13. THANK YOU