The Hindu Business Line : KSCARDB: Blending banking with insurance

KERALA State Co-operative Agricultural and Rural Development Bank (KSCARDB) is seeking to enter the insurance sector by taking up distribution of insurance products of leading companies.

The apex agri-rural bank in the State would like to pick the threads of an informal communication already made in this connection with the Iffco-Tokio Marine combine and revive the proposal for vending the latter's insurance products, according to Mr K. Sivadasan Nair, President.

The bank is required to route its proposal through the National Federation of Co-operative Agricultural and Rural Development Banks.

The rural reach of the bank will be quite an attractive proposition for all new-generation insurance companies planning to tap the huge potential in the State, Mr Nair told Business Line.

Housing credit is another area where the bank would like to make its presence felt, he added.

Both National Bank for Agriculture and Rural Development (Nabard) and National Housing Bank (NHB) have granted lines of credit to KSCARDB for this purpose.

In this connection, Mr Nair referred to the special gesture of NHB having amended its bylaws and reviewed its exposure norms merely to the line of credit possible. "The housing credit disbursals have been very good and, at times, have exceeded expectations."

According to Mr George Kuriakose, Secretary of the bank, the NHB line of credit has been on stream for the last 10 years. The bank has disbursed an aggregate Rs 524.08 crore for building 74,431 new dwelling units.

Another Rs 177.08 crore has been given away for the repair of 40,529 units during this period.

The Nabard line of credit was made available from last year and disbursals amounted to Rs 58.29 crore with respect to 5,522 new units. Loans for repairs amounted to Rs 23.8 crore for 3,816 units.

But, in recent times, the bank has found it difficult to measure up to the full-throttle campaign by aggressive players in the field, including commercial banks and other specialised agencies.

In Mr Kuriakose's view, the interest rate band of 12.5 per cent (lowest) to 14.5 per cent (maximum) that KSCARDB offers is the "most honest''.

Because, the bank does not have hidden charges built into the structure, which is what help the more voluble players play to the gallery by quoting the rates out of context. But KSCARDB is not able to carry this message effectively into the domain of the rural farmers who provide its target audience.

This is primarily because the bank does not have the freedom to initiate efforts on its own to reach out to them.

It is also hemmed in by the fact that no appreciate cuts in refinance rates have been forthcoming from either NHB or Nabard.

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