Taking a Bank to the Masses Has Always Been Close to My Heart

IDFC Bank, the country’s youngest bank, is on a drive to transform itself into a mass retail bank in 5 years. The bank, which started operations in October 2015 after getting a banking licence from the Reserve Bank of India in 2014, targets to acquire 6 million customers in the next 4 years, of which, it says, about 80 per cent would be from the mass retail segment. Says Rajiv Lall, founder managing director and CEO, IDFC Bank, “Taking a bank to the masses has always been close to my heart. I have been closely involved in the financial inclusion space… and now with the convergence of technology and finance, it is my conviction that we can create a profitable mass retail bank over the next few years.” He says the bank’s customer acquisition strategy focuses on addressing product/service gaps and judicious pricing incentives — which will go a long way in helping it achieve its targets. He believes “convenient access” in rural and peri-urban areas itself is a strong incentive for customers. The bank will roll out its network for mass retail in 50 districts in five states. In these geographies, it will reach out to people through a delivery model similar to microfinance institutions. Says Lall, “Partnerships and alliances will play a critical role in the bank’s journey.” In July, the bank acquired Grama Vidiyal Micro Finance Ltd, a Trichybased microfinance entity, which gave it access to 1.2 million rural and semi-urban households across seven states. “We have already on-boarded over 1 million of these customers onto our system,” says Lall. As Lall gives shape to his vision, his wife Bunty Chand, the executive director of Asia Society India, is taking her organisation to new heights. The leading educational organisation promotes understanding and strengthening of partnerships among peoples, leaders and institutions of Asia and the US. In an interview with Amit Ranjan Rai, the power couple speaks on their plans ahead.

- Amit Ranjan Rai

Rajiv Lall

Founder Managing Director & CEO, IDFC Bank

The IDFC Group has played a key role in infrastructure development through its multiple financial entities. Why the decision to enter the banking space — particularly, the mass market banking space? What has been the thought behind?

The decision to enter the banking space was essentially to diversify the asset base and liabilities of IDFC. As a mono-line institution focused on private infrastructure, the challenges confronting the infrastructure landscape made it imperative for us to look for opportunities outside of infrastructure. In many ways, the opening up of the RBI window for issuing new universal bank licences in 2013 could not have come at a more opportune time for us as macro developments in technology, telecom, banking, payments and Aadhaar created the possibility for us to offer banking products and solutions in a potentially disruptive manner. Taking a bank to the masses has always been close to my heart. I have been closely involved in the financial inclusion space through Lok Capital and now with the convergence of technology and finance, it is my conviction that we can create a profitable mass retail bank over the next few years. Also, over a period of time, a universal bank licence will help us build a retail depositary franchise which will reduce our dependence on wholesale funding.

Your vision for IDFC Bank is to transform it into a mass retail bank in 5 years. What are the key pillars of your strategy to achieve this vision? What will be your key growth drivers?