Innovative Rural Finance in India: ICICI Bank's Credit Access Points
This paper presents the Credit Access Point (CAP) model of rural finance implemented by ICICI Bank in India. It describes the design of an experiment to test the model's risk incentives, compares the model with others in various countries and offers suggestions for future bank-academic collaborations. The paper states that private banks often find rural finance unprofitable due to several reasons. ICICIs CAP model is part of the bank's "No White Spaces" strategy to provide every rural community an ICICI bank customer touch-point within a 10-kilometre radius. The paper discusses major indicators of CAP's success, namely previous credit exposure, employee composition, office assets and lending behaviour. The paper states that CAP is part of a global trend of improving rural finance through innovation. Findings include:
- "Soft" techniques and practical techniques often succeed in rural finance;
- Education and time in the area may be less important for success of CAP than office sophistication;
- Identifying common goals makes collaboration between banks and research institutes possible;
- Extensive work is required to make rural financial coverage a reality.