Assessing Market Potential and Business Model of Banks in Rural India


The client was one of Indias largest international banks having a combined customer base of 2.1 million in retail banking and over 1,000 top corporate relationships. In light of the exponential growth expected in rural financing and given the client’s strong commitment to the Indian market, the top management was evaluating entry in semi urban and rural markets.

Our Approach 

To assess market potential and business model of bank in rural India, UC adopted the following approach:

  • Conducted primary research across 8 locations. The parameters used for identifying locations were food and cash crop production, extension of agricultural loans, demand and consumption trends for agricultural related products like tractors and fertilisers, concentration of organised retail chains (e-choupal, Haryali Kisan Bazar), concentration of potential distribution channels like post offices and extent of micro financing
  • Identified key financial products – crop loans (Kisan Credit Card), land development loan, commodity financing, working capital loan, jewel loan and micro financing
  • Segmented rural customers R1, R2, R3 and R4 based on demographic profile and income. Analysed customer preferences for different types of products
  • Analysed average interest rates and delinquency rates across product categories
  • Analysed the following for financial entities operating in rural markets, viz. regional rural banks, commercial banks, co-operatives, self-help groups and micro finance institutions

    1) Product portfolio

    2) Market share and presence

    3) Customer preferences

    4) Distribution channels and technology platform

    5) Organisation structure

    6) Cost structure capital and recurring

  • Categorised districts by assessing product and market attractiveness.
  • Estimated potential of rural finance in identified districts and estimated overall potential for rural credit in India
  • Extrapolated sizing for other key districts in the state


Client received a shortlist of locations to conduct a pilot, a better understanding of elements of rural financing business model including product portfolio, customer segments, alliance partners, distribution channels and technology platform. A roll-out and implementation plan was also defined.