Leading Indian banker describes the blueprint for a banking revolution in rural India
The NYU Microfinance Initiative and the Financial Access Initiative (FAI) directed by NYU Wagner Professor Jonathan Morduch co-sponsored a rare opportunity for New York University graduate students and representatives from a range of Wall Street institutions to hear first-hand about the introduction of financial services in rural India from Nachiket Mor, a leading Indian banker who is Chairman of the IMFR Trust and President of the ICICI Foundation. Among those attending the event were representatives from such financial institutions as Standard & Poor's and Pro Mujer, and members of NYU Stern's Social Enterprise Association, Emerging Markets Association, and South Asian Business Association.
Mor, who as former Depurty Managing Director of ICICI helped lead the largest private bank and second largest bank in India, was introduced by Thomas Cooley, Dean of NYU Stern, and Professor Morduch, Managing Director of the FAI and Professor of Public Policy and Economics at the Robert F. Wagner Graduate School of Public Service at NYU.
In his presentation, Mor spoke of how the IFMR Trust, a for-profit holding company, is bringing financial services that are "continuous, reliable, flexible and convenient" to some of the poorest districts in India, aiming to build a 300-bank infrastructure. That ideal comes from a vision for microfinance in India that Professor Morduch has co-published, in part inspiring Mor's work in this area.
The goal, Mor explained, is to offer 14 financial products, including ATMs, while paying the highest interest rate on savings and offering the lowest rate on loans. (The interest rate on savings of 9% is three times higher than the going rate.) The first bank opened June 1, 2008 in Tanjore, with 15 more planned.
Mor is using the US banking system as a model, but watching the sub-prime melt-down closely for lessons learned. In particular, he is paying attention to transparency and who holds the risk of the loan originator. He promises that the banks will stay in markets that are entered. By providing access to financial services where no alternative exists, Mor expects to markedly change lives - of those who work in the banking system as well as those who use its services.
Following his visit to NYU Stern, Nachiket Mor returned with Jonathan Morduch to the Wagner School, home of the Financial Access Initiative. He met there with Professor Morduch and senior FAI staff members Caitlin Weaver and Aparna Dalal about collaborative projects. In August, Weaver and Dalal met with Mor and his staff in India. Weaver visited Mor's new project in Tanjore.