India: Banking on Growth

Today, it seems, everything is booming in India. Nowhere is that more evident than in its banking system where an emerging middle class is helping to drive innovation. The 21st century Indian customer is seeking not just a bank, but total financial institutions providing credit cards, loans, financial services, insurance, mutual funds, securities, and commodities.

And the banking industry is responding. India’s robust financial system is marked by well-established institutions, healthy competition, and high technology adoption. Managing assets worth $1 trillion, the Indian banking sector is growing at an annual composite rate greater than 13 percent. The next logical step for India’s banking system lies in its goal of greater financial inclusion throughout the country.

Under-banked Regions

In rural and remote areas of the country, for example, a high percentage of the population is considered “under-banked,” an industry term that means that the average branch office in these areas serves a larger population than the national average. What’s more, every one million people in India are served by a mere 39 ATMs, translating to a vast underserved segment that offers enormous potential for growth. There is also a strong correlation between under-banked areas and low tele-density areas where the reach of terrestrial telecommunications is low. This lack of infrastructure and services creates a significant digital and financial divide among Indian people.

Closing the Divide

Fully managed satellite and terrestrial broadband solutions from Hughes Communications India Ltd. (HCIL) are helping to close that divide. As the leading provider of satellite broadband solutions in the Indian financial sector, Hughes today supports more than 25 nationalized and private banks with nearly 19,000 sites, including more than 10,000 branches and 8,000 offsite ATMs. Currently, HCIL is rolling out an additional 8,000 branches for various regional rural banks that will further financial inclusion in under-banked areas in the country.

Under a recent contract with Allahabad Bank, HCIL will provide broadband services connecting 1,400 locations with satellite terminals and 1,000 with terrestrial MPLS links. Allahabad Bank plans to utilize the satellite and MPLS network to launch Phase II of its Core Banking Solution, which improves efficiency and enables low-value transactions, in both urban and rural branches. Similarly, HCIL signed a recent contract to deploy a network of 1,955 satellite terminals for the Central Bank of India whose mandate is to expand its Core Banking Solution to all its rural branches. Serving many of India’s largest banks, including the State Bank of India, ICICI Bank, and HDFC Bank, HCIL has built and operates INFINET—the Indian Financial Network of more than 3,000 locations across all banks, facilitated by the Reserve Bank of India.

A huge offsite ATM/kiosk rollout is also under way involving the deployment of 25,000 ATMs over the next three years, and in which HCIL is playing a key role by providing its satellite broadband technology. The company is also in partnership with various ASPs (application service providers) to provide core banking solutions to smaller and cooperative banks through managed service/outsourcing models.

The Role of Satellite Technology

“The banking journey has been an exciting one for HCIL,” said Shivaji Chatterjee, vice president of HCIL. “Because satellite communications is available everywhere—even in remote areas where terrestrial technologies can’t reach—it is a natural means to help expand financial inclusion in India. In addition to its ubiquity and quick deployment, satellite is optimal for sharing bandwidth resources, making it a highly cost-effective solution for small branches.”

Moreover, as the most disaster-proof technology, satellite can be also used as a backup for major banks where an emergency can disrupt terrestrial connectivity for days or even weeks.

Surging Economic and Social Systems

Today, by implementing their Hughes broadband communications systems, Allahabad Bank, the Central Bank of India, and other prominent banks are taking important steps toward the expansion of financial inclusion in India—providing needed services to communities and further contributing to the country’s surging economic and social growth