The Challenge of Sustainable Outreach: How can Public Banks Contribute to Outreach in Rural Areas? Five Case Studies from Asia

Evaluating the challenges in outreach faced by rural finance practitioners

This collection of case studies was compiled in conjunction with the International Conference "The Challenge of Sustainable Outreach", held by APRACA and GTZ in Colombo, Sri Lanka, in 2003. It looks at the potential role of public banks in financial services provision in currently underserved rural areas in Asia. The publication takes the standpoint that public banks can make a significant contribution to outreach if certain conditions are achieved to facilitate institutional evolution from providers of supply-led subsidized agricultural credits into sustainable, demand-oriented providers of financial services. These conditions revolve primarily around five critical issues:

Ownership and governance;
Economic viability;
Decentralization;
Good management;
Customer orientation.

Using these criteria as a basis, case studies have been conducted for five public banks in Asia:

India: Kakathiaya Grameena Bank (KGB), in conjunction with NABARD (National Bank for Agriculture and Rural Development);
Indonesia: Bank Rakyat Indonesia (BRI);
Nepal: Agricultural Development Bank (ADBN);
Sri Lanka: People's Bank;
Thailand: Bank for Agriculture and Agricultural Co-operatives (BAAC)

A synopsis report links together the results of these case studies in the context of the paradigm shift from directed credit to rural financial intermediation, while the final chapter looks at relevant issues for the future development of public banks.