HDFC Bank has acquired a 10% stake in CSC Grameen e-Store, a special purpose vehicle run by the Ministry of Electronics and Information Technology, for an undisclosed amount, the Economic Times reported. The partnership between the country’s largest private bank and CSC Grameen aims to deliver and scale access to financial services and banking products to semi-urban and rural customers.
CSCs, or Common Service Centres, are a government initiative to provide rural jobs to Village Level Entrepreneurs (VLE) who act as agents for enrolling citizens into government schemes. CSC Grameen is a subsidiary CSC e-Governance Services India Ltd across the country which provide e-commerce, banking and finance as well as government services entirely through digital means. Unlike traditional CSCs, which also have digital operations, CSC Grameen is a step up operation wherein these VLE doubles as an e-commerce and banking correspondent.
“CSC Grameen eStore is a ground-breaking eCommerce initiative by CSC SPV to promote digital ordering and delivering safely to the consumer doorstep. That which started as a humble beginning to serve the community during the COVID-19 Crisis, is turning into a flourishing Grameen eCommerce revolution,” the website says.
It is important to remember that CSCs were an integral part of the Aadhaar project, as these centres were used to enroll a significant proportion of the population onto the national health ID. They are also enrolment points for other government schemes like the Awas Yojana (Housing), Ayushman Bharat (Health Insurance) and Jan Dhan (financial inclusion bank account).
“We are working closely with CSC to take banking services to the last mile, through VLEs. We have been working very closely with CSCs in the last few years to make these VLEs our banking correspondents,” a person aware of the development told MediaNama. Apart from working on government level schemes, the VLEs are cross-selling banking and financial services in return for a fee, this person said on the condition of anonymity. “We have 5,000 branches but we have access to close to 200,000 to 300,000 lakh CSCs. This will allow us to expand our presence in rural India,” the person quoted above told MediaNama.
On Monday, HDFC Bank launched its flagship artificial-intelligence chatbot ‘Eva’ on CSC’s Digital Seva Portal, which would allow VLEs to learn about the banks’ products and services in quick manner before on-selling them to consumers in their catchment area. “This initiative will bridge the gap between India and Bharat. Urban India has been quick to learn and adapt to the world of digital but it is yet to benefit Bharat. We are trying to bring about a change by empowering VLEs to learn more banking services and improve their business by helping others,” said Smita Bhagat, Group Head of Government and Institutional Business and Start-ups at HDFC Bank.
HDFC Bank has integrated its core systems with the CSCs to ensure that its existing product and services can be sold by the VLEs. The bank will market and provide Kisan Credit Cards, Home Loans, Gold Loans, Two wheeler loans, Tractor loans, and other types of loans and deposit products to rural customers through this network of e-Stores. Currently, 1,27,348 VLEs are providing HDFC Bank’s products and services in semi-urban and rural India, of which 15,791 are business correspondents who act as banking outlets across 685 districts across the country, the bank said in a recent statement.
Scaling private services on top of CSCs
CSC Grameen was set up in April last year and essentially a platform for VLEs to not only on-board citizens for government programs but also to provide access to a range of e-commerce services like handicrafts, groceries and consumer durables. The advantage of this strategy is that private companies can reach out to rural customers using a digital platform run by CSC Grameen that is used by VLEs. This reduces the cost of operations and servicing rural consumers for companies as they not need to directly hire employees and distributors in remote areas, or set up a physical shop in the 10,000 PIN Codes that CSC Grameen operates in at present. According to the ET report, in the last one year CSC Grameen has clocked over Rs 250 crore in transactions.
HDFC Banks’ investment into CSC Grameen follows an earlier investment by Tata Digital in December last year.
Recently, auto-manufacturer Renault tied up with CSC Grameen to list their product catalogue on the CSC Grameen e-Store app. “To facilitate smooth rural e-commerce, Renault will build a mechanism that would facilitate the supply of its products to Village Level Entrepreneurs (VLEs) who will help list the products on select CSC Grameen eStores,” said the company in a statement. Other auto-makers like Bajaj Auto and Tata Motors are in talks with the IT Ministry to also integrate their car booking platform with the CSC Grameen network, according to the Indian Express.
Similarly, FMCG giants Coca-Cola, Pepsi Co and Dabur India have also tied up with CSC Grameen to list their product catalogue on the e-Store. Interestingly, the IT Ministry recently rejected a proposal from Walmart India to buy out 140,000 Grameen e-Stores and it also rejected an offer from Amazon India to help scale-up these outlets, the Indian Express reported.