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Anuj Mehra, Managing Director, Mahindra Rural Housing Finance Limited (MRHFL) says, “Crop insurance can be a big reform to address the rural economic distress.” Speaking to Mohd Mustaquim, he discusses on what are the dos and don’ts to cater to the rural markets and about the MRHFL’s customer engagement in the hinterlands...
What kind of innovative steps will ensure better engagement will rural consumers?
There is need to design products and services which offer value to the rural customers. As long as you are providing him value he will be engaged with your business. For example, nearly 70 percent of our business comes through references as the customer is engaged and committed. As long as you're able to engage the customer by offering him back, you're into the business.
How out-of -home (OOH) can be best leveraged for marketing success?
The problem with out-of-home is that the consistency of the message. A lot of time the message gets distorted. As long as out-of-home can ensure consistency of the message it's a great medium for rural markets.
In the time of economic slowdown, how is it challenging for the marketers to approach the rural consumers?
A rural marketeer must always recognise that due to the nature of cash flow in the rural markets, customers will have challenges on and off. That is why, your model has to be responsive to these kinds of ups and downs. It must be anti-fragile.
Kindly, shed some light on your customer profile and operations.
Mahindra Rural Housing Finance provides home loans to rural customers. The typical size of our loans are around rupees one lakh to a household which has an annual income of rupees 1.5 lakh. These are typically home completion loans in rural areas. A rural household starts constructing a house and if he gets run out of money after completing the walls and puts sheets in place of roof. Our loans help them get the sheets away and construct a proper roof. That's the kind of business unit we have. Currently, we are operating in 13 states in India. The biggest state is Maharashtra for us and the second state is Tamil Nadu.
How do you reach out to the rural customers?
Our product is very highly manpower oriented. As most of our customers are not even really believe in mass media, if we advertise they are not willing to believe that they can get financial assistance for their homes. And therefore, we have to do a one on one concept selling. We go to a village, gather 20-30 people, sitting below a tree, tell them what home loans are all about and what we can do for them. And from there the process starts off. That's how we reach out to rural customers.
There have been reports that banks are in stress to finance the business houses so what challenges NBFCs like you are facing in this circumstance?
Fortunately, we don't have much of this types of problems as we are a AA plus rated organisation. Our parent organisation Mahindra is AAA rated. And therefore, from that perspective that we don’t have that types of challenges. For those who are into stress, the government has recently announced a great step, the partial credit guarantee scheme. It should enthuse or encourage banks to start lending to NBFCs. That would solve the problem.
During economic slowdown, what challenges is rural housing finance facing in India?
Credit flow to the rural markets has dipped to a very large extent, different states have different percentage or numbers. Due to the drop in credit flow, rural customer today has got an attitude of a departure. He is not willing to invest in asset building, is not willing to invest in consumption, as he's not really sure if he would get the right amount of credit. That is the crux of the slowdown in rural markets. Huge logjam of credit has been caused in the last one year or so.
Rural economy is, nowadays, constantly going through distress. What are the solutions you can suggest to combat this situation?
It's a very big question. The first thing is, we need a spark to increase the credit flow to rural areas. This could have the kind of announcements made by the government recently, which is the partial credit guarantee scheme, could be a great starting point. The other longer term solution for rural distress could be a) investments in irrigation, b) investments in infrastructure and c) insurance. Crop insurance as well as health insurance as a lot of rural distress is caused due to either crop failure or health issues of family members.
A farmer invests his entire money into the farm, takes loans too. If his crop fails due to weather condition or any reason, he lands into big problem. He has to take another loan from moneylenders and gets trapped into a vicious cycle. This is not a single farmer’s problem, but an overall scenario of agriculture in India and reason behind is economic distress. If his crop is insured and gets the insurance money in case of crop failure, it can save him. This could tackle the economic distress in rural India.
You’re talking about health insurance, but it is not easy to access the doctor as number of hospitals and health facilities are insufficient in rural India?
All that is also important. But, see today if he was to be somehow managed to go to a doctor, very often, he has to borrow from the moneylender to get himself treated. If he has health insurance, at least he can afford or he will be able to get himself treated on time and will get well on time. Today, he may be postponing visiting to the doctor due to cash issues. And therefore, at least that part will get taken care of. I'm not saying that everybody has access to doctor. We need to embrace them also, but at least the people who have access, let them go and get treated properly. And that could happen if you have health insurance.