The third largest private sector lender of the country, Axis Bank has joined hands with microfinance institution (MFI) Janalakshmi Social Services to aid in providing financial services to the urban poor.
The MFI will be acting as business correspondent for Axis Bank and also use its client base to provide financial services of Axis Bank.
"It solves two purposes for us. Firstly, it is part of the bank's financial inclusion plan that will come through this effort. Secondly, unbanked population in urban areas is a big and faster growing segment, which the bank intends to tap," Axis Bank Managing Director and CEO Shikha Sharma said.
She said that the new initiative will start from Bangalore and widen its base to 50 more cities in the coming future. The bank would be offering services like No frill accounts to the urban poor.
"The migrant and informal sector population in urban cities undertakes viable economic activity and creates productive assets, yet, they can't access formal sources of credit or take care of their savings through formal channels. We are happy to be a part of this urban financial inclusion initiative by Axis Bank to reach out to the huge unbanked and underbanked population in urban India starting with Bangalore," Ramesh Ramanathan, promoter and chairman of Janalakshmi Social Services said.
"We don't hope to make operating profit from this segment for next two years but are likely to reach sustainable level in the third year of operation," Sharma said.