In Chennai, during Dussehra a 10-day festival, there is a tradition of inviting people for Golu, where people display dolls and serve a lentil snack called sundal. This Dussehra, a bank used Golu to reach out to customers. Bank employees placed a stack of dolls in a mini-truck and took it door to door to neighbourhoods giving the residents sundal along with a pamphlet. The pamphlet spoke of a bank called Equitas Small Finance Bank that offered fixed deposit rates of 8.5% and savings account rate of 6.5%.
When MFIs stop being startup banks’ golden goose
For small finance banks, microfinance has been the gift that keeps on giving. As they diversify, their biggest USP—interest rates—slowly comes under pressure
Small finance banks have shown remarkable deposit growth thanks to the magic pill called interest rates
On the lending side, microfinance (MFI) has been their pillar of strength that allowed them to give high interest rates
But they are taking the axe to their MFI portfolio and this could eventually lead them to lower interest rates
Without high interest rates, small finance banks are going to find it tough to sustain user interest