India’s neobanks find their feet
The new entrants are slowly gaining ground and finding ways to bring change to the financial industry. But their path to growth is handicapped by regulatory roadblocks.
Kota, a city in the northern Indian state of Rajasthan, is a training hub for students preparing to take competitive exams to enter the top universities.
But when Pruthiraj Rath decided to enrol in one of its institutions in 2014, he had a problem. To enrol with a training academy, he needed a bank account. Rath, who had just finished high school, didn’t have one.
Like thousands of other students signing up for the training programmes, he was forced to set up an account at a nearby branch of Central Bank of India – which is not to be confused with the Reserve Bank of India, the country’s actual central bank.
When he went to Central Bank’s branch, the queue was daunting. Rath says he waited at the bank for two to three hours every day for around 15 days, and often despaired of ever being able to open an account – until he finally succeeded.
“The same problem occurred when I got into college,” he says. “Most people had a banking app with public sector banks, but the customer experience on these apps was awful.”