Question 1

What is KBS Bank?

Accepted Answer

KBS Bank (Krishna Bhima Samruddhi Local Area Bank Limited) is a Local Area Bank operating in India with a specialized focus on financial inclusion and microfinance. The bank operates 29 branches and 14 Business Correspondent Outlets across 12 districts in three southern Indian states: Telangana, Andhra Pradesh, and Karnataka. KBS Bank is one of only two remaining Local Area Banks currently operating in India, serving underserved and unserved rural and semi-urban communities.

Founded with the mission to provide financial services to marginalized populations, KBS Bank has built its entire business model around reaching the "last mile" customers who traditionally find it difficult to access mainstream banking services.

Question 2

When was KBS Bank founded?

Accepted Answer

KBS Bank was incorporated on February 19, 1999, under the Companies Act as a public limited company. The bank was established during the Reserve Bank of India's experimental phase of introducing Local Area Banks, which were designed to mobilize rural savings and channel them back into local development.

The bank was founded with an authorized capital of Rs. 25 crore and a paid-up capital of Rs. 13.42 crore. From its inception, KBS Bank adopted the mission to be a sustainable local community-based institution providing financial services to the underserved, with financial inclusion as its core objective and microfinance as its delivery model.

Question 3

Where is KBS Bank headquartered?

Accepted Answer

KBS Bank is headquartered in Hyderabad, Telangana, India. The registered office is located at 1-98/8 to 11/FC/501 & 1-98/8 to 11/FC/502, 5th Floor, Fortune Chambers, Silicon Valley, Madhapur, Hyderabad 500081.

The bank was originally registered in Mahbubnagar (within the Telangana region) and maintains its registration with the Registrar of Companies in Hyderabad.

Question 4

Where does KBS Bank operate?

Accepted Answer

KBS Bank operates across 12 districts in three southern Indian states: Telangana, Andhra Pradesh, and Karnataka. While Reserve Bank of India regulations currently allow a Local Area Bank to operate in a maximum of five districts, KBS Bank's expanded footprint resulted from the administrative reorganization and splitting of districts such as Gulbarga (into Yadgir and Gulbarga) and the division of Rangareddy and Mahbubnagar districts in Telangana.

The bank serves predominantly rural and semi-urban areas within these districts, focusing on communities that have limited access to traditional banking infrastructure.

Question 5

What services does KBS Bank offer?

Accepted Answer

KBS Bank offers a comprehensive range of banking services tailored to the needs of underserved customers. The bank provides various savings and deposit products, with an average deposit account size of approximately Rs. 9,700, reflecting its focus on small savers.

On the credit side, KBS Bank offers microloans with an average outstanding loan account size of around Rs. 38,800. The lending portfolio includes loans for non-farm micro enterprises, agriculture loans for small and marginal farmers, dairy loans for milch animals, and various other credit products spanning different economic activities.

Digital services include mobile banking (introduced in September 2018), UPI (Unified Payments Interface), IMPS, NEFT, and RTGS facilities. The bank operates 23 on-site and 3 off-site ATMs connected to the NFS network. KBS Bank also offers RuPay debit cards, merchant QR codes for digital payments, NACH e-mandates, and SMS banking services.

Question 6

What makes KBS Bank unique?

Accepted Answer

KBS Bank distinguishes itself through its pioneering doorstep banking model using Hand Held Devices (HHDs). Field staff equipped with these POS devices visit customers at their homes to facilitate transactions including loan repayments, cash withdrawals, and even loan disbursements in real-time. This innovative approach enables Sukshma Loans (small ticket loans) to be processed and delivered entirely at the customer's doorstep.

The bank claims to be the only bank in India whose business model has been built entirely around financial inclusion as its core objective and microfinance as its delivery model. KBS Bank operates on the B@ncs24x7 Core Banking Solution provided by C-Edge Technologies Ltd., a CBS platform used by over 150 mid-size banks across India.

The bank's commitment to serving the financially excluded is evident in its mission to "connect the last mile in Banking to the doorstep of our customers" and deliver simple, dependable, and innovative banking services to create value for under-served and un-served customers.

Question 7

What type of financial institution is KBS Bank?

Accepted Answer

KBS Bank is a Local Area Bank (LAB), a specialized category of private banks introduced by the Reserve Bank of India in 1996 as an experimental model. Local Area Banks were designed to bridge the gap between large commercial banks and small cooperative banks, focusing on mobilizing rural savings and providing credit to local enterprises, traders, and farmers within a geographically restricted area.

KBS Bank operates as a non-scheduled commercial bank under RBI supervision and is governed by both the Companies Act and the Banking Regulation Act. The LAB model allows for smaller capital requirements compared to universal banks but restricts operations to a limited number of contiguous districts. Following the cancellation of Subhadra Local Area Bank's license in 2020, only two LABs remain operational in India: KBS Bank and Coastal Local Area Bank Ltd.

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