KBS Bank: a path breaking initiative in financial inclusion

KBS Bank (Krishna Bhima Samruddhi Local Area Bank) is one of the Local Area Banks operating presently in the country. Today, the bank operates in 11 districts in three states viz. Telangana, Andhra Pradesh and Karnataka. Although the regulation currently allows a LAB to operate in 5 districts, the remaining districts are an outcome of administrative split of the erstwhile district of Gulbarga into Yadgir and Gulbarga and splits of Rangareddy and Mahbubnagar Districts in Telangana. As of date the Bank has 26 branches and 31 Business Correspondent Outlets spread across the districts.

What sets apart KBS is its business model. Perhaps it is the only bank in the country, whose business model has been built on Financial Inclusion as its core objective and Micro Finance as its delivery model. Right at the beginning the Bank had adopted the mission "to be a sustainable local community based institution providing financial services to the underserved. Over the years the bank has taken a multitude of initiatives in the direction and the mission of the bank has been revised to read as follows …


To be a partner in progress of our customers by

  • Delivering simple, dependable and innovative banking services
  • Being cost effective using technology effectively
  • Being proactive in understanding customers’ needs and preferences and
  • Connecting the last mile in Banking to the doorstep of our customers.


  • Make a difference by creating value for the under-served and un-served customers

In keeping with its mission, the Bank has been offering various savings and credit products to its customers, customised to suit their requirements. It also provides service at the doorstep of the customer, for both deposits as well as credit, keeping in mind the specific needs of the segment it serves. The very fact that the average size of a deposit account is around Rs.8,000/-.and that of an outstanding loan account is around Rs. 33,000/- would suffice to indicate that the Bank has been catering to the needs of customers who normally find it difficult to access the mainstream banking system for their needs.

As regards credit, the bank offers a wide range of loans catering to different segments, especially the poor and the under-served to meet their various needs across a wide spectrum of economic activities. While non-farm micro enterprises form a major share of the loans of the Bank, loans to small and marginal farmers for agriculture and dairy farmers for milch animals also account for a sizable portion the total credit.


The Bank has always been operating a fully computerized environment. Since the year 2010, the Bank has migrated to a Core Banking Solution (CBS) by installing Bank Soft, a CBS solution hitherto in use with over 30 mid size UCBs across southern Indian states of Karnataka and Maharashtra. The CBS solution is particularly well suited to the credit model of the bank which constitutes a large number of loans with fixed EMIs.

The hardware configurations are perfectly in tune with the size of the operation. The main server of the Bank is housed in a well-established data centre in Bengaluru, which caters to few more scheduled commercial banks and large corporate houses.

The field staff of the bank are equipped with Hand Held Devices (HHD) which are GPRS enabled with interface capability with the Bank's main server and basic customer transactions of receipts are booked directly into the banking system of the Bank.

The Bank is currently implementing internet based banking and has already implemented certain basic services which is slated to be upgraded to the current environment and needs of its customers.