Millions of Indians still find it hard to get a small loan from a regular bank. Govind Singh built a company around that gap. It started as Utkarsh Microfinance in Varanasi and grew into a small finance bank. Here is how the story is told in company and press profiles.
The short version
- Govind Singh grew up in a village in Uttarakhand and began his career as a probationary officer at State Bank of Patiala.
- He later worked in several financial firms and joined ICICI Bank, where he became business head for micro banking in the Rural, Micro and Agri Business Group.
- He was also a member of the RBI’s working group that reviewed the business correspondent model, which lets banks serve people through local agents.
- In 2009 he started Utkarsh Microfinance, based in Varanasi. It began operations in September 2009.
Who it served
The company focused on poor and rural families in Uttar Pradesh, Bihar and nearby states who had little access to regular banking. In 2016 it raised about ₹395 crore from domestic investors, according to Business Standard.
Becoming a bank
The company later received a Small Finance Bank licence from the Reserve Bank of India. YourStory notes that it was the only entity in the Hindi heartland states of UP, Bihar, Jharkhand, Madhya Pradesh and Chhattisgarh to receive one. Govind Singh is the managing director and CEO of Utkarsh Small Finance Bank.
A note on a popular claim: Some online versions say he “launched the business correspondent model in India” at ICICI. The sources we checked say he led micro banking at ICICI and worked on the RBI’s review of the model, so we describe it that way.
Questions to think about
- How can banks reach people who have never had a bank loan?
- What are the benefits and risks of lending small amounts to many borrowers?
- Do small finance banks serve customers differently from large banks?
What is a small finance bank?
Small finance banks (SFBs) are a type of bank licensed by the Reserve Bank of India to serve people and businesses that big banks often miss: small farmers, micro and small businesses, low-income households and workers in the informal economy. They can take deposits and give loans like other banks, but the RBI requires them to lend a large share of their money to priority sectors and to keep a big part of their loan book in small-sized loans. Several of today’s SFBs, including Utkarsh, started as microfinance companies.
Microfinance in simple words
Microfinance means small loans, often to women in rural areas, usually given to groups whose members support each other’s repayment. It has helped many families start small businesses or handle emergencies without going to moneylenders. It also carries risks: if borrowers take loans from several lenders at once, debt can pile up quickly, which is why the RBI has rules on how much a household can borrow.
What the business correspondent model is
Business correspondents are local agents, such as shopkeepers or trained individuals, who provide basic banking services on behalf of a bank in villages where there is no branch. They can help people open accounts, deposit and withdraw cash, and send money. The model has been an important part of bringing banking to rural India.
For more on how interest rates affect small borrowers, read our explainer on the RBI’s latest repo rate decision.
Related reading
- Startup basics: a plain-English glossary for entrepreneurs
- Cabinet clears ₹10,000 crore SME Growth Fund: which small businesses can benefit
- Startup funding this week: Indian startups raised $123 million
Sources: Avendus, Business Standard, Business Today, YourStory and Entrepreneur India profiles.
Founder stories are often retold online with slightly different details. Where sources disagree, we say so, and company figures change over time, so please check the latest numbers before relying on them.
