Financial Inclusion & Branchless Banking Initiatives

1. Financial Inclusion & Branchless Banking Initiatives Using Information Technology for rural outreach

2. Agenda • Financial Inclusion Survey • Branchless Banking Initiatives • Financial Literacy • Self Employment Training Institute

3. Stages of Financial Exclusion Financial Illiteracy Financial Discrimination Financial Exclusion Financial Exploitation

4. Financial Inclusion Survey - Need • Need for I T Support • Branches to open large number of small value accounts • Facility for the branches to upload the data • Exception Reports when the balance exceeds or the • turnover exceeds the parameterised amount • Survey details directly generates an uploadable file • All accounts maintained in the Bank’s Server

5. Survey Automation • Survey Format segregated in to three sections • Village Information • Family Information • Family Members Particulars

6. Survey Automation • Village Information: • Each Village linked to a particular Branch • Each Branch can be linked to multiple Villages • Village Profile to be captured once • Number of Households • Availability of Infrastructure

7. Survey Automation Family Information: • Generates a Unique Number for Each Family • Facilitates capture of photograph of the family members • Enables capture of information such as • Religion • Caste • Extent of Land Owned • Assets Owned

8. Advantages of Survey Automation • Data Capture can be either Online or Offline • Enables creation of Database of all households • Provides the ability to Query the database • Prevents Loss/ Destruction of Information • Facilitates Consolidation of Data • Can be a Single Point of Reference • Enables access of Information from anywhere

9. Bank’s Performance under Financial Inclusion • 337 Branches included. • 1459 Villages covered • 4,31,655 House holds surveyed. • 2,35,774 People identified to open no-frill SB account. • 4,26,711 No frill SB accounts opened. • 26938 Persons identified for issue of GCC • 19463 Cards have been issued.

10. Technology Initiatives • Need for Technology • Offers high levels of Security • Reduced Transaction Cost • Prevents loss or destruction of data • Reduces rigidity • Increases Efficiency

11. Branchless Banking • Secure • Scalable • Reliable • Flexible • Interoperable • Robust & Upgradable • Cost Effective

12. Branchless Banking • Service provided at their doorstep/ village • Availability of Basic Banking Services throughout the day • Hassle free for the villagers as there are no challans/vouchers • Familiarity in dealing with their own person • Reduces the cost of transaction • Ability to handle large volumes with less staff • Reduces the pressure on the counters at rural branches

13. Branchless Banking • Types of Technology Used • Card Based Device • Support for Fingerprint Authentication • Redundant Power Sources for continuous operation • Mobile and easy to carry • Voice Guidance in Local Language • Support for multiple communication Channels • Device should store minimal data • Ability to support multiple products and services • Receipt printing • Scalable

14. Products & Services Offered • Cash Deposits • Cash Withdrawals • Balance Enquiry • Mini Statement • Transfer of Funds between Own Account • Loan Repayments • Loan Withdrawals in Running Accounts (GCC) • Self Help Group Accounts (SB and Loan Accounts) • Recurring Deposits • Milk Payments • National Rural Employment Guarantee Payouts • Social Security Pension Payments

15. Products & Services in the offing Products Under Development • Person to Person (P2P) Remittance Facilities using mobile • JanaShree Bima Yojana Premia Collection • Utility Bill Payments • Pre-paid Mobile Recharge • Remittance from One Card to another Card

16. Branchless Banking • Risk Mitigation • Two Factor Authentication (Presence of Card & Fingerprint) • Per Day Transaction Limit • Customer Per Day Limit for Withdrawals and Receipts • Number of Transactions • Business Correspondent Per Day Limit • Total Transactions by the Business Correspondent for a Day • Interval between Two Day Ends • Branches also provided a Terminal to transact • Customer Receipt using an Impact Printer • Web Access to monitor the Card Balances and BC Balances • Forces On-line transactions when there is a balance mismatch

17. Branchless Banking • Risk Mitigation – Contd.. • A Banner provided at BC location • A poster containing the instructions provided at BC Locations • Branches provided with a similar terminal to handle emergencies • Cash Box provided to the BC for safe keeping of cash • Imprest Cash provided to the BC for handling payments • BC insured for the Cash at BC location

18. Branchless Banking • Nature of Transaction • Offline • Online when it is a foreign Card or • when there is a balance mismatch • Customer Deliverables • Printed Receipt using an Impact Printer • Print out in local language would be provided • Providing GPS for greater comfort

19. Branchless Banking • Data Storage Policies • Account Information only with the Bank • Transaction Data only routed by the Technology Service Provider • Periodic Reconciliation process to tally • the balances

20. Branchless Banking • Minimum Standards for identifying and engaging a BC • Methodology and Standards for Data Storage on Cards • Finger print Storage and Retrieval Standards • Risk Mitigation Criteria • Card Numbering Standards

21. Branchless Banking • Technology Framework should define • Policy Framework (Card Issuance, BC, Service Delivery) • Legal and Statutory Framework • Security Framework • Transaction Processing Framework • Should facilitate Convergence

22. Business Initiatives • Financial Inclusion should not be a regulatory directive but a viable business proposition • Facilitates to extend the outreach • Reduces the cost of delivery • Effective credit delivery system • Ability to offer new products and services • Linkage to an economic activity or income generation activity • Easier Implementation at fractional cost of the branch

23. Schematic Representation of Transaction Flow Core Banking Centre Core Server GSM/GPRS WAN PSTN Web Server Firewall Business Correspondent Core Branch Database Server

24. Branchless Banking – State-wise Distribution

25. Branchless Banking – Business Garnered Growth of ‘No-Frill’& GCC Accounts Amt. In lakhs

26. Transaction Volumes

27. Point of Transaction Terminal A Point of Transaction Terminal in Operation In a village

28. New Integrated Terminals

29. Financial Literacy • Bank has lead responsibilities in three districts • Chikmagalur Kodagu Grameena Bank (CHIKO Bank) is the RRB sponsored by the Bank • All branches of the RRB are automated. Steps initiated for Core Banking Solution • Set up Financial Literacy and Credit Counseling Centre in Chikmagalur • Established COBSETI (Self Employment Training Institute) in March 1996 at Chikmagalur. Training provided for Skill development, Skill upgradation and agriculture related activities • Awaiting land allocation for setting up a similar institute at Kushalnagar in Kodagu District; Presently being handled at the Lead Bank Office at Madikeri

30. Thank you