COMMON FINANCIAL INCLUSION

PROGRAM

CONTENTS

Rural landscape

Rural footprint of banks

Scope of inclusive banking programme

2

RURAL LANDSCAPE – TOTAL NO. OF DISTRICTS(600)

# State Dist. # State Dist.

1 Andhra Pradesh 23 15 Maharashtra 35

2 Arunachal Pradesh 14 16 Manipur 9

3 Assam 23 17 Meghalaya 7

4 Bihar 37 18 Mizoram 8

5 Chhattisgarh 16 19 Nagaland 8

6 Goa 2 20 Orissa 30

7 Gujarat 25 21 Punjab 17

8 Haryana 19 22 Rajasthan 32

9 Himachal Pradesh 12 23 Sikkim 4

10 Jammu and Kashmir 14 24 Tamil Nadu 29

11 Jharkhand 22 25 Tripura 4

12 Karnataka 27 26 Uttarakhand 13

13 Kerala 14 27 Uttar Pradesh 70

14 Madhya Pradesh 48 28 West Bengal 19

# UT Dist. # UT Dist.

A Andaman and Nicobar Islands 2 E Lakshadweep 1

B Chandigarh 1 F Pondicherry 4

C Dadra and Nagar Haveli 1 G Delhi 9

D Daman and Diu 1

3Source:

http://en.wikipedia.org/wiki/List_of_Indian_districts

RURAL LANDSCAPE – INFRASTRUCTURE CROSS-

SECTION

4

Source: Bharat Nirman Plus:

Report by Mckinsey for CII

Able – 160 (17%)

Rural economic

Centres – 118

(23%)

Urban cousins –

67 (10%)

Deprived – 248 (50%)

Fig. in brackets are % of

rural pop.

Majority of the population resides in areas with minimal infra. and accessibility

FOOTPRINT @ RURAL LEVEL

No. of sponsored Regional Rural Banks (RRBs) – 177 *

These banks have a large rural presence incl. remote areas

Their governance is largely influenced by the sponsoring PSBs

Many of these have some level computerisation

Lead banks in districts

Traditionally PSBs have been lead banks in most districts in India

They are the channelising agency for development in those districts

This is a non-competitive arrangement between banks with a social banking objective

Rural branches of commercial banks

Total no. of rural branches 30754 (estimate)

Total no. of villages in India 6,38,365 (2001 census)

These are brick & mortar branches which have the potential of technology investment

Post Offices

Over 1.5 lacs post offices in India of which ~ 1.3 lacs in villages

Other distribution entities

Local merchants, telco agents > 6 lacs

Common Service centres ~ 1 lac

Insurance agents, dairies etc. 5

* Source : The Performance of Regional Rural Banks (RRBs) in India:Has Past

Anything to Suggest for Future?

Substantial rural footprint is currently available for leveraging as hubs

SCOPE OF THE INCLUSIVE BANKING PROGRAM

6

Creating successful business delivery models which can be replicated

in view of the diversity of rural India

Creating tailored solutions to ensure effectiveness and

sustainability of the initiative

Ensuring a concerted effort by all key stakeholders

to rejuvenate rural India

BUSINESS DELIVERY MODELS

Inter - Bank collaboration

Standardising the product suite, service pack on offer

Standardising business processes, risks

Standardising enrollment of 3rd party agencies/ service

providers

Non-competitive areas of concentration say based on lead

districts, RRB presence etc.

Complimentary shared services in the areas of

Field force training

Support network at the field level

Joint negotiation with vendors

7

Banks become nodal agencies for rural initiatives and leverage existing setups

Creating successful business delivery models which can be replicated in view of the diversity of rural India

IMPLEMENTATION APPROACH – HUB & SPOKE MODEL

8

Robust & Scalable Architecture

Solution

Characteristics

District CategoryTxn Delivery

model

Urban/

Urban

Cousins

Rural

economic

centres

Able

Deprived

RRB’s as nodal branches +

3rd party merchants etc.

RRBs + lead bank rural

branches

Branch staff

RRB’s as nodal branches +

3rd party merchants etc.

CBS for nodal branches +

POS

CBS + internet kiosks +

POS online

CBS + internet kiosks +

POS online (Slums)

CBS for nodal branches +

POS

Customised solution models for a standard implementation approach

Creating tailored solutions to ensure effectiveness and sustainability of the initiative

COMMON FINANCIAL INCLUSION

Inter – industry collaboration

Collaboration with insurance companies for addressing insurance

requirements

Collaboration with NGO’s/SHG’s

Collaboration with companies engaged in rural development like power,

telecom, road, fertilizer etc.

Collaboration with educational institutions for rural vocational education

Bank – Govt. collaboration

Channelising agencies for NREGA funds, subsidies etc.

Channelising agencies for Bharat Nirman funds

Subsidies/schemes for infrastructure development at the local level say

Alternate power e.g. biomass, wind

Rain-water harvesting for water

Roads

Subject Matter Expert’s (SME’s) to accompany service provider for technical

assistance9

Collaborative effort in ensuring funding – channelising - operationalising

Ensuring a concerted effort by all key stakeholders to rejuvenate rural India

DISENGAGING TECHNOLOGY & DISTRIBUTION

- 10 -

Authentication System

e.g. AADHAR

Centralised Gateway

(ala Visa/Mastercard

for cards)

Credit Information Bureau

e.g. CIBIL

Dairies,

Insurance

agents

etc.

Local Merchant

All bank branches

Co-op Banks /

PACS /RRB

PC / Kiosk / POS / Mobile….

Back end systems e.g. bank, insurance, government etc.

Customer

Self-

service

Common Service Centers,

Post Offices

Ensuring a concerted effort by all key stakeholders to rejuvenate rural India

CREATING A STRONG TECHNOLOGY BACK BONE

Backbone - Messaging Super-Highway to

form the central message carrier &

distribution grid

Empanelling last mile technology

Inter-operable technologies

Standards driven approach

Compatibility with central messaging backbone

Common maintenance, repair & helpdesk at the

local level

Leverage existing settlement systems

Ensuring a concerted effort by all key stakeholders to rejuvenate rural India

STRENGTHENING LAST MILE DISTRIBUTION

Shared Training

Shared Support

Favorable Cost-

benefit

Community

involvement

Trust

Reliable

services

Ensuring a concerted effort by all key stakeholders to rejuvenate rural India

STATE OF AFFAIRS

Confused customer – multiple cards, multiple touch points, local money lender still scores on reliability of service

Banks / insurance companies – no business case, no real integration with the normal banking systems, limited banking products made available to the customer

Govt. – steam-rolling AADHAR as the panacea without adequate on-ground experience/civil society involvement to support, multiple ministries/departments singing their own tunes, treating rural India as one homogenous segment to woe with doles

Ensuring a concerted effort by all key stakeholders to rejuvenate rural India

THANK YOU