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Financial Inclusion &Branchless Banking Initiatives

Using Information Technology for rural outreachUsing Information Technology for rural outreach

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Contents

Branchless Banking – Corporation Bank’s Business Model

Technology Framework

Way Forward

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Branchless Banking Model Corporation Bank initiated the process of Financial Inclusion in June 2006 to reach out to the rural population who were hitherto not having Bank accounts

The Bank adopted the Branchless Banking model with the help of technology to handle the transactions

RBI Guidelines on engagement of Business Correspondents enabled the rural branches to reach out to the remote villages

Typically it involves the ability to handle high volume of low value transactions

Provide basic banking services at the doorsteps of the villagers

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Branchless Banking Model – Financial Inclusion Survey

Financial Inclusion – Survey

Survey formed the basis for identification of the financially excluded

Survey Format segregated into three sections

Village Information

Family Information

Family Members Particulars

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Survey Methodology

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 in the village

Availability of Infrastructure like Post Office, Hospital, Veterinary Clinic, Schools etc.

Branchless Banking Model – Financial Inclusion Survey

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Branchless Banking Model – Financial Inclusion Survey Family Members Information: Links all Family Members to the unique family number Enables capture of information such as

Religion Caste Extent of Land Owned Assets Owned Enables capture of Bank Account details

Facilitates entry of other information such as Willingness to open an account Loans with money lenders Insurance / Other details Interested Activities Ensures capture of other details

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Branchless Banking Through Business Correspondents

The Bank has availed BC services from:

Individuals - Should hail from the same village - Minimum Qualification – 7th Standard Pass - Preferably SHG Members Section 25 Companies under Companies Act

- Similar Criteria as above - Branch Manager assists in identifying the correct person

Trusts

• The RBI Working Group has recently recommended additional entities who

can be engaged as Business Correspondents and now it was announced that

Individuals would be permitted as BCs. This would facilitate Banks to reach

out to more villages

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• The Bank adopted one Business Correspondent for one village model who is available throughout the day for the villagers to transact business

• Individual Accounts are opened in the Core Banking server at the respective branches

• Account Information only with the Bank

• Transactions alone are routed through the Technology Service Provider

Branchless Banking – Methodology Adopted

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Branchless Banking Through Business Correspondents

Utility

• Service provided at their doorstep/ village- Saves on the commuting time and transportation cost

• Availability of Basic Banking Services throughout the day- The BC is a permanent resident of the village and hails from the same village

and hence can assist customers at any time of the day• Hassle free for the villagers as there are no challans/vouchers

- User-friendly and no need to write or fill-up cheques • 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 / semi-urban branches

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Branchless Banking - Technology

Different Technologies were evaluated and tested by the Bank to ensure that it

• Offers High levels of Security

• Reduces Transaction Cost

• Prevents loss or destruction of data

• Ensures User friendliness

• Increases Efficiency

• Enables Cross Selling of products and services

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Branchless Banking - Technology

• Secure- Two factor authentication card and Biometric Authentication

• Scalable- Can handle multiple products & services

• Reliable- Transactions are secure and ensures non-repudiation

• Flexible- Supports on-line and off-line transactions

• Interoperable- Customers can use Branch/alternate BC in case of need

• Robust & Upgradable- Ability to support Contactless, Contact and Magnetic Stripe Cards

• Cost Effective

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Branchless Banking - Technology

Type of Technology Used Card Based Point of Transaction Terminal Smart/ Radio Frequency Identification (RFID) Cards used Supports Fingerprint Authentication Alternate Power Sources for continuous operation Mobile and easy to carry Voice Guidance in Local Language Support for multiple communication Channels Device stores minimal data Ability to support multiple products and services Receipt printing using Impact Printers Scalable Supports off-line and on-line transactions

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Branchless Banking – Services Offered

Cash Deposits Cash Withdrawals Balance Enquiry Mini Statement Transfer of Funds between Own Accounts Loan Repayments Loan Withdrawals in Running Accounts (GCC) Self Help Group Accounts (SB and Loan Accounts) Recurring Deposits Payments to Milk Pourers of dairy co-operatives National Rural Employment Guarantee Payouts Social Security Pension Payments

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Branchless Banking – Services Offered

Person to Person (P2P) Remittance Facilities using mobile

Branchless Banking using Mobile Phones

JanaShree Bima Yojana Premia Collection

Utility Bill Payments

Pre-paid Mobile Recharge

Remittance from One Card to another Card

Products in the Offing:

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Branchless Banking – Present Position- State-wise DistributionSl Name of the State Villages Branches

01 Karnataka 858 171

02 Andhra Pradesh 1057 47

03 Tamil Nadu 326 80

04 Kerala 56 32

05 Goa 27 15

06 Gujarat 92 18

07 Maharashtra 18 07

08 Haryana 22 09

09 Punjab 13 06

10 Delhi 09 04

11 Madhya Pradesh 11 03

12 Orissa 01 01

13 Uttar Pradesh 02 02

14 West Bengal 08 04

Total 2500 399

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Type of Account

31.03.2009 31.03.2010 31.03.2011

Accounts Amount Accounts Amount Accounts Amount

CPSB 447863 1767.22 547228 2655.04 1260439 3943.65

CGCC 19779 2344.50 21497 2672.25 23323 3022.65

Amt. In lakhs

Growth of ‘No-Frill’& GCC Accounts

Branchless Banking – Accounts Opened

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Month Cr.Tran

Credit Amt Db. Tran

Debit Amount Tot.Tran

Total Amount

Mar – 08 1034 2.99 368 2.79 1402 5.78

Mar – 09 4653 7.67 5238 26.00 9891 33.67

Mar – 10 12221 12.51 7404 25.46 19625 37.97

Mar –11 8542 10.38 27459 104.52 36091 114.90

Branchless Banking – Transactions Handled

Transaction Growth[Amount in lakhs of Rs.]

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Branchless Banking – Villages with Population > 2000

Sl. No. Name of the State No. of Locations Allotted

Branches Present

B.C. Model

01 Karnataka 124 03 121

02 Andhra Pradesh 66 05 61

03 Tamil Nadu 97 05 92

04 Kerala 04 0 04

05 Uttar Pradesh 01 0 01

06 Haryana 10 0 10

07 Punjab 02 0 02

08 Chattisgarh 11 0 11

09 Maharashtra 03 0 03

10 Gujarat 08 0 08

11 Delhi 03 0 03

12 Madhya Pradesh 04 0 04

13 Sikkim 01 0 01

T O T A L 334 13 321

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Branchless Banking – Our Business Model

Branchless Banking is an alternate Delivery Channel for providing basic banking services at an affordable cost

Financial Inclusion is not a Social Obligation or a Regulatory Directive but viewed as a viable business proposition and a commercial initiative

The cost per transaction through this model would be a fraction of the cost of a transaction incurred at a branch

Facilitates in extending the outreach and provides the ability to offer new products and services

The model chosen by the Bank is not limited in scope and restrictive in use but provides the capability to support livelihood programs to add economic value

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Branchless Banking – Way Forward

• To cover 4000 villages by March 2012 and 6000 villages by March, 2013

• Increase the card population and Provide multiple products on the Card

• Extend incentives to Business Correspondents for canvassing accounts

• Scout for Cash based activities in the village and route them through cards

• To cover 200 locations under Urban Financial Inclusion by March 2012

• To implement EBT payment in 900 locations by March 2012 and 1000 locations by March 2013

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Branchless Banking – Way Forward

• Expanding the footprint in all the existing Service Area Villages of the Bank

• Tie-up with Dairy Units for routing milk payments

• Further extending Electronic Benefit Payments in Andhra Pradesh, Karnataka, Haryana & Other States

• Extend Cards to Self Help Groups to facilitate them to transact from their villages

• Facilitating customers to transact using Mobile Phones

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Branchless Banking – Way Forward

• Obtained licenses for 5 Microsate Branches to cater to the urban poor – 3 branches have become functional.

• Identify and install at rural markets where people congregate

• Set up manned kiosks at villages to serve as a linkage between the branch and the Business Correspondents after obtaining necessary approvals from the regulator

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Branchless Banking – Financial Inclusion Plan

Period No. of Branchless Banking Units

Number of households to be covered

Number of CPSB Accounts

Number of CGCC Accounts

Mar.2011 2500 175000 9,00,000 40,000

Mar.2012 4000 3,50,000 15,50,000 75,000

Mar.2013 6000 5,00,000 25,00,000 1,00,000

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The Bank has won many awards and the following were for the Financial Inclusion and Branchless Banking initiatives undertaken by the Bank

• SKOCH Challenger Award “Inclusion Champion of the Year” for the year 2010 for contributing to inclusive growth of the nation.

• SKOCH Challenger Award - “Inclusion Champion of the Year – 2011”

• Won IBA – Best Bank Award 2010 under “Best Financial Inclusion Initiative”.

• The ‘Committee on Financial Inclusion’ headed by Dr. C Rangarajan, the then Chief Economic Advisor to the Prime Minister of India made a special mention on the ‘Branchless Banking’ initiative of the Bank .

Awards & Accolades

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Thank you