Mor Icici India EFfD

8/3/2019 Mor Icici India EFfD

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e-Finance for Development- An Indian Perspective

Monterrey, MexicoMarch 19, 2002



2

Agenda

Development Banking in India ICICI - Development framework

Sectoral initiatives

Legal structure in India

Going Forward



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Development Banking in India

Priority Sector in India characterised by Low capitalisation and limited assets

Geographical diversity and high mortality

Poor access to capital markets

Non accessibility to credit history Cash intensity in transactions

Cyclical fund requirement and high commodityrisk

Informal sector and uncorporatisedHigh dependence on Govt. support/ subsidies

Poor financial disclosure on account of taxissues

High risk perception has led to high borrowing



4

Agenda

Development Banking in India ICICI - Development framework



Going Forward



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ICICI Group - Developmentframework

Product lead approach for each sector Small and Medium Enterprise (SME)

Agriculture and Micro Finance

Community Banking

Internet and Electronic Banking Product and delivery technology dependent

Branch remote approach

Central processing centres enable optimum

monitoring



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Agenda

Development Banking in India e-initiatives in ICICI Group



Going Forward



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SME - Strategic framework

Concerns• Improve Quality•Exit weak accounts• Improve yields•Reprice on RaRoC

benchmark •Reduce delivery

cost•Web / call centre

based delivery

Aspirations•Non capitalintensive growth

•Liability/ feeincome

•Cash managementproduct

•Innovative delivery•Smart / Credit cards•Web / call centre

delivery

•Servicerelationships

•Banker for servicesrather than credit



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SME - Service & Delivery

Information

Logging requests

Call centre

Customer

Branch

ATM

For all

transactionsexcept highvalue cash

Drop box point

High value cashtransactions

Handles exceptions

Cross sells

Monitors accounts

Account/Relationshipmanager

Trade financefactory

Credit factory

RPC/CPC

Processes all

pure creditrelatedrequests

Processes alltrade related

requests for acity

Providesupport

backbone foralltransactionrequests

Servicesdoorstepdeliveries

Information

Loggingrequests

Internet“Processing centres*”



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Online Products

e-banking in ICICI

ICICI Marketsonline FX, Debt,

SME Portal

Corporate Infinity

online transfer/settlement

system

Bill JunctionUtility billpayments

BusinessMultiplier

web interface

ICICI Direct and

ICICI Select

Pay Sealelectronicpayment system



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Agri - Micro-credit initiatives

Innovative structure for micro-credit in rural areasOvercome the reach problem Lower administration costs

Channels for delivering micro-credit

Sugar companies Seed producers Input companiesNGOs and micro credit institutions

These channels help build volumes, reduce costs andmonitor credit risk



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FSC provides one stop solution to the farmer Agri extension support

Inputs and other services

Credit

Market linkage Rural infrastructure

These FSCs are promoted by Agri Inputsuppliers , and avoids duplication of efforts by

different players

Agri - Farmer Service Centres(FSCs)



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Smart card solution for FSCs

Bank Account/Credit History

Output Sale

Collect Money

Farmer Service Center

• Credit• Debit

• e-purse

MerchantStoreInput

Online update of Bank accounts



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Smart Cards … An alternative

Difficulty in rural bankingManagement of Cash

Cost of idle cash

Cost of cash handling infrastructure

Geographical spreads Solutions through

Elimination/ reduction of cash handling

Innovation of low cost delivery channels

Smart Card - an ideal vehicle



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Smart Cards at ICICI

Smart Cards launched in October 2000 Infosys Campus in Bangalore

Manipal Academy of Higher Education (MAHE)

New Initiatives

Satyam Smart CardHPCL Petro Card

Work on multiple application card - Debit, Credit,E-Purse and Loyalty



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Social Initiatives -ICICIcommunities

Give Online: On-line donation channel Retail donors can donate to specific initiatives

across India

100% of donations reach the initiative

Prompt feedback on utilisation of grant Rs. 11.5 million towards Gujarat Earthquake

Shop the Cause: On-line shopping mallOver 100 exquisite hand crafted products

available The only facility of its kind available to

non-profits in India



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Innovations in DeliveryChannels

Sustainable Access for Rural India (SARI) project Partners: MIT Media Labs, Harvard University, IIT-

Chennai, I-Gyan, DHAN Foundation, ICICI Ltd

Providing reliable Internet access through Kiosks

in rural Madurai using corDECT WiLL 100 kiosks managed by entrepreneurs to be set-

up

Providing e-governance, communication andinformation services

Possibility of delivering banking servicesthrough Internet kiosks being explored



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Internet Banking

First Bank in India to launch website - 1996 First Bank in India to launch Internet Banking -

1997

First Bank in India to launch online bill

payment-1999 Only Bank in India with million online

customers

Monthly average transactions per online

customer- 7



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Internet Banking - Statistics

117% increase in transaction volume sinceApril 2001

More than 1 million contacts in February 2002

Coverage across 100 locations in the country

103% increase in internet banking registrantssince April ‘01

84% increase in transactions since April ‘01



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Channel Usage

Apr22

Branch

%22

ATM

%22

Internet

%2

Call

Centre

%2

J an22

Cops

%2Branch

%22Internet

%2

ATM%22

Call

Centre%2

Branch ATM Call Centres Net COPS

J an-22 %22 %22

Apr-22 %11 %22

J an-22 %22 %22 %2 %2 %22

Apr-22 %22 %22 %2 %2 Nil

Cash Transactions

Non Cash Transactions

Nil

Nil



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Retail Initiatives - UtilityPayments

First bank to introduce this service in India Tie-ups with 50 utilities for online payments

Talks with state governments/ municipalities tofacilitate e-governance

AP Govt. initiative - eSevaonline Vizag Municipality - Saukaryam



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Agenda




Going Forward



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e-banking related laws

e-banking governed by: Information Technology (IT) Act, 2000

Internet Banking guidelines of the Central Bank

India is the 2nd country in Asia to initiate

technology related act e-banking encouraged through:

Focussed legislation

Access to IT skills, computers and incentives to

ISPs



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Salient features of IT Act

Drawn as per the UN Model Law for IT Legal recognition to

Electronic records

Electronic contracts

Digital signature Appointment of certifying authority and

controller Issuer of public and private key

Controller - repository of all the signatures e-Governance- Filing of documents in e-form



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Central Bank guidelines

Bank to have security policy approved byBoard of Directors

Introduction of logical access control systems

Security buffers between bank system and

internet Products to be compliant with domestic foreign

exchange regulations

Setting of inter bank payment gateway

Mandatory disclosure of risks in internet baseddealings



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Agenda




Going Forward

C ti th “ ”



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Creating the “e” wave -Statutory

Legal validity for e transaction Consumer Protection

Negotiable Instrument Act

Acceptance of electronic based document

Full Account Convertibility Exchange Control Laws

Strengthening the Intellectual Property Laws

C ti th “ ”



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Creating the “e” wave -Infrastructure

Encourage internet/ “e” usage Voice over Internet

Improvement in telecom infrastructure

Tax incentives for internet based transaction

Incentive for electronic settlement

C ti th “ ”



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Creating the “e” wave -Banking

Allowing appointment of third parties forbanking

Allowing variable interest rates on deposits

Modifications in “service area approach” to

encourage competition in the rural areas Undertaking specific initiatives to provide an

impetus to rural banking Computerisation of operations of banks

especially the rural operations Land Records Computerisation

Networking of Post Offices

C ti th “ ”



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Creating the “e” wave -Electronic

Standards for smart cards Guidelines on smart card interoperability

Changes in Central Bank guidelines Eligibility of clients

Loading of value Provision of written reports and receipts

Govt. incentives to stakeholders

Govt. encouragement for ATMs/ POS

infrastructure terminals



e-enabling the economy Thank You !!!

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Mor Icici India EFfD