IMPLEMENTATION OF FINANCIAL

INCLUSION THROUGH BC

MODEL

BY:-

PIYUSH PODDAR - 2004

SHUBHAM AGARWAL – 1995

FMS-IIRM 2011-2013

OBJECTIVES

To study the process of BC model in PNB.

To study the issues associated with BC model at ground level.

To analyse the level of awareness among rural people regarding the services provided by BCAs.

To analyse the level of implementation of BC model and working of BC Agents.

LIMITATIONS OF THE STUDY

Communication barrier

Lack of authority

Low interest of rural people

Limited sharing of information due to involvement of confidential data.

Time constraints.

Distance criterion was one of the constraints.

RESEARCH METHODOLOGY

• DESCRIPTIVERESEARCH TYPE

Deliberate & Random sampling

160 respondents &

8 BCAs

SAMPLE TYPE

SAMPLESIZE

QuestionnaireObservationInformal Interviews

Primary Data

Secondary Data

Data collection techniques

Bank’s literatureInternetNABARD report

Analysis Tool

(Ms-Excel)

Tools Of Data Interpretation(Bar graphs, Pie- charts &

Venn diagram)

Statistical

Tools

(Percentage

Method)

“Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as low income groups at an affordable cost.”

Financial inclusion

Government of India launched Third party banking in 2006 with the intent of achieving the milestone “Financial Inclusion”.The BC model was explained in 2008 report submitted by Dr. C. Rangarajan.Model was introduced to cater financial inclusion in a cost effective manner.RBI focused on ‘no frill account drive’ by regulating this model.It is based on branchless banking concept.The BCs are permitted to carry out transactions on behalf of the bank as agents

Business correspondent model

Opening of no frill and other regular deposit accounts under smart card.

Collection and payment of small value deposits and withdrawals

Payment of sanctioned. / disbursed small value loans

Receipt and delivery of small value remittances / other payment instruments

The BC/his agent will be authorized to accept / deliver cash either at his place of work or at any convenient location

Furnishing of mini account statements and other account information

Recovery of principal / collection of interest in respect of borrower accounts.

Any other service on behalf of the Bank, duly authorized by the appropriate authority.

Major activities of Business Correspondence agents

Established in 1895 in LahoreThe bank has over 35 million customers through 4540 offices including 421 extension countersPNB offers banking products, and also operates credit card and debit card business, bullion business, life and non-life insurance business, and gold coins and asset management business.It has also set up 11 specialized International Banking Branches (IBBs)

Organizational profile

Started in the year 2009 in PNB.

Started in 2011 in Jaipur district.

BC Model:-

Individuals were appointed as BCAs to impart the model.

The remunerations was fixed by the corporate BC. It was Rs.3000/month and Rs. 1/transaction more than 1000 transaction.

FWT(FTC) also work as BC model.

Bc model in pnb

Bank (PNB)

TSP (Integra)

Corporate BC (i25)

BC Agents

The various Technology components include the following:-

Smart CardPOS Machine with Biometric Devices, Smart card reader, Printer etc.Technology providers’ Intermediary ServicesBank’s Intermediary ServicesBank’s FINCBS ServerBank Main CBS Server

Technological details

Name of a/c holder

Photograph of a/c holder

Code of BCA

Modem ports

Finger print scanner

Display screen

Biometric card readerSmart card reader

Standard keyboard

Receipt printer

PROCESS FLOW

Customer

POS Machine

Vendor's Intermediary server

Bank's Intermediary Server

FINCBS Server

Main CBS Server

Signature & A/c details Capture

Data Flow

Data Validation & Data Upload

Updatation

FILE FORMAT CHANGE

DATA ANALYSIS

Data Analysis

Respondents

Household profile

FINANCIAL POSITION

BANKING HABIT

IMPLEMENTATION LEVEL

AWARENESS LEVEL

BCAs

63%

29%

4% 3%

EARNING MEMBERS

123>3

Household profile

12%

32%

17%

23%

12% 5%

EDUCATION LEVEL

ILLITERATEPRIMARYSECONDARYHSCSSCGRADUATE

AGRICULTURE

AGRI. ALLI

ED ACTIVITY

SELF

EMPLO

YED

GOVT. EM

PLOYEES

PVT. EM

PLOYEES

LABOUR

NOT WORKIN

G0

10

20

30

40

50

6059

6

41

5 3

28

18

EMPLOYMENT LEVEL

EMPLOYMENT LEVEL

86%

5% 9%

SAVINGS DETAILS

YESNONA

FINANCIAL POSITION

31%

18%13%

11%

28%

MONTHLY SAVINGS

<10001000-20002000-30003000-4000>4000

SAVING INSTITUTIONS

3(2%)

8(5%)

1(1%)

3(2%)

13 4(2%)

17(11%)

10(6%) 55(36%)

I-15

C-132

O-20

B-90

46(29%)

PO

NA

(8%)

T-160

Note:- Percentages are mentioned in Parenthesis

62%

38%

Saving A/c at bank branch or at other banks

YESNO

BANKING HABIT

54%

46%

LOAN AVAIL

YESNO

SOURCES OF LOAN

9 22(6%) (14%)

17 (11%)

7 (4%)

4 11 4(3%) (7%) (3%)

10 (6%)

72(46%)

2(2%)

NA

F & FMBO

S

Note:- Percentages are mentioned in Parenthesis

41%

59%

SMART CARD AVAILABILITY

YESNO

Implementation level

14%

27%

59%

SMART CARD USABILITY

YESNONA

20%

60%

20%

Usage of smart cards

None1 Time2 Time

NO100%

SATISFACTION LEVEL OF BENEFICIARIES

YESNO

59%

16%

12%14%

REASONS OF DISSATISFACTION

SMART CARDS NOT ISSUEDNOT RECOGNISING THE FINGER PRINTSACCESSIBILITY PROBLEMLIMIT OF TRANSACTION

18%

82%

AWARENESS OF PNB MITRA

YESNO

AWARENESS LEVEL

10%

90%

AWARENESS OF SWABHIMAAN

YESNO

43%

57%

AWARENESS OF DO’s & DONT’s OF A/c

YESNO

57%

40%

3%

PERCEPTION TOWARDS BANKING

NECESSARY & HELPFULFRAUD & CHEATINGTIME CONSUMINGONLY FOR ELITE & ED-UCATED CLASS

VILLAGES BASE BRANCH NAME OF BCAs TOTAL POPULATION

AOF SMART CARD ISSUED

NIWARU JHOTWARA Mrs. Karuna 7000 450 -

DHAULARAUJI KHAWARANIJI Nirmal Sharma 5500 350 5

DHAULA GATWADI Chitra Mal Kumawat 5000 150 -

BOBADI GATWADI Kailash Chandra Choudhary 3500 200 45

REHLANA HARSOLI Ritambhara Devi 7000 161 38

DHANDHOLI HARSOLI MahendraRaigar 3000 200 47

KHEDIMILAK KARANSAR BanwariLal 3500 365 21

SINODIA BHADHWA MalehandMalkar 5000 308 94

DATA COLLECTED THROUGH BCA

RATIO OF AOF TO THE TOTAL POPULATION

0

1000

2000

3000

4000

5000

6000

70007000

55005000

3500

7000

30003500

5000

450 350 150 200 161 200 365 308

TOTAL POPULATIONAOF

0

50

100

150

200

250

300

350

400

450450

350

150

200161

200

365

308

0 5 0

45 38 4721

94

AOFSmart Card

RATIO OF AOF TO SMART CARD ISSUED

75%

25%

DETAIL OF BCAs TRAINING

YESNO

YES100%

DESIRE MORE TRAINING

YESNO

NO100%

VISIT OF BASE BRANCH MANAGER

YESNO

NO100%

COMPENSATION DETAILS

YESNO

YES13%

NO88%

SPACE PROVIDED BY THE BANK

YESNO

Providing door steps services to the people helps in saving time and transportation cost.

Unawareness of No Frills Bank Account among the respondents.

Time constraint of issuing smart cards was of 4 months and more.

Operational issues of POS device & smart cards

Functional issues of BCAs training and compensation.

Slow process of implementation as no checking done till date.

Majority of respondents take loan from money lenders, friend and family for their needs at high rate of interest i.e. from 24% to 60%, showing a scope for the model.

RBI’s guidelines were not followed properly

No other product offered through smart cards other than saving and withdrawal

FINDINGS

suggestionsPNB should start counseling camps, visit of manager should be fixed per week to impart awareness regarding the program.

Time constraint while issuing smart card should be reduced by improving the work at TSP level.

BCAs compensations should be made so as to remove the grievance.

Majority of people engaged in taking loan from the institutions other than banks so loan facility like KCC should also be started through smart cards.

The service of Govt. payments like MNREGA, Pensions (Old age/Widow/PH) & Scholarships etc. could be introduced through smart cards in every village at a faster pace.

Bank may review the maximum transaction limit of the BCA. Further they may also develop systems to provide for emergency withdrawal of higher amount at the branch level.

Connectivity at village level should improved for hassle free operations at the ground level.

Bank/TSP should conduct the training programs for BCA focusing on maintenance of registers, POS handling, enrolling, and customer handling as also making them aware about other banking/ insurance products.

Technical improvements should be done by TSP to remove the technical snags of POS device and smart cards.

Audits should be done at regular intervals by TSP and bank’s authorities.