Thesis Abstract and Dissertation Abstracts
Financial Inclusion Through Business Correspondent Model: Study On Tripura Gramin Bank
Abstract Category: Accounts and Economics
Course / Degree: PHD
Institution / University: Tripura University, India
Published in: 2014
Financial Inclusion can be defined as providing affordable access to basic banking products and services likes savings, loans, remittances, insurances, etc. to the hitherto excluded and often under privileged and disadvantaged section of the society. In India affordable access to basic financial services has been denied to a majority of the population in the eastern, north eastern and central Indian states besides several districts in the other part of the country.
In January 2005, the Reserve Bank of India issued a new set of guidelines allowing banks to employ two categories of intermediaries - Business Correspondents (BCs) and Business Facilitators (BFs) - to expand their outreach. According to the guidelines, while the BCs are permitted to carry out transactions on behalf of the bank as agents, the BFs can refer clients, pursue the clients’ proposal and facilitate the bank to carry out its transactions, but cannot transact on behalf of the bank.
These new guidelines have arrived at the same moment when a vast array of new technologies is available, offering new and inexpensive ways for transactions to be managed from remotely located offices. The combination of these new technologies with the new guidelines has inspired a number of efforts in India to experiment with the BC/BF model. These efforts use a variety of new technologies – for example, POS Devices and Mobile Phones – to secure and process transactions. New organizations are being formed to offer BC services. Some of the efforts also include responding to government policy to open ‘No Frills Accounts’ and to process Government to Customer (G2C) such as the National Rural Employment Guarantee Scheme, Pensions and other social payments and Customer to Customers (C2C) services i.e. providing linked bank services to its customers.
‘Financial Inclusion’ Project of Tripura Gramin Bank (Regional Rural Bank of United Bank of India) named ‘BC Model’ started in four districts of Tripura on January,2012. And Senrysa Technologies Pvt. Ltd. is the Technical Support Provider (TSP) of Tripura Gramin Bank. Those four districts are undivided West, North, Dhalai and South Tripura districts, presently restructured as 8 districts. Project titled is ‘Rural Banking through Business Correspondent Model”. There are total 226 Financial Inclusion villages under Tripura Gramin Bank, West Tripura District which has been studied /surveyed by me to select Customer Service Provider (CSP) from the maximum villages and to collect primary data for that project, profiling of surveyed villages and assessment of quality of banking service in those villages have been done in the course of my final project report.
(Key words: Financial Inclusion, BC Model, TGB, CSP, G2C, C2G)
Introduction:
While technology and finance hold the key to ameliorate poverty, the poor in India do not have adequate access to the formal banking sector. Inaccessibility of the poor to the formal/institutional banking sector is mainly due to the following reasons:
(a) Lack of good retail outlets offering banking services,
(b) Lack of assets with the poor that could be used as collaterals and
(c) Illiteracy of the poor.
The credit requirement of the poor in India has been estimated by the World Bank to be around Rs.50, 000 crore per annum in 2002. Against this requirement, the credit outstanding of the poor with the formal banking sector is stated to be Rs.5000 crore or ten per cent of the total demand.
The poor require finance for both production and consumption purposes. Production loan may be of three types, viz. (a) short term (for periods up to 15 months), (b) medium term (from 15 months to 5 years) and (c) long term (for periods above five years). Economic activity in rural areas may relate to the various sectors of crop husbandry, animal husbandry, poultry, fishery, cottage & village industries, handicrafts, transportation, repair shops, and trade & services. But the recent strategy is to ensure flexibility in lending and in repayment based on the capacity of the borrower to earn enough to repay- whether it is daily, weekly, monthly or seasonal. Short term loans may be required by the poor for purchasing (HYV) seeds, fertilizer and for irrigating a leased-in land etc. Medium term loans may be required for purchase of bullocks (or a boat) and for purchase of machinery and equipment. Long term loans may be required for repayment of loans, for constructing a shed/shop and for purchase of land etc. What needs to be appreciated is that all the three kinds of production loans are relevant to the poor. Financial exclusion is often the symptom as well as the cause of poverty. Here Inclusion becomes a major pre-requisite to poverty alleviation. Financial exclusion has been predominant in rural areas primary due to poor infrastructure resulting in lesser access. This along with financial illiteracy, burdensome documentation and procedures insisted by formal source of credit, lack of credit history and absence of documentary proof of identity or address of the prospective borrowers become obstacle.
1.2. Financial inclusion in India:
In the Indian context, the need for financial literacy is accentuated by the low levels of literacy and the large section of the population, which still remains out of the formal financial setup.
Of the total workforce of 321 million, 70% of them have cash income, of which 48% have no savings in any form. This 48% forms a large enough part of the population and even more appalling is the skewed ratio of the Urban versus Rural population in it. In this 48% “No Savings” segment, only 20% of them are Urban and the rest 80% is rural (IIMS Survey, 2007).
In the year 1990, Government of India declared that sixty percent of Indian population had no Savings Book (S.B) account; ninety percent of people had no loan and ninety nine percent people had no insurance. In the year 1995, Union Bank of India announced every villagers of Mangalpuram village of Pondichery whose age was above eighteen years have a savings bank (S.B) account.
India lives in villages, close to 72 percent of Indian population lives in rural areas. In the country we have 6.36 lakhs villages out of which only 13 percent have population above 2000. The rural economy contributes nearly half of the country’s GDP (ETIG 2002-03) which is mainly agriculture driven and monsoon dependant.
Government of India already implemented this ‘Financial Inclusion’ project to the many states of India. The main aim of this project is to provide banking service through business correspondent model and giving banking facilities to the doorstep of the villagers. So that they can save their money as well as business of respective banks will also increase.
Financial Inclusion Plan – Summary progress of all Banks including RRBs, during three years period are as under:
Particulars Year Ended, 2010 Year Ended, 2011 Year Ended, 2012 Year Ended, 2013
Banking Outlets in Villages
a) Branches 33,378 34,811 37,471 40,837
b) BCs 34,174 80,802 1,41,136 2,21,341
c) Other modes 142 595 3,146 6,276
d) Total 67,674 1,16,208 1,81,753 2,68,454
Urban Locations through BCs 447 3,771 5,891 27,143
Basic Saving Bank Deposit A/c- branches
a) No. in millions 60.19 73.13 81.20 100.80
b) Amt. in billions 44.33 57.89 109.87 164.69
Basic Saving Bank Deposit A/c- BCs
a) No. in millions 13.27 31.63 57.30 81.27
b) Amt. in billions 10.69 18.23 10.54 18.22
OD facility availed in BSBDA’s account
a) No. in millions 0.18 0.61 2.71 3.92
b) Amt. in billions 0.10 0.26 1.08 1.55
KCCs (No. in millions) 24.31 27.11 30.24 33.79
Source: Table IV.4, RBI Annual Report, 2013
1.3 Background of Financial Inclusion:
With the objective of ensuring grater financial inclusion and increasing the outreach of primary Regional Rural banks (RRBs) in providing basic and affordable banking services in their areas of operations, the Reserve Bank of India will now consider requests from well managed and financially sound RRBs to engage Business Facilitator (BF)/ Business Correspondent (BC) using information and communication technology (ICT) solutions. Accordingly, RRBs may, with their Board’s approval. Formulate a scheme for use of BFs/BCs and submit the same to the concerned regional office of the Reserve Bank. The detailed guidelines in this regard are……
Eligibility-:
RRBs which satisfy the following criteria are eligible to engage the services of BCs/ BFs.
• CRAR of more than 10 per cent.
• Net NPAs less than 5 per cent.
• No default in the maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) during the preceding financial year. Continuous net profit for the last three years. At least two elected professional directors on the board; and
• Regulatory comfort based on, inter alia , record of compliance with the provisions of the Banking Regulation act,1949 (AACS). RBI act, 1934 and the instructions by the RBI from time to time.
1.4 Business Facilitator:
Eligible Entities : Under the BF model, RRBs may use intermediates, such as , non-government organizations (NGOs)/ Micro finance institutions (MFIs) set up under societies/trust acts, farmers clubs, co-operative societies, other than primary and credit co-operatives, community based organizations, IT enable rural outlets of corporate entities, post offices, insurance agents, well functioning panchayats, village knowledge centers, agri clinic and agri business centers, krishi vigyan kendras, khadi and village industry board and individuals and BFs depending on the comfort level of the bank, for providing facilitation services. Directors of RRBs and their relatives as also serving employees of RRBs are, however, not eligible to act as BFs.
Scope and Activities: The facilitation service may include:
(I) Identification of borrowers and fitment of activities;
(1) Collection and preliminary processing of loan applications including verification of primary information and data.
(2) Creating awareness about savings and other products and education and advice on managing money and debt counseling;
(3) Processing and submission of applications to RRBs;
(4) Promotion and nurturing of self help group (SHG) and Joint liability groups;
(5) Post sanction monitoring ;
(6) Monitoring and hand holding of SHGs/joint liability groups/credit groups/others; and follow-up for recovery.
Where individuals are engaged as BFs, RRBs should take adequate precautions and conduct proper due diligence.
1.5 Business correspondent:
Eligible Entities: Under the Business correspondent (BC) model, NGOs/MFIs set up under societies/trust acts , co-operative societies registered under Mutually Aided Co-operative societies acts or the Co-operative Societies Acts of states, other than primary/co-operative credit societies, post offices, retired bank employees, ex- servicemen , retired teachers, retired government employees, individual kirana/medical/fair price shop owners, individual public call office (PCO) operators, agents of small savings schemes of Government of India/Insurance companies, individuals who own petrol pumps, authorized functionaries of well run SHGs linked to RRBs or any other individual, including those operating common service centers, may act as BCs.
Scope and Activities: In addition to the activities listed under the BF model, the scope of activities to be undertaken by the BCs would include:
(1) Disbursal of small value credit;
(2) Recovery of principal/ collection of interest;
(3) Collection of small value deposits.
(4) Sale of micro insurance/mutual fund products/pension products/other third party products; and
(5) Receipt and delivery of small value remittances/other payment insurances.
The activities to be undertaken by the BCs would be within the normal course of the bank’s banking business, but conducted by BCs at places other than the bank premises.
The arrangements with the BCs should specify –
(1) Suitable limits on cash holding as also limits on individual customers payments and receipts;
(2) The transactions are conducted for and reflected in the bank’s books by end of the day or next working day;
(3) All arrangements/contracts with the customers should clearly specify that the bank is responsible to the customer for acts of commission and omission of the BF/BC.
With a view to ensuring adequate supervision over the operations and activities of the BCs, every BC will be attached to and be under the oversight of a specific bank branch to be designated as a base branch. The distance between the place of business of a BC and the base branch should not exceed 30 kms in rural areas. While engaging BCs, RRBs should ensure that the area covered by them is strictly within their eligible area of operation.
In engaging intermediaries as BCs, RRBs should ensure that they are well established, enjoying good reputation and having the confidence of the local people. RRBs should ensure that individuals engaged as BCs are permanent resident of the are in which they propose to operate as BCs. RRBs should give wide publicity in the locality about the intermediary engaged by them as BCs and take measures to avoid being misrepresented.
1.6. Operating norms:
Banks have been permitted to pay reasonable commission / fees to the BFs / BCs, the rate and quantum of which is to be reviewed periodically. Such costs have to be borne entirely by the banks. Initially, it may affect operational margins, but over time, on account of the incremental business brought in, the arrangement is expected to become viable and self-sustaining. Further, banks have been advised that the agreement with the BCs should specifically prohibit them from charging any fee to the customers directly for services rendered by them on behalf of the bank. It has been clarified that the arrangements with the BCs shall specify:
• Suitable limits on cash holding by intermediaries as also limits on individual Customer payments and receipts,
• The requirements that the transactions are accounted for and reflected in the Banks' books by end of the day or next working day,
• All agreements / contracts with the customer shall specify that the bank is responsible to the customer for acts of omission and commission of the BF / BC. It was explained to the Committee that notwithstanding the dispensation given to banks, the response of the banking system was somewhat low key and that the model is yet to be fully grounded.
Discussions with a cross section of bankers revealed that the muted response was in part due to:
• Disinclination on part of banks to absorb the costs involved on grounds of its impact on viability of operations,
• Lack of clarity regarding certain procedural complexities. Taking the totality of circumstances into account, especially the need to facilitate greater financial inclusion, the Committee makes the following Recommendations in so far as the BF/BC Model is concerned.
1.7. Service charges:
To ensure viability of the BC model, RRBs (and not BCs) are permitted to collect reasonable service charges from the apex bodies, in a transparent manner under a Board-approved policy. RRBs should ensure that the service charges/fees collected from the customers for delivery of banking service through BC model are fair and reasonable.
RRBs may pay reasonable commission/fee to the BFs/BCs, the rate and quantum of which may be reviewed periodically. The agreement with the BFs and BCs should specifically prohibit of charging any kind of fee to the customers directly for services rendered by them on behalf of the bank.
1.8. Know Your Customer:
Compliance with ‘Know Your Customers’ (KYC) norms would continue to be responsibility of RRBs. since the objective is to extend savings and loan facilities to the underprivileged and unbanked population, RRBs should adopt a flexible approach within the parameters of KYC guidelines issued from time to time. In addition to introduction from any person on whom KYC has been done , RRBs can also rely on certificates of identification issued by the intermediary being issued as BC, block development officer, head of village panchayats, post master of the post office concerned or any other public functionary.
The implementation of the BF/BC model should be monitored closely by controlling authorities of RRBs , who should specifically look in to the functioning of BFs/BCs during the course of their periodical visit to the branches.
Information regarding BCs engaged by RRBs may be placed on their website. & RRBs should consider bearing the initial set up cost and others costs of the BCs and extended a handholding support to the BCs, at least during the initial stage.
Comprehensive Financial Inclusion in India: ‘Sampoorn Vitteeyea Samaveshan(SVS)’ (or Comprehensive Financial Inclusion) incorporates ensuring access to financial services and timely & adequate credit to the excluded sections i.e. weaker sections & low income groups.
1. Mission Mode Objectives ( 6 Pillars):
The present proposal of SVS under the Mission Mode envisages provision of affordable financial services to all citizens within a reasonable distance. It comprises of the following six pillars:-
1.1 Universal access to banking facilities:- Mapping of each district into Sub Service Area(SSA) catering to 1000-1500 households in a manner that every habitation has access to banking services within 5 km by March,2016.
1.2 Financial Literacy Programme:- To be extended to the block level from district level at present by March, 2016.
1.3 Providing Basic Banking Accounts:- To all families and to all beneficiaries of Government schemes by March 2016 and then on an ongoing basis.
1.4 Micro Credit availability & Creation of Credit Guarantee Fund for coverage of defaults in such accounts:- Facility of an overdraft of Rs.5000/- through debit card to every basic banking account holder on completion of financial literacy training by March,2016.
1.5 Micro Insurance:- By March,2017 and then on an ongoing basis.
1.6 Unorganized sector Pension schemes like Swavlamban:- By March 2017 and then on an ongoing basis.
6. Time Lines for Implementation:
Launch 15th Aug 2014
Formation of Committees 2nd Oct 2014
Coverage of SSAs
o 80% 15th Aug 2015
o 100% 31 March 2016
Opening of accounts
o 50% 31st March 2015
o 75% 15th Aug 2015
o 100% 31st March 2016
2. Background of project Financial Inclusion
2.1. Objective of the project:
(a) Village profile of the surveyed villages.
(b) Villages from the last mile villages and analysis on quality of banking service.
(c) Starting of financial inclusion project in the selected villages.
(d) Selection of Business Correspondent /BCAs and starting enrollment process on those Financial Inclusion villages.
2.2. Location of the project: While Tripura as a whole lies approximately between the north latitude 22 degrees 56' and 24 degrees 32' and between longitude 91 degrees 0' and 92 degrees 20' east, the West Tripura district lies approximately between latitude 23 degrees 16' to 24 degrees 14' north and longitude 91 degrees 09' east to 91 degrees 47' east. The West Tripura District is bounded by Bangladesh in the north and west by North Tripura in the east and by South Tripura in the south. Total area of the district is 3544 sq.kms. The district headquarters is located at Agartala, which is also the capital of the State. Main languages spoken in the district are Bengali, Kakbarak and Manipuri. Religion wise breakup of population is indicated below as per 1981 census:
Hindus : 906543
Muslims : 65552
Christians : 3143
Sikhs : 209
Buddhists : 643
Jains : 143
Other religions and
persuasioins : 14
Religion not stated : 5
3. Methodology:
3.1. Different stages in project:
I have completed my project through the different stages. In the time of stage one, I had visited through out the West Tripura District where these Financial Inclusion project was already commenced and talked to the supervisor of those district to know multi dimensional aspects of this project especially practical issues and also learn what I actually need to do for complete this project with a grand success. I have got the opportunity to meet with the bank officials and Regional Manager of Tripura Gramin Bank and discuss several project related issues and collected primary data through structured questionnaire. In the third phase I had started to select customer service provider (CSP) village wise and gave them proper training to fill the enrollment form (Saral Account – No Frill) properly, and every selected CSP started enrollment procedure to their respective villages .As the objective of my study is, assessment of quality of banking service and village profiling, so I have developed a questionnaire for end customers also and made sample design for conducting survey to those villages and collected primary and secondary data. I had completed my primary and secondary data collection in stage four. And finally did data analysis part to reach to an inference on my project.
Stage – 1 Stage – 2 Stage - 3 Stage - 4 Stage – 5
Orientation to know the basic things of the project properly. Literature review etc. Selection of project location, project title, and sample designed, developed questionnaire, met with bank official, RM & customers. Started work as Project Manager-FI and got the opportunity to visit & met with target group and collected primary data.
Field study and started visiting FI villages and collecting primary data from the villages as well as respective branches. Data analysis and findings.
Table 1: stages of the project
3.2. Sample design:
The objective of this study aimed to assess the quality of banking services through BCs in the Financial Inclusion villages and also the profiling of those villages. For the purpose of my study I had choose 10 branches of Tripura GraminBank, Bankura district. And maximum numbers of villages are consisting under these seven branches. so for this case I have done a non-probability sampling which we can termed as purposive sampling. Reason behind it is that, I am looking to cover maximum number of villages, so I have been choose these seven branches only. And then I started visiting those respective villages and population of my project is villagers whose age is above eighteen years of age and who are eligible as a customer of the Bank. Here I chosen respondent randomly from the each village. And my sample size is 450.
3.3. Survey design:
For proper assessment of quality of banking service and profiling of those financially inclusive villages under the Tripura GraminBank, West Tripura district I have developed a questionnaires having two parts which consist some straight forward questions for the respondents. It was also consist of savings pattern, frequency of visiting base branches and etc. overall it was mixed up with qualitative and quantitative questions.
3.4. Data collection:
I have collected primary as well as secondary data for successful completion of my project. In the first phase when I used to visited branches in a daily basis and collecting primary data through survey from the bank officials and also collecting secondary data from the branch correspondences. In the second phase I had collected Primary and secondary data from the respective villages and Panchayet offices.
3.5. Data analysis:
In the data analysis part I had tried to analyze different aspects of villagers which are related with the bank. The most important part is their savings pattern. Other aspects like whether they have bank account or not? If they don’t have bank account then what is the cause behind it? And many other things prevailed. so that we can analyze the quality of banking service to those villages and what are the other opportunity to improve the banking services to those villages through business correspondent model.
4. Finding and analysis:
As I mentioned earlier, there are different issues I had observed while visited those villages and conducting surveys. So, I have clearly analyzed those different issues in my data analysis part as a finding one by one based on my questionnaires
4.1. Regarding of a customer:
Holding a bank account itself confers a sense of identity, status and empowerment and provides access to the national payment system. Therefore, having a bank account becomes a very important aspect of financial inclusion. Further, financial Inclusion, apart from opening and providing easy access to a No Frills account, should also provide access to credit, perhaps in the form of a General Credit Card (GCC) or limited OD against the no frills account. It should encompass access to affordable Insurance and remittance facilities. It should also include credit counseling and financial education / literacy. While financial inclusion, in the narrow sense, may be achieved to some extent by offering any one of these services, the objective of “Comprehensive financial inclusion” would be to provide a holistic set of services encompassing all of the above.
Graph No 1: Customers having bank account
From the above graph we can clearly see that 77 % of the population not having any bank account till now as well as only 23% of the population having bank account in those financially inclusive villages. We can be hopeful that after proper implementation of this project in this area every one of the village should have a bank account through Business Correspondent Model.
4.2. Reasons for not having a bank account:
While developing my questionnaires, I had mentioned some of the most important cause behind not having a bank account till now. And that I have been show through a proper graph so that it is easy to know different issues regarding not having a bank account.
Graph no 2: Reason of not having a bank account.
From the above graph we can clearly see the different causes behind not having a bank account till now. As we saw earlier that 77% of the population not having any bank account, so this is a very major issue regarding of this project. So from now, we will able to enroll a huge amount of customers under TGB near future.
4.3. Frequency of visit to the base branch:
It is being already shown that near about 23 percent people have the bank accounts out of the whole target population. And a large number of people do not have any bank account even they are not used to visit their respective branches.
Graph no 3: Frequency of visit to the base branch
From the above graph we can clearly see that out of 23 percent people who are already customer of a base branch, 7 percent of them used to visit the base branch of bank two times in a month and 41 percent of them used to visit their respective base branches on a single time basis only.
4.4. Initial deposit while opening a bank account:
In the time of conducting survey in those FI villages, I had observed that very less number of people having bank account. Instead of that I talked to the villagers who are already customer of the bank. And the purpose of talking is to know that with how much of initial deposits they open their account.
Graph No 4: Initial deposits by customer to open a bank account
4.5. Monthly savings pattern of the customer:
This is the most important thing in the analysis part of my project. From where we can assess lots of things like potentiality of the rural customers, what could be the changes happen to their financial condition part if they are financially included under this project and what could be the future of this project undertaken by TGB.
Graph no 5: Monthly savings pattern
Even though 40 percent of the population not having any savings monthly basis by adding others we can say 60 percent of people having savings in a monthly savings, and that is a great indication of potentiality of those financially included villages. It is clearly shows that 55 percent of people having monthly savings of less than two hundred rupees, 3 percent having monthly savings between rupees 200-500 and about 2 percent of people having savings of above five hundred rupees monthly. So, overall it is a great indication for this project.
5. Village profiling of surveyed villages:
Village Household Population TGB Base Branch Customers with BC Remarks
Ishanpur 2672 Panchabati
Paschim Simna 4606 TSCB
Meglibond Part 3827 Panchabati
Meglibond 3122 Panchabati
Mantala 2702 Kalacherra
Kalacherra 2555 Kalacherra
Bijoynagar 2249 TSCB
Kalkalia 8054 Bamutia
Fatikcherra 11865 Kamalghat
Budhjungnagar 5595 Kamalghat
Tulabagan 5604 Mohanpur
Balurband 4706 Hezamara
Chhankhala 2826 TSCB
Chandpur 5734 TSCB
Domrakaridak 2433 TSCB
Wakinagar 2197 Mandwai
Shibnagar 2709 Mandwai
Ramchandranagar 3062 Khayerpur
Dinabandhunagar 4759 Mandwai
Patnipara 3288 Mandwai
Ashigarh 2077 Mandwai
Mandainagar 6003 Mandwai
Laxmipur 10594 TSCB(Mandwai)
Radhakishorenagar 11553 Khayerpur
Uttar Champamura 10209 Khayerpur
Purba Noagaon 7674 Khayerpur
Purba Debendranagar 8275 Champaknagar
Radhamohanpur 3446 Khumlwng
Janmejoynagar 2385 Khumlwng
Radhapur 6618 Khumlwng
Belbari 6846 TSCB
Majlishpur 15440 Mohanpur
Pandabpur 6202 Bikramnagar
Kanchanmala 2937 Kanchanmala
Srinagar 7056 Jogendranagar
Table no 2: Details of surveyed villages
From the above chart we can clearly know about the profile of those seventeen surveyed villages of West Tripura district, BGVB .and these data are all collected from the village panchayats and respective base branches of each village. From here we can clearly asses that if this financial inclusion project implemented in those villages then how much of eligible customers we can include under this project from the each villages. We can also generate how much of business bank can generate in those villages.
5.1. SHG and Bank linkage:
The SHG - Bank Linkage Programme can be regarded as the most potent initiative Since Independence for delivering financial services to the poor in a sustainable manner. The programme has been growing rapidly and the number of SHGs financed Increased to 29.25 lakhs on 31 March 2007.
The spread of the SHG - Bank Linkage Programme in different regions has been Uneven with Southern States accounting for the major chunk of credit linkage. Many States with high incidence of poverty have shown poor performance under the Programme. NABARD has identified 13 States with large population of the poor, but Exhibiting low performance in implementation of the programme. The ongoing efforts of NABARD to upscale the programme in the identified States need to be given a Fresh impetus. The State Govts. And NABARD may set aside specific funds out of the budgetary Support and the Micro Finance Development and Equity Fund (MFDEF) respectively For the purpose of promoting SHGs in regions with high levels of exclusion. For the North-Eastern Region, there is a need to evolve SHG models suited to the local Context of such areas.
NGOs have played a commendable role in promoting SHGs and linking them with banks. NGOs, being local initiators with their low resources, are finding it difficult to expand in other areas and regions. There is, therefore, a need to evolve an incentive package which should motivate these NGOs to diversify into other backward areas. The SHG - Bank Linkage Programme is now more than 15 years old. There are a large number of SHGs in the country which are well established in their savings and credit operations. The members of such groups want to expand and diversify their activities with a view to attain economies of scale. Many of the groups are organizing themselves into federations and other higher level structures. To achieve this effectively, resource centers can play a vital role. Federations of SHGs at village and block levels have certain advantages. Federations, if they emerge voluntarily from amongst SHGs, can be encouraged. However, the Committee feels that they cannot be entrusted with the financial intermediation function.
There were lots of SHGs in those villages of Bankura where they are financially supported by either by BGVB base branches or by NABARD. If a person wants to take loan from the SHGs for the 1st time then the rate of interest will be one percent in per hundred rupees in per month, for each thousand rupees the repayment rate is six months. Where as if the same person wants to take loan from the same SHG second time then the rate of interest will be two percent in per hundred rupees in per month. In Tripura there are around 50,000 active SHGs flourished under the hypothecation of DRDA and other agencies.
5.2. Out Source Organizations:
Each and every bank has their own out source partner for rendering ICT based door to door financial inclusion services; basically IT experts are contributing a lot with their hi-tech solution. Being a Project Manager of such a great IT Company namely STPL Ltd. I have got the opportunity to make an extensive visit. So in the time of visiting I observed that BC agents are serving well with multiple services to those villagers. We are paying high incentives to the agents than bank. This could be a threat to the villagers as well as BC model. As they are already gather experience from the villagers and they started campaigning from the last few months. As the villagers have less time and they used to work in their field in the day time so they are unable to go to the bank. And these private companies are utilizing this opportunity. So I think awareness programme in those villages about this project under taken by TGB and Senrysa Technologies Pvt Ltd is the most important part.
6. S.W.O.T. analysis:
Strengths Weakness
1. This is the own project of TGB, West Tripura. So there are no questions about trust in customers mind.
2. Same sort of banking facilities a customer can get from doorstep.
3. Full support and proper guidance from the regional office and TSP supervisor to the CSP time to time.
4. Scheme like insurance, loan, NREGA payments, pension payments a customer can get without visiting base branch.
5. As the bank is undertaken by Government so there is no chance of any risk by depositing money to the BC.
6. Use of smart card is a huge advantages, as it can be used as a identity card and no can withdraw money from the customer’s account unless the Smart card holder of that account.
1. Awareness about this project is very less. So bank managers need to visit their FI villages along with CSP.
2. Villagers want immediate actions, so after the enrollment they want to use this facility as quick as possible. so Bank need to take less time to give service to the villagers.
3. In the time of first time of enrollment CSP needs to enroll through ‘Saral Account Form’ and further them needs to do it in online mode when HHT is available.
4. If HHT is not working then customers have to go to the base branches.
5. It will be better to motivate CSPs, if the TSP will able to pay them at least some amount of fixed salary.
Opportunity Threats
1. Employment and growth generate.
2. Increase in savings of customers.
3. Business of base branch will also improve gradually.
1. Private company’s agents are already able to motivate villagers .and they have already started transaction in those villages.
2. There may be security problem to the CSP’s as they are holding cash in the customer service point.
7. BC Model ICT Solution for UBI RRBs:
7.1. Introduction:
“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 weaker sections and low income groups at an affordable cost.” - C. Rangarajan Committee.
Senrysa Technologies Pvt Ltd is the Technical Support Provider for financial inclusion project of Tripura GraminBank. They have already worked with Assam Gramin Vikash Bank, Manipur Rural Bank and Tripura Gramin Bank as a TSP. There are total of 1600 financial inclusive villages under RRB of United Bank of India, and out of that 531 villages are located in Tripura. In case of Financial Inclusion in India,
• 40% is unbanked in urban areas
• 61% is unbanked in rural areas
• Higher in North Eastern(63%) and Eastern
• Regions (59%)
• Only 14% of adult population has loan accounts
9.5% in rural areas
14% in urban areas
North Eastern (7%) and Eastern region (Source RBI)
Picture 1: Hand Held Terminal (HHT) and Web Camera. (GL-11) Model.
7.2. Set-up:
This the proposed model for the financial inclusion initiative of Tripura GraminBank. The model is being developed by Senrysa Technologies Pvt Ltd after discussion with HP and Infosys.
By this model transaction will be done in a smooth process. For the each transaction by CSP, a message will generate in the Hand Held Terminal and it will go to the Financial Inclusion (FI) server of respective base branches in a encrypted way. Accommodative transaction will not happen. Suppose there are five consecutive deposits of one hundred rupees in that case bank will take it as one transaction only.
For each transaction the Business Correspondent will get one and half rupees on each transaction and for each enrollment they will be getting rupees five. There is no monthly salary, the whole work is commission basis only as per there transaction of each month. Bank or TSP will not provide the Customer Service Point; it will be totally depend upon the CSPs.
7.3. Appointment of Business Correspondent:
Stage 1 Stage 2 Stage 3 Stage 4
1. Selection of probable CSP from the FI village by the base branch Manager.
2. Recommend to the Regional Manager.
1. Regional Manager ensure that the proposed candidate fulfill the criteria.
2. Recommend to the supervisor of TSP for selection. 1. Supervisor interview the candidate and aware him/her everything about the project. 1. Fulfill the criteria by the candidate and got engagement letter.
2. Provided the forms for starting enrollment.
Table No 3: Appointment process of BC
7.4. Smart Card Personalize process:
Every customer enrolled under FI will be given a Smart Card with a electronic chip embedded on it. Various account details will be stored in this chip, including account balance and last few transactions made in the account. There is slot in the hand held terminal where the smart card will be inserted for reading existing data from it or writing new data on it. There is a fingerprint scanner in the each of the hand held device. The customer presses the fingers one-by-one on the FPS to take a snap of his finger. Starting from the enrollment to printing of Smart cards went through a very smooth process.
Stage 1: CSP enroll the customer by form fill up through HHT.
Stage 2: Documents of customer verified by CSPs.
Stage 3: CSP send the filled form through GPRS to the FI server of base branch.
Stage 4: Then it is send to the branch manager server.
Stage 5: Approved by branch manager.
Stage 6: Then it is send to the CBS by the branch manager.
Stage 7: Customer identity and account created by the bank.
Stage 8: Then it is send to the TSP (Senrysa)
Stage 9: Manufacturing of card by the TSP.
Stage 10: Customers get the Smart card through CSP.
Table No 4: Personalization Process
After the personalization process customers need not go to bank branches for getting Smart Card. Customer Service Provider (CSP) will issues the Smart Card to the customers. Now they can do transaction by their smart card. The account will be opened with Zero balance. In further also the customers will not be required to maintain any balance in the account. And this is why such account is called No-frill account.
Pics No 3: Smart Card of customers.
From the above picture we can now clearly able to see the proposed smart card for this project. The card will be consist of Micro Cheap, Customers address, Unique card number ,Security Hologram, Customer photograph and TSP logo .Customer can use it as a identity card.
8. FI THROUGH ADHAAR: In order to further speed track Financial Inclusion in the country, Two Working Group were constituted by RBI on MicroATM standards and Central Infrastructure & Connectivity for Aadhaar based financial inclusion transactions with members representing RBI, Unique Identification Authority of India, NPCI, Institute for Development and Research in Banking Technology and some special invitees representing banks and research institutions.
The working group on MicroATM standards & Central Infrastructure & Connectivity has submitted its report to RBI. As a part of the working group it was proposed to conduct a Lab level Proof of concept (PoC), integrating the authentication & encryption standards of UIDAI, to test the efficacy of MicroATM standards and transactions using Aadhaar before they are put to actual use. The PoC was successfully demonstrated at various venues.
AEPS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.
The four Aadhaar enabled basic types of banking transactions are as follows:-
• Balance Enquiry
• Cash Withdrawal
• Cash Deposit
• Aadhaar to Aadhaar Funds Transfer
The only inputs required for a customer to do a transaction under this scenario are:-
• IIN (Identifying the Bank to which the customer is associated)
• Aadhaar Number
• Fingerprint captured during their enrollment
9. Conclusion:
The financial system in India has grown rapidly in the last three decades and more. The functional and geographical coverage of the system is truly impressive. Nevertheless, data do show that there is exclusion and that poorer sections of the society have not been able to access adequately financial services from the organized financial system. There is an imperative need to modify the credit and financial services delivery system to achieve greater inclusion. The implementation of the recommendations made in this Report could go a long way to modify particularly the credit delivery system of the banks and other related institutions to meet the credit requirements of marginal and sub-marginal farmers in the rural areas in a fuller measure. However, creating an appropriate credit delivery system is only a necessary condition. This needs to be supplemented by efforts to improve the productivity of small and marginal farmers and other entrepreneurs so that the credit made available can be productively employed. While banks and other financial institutions can also take some efforts on their own to improve the absorptive capacity of the clients, it is equally important for Government at various levels to initiate actions to enhance the earnings capacity of the poorer sections of the society. The two together can bring about the desired change of grater inclusion quickly.
The message that comes out of the event is loud and clear - the focus of the model has to shift significantly to ensure that it finds space in the business strategies of the banks and not in the footnotes of their annual reports. The BC model is in its infancy. The different experiments being tried out enhance the understanding and the skill sets of the sector to make the model a viable and feasible instrument of increasing financial services outreach. In the initial stages, the focus seems to be on inclusion. The experiments are by and large not treating the BC-led inclusion as a commercial prospect and seek to contain costs, not only of the current kind but also of investments which are critical from a long-term point of view. The regulatory stance is to learn from ongoing implementation and incrementally remove hindrances as is seen in the recent relaxation of distance norms for BCs’ operations. This stance while not entirely proactive is sufficiently supportive. While the technology service providers have taken a keener interest to prove the practicability of the model, they necessarily focus on technology aspects rather than the customer aspects. The key to success of BCs lies in banks making client acquisition and business expansion a business proposition; and not treating it as a CSR activity. When BC becomes an instrument of business expansion and profitability, banks will ask different questions and find practical answers to the many problems that exist today.
The purpose of my study was to proper assessment of quality of banking service in the financially inclusive villages of the district as well as village profiling. My analysis is based on survey, secondary data collection from the source and previous literatures. I stared my research with the following questions.
1. Have you any bank account?
2. If no, then what are the causes behind not having a bank account?
3. How much amount of savings do you have? (Monthly Basis)
4. An appraisal on TGB Financial Inclusion Project.
9.1. Answer:
Answers for question 1:
Eighty Seven percent of people not having a bank account as well as thirteen percent having a bank account out of the total populations.
Answer for question 2:
Lack of financial knowledge, low income and asset, branch is far etc are the cause of it. Low income and asset is the one of the major cause behind it with thirty four percent of the population having this problem.
Answer for question 3:
With fifty eight percent of people not having any savings monthly basis and forty two percent of people having savings in each month starting from less than two hundred rupees to above five hundred rupees.
References:
(a) RBI Circular & Publications
(b) Report of NABARD and other banks on financial inclusion.
(c) Supporting report from the Senrysa Technologies Private Ltd.
(d) Tripura GraminBank HO & base branches for collecting secondary data.
(e) Lots of knowledge gathering from the different awareness programme and training programme during working as a Project Manager-FI.
(f) DFS, Approach paper on CFI dated 16.06.2014
Paper Keywords/Search Tags:
Financial Inclusion, BC Model, TGB, CSP, G2C, C2G
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Submission Details: Paper Abstract submitted by SUNIRMAL BISWAS from India on 06-Dec-2014 10:45.
Abstract has been viewed 3777 times (since 7 Mar 2010).
SUNIRMAL BISWAS Contact Details: Email: mbasunirmal@gmail.com
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