“Innovative use of ICT by PSUs for Customer’s Benefits”

1

• Innovative use of ICT by PSUs for Customers
  Benefits
• Project
• Financial Inclusion_at_PNB

1
2
As per Rangarajan Committee Report
Financial Inclusion is the process of ensuring
access to appropriate financial products and
services needed by vulnerable groups such as
weaker sections and low income groups, at an
affordable cost, in a fair and transparent manner
by mainstream institutional players.
2
3
Important Milestones on Road to Financial
Inclusion in India
1904 Setting up of Rural Cooperatives
1969 Nationalization of 14 major Commercial Banks
1975 Setting up of Regional Rural Banks
1990s Self Help Group
2005 RBI advised banks to open no frill accounts
2006 RBI allowed BC/BF to act as agents of banks
Sept. 2010 RBI allowed for - profit companies (excluding NBFC) to act as Business Correspondent
2011 National Payment Corporation of India (NPCI) launched Interbank Mobile Payment System (IMPS)
3
4

OUR BELIEF Banking to the unbanked is a
profitable business

MISSION
Banking for the Unbanked

VISION
To be a leading Global Bank with PAN India
footprints and become a household brand in the
Indo-Gangetic plains, providing entire range of
financial products and services under one roof
5

Financial Inclusion Models Adopted by the Bank

• Brick Mortar Model
• Opening PNB MITRA-No frill accounts (Zero balance
  accounts) with relaxed KYC norms
• Launched PNB Mitra ATM card withdrawal limit
  upto Rs. 5,000 per day.

• ICT (Information Communication Technology)
• Model
• Base Branch acts as a focal point for Business
  Correspondents (BCs)
• BCs are engaged by the Bank/technology providers
• BC Agents (BCAs) contact the customers for
  enrollment and issue biometric smart cards.
• BCAs use laptops and POS in Off Line mode.
• Relaxed KYC norms

6

Project FI through RRBs

• Following Srinivasan Committee recommendation, to
  leverage technology for business and inclusive
  growth, the project CBS_at_RRB implemented in all
  the 6 RRBs sponsored by PNB in April,2010.
• Six RRBs sponsored by PNB
• Haryana Gramin Bank ,Rajasthan Gramin Bank,
  Punjab Gramin Bank
• Himachal Gramin Bank, Sarva UP Gramin Bank,
  Madhya Bihar Gramin Bank.
• Project adjudged as the best IT implementation
  for year 2010 by PC QUEST Magazine.
• Project was awarded SKOTCH AWARD for the year
  2010.

No. of Service Outlets 1488
Avg. no. of Txn. In Lacs (Post CBS) per day 3.07
Customer Base (In Lacs) 87.94
6
7

FI Products Offered by PNB

• Products offered
• Savings with inbuilt OD facility upto Rs.2500/-
• OD facility of Rs. 500/- is offered upfront
• Proposed new products
• Micro Credit
• Remittances/ Fund Transfer
• Term Deposit Recurring Deposit
• Micro Insurance
• Micro Mutual Fund

• Banking transactions in Financial Inclusion
• Cash withdrawal
• Cash deposit
• Mini statement
• Balance inquiry
• Besides Mini Statement facility, Passbook
  facility is also offered to FI customer.

8
Customer Enrollment Process
Web Camera for Photograph
Biometric scanner for Fingerprints
Pad for Signature capturing
Battery Power back-up for undisrupted enrolment
8
9
FI Vendor
ENROLLMENT PROCESS
Data conversion
Back Office 3
Back Office n
FINCBS Server at DC
Validation of Data
External Firewall
External Firewall
Vendor Intermediary server
FI Intermediary server
Back Office 1
Back Office 2
Card personalization centre
Card distribution centre
9
10
Machine is used to capture Transactions HHT
application supports all products Secured
transaction With BCA card Customer
card Transactions are Recorded in customer
BCA card Banks security key embedded in
SAM- smart chip component of HHT
Transaction Process Transaction at the village
carried out by BCA with Hand Held Terminal
(HHT)
10
11

• Uniqueness of project FI _at_PNB
• PNB has adopted branchless banking model
  supported with smart card based technology.
• It has independent CBS setup for FI server at
  data centre with DRS setup.
• The management and control of whole setup is done
  by PNB team.
• Data validation, upload and other activities are
  performed by exclusive FI back Offices.
• The complete system is secured with symmetric key
  based Key Management System( owned and managed by
  Bank) as per IDRBT open standards for FI.
• Financial transaction happens at HHT only after
  authentication of BC agents smartcard and
  customers smartcard followed by finger print
  authentication.
• On completion of any transaction, the HHT prompts
  transaction amount and the resultant balance of
  the customer in local language

11
12

• Uniqueness of project FI _at_PNB Contd.
• An instant receipt generated from the HHT is
  given to the customer
• Data transmission is done in encrypted form.
• Interoperability is achieved through use of
  centralized KMS facilitating the FI customers to
  avail banking facilities anywhere within the
  district/state.
• Necessary Information security system and
  policies including Firewall system has been put
  in place for FI project.
• FI disaster recovery site has been put in place
  to meet the challenge of any failure at Data
  centre.

12
13

• BCP in FI (Business Continuity Plan)
• Customer Finger print fails to match
• BCA can manually perform the transaction (
  override)
• Within the customer wise, day wise limit fixed by
  Bank
• It is controlled through the HHT application
• New smart card will be issued if the failures are
  continuous
• HHT is lost before the transaction upload
• Copy of the transactions are stored in BCA card
• Retrieved from the BCA card and uploaded
• HHT is lost and BCA card is also lost
• Second copy of the receipt with the BCA sent to
  FI back office
• Transaction created in FINCBS

13
14

• BCP in FI (Business Continuity Plan) cont.
• BCA fails to turn up
• Alternate BCA sent to village
• Customer card read and the transaction retrieved
• Uploaded to FINCBS after validation
• Customer card lost
• New card is issued with the data already
  available with the Bank
• Weekly reconciliation between Banks account and
  BC account.
• Cash management
• BC maintains main account with bank
• Provides cash to each BCA within the limit
• Cash held with the BCA is insured for loss and
  fidelity
• BCA to remit the net amount and the data to Bank
  atleast once in 48 hours
• HHT application will not permit further
  transaction without sync with TSP server

14
15
Particulars As on March2011
No Frill accounts opened (lacs) Amount in Rs.(lacs) 73.33 100342
Out of above ICT based accounts ( lacs) Under Brick Mortar model (Branch based) (lacs) 40.89 32.44
Credit Based FI Accounts Amount (in lacs) 18328 5380.92
No. FI Back Offices 08
No. of FI SOLs 991
FI Technology Providers 10
Total no. of correspondent (NGOs, sec 25 co. FTC other bodies) 21
Business Correspondent Agents 2965
Business Facilitators 1633
Farmers Training Centers 9
15
16


Major Financial Inclusion Projects
Projects Number States
Projects in Rural Area 28 Bihar, Rajasthan, HP, Uttarakhand, UP, Punjab, Jharkhand, MP, Orissa, West Bengal
Projects in Urban Area 06 Punjab, Delhi, JK, Chandigarh, Bihar
NREGA/Social Security 05 AP, Haryana, UP, Chattisgarh
Total ( ICT projects) 39 14 STATES (Indo Gangetic Plain) Andhra Pradesh
Project BHAMASHAH 01 Rajasthan
Credit Driven Projects ( Non ICT ) 06 UP, Chhatisgarh, North East, Bihar , Karnataka
GRAND TOTAL 46 17 States (14 in Indo Gangetic Plain AP, Karnataka and North East)
17
Reach under Financial Inclusion
Particulars As on March 2011
Number of villages with Population gt 2000 through Bank Branches (Brick Mortar Model) 2013
Number of villages with population gt 2000 through BC Model (ICT model) 2186
Number of villages with population lt 2000 through BC Model (ICT model) 3219
No. of NO Frill a/cs  opened in 2010-11 in villages with population over 2000. 10.09 lac
18
PNBs Jana Mitra Rickshaw Project

• Making Rickshaw Pullers Rickshaw Owners
• Launched in Varanasi on Feb 2, 2008 in
  association with Centre for Rural
  Development
• Extended to Agra, Allahabad, Kanpur, Meerut,
  Lucknow, Patna
• Targets to cover 10000 rickshaw pullers
• 9503 Rickshaws are financed under Rickshaw
  Projects with outstanding credit of Rs. 9.88
  Crore (as on June 2011)

18
19
Financing Farmers in Bulandsahar in Collaboration
with Mother Dairy

• ICT Based Financial Inclusion with Credit Driven
  Project
• Farmers supply milk to Mother Dairy and get fair
  price
• No dependency on local milk vendors
• Mother Dairy pays back through the accounts
  (smart card based) on weekly basis
• BC agent makes payment to the farmers through
  smart card
• Farmers get loan for milch cattle at affordable
  interest rate
• More than 30000 farmers have been covered under
  this project

19
20
Credit Driven FI Projects in PNB (Data as on
June 2011)

• Financing to Farmers in North East through KCC
  through BC model.
• 5439 accounts are opened (tie up with KAKSSUS
  NGO) with outstanding credit of Rs. 26.99 crore
• Financing to Self Help Groups in Rajanandgaon
  through BC model.
• Financing to vegetable growers in Tineri
  Punpun (Patna)
• 741 accounts are opened with outstanding credit
  of Rs. 2.42 Crore
• More than 56000 GCCs issued with outstanding
  credit of Rs. 1.16 crore
• More than 16.53 lac KCCs issued with outstanding
  credit of Rs.
  134.46 crore
• 2322 accounts are opened under Weavers Project,
  Varanasi with outstanding credit of Rs. 11.61
  Crore
• 190 accounts are financed to Common Service
  Centres with outstanding credit of Rs. 1.95 Crore

20
21

• Capacity Building
• Officials of the bank have been trained under the
  Train the Trainer programme of (Indian
  Institute of Banking Finance) IIBF
• A. Training to BC agents
• On-locations training programmes are organized
  for BC agents
• Bank provides training on its products
  processes.
• Technology related training is provided by
  concerned TSP
• B. Financial Literacy Counseling Centre (FLCC)
• 58 FLCCs have been established for spreading
  Financial Literacy
• Rural Libraries have been setup for dissemination
  of Information in remote rural areas.
• C. 9 Farmer Training Centres (FTCs) have been
  established under PNB Farmers Welfare Trust
  to provide customized training to local farmers.
• PNB has established 30 Rural Self Employment
  Training Institute (RSETI) for organizing
  employment generation oriented training
  programmes.

21
22
The Way Forward

• With the improvement of connectivity, online
  transaction model to be implemented.
• Web based kiosk/ mobile based model to be made
  available at villages
• Introduction of combo card (smart chip with
  magnetic stripe) to enable payments through ATMs.
• Integration with UIDAI project.

22
23
Replicability of the project FI_at_PNB

• The PNB offline FI model can be replicated to
  offer doorstep banking services in remote rural
  areas where last mile connectivity is still a
  challenge.
• Credit delivery through smart card model can be
  implemented to reach a larger section of the
  society.
• FI model will help in minimizing the transaction
  cost.
• This model can be integrated with RSBY, PDS,
  payment of social security benefits and wages to
  the MGNREGA.

23
24
Third Party Assessment/Awards

• E-Governance GOLD Award 2010 under award
  category Innovative use of ICT by PSUs for
  Customers Benefits by Government of India.
• Special Technology Award for Financial Inclusion
  from IDRBT for the years 2008-09 2009-10
  respectively.
• SKOTCH AWARD for the year 2010.

24
25
Thanks TEAM IT PNB
25