Welcome Presentation on SMART CARD Government of Andhra Pradesh

Objectives To increase the outreach of main- stream banking and financial services to the poorest of the poor by using technology based solutions. Ensure efficient and timely transfer of Govt. benefits to the poor. Minimize the possibility of fraudulent payments. Total Financial Inclusion.

Approach Create branchless banking infrastructure. Open zero-frills accounts & issue Smart Cards to the poor. Establish a banking out post in each village. To begin with NREGS and SSP payments. Banks will subsequently deliver banking services.

AP model- bank led Banks lay the entire infrastructure through Service Providers and BC selected through competitive bidding. Service providers provide technology. –PoS equipment, biometric reader, Printer, cards, backend servers etc. Business Correspondent delivers financial services to people through a village level CSPs All CSPs are women and members of SHGs Stationary Payment system in every GP Govt pays 2% commission on payments handled.

Technology Aspects Back end network – central servers of service providers integrated to bank servers Front end –Finger print scanner and reader –Hand held equipment provided with a printer which handles enrolments and payments –Mobile phone with camera (OR) –PoS terminal which integrates all the above functions. Mx Smart Card –32 KB and with java Card application called data store.

6 A.P. SMART CARD PROJECT Technology (M/s Fino) … Image Template Code Slot to insert Operator / Customer card F button Receipt Generation Slot Slot to capture thumb print Arrow Key for starting the device

7 A.P. SMART CARD PROJECT Technology (M/s Little World ) Based on new generation Near Field Communications (NFC) mobile phones; contact-less RFID smart cards and integrated biometrics. Alternate option of attaching fingerprint scanner + card reader to a PC or PoS. Can also be deployed on PCs - by adding a NFC card reader + fingerprint scanner (both USB peripherals costing about Rs. 6000)

Awareness Orientation to APDs, MPDOs, APOs & TAs by PD,DWMA Orientation to APDs, MPDOs, APOs & TAs by PD,DWMA Orientation to IKP staff by PD, DRDA Orientation to IKP staff by PD, DRDA Orientation to FAs at Mandal level Orientation to FAs at Mandal level Orientation to VOs at Mandal level Orientation to VOs at Mandal level Awareness prog for the non- officials at Mandal level Awareness prog for the non- officials at Mandal level Awareness prog for the non- officials at Mandal level Awareness prog for the non- officials at Mandal level

Key- processes 1. Enrolment –RD gives beneficiaries data of SSP & NREGS database –Concerned bank conducts enrolment camp in the village through SP. –GPs, VOs assist the organisation in mobilization and identification of beneficiaries. –6/ 10 finger prints, photo and nominee details of the beneficiary captured. –Data will be forwarded to back office for processing Contd..

i)MCC to give NREGS data to Bank/SP ii) DRDA to give bank wise SSP data to Bank/SP GP wise schedule to be worked out with the Bank/SP Tom-tom to be done in the GP for three days before start of enrolment To take up enrolment for 3-4 days in the presence of GP Members and VO. 6/10 fingerprints captured, photo taken & KYC forms filled during enrolment To send enrolment status to PDs & Director, SHGs on a daily basis. To send enrolment details to their server for further process. Close enrolment If more than 80% achieved. Obtain signed copies of those attended from VO/FA. Enrollment- work flow

Key- processes 2. Preparation and issue Smart Card. –Data collected during enrolment is encrypted on the card including biometric. (Encrypted Java smart card with 32 KB memory). –Account is opened –Card is delivered to the beneficiary in the village within three weeks.

Cleaning data & de-duplication Sending back erroneous & mismatched data Opening of bank accounts at the back-end Sending data for Personalization, to be encrypted on smart card. Sending cards to state HQs. Sorting & sending to dist Village wise sorting & sending to CSPs. Issue of smart cards to beneficiaries. Sending report to PDs & Director, SHGs Issue of Cards- work flow

Key- processes 3. Business Correspondent(BC) & Customer Service Provider (CSP) –BC of the bank appoints CSP at village level. –Training to CSP is given by bank and BC. –Required hardware like Finger print reader, printer, mobile phone etc., are positioned in the village.

Key- processes 4. Payment –Govt. issues instructions to the banks authorizing payment. List of beneficiaries and authorized amount will be handed over to bank –Bank credits the Individual account of beneficiary –Cash is physically transported by the BC on behalf of bank and delivered at the door steps of CSP.

Key- processes 5. Disbursement – CSP sits at a pre-designated government premises usually GP building etc. –Beneficiary approaches with card. –Card is inserted in the card reader and identity of beneficiary is established through biomatric authentication. –a/c balance of the beneficiary is displayed on the screen & cash is paid. –A receipt is generated in duplicate. –A manual acquittance also maintained. –In case of exigencies, manual payment is made.

Key-processes 6. Data uploading –CSP uploads data of disbursements daily, bank data base is updated. –MIS report on progress of disbursement is submitted to Government by bank.

Smart card – interface work flow Beneficiary A/cs updated B.C. Delivers cash to CSP CSP pays & uploads data S.P. & Bank servers updated Musters entry A/c No. data Govt. A/c Data is updated in MCC e-payorder & Check MIS to Govt. Enrolment in Village A/c opened and cards personalized Bank & S.P.

Pilot districts - Warangal (6) Mandals in Warangal district. –DharmasagarS.B.I –GeesukondaAndhra Bank –Station Ghanpur A.P.G.V.B –Raghunathpally Axis Bank –HanumakondaUnion Bank of India –RaiparthyS.B.H. Started in 5 villages on April 30 th 2006 with pension payment. Pension payment under taken in all 6 mandals 7/06 Service provider- ALW & Zero Mass, for all banks

Pilot district - Karimnagar. (2) mandals in Karimnagar district with -FINO –Thimmapur –Sirsilla Started in 5 GPs on 1/7/06 with pension payment. Wages under NREGS paid in the entire Thimmapuram mandal on 13 th Aug After the pilot, the bank model was adopted.

Pilot - progress No. of GPs covered : 199 No. of benfs, enrolled: 1.37 Lakhs No. of cards issued: 1.12 Lakhs Amount paid: Rs Cr Pilot continued for 1 year for stabilization

Upscaling ( service area model) Phase -I Upscaled to 6 districts in Aug Service area approach adopted. 20 banks out of 27 agreed to implement, but only 10 banks started work.

Service Area Model S.No.BankDistrictNo. of Districts 1State Bank of India Warangal, Karimnagar, Medak, Mahabubnagar, Chittoor, East Godavari 6 2Union Bank of India 3Corporation Bank 4Axis Bank 5Deccan Gameen Bank 6A.P.G.V.B. 7ING Vysya Bank 8Andhra Bank 9Punjab National Bank 10 State Bank of Hyderabad

Progress at a glance - Phase-I Villages where enrolment started: 3636 Beneficiaries enrolled : Lakhs Beneficiaries issued cards : Lakhs Amount disbursed to the beneficiaries:Rs Crs.

Limitations in service area approach Project is being implemented in isolated pockets because a bank branch has few villages in its SA. Service areas of a bank are small and widely dispersed. MPDO had to deal with several banks. Operations became cumbersome. This model could not saturate sizable area and failed to enthuse the stakeholders.

Upscaling (One bank – one dist. Model) – Phase -II Govt. of AP explored new models. Based on such recommendations of a technical committee recommendations, RBI approved One Bank – One District model Banks started showing considerable interest in this model.

One Bank – One District Model S.No.BankDistrict No. of Districts 1State Bank of India Vizianagaram, Kadapa & Nalgonda 3 2Union Bank of India Visakhapatnam, West Godavari & Prakasam 3 3Andhra BankSrikakulam & Guntur2 4Axis BankKrishna & Ranga Reddy2 5Syndicate BankAnanthapur & Kurnool2 6A.P.G.V.B.Khammam1 7State Bank of HyderabadNellore1 Total14

Progress at a glance - phase-II Villages where enrolment started: 6902 Beneficiaries enrolled: Lakhs Beneficiaries issued cards: Lakhs Amount disbursed to the beneficiaries:Rs Crs.

Overall progress at a glance No. of GPs where project is under way.: 10,737 No. of benfs, enrolled: lakhs No. of cards issued: Lakhs Amount paid: Rs Crs

Emerging models 1.One bank – one mandal – pilot – in 8 mandals (Aug-06) 6 banks participated 199 Panchayats covered 1.12 lakhs cards issued Rs Crs amount disbursed to the beneficiaries 2.Service Area approach – in 6 districts (Aug-07) 10 Banks are participating 3,636 G.Ps work started lakh cards issued Rs Crs. amount disbursed to the beneficiaries 3.One bank – One district model – in 14 districts (Sep-08) 7 banks are participating In 14 districts work has started lakh cards issued Rs Crs amount disbursed to the beneficiaries

Important developments RBI announced an incentive policy of Rs.50/- for each account opened ( effective from ) 6 banks accessed Rs 1.81cr sofar GOI established Financial Inclusion Fund (FIF) and Financial Inclusion Technology fund (FITF) with 500 crores. APGVB is the first bank to access Rs crores from FIF. RBI set up a state level steering committee with CS as chairman

Critical learning from the project 1. Detailed implementation arrangements: At state level, district & Sub-district level Should involve Govt., Banks & Service providers Involvement of Regional Office of RBI A dedicated team at every level is critical * Bank & Service Provider position a point person at district level 2. Enrolment: Better to start block by block, saturate and move on Arrangements for prior intimation identification of beneficiaries After completion of main phase. Separate arrangements for handling left over enrolments. For Coordination

Critical learning from the project 3. Issue of Cards: Delay in opening accounts Delay in activation of cards Delay in handing over cards to beneficiaries * Activated cards ready for operation should be delivered in 2-3 weeks after enrolment 4. CSPs : Identification, Training and Positioning - delays Regular over sight Periodical training, inspection * Possible problems of politicization Contd..

Critical learning from the project 5. Payments: On-line MIS and 100% biometric based electronic payments are very critical Advisable to keep a pass book with beneficiary 6. Change management: Orientation to Govt. Officials, Banks staff and Public representatives – On concept and procedure – Helps raising awareness, removing apprehension and problem solving – Training Branch managers and Bank Staff is critical Contd..

Critical learning from the project 7. Long – Term issues De- duplication of data Laying uniform technology standards Inter –operability across varies service providers Delivering Banking services Contd..

Enrolment Kit

Enrolment – photo graph

Enrolment – Capturing finger prints

Disbursement of Cards

Handing over cash to CSP

CSPs about to make payment

Payment –finger print checking

Payment –Receipt printing