Welcome Presentation on SMART CARD PILOT Department of Rural Development

Why smart card based banking model ?  Smart Card based models enable branchless banking even in remotest areas.  Technology based models have the potential to set up. a bank in every village.  Thus it becomes possible to deliver banking and financial services to the poor at the door steps.  It is a major step towards Total Financial Inclusion.

GoAP initiative  Department of Rural Development's initiative started in Aug,2006.  For timely and fool proof payment of benefits to the SSP, EGS etc.,  A pilot was taken up in 8 mandals, by laying down infra, issuing cards and payments being made.  Thus, branchless banking model using technology was successfully demonstrated.  Hon`ble Chief Minister desired to scale up the model in the entire state.

Expected Outcomes  Achievement of visible economic identity for people at the bottom of the pyramid.  Enhancement in the per-capita consumption of financial services in rural areas.  Efficiency in delivery of Government and financial services.  Platform for convergence of delivery of public and private services to the un-served populace.

AP Model  Bank Led model:  Entire infrastructure at the village level (machines, Smart Cards etc) are provided by banks.  All Smart Cards are backed by bank accounts.  Covers urban and rural areas.  Service delivery point in every GP/Ward.  Members of SHGs as customer service providers.  To begin with, two schemes, SSP & NREGS disbursements are taken up. other schemes will be roped in course of time.  Government pays 2% service charges on the volume of payments.  Ultimately, banking services like savings, loans, insurance etc. will be delivered by bank.

Key- processes 1. Enrolment  Department gives list of beneficiaries – SSP & NREGS.  Concerned bank / Financial institution conducts an enrolment camp in the village.  GPs, VOs assist in identification of beneficiaries.  6/ 10 finger prints, photo and other details of the beneficiary captured.  An account will be opened. Contd..

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).  Card is delivered to the beneficiary in the village within three weeks. Contd..

Key- processes 3. Business Correspondent & Customer Service Provider (CSP)  Bank / FI appoints a business correspondent.  BC appoints CSP at the village level.  Training to BC/CSP.  Required hardware like Finger print reader, printer, mobile phone etc., are positioned in the village.  BC delivers service( payments) at GP level.

Key- processes 4. Fund flow  Government issues instructions to the Banks / FI authorizing payment.  List of beneficiaries and authorized amount will be given.  Individual account of beneficiary is credited.  Cash is delivered in the village to CSP.

Key- processes 5. Disbursements  BC /CSP sits at 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.  Based on the a/c balance of the beneficiary as 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-process 6. Data uploading  CSP / BC uploads data of disbursements daily.  MIS report an progress of disbursement is submitted to Government.

Key Partners 1.Government of Andhra Pradesh 2.Reserve Bank of India 3.Banks 4.Service providers 5.People of Andhra Pradesh

Emerging Bank – Led models 1.One bank – one mandal – pilot in 8 mandals (Aug-06)  6 banks participated  202 villages covered  1.08 lakh cards issued 2.Service Area approach – 6 dts (WGL, KRNR, MBNR, MDK, EG & CTR) (Aug-07)  10 Banks are participating  3575 Villages work started  lakh cards issued 3.One bank – One district model – 11 districts (VZM, KDP, VSP, WG, (Sep-08) SKLM,GTR,NLR,RR, PRKSM, KRSNA and NLG)  5 banks are participating  In 9 districts work has started  lakh cards issued

List of partner banks 1.State Bank of India 2.State Bank of Hyderabad 3.Union Bank of India 4.Axis Bank 5.AP Grameena Vikas Bank 6.Deccan Grameena Bank 7.Andhra Bank 8.ING Vysya 9.Corporation Bank 10.Canara Bank 11.Punjab National Bank

Progress – At a glance 1.Work started in : 17 districts : 9940 GPs 2.No. of beneficiaries covered : Lakh 3.No. of Cards issued : Lakh 4.Total payments made sofar : Rs Crs. AP is the pioneer in the country to use IT based Financial Inclusion on such a large scale.

Other important Developments  All banks simplified enrolment procedures.  Cost of infrastructure & Smart Cards are brought down.  Procedures are firmed up and monitoring systems are stabilized.  A steering committee at the state level under the chairmanship of Chief Secretary.  RBI announced incentive policy  Rs. 50 per Smart Card account  Effective from –  FIF & FITF funds setup  Each with a corpus of Rs 500 Cr.  NABARD will operate both funds

Experience in Krishna District  One bank – one district model.  Axis bank & FINO as service providers.  Field work started in Sep,  From 1 st December SSP & NREGS payments made through Smartcards in 1/3 rd villages.  From 1 st Jan,2009 entire district –rural & Urban areas covered and all beneficiaries paid through Smart Cards.  With this, Krishna has become the 1 st district in the country to make Govt., benefits through Smart Cards on such a scale.

 Mobilization:  District administration initiated a communication/Awareness campaign.  Workshops for officials, Non-officials.  Posters.  Mobilization of people at grass root level.  Enrollment:  Started on Sept,12 th  Axis bank positioned 130 enrolment teams.  All teams started work simultaneously.  Per day, each team enrolled about 200 people.  Total average enrolment per day 26,000 people.  Total time taken to complete enrolment 45 days.  4.01 Lakh People enrolled. Experience in Krishna District Contd..

Other important efforts:  900 Women are identified from SHGs, given training and appointed as CSPs.  1,000 Delivery points operational from  Nearly 2.00 lakh beneficiaries paid through Smart Card. Experience in Krishna District Contd..

Issues (contd…)  To review critically the performance of the banks on the Smart Card initiative. Though 11 banks are partnering in the initiative only 5 banks have shown good progress.  Need to bring about change management. About the bankability of the unbankable population. About adopting technology solutions.

Issues  Need to initiate series of steps like trainings to focus on the social agenda of the banks.  To set up champions group in each bank to develop unconventional banking models.  To develop uniform technical standards to facilitate interoperability.  Banks to introduce other banking services.  FIF and FITF to be made available for upscaled models such as the AP initiative.

Enrolment Kit

Beneficiaries waiting for Enrolment

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

Cash Payment