1 Financial Inclusion & Branchless Banking Initiatives Using Information Technology for rural outreach

2 Contents  Branchless Banking – Corporation Bank’s Business Model  Technology Framework  Way Forward

3 Branchless Banking Model  Corporation Bank initiated the process of Financial Inclusion in June 2006 to reach out to the rural population who were hitherto not having Bank accounts  The Bank adopted the Branchless Banking model with the help of technology to handle the transactions  RBI Guidelines on engagement of Business Correspondents enabled the rural branches to reach out to the remote villages  Typically it involves the ability to handle high volume of low value transactions  Provide basic banking services at the doorsteps of the villagers

4 Branchless Banking Model – Financial Inclusion Survey Financial Inclusion – Survey Survey formed the basis for identification of the financially excluded  Survey Format segregated into three sections  Village Information  Family Information  Family Members Particulars

5 Survey Methodology  Village Information:  Each Village linked to a particular Branch  Each Branch can be linked to multiple Villages  Village Profile to be captured once  Number of Households in the village  Availability of Infrastructure like Post Office, Hospital, Veterinary Clinic, Schools etc. Branchless Banking Model – Financial Inclusion Survey

6 Family Members Information: Links all Family Members to the unique family number Enables capture of information such as Religion Caste Extent of Land Owned Assets Owned Enables capture of Bank Account details Facilitates entry of other information such as Willingness to open an account Loans with money lenders Insurance / Other details Interested Activities Ensures capture of other details

7 Branchless Banking Through Business Correspondents  The Bank has availed BC services from:  Individuals - Should hail from the same village - Minimum Qualification – 7 th Standard Pass - Preferably SHG Members  Section 25 Companies under Companies Act - Similar Criteria as above - Branch Manager assists in identifying the correct person  Trusts The RBI Working Group has recently recommended additional entities who can be engaged as Business Correspondents and now it was announced that Individuals would be permitted as BCs. This would facilitate Banks to reach out to more villages

8 The Bank adopted one Business Correspondent for one village model who is available throughout the day for the villagers to transact business Individual Accounts are opened in the Core Banking server at the respective branches Account Information only with the Bank Transactions alone are routed through the Technology Service Provider Branchless Banking – Methodology Adopted

9 Branchless Banking Through Business Correspondents Utility Service provided at their doorstep/ village - Saves on the commuting time and transportation cost Availability of Basic Banking Services throughout the day - The BC is a permanent resident of the village and hails from the same village and hence can assist customers at any time of the day Hassle free for the villagers as there are no challans/vouchers - User-friendly and no need to write or fill-up cheques Familiarity in dealing with their own person Reduces the cost of transaction Ability to handle large volumes with less staff Reduces the pressure on the counters at rural / semi-urban branches

10 Branchless Banking - Technology  Different Technologies were evaluated and tested by the Bank to ensure that it Offers High levels of Security Reduces Transaction Cost Prevents loss or destruction of data Ensures User friendliness Increases Efficiency Enables Cross Selling of products and services

11 Branchless Banking - Technology Secure -Two factor authentication card and Biometric Authentication Scalable -Can handle multiple products & services Reliable -Transactions are secure and ensures non-repudiation Flexible -Supports on-line and off-line transactions Interoperable -Customers can use Branch/alternate BC in case of need Robust & Upgradable -Ability to support Contactless, Contact and Magnetic Stripe Cards Cost Effective

12 Branchless Banking - Technology Type of Technology Used  Card Based Point of Transaction Terminal  Smart/ Radio Frequency Identification (RFID) Cards used  Supports Fingerprint Authentication  Alternate Power Sources for continuous operation  Mobile and easy to carry  Voice Guidance in Local Language  Support for multiple communication Channels  Device stores minimal data  Ability to support multiple products and services  Receipt printing using Impact Printers  Scalable  Supports off-line and on-line transactions

13 Branchless Banking – Services Offered  Cash Deposits  Cash Withdrawals  Balance Enquiry  Mini Statement  Transfer of Funds between Own Accounts  Loan Repayments  Loan Withdrawals in Running Accounts (GCC)  Self Help Group Accounts (SB and Loan Accounts)  Recurring Deposits  Payments to Milk Pourers of dairy co-operatives  National Rural Employment Guarantee Payouts  Social Security Pension Payments

14 Branchless Banking – Services Offered  Person to Person (P2P) Remittance Facilities using mobile  Branchless Banking using Mobile Phones  JanaShree Bima Yojana Premia Collection  Utility Bill Payments  Pre-paid Mobile Recharge  Remittance from One Card to another Card Products in the Offing:

15 Branchless Banking – Present Position- State-wise Distribution SlName of the StateVillagesBranches 01Karnataka Andhra Pradesh Tamil Nadu Kerala Goa Gujarat Maharashtra Haryana2209 Punjab Delhi Madhya Pradesh Orissa01 13Uttar Pradesh02 14West Bengal0804 Total

16 Type of Account AccountsAmountAccountsAmountAccountsAmount CPSB CGCC Amt. In lakhs Growth of ‘No-Frill’& GCC Accounts Branchless Banking – Accounts Opened

17 MonthCr. Tran Credit AmtDb. Tran Debit AmountTot. Tran Total Amount Mar – Mar – Mar – Mar – Branchless Banking – Transactions Handled Transaction Growth [Amount in lakhs of Rs.]

18 Branchless Banking – Villages with Population > 2000 Sl. No.Name of the StateNo. of Locations Allotted Branches Present B.C. Model 01Karnataka Andhra Pradesh Tamil Nadu Kerala040 05Uttar Pradesh010 06Haryana100 07Punjab020 08Chattisgarh110 09Maharashtra030 10Gujarat080 11Delhi030 12Madhya Pradesh040 13Sikkim010 T O T A L

19 Branchless Banking – Our Business Model  Branchless Banking is an alternate Delivery Channel for providing basic banking services at an affordable cost  Financial Inclusion is not a Social Obligation or a Regulatory Directive but viewed as a viable business proposition and a commercial initiative  The cost per transaction through this model would be a fraction of the cost of a transaction incurred at a branch  Facilitates in extending the outreach and provides the ability to offer new products and services  The model chosen by the Bank is not limited in scope and restrictive in use but provides the capability to support livelihood programs to add economic value

20 Branchless Banking – Way Forward To cover 4000 villages by March 2012 and 6000 villages by March, 2013 Increase the card population and Provide multiple products on the Card Extend incentives to Business Correspondents for canvassing accounts Scout for Cash based activities in the village and route them through cards To cover 200 locations under Urban Financial Inclusion by March 2012 To implement EBT payment in 900 locations by March 2012 and 1000 locations by March 2013

21 Branchless Banking – Way Forward Expanding the footprint in all the existing Service Area Villages of the Bank Tie-up with Dairy Units for routing milk payments Further extending Electronic Benefit Payments in Andhra Pradesh, Karnataka, Haryana & Other States Extend Cards to Self Help Groups to facilitate them to transact from their villages Facilitating customers to transact using Mobile Phones

22 Branchless Banking – Way Forward Obtained licenses for 5 Microsate Branches to cater to the urban poor – 3 branches have become functional. Identify and install at rural markets where people congregate Set up manned kiosks at villages to serve as a linkage between the branch and the Business Correspondents after obtaining necessary approvals from the regulator

23 Branchless Banking – Financial Inclusion Plan PeriodNo. of Branchless Banking Units Number of households to be covered Number of CPSB Accounts Number of CGCC Accounts Mar ,00,00040,000 Mar ,50,00015,50,00075,000 Mar ,00,00025,00,0001,00,000

24 The Bank has won many awards and the following were for the Financial Inclusion and Branchless Banking initiatives undertaken by the Bank SKOCH Challenger Award “Inclusion Champion of the Year” for the year 2010 for contributing to inclusive growth of the nation. SKOCH Challenger Award - “Inclusion Champion of the Year – 2011” Won IBA – Best Bank Award 2010 under “Best Financial Inclusion Initiative”. The ‘Committee on Financial Inclusion’ headed by Dr. C Rangarajan, the then Chief Economic Advisor to the Prime Minister of India made a special mention on the ‘Branchless Banking’ initiative of the Bank. Awards & Accolades

25 Thank you