Electronic Fund Management System (e-FMS) and Business Correspondent (BC) Model under Mahatma Gandhi NREGS in Odisha 29 th November 2012 Panchayati Raj Department, Government of Odisha

19 Districts w.e.f Districts w.e.f Districts w.e.f Mahatma Gandhi NREGS in Odisha 2

Electronic Fund Management System (e-FMS) for Bank accounts in Odisha e-FMS enables the direct credit of wages into MGNREGS beneficiaries’ bank accounts. It is a Government of India, MoRD initiative in partnership with the State. It requires Core Banking System Technology. 3

Electronic Fund Management System (e-FMS) for Bank accounts in Odisha In Odisha, current e-FMS partners are – Ministry of Rural Development, GoI – National Informatics Centre (NIC) – Panchayati Raj Department-Odisha – Reserve Bank of India (RBI) – State Bank of India (SBI) as Nodal Bank – CBS enabled banks in the field including RRBs. e-FMS takes care of the second mile in flow of MGNREGS funds. 4

Electronic Fund Management System (e-FMS) for Bank accounts in Odisha e-FMS process flow: From implementing agency (GP/Block/Line dept.) to MoRD server in Delhi to SBI server to RBI RECS server to beneficiary account. e-FMS currently addresses CBS enabled bank accounts which form 57% of total MGNREGS accounts. T+1 Day Implementing Agency (GP/ Block/ Line Dept.) MoRD Server, DelhiSBI ServerRBI RECS ServerBeneficiary A/c 5

Advantages of e-FMS (1) – Shortens turn-around time required for wage processing and payments – Reduces work load at different levels of implementing agencies – Eliminates idle parking of fund with implementing agencies – Credits the accounts of MGNREGA workers seamlessly in T+1 day – Fosters electronic governance at grass root level – Thus reduces delay in payment in the second mile 6

– Manages lakhs of beneficiary accounts electronically. – Disburses benefit to entitled beneficiary thus eliminating middlemen in the second mile. – Digital Signature Certificate (DSC) based authorization, encryption and authentication. – Less paper work. Hence, “Green Environment”. Advantages of e-FMS (2) 7

– Reduced administrative costs. – Simplified book-keeping. – Ease of maintenance of accounts and generation of simultaneous Utilization Certificates. – Greater security, transparency & efficiency. – Optimum utilisation of funds released for developmental programmes. Advantages of e-FMS (3) 8

Odisha’s Journey thus far … (1) Payment of wages through bank/post office account made mandatory since Oct e-Muster roll made mandatory in Odisha since July Pilot of e-FMS in Sheragada Block of Ganjam District in December Expansion launched in 3 districts and 1 block of other 27 districts) in July 2012 by Deputy Governor, RBI, Shri H R Khan. 9

13624 Digital Signature Certificates (DSCs) issued to field level functionaries including Gram Panchayat Sarapanches. Around 30,000 functionaries including elected representatives at Gram Panchayat level trained. e-FMS in entire state rolled out on 15 th November, During , Rs. 3.6 Cr wages has been credited in MGNREGA workers’ accounts through 58,000 transactions processed through e-FMS under MGNREGS till date. Odisha’s Journey thus far … (2) 10

Learnings from Business Correspondent (BC) Model under Mahatma Gandhi NREGS in Odisha

Bank & Post Office a/c under MGNREGS in Odisha Bank 12

Banking Network in Odisha (No. of Branches : 3405) 13

BCs in Odisha under MGNREGS Sl. No Name of the BankNo. of Dists. MOU Signed on Nos. of Accounts opened Transacti on made (INR in Cr) 1 State Bank of India lac61.99 Cr 2 ICICI Bank lac4.4 Cr … Image Template 14

15 BC Model Implementing Agencies (GP/ Block/ Line Dept.) Partner Bank Business Correspondent (BC) Mahatma Gandhi NREGS Workers Attendance and measurement details from worksite Funds & FTO thru e-FMS Funds & workers’ account information 1.Workers’ account information downloaded to mobile device 2.Cash in hand Wages disbursed to the workers 5 4 CSP e-FMS

In BC model, the Bank a/c of MGNREGS beneficiaries cannot be operated by beneficiary even s/he wants to Though earnings are credited into her/ his a/c, it is only a book transfer. The money is transferred by bank into BC’s a/c and only the BC is empowered to withdraw it and he disburses to the MGNREGS beneficiaries at a common place at GP/ Village through their CSP. Bank appoints Technology Service Provider through whom BC/ CSP operates. 16 Learnings from BC model in Odisha (1)

CSPs are drawn from villages and work fulltime or part time. Hence transaction volumes handles by each BC have to be adequate to ensure that he earns a basic amount. Only this will give the model economic viability. Banks have not control over CSPs as they are not appointed by the Bank. Since there is no supervisory mechanism, there have been delays in transfer of cash from CSP to workers. Transportation cost to long distance villages 17 Learnings from BC model in Odisha (2)

Entire cash management with BCs Retaining CSPs by BCs to be ensured Building awareness and motivating workers 3Ts to be ensured (Transparency, Timeliness & Trust) Despite the difficulties in the BC model, Odisha’s achievement in the last 3 months has been e-FMS through Bank accounts. 18 Learnings from BC model in Odisha (3)

We are now taking up piloting e-FMS for Postal Department. Perhaps one of the biggest intervention that GoI can make to help not only Odisha but all States is to computerise the Postal Department right down to every Branch Post Office. 19 e-FMS under MGNREGS for Postal Department