1. Welcome Chief Secretary to Govt. Presentation on SMART CARD PILOT Department of Rural Development Date18.08.2007

2. Outline Of The Presentation  Concept  Stake holders  Roles & Responsibilities  Process  Pilot districts  Highlights of the pilot  Present status  Strengths  Costing  Scope of Business  Roadmap  Challenges

3. Concept.  Disbursement of Social Security Pensions and NREGS wages through Smart Card technology.  Chip based smart card as identity card for disbursement.  Biometric (finger print based) proof of identity arrangement.  Disbursement through a GP level Business correspondent to beneficiaries.  Payment within 4 days of release of amount to bank / financial institution. Continue

4. Concept.  It is a branch less banking model – major step towards financial inclusion.  Enabling the establishment of a last mile banking business correspondent network at each village.  Provides mainstream banking and financial services to the poorest of the poor. Continued..

5. Stakeholders IDRBT RBI Banking Institutions Rural Development NREGS Wage Seekers & Pensions

6. Roles and responsibilities  Role of Rural Development  Provide information about approved beneficiaries.  Put in place appropriate systems and procedures for transfer of payments.  In Warangal district, bear the cost of the smart card and hand-held / point of sale devises.  2% service charges of the value of the benefits disbursed in Warangal and Karimnagar districts.

7. Roles and responsibilities  Role of Banks / FINO  MoU with Government.  Open SB a/c accounts and issue Smart Card to beneficiaries.  Appoint, train and enter into contract with CSPs.  Credit pensions / wages to the account of the beneficiaries.  Provide all required MIS from time to time.

8. Roles and responsibilities  Role of DRDAs / DWMAs  Supporting enrollment of beneficiaries.  Identification and orientation of VOs as Customer Service Providers (CSP).  Provide copies of Wage / Pension payment orders.  Monitoring and periodical review.

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

10. Key-process 2. Preparation and issue Smart Card.  Data collected during enrollment 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..

11. Key-process 3. Business Correspondent & Customer Service Provider (CSP)  Bank / FI appoints a business correspondent.  To deliver service at GP level.  BC correspondent appoints CSP at the village level.  Training to BC/CSP.  Require hardware like Finger print reader, printer, mobile phone etc., is positioned in the village.

12. Key-process 4. Payment  Government issue instructions to the Banks / FI authorising payment.  List of beneficiaries and authorise amount will be given.  Individual account of beneficiary is credited.  Cash is physically transported and delivered in the village to BC / CSP.

13. Key-process 5. Disbursement  BC /CSP sits at pre-designated at 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.

14. Key-process 6. Data uploading  CSP / BC uploads data of disbursements daily.  MIS report an progress of disbursement is submitted to Government.

15. Pilot districts - Warangal  (6) Mandals in Warangal district with banks.  DharmasagarS.B.I  GeesukondaAndhra Bank  Station GhanpurA.P.G.V.B  RaghunathpallyU.T.I  HanumakondaUnion Bank of India  RaiparthyS.B.H.  Started in 5 villages on April 30 th with pension payment.  Pension payment under taken in all 6 mandals in the month of July 2007.  An agency named Little World is providing technical support and an agency named Zero Mass is providing logistic support to the banks

16. Pilot districts - Karimnagar.  (2) mandals in Karimnagar district with a private agency M/s Financial Information Network and Operations Ltd., (FINO)  Thimmapur  Sirsilla  Started in 5 GPs on 1 st July with pension payment.  Wages under NREGS paid in the entire Thimmapuram mandal on 13 th Aug. 2007.  After the pilot, the bank model will be adopted.

17. Highlights of the pilot WarangalKarimnagarTotal Total no. of villages covered 15022172 Beneficiaries covered31,0988,28539,383 Payments made

18. Present status – warangal. MandalBank TotalEnroll cards issued Disb, throug h card card issued disb. Manually through manual disb. Total disb. Amount disb. Paying since DharmasagarSBI Pensions40023850362430644501733687737400May NREGS57884196000000 RaghunathapallyUTI Pensions2452231121811907241902238447600May NREGS104462823000000 Station Ghanapur APGV B Pensions38293512329231591181923469693800June NREGS121212338000000 GheeskondaAB Pensions2698250424192324262252575515000June NREGS56620000000 HanumakondaUBI Pensions26212458231420282771852490498000May NREGS30302756000000 RaiparthySBH Pensions3027284226822655262052886577200June NREGS61730000000 Total Pensions1862917477165121513711381070173453469000 NREGS4322012113000 00

19. Present status – Karimnagar by M/s FINO, Ltd., in 2 mandals Mandal TotalEnrolled cards issued Disb. through card card issued disb. manually through manually Total disb. Amount disb. Paying since ThimmapurPensions17391500 24215429759400 July in 5 GPs NREGS101631587 1820376558230000Aug 13th SirsillaPensions23632031 NREGS139191478

20. Strengths Saving of Rs.1.89 lakhs after commencement of disbursement through Smart Card Expected savings of Rs.158.00 lakhs per month if up scaled for entire state Un disbursed pensions – breakup Never turned up for enrollment -474 (most likely bogus cases) Enrolled but (did not turn up) - 810 may or may not come back. Total 1284

21. Costing - pilot One time investment(In lakhs) DistrictBeneficiaries (no)Card Cost @ Rs.90/- & Rs.60/- Terminals @ Rs.10000/- Total Warangal31,09827.9815.4043.38 Karimnagar8,2854.97- TOTAL39,38332.9515.4048.35 Recurring(In lakhs) DistrictBeneficiaries (no)2% Service charge Warangal31,09818.88 Karimnagar8,2855.31 TOTAL39,38324.19

22. Costing - Up scaling in two districts One time investment District Beneficiaries (no) Card Cost @ Rs.90/- Terminals @ Rs.10000/- Total (in lakhs) Warangal6,40,000576.00101.00677.00 Karimnagar5,11,821460.64119.00579.64 TOTAL66,51,8211036.64220.001256.64 Recurring cost(In lakhs) DistrictBeneficiaries (no)2% Service charge Warangal6,40,000436.00 Karimnagar5,11,821351.93 TOTAL66,51,821787.93

23. Costing – up scaling to entire state (annual) One time investment(In lakhs) Beneficiaries (no) Card Cost @ Rs.90/- Terminals @ Rs.10000/- Total 94.832,7918467.44218.908686.34 Recurring cost(In lakhs) Beneficiaries (no) 2% Service charge 94.832,7916114.23

24. Scope of Business  Pensions likely to touch 50 lakhs.  Amount to be disbursed Rs.12,000.00 crores  NREGS wages seekers 60 lakhs.  Amount to be disbursed Rs.24,000.00 crores  Total SHGs in the state 6.99 lakhs.  Number of members of SHGs 87.37 lakhs.  SHGs transactions Rs.10,000.00 crores.  Crop loans Rs.17,300.00 crores.  Housing loans Rs.4,115.00 crores.  Total business in Rural areas Rs.67,000.00 crores

25. Roadmap Pilot in 8 mandals in two districts By September 15 th 2007 Entire Warangal & Karimnagar districtsBy December, 2007 Entire State - expand to 4 districtsBy December, 2007 - expand to 4 districtsBy June,2008 - expand to 4 districtsBy December, 2008 - expand to 4 districtsBy June,2009 - expand to 4 districtsBy December, 2009 - expand to 2 districtsBy March, 2010

26. Challenges  Up scaling to the entire state.  Budget.  Autonomous certification agency – technology etc.,  Availability of vendors.  Cost sharing model.  Sharing between RBI and Government.  Cost sharing by banks. Contd..

27. Challenges  MIS – sending of authenticated reports.  Nodal agency to compile and provide authentic MIS.  Database MIS.  Operational issues.  De duplication.  Enrolment process.  Money evacuation. Contd..