1. Financial Inclusion Andhra Bank’s Experience

2. Challenges! Enrollment of large numbers Wide geographic spread High maintenance costs for accounts Small ticket size of transaction Illiteracy and use of vernacular Product & service pricing Trust and acceptance Lack of electricity Poor telecommunications

3. Financial Inclusion through Smartcard Bank’s role in AP Schemes covered so far Social Security Pensions (SSPs) Wages under NREG Scheme SHG Linkage (Pilot) Geographic scope – Indentified mandals in Warangal, Karimnagar, Medak, Mahaboobnagar, Chittoor, East Godavari – One- district-one-bank Srikakulam and Guntur

4. Our Technology Partners A Little World Pvt Ltd – Pilot project in Geesukonda Mandal – Warangal district Access Development Services (BC) & Atyati Technologies – Districts of East Godavari, Srikakulam, Karimnagar, Mahaboobnagar, Medak, Chittoor, Guntur Fino Ltd. – SHG Linkage – Pilot - in East Godavari

5. Pilot Project – AP Govt - 2007 Andhra Bank was allotted 25 villages in Geesukonda Mandal (Warangal district). Government has extended financial assistance – of Rs. 90/- per card – Rs.10,000 per hand held device – Service charges of 2% of the volume of cash disbursed.

6. ALW –Solution One-Time Costs – Cost of Smart Cards Per Card – Enrollment Fees Per Card – Cost of Photo Personalization Per Card – Cost of Terminals- Per Terminal – Cost of Cashboxes One time Operating Costs – Technology Operation fee Per Card – Transaction Fee Amt Disbursed – Cash Management Charges Amt Disbursed – Monthly fee per CSP Per Month – Mobile (connectivity) expenses

7. Salient aspects of our RFP Proven Technology Scalable and interoperable system Contact or Contactless smartcards Fingerprint image acquisition as per RBI norms End-to-end Solution (technology and banking services)

8. The entire solution outsourced – to a single Systems Integrator – result in better efficiencies and effectiveness. Bank need not procure any hardware or software Bank need not procure any other resources – Pay for the Vendor’s resources on usage basis. Integration of Banking and financial services – Provided by the same vendor – Payment for services based on gross value of customer transactions. Avoidance of risks from – obsolescence of Technology and – change of Methodology if any, will be handled by the Vendor. The merits of the approach

9. Smart Card Smart Card Reader POS Terminal Printer Biometric scanner Financial Switch Backend Banking Server ISO 7816-4 / ISO 14443-4 ISO 19794 ISO 8583 GSM/GPRS/PSTN/ LEASED LINE/ INTERNET FRONTEND SYSTEMSCONNECTIVITYBACKEND SYSTEMS Architecture suggested by Govt. of AP

10. Technical Specifications - RFP Smartcard – ISO 14443 / ISO 7816 – EMV Compliant – 32 K EEPROM memory – Standard dimension PVC / Polycarbonate Card – DES/3DES (key length 1024/2048) – Hold User Certificates, Smartcard OS, Applications, etc

11. Technical Specification - RFP Handheld devices – Integrated system or 2/3 components – ISO 14443 / ISO 7816 and ISO 18092 for read and write operations – Built-in PKI support – EMV Compliant – Multilingual support – Online & Offline capability – Secured storage and communication – Long hours of battery support

12. Technical Specifications - RFP Fingerprint Scanner – Image acquisition at setting level 31 of ISO/IEC 19794-4 – Contact area 1 x 1 sq.inch – Min. capture-size 13mm wide x 17 mm high – Pixel density 500 ppi with + 5 ppi – Pixel depth 8 bits – 200 grey levels (dynamic range of scanned image) – Sense live-scan plain finger impression – Strong anti-spoofing features – Protection from ambient light, residual images – Standard for Data-Interchange - ANSI-378 – Encrypt fingerprint minutiae with 3 DES – Scanner surface to be resistant to dust, humidity, shocks, electronic discharge, ambient light, extreme temperatures, etc

13. Responses to RFP BIDDER-1BIDDER-2BIDDER-3BIDDER-4 BIDDER-5 BIDDER-6BIDDER-7 End-to-End proven experience Yes NoYesNo Smartcard 32 KB Contact ISO 7816 32 KB Contactless ISO 14443 64 KB Contact ISO 7816 No Card 32 KB Contactless ISO 14443 64 KB Contact ISO 7816 32 KB Contact ISO 7816 Communication between Front-end and Middle-tier PSTN, GPRS, WiFi GPRS PSTN CDMA GPRSPSTN PSTN, CDMA GPRS, GSM, CDMA Front-end system Multilingual support Available Will be available AvailableNot AvailableAvailable Not Demonstrated Voice Prompt on Front-end system Not Available AvailableNot Available Not Demonstrated Backend Interface with Middle-tier tried and tested in their prior engagements Yes NoYesNo Not yet tried in a bank De-duplication of Biometric AFISPropreitoryAFIS Not factored AFIS Not factored Indication of the timelines for the solution to go live. 2 months1 month2 months1 month2 months 6 months

14. Outsourcing Terms Payment to Vendor Enrollment, Card Personalization Delivery of the Card to Customer Card Management services fixed price per-card basis Technology & Management Facility Management Commission as a percentage of gross amounts received / paid to Beneficiaries Banking and financial services Financial Literacy Capacity building of BC Part of deliverables by vendor at no extra cost.

15. Progress in coverage Beneficiaries covered so far in AP – Warangal District (pilot)14,000 – East Godavari District (enrolled) 150,000 – Srikakulam District20,000