Banking - E&Y

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Beyond the mazeFinancial inclusion for equitable growth

10 May 2010


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Financial inclusion has long been a challenge in India, where large sections of

the population still do not have access to basic banking facilities. There has

been growth, but it needs to be inclusive and permeate downwards to the lower

rungs of the population by rolling out much-needed government incentives and

nancial services, bringing transparency and creating widespread employment

opportunities that can be sustained in far ung areas of the country. FI is the

delivery of banking services at affordable costs to vast sections of disadvantaged

and low-income groups. The Finance Ministers recent Budget speech, in which

he communicated the Governments aim of bringing in 60, 000 new inhabitations

with populations of 2000 and above within the ambit of FI by 2012, reects the

commitment and urgency of the Government. The need to develop cost-effective

technology, affordable nancial products and services, a robust regulatory and

security framework and empowerment through nancial literacy are the areas

and issues that need quick and planned attention and implementation for a 360

degree outcome.

ASSOCHAM and Ernst & Young have undertaken a study to identify the need for

FI, and analyze its impact on growth prospects and how unexplored unbanked

areas can be brought into the mainstream to accelerate FI. The study suggests

various options for quick credit delivery as well as the need of low-cost technologyto sustain the process. This is a concerted attempt to create nancial awareness

and also suggest to the authorities how 100% FI is attainable.

We acknowledge the efforts made by Ernst & Young in this study and extend

our sincere thanks for this publication. We also hope that this will be a useful

reference work for the Industry as well as the general public.

D. S. Rawat

Secretary General

ASSOCHAM

Ashvin Parekh

Partner & National Industry Leader,

Financial Services

Ernst & Young Private Limited

New Delhi

10 May 2010

Preface


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Executive summary ................................................................................ 1

Financial Inclusion (FI)............................................................................ 2

Introduction ...................................................................................... 2

State of FI in India .............................................................................. 3

FI and its role in furthering economic growth ....................................... 5

Regulatory Initiatives ......................................................................... 5

Banking sectors approach to FI ........................................................... 7

Challenges faced by banks .................................................................. 8

Sustainable inclusion: institutional perspective ....................................... 9

How viable is FI for nancial services providers?................................... 9

Policy initiatives of different countries ............................................... 11

Use of technology to propagate FI ..................................................... 14

Case studies success stories ........................................................... 14

Successful effort by a bank Syndicate Banks Pygmy

Deposit Scheme .............................................................................. 14

Leveraging technology electronic benet transfer (EBT)

in Andhra Pradesh ........................................................................... 15

FI the way forward .............................................................................. 17

Evolving business models ................................................................. 17

Building blocks ................................................................................ 21

Structuring solution sets for FI .......................................................... 23

Critical success factors (CSFs) ........................................................... 24

References ............................................................................................ 27

Content


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1 Beyond the maze Financial inclusion for equitable growth

Financial Inclusion (FI) is broadly a means to eradicate poverty and provide

Indias disadvantaged population with easily accessible nancial services. In

the last 15 years since the United Nations Organizations (UNO) took it up as a

major challenge in its Millennium Development Goals, policy makers across the

world have been giving FI their due attention. The late professor CK Prahalad,

in his seminal paper and book, The Fortune at the Bottom of the Pyramid, also

brought about a radical change in the thinking of corporate organizations by

emphasizing that The future belongs to those companies, which will look to serve

the bottom of the pyramid.

Indian policy makers have always been aware of the need for poverty alleviation

and taken initiatives such as the setting up public distribution systems,

nationalizing banks, setting up regional rural banks and implementing various

scal measures. However, the lack of a well- thought out implementation strategy

has resulted in the failure of all such initiatives and sickness of delivery systems.

The last two decades have seen phenomenal performance from all the sectors

of the Indian economy. The good health of the banking sector and a fairly strong

economic growth has put the inclusion agenda rmly back into the Governments

line of vision. The evolution of technology and the initiatives of banks and micro-

nance organizations has been critical in giving momentum to this agenda.However, the road ahead is still difcult as different business models are still

emerging. The sustainability of the banking system needs to be balanced with

social performance objectives. Hence, what is needed at this juncture is the

concerted effort of the three pillars of state, self-help groups (SHGs)/non-

governmental organizations (NGOs) and the nancial system to give the required

thrust to achieve this objective.

Executive summary


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2Beyond the maze Financial inclusion for equitable growth

Introduction

An estimated, 2.5 billion adults worldwide do not currently have access to even

basic formal nancial services. In mature economies, rates of exclusion tend

to be low, for example, only an estimated 4% of the population in Germany and

9% in the United States are without basic access to services. But in the worlds

smaller and less mature economies, nancial exclusion rates reach exorbitant

levelsapproximately 88% of the nancially excluded live in Latin America, Asia

or Africa. In this sense, nancial inclusion poses policy challenges on a scale and

with an urgency that is unique in the case of developing countries.1 The benecial

effects of credit have already been established and need to be made available to

a larger section of society for their equitable growth. The greater goal of nancial

inclusion should therefore be to eradicate poverty through the use of credit.

FI is the process of ensuring fair, timely and adequate access to nancial services

(such as savings, credit, payment, remittance facilities and insurance) at an

affordable cost in a fair and transparent manner. It aims to lift the standard

of living of the poor and cover them under the organized nancial system. It

provides poor people with an opportunity to build better lives for themselves and

their children. FI can help people achieve sustained improvements in their quality

of life at the community level and foster growth and poverty reduction at the

national level.

Financial inclusion and exclusion can be dened at multiple levels. At an extreme

level, there are the super included customers who are actively and persistently

pursued by nancial services providers, and who have at their disposal a wide

range of nancial services and products. At the other extreme are the nancially

excluded, who are denied access to even the most basic of nancial products.

Financial exclusion is directly related to levels of earnings, as is clearly manifested

in the urban scenario, where reach is not a problem. However, FI should not be

a question of viability, as has been demonstrated by micro nance organizations

(MFOs); it is more a matter of willingness.

The following table depicts a comparison of the state of nancial exclusion amongsome regions/countries across the world. It considers FI as ownership and ignores

the levels of activity in savings accounts. The state of exclusion will surely become

worse if the real rate of inclusion, which measures usage frequency, is also taken

into account.

Financial inclusion

1 Alliance for Financial Inclusion (AFI) survey April 2010


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Country/Region No. of households (million)

China 263

Africa 230

Rest of Asia 132

India 135

Indonesia 30

Latin America (Ex-Brazil) 28

Middle East 20

Central and Eastern Europe 19

Western Europe 18

United States 17

Brazil 14

Commonwealth of Independent States 14

Global snapshot of nancially excluded households (2005)

Source: BCG Report

State of FI in India

India has the second-highest number of nancial excluded households in the

world. Furthermore, out of the 600,000 habitations in the country, only about

30,000 have at least one commercial bank branch. Approximately 40% of

Indias population have bank accounts, and only about 10% have any kind of life

insurance cover, while a meagre 0.6% have non-life insurance cover. People with

debit cards comprise only 13% of the population and those with credit cards only

a marginal 2%.2

Furthermore, these statistics do not convey the correct state of nancial exclusionin the country. Many open bank accounts are dormant with only a few people

conducting transactions and even fewer receiving any credit. Millions of people

across the country are thereby denied the opportunity to harness their earning

capacity and entrepreneurial talent, and are condemned to marginalization and

poverty.

Some of the parameters, which characterize nancially excluded people, include:

Lack of bank account and the nancial services that come with it

Reliance on alternative forms of credit

Lack of other nancial products such as insurance, savings products and pension

Lack of capacity and livelihood alternatives

2 Remarks by Dr. Duvvuri Subbarao, Governor, ReserveBank of India at the Bankers Club in

Kolkata on 9 December 2009


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Source: Report on Currency and Finance 2006-08 (IIMS, 2007)

Although nancial exclusion is widespread, the situation is more acute in the case

of people in the low-income group. A very small number of people with an annual

income of less than INR50,000 have bank accounts.

Earners with a bank account in 2007

Annual income (INR) Urban Rural Total

400,000 98.0 96.3 97.6

All 61.7 38.0 44.9

Source: Report on Currency and Finance 2006-08, RBI, September 2008

It is clear from the categories of nancially excluded sections (given above) thatthe option of having reasonable access to nancial services is directly correlated

with income levels. The low-income segments of society continue to be sidelined

form Indias nancial system. The following table depicts the sources of credit for

earners (people in the age group of 1859 years with some cash income) across

different income groups. The data is based on a survey conducted by Invest India

Market Solutions, which was completed in July 2007.


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As depicted in the table above, people in the low-income bracket are more

dependent on non-institutional sources for credit. This proportion declines as

income levels increase. Furthermore, banks provide credit to approximately 63%

of earners with an annual income of more than INR400,000, as compared to only

13% of earners with an annual income of less than INR50,000.

FI and its role in furthering economic growth

A well functioning nancial system is required to empower individuals, facilitatetheir integration with the economy and protect the economy against shocks. This

is a necessary condition to achieve equitable growth. It is almost impossible to

sustain high economic growth rates without the participation of approximately

half the population. The following points illustrate the signicance of FI in

economic growth:3

Mobilizations of savings: One of the most signicant benets of FI is the

mobilization of the savings of poor people into a formal nancial intermediation

system, which will channelize these into investments. On one hand, this will

strengthen the domestic savings rate and make the countrys economic growth

more inclusive and sustainable. On the other hand, it will provide banks with

access to low-cost deposits to better manage liquidity risks and asset-liability

mismatches.

Poverty eradication: FI helps vulnerable groups such as low income groups and

the weaker sections to increase their incomes, acquire capital, manage risk and

work their way out of poverty. Economic opportunity for the poor is strongly

intertwined with nancial access. Access to nancial services provides the poor

with an opportunity to build their savings, make investments and avail of credit.

Apart from protecting them from the clutches of usurious money lenders, it also

helps them insure themselves against income shocks and equips them to meet

personal emergencies.

Effective direction of government social programs: Another signicant potential

benet of FI could be its use in facilitating payment under various Government

agship programs, such as social security and the National Rural Employment

Guarantee Programme (NREGA), into the bank accounts of beneciaries through

electronic benet transfer (EBT). Apart from curbing leakages, it is also likely to

help in reducing transaction costs.

Regulatory initiatives

The Government and the Reserve Bank of India (RBI have been aggressively

pursuing the goal of implementing FI over the last several decades. Building the

rural cooperative structure in the 1950s, social contract with banks in the 1960s

and expanding bank branch networks in the 1970s and 1980s are some of the

noteworthy initiatives taken by the Government and RBI. These initiatives have

paid off in terms of a network of branches across the country.

3 Remarks by Dr. D. Subbarao, Governor, Reserve Bank of India at the Bankers Club in



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Some of the key initiatives taken by RBI for FI include:

Priority sector lending: RBI has stipulated that a portion of the credit is extended

to the priority sector.

No frills accounts: In November 2005, RBI asked banks to offer a basic banking

no-frillsaccount with a low or zero minimum balance and minimum charges for

people in low income groups.

Easier credit facility: RBI directed banks to extend a General Purpose Credit Card

(GCC) facility of up to INR25,000. However, the scheme was not very effective

since the total number of GCCs issued by banks, as on end-March 2009, was only

0.15 million4.

Simpler KYC norms: Know your customer (KYC) norms, which were considered to

be a big obstacle in offering banking services to people in far-ung areas, were

relaxed for accounts with a balance not exceeding INR50,000, and credits thereto

not exceeding INR100,000 in a year.

Use of Information Technology: The use of biometric smart cards to open bank

accounts is geared to take banking services to customers doorsteps. In October

2008, RBI issued guidelines relating to issues such as technology, security

standards and customer protection pertaining to the use of mobile hand-heldelectronic devices for banking transactions.

EBT through banks: RBI has encouraged state governments to promote usage of

EBT by banks, to transfer funds to people under their various schemes.

100% nancial inclusion drive: RBI launched a drive to achieve 100% FI in one

district in each state. The scheme was later extended to other areas/districts.

Business correspondent model: Appreciating the challenges involved in operating

in far-ung areas, RBI permitted banks to employ local non-government entities/

individuals to act as business correspondents (BCs) for banks in 2006. The BC

model is aimed at providing customers with easy access to banking services

in such areas. BCs can include NGOs, micronance institutions, retired bank

employees, ex-servicemen, retired government employees and teachers and

kirana/medical/fair price shop owners, Section 25 companies, individual PublicCall Ofce (PCO) operators, the agents of small savings schemes and insurance

companies, petrol pump owners and self-help groups (SHG) linked to banks. Banks

can also collect a reasonable service charge in a transparent manner to ensure

the viability of the BC model.

Liberalization of rules governing the expansion of bank branches and ATMs: In

October 2009, RBI allowed domestic scheduled commercial banks (other than

RRBs) to open branches in towns and villages with a population of less than

50,000. Furthermore, RBI will ensure that at least one-third of such branch

expansion takes place in underbanked districts. The regulator has also totally

freed the location of ATMs from prior authorization.

4 Remarks by Dr. Duvvuri Subbarao, Governor, ReserveBank of India at the Bankers Club in



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Expansion of banks in the north-east: RBI has offered to fund capital and running

costs for ve years in identied unbanked areas in the north-east, provided

adequate security arrangements are made by the concerned state government.

For example, in Meghalaya, RBI has allotted eight centers to three public sector

banks through a bidding process.

Project nancial literacy: Since nancial literacy is a pre-requisite for FI, RBI

has initiated Project Financial Literacy, with the objective of disseminatinginformation relating to general banking concepts to various target groups.

Financial literacy and credit counseling centers: The convenor banks of each

of the State Level Bankers Committees has been asked to set up a nancial

literacy-cum-counseling center in any one district on a pilot basis, and extend the

facility to other districts in due course. These centers are expected to provide

free nancial education to people in rural and urban areas on various nancial

products and services, while maintaining an arms length relationship with the

parent bank. Till now, 154 credit-counseling centers have been set up in various

states in the country.

Financial curriculum in schools and colleges: RBI has collaborated with various

state governments to include nancial literacy in the school syllabus. It has

already launched a pilot in Karnataka, which can be adopted across the country.

Banking sectors approach to FI

The Government and RBI have been at the forefront in propagating the agenda

of FI. This has gained even more relevance in view of the rapid growth of the

Indian economy and its impact on income levels, which were skewed toward the

countrys urban and metropolitan areas. The broad strategy at the policy level for

FI in India in recent years comprises the following elements:

Encouraging penetration into unbanked and backward areas

Encouraging agents and intermediaries such as NGOs, MFIs, CSOs and BCs

Focusing on a decentralized strategy by strengthening existing entities, such as

State Level Bankers Committees (SLBCs) and district consultative committees(DCCs), co-operatives and RRBs

Using technology to encourage FI

Advising banks to provide basic low-cost nancial services

Emphasizing on nancial literacy and credit counseling

Creating synergies between the formal and informal segments

Apart from the above, banks have been forthcoming with their own initiatives.

Some of these include:

Simplied products and processes

Customized offerings; small and affordable productsSimple loan product for general purposes

Facilitation of low-cost remittance products


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Development of enabling infrastructure/creation of capacity

Creating enabling environment for poor people to raise their income levels

and thus become bankable

Helping people graduate from consumption to production/investment credit

Promotion of nancial education

Setting up nancial literacy centers and credit counseling

Community-based approach

Promoting and encouraging SHG bank linkage and micronance institution

linked programs

Implementing tribal development program through WADI approach

Training for intermediaries

Engaging and training business correspondents

Banks have taken tentative steps toward FI, but this has been more due to a

push from the apex bank rather than from a belief that FI can become a viable or

sustainable source of income. A business conviction is still lacking.

Challenges faced by banks

Despite FI being a top priority for the Government during the last few decades,

more so during the last three to four years, a signicant number of bankable

people are still unbanked. Barriers to access nancial services can be broadly

categorized into the demand and supply sides.5

Demand side:

The limited literacy and even lower nancial literacy of the populace is a major

hindrance for achieving FI..

Lack of awareness about nancial services and products makes the task of

intermediaries even more difcult. With no well-established banking relationships,

the unbanked poor are pushed toward expensive alternatives.

Many generic nancial products are unsuitable for the poor and there is not much

of an effort to design products that are suitable for their needs.

The unfriendly and unempathetic attitude of the banks to customers plays animportant role in undermining the demand for nancial services.

Exorbitant and non-transparent fees, combined with burdensome terms and

conditions attached to nancial products, also dampen demand.

Supply side:

High customer acquisition and transaction costs deter nancial intermediaries

from serving unbanked areas.

Banks do not nd it cost-effective to serve poor customers due to low volumes of

business, at least during the initial period.

Lack of basic physical and social infrastructure (roads, transport and

communication facilities) not only increases the cost of serving unbanked areas,

but also places an obligation on banks to provide a conductive environment tomake people bankable.

5 Remarks by Dr. D. Subbarao, Governor, Reserve Bank of India at the Bankers Club in Kolkata on 9 December 2009


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For nancial inclusion to be successful, it needs to be a win-win situation for the

provider and the beneciary. On one hand, it should be viable and add to the

bottom line of nancial institutions and other intermediaries in the value chain.

On the other, it should be cheaper and more easily accessible than other available

alternatives for borrowers. Therefore, the operating cost of providing nancial

services and the charges levied to borrowers are important dimensions of the

FI process. In fact, one of the primary hindrances for FI from the supply side is

the high operating cost of nancial institutions, which is generally the result of

dealing in low-value transactions. Consequently, banks either become cautious in

providing such services or charge higher charges to the users of such services,

both of which hamper the objective of FI.

How viable is FI for nancial services providers?

Commercial banks are generally cautious about extending their services to

people from lower income groups due to their fear of loan losses or inability to

recover such loans, especially since such people do not have any assets to pledge

as collateral. Similarly, the operating cost of maintaining a deposit account,

particularly when average deposits in an account are low, may make it an

economically unviable proposition for banks to extend banking services to

such customers.

The cost of a nancial services sector company extending credit can be broadly

classied into the following three categories:

Cost of funds

Operating cost

Cost of loan losses

Although the cost of raising funds is the same for all types of credit, the operating

cost and cost of loan losses may vary, depending on the nancial services

provider and the borrower prole. Generally, the operating cost staff salaries,

travelling expenses, commissions not classied under nancial costs, expenses

on promotion of groups, staff welfare expenses, depreciation and amortization,

rent on hired buildings and other overheads is higher in the case of small loans.According to the Planning Commission of India, the operating cost of micronance

institutions (MFIs) is around 10%14% as compared to 3%4% incurred by banks

to service their average borrowers. Furthermore, the cost of funds for MFIs is

8%14%, as compared to 4%7% in the case of commercial banks. Accounting for

the third component of the cost involved, the cost of loan losses, an operationally

feasible interest rate that an efcient MFI can charge its borrowers works out to

22%26%.

Sustainable inclusion:institutional perspective


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According to some estimates6, a no-frills account requires a balance of around

INR2, 000 for it to be an economically viable activity for commercial banks. An

analysis of the cost of no-frills accounts in the case of Canara Bank indicates that

the cost of opening a new account is INR48 and that of each transaction (deposit/

remittance) is INR10. The average deposits to be maintained for breakeven, which

is proportional to the number of transactions, is estimated to be INR1,911 and

INR11,465 for 12 and 72 transactions a year, respectively. The actual average

balance of no-frills accounts was INR528, which was less than half the breakeven

level of 12 transactions in a year. A survey of two other banks revealed a similar

cost structure for operating no-frills accounts. However, given that xed costs

often constitute a large part of the operating costs of bank branches and that

their number of personnel is generally xed, calculation of the marginal cost of

opening small accounts can be further reduced by using innovative methods and

technology. Therefore, even if opening of no-frills account seems unprotable in

the short run, it can denitely be made protable by increasing the number of

accounts and tapping a huge pool of bankable unbanked potential customers. As

the competition intensies further in metropolitan and urban areas, this may very

well act as a source of competitive advantage for banks.

Moreover, the average deposit amount of no frills accounts has increased inrecent years. This trend of an increase in the average deposit amount is expected

to gain further momentum in view of Indias high economic growth. As the

countrys economy grows and its incomes rise, todays no frills accounts can be

expected to reach normal account gures over the years.

Apart from the standalone viability of no-frills accounts, extending banking

services to lower income groups is likely to trigger a cycle, whereby access to

banking services will enable more equitable distribution of the benets of high

economic growth, resulting in improved levels of income in lower income groups.

This should result in an increase in the average deposit size of accounts opened

by people from lower income groups, which would make FI an operationally

protable and sustainable business proposition for banks.

While the operating costs of no-frills accounts may seem high, an analysis of

the operations (in totality) for some banks suggests that they can open a larger

number of such accounts and still maintain their performance level. For instance,

the protability of Syndicate Bank (as reected in its RoA), which has opened the

largest number of no frills accounts (INR1.25 million) in 200607, was unaffected

during the period. It is true that RoA is inuenced by several factors, but the

Syndicate Bank case indicates that opening of no-frills accounts may not be a loss-

making proposition.

6 Report on Currency and Finance 2006-08, Volume II, The Banking Sector in India:

Emerging Issues and Challenges


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Policy initiatives of different countries

It is generally seen that FI has been a challenge for regulators and policymakers

across the world. The governments of several countries have intervened (on the

supply side) to address issues in various ways:

1. Nationalizing mainstream banks

2. Regulating branch expansion

3. Directing credit to the poor

4. Promoting specialized banks including national savings banks

5. Providing subsidized credit and interest rate ceilings on credit to low income

households

6. Enacting legislations that dene right of access to formal banking services

7. Setting up empowered and dedicated agencies

8. Running specialized and sponsored schemes

9. Countering the operations of moneylenders

10. Encouraging community-based savings, credit societies and mutual savings

banks


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The following table summarizes the key initiatives taken by governments and

policymakers across the world:

FI initiatives in various countries

Country Legislation/Instrument/

Policy Scheme

Objectives

United Kingdom

Social Exclusion Unit (SEU),1997

Reducing social exclusion, of which FI is an integral part

Policy Action Teams (PATs) Looking in an integrated way at problems in poor neighborhoods

Ofce of Fair Trading1.Enforcing consumer protection law and competition law

2. Reviewing proposed mergers and conduct market studies

Financial Inclusion Task Force1. Enabling access to banking and affordable credit

2. Enabling access to free face-to-face money advice

Financial Inclusion Fund

1. Enabling access to banking services

2. Enabling access to affordable credit

3. Enabling access to money advice

United States of

America

The Community Reinvestment

Act, 1977

1. Prohibiting discrimination by banks against low and moderateincome neighborhoods

2. Making mortgage loans to lower income households

3. Rating banks every three years on their efforts to meet

community credit needs

Matched Savings Scheme (MSS)

1997

1. Ensuring that personal savings in Individual Development

Accounts (IDAs) are matched by local and national funds

2. Ensuring that matching amount is spent on one among a

number of prescribed uses, such as on education, business or

home purchase

France

Banking Act, 1984

1. Ensuring that any French national has the right to open an

account with any bank

2. Ensuring that, if refused, the aggrieved person can apply to the

Banque de France to designate a bank that will open an account

for him or her

French Bankers

Association (Basic Banking

Services Charter of 1992)

Is committed to providing:

Affordable account

Cash card

Free access to a cash machine

Distance payment facilities

Bank statement

Negotiable number of cheques


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Country Legislation/Instrument/

Policy Scheme

Objectives

Law on Exclusion, 1998

1. Reiterating the Banking Act of 1984

2. Providing extended right to transaction account to those

banned due to bad credit history

3. Allowing bounced cheques an extra month for correction

Australia

Australian Bankers Association

(ABA) Code of Practice, 1995

1. Generic Account introduced in 2002

2. Staff to give information about suitable accounts to low-income

customers

3. Face-to-face banking services, even after branch closure,

through alternative means such as franchising

4. Three months written notice to customers before closing any

branch

Rural Transformation Centre

Programme (RTCP)

1. Providing banking and other transaction services to

communities without banking facilities

2. Using existing stores and post ofces or standalone centers

3. Installing Electronic Point of Sale (EPOS) equipment in post

ofces

Belgium

Charter on Basic Banking

Services, 1996

1. Providing a basic bank account with no minimum balance and

without overdraft facilities

2. Crediting transfers, direct debits, and deposit and withdrawal

facilities

3. If refused, informing customers of the reasons, i.e., laundering,

bad credit history, etc.

Basic Banking Act, 2003Implementing sanctions if principles of Charter on Basic Banking

Services, 1996 are not applied

Canada

Access to Basic Banking Services

Regulations, 2003

1. Providing personal bank accounts to all Canadians, regardless

of employment or credit history, and with minimum

identication requirements

2. Banks/FIs to encash government cheques at no charge

Financial Consumer Agency of

Canada (FCAC), 2001

1. Supervising provisions on consumers under Canadas Bank Act

2. Providing access to basic banking

3. Offering consumer protection measures and expanding

consumer education

4. For rural banking, i.e. requires bank to give four months

notice of branch closures and six months notice if it is the only

branch within a range of 10 km

Source: Report on Currency and Finance 2006-08, RBI


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As of now, no one single model or method has been found (internationally) that

can service all the requirements of the target customers. Whereas, in Bangladesh,

the government has used the state-owned Krishi Bank and Building Resources

Across Community (BRAC) extensively, other Asian countries, including Sri Lanka

and Pakistan, have resorted to nationalization of private banks to extend banking

services to the excluded.

Use of technology to propagate FIGlobally, technology has emerged as one of the major enablers of FI. mobile

phones (low-cost technology solutions with a wide outreach), and has emerged

as one of the most viable solutions to extend nancial services in unbanked

areas. According to the ndings of the Mobile Money Market Sizing Study carried

out jointly by CGAP and the GSMA Association in 147 countries in June 2009,

more than a billion people worldwide, who have mobile phones, do not have bank

accounts. This is a tremendous opportunity to achieve enhanced FI. Some of the

oft-quoted success stories relating to mobile payments in developing countries

include the Philippines (Smart Money & G-Cash operated by Mobile Network

Operators), Kenya (M-PESA), South Africa (WIZZIT) and Zambia (Celpay).

Case study success stories

Successful effort by a bank Syndicate Banks Pygmy Deposit Scheme7

The Syndicate Bank was established in 1925 in Manipal, a small town located in

Karnataka in India. At the time, it was the only bank with a head ofce in a rural

area. By 1968, 32% of its branches were in rural areas. Its loans to agriculture

and small enterprises constituted 30% of its total loans, whereas such loans

were less than 8% of the total loans of other banks. Around 90% of the banks

deposit accounts included small accounts of less than INR1, 500. Such accounts

comprised 50% of its total deposits. It then introduced its Pygmy Deposit Scheme

in 1928. The scheme was part of its crusade to inculcate thrift among relatively

poor people. At the same time, the promoters regarded the scheme as a business

opportunity. Other banks had not harnessed this opportunity because of the highcost of collecting a large number of small deposits. However, Syndicate Bank

devised a system that was attractive for its depositors. The system included door-

to-door collection of deposits (which were sometimes as low as INR0.25) at stated

intervals, since most poor people do not have time to go to a bank and deposit

small amounts regularly. The bank appointed agents to collect small deposits on

a commission basis. Until 1962, it permitted its staff to work as agents during

their spare time. (The Central Bank prohibited this practice in 1962.) Their

commission rate was 3% of the total deposits collected per annum. The interest

rate on the deposits was 3.13% per year, provided the saver did not withdraw

from the scheme for seven years. Within this period, the saver could borrow from

the bank against the security of his or her deposit. The schemes specic features

have changed since 1969, but the broad principles have remained the same. The

7 ADB Finance for the poor, July 2000


18/34


bank was able to harness a business opportunity without competition from other

banks until 1960. Its Pygmy Deposits accounted for 14%15% of its total deposits

in 1946. This rose to 21% in 1960. Since then, this share has declined because of

the faster growth of other types of deposits and competition from other banks.

Nevertheless, in 1975, Pygmy Deposits constituted 7%8% of the Syndicate

Banks total deposits. Was the Pygmy Deposit scheme a loss-making activity for

the bank? No. On an average, the total cost to the bank for this long-term depositvaried between 3% and 5% per annum. This was signicantly lower than the cost

of a three- to ve-year xed deposit.

In 1975, its total cost was only 5.52% per annum as compared to the cost of xed

deposits at 13% per year.

The Syndicate Banks experience proves the following:

The transaction costs of mobilizing small deposits can be reduced by adapting

banking technology innovatively to suit local conditions.

Low income households value deposit services they can and do save.

Syndicate Bank discontinued this scheme in the late 1990s.

Case study

Leveraging technology Electronic Benet Transfer (EBT) in

Andhra Pradesh

Situation

More transparency and efciency was required for the payment of Social Security

Pension (SSP) and National Rural Employment Guarantee Scheme (NREGS)

benets to beneciaries. The Andhra Pradesh government is partnering with

Financial Information and Network and Operations Ltd. (FINO) and A little World

(product brand name ZERO) as BCs for direct transfer of funds to beneciaries

through bank accounts.

Approach

The Rural Development Department of Government of Andhra Pradesh launched

a pilot project in six mandals of Warangal district in Andhra Pradesh to ensure

payment under various government welfare schemes, including Social Security

Pensions (SSP) and National Rural Employment Guarantee Scheme (NREGS), to

beneciaries. The department employed the business correspondents of six banks

to make payment to villagers using smart cards and mobile technology 20,629

and 3810 beneciaries were covered under the SSP and NREGS, respectively.

Process

The beneciaries are issued smart cards with their photographs and images

of their ngerprints pre-loaded at the time of their enrolment. After the rst


19/34


authentication, the radio frequency identication device (RFID) chip embedded in

the card is charged. As soon as the card with the charged chip is brought close to

a mobile phone, message templates for deposit, withdrawal and balance enquiry

are generated on the mobile. BCs, who are equipped with a ngerprint scanner-

cum-identier, a mobile and a printer, need to select the relevant option and feed

the gures of the transaction through the mobile keypads and send the message

to the back-end server. The server authenticates the message, processes the

transaction and sends an update back to the mobile, which, in turn, writes on

the card. When the card is brought close to the printer, the transaction report is

printed in triplicate. The BCs settle the transaction with the cash they carry

with them.

Technology

The ZERO platform offers cardholders facilities to perform a range of transactions

including cash deposit and withdrawal (including cash disbursement for pensions

and EGS wages), transfer, cashless payments, balance enquiry, statement

generation and balance synchronization at Customer Service Points (CSPs). CSPs

are located in villages as the authorized agents of Business Correspondents,

enabled with tele-connectivity and a transaction-ready mobile device (or a PC or

any suitable embedded device) with the ZERO application software. Applicationsare installed in a central data center with multiple server congurations.

Interfaces have been developed, tested and implemented between a range of

front-end devices (NFC phones, PCs and embedded devices) and the central

server. The ZERO platform is designed as an application service provider (ASP)

model that is used by multiple banks, utility service providers and government

departments. The platform is based on open systems at the back end and the

front end, for issuance and transaction management of millions of customers,

with the addition of appropriate hardware. The product platform is multi-tiered

and modular and uses several types of front end devices, to communicate with an

array of back end applications that manage banking and telecom systems using

multiple modes of communication

Advantages:Banks can offer a number of nancial offerings, such as xed deposits, loans and

insurance, to beneciaries as well as access to cheap deposits.

State governments can route various payments, including salaries, pensions and

contractor payments, through this mechanism. Apart from making the payment

process easier, this also enables signicant cost savings for the Government.

Several bogus beneciaries have been weeded out because of bio-metric

identication and the state government are expecting to save a substantial

amount due to this function.

There is also an off-line version of the model, which enables its operation in

remote areas where there is no connectivity.


20/34


The way forward for FI has to be a virtuous cycle of sustainable income

generation programs for the poor, followed by customized products offered by

the nancial system, delivered directly or with the help of intermediaries on a

mass scale by leveraging technology. A sustained campaign to increase nancial

literacy also needs to be implemented to support the initiatives. Most of the

credit requirements of the poor, in rural and urban areas, are for consumption

(food expenses account for 53% of total spends in rural areas) and not for

entrepreneurial activities. Meeting daily requirements leaves little or nothing as

savings. The challenge, therefore, lies in guiding the borrower up the bankability

curve by helping to augment income rather than seek to get a share of the wallet.

A sustainable ecosystem of livelihood generation, coupled with easy microcredit

for times of need, will enable the borrower to move up the curve and become

bankable, and thereby, a consumer of nancial products and services.

After the Finance Minister Pranab Mukherjees Union Budget for FY11, there is a

renewed focus on FI. Globally, and in India, there is an increasing consensus that

economic growth should be more equitable and inclusive. Various initiatives in

the past have not yielded the desired results, primarily because service providers

were unable to achieve coverage and scale of operations.

Another reason could be that the challenge of helping the poor achieve a

sustainable livelihood, rather than being looked at as a business proposition

targeted at the bottom of the pyramid, has not been understood or looked at

in the right perspective. The latter will eventually end up creating indebtedness

among the poor and failure of the desired objectives. Gaining an understanding

of the social environment of the target segment, and then creating an ecosystem

where credit is an enabler rather than a burden, will help to drive the inclusion

agenda forward.

Evolving business models

FI cannot be addressed by a single product or technological innovation, and

therefore, policymakers need to focus on a set of solutions that best t the

national context. There is no single pre-determined recipe for improving FI.

Policymakers are in the best position to evaluate the unique institutional,

socio-economic, nancial and political circumstances and pursue the strategy

that best ts.

FI has covered more ground in the recent past than at any other time.

The momentum in the last ve years has been generated by micronance

organizations and some effort by the three pillars of state, nancial systems

and NGOs/SHGs. The evolution and spread of IT has helped to sustain the

momentum and will be critical in the future. Micro nance organizations (MFOs)

have made huge inroads and are doubling their size every year. SHG-bank

linkage programs have also worked, mainly because of the risk management

measures adopted, e.g., lending to women, group lending and effective collection

mechanisms. However, the model is mainly prevalent in the southern states. It

needs to be replicated on a wider scale in the rest of the country. Additionally,

SHGs and NGOs are critical for providing direction to livelihood generation

FI the way forward


21/34


activities.

With the evolution of technology, newer business models such as branchless

banking, electronic banking and mobile phone banking have emerged. Technology

has liberated banks from the traditional brick and mortar model, and is

therefore, being looked at as a core ingredient for the delivery of nancial

services to the excluded population. The biggest difference has been felt in

the KYC, authentication and verication processes, with biometric handhelddevices eliminating paperwork for largely illiterate clients with no documentary

identication. Technology service providers such as FINO and Eko, providing

technology platforms and front-end services for enrolling, collecting and

disbursing cash, have also been growing at a fast pace.

The last ve years have seen the emergence of MFOs, which have been active in

providing micro credit and other nancial products to the excluded population.

MFOs have been largely successful in reaching out to borrowers and building

scale. However, their viability can be largely attributed to the higher interest rates

Hurdles Solution

Reach Increase Bank-SHG linkage; technology for

connectivity

Identication of the consumer Identication through SHGs; biometrics till a

solution such as UID is implemented

Risk management policies Adaption of policies for managing SHGs, who,

in turn, manage individuals in the group;

community-based approach; creation of

centralized database by CIBIL; strengthening of

corporate governance among RRBs; governance

of MFOs

Cost of service delivery Use of technology to drive down costs; subsidy/

import duty exemption on POS devices; use of

wireless and mobile technology to increase reach

in a cost-effective manner

Scaling up of operations Increased manpower; effective use of technology;

customization of products; increasing BCs, village

kiosks and banks on wheels

Overcoming the hurdles to nancial inclusion:

charged by them.

So how does the nancial system increase its scope of activities to make its

operations viable? Various alternatives have been tried, but a feasible model has

yet to emerge. since the BC and Bank-SHG linkage model has shown promise,

strengthening the linkage will be crucial. Globally, community-based targeting

and acquisition has proved to be more effective in reaching the rural consumer.

A number of pilot projects have been successful, but scaling up of operations isproving to be difcult. Given the small size of transactions and lack of scale, most

of the models are considered unviable if weighed by traditional evaluation criteria.

However, once an infrastructure is put in place, specic models can be developed


22/34


to drive system efciency.

A look at the cost structure will help us further understand the viability of

the model.

Bank costs:

Technology infrastructure

A/C maintenance

Transaction

Risk management

Others administrative

BC costs:

Biometric hand-held device INR25, 000 purchase

INR9,000 rent

Smart Card INR112 per card

Mobile handset, connectivity

Other operational manpower, administrative

Bank BC Consumer

Traditional model

Technology service provider modelAnother model that has emerged are technology service providers such as

FINO and EKO, which create the delivery platforms. These technology providers

incur the costs of delivery platforms and client acquisition and regularly interact

with the clients. Sharing of infrastructure costs will benet the system, not

just by avoiding duplication, but also on issues relating to interoperability and

standardization.

Technologyservice

providersBank

MFIs/SHGs/NGOs

Consumer

BC costs aggregated at technology serviceprovider, creating a shared technology

infrastructure, interoperability and standardization


23/34


Service delivery through mobile phones global examples

SmartMoney

Philippines

G-Cash Philippines M-PESA

Kenya

WIZZIT

South Africa

Customer

acquisition

user completes a

form with valid id

From mobile by

sending SMS with

keyword REG

followed by auser- dened PIN,

mothers maiden

name, rst and last

name, address, and

landline number

Users provide

name, national

ID or passport

number, phonenumber

Users provide

name, date of birth

and national ID

number

Services Electronic transfer

of money (basic

P2P), merchant

transaction for

cash or purchase

of goods, account

management,

buying airtime, bill

payment, direct

deposit of salaries

and International

remittances

Electronic transfer

of money (basic

P2P), merchant

transaction for

cash or purchase

of goods, account

management,


payment, direct

deposit of salaries

and international

remittances

Electronic transfer

of money (basic

P2P), Merchant

transaction for

cash or purchase

of goods, account

management,


payment

Electronic transfer

of money (basic

P2P), Merchant

transaction for

cash or purchase

of goods, account

management,


payment

Mobile phones are versatile devices and popular even in rural areas, but they

cannot convert electronic value to cash and dispense it,or vice versa. A mobile

banking platform therefore needs to be supported with a cash conversion

platform. Additionally, the delivery models will require some identication, which

is one of the primary roadblocks for their applicability in the Indian scenario. The

mobile network can however be effective in offering money transfer services.

Mobile banking can, at best, be a complementary channel. The State Bank of India

has experimented by providing accounts to unbanked mobile phone holders. In

India the problem is at the consumer level in rural areas, where cash is the only

transaction mode. The solution lies in making cash available as close as possible

to the consumer, to make optimum use of the accounts opened via mobile phones.


24/34


8 NCAER-PIF Study on Evaluating Performance of National Rural Employment Guarantee Act

Shared technology infrastructure

Bank

Bank

Bank

Shared

technology

platform

CIBIL UID

SHGs

NGOs

MFIs

Wireless

Clients

Clients

Clients

The key to driving down costs is shared technology infrastructure, which has to

be standardized and interoperable. Supply and demand needs to to aggregate

at a common technology platform for effective delivery of nancial services. A

key learning from the Brazilian experiment (with success) with FI is the very highdegree of interoperability between banks, which facilitates standardized payment

solutions. Banking in India is still low in terms of interoperability. An effective

external common platform, e.g., FINO, can help to increase its reach and also limit

duplication of effort and lter out multiple borrowing by clients.

Building blocks

First pillar the state

The state, realizing that inequitable growth is unsustainable in the long run, has

made its objectives clear with policy announcements. These objectives have been

backed by scal measures to create a sound social infrastructure. Employment-

generation schemes such as NREGS, SGRY and PMGSY; setting up of the RuralDevelopment and Self Employment Training Institute (RUDSETI) and health

insurance programs for rural and unorganized workers. The state machineryneeds

to create a support environment for sustained livelihood generation for the

poor. The Union Budget made an allocation of INR391 billion in 200910, and

increased this to 401 billion for 2010-11 under NREGS. The positive effect8 of the

scheme is evident in rural wages. The wages of agricultural and non-agricultural

labor in rural areas have witnessed a signicant increase in nominal terms from

2.7% and 3.0% during 200405 to 200506 to 6.7% and 7.7% during 200607

and 200708. Almost all the states seem to have witnessed an increase in

nominal wages in the case of male and female labor due to the launching of

NREGS.


25/34


Second pillar MFOs/NGOs/SHGs

The second pillar provides last mile connectivity and contact with the excluded

population. NGOs/SHGs are community-based organizations and support

economic and training activities. Their collective ownership generates a high level

of comfort among their members. MFOs have been instrumental in reviving the

inclusion agenda by spanning the gap left by the formal banking system.

Third pillar nancial systemThe third pillar provides products and services at an affordable cost. The banking

system has been grappling with ways and means of increasing inclusion, but

has not been able to make any headway due to the absence of a viable business

model. With the business correspondent (BCs) model showing some signs of

success, and the rapid evolution of technology, both of these can be combined to

obtain better results.

Three pillars

Leveraging technology and

customized products

Front end service delivery,

livelihood support and training

Policy direction, livelihood

support, nancial literacy,

building social capital

Third pillar:

nancial

institutions,

products and

services

Second pillar:

SHGs/NGOs/ credit

unions/MFOs acting

as BCs

First pillar:

governments

sustainable

economic

ecosystem

Excluded

consumer


26/34


Technology service providers such as Financial Information Network and

Operations Ltd. (FINO) offer end-to-end infrastructure in terms of technology,

distribution and logistics. FINO has tied up with 14 banks, 20 MFIs, 3 insurance

and 7 government entities and enrolled 13.4 million clients. Biometrics is

being used extensively to identify and authenticate clients. Many banks have

adopted the concept of bank on wheels, which is a mobile unit that is wirelessly

connected to the branch to provide door-to-door services.

Structuring solution sets for FI

Increasing enrollment of SHGs through bank linkage program

SHGs perform a very important function as the contact point with borrowers.

They deliver nancial products to the end consumer and also mitigate risks

for the bank by carrying out checks and collection activities for the bank. The

group structure of SHGs instills a greater amount of trust in customers. The

livelihood-related training and support work conducted by SHGs is crucial for

sustaining the rural economy. In addition, the Indian postal network should be

utilized to increase the reach of banks.

Appropriate product design

Understanding the cash ows of the prospective borrower is critical for

effective product delivery. Various groups of borrowers can be organized into

SHGs and linked to banks. The main argument for customization is that the

poor have irregular cash ows and no savings, so are hardly ever in a position

to make regular payments. For example, a handicraft maker has a very

different cash ow from a share cropper or a grocery shop owner, and hence,

also has different credit requirements. Synchronization of requirements

and payments with disbursal and collection is essential for effective product

delivery. Solution sets need to be structured, based on the different

requirements of borrowers, rather than having a standardized product to t all

cases.

Leverage technology

Technology has made a huge impact on the banking industry as a whole, and

will be crucial for putting in place a cost-effective service delivery model for

achieving FI.


27/34


The key to achieving FI is helping the customer move up the bankability curve

by means of a concerted effort made by the state, SHGs/NGOs and the nancial

system.

Critical Success Factors (CSFs)

Concerted efforts of the three pillars

The three pillars of state, the SHGs and the nancial establishment, working

in tandem and supporting each other, will be the biggest factor that will

decide the success of the effort. The Bank-SHG linkage model is effective in

establishing end-point contact with the consumer. The more involved nature

of SHGs generates an amount of trust, and being a part of a group provides

comfort to the consumer.

Education and training for SHGs, BCs and customers

Financial education and training will be vitally important, going forward. It is

equally important for entities such as SHGs, BCs and customers. However, the

Creating sustainable social ecosystem for the excluded

Use community forums, NGOsandSHGs to reach consumers

Understand consumers

repayment capability and pattern

Customize products according to

needs microcredit, insurance, etc.

Provide government support in

sustainable livelihood activities

Leverage technology for delivery,

scale and cost-effectiveness

Increase product offering as client

becomes bankable

Bankable

Sustain

viability

Establish

contact

Create

viability

TimeUn-bankable


28/34


content and approach of each will differ.

Establishment of RUDSETIs, regional training centers for BCs and credit

counseling centers will be crucial for bringing a change in mindsets and

attitudes in the rural areas.

RUDSETIs will enhance the capabilities of SHGs and make them more effective

and train the trainer programs will enable them to bridge the gap between

the formal banking system and uneducated clients. Banks should also take

the initiative to train correspondents in the requisite systems and procedures

of the banking system. Credit counselling can be dened as counseling that

explores the possibility of repaying debts outside bankruptcy and educates the

debtor about credit, budgeting, and nancial management. It serves three

purposes. First, it examines the ways to solve current nancial problems.

Second, by educating about the costs of misusing a credit, it improves

nancial management. Third, it encourages poor people to access the formal

nancial system.

Technology

The evolution of technology will have a great impact on driving FI. Technology

has liberated the xed branch banking model and has made possiblebranchless banking, thereby increasing the reach of banks signicantly.

Another impediment to the identication and KYC procedure has been solved

by biometric technology. These technology platforms need to be unied,

standardized and made interoperable. Along with delivery platforms, a unied

central database also needs to be created for credit and other information.

Capacity-building

Scaling up of operations will be crucial for the long-term viability and

implementation of initiatives in the banking system. Infrastructure costs need

to be shared by the entities involved. The challenges involved will not just

be in terms of customer acquisition, but also in suitable product design and

customer servicing.


29/34


Centralized information database

A unied central database creating a unied central database of borrowers

(initiative already announced by CIBIL) for credit information will help in faster

credit assessment and disbursal of credit and services.

Unique Identication (UID)

In ambitious program initiated by the Government is to have a unique

identication procedure for all Indian citizens. The UID will solve various issues

associated with the KYC procedure of banks. It will make it faster and easier

for banks to open accounts and also bring down related costs. However, till the

time such a system is in place, traditional methods will have to be followed.

FI is a big challenge as well as a huge opportunity for banks and policy makers.

Diverse approaches have been tried across the globe with varying degrees

of success, but a denitive model is yet to be achieved. Every geography and

socio-economic situation demands a different and unique approach, but success

depends on how effectively policymakers are able to create and implement

sustainable livelihood-generation schemes for the disadvantaged population.

The bottom of the pyramid denitely has value, but FI will be achieved not bylooking to exploit it but by creating a supportive socio-economic environment to

build and sustain it.


30/34


Reference1. Report of the committee on Financial Inclusion, Chairman C Rangarajan,

January 2008.

2. RBI circular on 100 per cent Financial Inclusion - Evaluation by external

agencies- Broad ndings, 22 January 2009

3. RBI circular on Micro Credit, 1 July 2009

4. Indian Micronance Sector, Vijayalakshmi Das, Friends of Womens WorldBanking, India, 2 December 2005

5. Financial Inclusion Concept,Issues and Roadmap, presentation by Dr.

KC Chakrabarty, at Institute for Development and Research in Banking

Technology Hyderabad, 2 September 2006

6. Speeding Financial Inclusion, Sameer Kochhar, SKOCH Development

Foundation

7. Report of High level committee to review lead bank scheme, RBI, August

2009

8. Access Development series, Micronance India, State of the Sector Report,

2008, N.Srinivasan

9. Universal Financial Inclusion in India: The Way Forward, S.Ramesh and Preeti

Sahai, BASIX

10. The Fortune at the Bottom of the Pyramid, CK Prahalad and Stuart L. Hart,

strategy+business, Booz Allen Hamilton Inc.

11. NCAER-PIF study on Evaluating Performance of National Rural Employment

Guarantee Act, 28 April 2009

12. United Nations Department of Economic and Social Affairs (DESA) working

papers, The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed

Promise, Aneel Karnani, Professor Ross School of Business, University of

Michigan, Ann Arbor, August 2009

13. Research Report on Financial Inclusion, Ernst & Young, 2010

14. Report on Currency and Finance (Vol. II), Reserve Bank of India, September

2009, p.294-348.

15. Financial inclusion is commercially viable Financial Express website, http://

economictimes.indiatimes.com/opinion/interviews/Financial-inclusion-is-

commercially-viable/articleshow/5521996.cms, accessed 25 April 2010

16. Economic Survey 2009-10, Planning Commission of India, Chapter 2 Micro

foundations of Inclusive Growth


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The Associated Chambers of Commerce and Industry (ASSOCHAM) is one of

the oldest Chambers of Commerce, which was initiated in 1917. ASSOCHAM

is known as the knowledge chamber for its ability to gather and disseminate

knowledge. Its vision is to empower industry with knowledge so that it

becomes strong and powerful with world-class management, technology and

quality standards.

ASSOCHAM is also a pillar of democracy as it reects diverse views andsometimes opposing ideas in industry groups. This puts us ahead of countries

such as China and will strengthen our foundations, further enhancing the climate

we have engendered for democratic debate and provision of better solutions

for the future. ASSOCHAM is also the voice of industry it communicates

the pain of industry as well as its success to the Government. The chamber

is a change agent, which helps to create an environment for positive and

constructive policy changes and solutions, formulated and implemented by the

Government for the countrys progress.

The road is long. It has many hills and valleys yet the vision ahead of us

of a new resurgent India is strong and powerful. The light of knowledge and

banishment of ignorance and poverty beckons us, calling each member of the

chamber to serve the nation and make a difference.

ASSOCHAM derives its strength from promoter chambers the Bombay Chamber

of Commerce and Industry in Mumbai, the Cochin Chamber of Commerce and

Industry in Cochin, the Indian Merchants Chamber in Mumbai, the Madras

Chamber of Commerce and Industry in Chennai and the PHD Chamber of

Commerce and Industry in New Delhi and has more than 30 million members.

Together, we can make a signicant difference to the burden our nation carries

and usher in a bright, new tomorrow.

The Associated Chambers of Commerce and Industry of India

ASSOCHAM Corporate Ofce, 1, Community Centre Zamrudpur, Kailash Colony,

New Delhi 110 048,

Phones: 4655 0555 ( Hunting Lines) FAX: 46536481/82

Email: [email protected]

Website : www.assocham.org

About ASSOCHAM


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Ahmedabad - 380 015

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EYIN1005-046 Beyond the maze

This publication contains information in summary form and is therefore

intended for general guidance only. It is not intended to be a substitute

for detailed research or the exercise of professional judgment. Neither

EYGM Limited nor any other member of the global Ernst & Young

organization can accept any responsibility for loss occasioned to any

person acting or refraining from action as a result of any material in

this publication. On any specific matter, reference should be made to

the appropriate advisor.

www.ey.com/india

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