Full Report

STUDY ON ICT BASED FINANCIAL INCLUSION THROUGH BC –

IMPEDIMENTS & CORRECTIVE ACTIONS

L.M.Ganesan Member of Faculty

Pune

College of Agricultural Banking, Pune

2

Acknowledgement

I am thankful to Shri. Vikas Deshmukh, District Collector, Pune and Shri. Laxmikant

Deshmukh, District Collector, Kolhapur for sparing their valuable time and suggestions. My

sincere thanks to Shri.A.A.Mali, Lead District Manager, Pune, Shri.A.R.Savardekar, Lead

District Manager, Kolhapur, Ms.Savita P.Killdar, Central Bank of India, Branch Manager,

Velu Branch, Pune, Shri.Abhishek Kumar, Bank of Maharashtra, Branch Manager,

Khadkewada Branch, Kolhapur and Ms.Swarna Gokhale, Secretary, Jnana Prabodhini NGO

for their coordination and facilitation of the study with all stakeholders.

I am thankful to Shri.R.N.Panigrahi, General Manager & Academic Coordinator and

Shri.R.R.Kulkarni, Deputy General Manager & Channel Coordinator for their guidance. I

thank Smt. N.Mohana, DGM & Member of Faculty for her timely help in preparing the

qualitative report.

My special thanks to Shri.Nitin Desai who at a very short notice translated the questionnaire

meant for household customers into local language Marathi.

I take this opportunity to thank all the stakeholders, viz., households / customers, BCs /

CSPs, Village Panchayats, IT Vendors, controlling officials of banks, Lead District Officer

and District Development Managers for their valuable feedback in preparing this study report

with deep field level insight into the implementation of ICT based financial inclusion.

I am grateful to Ms.Kamala Rajan, Principal, College of Agricultural Banking, Pune for

entrusting the study and also for her valuable guidance.

L M Ganesan

Assistant General Manager

Member of Faculty

College of Agricultural Banking

Pune

Dated October 20, 2011

3

INDEX

Pages

1. Chapter – I Executive Summary 4 - 9

2. Chapter – II Introduction 10 - 14

3. Chapter – III Methodology 15-16

4. Chapter – IV Khopi Village 17-26

5. Chapter – V Lingnoor Kapashi Village 27-36

6. Chapter – VI Bank of India – An Alternate

ICT Based BC Model for Financial Inclusion – 37-40

7. Chapter – VII Summary of Findings 41-43

8. Chapter – VIII Five Important Issues 44-45

9. Chapter – IX Suggestions 46-47

10.Chapter – X Last Mile Walk of

Govt of Maharashtra 48

11.Chapter – XI Conclusion 49

4

Chapter - I

Executive Summary

The Reserve Bank of India (RBI ) advised the State Level Bankers Committee (SLBC) of all

States / UTs to prepare a Road Map of Villages with population more than 2000 to provide

banking services through banking outlets. Accordingly, all SLBCs submitted the Road Map

to RBI before March 31, 2010. The original target date of achieving the target was March 31,

2011 which was extended to March 31, 2012. The RBI, Central Office, RPCD, Mumbai, is

monitoring the progress in opening of banking outlets in respect of these villages based on

quarterly reports submitted by SLBCs. As per the Central Office Statement for the position

as on June 30, 2011, all banks together had opened banking outlets in 32,144 villages

(43%) as against the total of 74,386 villages included in the Road Map of villages with more

than 2000 population. Of which, branches were opened in 809 villages and BC model

banking outlets were opened in 30,882 villages. Remaining 453 accounted for banking

outlets opened under others category.

1.2. As per the RBI, RPCD, Central Office Statement, Maharashtra State was the sixth top

most achiever in implementing financial inclusion in 1910 villages as against the total of

4292 identified villages in the Road Map of Villages with population more than 2000. Of

which, BC model banking outlets had been implemented in 1878 villages.

1.3. As per the information available with SLBC, Maharashtra, as on March 31, 2011, the

banks could implement financial inclusion in 1,692 villages as against the target of 2,742

villages fixed for 2010-11 thus achieving 62% of the target. Of which, BC Model was

implemented in 1666 villages, branches were opened in 20 villages and six villages were

covered under other models. In the last quarter of 2010-11, financial inclusion was

implemented in 800 villages thus accounting for approximately 50% of the target.

1.4. Also, the bank-wise analysis of SLBC, Maharashtra data revealed that Bank of

Maharashtra was one of the top most achiever with 108% of the target for 2010-11 and

Central Bank of India was one of the low performing banks with 31% achievement.

Accordingly, this study selected these two banks for study.

Objectives of the Study

The objectives of the study were to identify the field level problems and make suggestions

for resolving these problems so that financial inclusion could be expedited and completed in

a time bound manner, thus paving the way for the real financial inclusion of the people in the

country.

5

1.5. Proper data were not available for selecting village for the study purpose. The difficulties

regarding availability of data had been discussed in Chapter III on Methodology. Hence, in

the absence of vital information, Khopi (Central Bank of India, Pune) and Lingnoor Kapashi

(Bank of Maharashtra, Kolhapur) villages were identified based on information received from

the concerned banks and the Lead District Managers based on their confirmation regarding

appointment of BC and issue of smart cards.

1.6. The captioned study was conducted in Maharashtra State from August 22-27, 2011 in

two villages, viz., Khopi Village in Pune District and Lingnoor Kapashi Village in Kolhapur

District.

1.7.Questionnaire Method with On-site Field Visits was adopted for various stake holders.

viz., Households, Business Correspondents (BCs) / Customer Service Providers (CSPs),

Village Panchayats, District Collectors, Vendors, banks – both branch and their controlling

officials, Lead District Officer (LDO) / Lead District Manager (LDM) / District Development

Manager (DDM), Local Media Persons, NGOs. A sample size of 100 households had been

taken for the study. The responses of these households regarding opening of no frills

accounts, receipt of smart cards, customer service etc., had been gathered and analysed.

1.8.The questionnaire meant for households was made bilingual in the local language

Marathi and English.

1.9.The Field Visits to villages and other stake holders were carried out in close Coordination

with the controlling office of the base branch of BC and the Lead District Manager of the

district in which the village is located.

2.0 Field Study in Villages

2.1 Khopi Village, Pune, Maharashtra

The study in this village has been conducted from August 22-24, 2011. The Khopi village is

located 35 KM from Pune The village is attached to Velu Branch of Central Bank of India

which is 5 KM away from the village. The Profile of Khopi Village is given in Annex-9.

It is happy to note that the Khopi Village earned the distinction of becoming the first

village in Maharashtra State to become 100% ICT Model Village as the Velu Branch,

the base branch has confirmed that as on October 20, 2011, it has issued 279 bio-

metric smart cards as against 242 households in the village.

6

2.2 Lingnoor Kapashi Village, Kolhapur, Maharashtra

The study in this village has been conducted from August 24-27, 2011. The Lingnoor

Kapashi village is located 53 KM from Kolhapur town. This village is located on the

Maharashtra / Karnataka Border. One has to pass through Karnataka State to reach this

Maharashtra village. It is 5 KM from Nippani Taluk of Karnataka. The village is attached to

Khadkewada Branch of Bank of Maharashtra which is 3.5 KM away from the village. The

Profile of Lingnoor Kapashi Village is given in (Annex-12).

The process of enrolment and issue of Smart Cards was commenced in the village in April

2011. Total number of households in the village is 406. As on October 20, 2011, no frills

accounts have been opened for 385 households but only 225 (55%) of the households

received the smart cards.

2.3 Alternate ICT Based BC Model for financial inclusion by Bank of India (Non-

Corporate BC Model)

To facilitate comparison, the main features of an alternate ICT Based BC Model for financial

inclusion (Non-Corporate BC Model) being implemented by Bank of India, Lead Bank of

Kolhapur district are given in Chapter VI.

3.Major Findings

3.1 District Collectors’ Views

3.1.1 Shri.Vikas Deshmukh, IAS, District Collector, Pune said that BCs had been appointed

in most of the villages in Pune but Point of Sale (POS) / Hand Held Devices (HHD) machines

were not available and there were delays in issue of bio-metric smart cards by the Technical

Service Providers (TSPs). Transactions were at very low level. He said a study at this stage

to know the impact was too early. When it was clarified to him about the objectives of the

study, he agreed that the findings of the study about the impediments and road blocks at this

stage would really be helpful for policy / mid-course correction.

3.1.2 Shri.Laxmikant Deshmukh, IAS, District Collector, Kolhapur opined that availability of

banking services in villages improved after introduction of BC model but more depended

upon its continuance in future.

The important findings of the study, both positive and negative, are presented as under:

7

3.2 Positive Feedback

The positive feedback included, customers‟ full faith and trust in CSP, villagers appreciation

of the ICT Based BC Model which was found to be very useful especially for senior citizens,

women and farmers, flexible timings of CSP, good digital connectivity, on-going enrolment of

customers, customers hope of higher savings in future, simple account opening form in the

local language, non-collection of charges by CSP for his services, active NGO and Farmers

Club helping the CSP for enrolment, cooperation of panchayat, NGO, village farmers club in

identifying CSP, appreciation of Presidents of village panchayats about the BC Model and

their suggestions for adequate salary to CSP in time for ensuring continuous services.

3.3 Negative Feedback

The Negative Feedback included, both Technical and non-technical.

3.3.1 The Technical deficiencies

The Technical deficiencies included, delay in supply of POS / HHD and smart cards by TSP,

slow functioning of HHD machines, difficulties faced by CSPs due to non-availability of on-

line system, non-linking of FI server with CBS, system related problems relating to

authorisation and uploading, slow connectivity, non-availability of camera in HHD machine

leading to operational difficulties in taking customers‟ photos, sharing of one laptop by three

CSPs, non-availability of Xerox machines, slow authorisation and uploading of account

opening forms by branch and 15 days time for supply of smart cards, slow enrolment and

distribution of smart cards.

3.3.2 The Non-Technical deficiencies included

The Non-Technical deficiencies included, non-availability of HO circular instructions at

branches / ROs, delay in appointment of CSPs, non-involvement of branches in the

appointment of CSPs, ROs not knowing CSPs, non-provision of a fixed place to CSP for

business, non-provision of minimum infrastructure / adequate hardware to CSPs for

enrolment, switching off mobiles by corporate BCs, low salary of Rs.500 and commission

paid to CSP, non-payment of salaries and other out of pocket expenses to CSPs, lack of

motivation of CSPs by BC, work at take-off stage, only one day training to CSP,

familiarisation of Sub-Cluster Coordinator and CSPs with the arrangement, non-availability of

details at branch regarding smart cards received and distributed by CSP, non provision of

credit facilities to customers, non-provision of cash to CSP by branches, difficulties in

understanding the accounting of advance amount paid by branch to CSP.

8

4. Five Important Issues

The Major Findings of the study which are presented above give rise to the Five Important

Issues regarding,

1) Ownership of Road Map

2) Monitoring of the progress under Road Map

3) Basis of determining the coverage of village under financial inclusion

4) Role of State Government

5) Media Visibility

These issues have been discussed in Chapter VIII in detail.

5. Suggestions

1. The Head Office of banks may consolidate its policies and instructions on

implementation of financial inclusion, outsourcing especially the Service Level

Agreements (SLAs) entered with TSP / Corporate BC and bring out a booklet which

may be updated every year. This booklet may be placed in their website.

2. In this financial inclusion programme, the reputation of banks is the greatest risk.

Hence, a proper system of issuing identity cards to BC / its controlling functionaries

and to CSPs should be put in place.

3. The banks may also incorporate minimum assured monthly earnings to CSPs in their

SLA.

4. Keeping in view, the reputational risk, Head Office may actively involve their

branches and controlling offices in the process of selection of CSPs, monitoring,

recommending action against inactive / erring CSPs to ensure good quality CSPs for

safeguarding the bank‟s reputation.

5. Training in financial education to CSPs is a must. This task should not be left to the

Corporate BC alone. The Head Office may instruct branches / controlling offices to

involve them in the training of CSPs, imparting financial education and capacity

building.

6. At present, village-wise reporting of progress in the implementation of financial

inclusion in villages under Road Map is not happening. A robust system may be

developed to ensure proper reporting to SLBC at the State Level and DCC at the

District Level.

7. All the SLBC Convenors may be asked to conduct the sensitisation workshop for

District Magistrates (District Collectors) on the financial inclusion and lead bank

scheme immediately.

8. A Joint Publicity Campaign on financial inclusion may be undertaken by banks and

State Government together in every district to make the Financial Inclusion

9

Campaign a Mass Campaign of the people and NABARD can involve in this mass

campaign and release financial assistance from its financial inclusion funds.

9. There are two important suggestions for the RBI also.

i)An urgent meeting of banks, TSPs, Corporate BCs and Government especially

State Governments may be convened by RBI to sort out problems relating to

financial inclusion.

ii)A Master Circular on Financial Inclusion may be brought out consolidating all

instructions issued since January 2006 which may include, relaxed KYC Norms,

technological specifications, guidelines for outsourcing, FLCC, RSETI etc.,

10. Lastly, but not the least, the FI server should immediately be connected to the bank‟s

CBS server for on-line transactions and effective MIS. This will be the starting point in

ensuring active no-frills accounts.

5. The Last Mile Walk of Govt of Maharashtra

Before we conclude, news items of the Last Mile Walk of Govt of Maharashtra are as under:

i) Sex workers in Maharashtra have been provided Ration Cards for by relaxing the Address

Proof Norm and the cards will include names of woman and her children. On October 3,

2011, Govt of Maharashtra distributed 50 ration cards to sex workers in red-light district of

Kamathipura, Mumbai.

ii) Similarly, on October 25, 2011 District Administration, Pune distributed ration cards to 91

homeless families of the Pardhi community belonging to Denotified Tribes who were living

under the Road Bridge in Pune.

Can we think of such path breaking and unconventional ways of financial inclusion on the

part of the bankers to reach the last mile and deliver the banking services to the homeless

people ?

Conclusion

Banks which have opted for Corporate BC model and banks which opted for non-corporate

model can mutually share their positive experience for mutual enrichment and fine tune their

systems and procedures for achieving a realistic financial inclusion.

To conclude, it is now time for banks to act seriously, implement financial inclusion

realistically and then report the progress accordingly.

10

Chapter - II

Introduction

The Reserve Bank of India advised the State Level Bankers Committee (SLBC) of all States

/ UTs to prepare a Road Map of Villages with population more than 2000 to provide banking

services through banking outlets. Accordingly, it was submitted by SLBC to RBI before

March 31, 2010. The original target date of achieving the goal was March 31, 2011 which

was extended to March 31, 2012. The RBI, Central Office, RPCD, Mumbai, is monitoring the

progress in opening of banking outlets in respect of these villages based on quarterly reports

submitted by SLBCs.

2.1 Progress of Financial Inclusion in Villages under Road Map as on June 30, 2011 –

All India

1. As per the information compiled by CO, RPCD, as on June 30, 2011 (Annex-I), all

banks together had opened banking outlets in 32,144 (43%) villages as against the

total of 74,386 villages included in the Road Map of villages with more than 2000

population. Of which, branches were opened in 809 villages and BC model banking

outlets were opened in 30,882 villages. Remaining 453 accounted for banking outlets

opened under others category. The top four states in opening of the banking outlets

in terms number of villages through BC Model were – Uttar Pradesh (6502), Andhra

Pradesh (3271), West Bengal (3101) and Tamilnadu (2440). The bottom four states

in opening of the banking outlets through BC Model were – Mizoram (1), Arunachal

Pradesh (3), Himachal Pradesh (8) and Meghalaya (12).

2. In terms of coverage of villages as against the total number of villages identified, top

four states were, Goa (98%), Kerala (93%), Haryana (64%) and Jammu & Kashmir

(64%). As per the latest news item, (Annex-2), Kerala had reported 100%

achievement of ICT based financial inclusion in 127 villages included in the Road

Map, which consisted of 120 villages with population of more than 2000 and seven

villages with population of more than 1000 but less than 2000.

3. Chandigarh had only one village under Road Map and it had not opened banking

outlet in that only village so far. The achievement of other UTs in the top order were,

New Delhi (41), Puduchery (35), Dadra & Nagar Haveli (14), Andaman & Nicobar

Islands (5) and Daman & Diu (2).

4. UT of Lakshadweep was the only territory which did not have any unbanked village in

the country.

11

5. Puduchery was the only territory which had opened banking outlets in all its 43

villages allotted to it, thus achieving 100% of the target which was followed by Goa

(98%) and Kerala (93%).

6. Maharashtra was the sixth top most achiever with 1910 villages as against 4292

villages. Of which, BC model banking outlets had been implemented in 1878 villages

2.2 Progress of Financial Inclusion in Villages under Road Map as on June 30, 2011 –

State of Maharashtra

2.2.1 State Level Bankers Committee (SLBC), Maharashtra

1. As per the latest SLBC records (Annex-3), Maharashtra could implement financial

inclusion in 1,692 villages as against the target of 2,742 villages fixed for 2010-11

thus achieving 62% of the target. Of which, BC Model was implemented in 1666

villages, branches were opened in 20 villages and six villages were covered under

other models. In the last quarter of 2010-11, financial inclusion was implemented in

800 villages thus accounting for approximately 50% of the target.

2. SLBC had fixed a target of 2,600 villages for the year 2011-12 which included the

shortfall in 2010-11. The deliberations in SLBC revealed that the target of

implementing financial inclusion in 4,292 villages with more than 2000 population

could be achieved before the target date March 31, 2011.

3. Banks which had not implemented financial inclusion in the allotted villages in

Maharashtra were, Allahabad Bank (33), Punjab National Bank (26), Vidarbha

Kshyetriya Gramin Bank (63), Vijaya Bank (3), Andhra Bank (1) and Karnataka Bank

(1).

4. Only five banks could achieve the given target for 2010-11. They were, Union Bank

of India (122%), Bank of Maharashtra (108%), Bank of India (101%), Corporation

Bank and Indian Bank 100% each. Central Bank of India with 31% achievement was

among the banks with lower performance.

5. This study had thus focussed on the implementation of ICT based financial inclusion

through BC model in two villages of Maharashtra, viz., Khopi Village in Pune district

being implemented by Central Bank of India and Lingnoor Kapashi village in

Kolhapur district being implemented by Bank of Maharashtra.

2.2 Important Observations of Financial Inclusion from SLBC, Maharashtra

1. Lead Banks were not submitting Monthly / Quarterly progress reports on

implementation of financial inclusion to SLBC in time.

2. MGNREGA payments were not routed through the nationalised banks‟ branches.

12

3. Individual banks should undertake village awareness financial inclusion campaign

under Swabhiman.

4. LDMs were advised to identify villages with population of more than 1000 and less

than 2000 and submit the list to SLBC before June 18, 2011. The list is yet to be

finalised.

5. As on June 14, 2011, the date of latest (111th ) SLBC meeting, FLCCs have been

established in 12 districts and all the Lead Banks have been asked to set up FLCCs

in the remaining 21 districts. Details of existing FLCCs and the FLCCs to be set up

are given in (Annex-4).

6. On the lines of financial support given to banks by Govt of Madhya Pradesh, banks

had requested for cost sharing and financial support from Govt of Maharashtra to

banks for implementing the ICT based financial inclusion in the identified villages with

population of more than 2000.

7. Principal Secretary, Finance, Govt of Maharashtra was nominated as Nodal Officer

for monitoring the FIP & channelizing MGNREGA / EBT / Social Security payments.

8. As advised by RBI, SLBC has approved “One District – Many Banks – One Leader

Bank Model” for routing payments of MGNREGA / Social Security payments through

BC model (Annex-5 RBI Circular dated August 12, 2011).

9. State Government has selected five blocks for MGNREGA payments through BC

Model on pilot basis. They are, Jawahar Block, Thane (Bank of Maharashtra),

Akkalkua Block, Nandurbar (SBI), Mohadi Block, Bhandara (Bank of India),

Pandharkawada, Yevatmal & Chikhaldara, Amravati (CBI).

10. Proper data were not available for selecting village for the study purpose. The

difficulties regarding availability of data had been discussed in Chapter III on

Methodology. Hence, in the absence of vital information, Khopi (Central Bank of

India, Pune) and Lingnoor Kapashi (Bank of Maharashtra, Kolhapur) villages were

identified based on information received from the concerned banks and the Lead

District Managers based on their confirmation regarding appointment of BC and issue

of smart cards.

2.3 Objectives of the Study

The objectives of the study were to identify the field level problems and make

suggestions for resolving these problems so that financial inclusion could be expedited

and completed in a time bound manner, thus paving the way for the real financial

inclusion of the people in the country.

13

2.3.1 Conduct of the Study

The captioned study was conducted in Maharashtra State from August 22-27, 2011 in

two villages, viz., Khopi Village in Pune District and Lingnoor Kapashi Village in Kolhapur

District. The study was conducted by way of field visits to these two select villages.

Various stake holders viz., Households, BCs, Village Panchayats, District Collectors,

Vendors, banks – both branch and their controlling officials, LDO / LDM / DDM, Local

Media Persons, NGOs had been contacted and their responses had been included in

this study. For the purpose, different questionnaires have been prepared for different

stake holders so that the feedback may be obtained and analysed systematically for

identifying the impediments in financial inclusion and suggest correction actions.

2.3.2 Khopi Village, Pune, Maharashtra

The study in this village has been conducted from August 22-24, 2011. The Khopi village

is located 35 KM from Pune The village is attached to Velu Branch of Central Bank of

India which is 5 KM away from the village. The Profile of Khopi Village is given in

Annex-9.

CAB, Pune conducted Platinum Jubilee Outreach Programme on August 25, 2009 and it

was declared as a Model Village. On May 30, 2011, the Smart Cards Project was

launched in the village by Dr.Deepali Pant Joshi, CGM-in-Charge of RPCD Central

Office, RBI and Ms. Kamala Rajan, Principal, CAB, RBI, Pune. Now, each household in

the village has got a smart card. Originally the bank wanted to complete this before July

31, 2011. However, it was delayed by three months mainly due to delay in the supply of

smart cards by the vendor and proposed takeover of Data Vision (TSP) by the DSK

Digital (Corporate BC). Thus, the village has become 100% ICT based financially

included village. It is happy to note that the Khopi Village earned the distinction of

becoming the first village in Maharashtra State to become 100% ICT Model Village

as the Velu Branch, the base branch has confirmed that as on October 20, 2011, it

has issued 279 bio-metric smart cards as against 242 households in the village.

2.3.3 Lingnoor Kapashi Village, Kolhapur, Maharashtra

The study in this village has been conducted from August 24-27, 2011. The Lingnoor

Kapashi village is located 53 KM from Kolhapur town. This village is located on the

Maharashtra / Karnataka Border. One has to pass through Karnataka State to reach this

Maharashtra village. It is 5 KM from Nippani Taluk of Karnataka. The village is attached

14

to Khadkewada Branch of Bank of Maharashtra which is 3.5 KM away from the village.

The Profile of Lingnoor Kapashi Village is given in (Annex-12).

The process of enrolment and issue of Smart Cards was commenced in the village in

April 2011. Total number of households in the village is 406. As on October 20, 2011, no

frills accounts have been opened for 385 households but only 225 (55%) of the

households received the smart cards. It is yet to be completed mainly due to delay in

receipt of smart cards, system related problems and lack of hardware / infrastructure to

CSP as reported by RO and GM, HO in their reports.

15

Chapter - III

Methodology

Questionnaire with On-site Field Visits

Questionnaire Method with On-site Field Visits was adopted for all the stake holders.

The study was conducted by way of field visits to these two select villages. Various stake

holders viz., Households, BCs, Village Panchayats, District Collectors, Vendors, banks –

both branches and their controlling officials, LDO / LDM / DDM, Local Media Persons, NGOs

had been contacted and their responses had been included in this study. For the purpose,

different questionnaires, a total of 12 questionnaires have been prepared for different stake

holders so that the feedback may be obtained and analysed systematically for identifying the

impediments in financial inclusion and suggest correction actions.

Special Feature of Questionnaire

The questionnaire meant for households was made bilingual in the local language Marathi

and English.

Sample Size

A sample size of 100 households had been taken for the study. The responses of these

households regarding receipt of smart cards, customer service etc., had been presented in

Chapter IV and V.

Duration of Study

The captioned study was conducted in Maharashtra State from August 22-27, 2011 in two

villages, viz., Khopi Village in Pune District (Central Bank of India) and Lingnoor Kapashi

Village in Kolhapur District (Bank of Maharashtra). A total of six days were taken for field

visits in Pune and Kolhapur.

Conduct of Field Visits

The Field Visits to villages and other stake holders were carried out in close Coordination

with the controlling office of the base branch of BC and the Lead District Manager of the

district in which the village is located.

Selection of Village for the Study

Bank of Maharashtra, Central Bank of India and some Lead District Managers (LDMs) were

contacted and based on the feedback, two villages, viz., Khopi Village in Pune and Lingnoor

Kapashi in Kolhapur districts were selected for conducting the study. Khopi village was

16

selected as RBI had conducted its Platinum Jubilee Outreach programme in that village and

many follow-up visits were also made by the College subsequently. However, as the

population of Khopi village was less than 2000, it was not included in the Road Map of

villages for financial inclusion in Maharashtra State prepared by SLBC. Due to continuous

follow-up made by the College, the Central Bank of India implemented ICT based financial

inclusion in Khopi village and smart cards were distributed to the villagers.

Data Constraints

Proper data was not available for selecting village for the study purpose. A scrutiny of the

SLBC Agenda Notes and browsing of SLBC Website did not provide any information except

name of the villages which were included in the Road Map. Further, detailed progress

reports were not available with SLBC relating to the progress of financial inclusion, village-

wise, bank-wise, district-wise, appointment of BC, number of no-frill accounts opened,

number of smart cards provided, details of transactions, provision of credit, remittance,

insurance facilities etc., Besides, information regarding 100% completion of issue of bio-

metric smart cards in any of the villages in Maharashtra State was not available with SLBC,

Maharashtra. Hence, in the absence of vital information, Khopi and Lingnoor Kapashi

villages were identified based on information received from the concerned banks and the

Lead District Managers after their confirmation regarding appointment of BC and issue of

smart cards.

Road Map of Villages for Financial Inclusion

List of Villages with population more than 2000 is given in Annex-6 for Pune District and

Annex-7 for Kolhapur District. Before finalizing the report, latest information was collected

and updated in respect of both the villages visited for the study purpose.

17

Chapter IV

Khopi Village, Pune, Maharashtra

Khopi village is located 35 KMs from Pune The village is attached to Velu Branch of Central

Bank of India which is 5 KM away from the village. CAB, Pune had conducted Platinum

Jubilee Outreach Programme on August 25, 2009 and it was declared as a Model Village.

On May 30, 2011, the Smart Cards Project was launched in the village by Dr.Deepali Pant

Joshi, CGM-in-Charge of RPCD Central Office, RBI and Ms. Kamala Rajan, Principal, CAB,

RBI, Pune. The No Frills Accounts of CBI is known as “Cent Bachat Khata”. It is happy to

note that the Khopi Village earned the distinction of becoming the first village in

Maharashtra State to become 100% ICT Model Village as the Velu Branch, the base

branch has has issued 279 bio-metric smart cards as against 242 households in the

village.

Feedback from Stakeholder

I.Households / Customers

As part of the study questionnaire for Households / Customers was prepared in bilingual

form in Marathi and English. Feedback was obtained from 105 Households / Customers from

the village. Of which, 13 did not receive smart cards. People of the village had full faith and

trust in the CSP. All of them expressed positive opinion about the BC Model.

CSP doing enrolment and transactions An elderly customer with Shri.L.M.Ganesan BC customers display smart cards

They appreciated the banking services through ICT / BC model. All accounts opened were

zero balance accounts. They said that they could save money through their bank accounts

which otherwise would have been spent. On the day of my study visit to the village (August

22, 2011), 20 accounts were opened and nine transactions (one debit and eight credits)

were done for Rs. 510. At the end of the day, CSP submitted the list of accounts opened,

details of transactions undertaken, etc., to the base branch, viz., Velu branch.

18

It was observed that there were very few transactions and most of the accounts were

inoperative. Also, one of the common features was that other than cash deposits and cash

withdrawals, other banking services like, small loans, MGNREGA payments, Govt payments,

pensions, remittances, insurance etc., were not extended by CSPs. Still the quality of

customer services was reported as satisfactory and there were no suggestions from the

customers which showed their ignorance about banking products and services. They have to

be educated about the availability of other banking products and services as it was found

that the CSPs themselves did not have much knowledge about banking except operating the

Hand Held Devices (HHDs). Thus, it is suggested that the bank has to conduct active and

frequent customer awareness and financial literacy campaign so that customers could

undertake more transactions in their no frills accounts and the CSP could earn reasonably.

The application for opening of no frills accounts was simple and was in the local language

(Marathi) (Annex-8). However, it did not contain the details of minimum overdraft amount of

Rs.500 given to the no frills account holders nor it was informed by the CSP to the

customers at the time of opening account. No charges were collected by CSPs from the

bank customers.

A mobile communication tower was located just behind the place of CSP‟s place of work.

Hence, there was no problem of connectivity. They could undertake on-line transactions with

the FI server of the vendor. However, it may be mentioned that the FI server of the vendor

was not connected to the bank‟s server.

II.Customer Service Provider (CSP)

Shri. Mayur Dattatray Marane Solar Powered HHD of DSK Digital Temple as Place of Business for CSP

CSP of Khopi Village

Shri. Mayur Dattatray Marane was the CSP appointed by DSK Digital Technologies Pvt Ltd

(DSK Digital), the Corporate BC of Central Bank of India. Bank had not issued any Identity

Card to the CSP. Instead, he carried the ID Card issued by DSK Digital. The CSP was

19

appointed based on the recommendation of the Grama Panchayat President. The branch

manager, the Farmers Club of the village (Shivganga Krishi Mandal) and NGO (Jnana

Prabodhini) informally played a role in the identification, selection and establishing the

integrity of CSP. DSK had provided a solar powered HHD to the CSP and also continued

support. The CSP was from Khopi village and was available in the village for banking

operations three times in a week. At present, he is operating in a temple of the village. The

process of enrolment and issue of biometric smart cards commenced in April 2011. As on

the day of visit (August 22, 2011), they had enrolled 355 customers far exceeding the total

number of households (242) in the village but only 136 smart cards had been issued. There

were delays in the receipt of smart cards from Data Vision Software Solutions Pvt Ltd, the

Technology Service Provider (TSP) of the bank. It was reported that DSK Digital was

planning to take over Data Vision and the delay in issue of smart cards was on account of

the transitional problems. As on October 20, 2011, the bank had issued 279 bio-metric

smart cards though there were 242 households in the village. It is happy to note that

the Khopi Village has become the first village in Maharashtra State to become 100%

ICT Model Village.

The CSP has been provided a limit of Rs.2,000 by the corporate BC for daily transactions as

against Rs.10,000 stipulated by the bank. The CSP is attached to the Velu Branch, Pune.

On a daily basis, CSP forwards the report to TSP who in turn forwards it to the branch. At

the time of visit, the authentication of accounts was manually taking place as the FI server of

TSP was not connected to the CBS server of the bank. The CSP visits branch twice a week.

Apparently, it was stated that the CSP would be provided a remuneration of Rs.3,500 and

conveyance of Rs.500 per month. However, informally it was learnt that the CSP had

received Rs.3,500 only in the past five months. Despite this, the CSP intended to continue

with this work as revealed during the interaction.

III.Khopi Village Panchayat

Shri.Krishna Eknath Shivakar is the President of

Khopi Village Panchayat. The total population of the

village is 1,458 (2011 Census) and the total number

of households is 242. The Profile of Khopi Village is

given in Annex-9.

20

No frills accounts have been opened for all the households. During the interaction he said

that the CSP from the village was a trustworthy person and the temple premises of the

village was provided for his work on stipulated days and time. The BC model was very useful

and the services of CSP were very much beneficial to the people. Now, people need not

spend time and money to go to the branch nor depend upon any transport. This BC Model

and CSP were very useful especially for senior citizens, women and farmers as banking

services were available within the village itself and the timings of CSP were very flexible.

The MGNREGS had not been implemented in the village. Registration under UID Aadhar

Cards was yet to commence.

IV.District Collector of Pune

I met Shri.Vikas Deshmukh, IAS, District Collector, Pune on October 24, 2011. I briefed him

about the purpose of my visit and requested him for his feedback. He shared his experience

as Satara District Collector and was proud to say that during his tenure, Satara became the

first district in the State of Maharashtra to become 100% financially included district in

February, 2009. Regarding, ICT based financial inclusion through BC model, he said that

BCs have been appointed in most of the villages in Pune but POS machines were not

available and there were delays in issue of bio-metric smart cards by the companies.

Transactions were at a very low level. He said a study at this stage to know the impact was

too early. When I clarified the purpose of the study he accepted that to know the

impediments and road blocks at this stage would really help in policy correction. The district

administration was routing the MGNREGA payment through banks. But the impact was less

due to low take off of the scheme as workers were not available due to low wage offered.

Govt scholarships for students were also routed through banks. He said that it was too early

for him to say anything about the service of BC / CSP. He felt that the issue of UID number

would go a long way in promoting financial inclusion programme and also EBT scheme.

21

V.IT Vendor / Corporate BC

Shri.Vinod Philips, Head of Sales, DSK Digital and his Team with Shri.L.M.Ganesan

The Data Vision Software Solutions Pvt Ltd is the Technology Service Provider (TSP) and

DSK Digital Technologies Pvt Ltd is the Corporate BC. It was learnt that DSK Digital was in

the process of acquiring Data Vision and hence, were responsible for the implementation of

ICT based financial inclusion in the Khopi Village. It was learnt that DSK was given 17

villages in Pune and 76 villages in Ahmednagar District. They provide end to end solutions to

the bank, both technology and in BCs. They have a support cell which provides continuous

support to the CSPs and Field Level BCs (FBC). Technical training was provided to the CSP

/ FBC once in two months. Problems relating to machines and operations were reportedly

attended to within 48 hours. It was reported that agreement between DSK Motors and

Central Bank of India was yet to be signed. The bank planned to complete the issue of smart

cards in the Khopi village before July 31, 2011. But it could not be completed due to the

delay in the supply of smart cards. They had assured to supply the smart cards as early as

possible. To a query regarding back up arrangements for temporary CSP / replacement, it

was submitted that they had back up arrangements but details were not made available.

During the course of the study, it was found that the IT Vendor / Corporate BC was not

aware that Rs.10,000/- is provided by the bank to each CSP as overnight cash limit against

proper insurance policy. At present, Rs.2,000 was provided by the BC to the CSP which put

22

a strain on its cash requirements as Corporate BC was also meeting the cost of HHD

provided to CSP. Later on, it was learnt while going through a file at the branch that such a

facility did exist and the bank was providing Rs.10,000 to CSP as overnight cash holding

limit and Rs.50,000 for MGNREGA and other EBT payments.

VI.Velu Branch, Central Bank of India

Velu Branch, Central Bank of India, Pune Shri.A.A.Mali, LDM, Pune, Shri.Mali, Manager, RO,

CBI& Smt.Savita P.Killedar, Br.Manager, Velu, CBI.

The Khopi Village is attached to the Velu branch of Central Bank of India. There was no role

for the branch in the appointment of CSP except an informal discussion. It was reported that

the Corporate BC / CSP were appointed by the Head Office / Zonal Office. The branch acted

as a base branch for nine villages. However, the branch did not have information regarding

appointment of CSP / BC for these villages except Khopi village. The role for the branch was

limited to the extent of verifying and authenticating details of no frill account holders,

maintaining account details of customers and that of CSP. So far, no loans had been

sanctioned to the BC customers. Apart from opening accounts, receipt and withdrawal of

cash, no other facilities had been offered to the BC customers like, remittance, transfer,

credit, insurance etc., As on August 20, 2011, the total deposits outstanding under no frills

accounts was Rs.4,300 and cash withdrawals amounted to Rs.390. At present, transactions

were maintained manually at the branch as the FI server of TSP was not connected to the

CBS server of the bank. The amount received from customers was kept in the CSP account

with the bank and a list of transactions carried out by customers was maintained by the

branch. The branch manager was not aware of the Board approved policy on financial

inclusion nor a copy of HO Circular issued in this regard was available in the branch records.

As the FI server was not connected to the bank‟s server, questions relating to connectivity,

trouble shooting, alternate arrangements for facilitating cash withdrawals, unresolved

problems etc., did not invoke any responses. The branch was not involved in the payment of

23

remuneration to CSP and it was reported that these were decided at higher levels. Details of

Business Continuity Plan (BCP) were not available, in case the BC / CSP quits or was

removed by bank. The process of Registration of Aadhaar Card had commenced in Pune

and a copy of the public notice issued by Central Bank of India in local language was

available with the branch (Annex-10). However, the registration for Aadhaar Card had not

commenced in Khopi Village.

VII. Central Bank of India, Regional Office, Pune

The Central Bank of India, Regional Office, Pune had been allotted 36 villages in four

districts under its control of which, 17 were in Pune district. It was reported that the ICT

based financial inclusion had not been implemented in any village except the Khopi village.

No dispute with the vendor was reported. The matter relating to deficiency or delay in

services had already been reported to its Central Office. Branch had not reported any

unresolved problem with the vendor. It was reported that ZO had directly reported to SLBC

regarding the status of implementation of financial inclusion in villages. The bank had

entered an agreement with UIDAI for availing the financial assistance for issue of smart

cards and the same was looked after by ZO. The RO official said that Business Continuity

Plan (BCP) in case the BC / CSP quits or was removed by bank was not available. There

was no follow up by RO with Corporate BC / CO relating to non-appointment of CSPs, non-

supply of machines and smart cards, delay in enrolment, system problems, non-payment of

salary to CSPs, non-availability of MIS etc.,

VIIA. Central Bank of India, Zonal Office, Pune

The Zonal Office of Central Bank of India was located in Pune. Shri.Duvvuri Bapanna, DGM

was the Zonal Manager and had four regions, viz., Pune, Nasik, Aurangabad and

Ahmednager under his control. A total of 253 villages spread over 13 districts had been

allotted to this zone and the Zone had a branch network of 115 branches under its control.

These 253 villages had a total population of 8.08 lakh and total number of households were

1.53 lakh. Data Vision, HCL and Integra acted as IT Vendors and DSK Digital, HCL, SEED,

I-25 acted as Corporate BCs. It was stated that the agreement between bank and DSK

Digital would be shortly signed.

VIII.Lead District Officer (LDO), Pune

According to Lead District Officer of Pune district from RPCD, Mumbai RO the lead bank of

Pune district had identified 277 villages with more than 2000 population and prepared a

Road Map. He stated that none of the villages could achieve 100% financial inclusion so far.

24

However, the process had commenced in 154 villages. Of which, in 151 villages BCs had

been appointed and branches had been opened in three villages. However, he did not have

any information regarding implementation of ICT based financial inclusion in these villages.

From his feedback, it could be inferred that as LDO, he was yet to attend the monthly

meeting of Sub-Commitee of DCC on Financial Inclusion. It was reported that these monthly

meetings were convened and the controlling officials of banks attended the meeting. As

reported by LDM, the minutes of Sub-Committee of DCC on Financial Inclusion was being

placed in the DCC Meeting held at quarterly intervals and the progress report to its

controlling office was submitted. Also, the matter regarding implementation of ICT in Road

Map villages was taken up by LDO with the controllers of banks and a letter was sent on

October 17, 2011. One positive feature reported by LDO was that the Pune District Collector

had issued instructions to district coordinators in the DCC Meeting held on September 26,

2011.

IX.Lead District Manager (LDM), Pune

Bank of Maharashtra is the Lead Bank of Pune District. The Lead District Manager (LDM), in

his feedback, had stated that a Sub-Committee of DCC on Financial Inclusion had been set

up and monthly meetings were held. These meetings were attended by the controllers of

banks. Minutes of Sub-Committee of DCC on Financial Inclusion was placed in the DCC

Meeting held at quarterly intervals. He stated that monthly reports were not submitted by

LDM to SLBC. The Road Map of financial inclusion for Pune District consisted of 277

villages with more than 2000 population and the same had been allotted to various banks.

He stated that none of the villages could achieve 100% financial inclusion so far. However,

the process of ICT based financial inclusion had commenced in 154 villages. Of which, BCs

had been appointed in 151 villages and branches had been opened in three villages. He had

not taken up with the controllers of banks regarding implementation of ICT based financial

inclusion in villages under Road Map. As Lead Bank of Pune district, Bank of Maharashtra

had implemented ICT based financial inclusion in 63 villages out of 123 villages allotted to

the bank. The Financial Literacy and Credit Counselling Centre (FLCC) in Pune had been

set up by Bank of Maharashtra, the Lead Bank of the Pune District. He had visited the Khopi

village a few times. LDM had so far attended only one function of issuing smart cards at

Khopi village.

Further, he added that district coordinators were not aware of the vendors and BC / CSP

appointed by their banks. These matters were being decided at HO / ZO levels and the

information flow was not happening down the line. The district coordinators were not

25

submitting any progress report on financial inclusion to LDM as they did not have the

requisite information. LDM did not receive any information from banks about the financial

inclusion programmes and distribution of smart cards in identified villages. So far, no bank

has informed the LDM about the progress and statistics of issuing smart cards in the

identified villages. In view of the above, the effectiveness of the Sub-Committee of DCC on

Financial Inclusion is doubtful.

X.District Development Manager (DDM), Pune

No bank had availed any financial assistance from NABARD under FIF and FITF for

implementing financial inclusion in Pune district. FLCC has been set up in the district by

Bank of Maharashtra, the Lead Bank of the district and is functioning.

XI.Local Media Persons

When banks conduct some programmes relating to financial inclusion or smart cards

distribution, small news items are given to the press. Apart from that, there is no concerted

or joint publicity campaign on financial inclusion or financial literacy at regular intervals from

the banks in the district. Also, LDM and District Administration had not conducted any active

publicity campaign for the purpose without which the success of the financial inclusion

programme through ICT / BC Model is severely undermined.

XII.NGOs / Voluntary Agencies

Discussion with Ms.Suvarna Gokkhale Shri. Sunil Ramchandra Sabale, Secretary

Secretary, Jnana Prabodhini NGO Shivganga Krishi Mandal (Farmers Club)

26

Jnana Prabodhini NGO

Jnana Prabodhini is a Non-profit NGO in Pune founded by Dr.V.V.(Appa) Pendse in 1962 for

development of educational institutions and promotion of social activities. This NGO was

actively involved in the implementation of financial inclusion programme in Khopi village.

Ms.Suvarna Gokhale is the Secretary of the NGO. The NGO was also actively involved in

the conduct of RBI outreach programme in Khopi and other villages, survey of households,

identification of CSP, conduct of awareness campaign on financial inclusion and financial

literacy campaign in Khopi village. The involvement and support of NGO was one of the

main contributing factors for the successful implementation of Bio-metric Smart Card Project

in the village. Although the secretary was fully aware that NGO could be appointed as BC by

banks, they did not want to act as BC and hence had not submitted any request to banks for

its appointment as BC. She said that the NGO was more interested in training and capacity

building and facilitating opening of bank accounts and transactions. They had therefore

helped the Corporate BC, DSK Digital, to identify CSP through Grama Panchayat and

Village Farmers Club. They also work for creating trust and building confidence in the

identified CSP.

Shivganga Krishi Mandal, Farmers’ Club

The Farmers Club of the Khopi village, viz., Shivganga Krishi Mandal is very active in the

village. Shri. Sunil Ramchandra Sabale, Secretary of the Farmers Club is the Vice-President

of the Khopi Village Panchayat. He is the person who recommended Shri. Mayur Dattatray

Marane for appointment as CSP. He said that all the people of the village come to this

temple for banking with CSP and there were absolutely no problems on account of caste or

religion. At present Govt payments were not routed through the CSP. He expressed his

happiness about the customer service rendered by the CSP and it had facilitated savings.

He suggested that the CSP should be given timely and adequate salary so as to ensure

continuance of his services. He felt that Bank‟s agreement with CSP should continue.

27

Chapter V

Lingnoor Kapashi Village, Kolhapur, Maharashtra

The Lingnoor Kapashi village is located 53 KM from Kolhapur. This village is located on the

Maharashtra / Karnataka Border. It is 5 KM from Nippani Taluk of Karnataka. The village is

attached to Khadkewada Branch of Bank of Maharashtra which is 3.5 KM away from the

village. The process of enrolment and issue of Smart Cards had commenced in the village in

April 2011. The No Frills Accounts of Bank of Maharashtra is known as “Mahabank Lok

Bachat Khatha”.

Feedback from Stakeholders

I.Households / Customers

Questionnaire for Households / Customers was prepared in bilingual in Marathi and English.

Feedback was obtained from 89 Households / Customers from the village. It was a little

short of sample size 100, as it was a busy season for agriculture and many of them had

gone out for agricultural work in fields. People of the village had full faith and trust in the

CSP. Out of 89 people interviewed, 22 did not receive smart cards. Out of remaining 67, five

said that they could not save even after opening the accounts. As on the date of visit, August

25, 2011, 115 smart cards were issued as against a total of 406 households in the village.

But, all of them expressed positive opinion about the BC Model. They appreciated the

banking services through ICT / BC model. All accounts opened were zero balance accounts.

However, transactions were not taking place as the bank and TSP were in the process of

introducing On-line system for transactions. Also, one of the common features was that other

than cash deposits and cash withdrawals, other banking services like, availing small loans,

MGNREGA payments, Govt payments, pensions, remittances, insurance etc., were not

extended by CSPs. Hence, many household demanded that the above mentioned banking

products and services be extended to them at the earliest. Other important suggestions

were, increasing cash holding limit of CSP to undertake more transactions, providing

suitable place to CSP so that people come to the designated place and time for transacting

business, facility of using the smart cards in ATM network to avail banking services

anywhere, educating farmers about the facilities available through smart cards, On-line

service for EBT transactions, cut time delays in capturing finger prints and enrolment. The

application for opening of no frills accounts was simple and in the local language (Annex-

11). It contained the customer‟s request for sanction of minimum overdraft amount of Rs.500

given to the no frills account holders and his agreement to pay interest at the prevailing rate

of the bank. No charges were collected by CSPs from the bank customers. The application

28

also contained a Declaration about the features of no frills accounts like, annual balance

outstanding limit of Rs.50,000, total value of transactions upto Rs.1.00 lakh and per day

cash withdrawal limit of Rs.15,000.

Subsequent to the study visit, latest information was obtained from the branch manager over

phone. He confirmed that transactions were still not taking place as Corporate BC was

waiting for the commencement of On-line transactions with the bank. However, till

finalisation of the report, it may be mentioned that the FI server of the vendor was not

connected to the bank‟s server.

II.Customer Service Provider (CSP)

Shri. Namdeve Madhukar Bhosale was the CSP appointed by Bartronics India Pvt Ltd, the

Corporate BC / TSP of Bank of Maharashtra. Bank had not issued any Identity Card to the

CSP. Instead, he carried the ID Card issued by Bartronics. The CSP is appointed by

corporate BC after discussion with the branch-in –charge of the base branch to which the

CSP would be attached and after due diligence by the concerned branch. The identification,

and selection were done by BC and only due diligence was carried out by the branch. The

Bartronics had provided the HHD to the CSP through Sub-Cluster Coordinator (SCC) and

continued support was available. A separate feedback of SCC had also been recorded. The

CSP was from the Lingnoor Kapashi village and was available in the village for banking

operations three times in a week. At present, he did not have a fixed place. Either the people

come to his house or he goes to their houses. Hence, people suggested that a suitable place

may be provided to CSP so that people come to the designated place and time for

transacting business. The process of enrolment and issue of biometric smart cards

commenced in April 2011. The village has 406 households. So far, they had enrolled 385

customers as against 317 on August 27 2011 (Date of visit). Remaining 21 households were

yet to be enrolled. Regarding issue of smart cards, 225 cards had been issued so far as

against 115 cards on August 27, 2011. It is yet to be completed due to delay in receipt of

smart cards and other problems as reported by RO and GM, HO in their reports.

There were delays in the receipt of smart cards from Bartronics Pvt Ltd. The CSP has been

provided a limit of Rs.5,000 by the bank based on an undertaking from corporate BC for

daily transactions. The CSP is attached with Khadkewada Branch, Kolhapur. On a daily

basis, CSP forward the report to TSP who in turn forwards it to the branch. At present, it is

manually taking place as the FI server of TSP is not connected to the CBS server of the

bank. The CSP visits branch twice a week. Regarding remuneration, neither CSP nor SCC

had given in writing about the payment. However, it was informally gathered that CSP

29

received just Rs.500 per month. Despite this, the CSP intended to continue with this work as

revealed during the interaction. He hoped that the system would settle down and then his

earnings would improve.

II-A.Customer Service Provider (CSP) – Monitoring

Shri.Sachin Baburao Waghmare along

with Shri. Namdeve Madhukar Bhosale,

CSP of Lingnoor Kapashi Village and

CSPs of other nearby villages.

Shri.Sachin Baburao Waghmare is the Sub-Cluster Coordinator (SCC) monitoring CSPs. He

was reporting to Shri.Suryakant Wadaje, Cluster Coordinator (CC) who in turn was reporting

to the Corporate BC. While CC was in-charge for a few districts, SCC was in-charge of a

group of villages and their CSPs. CC and SCC were appointed by Bartronics in discussion

with the Regional Office, Kolhapur of Bank of Maharashtra. Shri.Waghmare had been

appointed by Bartronics as SCC who was monitoring 26 CSPs. As on August 27, 2011,

CSPs under him had done 3,000 Enrolments and smart cards had been issued to 2,500

customers. He accepted that there were delays in issue of smart cards to customers due to

delayed receipt from TSP. Although he claimed that all accounts were active accounts,

interaction with the beneficiaries and bank officials revealed that transactions were not taking

place, mainly due to lack of on-line connectivity between FI server and CBS server and other

reasons were protest by CSPs striking the work, non-payment of salary and out of pocket

expenses, poor salary to CSPs. Besides, enrolment was also hampered due to withdrawal of

laptops given to CSPs by BC, non-availability of Xerox machines for taking copies of

address and identity proof etc.,.

SCC and CC do not submit any statement to branch or RO regarding implementation of

financial inclusion in villages.

30

III.Lingnoor Kapashi Village Panchayat

Smt.Deepali Kurade, President of Lingnoor Shri.Sambaji Yadav, Vice-President of Lingnoor

Kapashi Village Panchayat, Kolhapur Kapashi Village Panchayat, Kolhapur

Smt.Deepali Kurade and Shri.Samabji Yadav were the President and Vice-President of

Lingnoor Kapashi Village Panchayat and both were present on the day of visit. The nearest

bank is Khadkewada branch of Bank of Maharashtra. The total population of the village is

2,800 (2011 Census) and the total number of households is 406. The Profile of Lingnoor

Kapashi Village is given in (Annex-12).

No frills accounts have been opened for 385 households but only 225 (55%) of the

households received the smart cards. During the interaction he said that the CSP from the

village was a trustworthy person. When I posed the people‟s suggestion to provide a regular

place to CSP, he expressed his helplessness as the Grama Panchayat was itself short of

space. She said that the BC model was very useful and the services of CSP benefitted the

people. Now, people need not spend time and money to go to the branch nor depend upon

any transport. This BC Model and CSP are very useful especially for senior citizens, women

and farmers as the banking services are available within the village itself and the timings of

CSP are very flexible. The MGNREGS has not been implemented in the village.

Registration under UID Aadhar Cards was yet to commence.

There were no NGOs in the village. At present Govt payments were not routed through the

CSP. Shri.Sambaji Yadav, expressed his happiness about the customer service by the CSP.

He suggested that the CSP should be given timely and adequate salary so as to ensure

continuance of his services. He felt that Bank‟s agreement with CSP should continue.

31

IV.District Collector of Kolhapur

Shri.Laxmikant Deshmukh, IAS is the District Collector for Kolhapur and also Chairman of

DLRC / DCC. He was very appreciative of the financial inclusion programme. He said that

publicity assistance for financial inclusion was provided by the district administration through

its District Information Officer. The implementation of MGNREGA in the district commenced

recently and its scope in the district was very limited. The UID project was yet to commence

in the district. Pension payments were already routed through banks. Turnover commission

was not paid to banks. He said that there were no complaints about BC as it was in an

incipient stage. He opined that availability of banking services in villages improved after

introduction of BC model but more depended upon its continuance in future.

One of the important suggestions he made was that Community Service Centres (CSCs)

could also be engaged by banks for rendering banking services to the people of villages. He

said that there were 90 CSCs functioning in the district which handled all utility payments,

train tickets booking, issuing Govt related certificates etc., All CSCs were operated by private

people and provided fee based services to five or six villages.

V.IT Vendor / Corporate BC

The Bartronics India Ltd is the IT Vendor and Corporate BC was part of Bartronics.

Shri.Vinod is the Cluster Coordinator (SC) for Kolhapur and Sangli Districts. He had 79

villages, 52 in Kolhapur and 27 in Sangli districts for monitoring and control. Thus, Shri.

Vinod and his team members, Shri.Sachin Baburao Waghmare (SCC) and Shri. Namdeve

Madhukar Bhosale, CSP are responsible for the implementation of ICT based financial

inclusion in the Lingnoor Kapashi Village. They provided End to End solutions to the bank,

both technology and BC. They have support cell which provided continuous support to the

CSPs. Technical training was provided to CSP for five days. A post training support for five

days is proposed to be given by ILFS company. There were delays in receipt of Smart Cards

from Hyderabad reportedly due to delay in printing of cards. He confirmed that complaints

were received from bank / BC regarding non-functioning of ICT Kit and they were being

attended to at the earliest. To cut down the delays and to improve the supply position, the

company at Hyderabad proposed to dispatch the cards directly to the address of SCC. To a

query regarding back up arrangements for temporary CSP / replacement, it was submitted

that they have back up arrangements but details are not made available.

32

VI.Khadkewada Branch, Bank of Maharashtra

Khadkewada Branch Shri.Abhishek Kumar His Branch Team dealing with

Bank of Maharashtra Branch Manager Financial Inclusion

The Lingnoor Kapashi Village is attached to the Khadkewada branch of Bank of

Maharashtra. Shri. Abhishek Kumar is the branch manager. His feedback revealed that CSP

was appointed by the Corporate BC, viz., Bartronics Ltd after due diligence and clearance

about CSP by the base branch. There was a formal role for the branch in the appointment of

CSP as officially it had been asked to verify the antecedents of CSP and other details and

carry out the due diligence. The Corporate BC / CSP are appointed by the Head Office /

Zonal Office. The branch acted as a base branch for two villages. The role of the branch was

limited to the extent of carrying out due diligence for the identified CSP, verifying and

authenticating details of no frill account holders, maintaining account details of customers

and CSP. The account opening details of customers were verified and then uploaded on to

the bank‟s CBS server. So far, no loans were sanctioned to the BC customers. Apart from

opening accounts, receipt and withdrawal of cash, no other facilities have been offered to the

BC customers like, remittance, transfer, credit, insurance etc., At present, transactions were

not taking place as the bank was in the process of switching over to On-line mode by

connecting the FI server with bank‟s CBS server. The bank had a Board approved policy on

the financial inclusion and a copy of HO Circular issued in this regard was made available by

RO. As the FI server was yet to be made On-line with the bank‟s server, questions relating to

connectivity, trouble shooting, alternate arrangements for facilitating cash withdrawals,

unresolved problems etc., did not have much relevance. The branch was not involved in the

payment of remuneration to CSP and it was reported that these were decided at higher

levels. Details of Business Continuity Plan (BCP) were not available, in case the BC / CSP

quits or was removed by bank. The process of Registration of Aadhaar Card was yet to

commence in Kolhapur district.

33

VII. Bank of Maharashtra, Regional Office, Kolhapur

Shri.R.T.Bangartale is the Regional Manager of the Bank of Maharashtra, Regional Office,

Kolhapur.Shri.R.Ravindra, RITC and Shri.R.R.Patil, Nodal Officer were member of his team

on financial inclusion. The RM said that his RO had been allotted 79 villages in two districts

under its control, viz., Kolhapur and Sangli districts. And under Kolhapur district the bank

had 52 villages. On August 24, 2011, the day of visit, it was reported that the ICT based

financial inclusion had been implemented in 34 villages and the remaining 18 were yet to be

covered. To a query relating to achievement of ICT based financial inclusion in the allotted

villages before the target date of March 31, 2012, the Regional Manager was confident of

achieving it before the target date. As on October 25, 2011, it was reported that BC had

been appointed in all the villages except one village.

Monitoring & Follow up

Regarding monitoring of the progress in Lingnoor Kapashi village, he said that there was no

mechanism to monitor the progress village-wise. The Village-wise reports were called for

from Bartronics at periodic intervals. However, branch-wise progress was monitored through

web based portal. He reported that there was a dispute with the vendor regarding withdrawal

of Laptop from CSP and the same was reported to HO. At the time of finalising report, it was

confirmed that Laptop had been given back. Branch had not reported any unresolved

problem with the vendor. RO had also advised branches to avoid rejection of account

opening forms and carry out authorisation and uploading of the same in time. It was reported

that RO had provided status report to HO and LDM at quarterly intervals. The bank had

entered an agreement with UIDAI for availing the financial assistance for issue of smart

cards and the same was looked after by HO. He said that BCP was not available in case the

BC / CSP quit or was removed by bank.

Some of the other problems reported by RO to HO were, i)slow functioning of HHD

machines; ii)providing minimum infrastructure / adequate hardware to CSPs;

iii)representatives of Bartronics switching off mobiles and being inaccessible; iv) non-supply

of smart cards; v)non-payment of salaries to CSPs and other out of pocket expenses;

vi)difficulties faced by CSPs due to non-availability of on-line system; vii)appointment of

CSPs in all allotted villages; viii)motivation of CSPs by BC; ix)system related problems

relating to authorisation and uploading.

GM from Central Office of BOM visited two villages in April 2011 in Kolhapur / Sangli

districts and reported various deficiencies which included, work at take-off stage, training to

34

CSP for just only one day, Sub-Cluster Coordinator and CSPs were in the process of

familiarisation with the arrangement, low salary of Rs.500 and commission paid to CSP, slow

connectivity, non-availability of camera in HHD machine leading to operational difficulties in

taking customers‟ photos, sharing of one laptop by three CSPs which affects the progress of

account opening, non-availability of Xerox machines for taking photocopies of documentary

evidence, slow authorisation and uploading of account opening forms by branch and 15 days

time for supply of smart cards by Bartronics thus leading to slow enrolment and distribution

of smart cards, 19 cards as against total unbanked households of 200, branch not having

details of smart cards received and distributed by CSP, villagers difficulties in understanding

the English print-out of POS machines, inability to test debit transaction, non-provision of

credit facilities, difficulties in understanding the accounting of advance amount paid by

branch to CSP.

Finally he concluded in his report that the difficulties / issues faced by CSPs should be

addressed to introduce speed in the programme and ensuring continuity of CSPs. Also, he

did not favour primary school teachers and kirana traders as CSPs as the job required full

time attention.

VIII.Lead District Officer (LDO), Kolhapur

The Lead District Officer of Kolhapur district from RPCD, Mumbai RO had stated that the

lead bank of Kolhapur district had identified 212 villages with more than 2000 population and

prepared a Road Map. He stated that none of the villages could achieve 100% financial

inclusion so far. BCs had been appointed in 160 villages and branches had been opened in

two villages. However, he did not have any information regarding implementation of ICT

based financial inclusion in these villages. Monthly meetings of Sub-Committee were not

convened. The progress on implementation of financial inclusion in the identified villages

under Road Map was reviewed in the DCC Meeting held at quarterly intervals. Also, the

matter regarding implementation of ICT in Road Map villages was taken up by LDO with the

controllers of banks and a letter was sent on October 17, 2011. One positive feature

reported by LDO was that the Kolhapur District Collector had issued instructions to district

coordinators in the DCC Meeting held on September 22, 2011.

35

IX.Lead District Manager (LDM), Kolhapur

Shri. A.R.Sawardekar, Lead District Manager Shri.R.R.Patil, Manager, Regional Office

Bank of India, Kolhapur District Bank of Maharashtra.

Bank of India is the Lead Bank of Kolhapur District and Shri. A.R.Sawardekar is the Lead

District Manager (LDM). In his feedback, he had stated that s Sub-Committee of DCC on

Financial Inclusion had been set up but monthly meetings were not held. He stated that

monthly report was not submitted by LDM to SLBC and it was submitted by RO to SLBC.

The Road Map of financial inclusion for Kolhapur District consisted of 212 villages with more

than 2000 population and the same had been allotted to various banks. He stated that in the

first phase, the district achieved 100% financial inclusion. However, the process of ICT

based financial inclusion had commenced in 40 villages. He had taken up with the

controllers of banks regarding implementation of ICT based financial inclusion in villages

under Road Map. As Lead Bank of Kolhapur district, Bank of India had implemented ICT

based financial inclusion in 34 villages out of 52 villages allotted to the bank. The Financial

Literacy and Credit Counselling Centre (FLCC) in Kolhapur had not been set up and the

matter had been taken up with their HO. He had visited the Lingnoor Kapashi village a few

times.

Further, he added that district coordinators were not aware of the details of vendors and BC /

CSP appointed by their banks. These matters were being decided at HO / ZO levels and the

information flow was not happening down the line. The district coordinators were not

submitting any progress report on financial inclusion to LDM as they did not have the

requisite information. LDM did not receive any information from banks about the financial

inclusion programmes and distribution of smart cards in identified villages. So far, no bank

has informed the LDM about the progress and statistics of issuing smart cards in the

identified villages. In view of the above, the effectiveness of the Sub-Committee of DCC on

Financial Inclusion becomes doubtful.

36

X.District Development Manager (DDM), Pune

No bank had availed any financial assistance from NABARD under FIF and FITF for

implementing financial inclusion in the district. FLCC had not been set up in the district and

Bank of India, the Lead Bank of the district had submitted a proposal to its HO.

XI.Local Media Persons

When banks conduct some programmes relating to financial inclusion or smart cards

distribution, small news items were given to the press. Apart from that, there was no

concerted or joint publicity campaign on financial inclusion or financial literacy at regular

intervals from the banks in the district. Also, LDM and District Administration had not

conducted any active publicity campaign for the purpose without which the success of the

financial inclusion programme through ICT / BC Model is severely undermined.

XII.NGOs / Voluntary Agencies

No NGO / Voluntary agency was involved in the implementation of financial inclusion in

Lingnoor Kapashi Village.

37

Chapter VI

Bank of India – An Alternate ICT Based

BC Model for Financial Inclusion – Non-Corporate BC

During the course of study visit to Kolhapur, I paid a visit to the Bank of India, Zonal Office,

Kolhapur, controller of Lead Bank on August 26, 2011. I interacted with Shri.V.V.Agnihotri,

DGM & Zonal Manager and his team of officials dealing with financial inclusion. They said

that for Bank of India, the financial inclusion was a viable business proposition. They

described the systematic way, the bank had gone ahead with its implementation in a

professional way. The revealing experience is as under:

1. The No Frills Accounts of BOI is known as Basic Savings Account.

2. Tata Consultancy Services (TCS) is the Technical Service Provider.

3. The bank had a board approved policy for financial inclusion, appointment of TSP,

BC, payment of remuneration and other charges to BC etc.,

4. The bank pays Rs.3000 as salary and Rs.500 as conveyance charges per month to

BC for a period of six months. Thereafter, the BC will get only commission based on

transactions. These details of remuneration package are published in the

Advertisement for empanelment of BC. During the six months period, bank provides

enough training and capacity building and also gets a lot of business activities done

through the BC that the BC starts earning sufficiently. Thus, the bank takes an active

interest in ensuring viability of BC and business growth of the bank. Thus, it is a win-

win situation for both bank and BC. The bank had earlier appointed BFs in many of

their branches and it had widely benefitted from this experience.

5. The bank has already appointed BCs in 34 villages out of 52 villages allotted to it

under Road Map of villages with population of more than 2000. It is reported that 25

HHDs have already been provided to BCs. However, there is delay in supply of

HHDs and smart cards by TCS.

6. RO claimed that 100% enrolment was over and the bank‟s website also confirmed

the same. Besides, in the website, number of smart cards issued was mentioned as

zero. To a specific query as to how many bio-metric smart cards had been

issued, the bank officials in RO informed that in only one village, 350 smart

cards had been issued and in other villages, the process was on. Later on it was

transpired that 100% enrolment they refer to was the number of no frills accounts

38

opened manually in the earlier phase of financial inclusion without ICT. Now, these

no frills accounts holders would be issued smart cards.

7. The bank appoints BCs directly. There is a clearly laid down procedure for the

empanelment of BCs. Now, it has published advertisement calling for applications for

appointment as BC in the remaining unbanked villages with population of more than

2000 and more than 1000 but less than 2000, in urban centres and to replace

existing BCs with unsatisfactory record.

8. In this regard, a separate circular has been sent to all the branches under its control.

9. The procedure involves, publishing advertisement in the local newspapers by ZO.

10. Guidelines issued to branches for dealing with enquiries from the candidates which

are as under:

i)Informative Posters in Marathi. One poster should be displayed in branch premises

and remaining at village Gram Panchayat, Milk Collection Centres or at prominent

places in the respective villages where BCs are required to be empanelled.

ii)List of villages having population more than 1000 is forwarded to all branches.

iii)Separate Application forms for empanelment of BC as individuals and for other

than individuals.

iv)Rating Sheet. This sheet is for branch use and will help for verifying entry level

bench mark i.e. minimum 18 marks out of 30 marks.

11. Branch Managers should visit the villages for identifying right candidates. Minimum of

two applications should be collected from each village forward the same to ZO before

the due date along with the branch‟s recommendation.

12. The recommendations should include, compliance of KYC norms, liabilities with Bank

of India and with other banks, reputation, social economic status, aptitude for present

assignment, existing source of income, outcome of enquiry made with two references

given by the applicant, in case of institutes – Registration Certificate, Bye Laws,

Resolution for assignment of job, organisational set-up and specific comments on

key person.

13. For detailed information on financial inclusion, an Operational Manual Financial

Inclusion has been supplied to all the branches.

14. Copy of the circular along with enclosures has been forwarded to the Business

Development Manager and Lead District Managers of Kolhapur, Sangli Districts and

the District Co-ordinators of Satara District.

15. Scoring Sheet for Rating Model for individual BCs contains Total Marks of 30, on a

scale of 0-5, which varies for various parameters numbering nine, viz., location,

39

reputation in locality/society, age, education, bank customer, computer literacy,

present occupation, experience, annual income.

The scoring sheet contains, important riders for reputation like, the candidate should

be non-political and not afflicted to religious organisations, political parties, should not

have criminal record which should be verified from police authorities, individual /

organisation / persons managing organisation should not be defaulter with banks /

societies / financial institutions, due diligence of this BC are to be ensured by

concerned zonal / branch authorities.

16. The Scoring Sheet also contains the recommendation of the three member panel

which interview the candidates.

17. The bank informed that all CSPs are given a separate set of uniform dress with cap

and bank‟s identity card. The bank also provided a bank‟s name board with the name

of CSP for display in his house.

Financial Literacy Campaign for Public

Notices in Marathi explaining about various schemes of the bank particularly, KCC, other

agri loans, are distributed by news paper agents through Lead District Managers and Co-

ordinators thereby reaching each and every home of farmer and others.

Financial Education for BC

1.Zonal Office, Bank of India is conducting an examination on financial education cum

interview for all BCs selected for the job. This is conducted by a committee of officials

from bank and IIBM, Mumbai. Then, a Certificate is given to all BCs. To prepare BCs for

the examination, bank is providing one week training on banking knowledge before the

examination.

2.The bank also conducts Workshop for BCs / BFs as and when required.

3.Also, Shri.Ramesh, Mohite, Agricultural Officer of the Zonal Office, having 35 years of

rich experience and knowledge has written a Book in Marathi, viz., “ Sankalpa Gramina

Vikasacha” for imparting banking knowledge to BCs which also serves a Reference

Guide on Financial Inclusion for BCs. This book includes, information relating to financial

inclusion, Road Map for providing banking services to unbanked villages with population

of more than 2000, No Frill Accounts and its special features, account opening

formalities deposit accounts and loan accounts, various schemes of Bank of India,

procedures and documentation. One of the special features of this book is that it

40

contains Operating Instructions for its Hand Held Devices (HHD). I have attached a copy

of this book with my report for the kind perusal of the readers.

4.The bank organises special function and distributes HHD and a copy of the BC Book to

all the successfully appointed BCs. Besides, Workshops for BCs / BFs are periodically

arranged.

5. Monitoring BCs

For monitoring purposes, the bank has appointed its retired officials as Channel

Management Partners (CMPs) who hold charge for a group of villages. The bank has

provided good salary and conveyance charges to CMPs.

6.On-line linking of FI Server of TSP with bank‟s CBS Server has already been done.

Hence, it is reported that all the transactions of BC customers will be captured in the

bank‟s CBS system.

7.The bank‟s website on the progress of financial inclusion in villages under Road Map is

really comprehensive giving zone-wise details of name of village, BC / CMP along with

their contact details, number of households, enrolment, issue of smart cards, coverage

etc.,

41

Chapter VII

Summary of Findings

Shri.Vikas Deshmukh, IAS, District Collector, Pune said that BCs had been appointed in

most of the villages in Pune but Point of Sale (POS) / Hand Held Devices (HHD) machines

were not available and there were delays in issue of bio-metric smart cards by the

companies. Transactions were at very low level. He said a study at this stage to know the

impact was too early. When it was I clarified to him about the purpose of the study, he

accepted that finding out the impediments and road blocks at this stage would really be

helpful for policy / course correction.

1. ROs / branches do not have a copy for ready reference, of the bank‟s policy on

appointment of BC / CSP and the circulars issued by HO on financial inclusion and use of

ICT solutions as seen in Central Bank of India.

2. Under the Corporate BC set-up, the happenings and important decisions taken at HO for

implementing ICT based financial inclusion have not percolated down to ZOs / ROs /

Branches. In this regard, there is a disconnect between HO on the one side and controlling

offices and branches on the other side which can be seen in the following paragraphs.

3. Under the Corporate BC set-up, things are happening at snail speed and implementation

is very slow. Under End to End package, the progress is monitored at HO level. There is less

/ no role play for branches and ROs/ ZOs resulting in lack of involvement and seriousness.

The important findings of the study, both positive and negative, are presented as under:

Positive Feedback

1. The customers, village people, have full faith and trust in CSP who is also a resident

of the same village.

2. Villagers appreciated the ICT Based BC Model as it is very useful especially for

senior citizens, women and farmers as the timings of the CSP are very flexible and

does not require any transport and it also saves time.

3. No problem of digital connectivity in Khopi village as the Mobile Communication

Tower was available just adjacent to the village temple which acted as a place of

business for CSP.

4. Enrolment was happening. In Khopi, 100% smart cards had been issued to all

households and in Lingnoor Kapashi it was at 55%.

5. They are hopeful of higher savings in future. In Khopi, transactions were happening

with FI server.

42

6. In Khopi village, overdraft was given in respect of two accounts and the amount was

Rs.110/-

7. The application for opening of no frills accounts was simple. It was in the local

language (Marathi) for both the banks.

8. While application of Bank of Maharashtra (BOM) contained the details of minimum

overdraft amount of Rs.500 given to the no frills account holders.

9. No charges were collected from customers by CSP.

10. CSP of Khopi village had fixed place, days and time of business. Temple premises

was permitted by panchayat.

11. Despite low salary, CSPs said that they would continue their job as CSP.

12. NGO and Farmers Club are very active in Khopi village and they have recommended

the CSP for appointment. In Lingnoor Kapashi village, Corporate BC appointed the

CSP based on the recommendation of the Vice-President of the Village Panchayat.

13. Presidents of village panchayats appreciated the BC Model and suggested that

adequate salary be paid to CSP in time so as to ensure continuance of his services.

14. Also, President of Khopi panchayat suggested that the bank‟s agreement with CSP

should continue.

15. District Collector of Pune emphasised the need for convergence of financial

inclusion, UID and EBT for effective delivery and impact.

Negative Feedback

1. Transactions in Lingnoor Kapashi Village were not put through as the work of „On-

line‟ connectivity of CBS server with FI server was in progress. In Khopi village,

transactions were happening but it was very low and the details of transactions were

manually maintained at the branch in a Kachha Register. As on August 20, 2011, the

total deposits outstanding under no frills accounts was Rs.4,300 and cash

withdrawals amounted to Rs.390.

2. Except cash deposits and cash withdrawals, other banking services like, availing

small loans, MGNREGA payments, Govt payments, pensions, remittances,

insurance etc., were not extended by CSPs other those mentioned at para.6 (page

4).

3. CSPs did not have much knowledge about banking and hence, they were not in a

position to educate customers.

4. Application of CBI did not contain Overdraft facility of Rs.500 available to no frills

account holders.

43

5. In both the banks, FI server was not connected to the bank‟s CBS server and hence,

transaction details of BC / CSP customers were not captured in CBS.

6. CSP appointed by Corporate BC did not have bank‟s Identity Card.

7. Regarding appointment of CSP, CBI branch did not have any formal role play, but

BOM branch had a formal but limited role play to the extent of carrying out due

diligence but no greater say in the appointment.

8. ROs of both the banks did not know their CSPs appointed by their Corporate BC.

9. In Lingnoor Kapashi village, CSP did not have any fixed place of business. Neither

President of Panchayat nor TSP / BC could help in this regard.

10. Both the villages witnessed delay in receipt of smart cards from TSP.

11. Besides, ROs reported delay in receipt of HHD / POS machines from TSP for other

villages.

12. In Khopi village, Corporate BC / CSP were not aware of cash limits given by the bank

to CSP. Hence, BC was giving cash to CSP which put strain on his working fund.

13. In Khopi village, Corporate BC provided Rs.2,000 as cash limit to CSP which was

considered very low and in Lingnoor Kapashi, bank had provided Rs.5,000 as cash

limit to CSP. It was felt that this low cash limit also one of the contributing factors for

low volume of transactions.

14. CBI branch has not extended cash limit of Rs.10,000 to CSP of Khopi village as

instructed by its Central Office.

15. Remuneration to CSP was very low and it was directly paid by the Corporate BC. In

Khopi village, CSP received Rs.3,500 only in the past five months and in Lingnoor

Kapashi, CSP received just Rs.500 per month and RO, Kolhapur reported that three

CSP had already quit the job due to low remuneration.

16. MGNREGA and UID have not been implemented in these villages.

17. Government payments were not routed through the no frills accounts in the these

villages.

44

Chapter VIII

Five Important Issues

The Major Findings of the study which are presented above give rise to the following five

important issues.

1.Ownership of Road Map

At the State Level, it is SLBC. At the National Level, it is RBI because it is as per the

instructions of RBI that SLBC has prepared the Road Map and submitted to RBI with the due

approval of the SLBC forum consisting of all the banks in the State functioning under the

Chairmanship of the CMD of the Lead Bank of the State. If we go into further details, it is the

Lead Bank at the District Level which has prepared the Road Map for the District and

submitted the same to SLBC with the due approval of the DCC, consisting of all the banks in

the district, functioning under the Chairmanship of the District Collector.

2. Monitoring of the progress under Road Map

At the national level, RBI, Central Office and at the State Level, RBI, Regional Office are

monitoring the progress under Road Map through Quarterly Progress Report submitted by

SLBC Convenors. The Quarterly Progress report for the entire country is available with the

RBI, Central Office, State-wise and Bank-wise but NOT village-wise.

The moot question here is, on what basis, the SLBC prepares and submits the quarterly

report. As per RBI instructions, LDM should convene the Meeting of Sub-Committee of DCC

at monthly intervals which either is not happening or not effective as he does not receive any

data / reports, neither from controllers nor from branches. In turn, he is also not submitting

any report to SLBC. The Controlling Offices of banks do not have any system to monitor

progress of financial inclusion village-wise and hence, they are not in a position to report

anything to LDM / HO / SLBC.

Thus, SLBC does not have any village-wise data regarding the progress of financial

inclusion. Thus, village-wise progress reports are not available in SLBC Website nor in

SLBC Agenda Papers. The village-wise progress report should include, details of BC

appointment, contact numbers, TSP, total number of households, number of unbanked

households, enrolment, issue of smart cards, transaction details of volume and value etc., In

the absence of valid data, the SLBC reports the number of villages covered under the

branch, BC and other models.

The corollary question is how to ensure that Lead Bank at District Level and State Level

receives village-wise progress report so that effective reporting takes place, financial

inclusion programme is implemented realistically in the identified villages under Road Map

and the target is achieved before March 31, 2012?

45

It appears banks are driving the financial inclusion activities by signing agreement with the

Corporate BC and then leave everything to them. This „Laid Back Attitude” of banks should

change. They should involve their branches and ROs for effective implementation of

financial inclusion, capacity building of CSPs, training in financial education and monitoring.

3.Basis of determining the coverage of village under financial inclusion

(i) Is it signing of agreement by bank with Corporate BC for covering a specified number of

villages or appointment of CSP by BC?

(ii) Is it number of enrolments made or number of smart cards provided?

(iii) At least, smart cards should be provided to all unbanked households in the village, if not

to all the households.

These questions arise, because in many villages either CSPs are not appointed; if

appointed, they have not been given adequate training; if trained, machines (HHDs) are not

provided; connectivity was not available; time consuming data entry and operational

difficulties leading to delay in enrolment, issue of smart cards, etc.,

Even after the issue of smart cards, transactions are not taking place as the FI Server is not

connected to the bank‟s CBS server rendering all the smart cards dormant, not only no frills

accounts become dormant but the CSPs also. Thus, CSPs are not getting adequate

earnings which are again based on transactions. Thus, CSPs become inactive and

customers in the village are deprived of banking services. The dissatisfied CSPs made

Dharna before the Regional Office of Bank of Maharashtra, Kolhapur demanding adequate

and timely pay and infrastructure.

4. Role of State Government

The District Collector, as Chairman of DCC, feels that implementation of financial inclusion is

the responsibility of banks. His job is to review the progress and advice banks to expedite.

But serious efforts are not made to provide support to banks, both financial and otherwise,

for successful implementation of financial inclusion as the benefits will go to the poor and

disadvantage sections of society who will be the direct beneficiaries of Govt assistance and

welfare schemes.

5.Media Visibility

So far, the role of media is limited to the extent of publishing news items given by banks. But

what happens, if media becomes active and starts probing the claim of financial inclusion in

villages identified under Road Map. If the banks‟ claim of 100% financial inclusion in these

villages is proved wrong, the reputation of all the stake holders responsible for

implementation will suffer. This will not be in the interest of the healthy functioning of banking

sector.

46

Chapter IX

Suggestions

1. The Head Office of banks may consolidate its policies and instructions on

implementation of financial inclusion, outsourcing especially the Service Level

Agreements (SLAs) entered with TSP / Corporate BC and bring out a booklet for

information and necessary action to all its branches / controlling offices. This booklet

should clearly define the role and responsibilities of TSP / Corporate BC, the role of

branch and controlling offices, the monitoring and reporting mechanism envisaged,

the remuneration to CSP etc,. This booklet should be updated every year. This

booklet may be placed in their website / sent by email to branches / controlling offices

with a specific instruction to maintain a print copy for ready reference and make

available to officials from RBI / GOI.

2. In this financial inclusion programme, the reputation of banks is the greatest risk.

Hence, a proper system of issuing identity cards to BC / its controlling functionaries

and to CSPs should be put in place. As far as possible, a fixed place of business may

be provided to CSP so that customers in the village can approach him with certainty

for availing banking services. Banks may also think of issuing a common uniform,

bank‟s name board to CSP for easy identification and reinforcing the public

confidence.

3. The banks may also incorporate minimum assured monthly earnings to CSPs in their

SLA so that the Corporate BC pays focussed attention to equip CSP for alround

business development which would be a win-win situation for banks, BC / CSP and

customers. This critical information should be known to branches / controlling offices

also.

4. Keeping in view, the reputational risk, Head Office may actively involve their

branches and controlling offices in the process of selection of CSPs, monitoring,

recommending action against inactive / erring CSPs to ensure good quality CSPs for

safeguarding the bank‟s reputation.

5. Training in financial education to CSPs is a must. This task should not be left to the

Corporate BC alone. The Head Office may instruct branches / controlling offices to

involve them in the training of CSPs, imparting financial education and capacity

building.

6. At present, village-wise reporting of progress in the implementation of financial

inclusion in villages under Road Map is not happening. A proper system may be

47

developed to ensure proper reporting to SLBC at the State Level and DCC at the

District Level.

7. All the SLBC Convenors may be asked to conduct the sensitisation workshop for

District Magistrates (District Collectors) on the financial inclusion and lead bank

scheme immediately as suggested by the High Power Committee on Lead Bank

Scheme so as to create necessary infrastructure and provide support facilities to

banks.

8. A Joint Publicity Campaign on financial inclusion may be undertaken by banks and

State Government together in every district to make the Financial Inclusion

Campaign a Mass Campaign of the people and NABARD can involve in this mass

campaign and release financial assistance from its financial inclusion funds.

9. There are two important suggestions for the RBI also.

i)An urgent meeting of banks, TSPs, Corporate BCs and Government especially

State Governments may be convened by RBI to sort out problems relating to delay in

the supply of POS / HHDs, smart cards, logistics of cash management, on-line

connectivity of FI server with the banks‟ CBS, village-wise reporting to RBI / SLBC

and also for ensuring a fair minimum earnings to CSPs.

ii)A Master Circular on Financial Inclusion may be brought out consolidating all

instructions issued since January 2006 which may include, relaxed KYC Norms,

technological specifications, guidelines for outsourcing, FLCC, RSETI etc.,

10. Lastly, but not the least, the FI server should immediately be connected to the bank‟s

CBS server for on-line transactions and effective MIS. This will be the starting point in

ensuring active no-frills accounts.

48

Chapter - X

The Last Mile Walk of Govt of Maharashtra

Before we conclude, news items of the Last Mile Walk of Govt of Maharashtra are as under:

i) Sex workers in Maharashtra have been provided Ration Cards for by relaxing the Address

Proof Norm and the cards will include names of woman and her children. On October 3,

2011, Govt of Maharashtra distributed 50 ration cards to sex workers in red-light district of

Kamathipura, Mumbai.

ii) Similarly, on October 25, 2011 District Administration, Pune distributed ration cards to 91

homeless families of the Pardhi community belonging to Denotified Tribes who were living

under the Road Bridge in Pune.

Can we think of such path breaking and unconventional ways of financial inclusion on the

part of the bankers to reach the last mile and deliver the banking services to the homeless

people ?

49

Chapter – XI

Conclusion

Banks which have opted for Corporate BC model and banks which opted for non-corporate

BC model can mutually share their positive experience for mutual enrichment and fine tune

their systems and procedures for achieving a realistic financial inclusion.

To conclude, it is now time for banks to act seriously, implement financial inclusion

realistically and then report the progress accordingly.

Date post:	22-Oct-2014
Category:	Documents
Upload:	ashish-tiwari
View:	47 times
Download:	3 times

Full Report

Documents