An

INTERNSHIP REPORT

ON

DEVELOPMENT THROUGH

FINANCIAL INCLUSION

Submitted to-

Faculty of Management Studies

Banaras Hindu University

Submitted by -

Pushpanjali Roy

MBA (agribusiness) 3rd sem,

Roll no.- 09381RG024

1

FMS BHU

2

A C K N O W L E D G E M E N T

I convey my sincere gratitude to Prof.S.K.Singh(Head & Dean ) , Faculty of

management studies, B.H.U for providing me an opportunity to undergo this

summer internship project.

I would l ike to express my sincere thanks to Mr. Rajiv Saxena, Zonal Manager,

Bank Of India, Varanasi for giving me a chance to do my summer internship

project in BANK OF INDIA, VARANASI . It was his sincere permission due to

which I was able to perform such a challenging project.

I am highly obliged to Mr. Ram Dular, Branch manager, Bank of India, Phulpur

for providing me his valuable guidelines, support and for providing me an

opportunity to undertake this project. This project was a great opportunity for

me to get a f irsthand experience of professional culture that exists in an

organization, about the market conditions that exist and qualit ies required to

work under various conditions.

I would also l ike to thank al l the members of Phulpur branch for their support

and generous cooperation.

I can’t forget expressing my thanks to al l the respondents, because without

their help my project would have remained incomplete.

3

The organizational culture of BANK OF INDIA changes a person on philosophical,

psychological and analytical levels. I came out of BANK OF INDIA as a better

person because of the learning that I have gathered from these precious guides.

PUSHPANJALI ROY

MBA (AGRI-BUSINESS)

IIIrd Semester

FMS, BHU

4

TABLE OF CONTENTS

S.NO. PARTICULARS PAGE NO.

1. Acknowledgement I

2. Banking History 01

3. Introduction of Bank Of India 08

4. About the Project: Development Through Financial

Inclusion22

5. Objectives 31

6. Research Methodology 32

7. Data Analysis 57

8. Findings 70

9. Suggestions 73

10. Questionnaire 75

11. Bibliography 76

Banking sector in India5

Structure of the organised banking sector in India. Number of banks are in brackets.

6

Banking in India originated in the first decade of 18th century with The General Bank of India

coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are

now defunct. The oldest bank in existence in India is the State Bank of India being established as

"The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like

Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was

the most active trading port, mainly due to the trade of the British Empire, and due to which

banking activity took roots there and prospered. The first fully Indian owned bank was the

Allahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such as Punjab National

Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded

under private ownership. The Reserve Bank of India formally took on the responsibility of

regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve

Bank was nationalized and given broader powers.

Early history

At the end of late-18th century, there were hardly any bank in India in the modern sense of the

term. At the time of the American Civil War, a void was created as the supply of cotton to

Lancashire stopped from the Americas. Some banks were opened at that time which functioned

as entities to finance industry, including speculative trades in cotton. With large exposure to

speculative ventures, most of the banks opened in India during that period could not survive and

failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently,

banking in India remained the exclusive domain of Europeans for next several decades until the

beginning of the 20th century.

7

The Bank of Bengal, which later became the State Bank of India.

At the beginning of the 20th century, Indian economy was passing through a relative period of

stability. Around five decades have elapsed since the India's First war of Independence, and the

social, industrial and other infrastructure have developed. At that time there were very small

banks operated by Indians, and most of them were owned and operated by particular

communities. The banking in India was controlled and dominated by the presidency banks,

namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later on

merged to form the Imperial Bank of India, and Imperial Bank of India, upon India's

independence, was renamed the State Bank of India. There were also some exchange banks, as

also a number of Indian joint stock banks. All these banks operated in different segments of the

economy. The presidency banks were like the central banks and discharged most of the functions

of central banks. They were established under charters from the British East India Company. The

exchange banks, mostly owned by the Europeans, concentrated on financing of foreign trade.

Indian joint stock banks were generally under capitalized and lacked the experience and maturity

to compete with the presidency banks, and the exchange banks. There was potential for many

new banks as the economy was growing. Lord Curzon had observed then in the context of Indian

banking: "In respect of banking it seems we are behind the times. We are like some old fashioned

sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

Under these circumstances, many Indians came forward to set up banks, and many banks were

set up at that time, a number of which have survived to the present such as Bank of India and

Corporation Bank, Indian Bank, Bank of Baroda, and Canara Bank.

During the Wars

The period during the First World War (1914-1918) through the end of the Second World War

(1939-1945), and two years thereafter until the independence of India were challenging for the

Indian banking. The years of the First World War were turbulent, and it took toll of many banks

which simply collapsed despite the Indian economy gaining indirect boost due to war-related

8

economic activities. At least 94 banks in India failed during the years 1913 to 1918 as indicated

in the following table:

YearsNumber of banks

that failed

Authorised capital

(Rs. Lakhs)

Paid-up Capital

(Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1

Post-independence

The partition of India in 1947 had adversely impacted the economies of Punjab and West Bengal,

and banking activities had remained paralyzed for months. India's independence marked the end

of a regime of the Laissez-faire for the Indian banking. The Government of India initiated

measures to play an active role in the economic life of the nation, and the Industrial Policy

Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into

greater involvement of the state in different segments of the economy including banking and

finance. The major steps to regulate banking included:

In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,

and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India."

9

The Banking Regulation Act also provided that no new bank or branch of an existing

bank may be opened without a licence from the RBI, and no two banks could have

common directors.

However, despite these provisions, control and regulations, banks in India except the State Bank

of India, continued to be owned and operated by private persons. This changed with the

nationalization of major banks in India on 19th July, 1969.

Nationalisation

By the 1960s, the Indian banking industry has become an important tool to facilitate the

development of the Indian economy. At the same time, it has emerged as a large employer, and a

debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-

then Prime Minister of India expressed the intention of the GOI in the annual conference of the

All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The

paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and

the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from

the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the

step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the

Parliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and it

received the presidential approval on 9th August, 1969.

A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated

reason for the nationalisation was to give the government more control of credit delivery. With

the second dose of nationalisation, the GOI controlled around 91% of the banking business of

India.After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to

the average growth rate of the Indian economy.

Liberalisation

In the early 1990s the then Narasimha Rao government embarked on a policy of liberalisation

and gave licences to a small number of private banks, which came to be known as New

10

Generation tech-savvy banks, which included banks such as UTI Bank(now re-named as Axis

Bank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This

move, along with the rapid growth in the economy of India, kickstarted the banking sector in

India, which has seen rapid growth with strong contribution from all the three sectors of banks,

namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights

which could exceed the present cap of 10%,at present it has gone up to 49% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used

to the 4-6-4 method (Borrow at 4%;Lend at 6%; Go home at 4) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this

led to the retail boom in India. People not just demanded more from their banks but also received

more.

11

Current situation

Currently (2007), banking in India is generally fairly mature in terms of supply, product range

and reach-even though reach in rural India still remains a challenge for the private sector and

foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to

have clean, strong and transparent balance sheets relative to other banks in comparable

economies in its region. The Reserve Bank of India is an autonomous body, with minimal

pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage

volatility but without any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in

its services sector-the demand for banking services, especially retail banking, mortgages and

investment services are expected to be strong. One may also expect M &As, takeovers, and asset

sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak

Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed

to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any

stake exceeding 5% in the private sector banks would need to be vetted by them.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is

with the Government of India holding a stake), 29 private banks (these do not have government

stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They

have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by

ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

12

INTRODUCTION OF BANK OF INDIA

HISTORY:-

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from

Mumbai. The Bank was under private ownership and control till July 1969 when it was

nationalised along with 13 other banks.

Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees,

the Bank has made a rapid growth over the years and blossomed into a mighty institution with a

strong national presence and sizable international operations. In business volume, the Bank

occupies a premier position among the nationalised banks.

The Bank has 2884 branches in India spread over all states/ union territories including 155

specialised branches. These branches are controlled through 48 Zonal Offices . There are 27

branches/ offices (including three representative offices) abroad.

The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions

Placement in February 2008. . Total number of shareholders as on 30/06/2008 is 2,29,000. 

While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of

introducing various innovative services and systems. Business has been conducted with the

13

successful blend of traditional values and ethics and the most modern infrastructure. The Bank

has been the first among the nationalised banks to establish a fully computerised branch and

ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a

Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in

1982, for evaluating/ rating its credit portfolio.

The Bank's association with the capital market goes back to 1921 when it entered into an

agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an

association that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd.

to extend depository services to the stock broking community. Bank of India was the first Indian

Bank to open a branch outside the country, at London, in 1946, and also the first to open a

branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 27

branches (including three representative offices) at key banking and financial centres viz.

London, Newyork, Paris, Tokyo, Hong-Kong, and Singapore. The international business

accounts for around 20.10% of Bank's total business.

Organization

Name of the Bank - Bank Of India

Established in Sept. 07, 1906

Head office - MUMBAI

ZONAL OFFICES - 48

BRANCHES - 2883

EXTENTION COUNTER - 91

TOTAL OUTLETS - 2974

14

VISION AND MISSION

VISION-

“To become the bank of choice for corporate, medium business and up market retail customers

and developmental banking for small business, mass market and rural markets.”

MISSION-

“To provide superior, proactive banking service to niche markets globally, while providing cost

effective, responsive service to others in our role as a development bank, and so doing, meet the

requirements of our stake holders.”

15

FINANCIALS

Annual results in brief (Rs crore)

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sales 12,355.22 9,180.33 7,028.70 6,031.52 5,795.90

Operating profit 8,693.73 5,709.77 4,128.00 3,099.86 3,153.37

Interest 8,125.95 5,739.86 4,396.72 3,794.64 3,594.47

Gross profit 3,701.21 2,394.99 1,701.22 1,460.36 2,241.87

EPS (Rs) 38.21 23.01 14.37 6.97 20.66

Annual results in details  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Other income 2,116.93 1,562.95 1,184.38 1,155.80 1,791.99

Stock adjustment - - - - -

Raw material - - - - -

Power and fuel - - - - -

Employee expenses 1,657.01 1,614.00 1,328.13 1,263.21 1,172.43

Excise - - - - -

Admin and selling expenses - - - - -Research and development expenses

- - - - -

Expenses capitalised - - - - -

Other expenses 987.98 994.43 787.01 669.11 579.12

Provisions made 1,016.50 862.13 785.56 999.34 890.98

Depreciation - - - - -

Taxation 675.31 409.69 214.22 120.97 342.57

Net profit / loss 2,009.40 1,123.17 701.44 340.05 1,008.32

Extra ordinary item - - - - -

Prior year adjustments - - - - -

Equity capital 525.91 488.14 488.14 488.14 488.14

Equity dividend rate - - - - -

Agg.of non-prom. shares (Lacs)

1865.95 1488.22 1488.20 1488.20 1488.19

Agg.of non promotoHolding (%) 35.53 30.53 30.53 30.53 30.53

OPM (%) 70.36 62.20 58.73 51.39 54.41

GPM (%) 25.57 22.29 20.71 20.32 29.55

NPM (%) 13.88 10.45 8.54 4.73 13.29

Balance sheet  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

16

Sources of funds

Owner's fund

Equity share capital 488.14 488.14 488.14 488.14 488.14

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 5,257.75 4,338.39 3,811.12 3,347.20 2,869.07

Loan funds

Secured loans - - - - -

Unsecured loans 1,19,881.74 93,932.03 78,821.44 71,003.12 64,453.60

Total 1,25,627.63 98,758.57 83,120.70 74,838.46 67,810.81

Uses of funds

Fixed assets

Gross block 1,733.50 1,674.00 1,575.00 1,459.92 1,330.77

Less : revaluation reserve 149.48 157.35 165.61 174.32 183.57

Less : accumulated depreciation 955.61 874.71 783.41 687.19 603.08

Net block 628.40 641.94 625.97 598.40 544.12

Capital work-in-progress 11.41 10.68 22.59 25.86 9.01

Investments 35,492.76 31,781.75 28,202.62 27,162.89 24,434.84

Net current assets

Current assets, loans & advances 3,013.50 3,062.83 2,422.55 2,484.67 1,824.09

Less : current liabilities & provisions

9,239.05 7,464.44 5,729.92 5,326.43 4,605.47

Total net current assets -6,225.55 -4,401.62 -3,307.37 -2,841.75 -2,781.38

Miscellaneous expenses not written

- - - - -

Total 29,907.03 28,032.75 25,543.81 24,945.40 22,206.60

Notes:

Book value of unquoted investments

- - - - -

Market value of quoted investments

- - - - -

Contingent liabilities 71,927.74 69,930.86 68,571.04 56,888.90 42,575.88

Number of equity sharesoutstanding (Lacs)

4874.02 4874.00 4874.00 4873.99 4873.95

Share holding pattern as on : 31/03/2008 31/12/2007 30/09/2007

Face value 10.00 10.00 10.00

No. Of Shares % Holding No. Of Shares % Holding No. Of Shares % Holding

17

Promoter's holding

Indian Promoters 338580000 64.47 338580000 69.47 338580000 69.47

Sub total 338580000 64.47 338580000 69.47 338580000 69.47

Non promoter's holding

Institutional investors

Banks Fin. Inst. and Insurance 47589339 9.06 17840492 3.66 17601063 3.61

FII's 79308142 15.10 79735627 16.36 80117925 16.44

Sub total 141443767 26.93 106337034 21.82 106234400 21.80

Other investors

Private Corporate Bodies 6638992 1.26 4964337 1.02 4561636 0.94

NRI's/OCB's/Foreign Others 3547984 0.68 3444147 0.71 3620469 0.74

Govt 750 - 750 - 750 -

Sub total 10187726 1.94 8409234 1.73 8182855 1.68

General public 34963307 6.66 34075932 6.99 34404645 7.06

Grand total 525174800 100.00 487402200 100.00 487401900 100.00

Cash flow

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Profit before tax 1,532.86 915.65 461.02 1,406.96 1,160.18

Net cash flow-operating activity 5,111.96 3,380.52 -777.66 1,588.67 291.66

Net cash used in investing activity -67.53 -99.63 -107.52 -141.05 -81.10

Net cash used in fin. activity 915.12 638.84 -146.52 112.38 182.16

Net inc/dec in cash and equivalent 5,959.56 3,919.73 -1,031.70 1,560.00 392.72

Cash and equivalent begin of year 11,445.98 7,526.25 8,557.95 6,997.95 6,605.23

PERFORMANCE HIGHLIGHTS- FOR THE YEAR 08-09 (RS. IN CRORES)

MAR.2008 MAR.2009 CHANGE

Net Profit 2009.40 3007 INC.49.68 %

Gross NPA% 1.68 1.71 INC 0.03 %

Net NPA 0.52 0.44 DEC 0.08 %

18

Total business 264805 334440 INC 26.30 %

Total deposits 150012 189708 INC 26.46 %

Gross credit 114793 144732 INC 26.08 %

Earnings per share 40.83 57.26 INC 40.24 %

PERFORMANCE HIGHLIGHTS 31 ST MARCH 2009

Bank now has presence at 28 locations in 15 countries across 4 continents with the setting

up 2 outfits- a branch at Glasgow (UK) & representative office in Dubai.

118 new branches have been opened & 20 extension counters converted to branch, thus

increasing domestic outlets to 3091.

62% of branches are in rural and semi urban areas, thus providing a crucial advantage for

intrusive financial inclusion happening throughout the country.

Priority sector advances stood at 47% of net adjusted credit and agriculture financing

grew by 24% despite the huge reduction in outstanding on account of loan waiver.

Bank’s assistance to SME sector recorded growth of 25% and educational loan portfolio

grew by robust 31%.

Bank has achieved 100% connectivity for all branches under Core Banking Solution

Network.

19

Bank’s joint venture insurance company- Star Union Dai Ichi Life Insurance Company

Ltd has become fully operational.

Solar power is extensively used in remote branches making technology initiative as

“Green Projects”.

Prestigious awards received by the Bank:

India’s best PSU bank by NDTV business leadership awards 2008.

No.1 public sector bank by Business World- PWC survey.

Ranked no. 1 by Business Today- KPMG survey.

SWOT ANALYSIS

STRENGTH-

Government ownership of the bank gives cutting edge over private sector bank.

Our status as one of the large public sector banks and major player in the industry plays

important role in the marketing of deposit products.

Wide network of branches gives us platform to reach wide spectrum of customers.

WEAKNESS-

20

The Bank’s operating costs are high as compared to the peer banks.

Productivity per employee is low as compared to the peer banks.

Marketing of new products lack required vigor from staff.

Average cost of domestic deposit is higher as compared to the peer banks.

OPPURTINITIES-

• Diversified business opportunities provide good scope for expansion.

• Technological innovations have expanded the horizon of banking services and are

presenting numerous opportunities.

• Liberalized economy has prescribed business potential for the banking sector and retail is

one such area.

THREATS-

• Competition is eating in to our market share. Other banks have professional approach

we should also learn it and use it to development of business.

• Customer loyalty cannot be taken for granted. We should develop best relationship with

our customers and CRM at the branches.

• Internet banking will make the branch network redundant in the urban and metropolitan

centers

21

PRODUCT AND SERVICES OF BANK OF INDIA

CROP FINANCING

FARM MACHANISATION IMPLIMENTS AND EQUIPMENTS

FINANCING FOR DRAUGHT ANIMALS AND CARTS

LAND DEVELOPMENT

POULTRY DEVELOPMENT

PURCHASE OF LAND FOR AGRICULTURE PUPOSE

RURAL GODOWNS SCHEME

BOI SATABDI KRISHI VIKAS CARD

22

KISAN CREDIT CARD

KISAN SAMADHAN CARD

STAR BHOOMIHIN CARD

STAR HOME LOAN

STAR EDUCATION LOAN

STAR PERSONAL LOAN/STAR AUTO FIN

STAR HOLIDAY LOAN

STAR IPO

STAR MORTGAGE LOAN

STAR SECURITIES ADVANCE SCHEME

PRODUCTS OF BANK OF INDIA

The basic function of bank is to accept deposits from the public for the purpose of lending and

investments. Bank has to pay interests on the deposits, which is their expenditure, and they earn

interest on their lending & investments, which is their income.

The difference between income and expenditure is the profit of the bank. More precisely,

differences between cost of funds and return on advances is called “spread” which is getting

shrunken day by day due to stiff competition amongst the bankers to increase their advances by

offering lower rates of interests.

DEPOSIT SCHEMES:

23

The main deposit schemes are:

Saving bank accounts: Convenience of savings account and returns of fixed deposit, star

savings plus offers a host of benefits in a minimum balance of just Rs. 25,000.

Current deposit account: A high –powered current account. Automatically transfers

excess amount of minimum stipulated balance to fixed deposits ensuring higher returns

from idle funds.

Recurring deposits: The deposits are meant for regular monthly savings.

Term deposit

FDR/SDR,MIC/QIC,DBD/CASH CERTIFICATES,BOI Saving plus, BOI Floating Rate

Deposits, Schemes for Senior Citizens, BOI C/D Plus A/c and Special Deposit Product

for High Value Deposit Customers.

OTHER DEPOSITS:

BOI Floating Rate Deposit Scheme: For high net worth individuals, firms ,companies,

societies ,trusts and other corporate bodies, deposit of minimum amount Rs.5 lakhs for a

tenure of 91 days to 5 years will earn variable interests.

Savings plus and CD plus accounts.

Star savings silver, Gold and diamond accounts.

Star Gold and diamond current account scheme.

Star Diamond plus account :.High value customers get personal relationship manager,

free ATM cum Debit Card, Standing instructions, internet banking, ATM Banking Door

Step Banking, Instant Credit of outstanding cheques.

Super savings plus and super CD Plus scheme.

24

These schemes cater to the needs of all segments of society.

There are different new products which are as follows:

DEPOSIT SCHEMES FOR SENIOR CITIZENS-

Senior citizens are those who has completed the age of 60 years of age There rate of interest is

0.50% additional value over the applicable rate for 6 months deposits and 1 % more for deposits

of one year and above. Nomination facility is available.

BOI SAVINGS PLUS SCHEME-

This is a combination of short term deposit schemes and saving bank scheme with very attractive

features. The facility is available at fully computerized branches.

BOI CURRENT DEPOSIT PLUS ACCOUNT-

The product is mix of current deposit accounts and short deposit

Accounts. The account is eligible for corporate proprietorships and partnership etc. maintaining

minimum average balance of Rs.2 lakhs.

BASIC SAVINGS BANK ACCOUNT-

The product is offered to the adult individual who wants to open account for limited transaction

purpose and is not filling the income tax return. The acconts are opened as per the RBI

guidelines.

SHATABDI DEPOSIT SCHEME-

The scheme is launched in order to encourage long term savings with assurances of complete

safety high rate of returns.

CARD PRODUCTS-

25

GOLD INTERNATIONAL CREDIT CARD: Customers having savings, current and overdraft

accounts can use at all Bank of India ATMs, ATMs under cash tree network, BANCS and all

ATMs that display the logo world wide.

CREDIT CARDS:

INDIA CARD- A value for money- card that offers tremendous benefits at minimal fees

to salaried and self employed individuals. All card holders are covered for air and all

other accidents apart from regular privileges.

GOLD CARD VISA- For salaried and self employed customers with an annual income

of Rs.1,50,000 and above Visa Gold Card holders are covered for up to Rs 8 lakhs in case

of air accidents and for Rs.4 lakhs in all other cases apart from regular privileges.

GOLD INTERNATIONAL VISA- Accepted at all Visa locations anywhere in the world

for cash withdrawls at over 8 lakhs ATMs or for swiping at any of the 4 lakhs in all other

cases apart from regular privileges.

26

DEVELOPMENT THROUGH FINANCIAL INCLUSION

INTRODUCTION

"If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value conscious consumers, a whole world of opportunity will open up.”

- C.K. PrahaladManagement guru

Financial Inclusion in broad terms, can be defined as the inclusion of vast segments of disadvantaged and low income groups of the society under the services of the banking sector, thereby providing them the privilege of banking services at an affordable cost. World over, recognizing the importance of inclusive growth, there are efforts towards making the financial system more inclusive. In India, the Committee on Financial inclusion, chair manned by Dr. C. Rangarajan, has suggested a National Mission on Financial inclusion and observed that financial inclusion must be taken up in a mission mode. Getting connected with the banking system would enable people to avail a range of transaction and payment services, access to affordable credit, insurance and safe savings products. It has been noticed that people without bank accounts are often the most vulnerable and impoverished. Not having a bank account excludes these people from simple credit products also, making them more likely to turn to predatory or even illegal lenders leaving them in perpetual debt.

Some facts about India's banking infrastructure:

India has the world's most extensive banking infrastructure.

There are about 60,000 retail credit outlets of the formal banking sector comprising 12,000 branches of district level cooperative banks, over 14,000 branches of Regional Rural Banks and over 30,000 rural and semi-urban branches of commercial banks, in addition to 112,000 cooperative credit societies at the village level.

27

There is at least one retail credit outlet on an average for about 5,600 rural people or every 1,100 households, which can be expected to meet the financial needs of the entire rural population.

The Real situation:

According to NSSO (2008), 45.9 million households (51.4% of 89.3 million) have yet not accessed credit from institutional or from non institutional sources.

As on June 2002, 22.9 million households (58.5%) accessed credit amounting to Rs 47,820 crore (42.9%) from non institutional sources. The amount per household worked out to be Rs 20,882. Interest rate charged by non institutional agencies was 28.58% per annum as against 12.48% charged by institutional agencies.

Only 24% of the rural households with assets of less than Rs 15,000 had accessed credit from institutional credit agencies.

As on 2007, Savings Accounts and Credit accounts per 1000 population in rural areas were only 26 and 65 respectively.

As on June 2007, 1 branch catered to the needs of 16,000 population.

A vast segment of India's population exists on the margins of India's financial systems. Whilst the per-capita savings of this class may not be very high their sheer number means that taken together their savings are of a considerable amount. If their entry in the formal financial sector is made easier these savings can be channelized for the formal economy. Also savings cum risk products that are their primary need can be structured for them once they are part of the formal banking system.

28

Various Aspects of Financial Inclusion:

Financial Inclusion: Methodology

29

FINANCIAL INCLUSION

SAVINGS

MICRO INSURANCE

PAYMENTS & REMITTANCES

AFFORDABLE CREDIT

FINANCIAL LITERACY & CREDIT

COUNSELLING

BANK ACCOUNTS

1. Enrolment ProcessData Collection SystemDemographic DetailsBiometric Details etc.

2. Issuance ofBiometric Enabled

Multi-Function CardDiverse points of usage

Hand-held devices

3. Financial Transactions through Field Devices Single Device supports multiple application

4. Transaction data loading to Integrated Back-end system & then to CBS

30

Challenges in financial inclusion:

a. From Demand Side

i. Lack of awareness about financial services and productsii. Limited literacy especially financial literacy of the populace.iii. Social exclusion.iv. Many generic financial products are unsuitable for the poor.v. Lack of adequate efforts to design products suitable to their needs.vi. Delay in dispension of credit.vii. Lack of empathy among the functionaries.viii. Lack of transparency in charges.ix. Burdensome terms and conditions as perceived by users.

b. From Supply side

i. Heavy transaction cost ab-initioii. Uncertainty of potential business in the space.iii. Lack of robust technology.iv. Enormity of members- large number of people to be serviced.

Opportunities in Financial Inclusion

1. Major chunk of population based in rural areas whose income level is quite low. Due to regional disparities in economic development, there is large migration in labour force to far off places, leaving behind their dependents at their village home.

For remittance services, the senders have to depend mainly on informal sector and they have to pay heavy commission for this.

2. Income level of rural mass or urban poor increases, demand for goods and services produced by manufacturing services sector will also increase. This will put demand on the banks for credit dispension for acquisition of the goods and services produced by the expanding manufacturing and services sector.

31

3. Experiences in several other countries like Bangladesh, Srilanka etc. and SHG/JLG experiment in India has proved that “Small is bankable”.

Large number of people coming to the banking fold will provide a banking opportunity on sustained basis.

4. Government of India has implemented NREGA programme throughout the country ensuring minimum 100 days employment in a year. GOI or state governments desire use of bank’s delivery channels for the benefit of the beneficiaries. This will bring a good float fund and/or distribution commission.

5. Government has planned for huge social sector investment to cover the vast majority of people who may not be able to afford education, skill development of their own, primary medical facilities etc. These investments to be routed through banking system.

6. Due to large gap in the supply side of food items, the Government of India desires the growth to take place in agriculture which is now being termed as another green revolution to take care of food security of growing population of the country.

Calls for credit linkage in a big way to the farmers and others who are/will be engaged in production, collection, preservation, processing and distribution of food items. So, demand for credit will certainly increase in a big way.

7. Higher growth in agriculture and rural areas coupled with demographic dividend (working age group of 15-65) will lead to rise in savings level for financing the increasing level of investments.

Financial Inclusion and Development:

Financial inclusion refers to a process that ensures the ease of access, availability and usage of the formal financial system for all members of an economy. An inclusive financial system has several merits.

It facilitates efficient allocation of productive resources and thus can potentially reduce the cost of capital.

In addition, access to appropriate financial services can significantly improve the day-to-day management of finances.

An inclusive financial system can help in reducing the growth of informal sources of credit (such as money lenders), which are often found to be exploitative.

Thus, an all-inclusive financial system enhances efficiency and welfare by providing avenues for secure and safe saving practices and by facilitating a whole range of efficient financial services.The importance of an inclusive financial system is widely recognized in the policy circle and recently financial inclusion has become a policy priority in many countries. Initiatives for financial inclusion have come from the financial regulators, the governments and the banking industry. Legislative measures have been initiated in some countries.

32

For example, in the United States, the Community Reinvestment Act (1997) requires banksto offer credit throughout their entire area of operation and prohibits them from targeting only the rich neighbourhoods. In France, the law on exclusion (1998) emphasises an individual’s right to have a bank account. In the United Kingdom, a ‘Financial Inclusion Task Force’ was constituted by the government in 2005 in order to monitor the development of financial inclusion.

The banking sector has taken a lead role in promoting financial inclusion. In India, the Reserve Bank of India (RBI) has initiated several measures to achieve

greater financial inclusion, such as facilitating ‘no-frills’ accounts and “General Credit Cards” for low deposit and credit.

The German Bankers’ Association introduced a voluntary code in 1996 providing for an ‘everyman’ current banking account that facilitates basic banking transactions.

In South Africa, a low cost bank account called ‘Mzansi’ was launched for financially excluded people in 2004 by the South African Banking Association.

Alternate financial institutions such as micro-finance institutions and Self-Help Groups have also been promoted in some countries in order to reach financial services to the excluded.

A Government Committee on financial inclusion in India defines

financial inclusion as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as the weaker sections and low income groups at an affordable cost (Rangarajan Committee, 2008).

Of the issues raised in academic debates, an important question is whether economic development leads to an all-inclusive financial system. It has been observed that even ‘well-developed’ financial systems such as those in the US and the UK have not succeeded to be ‘all-inclusive’ and certain segments of the population remain outside the formal financial systems.Another issue of interest is whether low level of financial inclusion is associated with high income inequality relationship between financial inclusion and development.

Index of Financial Inclusion (IFI):

The index of financial inclusion is a measure of inclusiveness of the financial sector of a country. It is constructed as a multidimensional index that captures information on various aspects of financial inclusion such as banking penetration, availability of banking services and usage of the banking system. The IFI incorporates information on these dimensions in one single number

33

lying between 0 and 1, where 0 denotes complete financial exclusion and 1 indicates complete financial inclusion in an economy. Sarma (2008) has developed a method of computing the IFI for several dimensions of financial inclusion. Based on the availability of comparable data, Sarma (2008) has computed the values of IFI for 54 countries using the three basic dimensions of financial inclusion–accessibility, availability and usage of banking services.

Accessibility has been measured by the penetration of the banking system proxied by the number of bank A/C per 1000 population. Availability has been measured by the number of bank branches and number of ATMs per 100,000 people. The proxy used for the usage dimension is the volume of credit plus deposit relative to the GDP.

A comparison of IFI with human development index (HDI) shows that all the countrieswith high and medium IFI values belong to the group that is classified by the UNDP ascountries with high human development (HDI > 0.7). While having a low value of IFI, Indiaperforms better than its neighbours Pakistan and Bangladesh.

Income as measured by per capita GDP is an important factor in explaining the level of financial inclusion in a country.

Going beyond per capita GDP, we find that income inequality, adult literacy and urbanisation are also important factors.

Further, physical and electronic connectivity and information availability, indicated by road network, telephone and internet usage, also play positive role in enhancing financial inclusion.

These findings strengthen the assertion that financial exclusion is indeed a reflection of social exclusion, as countries having low GDP per capita, relatively higher levels of income inequality, low rates of literacy, low urbanization and poor connectivity seem to be less financially inclusive.

Undoubtedly, financial inclusion is one of the key elements that will give a thrust to financial deepening and thus economic growth, given that India has over 50 per cent of the population which has no access to banking. Financial deepening encompasses the increase in the stock of financial assets. From this perspective, financial deepening implies the ability of financial institutions in general, to effectively mobilise financial resources for development. This view accepts the fact that a financial system’s contribution to the economy depends on the quality and quantity of its services and the efficiency with which it performs them.

A high level of financial deepening is a necessary condition for accelerating growth in an economy. This is because of the central role of the financial system in mobilising savings and allocating the same for the development process.

The financial system serves as a catalyst to economic development through various institutional structures. The system vigorously seek out and attract the reservoir of savings and idle funds and allocate same to entrepreneurs, businesses, households and

34

government for investments projects and other purposes with a view of returns. This forms the basis for economic development.

The financial system play a key role in the mobilisation and allocation of savings for productive, use provide structures for monetary management, the basis for managing liquidity in the system.

It also assists in the reduction of risks faced by firms and businesses in their productive processes, improvement of portfolio diversification and the insulation of the economy from the vicissitudes of international economic changes. Additionally, the system provides linkages for the different sectors of the economy and encourages a high level of specialisation expertise and economies of scale.

35

Objective:To develop Financial Inclusion strategies for Bank of India in Phoolpur region of Varanasi Zone.

To study existing policy of Financial Inclusion of Bank of India. To study the implementation of Financial Inclusion by Bank of India with respect to

its existing policy. To formulate strategies for financial inclusion.

RESEARCH METHODOLOGY

Research design:

This study has been descriptive. Data was collected through survey with structured data collection method i.e. a formal questionnaire was prepared with questions in a prearranged format and sequence. In addition to this informal questions were also asked.

Research Technique:

Questionnaire survey: The questionnaire survey method was used for data collection to obtain data from the respondents.

Research Tool:

Interpretation is based on percentage analysis.

Sampling:

The sampling technique used in the study is convenient sampling.

Elements: Customers of the bank, bank personnel and the residents in Phoolpur region.

Sampling units: Phoolpur region of Varanasi district

Period of study conducted: May-June, 2010

Sampling size: 50

36

Secondary data

Secondary data means data that are already available i.e. they refer to the data which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he/she has to look into various sources from where he can obtain them. In this case s/he is certainly not confronted with the problems that are usually associated with the collection of original data.

Internet Books

Primary data

Primary data are those that are collected fresh and for the first time and this happen to be original in character. There are several methods of collecting primary data.

a) Observation method

b) Through Questionnaires

c) Interview method

d) Through schedules

Data Collection Stage:

Stage I:

Gathering the Information about Financial Inclusion Plan 2010-2013, of BOI.

Information about various aspects of FIP 2010-2013, of BOI was collected. The basic source was the literatures of BOI.

Stage-II:

Gathering the information about no. of no frill accounts opened in the month of FI 2010.

The personal interviews were conducted with customers about financial inclusion and their impact on their development.

37

Stage III:

Information Handling

The collected information is handed over to our project guide, then a detail discussion took place on the information and final decision is taken whether to further proceed on it or not.

Stage IV:

Data Analysis

The data collected about various prospect, is analyzed and a clear picture about the programmes and their impact is obtained and it is presented to the top management.

Scope:

The research was conducted only in the Phoolpur area of Varanasi district about various aspects of financial inclusion and the steps taken by BOI to implement it. So can’t be represented at national level but can be a helpful tool for further study in this area to students, researchers, academicians etc. This study will also help BOI, Phulpur branch to understand the extent of Financial Inclusion in the region.

Limitation:

Accuracy of data depends upon the ability & willingness of the respondents. Unwillingness of respondents to share information. As the primary data about customer satisfaction and customer relation’s is collected

through convenient sampling so the exact scenario could be different than the analysis show.

Respondents were reluctant to answer questions as they were not aware of the importance of the project and topic.

Availability of respondents for questioning was also limited due to summer season. In some cases education level of respondent was a limiting case.

38

Secondary data are available in the scattered manner due to which problem arises in summarization of data. Also the requirements of customers were very much scattered in terms of size & specifications.

AREA OF STUDY-

The study was conducted in Phulpur region of Varanasi district . It is approx 35 kilometres away from Varanasi. The villages under Bank of India, Phulpur are:

Khalispur, Mani, Vikrampur, Devji, Katawna, Bharauna, Parsara, Gauria, Hiramanpur, Nadoi and Gajokhar.

39

Bank of India’s existing policy for Financial Inclusion:

Bank of India has deepened its investment in several critical area required for inclusive growth in country strengthened its commitment to create conditions for the empowerment of the low income segment of the people. The bank is making modest efforts towards improvement of basic health, elementary education, access to financial services, strong civil society and environmental sustainability. Bank of India desires to be one of the largest partners in economic growth and development in days ahead.

Bank of India proposes to ensure fair, timely and adequate access to financial services, viz. savings, credit, payment/remittance facilities, and insurance services at an affordable cost in a fair and transparent manner to the excluded segment of the populace.

Bank of India has framed the Financial Inclusion Plan 2010-2013 through which it proposes to provide banking facilities in all villages having populations above 2000. The Bank aims to provide banking services to all households allotted to the Bank in villages having population above 2000 within the stipulated time frame. Providing banking services means- (1) no frill accounts with inbuilt overdraft facility of Rs 500, each in respect of all eligible

persons to be opened(2) each household to be provided with either a GCC/KCC facility based on the activity they

choose for livelihood.

Bank has designed special strategies regarding the implementation, reporting and monitoring of the FIP 2010-2013. Implementation strategy includes Appointment of Business Correspondents on a large scale. Biometric cards to be issued to existing no frill account holders as well. All services to be provided through Business correspondents (BCs). Credit decision or sanction will remain with the branches but BCs are to be used effectively

for other credit related activities like mobilization of applications, filling up of application forms, documentation, ensuring end use of funds and recovery etc.

Regarding the reporting of the FIP 2010-2013 to the Bank’s head office, Branches should open no frill account under scheme codes SB-104 or SB-105. Only these no frill accounts are to be reported by the zones. Bank will be switching over to generation of all MIS related to FIP, very soon.

Regarding monitoring the FIP 2010-2013, quantity and quality of business mobilized through BCs are to be monitored closely.

40

Bank of India’s FI initiatives:

Opening of no frill account and simpler KYC norms.

Branch and ATM expansion

Scaling up of IT initiatives

-smart cards for opening bank account with biometric identification will help the customers get banking services near their doorstep.

-link to mobile hand held electronic devices for banking transactions with due consideration of technology, security standards and customer protection.

Customer acquisition and servicing -through the branch

-through business correspondents

Product development: easier credit facilities through KCC/GCC/OD in SB accounts.

Capacity building through RSETI

Financial literacy and credit counseling (ABHAY)

QUALITATIVE ASPECTS OF FINANCIAL INCLUSION PLAN:

i. Technological Status:All the BOI branches across the country are in CBS. Bank has 5 RRBs sponsored by it. All these RRBs are also going to be on CBS system by September 2011.

41

ii. Road map for provision of banking facilities –bank envisages to provide banking services to all villages within its command area by the year March, 2013.

Services will be provided through our branches and business correspondents to be engaged for the purpose as per RBI guidelines.

Out of 28,929 service area villages, both in lead and non-lead districts across the country, it is being proposed to extend banking services in 6,936 villages by March,2011 where the population exceeds 2000 per village.

It will be rolled out to additional 11,023 villages by March,2012 and finally to remaining 10,970 service area villages by March, 2013.

Facilities will be provided through our existing rural/semi urban branch network of 1268 rural and 647 semi urban branches across the country and also engagement of Business Correspondent sub agents.

iii. Information and Communication Technology (ICT) based solution-

Bank has already implemented ICT based financial inclusion solution to offer basic banking services at doorsteps of villagers at selected villages attached to the bank’s few identified rural/semi urban branches using biometric smart cards based solution utilizing the service of field BC.

iv. Extensive outreach through BC model- Bank proposes to engage the services of approximately 15,000 BCs/BFs/sub

agents for the purpose Already engaged the services of 530 BCs/BFs in different geographical locations. BCs will be imparted elementary training of banking operations by the bank.

Their banking skills will be upgraded/reoriented through capsule programmes/workshops etc. apart from financial products knowledge.

A detail “Policy on engagement of Business Correspondents” is envisaged for the purpose.

v. Process of vendor selection

42

Bank to come out with a fresh RFP (request for proposal) for end to end solution for financial inclusion project shortly on its website.

Bank is looking for engaging multiple vendors for multiple locations with multiple technological solutions compatible to our core banking operations. The process is yet to be finalized.

Bank envisages to conclude awarding of contract to the vendors by end of May, 2010.

vi. Credit Linkage- Bank has factored an initial overdraft of Rs 500 in each no frill account as an

inbuilt facility. Beside this, bank has also considered GCC/KCC facility to the beneficiaries with

an average ticket size of Rs 15,000 per account based on number of households.

vii. Review and Monitoring mechanism: Zonal manager will be the chief monitoring authority for the progress of the plan

in the zone. He will be supported by a team of 1 senior officer of minimum to be designated

as Chief Manager (Rural Development) SM IV ( a vertical in Zonal offices who will be nodal officer for financial inclusion project for the zone), adequate number of field officers (1 field officer for a cluster of 5 branches) dedicated for the credit linkages under financial inclusion project and “channel management partners” (1 CMP for a cluster of 20 BCs/BFs/sub agents) on contract basis.

The CMPs so envisaged will be retired senior officers from the banking system and will coordinate, advice and assist bank’s officials and work as intermediaries between bank and BCs/BFs/sub agents.

Proper MIS developed to capture data in respect of number and names of villages covered, number of beneficiaries provided with smartcards/biometric access/ mobile phones, number of persons receiving government payments through EBT, level of credit dispension, recovery, transactions, savings etc. on periodical basis.

MIS will be used for effective monitoring, undertaking midterm correction, if required, for achievement of planned target.

Distinctive feature of MIS in FIP is that it will be upstream where required reports will be generated at the level of monitoring and controlling authorities.

43

viii. Integration of FIP with the business plan:

Against an expected outstanding level of Rs 14,000 crores as on 31/03/2010 in respect of direct agriculture finance, minimum 25% growth is desired by the Bank.

With the integration of FI business plan, Bank is confident of enhancing its business size commensurate to its corporate business plan with a thrust on inclusive growth.

ix. Urban Financial Inclusion-

A good number of people residing in urban/metros engaged in labour intensive job are also excluded from mainstream banking services. In order to bring them into banking fold, BOI has started a project called “Urban FI” in Mumbai through 2 branches in Mumbai (N) and Raigad Thane Zones.

Migrant labourers and self employed persons remit money to their family members and depend on the informal sector for the service.

Bank has started a mobile remittance facility for this segment at Mumbai with the help of technology provider Mchek. This facility will be implemented across the country shortly.

x. Leveraging on Unique Identity Project initiatives-Technological solution has been so designed that FI efforts is suitably leveraged on unique identity solution being proposed by UIDAI (Unique Identity Authority of India).

44

QUANTITATIVE ASPECTS OF FIP

Serial number

Particulars

i. No. of rural branches 1268ii. No. of semi urban branches 647

iii. No. of service area villages 28929iv. No. of service area villages with population more than 2000 to be

covered in year 2010-20116936

v. No. of service area villages to be covered in year 2011-12 11023vi. No. of service area villages to be covered in year 2012-13 10970

vii. No. of persons eligible under FIP in our service area villages 92.43 lacviii. No. of persons proposed to be covered under urban FIP 7.47 lac

ix. Total no. of persons proposed to be covered under bank’s FIP 100 lacx. Out of (ix), account already opened 27.14 lac

xi. Accounts yet to be opened in next 3 years 72.86 lacxii. Biometric cards to be opened in next 3 years- including issuance of

cards in existing accounts 97 lacs

xiii. Total credit outlay proposed under FIP in next 3 years 11,480 croresxiv. Total deposits expected to be mobilized in next 3 years in proposed

accounts728.62 crores

xv. Total no. of BCs/BFs/sub agents to be appointed 15,000xvi. Total no. of CMPs to be appointed 750

xvii. Coverage proposed in 1st year (for account opening & issuance of biometric cards)

60 lacs

xviii. Coverage proposed in 2nd year (for account opening & issuance of biometric cards)

20 lacs

xix. Coverage proposed in 3rd year (for account opening & issuance of biometric cards)

20 lacs

xx. Credit linkage proposed in 1st year (amount) 3300 croresxxi. Credit linkage in 2nd year (amount) 3900 crores

xxii. Credit linkage proposed in 3rd year 4280 crores

**above figures arrived after taking into account cumulative data of service area villages, their households and adult population from all the rural and semi urban branches of BOI.

ASSUMPTIONS:

45

While arriving at the figures, following assumptions were made which are based on relevant empirical data collected from the branches and other sources like census data, statistics available on RBI website etc.

Various assumptions are enlisted below:

Over the years, various financial intermediaries viz. credit cooperative societies, cooperative banks, land mortgage banks, PACs etc. have extended credit facilities to farmers even in the service area of BOI.

In built overdraft facility is proposed at the rate of Rs 500 in all the accounts. GCC/KCC/BKC is proposed at the rate of Rs 15,000 to be given to all the households. Incidence of NPA is taken at the rate of 5% against an average NPA of less than 3% in

AFD accounts. Expected average deposit generation per account is taken at Rs 1,000 Micro insurance projections are based on group life insurance. This cover is available to

all agricultural borrowers with credit limit up to Rs 50,000. Total expenses involved towards cost of cards is taken at Rs 80. Business correspondent

(BC) charges at 1.75% of turnover as per IBA working group report. Appointment of BCs, monitoring of business through BCs and evaluation of the project is

proposed throughout creation of fresh vertical of Channel Management Partners-proposed to be outsourced on contract basis at the rate of one CMP per 20 BCs.

Average Government deposits under various development projects will be available at least in 48 lead districts at the rate of Rs 50 crores per district- leading to a float of 2400 crores-on average basis.

Bank plans to roll out the financial plan across the country as under-

46

Over 2000 by March 2011

2000 and below by March 2011

2000 and below in Financial year 2011-2012

2000 and below in financial year 2012-2013

Total

i. No. of villages to be provided with banking services

a)through branchesb)through BCs

12515685

-400

-11023

-10570

125127678

ii. No. of households to be covered

1825318 82150 2216336 2088686 6212490

iii. No. of BCs to be appointed

5685 175 4666 4474 15000

iv. No frill accounts to be opened along with overdraft

6000000 125000 2000000 2000000 10000000

v. Households to be provided with KCC/GCC

1825318 82150 2216336 2088686 6212490

vi. Other financial products to be introduced and targets thereof business generation:

a. Depositsb. Advances

30000300298

1425410

20000380402

21375418091

728001099201

Strategies:

Action plan to achieve the target (business volume) and support requirement involve-

Engaging of technology vendors based on the premise that there will be multiple vendors for providing cost effective services at segmented locations across the country.

Opening of branches-presently 1915 rural and semi urban branches of BOI. Bank plans to add 500 such branches in next 3 years as under-

2010-2011:2002011-2012: 2002012-2013: 100

47

Engaging 750 CMPs as an intermediary between bank and the BCs/BFs/sub agents with distinct job profile to coordinate, assist and advice bank’s officials in drawing and allocating business plans for BCs.While allowing CMPs for assisting in processing the credit proposals, steps be taken for avoiding any conflict of interest.

Engaging 5,000 BCs/BFs/sub agents and train them ab initio to become an effective delivery channel at the doorsteps of the customers.

Recruiting 500 field officers to be posted at rural/semi urban branches to assist them in processing GCC/KCC/Loan applications of financially excluded households.

Branches to sanction and disburse all eligible loan applications within a maximum period of 15days from the date of receipt of application.

Assigning a dedicated position of Chief manager SM IV (Rural Development) to be created as a separate vertical at all 45 zones having rural and semi urban branches. He will coordinate the activities of branches/field officers and BCs/BFs/sub agents with the help of CMPs.

Chief Manager RD will be a “one point contact” for the FIP and will report to zonal manager of zone and Head office, Priority sector development (Rural Development Cell).

Opening of no frill account with an inbuilt overdraft facility of Rs 500 ab initio. Providing GCC/KCC/BKC to all eligible households with an average ticket size of Rs

15,000 per household. Covering all no frill account with Group Life insurance of Rs 25,000 each. Financing through JLGs/SHGs with a focus on women beneficiaries to inculcate

improved repayment ethics Mobilizing savings of rural households as with growth in income levels, the level of

savings is also expected to increase. BOI has projected a savings of Rs 1000 per borrower per annum.

Availing the opportunity of good FLOAT FUND in respect of Government payments viz. NREGA wages, social security, SC/ST scholarship etc. It is expected that a good FLOAT FUND will be available to the bank.

Business opportunities available in the plan be captured for the expansion of banks business

Providing impetus to the savings potentials as it is expected that with enhanced infrastructure investments and the demographic profile of the country, there will be increased labour force in the age segment of 15-65 years

Operationalisation of “MOBILE REMITTANCE” facility. Migrant labours remit money to their inmates in villages. We are confident that it will penetrate into this segment and capture sizeable portion of remittances through advent of mobile technology. This will lead to twofold increase in banks business- savings deposits at one end and fee based income on the other.

48

KYC norms AML measures and all other statutory obligation are strictly complied in the implementation of the plan.

Rigorous audit be put in place in the implementation of the plan to ensure accuracy of the transactions.

Committee of GM’s at head office will be constituted to study the audit and control measures in the implementations of the plan.

Bank will explore covering 400 villages with population of 2000 and below also during the period 2010-11

It will be ensured that the services to the customers under the plan be made available regularly.

A review note on the implementation of the plan will be submitted to the board after six months.

ACTION PLAN- STEPS 1 TO 9

The various steps to be taken up for ensuring 100% Financial Inclusion are enumerated below in the proper sequences for easy understanding of all concerned:

Step 1:

One officer in the Zonal office should be designated as “Nodal Officer” to coordinate with our Bank branches, NABARD, district coordinators of other banks including RRBs, Cooperative Institutions, Government Offices, NGOs etc. The Officer should always be in a position to furnish up-to-date position of financial inclusion in the district.

Step 2:

The zonal manager should issue a DO letter to the branches in the zone about ‘Financial Inclusion’ campaign/ implementation. ZO should also ensure that branches have adequate stationery such as SB A/c, opening forms, loan application forms, documents for sanctioning general credit card etc.

Step 3:

49

Branches should furnish a list of villages/ maintain village wise register of villages allotted to them for financial inclusion. The basic statistics on each and every allotted village should also be furnished to the zonal office.

Step 4:

Wherever required, branches may engage a private photographer for obtaining the passport size photographs of customers, as obtaining photographs is a mandatory requirement at the time of opening SB account, including V- Saral account. The photographer may have to accompany the branch team to the villages for taking photographs.

Step 5:

Keeping in mind the local situation and the time frame for 100% coverage of households in allotted villages under Financial Inclusion, branches should formulate and finalize their own strategies. However, while finalizing the strategies the following points may be considered:

Villages which are considered to be highly responsive should be selected first for the purpose of the survey.

The dates and time of visits to the villages should be decided in advance. A team consisting of staff members should be selected for this purpose.

It should be kept in mind that the time of visit to the villages should be convenient to the villagers/ households.

The dates and time of visit of the survey team to the villages should be announced in advance and the purpose of the visit of the survey team should be made known to the villagers. The assistance of GP members/ local leaders/ village youth may be sought for this purpose.

The survey team should visit all the houses and all the streets in each village in a chronological order so as to ensure 100% coverage of households for the survey.

While opening SB accounts, branches should comply the applicable KYC norms. Proper introduction from the already existing customer who had complied with KYC norms and/or from local revenue official to be obtained.

To begin with, branch shall ensure opening of at least one account by each household. Opening of more than one account from each household may be encouraged.

At the time of opening of SB account itself, the family survey report on the potential of each family has to be collected.

Branch staff shall ensure that the required information is fully collected, the prescribed forms are properly filled in, the signature/ thumb impression is got affixed at all the required places; nomination is registered and then only passed for opening of SB accounts.

50

Branch shall ensure that accounts are opened promptly. The branch manager has to personally ensure that the account opening is properly authorized and the photographs are affixed in the account opening forms, specimen signature cards, etc.

The branch shall ensure and confirm that all the eligible households in a village are covered under Financial Inclusion and their accounts are opened.

Step 6:

At the end of each day of the survey, the survey team should prepare a statement as per annexure- II and submit the same to the branch manager. The branch should submit Weekly Report as at the end of each Friday, as per Annexure-II to the regional office.

Step 7:

ZOs should provide necessary assistance and support to rural/ semi urban branches for timely completion of this exercise. In case of requirements, services of staff members of RO and/ or nearby urban branches may be utilized. The RO shall get information from each branch over phone on a daily basis, regarding the process so that the required support and encouraged can be ensured.

Step 8:

The ZOs to submit weekly report as at every Friday, to reach Credit Department (Priority), Head Office by the succeeding Saturday/ Monday. The format is furnished at Annexure- IV.

Step 9:

The business model developed for the household should be implemented in a time bound manner.

MANPOWER PLANNING-

It is proposed to engage business correspondents/ business facilitators/ sub agents while executing the plan as per RBI guidelines.

Channel Management Partners are proposed to be appointed on contract basis as a vital link between bank and BCs/ BFs/ sub agents.

A. Recruitment of BCs/ BFs/ Sub agents- Data collection of beneficiaries, their enrolment, account opening, and biometric

card issuance requires skills at lower end and cost considerations do not permit to engage Bank’s own staff for these.

51

It is proposed to appoint approximately 15,000 business correspondents across the country.

These persons will be sourced locally so that their knowledge of local language and culture can be put to best use.

BCs/ BFs/ sub agents will be working as an extended arm of the technology providers in the implementation of the project.

Selection of BCs will ultimately be approved by Bank through a committee at zonal level.

Salient features of the Business Correspondent Model envisaged are indicated below:

Eligibility/ scope/ Extent of activities:

Eligibility: NGOs/ MFIs set up Societies/ Trust Acts, Societies registered under Mutually

Aided Cooperative Societies Acts or the Cooperative Societies Acts of states. Section 25 companies, registered NBFCs not accepting public deposits. Post offices Reputed Farmer’s Clubs.

Scope:

The primary activities to be undertaken by the BCs will include:

Disbursal of small value credit Recovery of principal/ collection of interest Collection of small value deposits Sale of micro insurance/ mutual fund products/ pension products/ other third party

products and Receipt and delivery of small value remittances/ other payment instruments Any other service on behalf of the bank, duly authorized by the appropriate

authority.

Further, the activities carried out by the business facilitators will also be additionally undertaken by the Business correspondents as under:

Identification of borrower Collection and preliminary processing of loan applications including verification

of primary information/ data Creating awareness about savings and other products and education and advice on

managing money and debt counseling Processing and submission of applications to branches

52

Promotion and nurturing Self Help Groups/ joint Liability groups Post sanction monitoring Monitoring and handholding of self help groups/ joint liability groups/ credit

groups/ others and Follow-up for recovery

The Business Correspondents will be undertaking activities within the normal course of the bank’s banking business, but conducted through the entities indicated above at places other than the bank premises.

Role of Business correspondents:

These functions are essentially in the nature of agents of the bank, (an extended arm of the bank) and may include the following-

Authentication of the application for enrollment brought in by the facilitators Verification of primary information/ data Creating awareness about savings and other products, education and advice or managing

money and debt counseling, marketing of the financial products including savings/ providing product information etc.

Disbursal of small value credit Recovery of principal and collection of interest Collection of small value deposits Sale of micro insurance/ mutual fund products/ pension products/ other third party

products.

B. Channel Management Partners- To monitor the functioning of BCs and BFs, CMPs will be engaged who will be

reporting directly to the nodal officer at zonal level. 1 CMP for a cluster of average 20 BCs is envisaged. Retired bank officials will be engaged as CMPs.

C. New recruitment- Bank proposes to recruit 500 officers with aptitude in areas like Agricultural

extension, rural development, and social work and community service. These officers will be coordinating field level efforts of business correspondents

for entire gamut of activities (from account opening to credit linkage and credit monitoring).

53

Meticulous planning and its time bound execution is expected to be the differentiated to place BOI ahead of other players in this niche.

This will require engagement of 15,000 BCs, appointment of 750 CMPs, recruitment of additional 500 officers with aptitude to work in rural areas, 50 Chief Managers at Zonal offices and Head office, one AGM and one DGM.

FINANCIAL LITERACY & CREDIT COUNSELLING-

i. Establishment of RSETIs- Bank is aware that financial markets offer a variety of both simple and

complex financial products. It is difficult for the common person to grasp the downside risks associated

with financial products especially if he/she is confronted by clever advertising.

Financial education is thus primarily on the individual, who usually has limited resources and skills to appreciate the complexities of financial dealings with financial intermediaries on matters relating to personal finances on a day to day basis.

In terms of GOI, MORD guidelines, Public sector Banks are expected to establish RSETIs in districts where it has lead bank responsibility.

Government guidelines also permit establishment of need based RSETIs at places where banks do not have lead bank responsibility with concurrence of the state governments.

Bank has lead bank responsibilities in 48 districts spread over in 19 zones and 5 states.

Bank has already established 12 such institutes so far, and going to establish 20 institutes by 31st March 2010 for which necessary formalities are in different stages.

Rest RSETIs will be established in next 2 years. RSETIs are organizing vocational training programme for unemployed

persons in villages with special emphasis on BPL families, women and members of SC/ST.

Emphasis will be given for credit linkage to the trained persons for establishing/expanding their venture.

ii. Integrated Centre of Development:

54

Banks plan to upgrade the RSETIs to become a hub for integrated centre of development by extending its scope to primary healthcare, adult literacy, comprehensive financial access and planning for growth, strengthening civil society organization, environmental sustainability etc.

iii. Collaborators: For primary health services, BOI would like to collaborate with local

government doctors, red cross society, lions and rotary clubs and also private medical practitioners to provide medical checkup and offer services to the local populace on daily/tri weekly basis at these centres.

For adult literacy programmes, BOI would collaborate with the local adult education department of the state governments and also the services of retired teachers will be taken to impart basic education to the deprived section at the centre.

Towards access to financial services, BOI would like to rope in the services of KVIC, NABARD, DRDA, local PACs, BCs/BFs, insurance companies and also BOI’s own outlets so that needy people are connected appropriately which will not only end up to their exploitations but will also generate their livelihood.

Towards creation of strong civil society, BOI would like to strengthen the bondage with the local Panchayati Raj Sansthan at village, Panchayat, block and district level along with the Government functionaries and NGOs working in the area having good credential.

Towards environmental sustainability, BOI would like to develop bondage with Horticulture Board, Government irrigation/forestry/rural development departments, project specific corporation/board created for environment protection, local agriculture universities/colleges, operating NGOs with good credentials, farmers’ clubs.

All out campaign for smokeless chulhas, clean drinking water for rural households, improvement of hygiene through hand washing, provision of hygienic toilets, lighting through solar energy etc. is proposed with the help of various agencies involved.

iv. Credit Counseling Centers- BOI played captain’s role in opening Credit Counseling Centers manned

by senior/ experienced bankers.

55

Counselors aim at exploring the possibility of repaying debts outside bankruptcy for users and educate them about credit, budgeting and financial management.

Examine the ways to solve current financial problems of the users, educating them about the costs of misusing a credit and improve financial management besides encouraging distressed people to access the formal financial system.

Apart from curative counseling on case to case basis for the distressed borrowers, Preventive counseling can be through the media, workshops and seminars as well.

OTHER RELATED ISSUES-

I. Money Lender’s free village-All branches to free at least 5 villages in their command areas to make these villages free from the debt trap of money lenders.

II. Product innovation- Bank has a full suit of products suitable for the excluded segment both in

terms of deposits and credit as well. Presently BOI does not propose introduction of any new products. However,

need based fine tuning of the products will be done from time to time.

III. Village adoption scheme- BOI proposes to adopt 525 villages in 3 years span starting from the Financial

Year 2010-2011 for its integrated development as a part of bank’s commitment towards socio-economic development.

BOI has started adoption of villages under its centenary celebration programme to give further impetus to village adoption scheme and make this as an integral part of FIP.

Village adoption scheme supposed to be implemented as under-

Year No. of villages to be adopted Distribution of villages2010-11 150 i. 2 villages each lead

56

districts for zones having lead district responsibilities (19 zones).

ii. 2 villages each by zones that do not have lead district responsibilities (26 zones).

2011-12 151 (new) i. 2 villages each lead districts for zones having lead district responsibilities (19 zones).

ii. 2 villages each by zones that do not have lead district responsibilities (26 zones).

2012-13 225 (new) i. 3 villages each by zones having lead

ii. 3 villages each by zones that do not have lead district responsibilities.(26 zones)

IV. Incentives/ disincentives to human resources: BOI contemplates to start cash incentives to the performing staffs. BOI also proposes inclusion of “Performance in Financial Inclusion” as a non

financial KRA in the annual performance appraisal of officers/branch heads and zonal heads with appropriate weightage.

v. Seminar/workshops- Holistic approach of the ground level functionaries is required for the success

of this project. Accordingly, conferences, seminars, workshops are proposed preferably at the

work place locations for sensitization of different level functionaries.

57

Implementation of Financial Inclusion by Bank of India with respect to its existing policy:

Bank of India has planned for a large size business model under FIP backed with a deep conviction that poor is bankable with good business prospects. Its various FI initiatives are expected to further strengthen its financial deepening and provide resources to expand delivery. With evolution of banking technology, the transaction costs are also expected to be reduced.

Bank of India has devised strategies for effective implementation of FIP 2010-2013. As given in its existing policies for financial inclusion, opening of no frill accounts has been given the top priority in the initiatives taken by Bank of India.

1. Organizational structure for implementation of Financial Inclusion Project:

Bank of India has devised an organisational structure for effective implementation of the FIP 2010-2013.

At the top, there is General manager at Head Office, Priority Sector Department. The Priority Sector Department consists of a Rural Development Cell at the head Office.

which deals with the diverse aspects of FIP 2010-2013 viz.

Financial inclusion Plan: Account opening, issuance of biometric smartcards, implementation of ICT based, FI solution from approved technological service providers.

Integrated Development Project for RSETIs: Credit Linking to No frill accounts, smart cards opened.

Financial Literacy: MIS reports:

The Zonal Managers at the Zonal Head Quarters are informed about the strategies and plans devised by Priority sector Department at the Head Office.

Zonal managers pass on the information further to the Nodal Officers (Scale: SM IV) who passes on the information to

Field officers at Branches/Fields Branch managers Lead District managers at BOI’s lead districts Channel Management partners

58

for the actual implementation of the Financial Inclusion Solution Project.

2. Observing May 2010 as “FINANCIAL INCLUSION MONTH” by all rural and semi urban branches of BOI for credit delivery and recovery drive.

Bank of India’s FIP 2010-2013 envisages opening of 1 crore no frill accounts with credit linkage to 66 lakh households in about 33,000 villages across the country with a projected credit outlay of Rs 11,480 crore.

Implementation of the plan has already begun and at the first step, branches are required to cover minimum 10% of the villagers with population more than 2000 by the end of June 2010.

Accordingly, the branches are advised to implement the following action plan as under-

Adequate publicity to be made in the command area villagesby holding regular meetings, mass contact campaigns, credit camps at the village level by inviting functionaries from Zonal office, Local MLA, BDO, SDO, District collector and involving SHGs/farmers club.

All rural/semi urban branches to organize minimum 7 credit camps during the Financial Inclusion Month.

Under FIP, each and every household are to be provided credit linkage viz. GCC, KCC and overdraft in SB accounts in a time bound manner and minimum 10% of households are to be covered by end June 2010 in villages with population more than 2000 alloted to BOI.

This would help the branches to meet all the existing borrowers and ascertain their credit needs and sanction fresh/additional limits as well as for new customer acquisition.

Branches are advised to open as many accounts as possible everyday with token disbursement from amongst the sanction accorded in respect of the applications collected in the credit camps.

Branches are also advised to take a note to market and popularize BOI’s other microfinance products-solar energy home lightening system, educational loans, rural housing loans, gold loans, loans under debt swap scheme, DRI, finance to minorities as well as lending to small farmers/ marginal farmers/tenant farmers/share croppers/farmer’s clubs/JLG etc. in increasing number of accounts as well as achieving the purpose of Financial Inclusion.

Recovery Drive: As the time coincides with the harvesting season, this would enable the

branches to effect recovery and obtain renewal documents.

59

Branches have already been advised to make rigorous efforts for recovery in respect of farmers eligible under Debt Relief where last date of time for repayment has been extended upto 30th June 2010.

Therefore, all the efforts are to be made to recover the dues even by offering compromise settlement for farmers facing genuine financial difficulties.

During this campaign, branches to ensure that all farmers benefitted under Agricultural Debt waiver and debt relief scheme are extended fresh credit facility as advised earlier.

3. Financial Inclusion solution Project: M/s “i-25 Rural Mobile Commerce Services”- a not for profit organisation under

section-25 companies promoted by 3 reputed NGOs, viz. M/s ADATS, M/s FAER, M/s Sunrise imaging india Pvt. Limited with M/s Integra Microsystems Pvt Ltd., bank’s approved technical service provider, has been engaged as the Business Correspondent to appoint their local BCs sub agents at the grass root level to render the services of BCs/ BC sub agents at the service areas of concerned branches under Varanasi zone in the IT enabled Financial Inclusion solution Project irrespective of the rural, semi urban and urban areas under the varanasi Zone.

4. Adoption of Villages: Bank of India BOI has started adoption of villages under its centenary celebration

programme to give further impetus to village adoption scheme and make this as an integral part of FIP.

5. Credit Counseling Centres: Bank of India has opened 4 credit counseling Centres named “ABHAY” and also

proposes to open 7 more such centres across the country by March 2013. The 4 centres have been opened at Mumbai, Chennai, Wardha and Gumla. All the 4 centres have so far handled more than 3500 cases. These centres have also organized seminars to educate people in respect of

financial planning and judicious use of credit.

60

Data Analysis: Findings and Interpretation

1. Rural and semi urban branches of BOI under Varanasi Zone: There are 15 rural and semi urban branches of Bank of India under Varanasi Zone. 7 are rural branches and 8 are semi urban branches.

Among the rural branches: Jamui, Tela, Sukaha, Lattudih, Phoolpur, Musafirkhana, Kauhar

Among the semi urban branches: Robertsganj, Jhusi, Pratapgarh, Azamgarh, Bhadohi, Nayabazar, Mughalsarai, Balrampur

Sl. No. Branch Number of Villages covered by

61

the branch1. Jamui 112. Robertsganj 23. Tela 54. Jhusi 15. Pratapgarh 26. Azamgarh 27. Sukaha 78. Lattudih 59. Bhadohi 210. Nayabazar 111. Mughalsarai 312. Phoolpur 1113. Balrampur 514. Musafirkhana 915. Kauhar 10

2. Bank of India, Phoolpur Branch:

District: VaranasiCategory: SmallDate of opening: 21.01.2008No. of villages adopted by the branch in September 2009: 11Name of the Villages: Khalispur, Mani, Vikrampur, Devji, Katawna, Bharauna, Parsara, Gauria, Hiramanpur, Nadoi and Gajokhar.

62

3. Total no. of villages serviced by Rural and semi urban branches of BOI, Under Varanasi Zone: 76Villages serviced by BOI, Phulpur: 11

villages under Phulpur branch15%

villages under rest of R & SUbranches of BOI, varanasi

Zone85%

Percentage wise distribution of villages serviced by Phulpur branch & rest of rural

& semi urban BOI branches

4. No. of villages serviced by rural branches of BOI under Varanasi Zone: 58No. of villages serviced by BOI, Phulpur: 11

63

villages under Phulpur branch19%

villages serviced by other rural branches

81%

Percentage wise distribution of villages serviced by Phulpur branch & rest of the

rural branches

5. Number of No frill accounts to be opened during FIP 2010-2013 in Varanasi Zone:

No frill accountsalready opened 6445 to be opened in 2010-13 57870

already opened to be opened in 2010-130

10000

20000

30000

40000

50000

60000

6445

57870

number of no-frill accounts in Varanasi Zone

no frill accounts

64

6. Under the Financial Inclusion Plan 2010-2013:No. of biometric cards to be issued in FIP 2010-2013: 60480No. of biometric cards to be issued in 2010-2011: 36288No. of biometric cards to be issued in 2011-2012: 12096No. of biometric cards to be issued in 2010-2013: 12096

2010-11 2011-12 2012-130

5000

10000

15000

20000

25000

30000

35000

4000036288

12096 12096

Biometric cards to be issued in FIP 2010-13 in Varanasi Zone

Issuing of Biometric cards

7. In Financial inclusion Month, May 2010:No. of beneficiaries contacted in Varanasi Zone: 11380No. of No frills accounts opened in Varanasi zone: 4315

65

11380

4315

number of beneficiaries contacted out of which new no frill accounts canvassed in

Varanasi Zone

no. of beneficiaries contactedof which new accounts canvassed

8. May 2010 celebrated as Financial Inclusion Month by BOI, Varanasi Zone.

66

no frill accounts opened

in rest of varanasi zone 4174

in phulpur branch 141

Total of no frill accounts in Varanasi Zone

4315

in rest of varanasi zone; 4174; 97%

in phulpur branch; 141; 3%

no frill accounts opened in May 2010, in Varanasi Zone

9. In May 2010, no frill account opened under Scheme code SB-105 in semi urban and rural branches of Varanasi zone:

SL .No. Branch SB- 105 Total amount deposited (in lacs)

1. Jamui 0 02. Robersganj 01 0.0013. Tela 775 0.184. Jhusi 32 5.975. Pratapgarh 47 0.156. Azamgarh 44 0.017. Sukaha 55 0.138. Lattudih 859 0.079. Bhadohi 43 0.0410. Nayabazar 62 011. Mughalsarai 48 4.0912. Phoolpur 141 0.6013. Balrampur 13 1.0314. Musafirkhana 76 015. Kauhar 164 0.02

67

TOTAL 2360

10. No Frill accounts opened under Scheme code SB- 104 in Semi Urban and Rural branches of Varanasi Zone during May 2010:

SL. No Branch SB- 104 Total Amount deposited (in lacs)

1. Jamui 74 3.50 2. Sukaha 1253 03. Lattudih 520 0.154. Musafirkhana 53 0

TOTAL 1900

**Total accounts opened under SB-105 are 2360. Total accounts opened under SB-104 are 1900. Thus, 55 no frill accounts have been opened in urban branches.

11. In May 2010, KCC account opened in Rural and semi branches under Varanasi Zone:

BRANCH KCC A/C opened Amount sanctioned( in lacs)Jamui 03 3.81

Robersganj 02 1.10Tela 06 1.34Jhusi 0 0

Pratapgarh 0 0Azamgarh 0 0

Sukaha 09 8.24Lattudih 05 2.56Bhadohi 0 0

Nayabazar 03 1.10Mughalsarai 0 0

Phoolpur 01 0.12Balrampur 08 3.42

Musafirkhana 03 0.76Kauhar 05 2.13

TOTAL 45 24.58

68

in rest of rural branches; 31; 97%

in phulpur branch; 1; 3%

KCC/GCC accounts opened in May 2010, in Phulpur & other rural branches

12. Distribution of KCC/GCC during Financial Inclusion month in Varanasi Zone:

In May 2010,for KCC/GCC

(figures in lacs)

limit of amount sanctioned

30.5

disbursement made 15.5

** limit of amount sanctioned : 24.58 lacs for SU & R branches plus 5.92 lacs for urban branches

69

limit of amount sanc-tioned

disbursement made0

5

10

15

20

25

30

35

30.5

15.5

KCC/GCC limit for Financial Inclusion Month 2010

In May 2010,for KCC/GCC (figures in lacs)

13. Awareness among the people in Phulpur region about the 7 credit camps organized during Financial inclusion Month May 2010 on 06.05.2010, 10.05.2010, 14.05.2010, 17.05.2010, 21.05.2010, 24.05.2010 and 28.05.2010:

70

unaware, 65%,

aware, 35%

Awareness regarding credit camps organized in May 2010

14. In a No frill account, the minimum balance to be kept in the account in rural and semi urban branches is Rs 50. Initial amount deposited while opening a no frill account in Bank of India, Phulpur:Accounts opened with Rs 50 or less: 29%Accounts opened with more than Rs 50: 71%

71

account opened with Rs 50 or less

29%

account opened with more than Rs

5071%

Initial amount deposited while opening a no frill account in BOI Phulpur

15. Occupation of the beneficiaries/ no frill account holders contacted in BOI, Phulpur:

72

Farm related activ-ities/ NREGA

39%

Housewives(getting remittances)

31%

Aanganwadi workers

17%

Weavers, vendors, students etc.

13%

Occupation wise distribution of account holders

73

FINDINGS:

1. No. of no frill accounts already opened in Varanasi zone: 6445Total no. of no frill accounts opened in Varanasi Zone during May 2010: 4315No. of no frill accounts projected to be opened in FIP 2010-2013: 57870In May 2010, only 7.4% of the target aimed for the year regarding the no frill account, has been achieved by BOI, Varanasi zone.

2. BOI Phulpur has performed poorly in terms of opening of no frill accounts.

No. of no frill accounts opened in BOI, Phulpur during May, 2010: 141No frill accounts opened in total Varanasi Zone: 4315

No frill accounts opened by Phulpur branch is only 3.2% of the target achieved by BOI, Varanasi Zone, during May 2010.

Among rural branches, BOI, Phulpur has opened 141 no frill accounts among 3970 no frill accounts opened by total no. of rural branches. Thus, BOI, Phulpur contributed just 3.5% to the target achieved by the rural branches.

3. BOI, Lattudih provides services to only 5 villages under Varanasi zone but it has been able to open 1379 no frill accounts (highest among the rural branches) in may 2010.

Whereas,BOI, Phulpur services to 11 villages under Varanasi zone but it has been able to open only 141 no frill accounts in May 2010.

74

4. Ranking of the rural branches in terms of no. of no frill accounts opened during May 2010:

RANK BRANCH No. of no frill accounts opened

1 Lattudih 13792 Sukaha 13083 Tela 7754 Kauhar 1645 Phoolpur 1416 Musafirkhana 1297 Jamui 74

Thus, BOI, Phoolpur stands 5th among the rural branches of BOI in Varanasi Zone, faring poorly in terms of no. of villages it serves and no. of no frill accounts it has been able to open in May 2010.

5. In May 2010, total no. of KCC/GCC opened in Varanasi Zone: 57Total no. of KCC/GCC accounts opened by rural branches: 32

Ranking of rural branches in terms of no. of KCC/GCC opened in May 2010:

RANK BRANCH No. of KCC/GCC accounts opened

1 Sukaha 092 Tela 063 Lattudih, Kauhar 05,054 Jamui, Musafirkhana 03,035 Phoolpur 01

In terms of opening of KCC/GCC accounts, BOI Phulpur fares very badly holding the last position among the rural branches. BOI Sukaha leads the list with 9 accounts.

6. Households depending on remittances and NREGA workers are the main benefittors from the financial inclusion drive. These people operate their accounts for the maximum number of times.

7. The awareness regarding the credit camps organized by BOI Phulpur, was low. Only 35% of the population at Phulpur was aware about the credit camps organized during the financial inclusion month 2010.

75

8. The distance of the villages from BOI Phulpur, along with the hot and humid conditions during the financial inclusion drive led to low turnout in the credit camps.

9. Some of the no frill accounts opened during the financial inclusion drive remained inoperative later due to lack of interest shown by the customers.

10. Because of the delay shown by top management, Biometric cards have not been issued during the financial inclusion drive though the target for 2010-11 is 36288.

11. Shortage of bank staffs at BOI, Phulpur created chaotic situations at the credit camps during Financial Inclusion drive.

76

SUGGESTIONS:

1. Observing more weeks/ months as Financial Inclusion week/month to stress on the different aspects of FIP 2010-2013

It has been a laudable effort by BOI, Varanasi Zone to observe May 2010 as the Financial Inclusion Month to give an impetus to the FIP 2010-2013 and open a good number of no frill accounts and provide KCC/ GCC to the beneficiaries. But the targets would be more effectively achieved if more such months/ weeks are observed.

2. Organising Credit Counseling camps

Just like credit camps that were organized during FI month, May 2010; credit counseling camps may be organized to provide credit related advices to the rural/ semi urban branches.

3. Promoting the Credit cum counseling camps with proper promotional tools:

Using banners provided by the Zonal Office, BOI and placing them at strategic points in villages like near the village temple, near the market place etc.

Using pamphlets for distribution so that the masses can know about the credit camps. Providing an advertisement in a local newspaper. Providing information through the local radio/ FM.

4. Staffs from Zonal Office may visit the rural branches periodically to provide credit counseling to the account holders.

5. If possible, branch managers may organize credit camps at villages that are far away from the branch as people from these villages usually do not visit the branch because of the distance.

6. Bank forms can be distributed to the villagers through the Gram Panchayats of the respective villages. In this way, villagers will be saved from covering the far away distance just to get a form for opening an account.

7. To prevent no frill accounts from becoming inoperative because of lack of interest shown by customers, the branch may personally contact those customers.

77

8. The branch may take initiative in compiling the database of the households getting remittances, thereby approaching all of them to open no frill accounts at the branch.

78

QUESTIONNAIRE:

As asked to the account holders of the branch:

1. Have you ever been provided with credit counseling by the officials at the branch? Yes No

2. How frequently you operate your account at the branch in a month? 10 times in a month 5 times in a month Less than 5 times

3. What is the initial amount with which you are opening your account? Rs 50 More than Rs 50

4. What is the main economic activity you are associated with? Farming/NREGA Aanganwadi Weaving/vendor etc. Others

5. How you come to know about the Credit camps organized by BOI? Word of mouth Through the Gram Panchayat Banners etc. Any other means

6. How many members of your family have got accounts in the bank? None More than 2 Everyone

79

BIBLIOGRAPHY

1. Kothari, C.R.: Research Methodology: vikash publication, New Delhi.

2. Handbook of Bank of India

WEBSITE

1. www.bankofindia.org

2. www.nabard.org

3. www.rbi.org

4. www.google.co.in

JOURNALS

BOI’s Annual Report 2008-2009

BOI’s Annual Report 2007-2008

BOI’s Annual Report 2006-2007

BOI’s Annual Report2005-2006

MAGAZINES

1) Yojana

2) Kurukshetra

80