Welcome

Presentation on

SMART CARD PILOT

Department of Rural Development

Why smart card based banking model ?

Smart Card based models enable branchless banking

even in remotest areas.

Technology based models have the potential to set

up. a bank in every

village.

Thus it becomes possible to deliver banking and

financial services to the poor at the door steps.

It is a major step towards Total Financial Inclusion.

GoAP initiative

Department of Rural Development's initiative started in Aug,2006.

For timely and fool proof payment of benefits to the SSP, EGS etc.,

A pilot was taken up in 8 mandals, by laying down infra, issuing cards and payments being made.

Thus, branchless banking model using technology was successfully demonstrated.

Hon`ble Chief Minister desired to scale up the model in the entire state.

Expected Outcomes

Achievement of visible economic identity for people

at the bottom of the pyramid.

Enhancement in the per-capita consumption of

financial services in rural areas.

Efficiency in delivery of Government and financial

services.

Platform for convergence of delivery of public and

private services to the un-served populace.

AP Model

Bank Led model: Entire infrastructure at the village level (machines, Smart

Cards etc) are provided by banks. All Smart Cards are backed by bank accounts. Covers urban and rural areas. Service delivery point in every GP/Ward. Members of SHGs as customer service providers. To begin with, two schemes, SSP & NREGS disbursements

are taken up. other schemes will be roped in course of time.

Government pays 2% service charges on the volume of payments.

Ultimately, banking services like savings, loans, insurance etc. will be delivered by bank.

Key- processes

1. Enrolment

Department gives list of beneficiaries – SSP

& NREGS.

Concerned bank / Financial institution

conducts an enrolment camp in the village.

GPs, VOs assist in identification of

beneficiaries.

6/ 10 finger prints, photo and other details

of the beneficiary captured.

An account will be opened. Contd..

Key- processes

2. Preparation and issue Smart Card.

Data collected during enrolment is encrypted

on the card including biometric. (Encrypted

Java smart card with 32 KB memory).

Card is delivered to the beneficiary in the

village within three weeks.

Contd..

Key- processes

3. Business Correspondent & Customer

Service Provider (CSP)

Bank / FI appoints a business correspondent.

BC appoints CSP at the village level.

Training to BC/CSP.

Required hardware like Finger print reader,

printer, mobile phone etc., are positioned in

the village.

BC delivers service( payments) at GP level.

Key- processes

4. Fund flow

Government issues instructions to the Banks

/ FI authorizing payment.

List of beneficiaries and authorized amount

will be given.

Individual account of beneficiary is credited.

Cash is delivered in the village to CSP.

Key- processes

5. Disbursements BC /CSP sits at pre-designated government

premises usually GP building etc. Beneficiary approaches with card. Card is inserted in the card reader and

identity of beneficiary is established. Based on the a/c balance of the beneficiary as

displayed on the screen, cash is paid. A receipt is generated in duplicate. A manual acquittance also maintained. In case of exigencies, manual payment is

made.

Key-process

6. Data uploading

CSP / BC uploads data of disbursements daily.

MIS report an progress of disbursement is

submitted to Government.

Key Partners

1. Government of Andhra Pradesh

2. Reserve Bank of India

3. Banks

4. Service providers

5. People of Andhra Pradesh

Emerging Bank – Led models

1. One bank – one mandal – pilot in 8 mandals (Aug-06)

6 banks participated 202 villages covered 1.08 lakh cards issued

2. Service Area approach – 6 dts (WGL, KRNR, MBNR, MDK, EG & CTR)

(Aug-07) 10 Banks are participating 3575 Villages work started 17.14 lakh cards issued

3. One bank – One district model – 11 districts (VZM, KDP, VSP, WG,

(Sep- 08) SKLM,GTR,NLR,RR, PRKSM, KRSNA and NLG) 5 banks are participating In 9 districts work has started 11.96 lakh cards issued

List of partner banks

1. State Bank of India

2. State Bank of Hyderabad

3. Union Bank of India

4. Axis Bank

5. AP Grameena Vikas Bank

6. Deccan Grameena Bank

7. Andhra Bank

8. ING Vysya

9. Corporation Bank

10.Canara Bank

11.Punjab National Bank

Progress – At a glance

1. Work started in : 17 districts

: 9940 GPs

2. No. of beneficiaries covered : 50.52 Lakh

3. No. of Cards issued : 30.19 Lakh

4. Total payments made sofar : Rs.98.86 Crs.

AP is the pioneer in the country to use IT based

Financial Inclusion on such a large scale.

Other important Developments

All banks simplified enrolment procedures. Cost of infrastructure & Smart Cards are brought

down. Procedures are firmed up and monitoring systems

are stabilized. A steering committee at the state level under the

chairmanship of Chief Secretary. RBI announced incentive policy

Rs. 50 per Smart Card account Effective from 01.07.2008 – 30.06.2009

FIF & FITF funds setup Each with a corpus of Rs 500 Cr. NABARD will operate both funds

Experience in Krishna District

One bank – one district model.

Axis bank & FINO as service providers.

Field work started in Sep, 2008.

From 1st December SSP & NREGS payments made through Smartcards in 1/3rd villages.

From 1st Jan,2009 entire district –rural & Urban areas covered and all beneficiaries paid through Smart Cards.

With this, Krishna has become the 1st district in the country to make Govt., benefits through Smart Cards on such a scale.

Mobilization: District administration initiated a communication/Awareness

campaign. Workshops for officials, Non-officials. Posters. Mobilization of people at grass root level.

Enrollment: Started on Sept,12th 2008. Axis bank positioned 130 enrolment teams. All teams started work simultaneously. Per day, each team enrolled about 200 people. Total average enrolment per day 26,000 people. Total time taken to complete enrolment 45 days. 4.01 Lakh People enrolled.

Experience in Krishna District Contd..

Other important efforts:

900 Women are identified from SHGs, given training

and appointed as CSPs.

1,000 Delivery points operational from 01.01.2009.

Nearly 2.00 lakh beneficiaries paid through Smart Card.

Experience in Krishna District Contd..

Issues (contd…)

To review critically the performance of the banks on

the Smart Card initiative.

• Though 11 banks are partnering in the initiative

only 5 banks have shown

good progress.

Need to bring about change management.

• About the bankability of the unbankable

population.

• About adopting technology solutions.

Issues

Need to initiate series of steps like trainings to

focus on the social agenda of the banks.

To set up champions group in each bank to develop

unconventional banking models.

To develop uniform technical standards to facilitate

interoperability.

Banks to introduce other banking services.

FIF and FITF to be made available for upscaled

models such as the AP initiative.

Enrolment KitEnrolment Kit

Beneficiaries waiting for Enrolment

Enrolment Kit

Enrolment – photo graph

Enrolment – Capturing finger prints

Disbursement of Cards

Disbursement of Cards

Handing over cash to CSP

CSPs about to make payment

Payment –finger print checking

Payment –finger print checking

Payment –finger print checking

Payment –Receipt printing

Payment –Receipt printing

Cash Payment