Banking and e government

Bankingand

e-government

By

Mohan Datar17th May 2013

BSE Institute

Mumbai

By

Mohan Datar17th May 2013

Agenda

• What is Banking

• What is e-government

• Level 1 Interfaces: Citizens and Businesses.

• Level 2 Interfaces: Regulators

• Level 3 Interfaces: Financial Inclusion

• Financial Inclusion - Process

• Q & A

• What is Banking

• What is e-government

• Level 1 Interfaces: Citizens and Businesses.

• Level 2 Interfaces: Regulators

• Level 3 Interfaces: Financial Inclusion

• Financial Inclusion - Process

• Q & A

What Is Banking?

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3

What Is eGovernment?

• eGovernment refers to the use by government agencies ofInformation Technologies that have the ability to transformrelations with citizens, businesses, and other arms ofGovernment. ( World Bank)

• These technologies can serve a variety of different ends:– Better Service delivery to Citizens

– Empowerment of Citizens through access to Information

– More efficient Government management (NISG)

EXAMPLES?

• eGovernment refers to the use by government agencies ofInformation Technologies that have the ability to transformrelations with citizens, businesses, and other arms ofGovernment. ( World Bank)

• These technologies can serve a variety of different ends:– Better Service delivery to Citizens

– Empowerment of Citizens through access to Information

– More efficient Government management (NISG)

EXAMPLES?

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Level 1 Interfaces: Payment PurposeCitizens and Businesses

• Citizens

– Payments of Bills and Taxes

– Payments for Services

– PPF

– Pension Schemes

• Businesses– Payments of Bills and Taxes

– Payments for Services

– License Fees

– Tender Fees and Security Deposits

– Receipts and TDS

• Citizens

– Payments of Bills and Taxes

– Payments for Services

– PPF

– Pension Schemes

• Businesses– Payments of Bills and Taxes

– Payments for Services

– License Fees

– Tender Fees and Security Deposits

– Receipts and TDS 5

Level 1 Interfaces: Payment ModesCitizens and Businesses

• Citizens & BusinessesBank’s Drop BoxesAt Bank BranchesECSFranking Machines and e-StampsATMsCash and Cheque Deposit KiosksPayment GatewaysNet BankingNEFT

• BusinessesRTGS

• Citizens & BusinessesBank’s Drop BoxesAt Bank BranchesECSFranking Machines and e-StampsATMsCash and Cheque Deposit KiosksPayment GatewaysNet BankingNEFT

• BusinessesRTGS 6

Level 1 Interfaces: Payment ModesCitizens and Businesses

Sr No. Payment Mode System Interfaces1 Bank’s Drop Boxes ?

2 At Bank Branches

3 ECS4 Franking Machines and e-Stamps

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4 Franking Machines and e-Stamps5 ATMs6 Cash and Cheque Deposit Kiosks7 Payment Gateways8 Net Banking9 NEFT10 RTGS

Level 2 Interfaces:Regulators

• RBI• I Tax• Customs• Excise• Service Tax

• Sales Tax

• IGR

• ULBs

• EOW etc

• RBI• I Tax• Customs• Excise• Service Tax

• Sales Tax

• IGR

• ULBs

• EOW etc8

Level 2 Interfaces:Regulatory IDs

• PAN

• TAN

• DIN

• Sales Tax Registration no

• Service Tax Reg no.

• VAT Reg no.

• Property no.

• Company / Document Registration NoPlethora of Regulators Leading to

MuItiple IDs for each citizen / Business

• PAN

• TAN

• DIN

• Sales Tax Registration no

• Service Tax Reg no.

• VAT Reg no.

• Property no.

• Company / Document Registration NoPlethora of Regulators Leading to

MuItiple IDs for each citizen / Business9

e-government Service Delivery

• Physical Infrastructure Vision: National Service DeliveryGateway

• Legal Infrastructure: Electronic Service Delivery Act

•Legal Infrastructure: Electronic Service Delivery Act

•16 May 2013 10

• Physical Infrastructure Vision: National Service DeliveryGateway

• Legal Infrastructure: Electronic Service Delivery Act

•Legal Infrastructure: Electronic Service Delivery Act

Level 2 Interfaces:Integration & Interoperability

• Citizen / Business

• KYC = Ravana’s Soul

• Two Emerging Identities:– PAN

– Aadhaar

• Citizen / Business

• KYC = Ravana’s Soul

• Two Emerging Identities:– PAN

– Aadhaar

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Level 3 Interfaces:Financial Inclusion

• What is the Origin of the Term ‘Financial Inclusion’?

• Key Objectives:– Extending formal banking system among less privileged in

urban & rural India.

– Weaning them away from unorganized money markets andmoneylenders.

– Equipping them with the confidence to make informed financialdecisions.

• What is the Origin of the Term ‘Financial Inclusion’?

• Key Objectives:– Extending formal banking system among less privileged in

urban & rural India.

– Weaning them away from unorganized money markets andmoneylenders.

– Equipping them with the confidence to make informed financialdecisions.

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Level 3 Interfaces:Financial Inclusion

• Financial Inclusion: Some Facts

• Access to Banking– RBI – 40%

– Census 2011 – 58.7%

• No. of Standard Bank Accounts – 5.4 Cr

• No of Credit cards – 1.9 Cr.

• BPL Population – 29.8% (~30Cr)

• Financial Inclusion: Some Facts

• Access to Banking– RBI – 40%

– Census 2011 – 58.7%

• No. of Standard Bank Accounts – 5.4 Cr

• No of Credit cards – 1.9 Cr.

• BPL Population – 29.8% (~30Cr)13

Level 3 Interfaces:Financial Inclusion

• What is Financial Inclusion?

• RBI Definition:– Financial Inclusion is the process

of ensuring access to appropriate financial products andservices

(which are) needed by all sections of the society in general andvulnerable groups such as weaker sections and low incomegroups in particular

at an affordable cost (&) in a fair and transparent manner

by mainstream institutional players

• What is Financial Inclusion?

• RBI Definition:– Financial Inclusion is the process

of ensuring access to appropriate financial products andservices

(which are) needed by all sections of the society in general andvulnerable groups such as weaker sections and low incomegroups in particular

at an affordable cost (&) in a fair and transparent manner

by mainstream institutional players

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Level 3 Interfaces:Financial Inclusion

• Implementation Process– New Financial Product – ‘No Frills Account’

– New Payment Process – Formation of NPCI

– New KYC Process – Aadhaar

– New Funds Delivery system – Electronic benefits Transfers

– New Approach for Banking System Expansion

– New approach to Build Financial Literacy – Formation ofFinancial Stability Development council (FSDC)

• Implementation Process– New Financial Product – ‘No Frills Account’

– New Payment Process – Formation of NPCI

– New KYC Process – Aadhaar

– New Funds Delivery system – Electronic benefits Transfers

– New Approach for Banking System Expansion

– New approach to Build Financial Literacy – Formation ofFinancial Stability Development council (FSDC)

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Financial Inclusion Process:1. No Frills Account

Eligibility criteria andoperating instructions

This account is offered to those individuals who aredeprived of basic banking services, belong to lowerincome group and towards promoting FinancialInclusion initiative.

The total balance in the account should not exceedRs. 50,000/- at any given point of time.

The sum total of credits in the account shall notexceed Rs. 1 lakh in a year.

This account is offered to those individuals who aredeprived of basic banking services, belong to lowerincome group and towards promoting FinancialInclusion initiative.

The total balance in the account should not exceedRs. 50,000/- at any given point of time.

The sum total of credits in the account shall notexceed Rs. 1 lakh in a year.

Service Delivery At all Bank Branches.

Initial deposit amount Rs. 100/-Average Monthly Balance(AMB)

Rs. 100/-

ATM-cum-debit card Issuance charges waived however available subjectto annual charges

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Financial Inclusion Process:1. No Frills Account Thru BC

Service Delivery At designated Customer Service Points (CSPs)through Business Correspondent using MicroATMs.

Physical Statement Mini statement available through POT(Micro-ATM). Optional half yearly statement providedon request by BC.

Cash deposit charges NilAccount opening charges NilAccount opening charges NilSmart card e-passbook Rs. 100/-Average Monthly Balance (AMB) NilCash withdrawal charges Rs. 3/- per transaction

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Financial Inclusion Process:1. No Frills Account 31/03/13

• No. of Standard Bank Accounts – 5.4 Cr

• No. of No Frills Accounts - 17.14 Cr

• No of Credit cards – 1.9 Cr.

• No. of Kisan credit cards - 3.17 Cr

• No. of BCs - 1,52,328

• No. of Standard Bank Accounts – 5.4 Cr

• No. of No Frills Accounts - 17.14 Cr

• No of Credit cards – 1.9 Cr.

• No. of Kisan credit cards - 3.17 Cr

• No. of BCs - 1,52,328

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Financial Inclusion Process:2. New Payment Process: AEPS

• The four Aadhaar enabled basic types of banking transactions:– Balance Enquiry

– Cash Withdrawal

– Cash Deposit

– Aadhaar to Aadhaar Funds Transfer

• The only inputs required for a customer to do a transaction underthis scenario are:-– IIN (Identifying the Bank to which the customer is associated)

– Aadhaar Number

– Fingerprint captured during their enrolment

• The four Aadhaar enabled basic types of banking transactions:– Balance Enquiry

– Cash Withdrawal

– Cash Deposit

– Aadhaar to Aadhaar Funds Transfer

• The only inputs required for a customer to do a transaction underthis scenario are:-– IIN (Identifying the Bank to which the customer is associated)

– Aadhaar Number

– Fingerprint captured during their enrolment

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Financial Inclusion Process:2. New Payment Process: AEPS

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Financial Inclusion Process:3. New KYC Process AADHAR

• The purpose of the UIDAI is to issue a uniqueidentification number (UID) to all Indian residentsthat is– Robust enough to eliminate duplicate and fake

identities.

– Can be verified and authenticated in an easy, costeffective way

• The purpose of the UIDAI is to issue a uniqueidentification number (UID) to all Indian residentsthat is– Robust enough to eliminate duplicate and fake

identities.

– Can be verified and authenticated in an easy, costeffective way

Financial Inclusion Process:3. New KYC Process AADHAR

• Three Basic components of Aadhaar– Demographic Data.

– Biometric Data

– De-Duplication

• Three Basic components of Aadhaar– Demographic Data.

– Biometric Data

– De-Duplication

Financial Inclusion Process:3. New KYC Process AADHAR

• 3 Generations of Identity authentication• 1G

– In Person / Eyewitness

• 2G– Variety of ID Documents

• 3G– Aadhaar

• 3 Generations of Identity authentication• 1G

– In Person / Eyewitness

• 2G– Variety of ID Documents

• 3G– Aadhaar

Financial Inclusion Process:3. New KYC Process AADHAR

• 3G ID Features– Virtual

– 24 X 7 availability

– Global Access

– Systemic Interoperability

– Single Version of Truth

• 3G ID Features– Virtual

– 24 X 7 availability

– Global Access

– Systemic Interoperability

– Single Version of Truth

Financial Inclusion Process:3. New KYC Process AADHAR

1. Aadhar is proof of identity, not of citizenship

2. To establish identity, authenticate online

3. Aadhaar is valid throughout the country

1. Aadhar is proof of identity, not of citizenship

2. To establish identity, authenticate online

3. Aadhaar is valid throughout the country

Financial Inclusion Process:4. Electronics Benefits Transfer

• GoI launched the Scheme in 51 districts on 1st Jan,2013

• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.

• Est. Volume in next 2 Years: Rs. 5L Cr.

• NFS Usage Data

• GoI launched the Scheme in 51 districts on 1st Jan,2013

• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.

• Est. Volume in next 2 Years: Rs. 5L Cr.

• NFS Usage Data

Month/Year

No. Ofparticipants

No. Of ATM No. ofbalanceenquiry

No. of Cashwithdrawal Pin Change Mini

StatementTotal

Volume

Apr-13 143 111,493 37,257,214 138,220,349 216,506 4,250,210 179,944,279

Apr-12 93 98,025 40,977,284 125,408,277 132,495 2,746,105 169,264,161

Financial Inclusion Process:5. New Approach for Banking Expansion

• 40% lending MUST be to• Small Farmers

• Students

• Low Cost Home loans

• All villages with population above 2000 populationconnected on Broadband

• All Villages below 2000 population to be connected inthis 5yr Plan.

• Increased Reliance on ICT• Percentage of ICT accounts has increased from 25% to 45%

• 40% lending MUST be to• Small Farmers

• Students

• Low Cost Home loans

• All villages with population above 2000 populationconnected on Broadband

• All Villages below 2000 population to be connected inthis 5yr Plan.

• Increased Reliance on ICT• Percentage of ICT accounts has increased from 25% to 45%

Financial Inclusion Process:6. New Approach for Financial Literacy

• A technical group on Financial Inclusion and Financial Literacy under

FSDC – Coordinating the efforts of all Financial Sector Regulators

• National strategy on Financial Education prepared

• Financial Literacy-To be included in School Curriculum at National

Level.

• 658 Financial Literacy Centers (FLCs) functioning as at the end of

December 2012

• 1.5 million people educated during the period April to December 2012

• A technical group on Financial Inclusion and Financial Literacy under

FSDC – Coordinating the efforts of all Financial Sector Regulators

• National strategy on Financial Education prepared

• Financial Literacy-To be included in School Curriculum at National

Level.

• 658 Financial Literacy Centers (FLCs) functioning as at the end of

December 2012

• 1.5 million people educated during the period April to December 2012

Q and A

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THANK YOU