Financial Inclusion & Branchless Banking Initiatives

1. Financial Inclusion & Branchless Banking Initiatives Using Information Technology for rural outreach

2. Contents • Branchless Banking – Corporation Bank’s Business Model • Technology Framework • Way Forward

3. Branchless Banking Model • Corporation Bank initiated the process of Financial Inclusion in June 2006 to reach out to the rural population who were hitherto not having Bank accounts • The Bank adopted the Branchless Banking model with the help of technology to handle the transactions • RBI Guidelines on engagement of Business Correspondents enabled the rural branches to reach out to the remote villages • Typically it involves the ability to handle high volume of low value transactions • Provide basic banking services at the doorsteps of the villagers

4. Branchless Banking Model – Financial Inclusion Survey • Financial Inclusion – Survey • Survey formed the basis for identification of the financially excluded • Survey Format segregated into three sections • Village Information • Family Information • Family Members Particulars

5. Branchless Banking Model – Financial Inclusion Survey Survey Methodology • Village Information: • Each Village linked to a particular Branch • Each Branch can be linked to multiple Villages • Village Profile to be captured once • Number of Households in the village • Availability of Infrastructure like Post Office, Hospital, Veterinary Clinic, Schools etc.

6. Branchless Banking Model – Financial Inclusion Survey Family Members Information: • Links all Family Members to the unique family number • Enables capture of information such as • Religion • Caste • Extent of Land Owned • Assets Owned • Enables capture of Bank Account details • Facilitates entry of other information such as • Willingness to open an account • Loans with money lenders • Insurance / Other details • Interested Activities • Ensures capture of other details

7. Branchless Banking Through Business Correspondents • The Bank has availed BC services from: • Individuals - Should hail from the same village - Minimum Qualification – 7th Standard Pass - Preferably SHG Members • Section 25 Companies under Companies Act - Similar Criteria as above - Branch Manager assists in identifying the correct person • Trusts • The RBI Working Group has recently recommended additional entities who • can be engaged as Business Correspondents and now it was announced that • Individuals would be permitted as BCs. This would facilitate Banks to reach • out to more villages

8. Branchless Banking – Methodology Adopted • The Bank adopted one Business Correspondent for one village model who is available throughout the day for the villagers to transact business • Individual Accounts are opened in the Core Banking server at the respective branches • Account Information only with the Bank • Transactions alone are routed through the Technology Service Provider

9. Branchless Banking Through Business Correspondents • Utility • Service provided at their doorstep/ village • - Saves on the commuting time and transportation cost • Availability of Basic Banking Services throughout the day • - The BC is a permanent resident of the village and hails from the same village and hence can assist customers at any time of the day • Hassle free for the villagers as there are no challans/vouchers • - User-friendly and no need to write or fill-up cheques • Familiarity in dealing with their own person • Reduces the cost of transaction • Ability to handle large volumes with less staff • Reduces the pressure on the counters at rural / semi-urban branches

10. Branchless Banking - Technology • Different Technologies were evaluated and tested by the Bank to ensure that it • Offers High levels of Security • Reduces Transaction Cost • Prevents loss or destruction of data • Ensures User friendliness • Increases Efficiency • Enables Cross Selling of products and services

11. Branchless Banking - Technology • Secure • - Two factor authentication card and Biometric Authentication • Scalable • - Can handle multiple products & services • Reliable • - Transactions are secure and ensures non-repudiation • Flexible • - Supports on-line and off-line transactions • Interoperable • - Customers can use Branch/alternate BC in case of need • Robust & Upgradable • - Ability to support Contactless, Contact and Magnetic Stripe Cards • Cost Effective

12. Branchless Banking - Technology • Type of Technology Used • Card Based Point of Transaction Terminal • Smart/ Radio Frequency Identification (RFID) Cards used • Supports Fingerprint Authentication • Alternate Power Sources for continuous operation • Mobile and easy to carry • Voice Guidance in Local Language • Support for multiple communication Channels • Device stores minimal data • Ability to support multiple products and services • Receipt printing using Impact Printers • Scalable • Supports off-line and on-line transactions

13. Branchless Banking – Services Offered • Cash Deposits • Cash Withdrawals • Balance Enquiry • Mini Statement • Transfer of Funds between Own Accounts • Loan Repayments • Loan Withdrawals in Running Accounts (GCC) • Self Help Group Accounts (SB and Loan Accounts) • Recurring Deposits • Payments to Milk Pourers of dairy co-operatives • National Rural Employment Guarantee Payouts • Social Security Pension Payments

14. Branchless Banking – Services Offered Products in the Offing: • Person to Person (P2P) Remittance Facilities using mobile • Branchless Banking using Mobile Phones • JanaShree Bima Yojana Premia Collection • Utility Bill Payments • Pre-paid Mobile Recharge • Remittance from One Card to another Card

15. Branchless Banking – Present Position- State-wise Distribution

16. Branchless Banking – Accounts Opened Growth of ‘No-Frill’& GCC Accounts Amt. In lakhs

17. Branchless Banking – Transactions Handled Transaction Growth [Amount in lakhs of Rs.]

18. Branchless Banking – Villages with Population > 2000

19. Branchless Banking – Our Business Model • Branchless Banking is an alternate Delivery Channel for providing basic banking services at an affordable cost • Financial Inclusion is not a Social Obligation or a Regulatory Directive but viewed as a viable business proposition and a commercial initiative • The cost per transaction through this model would be a fraction of the cost of a transaction incurred at a branch • Facilitates in extending the outreach and provides the ability to offer new products and services • The model chosen by the Bank is not limited in scope and restrictive in use but provides the capability to support livelihood programs to add economic value

20. Branchless Banking – Way Forward • To cover 4000 villages by March 2012 and 6000 villages by March, 2013 • Increase the card population and Provide multiple products on the Card • Extend incentives to Business Correspondents for canvassing accounts • Scout for Cash based activities in the village and route them through cards • To cover 200 locations under Urban Financial Inclusion by March 2012 • To implement EBT payment in 900 locations by March 2012 and 1000 locations by March 2013

21. Branchless Banking – Way Forward • Expanding the footprint in all the existing Service Area Villages of the Bank • Tie-up with Dairy Units for routing milk payments • Further extending Electronic Benefit Payments in Andhra Pradesh, Karnataka, Haryana & Other States • Extend Cards to Self Help Groups to facilitate them to transact from their villages • Facilitating customers to transact using Mobile Phones

22. Branchless Banking – Way Forward • Obtained licenses for 5 Microsate Branches to cater to the urban poor – 3 branches have become functional. • Identify and install at rural markets where people congregate • Set up manned kiosks at villages to serve as a linkage between the branch and the Business Correspondents after obtaining necessary approvals from the regulator

23. Branchless Banking – Financial Inclusion Plan

24. Awards & Accolades • The Bank has won many awards and the following were for the Financial Inclusion and Branchless Banking initiatives undertaken by the Bank • SKOCH Challenger Award “Inclusion Champion of the Year” for the year 2010 for contributing to inclusive growth of the nation. • SKOCH Challenger Award - “Inclusion Champion of the Year – 2011” • Won IBA – Best Bank Award 2010 under “Best Financial Inclusion Initiative”. • The ‘Committee on Financial Inclusion’ headed by Dr. C Rangarajan, the then Chief Economic Advisor to the Prime Minister of India made a special mention on the ‘Branchless Banking’ initiative of the Bank .

25. Thank you