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e-Finance for Development - An Indian Perspective . Monterrey, Mexico March 19, 2002. Agenda. Development Banking in India ICICI - Development framework Sectoral initiatives Legal structure in India Going Forward . Development Banking in India . Priority Sector in India characterised by

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  • Development Banking in India
  • ICICI - Development framework
  • Sectoral initiatives
  • Legal structure in India
  • Going Forward
development banking in india
Development Banking in India
  • Priority Sector in India characterised by
    • Low capitalisation and limited assets
    • Geographical diversity and high mortality
    • Poor access to capital markets
    • Non accessibility to credit history
    • Cash intensity in transactions
    • Cyclical fund requirement and high commodity risk
    • Informal sector and uncorporatised
    • High dependence on Govt. support/ subsidies
  • Poor financial disclosure on account of tax issues
  • High risk perception has led to high borrowing costs


  • Development Banking in India
  • ICICI - Development framework
  • Sectoral initiatives
  • Legal structure in India
  • Going Forward
icici group development framework
ICICI Group - Development framework
  • Product lead approach for each sector
    • Small and Medium Enterprise (SME)
    • Agriculture and Micro Finance
    • Community Banking
    • Internet and Electronic Banking
  • Product and delivery technology dependent
  • Branch remote approach
  • Central processing centres enable optimum monitoring


  • Development Banking in India
  • e-initiatives in ICICI Group
  • Sectoral initiatives
  • Legal structure in India
  • Going Forward
sme strategic framework
SME - Strategic framework
  • Concerns
  • Improve Quality
  • Exit weak accounts
  • Improve yields
  • Reprice on RaRoC benchmark
  • Reduce delivery cost
  • Web / call centre based delivery
  • Aspirations
  • Non capital intensive growth
  • Liability/ fee income
  • Cash management product
  • Innovative delivery
  • Smart / Credit cards
  • Web / call centre delivery
  • Service relationships
  • Banker for services rather than credit
sme service delivery
SME - Service & Delivery

Processes all trade related requests for a city

  • Information
  • Logging requests
  • Drop box point
  • High value cash transactions

Call centre


Trade finance factory

  • Handles exceptions
  • Cross sells
  • Monitors accounts

Processes all pure credit related requests

Account/ Relationship manager


Credit factory

  • Provide support backbone for all transaction requests
  • Services doorstep deliveries
  • For all transactions except high value cash
  • Information
  • Logging requests




“Processing centres*”

online products
Online Products

Bill Junction

Utility bill payments

Pay Seal

electronic payment system

Corporate Infinity

online transfer/ settlement system

e-banking in ICICI

ICICI Markets

online FX, Debt, SME Portal

ICICI Direct and ICICI Select

Business Multiplier

web interface

agri micro credit initiatives
Agri - Micro-credit initiatives
  • Innovative structure for micro-credit in rural areas
    • Overcome the reach problem
    • Lower administration costs
  • Channels for delivering micro-credit
    • Sugar companies
    • Seed producers
    • Input companies
    • NGOs and micro credit institutions

These channels help build volumes, reduce costs and monitor credit risk

agri farmer service centres fscs
Agri - Farmer Service Centres (FSCs)
  • FSC provides one stop solution to the farmer
    • Agri extension support
    • Inputs and other services
    • Credit
    • Market linkage
    • Rural infrastructure
  • These FSCs are promoted by Agri Input suppliers , and avoids duplication of efforts by different players
smart card solution for fscs




  • Credit
  • Debit
  • e-purse

Farmer Service Center

Collect Money

Online update of Bank accounts

Smart card solution for FSCs

Bank Account/

Credit History

Output Sale

smart cards an alternative
Smart Cards … An alternative
  • Difficulty in rural banking
    • Management of Cash
      • Cost of idle cash
      • Cost of cash handling infrastructure
    • Geographical spreads
  • Solutions through
    • Elimination/ reduction of cash handling
    • Innovation of low cost delivery channels
  • Smart Card - an ideal vehicle
smart cards at icici
Smart Cards at ICICI
  • Smart Cards launched in October 2000
    • Infosys Campus in Bangalore
    • Manipal Academy of Higher Education (MAHE)
  • New Initiatives
    • Satyam Smart Card
    • HPCL Petro Card
    • Work on multiple application card - Debit, Credit, E-Purse and Loyalty
social initiatives icicicommunities
Social Initiatives - ICICIcommunities
  • Give Online: On-line donation channel
    • Retail donors can donate to specific initiatives across India
    • 100% of donations reach the initiative
    • Prompt feedback on utilisation of grant
    • Rs. 11.5 million towards Gujarat Earthquake
  • Shop the Cause: On-line shopping mall
    • Over 100 exquisite hand crafted products available
    • The only facility of its kind available to

non-profits in India

innovations in delivery channels
Innovations in Delivery Channels
  • Sustainable Access for Rural India (SARI) project
    • Partners: MIT Media Labs, Harvard University, IIT-Chennai, I-Gyan, DHAN Foundation, ICICI Ltd
    • Providing reliable Internet access through Kiosks in rural Madurai using corDECT WiLL
    • 100 kiosks managed by entrepreneurs to be set-up
    • Providing e-governance, communication and information services
  • Possibility of delivering banking services through Internet kiosks being explored
internet banking
Internet Banking
  • First Bank in India to launch website - 1996
  • First Bank in India to launch Internet Banking - 1997
  • First Bank in India to launch online bill payment-1999
  • Only Bank in India with million online customers
  • Monthly average transactions per online customer- 7
internet banking statistics
Internet Banking - Statistics
  • 117% increase in transaction volume since April 2001
  • More than 1 million contacts in February 2002
  • Coverage across 100 locations in the country
  • 103% increase in internet banking registrants since April ‘01
  • 84% increase in transactions since April ‘01
retail initiatives utility payments
Retail Initiatives - Utility Payments
  • First bank to introduce this service in India
  • Tie-ups with 50 utilities for online payments
  • Talks with state governments/ municipalities to facilitate e-governance
    • AP Govt. initiative - eSevaonline
    • Vizag Municipality - Saukaryam


  • Development Banking in India
  • e-initiatives in ICICI Group
  • Sectoral initiatives
  • Legal structure in India
  • Going Forward
e banking related laws
e-banking related laws
  • e-banking governed by:
    • Information Technology (IT) Act, 2000
    • Internet Banking guidelines of the Central Bank
  • India is the 2nd country in Asia to initiate technology related act
  • e-banking encouraged through:
    • Focussed legislation
    • Access to IT skills, computers and incentives to ISPs
salient features of it act
Salient features of IT Act
  • Drawn as per the UN Model Law for IT
  • Legal recognition to
    • Electronic records
    • Electronic contracts
    • Digital signature
  • Appointment of certifying authority and controller
    • Issuer of public and private key
    • Controller - repository of all the signatures
  • e-Governance- Filing of documents in e-form
central bank guidelines
Central Bank guidelines
  • Bank to have security policy approved by Board of Directors
  • Introduction of logical access control systems
  • Security buffers between bank system and internet
  • Products to be compliant with domestic foreign exchange regulations
  • Setting of inter bank payment gateway
  • Mandatory disclosure of risks in internet based dealings


  • Development Banking in India
  • e-initiatives in ICICI Group
  • Sectoral initiatives
  • Legal structure in India
  • Going Forward
creating the e wave statutory
Creating the “e” wave - Statutory
  • Legal validity for e transaction
    • Consumer Protection
    • Negotiable Instrument Act
    • Acceptance of electronic based document
  • Full Account Convertibility
  • Exchange Control Laws
  • Strengthening the Intellectual Property Laws
creating the e wave infrastructure
Creating the “e” wave - Infrastructure
  • Encourage internet/ “e” usage
    • Voice over Internet
    • Improvement in telecom infrastructure
    • Tax incentives for internet based transaction
    • Incentive for electronic settlement
creating the e wave banking
Creating the “e” wave - Banking
  • Allowing appointment of third parties for banking
  • Allowing variable interest rates on deposits
  • Modifications in “service area approach” to encourage competition in the rural areas
  • Undertaking specific initiatives to provide an impetus to rural banking
    • Computerisation of operations of banks especially the rural operations
    • Land Records Computerisation
    • Networking of Post Offices
creating the e wave electronic
Creating the “e” wave - Electronic
  • Standards for smart cards
  • Guidelines on smart card interoperability
  • Changes in Central Bank guidelines
    • Eligibility of clients
    • Loading of value
    • Provision of written reports and receipts
  • Govt. incentives to stakeholders
  • Govt. encouragement for ATMs/ POS infrastructure terminals