finance journal

Banking, Insurance, Pension A Journal of the Department of Financial Services

Theme :

Financial Inclusion

• Editorial and Messages

• Financial Inclusion

• Recent developments in Banking

• Recent developments in Insurance

• Recent developments in Pensions

• Important appointments

Department of Financial ServicesMinistry of Finance

Government of India

Issue 1 - September 2012

Publication issued by the Department of Financial Services, Ministry of Finance, Government of India

Contents

EditorialM

odern economies depend upon efficient allocation and optimal utilisation of savings and credit. Banks,

Insurance companies and Financial Institutions (FIs) play a pivotal role in undertaking this function and

ensuring that high economic growth is sustained. In India, these institutions have facilitated the growth in the

economy and have displayed remarkable resilience in the post financial crisis period. In the recent past, though the

Indian economy has slowed down, Financing, Insurance, Real Estate and Business Services continue to record impressive

growth of over 9 per cent.

To improve the functioning of various FIs, the Department of Financial Services (DFS) has taken several initiatives and

many more on the anvil. These include steps aimed to achieve effective financial inclusion, improve flow of agriculture

credit and lending to minorities and for education, payments and receipts through electronic mode, infrastructure

financing, debt recovery, timely settlement of insurance claims, customer grievance redressal, pension reforms etc.

The Banking, Insurance and Pension - A Journal for the Financial Services will be published at the beginning of every

quarter with a view to effectively disseminate the developments in the financial services sector. Each issue covers a

specific theme. The theme of the first issue is Financial Inclusion. Insurance for the masses would be the theme for the

next issue .

We at DFS look forward to reach out to the readers for deeper understanding of financial services and undertaking

the requisite course correction in policy interventions. Readers are invited to contribute an article on the theme of the

next issue and provide their feedback and suggestions for further improvements in this Journal.

Message from the Finance Minister

Shri P. ChidambaramFinance Minister

Shri Namo Narain Meena Minister of State for Finance (Expenditure & Financial Services)

Messages

Shri D.K. MittalSecretary, Department of

Financial Services

September 2012 - Issue 1 Department of Financial Services - Quarterly Journal

EditorialM

odern economies depend upon efficient allocation and optimal utilisation of savings and credit. Banks,

Insurance companies and Financial Institutions (FIs) play a pivotal role in undertaking this function and

ensuring that high economic growth is sustained. In India, these institutions have facilitated the growth in the

economy and have displayed remarkable resilience in the post financial crisis period. In the recent past, though the

Indian economy has slowed down, Financing, Insurance, Real Estate and Business Services continue to record impressive

growth of over 9 per cent.

To improve the functioning of various FIs, the Department of Financial Services (DFS) has taken several initiatives and

many more on the anvil. These include steps aimed to achieve effective financial inclusion, improve flow of agriculture

credit and lending to minorities and for education, payments and receipts through electronic mode, infrastructure

financing, debt recovery, timely settlement of insurance claims, customer grievance redressal, pension reforms etc.

The Banking, Insurance and Pension - A Journal for the Financial Services will be published at the beginning of every

quarter with a view to effectively disseminate the developments in the financial services sector. Each issue covers a

specific theme. The theme of the first issue is Financial Inclusion. Insurance for the masses would be the theme for the

next issue .

We at DFS look forward to reach out to the readers for deeper understanding of financial services and undertaking

the requisite course correction in policy interventions. Readers are invited to contribute an article on the theme of the

next issue and provide their feedback and suggestions for further improvements in this Journal.

Message from the Finance Minister

Shri P. ChidambaramFinance Minister

Shri Namo Narain Meena Minister of State for Finance (Expenditure & Financial Services)

Messages

Shri D.K. MittalSecretary, Department of

Financial Services

September 2012 - Issue 1 Department of Financial Services - Quarterly Journal 4 5

Why Financial Inclusion

“Swabhimaan”- the Financial Inclusion Campaign

To increase the penetration and

FI, the “Swabhimaan” campaign

was launched in pursuance of

Budget Announcement (2010-

11). Government advised banks

to open branches in all

habitations of 5,000 or

more population in under-banked

districts and 10,000 or more

population in other districts

under this campaign. In two

years time ending March 2012,

Banking facilities were provided

to 74,194 such villages. Further,

62,468 Banking Correspondent

Agents (BCAs) were appointed

and about 3.16 FI accounts had

been opened by end of March,

To build on the momentum and

success achieved, the

“Swabhimaan” campaign was

extended as per Budget

Announcement (2012-13) to

habitations with population of

more than 1000 in North Eastern

and hilly States and to other

habitations which have crossed

population of 2,000 as per

Census 2011. About 45,000 such

habitations have been identified

to be covered under the

extended “Swabhimaan”

campaign. Bank branches in

1237 such villages have been

opened in the current year.

The objective of Financial

Inclusion(FI) is to extend

financial services to the large

hitherto unserved population of the

country to unlock its growth

potential. In addition, it strives to

achieve more inclusive growth by

making financing available to the

poor in particular.

FI enables Banks to channelize the

savings of the unserved population

of the country and offers new

business avenues for lending to

this group. Prior to the recent

sustained efforts on FI, the banks

were barely scrapping the potential

business ,both on the deposit and

lending side.

Rural incomes have grown rapidly

in a short time span due to high

priority accorded by the Govt. to

rural development and

employment programs. A survey

by CRISIL, a ratings and research

firm, has reported in August 2012

that for the first time since

economic reforms began two

decades ago, consumption in rural

India is growing faster than in

urban areas. Between 2009-10 and

2011-12, additional spending by

rural India was Rs. 3,750 billion,

significantly higher than Rs. 2,994

billion by the urban population.

Banks have a key role in

converting into business

opportunities, the untapped large

no. of small deposits in rural areas

and facilitate achievement of the

aspirations of the bulk of our

population in these areas.

The increase in rural income will

open up various types of lending.

Not only will the demand for

business/commercial, education,

home and personal loans increase

substantially, various types of

services such as remittance

facilities will need to be provided

by the banks through modern

payment system to a very large

number of people who have hardly

interfaced with a modern financial

system. The process is expected to

enable manifold growth in the

banks’ business. Thus, FI is a win

–win situation for both the hitherto

uncovered people and the banks.

Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM and to ensure a closer relationship between poor

Policy for Branch Expansion

Ultra Small Branches (USB)

To minimize the cost of FI initiative, ensure universal accessibility to a range of banking services and instill confidence amongst bank customers, Ultra Small Branches(USBs) are set up at all places where opening of a brick and mortar branch is presently not viable. USBs comprise an area of 100-200 sq. feet where a bank-designated officer will be available with a laptop at a predetermined day and time of the week. The BCA also operates from such premises. The BCA provides cash dispensation services and the bank officer offers other bank services, undertakes field verification and follows up on banking transactions.

Banking presence ensured in all unbanked Blocks by March, 2012

There were 81 unbanked Blocks in the country, as on 31.03.2011. With the persistent efforts of the Government, banking facilities have been provided in all the unbanked Blocks by March, 2012, either through Brick and Mortar Branches or Business Correspondents Model or Mobile Banking.

As a next step, Banks have been advised to cover all those blocks which have so far been covered by mobile banking only, with BCA and USBs.

Financial Inclusion Financial Inclusion

Business Correspondent Agent

Launch of Ultra Small Branches(USB) by the Bank of Baroda

people and the organized financial system. RBI has permitted various individuals/entities that the banks may engage as Business Correspondents. Business Correspondent Agents (BCAs) are

the individuals appointed by the Business Correspondents at the point of customer interface or retail outlet of a bank.

The first step in FI is the interface between a bank customer and a bank. In

India, conventionally this interface has been through a normal brick and mortar bank branch. Since banking is essentially a commercial business there are limits to which such bank branches can be spread out in different areas to cover the entire population. It is only in the recent past that with the use of communications technology that a

bank branch has been able to spread out geographically.

Scheduled Commercial Banks (SCBs) had 97,473 branches in the country as on 30th June, 2012.Out of these 63.12% are located in rural and semi urban areas. To increase the outreach of banking services and to promote the FI efforts of banks, detailed guidelines have been issued by the Government whose salient points are-

lSetting up more brick and mortar branches with the objective to have a bank branch within a radial distance of 5 km.

To open bank branches in all habitations of 5,000 or more population in under banked districts, and 10,000 or more population in other districts

RBI has provided for a Branch Authorization Policy under which SCBs are permitted to open branches in rural, semi urban and urban areas, in North Eastern States & Sikkim and in Tier 2 to Tier 6 centres (population upto 99,999) in rest of the country, without having to take permission, subject to reporting.

In their Annual Branch Expansion Plan (ABEP), SCBs are required to allocate at least 25% of the total number of branches proposed to be opened during the year in unbanked Tier 5 and Tier 6 centres (population upto 9,999) which do not have a brick and mortar structure of any SCB for customer based banking transactions.

To incentivize banks to establish additional branches in Tier II centers, obtaining the prior approval of the RBI is no longer a requirement in the case of commercial banks looking at opening branches in such centers. The RBI has also incentivized banks by authorizing them to set up additional branches in Tier I centers for every branch they open in Tier II centers.

September 2012 - Issue 1 Department of Financial Services - Quarterly Journal 4 5

Why Financial Inclusion

“Swabhimaan”- the Financial Inclusion Campaign

To increase the penetration and

FI, the “Swabhimaan” campaign

was launched in pursuance of

Budget Announcement (2010-

11). Government advised banks

to open branches in all

habitations of 5,000 or

more population in under-banked

districts and 10,000 or more

population in other districts

under this campaign. In two

years time ending March 2012,

Banking facilities were provided

to 74,194 such villages. Further,

62,468 Banking Correspondent

Agents (BCAs) were appointed

and about 3.16 FI accounts had

been opened by end of March,

To build on the momentum and

success achieved, the

“Swabhimaan” campaign was

extended as per Budget

Announcement (2012-13) to

habitations with population of

more than 1000 in North Eastern

and hilly States and to other

habitations which have crossed

population of 2,000 as per

Census 2011. About 45,000 such

habitations have been identified

to be covered under the

extended “Swabhimaan”

campaign. Bank branches in

1237 such villages have been

opened in the current year.

The objective of Financial

Inclusion(FI) is to extend

financial services to the large

hitherto unserved population of the

country to unlock its growth

potential. In addition, it strives to

achieve more inclusive growth by

making financing available to the

poor in particular.

FI enables Banks to channelize the

savings of the unserved population

of the country and offers new

business avenues for lending to

this group. Prior to the recent

sustained efforts on FI, the banks

were barely scrapping the potential

business ,both on the deposit and

lending side.

Rural incomes have grown rapidly

in a short time span due to high

priority accorded by the Govt. to

rural development and

employment programs. A survey

by CRISIL, a ratings and research

firm, has reported in August 2012

that for the first time since

economic reforms began two

decades ago, consumption in rural

India is growing faster than in

urban areas. Between 2009-10 and

2011-12, additional spending by

rural India was Rs. 3,750 billion,

significantly higher than Rs. 2,994

billion by the urban population.

Banks have a key role in

converting into business

opportunities, the untapped large

no. of small deposits in rural areas

and facilitate achievement of the

aspirations of the bulk of our

population in these areas.

The increase in rural income will

open up various types of lending.

Not only will the demand for

business/commercial, education,

home and personal loans increase

substantially, various types of

services such as remittance

facilities will need to be provided

by the banks through modern

payment system to a very large

number of people who have hardly

interfaced with a modern financial

system. The process is expected to

enable manifold growth in the

banks’ business. Thus, FI is a win

–win situation for both the hitherto

uncovered people and the banks.

Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM and to ensure a closer relationship between poor

Policy for Branch Expansion

Ultra Small Branches (USB)

To minimize the cost of FI initiative, ensure universal accessibility to a range of banking services and instill confidence amongst bank customers, Ultra Small Branches(USBs) are set up at all places where opening of a brick and mortar branch is presently not viable. USBs comprise an area of 100-200 sq. feet where a bank-designated officer will be available with a laptop at a predetermined day and time of the week. The BCA also operates from such premises. The BCA provides cash dispensation services and the bank officer offers other bank services, undertakes field verification and follows up on banking transactions.

Banking presence ensured in all unbanked Blocks by March, 2012

There were 81 unbanked Blocks in the country, as on 31.03.2011. With the persistent efforts of the Government, banking facilities have been provided in all the unbanked Blocks by March, 2012, either through Brick and Mortar Branches or Business Correspondents Model or Mobile Banking.

As a next step, Banks have been advised to cover all those blocks which have so far been covered by mobile banking only, with BCA and USBs.

Business Correspondent Agent

Launch of Ultra Small Branches(USB) by the Bank of Baroda

people and the organized financial system. RBI has permitted various individuals/entities that the banks may engage as Business Correspondents. Business Correspondent Agents (BCAs) are

the individuals appointed by the Business Correspondents at the point of customer interface or retail outlet of a bank.

The first step in FI is the interface between a bank customer and a bank. In

India, conventionally this interface has been through a normal brick and mortar bank branch. Since banking is essentially a commercial business there are limits to which such bank branches can be spread out in different areas to cover the entire population. It is only in the recent past that with the use of communications technology that a

bank branch has been able to spread out geographically.

Scheduled Commercial Banks (SCBs) had 97,473 branches in the country as on 30th June, 2012.Out of these 63.12% are located in rural and semi urban areas. To increase the outreach of banking services and to promote the FI efforts of banks, detailed guidelines have been issued by the Government whose salient points are-

lSetting up more brick and mortar branches with the objective to have a bank branch within a radial distance of 5 km.

To open bank branches in all habitations of 5,000 or more population in under banked districts, and 10,000 or more population in other districts

RBI has provided for a Branch Authorization Policy under which SCBs are permitted to open branches in rural, semi urban and urban areas, in North Eastern States & Sikkim and in Tier 2 to Tier 6 centres (population upto 99,999) in rest of the country, without having to take permission, subject to reporting.

In their Annual Branch Expansion Plan (ABEP), SCBs are required to allocate at least 25% of the total number of branches proposed to be opened during the year in unbanked Tier 5 and Tier 6 centres (population upto 9,999) which do not have a brick and mortar structure of any SCB for customer based banking transactions.

To incentivize banks to establish additional branches in Tier II centers, obtaining the prior approval of the RBI is no longer a requirement in the case of commercial banks looking at opening branches in such centers. The RBI has also incentivized banks by authorizing them to set up additional branches in Tier I centers for every branch they open in Tier II centers.

Opening of one bank account per family

Opening of a Bank Account is one of the key requirements in FI. The country has made appreciable progress on this parameter during 2001-2011 as per Census data on Households (HHs) Availing Banking Services.

Number of Households availing Banking Services

Total Number of Households

2001 2011 2001 2011

Total 68,230,642 144,814,788 191,963,935 246,692,667

Rural 41,639,949 91,369,805 138,271,559 167,826,730

Urban 26,590,693 53,444,983 53,692,376 78,865,937

Percentage of Households availing Banking in 2001 and 2011Services

Percentage of Households availing banking services

2001 2011

Total 35.5 58.7

Rural 30.1 54.4

Urban 49.5 67.8

In 2011, the percentage of Hhs availing Banking Services in major States.

To inculcate saving habits and to extend banking facilities to the migrant labour and street vendors/ hawkers in urban areas, a drive has been launched to open their bank accounts. Oriental Bank of Commerce (OBC), Convenor State Level Bankers Committee (SLBC ) of Delhi launched this drive. The bank (i) started 24x7 Call Centre with toll-free telephone number, telephone number for SMS and has created e-mail ID for e-mail queries, (ii) imparted training to the Call Centre Staff, (iii) provided wide-publicity of the campaign , (iv) identified the target pocket and (v) undertook regular monitoring of the accounts opened. The drive has started giving results with nearly 42,000 accounts opened. All PSBs have now been advised to initiate similar drives in the State(s)/UTs where their Bank is SLBC Convenor.

RBI has advised all Scheduled Commercial Banks/Regional Rural Banks/all Cooperative Banks to offer a ‘Basic Savings Bank Deposit Account’ which will offer minimum common facilities to all their customers such as ATM card or ATM-cum-Debit Card, no requirement of any minimum balance and no charge for non-operation/activation of in-operative account.

In 2001, slightly more than 35% of the total number of HHs availed banking services. In rural areas, less than one in three HHs and in urban areas, one in two HHs availed banking services, 11 years ago. In 2011, the position has improved considerably with nearly 3 out of every 5 HHs in India availing banking services.In rural areas more than one in two and in urban areas more than 2 out of every 3 HHs availed banking services.

During 2001-2011, the no. of HHs availing banking services overall has increased by 112 % or a

CAGR of 7.8 % per annum. In rural areas they have increased by 8.2 % p.a and in urban areas by 7.2 % p.a.

Prime Minister, in his Independence day speech of 2012, has announced that “it will be our endeavour to ensure that all households benefit from bank accounts in the next 2 years.” It has been decided to take up this task on a campaign basis. Accordingly, banks have geared up their branches and it is expected that most of the families shall have a bank account by the end of this year.

Households availing Banking services -State wise position

Basic Savings Bank Deposit Account

Bank Accounts for Migrant labor

To ease the opening of bank account by the migratory labour, street hawkers, and other poorer sections of the society, “Simplified Account Opening Form” has been designed .Banks have been requested to put in place a system to enable the customer to fill the account opening form on an ‘online’ mode. This Form contains sections for Small Account, Accounts with Introduction and Basic Saving Bank Deposit Account.

Uttrakhand

Kerala

Maharashtra

Rajasthan

Punjab

Karnataka

All India

Gujarat

Jharkhand

Chattisgarh

Odisha

0 10 20 30 40 50 60 70 80 90 100

Simplification of Savings Bank Account Opening Form

Access to Banking : Major States

FI First product- basic bank accounts (excerpts) by Mr. Y. P. Issar, General Manager, Financial Inclusion Division, Punjab National Bank

Indian banks offer a savings bank account to all its individual customers. RBI’s 2005 initiative to introduce no frill accounts where no introductory deposit or very low minimum balances were to be maintained proved very effective as the banking system has opened 103 million no frill accounts as on March 2012… An unsung hero of our bank accounts group is the “Small Account” created under Prevention of Money Laundering Rules, 2005 for those having no KYC documents. This account can be opened by simply submitting own photograph and declaring the residential address and stating before a bank officer in a CBS branch that one does not have any proof of identity or residence and promising to submit KYC document with 12 months. Small accounts has no introductory balance, maximum balance allowed is Rs 50,000, maximum credit of Rs 1,00,000 per year and maximum withdrawals of all types are Rs 10,000 per month, with foreign inward remittances not allowed. What better account can be offered to crores of migrant workers within the country! …

Basic bank accounts remain only a first step in the long march to FI- though a very critical first step. The challenges of access, usage and quality are ongoing concerns.

Covering our population with meaningful bank accounts is likely to remain work in progress for a long time to come and shall require well knit efforts on the part of Indian banks under the close support and guidance of the Government and RBI.

(The author can be reached at [email protected])

Development of Geographical Information system (GIS)

Geographical Information System (GIS) can be effectively used to assist the decision makers in planning for expansion of infrastructure of the Banks by highlighting the pockets of the hinterland which are yet to have access to these facilities. A web based application to develop a GIS for the banking network in the country has been launched by the DFS. The project envisages capturing existing information about bank branches, ATMs, Business Correspondents, Clearing houses and Currency chests of Scheduled Commercial Banks at village level. This facility enables the Banks to easily identify the deficit areas as per the guidelines of the Department, where expansion of branch/ ATM/BCA network needs to be carried out.

Source: Census of India

Opening of one bank account per family

Opening of a Bank Account is one of the key requirements in FI. The country has made appreciable progress on this parameter during 2001-2011 as per Census data on Households (HHs) Availing Banking Services.

Number of Households availing Banking Services

Total Number of Households

2001 2011 2001 2011

Total 68,230,642 144,814,788 191,963,935 246,692,667

Rural 41,639,949 91,369,805 138,271,559 167,826,730

Urban 26,590,693 53,444,983 53,692,376 78,865,937

Percentage of Households availing Banking in 2001 and 2011Services

Percentage of Households availing banking services

2001 2011

Total 35.5 58.7

Rural 30.1 54.4

Urban 49.5 67.8

In 2011, the percentage of Hhs availing Banking Services in major States.

To inculcate saving habits and to extend banking facilities to the migrant labour and street vendors/ hawkers in urban areas, a drive has been launched to open their bank accounts. Oriental Bank of Commerce (OBC), Convenor State Level Bankers Committee (SLBC ) of Delhi launched this drive. The bank (i) started 24x7 Call Centre with toll-free telephone number, telephone number for SMS and has created e-mail ID for e-mail queries, (ii) imparted training to the Call Centre Staff, (iii) provided wide-publicity of the campaign , (iv) identified the target pocket and (v) undertook regular monitoring of the accounts opened. The drive has started giving results with nearly 42,000 accounts opened. All PSBs have now been advised to initiate similar drives in the State(s)/UTs where their Bank is SLBC Convenor.

RBI has advised all Scheduled Commercial Banks/Regional Rural Banks/all Cooperative Banks to offer a ‘Basic Savings Bank Deposit Account’ which will offer minimum common facilities to all their customers such as ATM card or ATM-cum-Debit Card, no requirement of any minimum balance and no charge for non-operation/activation of in-operative account.

In 2001, slightly more than 35% of the total number of HHs availed banking services. In rural areas, less than one in three HHs and in urban areas, one in two HHs availed banking services, 11 years ago. In 2011, the position has improved considerably with nearly 3 out of every 5 HHs in India availing banking services.In rural areas more than one in two and in urban areas more than 2 out of every 3 HHs availed banking services.

During 2001-2011, the no. of HHs availing banking services overall has increased by 112 % or a

CAGR of 7.8 % per annum. In rural areas they have increased by 8.2 % p.a and in urban areas by 7.2 % p.a.

Prime Minister, in his Independence day speech of 2012, has announced that “it will be our endeavour to ensure that all households benefit from bank accounts in the next 2 years.” It has been decided to take up this task on a campaign basis. Accordingly, banks have geared up their branches and it is expected that most of the families shall have a bank account by the end of this year.

Households availing Banking services -State wise position

Basic Savings Bank Deposit Account

Bank Accounts for Migrant labor

To ease the opening of bank account by the migratory labour, street hawkers, and other poorer sections of the society, “Simplified Account Opening Form” has been designed .Banks have been requested to put in place a system to enable the customer to fill the account opening form on an ‘online’ mode. This Form contains sections for Small Account, Accounts with Introduction and Basic Saving Bank Deposit Account.

Uttrakhand

Kerala

Maharashtra

Rajasthan

Punjab

Karnataka

All India

Gujarat

Jharkhand

Chattisgarh

Odisha

0 10 20 30 40 50 60 70 80 90 100

Simplification of Savings Bank Account Opening Form

Access to Banking : Major States

FI First product- basic bank accounts (excerpts) by Mr. Y. P. Issar, General Manager, Financial Inclusion Division, Punjab National Bank

Indian banks offer a savings bank account to all its individual customers. RBI’s 2005 initiative to introduce no frill accounts where no introductory deposit or very low minimum balances were to be maintained proved very effective as the banking system has opened 103 million no frill accounts as on March 2012… An unsung hero of our bank accounts group is the “Small Account” created under Prevention of Money Laundering Rules, 2005 for those having no KYC documents. This account can be opened by simply submitting own photograph and declaring the residential address and stating before a bank officer in a CBS branch that one does not have any proof of identity or residence and promising to submit KYC document with 12 months. Small accounts has no introductory balance, maximum balance allowed is Rs 50,000, maximum credit of Rs 1,00,000 per year and maximum withdrawals of all types are Rs 10,000 per month, with foreign inward remittances not allowed. What better account can be offered to crores of migrant workers within the country! …

Basic bank accounts remain only a first step in the long march to FI- though a very critical first step. The challenges of access, usage and quality are ongoing concerns.

Covering our population with meaningful bank accounts is likely to remain work in progress for a long time to come and shall require well knit efforts on the part of Indian banks under the close support and guidance of the Government and RBI.

(The author can be reached at [email protected])

Development of Geographical Information system (GIS)

Geographical Information System (GIS) can be effectively used to assist the decision makers in planning for expansion of infrastructure of the Banks by highlighting the pockets of the hinterland which are yet to have access to these facilities. A web based application to develop a GIS for the banking network in the country has been launched by the DFS. The project envisages capturing existing information about bank branches, ATMs, Business Correspondents, Clearing houses and Currency chests of Scheduled Commercial Banks at village level. This facility enables the Banks to easily identify the deficit areas as per the guidelines of the Department, where expansion of branch/ ATM/BCA network needs to be carried out.

Source: Census of India

Simplification of Know Your Customer (KYC)

Guidelines

To open a Regular Account, a customer has to provide documents on

(a) Proof of identity, and (b) Proof of address, as per RBI guidelines. RBI

has provided an indicative list of documents that can be relied upon for

the aforesaid proofs. It has also allowed each bank to specify “any other

document” which the banks can use for this purpose.

Customers face difficulties in providing the requisite documentation for

opening regular bank accounts. The Government has tried to address

this problem . To simplify the issue of documentation, a Sub-Group of

senior officers of some select public sector banks (PSBs), constituted by

DFS, has suggested uniform KYC guidelines and a common list of

documents, for guidance and adoption by the PSBs. The Sub-Group

noted that most banks/FIs have either not specified the documents

under the category “any other document” which their branches/offices

may rely upon for opening of accounts, or there is no uniformity in such

documents across banks. To overcome difficulties being experienced in

this regard, the sub-Group has suggested a list of documents that can

be relied upon by the Banks as Proof of identity (30 documents) and

Proof of residence (33 documents) at the time of opening the

accounts. The KYC Guidelines and the simplified account opening form

have been sent to the Indian Banks Association (IBA) for adoption by the

banks.

Mobile banking vans by Bank of Baroda

Mobile Vans move within a cluster of villages in close proximity to existing branch. Currently, Mobile vans have been deployed by Bank of Baroda at five centers in Gujarat, Uttar Pradesh, Bihar & Goa. The mobile vans also work as an advertising medium for the bank in rural area.

Launch of Mobile Van by the Bank of Baroda

Financial Literacy cum Credit Counselling Center (FLCCC)

The Indian Overseas Bank has set up 14 FLCCCs in Tamil Nadu . FLCCC at Kothagiri was set up mainly for the benefit of tribals of Nilgiris district with the objective of creating awareness about various products & services available from financial institutions.

Inauguration of FLCCC at Kothagiri, Nilgiris

Inauguration of RTC by Hon'ble Finance Minister

Mobile phone banking

Mobile phone banking enables

access to basic financial services

through mobile phones. With its

potential for providing the

unbanked with banking services,

mobile banking has become

increasingly prevalent in both

developed and developing

countries.

The potential of mobile banking

has not been fully realized in India.

The Inter Bank Mobile Payment

Service launched by National

Payments Corporation of India

(NPCI) for mobile-based fund

transfers and other banking

activities was accessible only on a

smart phone and hence unavailable

to the common man. NPCI has now

developed the Common USSD

Platform through which Banks can

provide banking services through

ordinary phones, which will lead to

Financial Inclusion in the rural

hinterland.

Boost to e-payments

To achieve quick success in FI,

the country has to urgently

move from the conventional

paper based banking to e-

banking. Banks, Governments at

the Centre and State level and

the RBI need to constantly keep

in focus this crucial endeavour.

Taking into account the increased

volume and value of mobile

banking transactions, the RBI

has removed the Rs 50,000 per

day cap on transactions

conducted by this mode, thereby

giving a boost to e-payments.

However, the regulator has

directed banks to set limits for

transactions, based on their own

assessment of risk and following

the prior approval of their board

members

National Electronic Funds Transfer (NEFT) System

RBI has asked all banks participating in NEFT to rationalise the customer charges levied by the banks for NEFT transactions effective from 1August 2012. The maximum charges upto Rs 10,000 are Rs 2.50 and above Rs 2 lakhs they are Rs 25.

E-Payment sensitization program for Bank Staff

To create awareness on the usage of electronic mode of payment across various categories of payments made by the banks to their customers, vendors etc. and also the payments made by customers of these banks, e-payment awareness/ training program for sensitization of bank staff are being conducted which will assist in furthering the financial inclusion efforts of banks. IDBI Intech was entrusted the responsibility of conducting such program in the first phase in 10 districts of Haryana in consultation with Punjab National Bank, SLBC Convener, Haryana.

RTGS and NEFT Systems for Electronic Payments

Electronic Benefit Transfer

Roll out of new KCC Scheme

National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) are the centralized payments systems. NEFT is an important, vital and convenient delivery channel. For the purpose of encouraging the people to increasingly adopt this channel and to enable them transact through NEFT at anytime convenient to them, the extent of coverage of NEFT and RTGS has been extended to all licensed banks through the sub-membership route. The DFS has also advised all the Public Sector Banks (PSBs) to proactively offer sub-membership of the centralized payment systems (like NEFT and RTGS) to all the banks including the State Cooperative Banks. 80 out of the 82 RRBs which have migrated to Core Banking Solution are offering NEFT services. PSBs could also offer their systems to enable these cooperative banks and Regional Rural Banks to provide the remaining payment products such as ATMs, PoS, Credit and Debit Cards to their customers.

Government of India as well as various State Governments are implementing a number of welfare schemes, which transfers benefits through Scheme Implementing Department (SID), to the Bank account of the beneficiary. The beneficiary can then withdraw from a branch/ ATM/ BC/PoS terminal and use it for his personal consumption or could even utilise the Merchant PoS terminal infrastructure to make purchases through Debit Card. Such transfers into the account of the beneficiary is referred to as Electronic Benefit Transfer (EBT).

While the benefit of schemes like MNREGA are being transferred directly into the bank accounts all over the country, the State Government are being persuaded to ensure transfer of as many as 32 schemes into the account of the beneficiaries directly. This includes all schemes of scholarships, old age pension etc. Substantial progress has been made in all States.

The Kisan Credit Card (KCC) is an innovative tool of credit delivery to meet the production credit requirements of the farmers in a timely and convenient manner. The scheme is under implementation in the Commercial Banks, Regional Rural Banks (RRBs) and Cooperative Banks.

A new scheme for KCC has been circulated by NABARD/RBI in May 2012 which provides for KCC as an ATM card which can be used at ATM/ Point of Sale (POS) terminals. DFS has advised all banks to implement the new KCC Scheme and issue ATM/Debit Cards to farmers in July, 2012.

Rural Training Centre (RTC), Karaikudi by Indian Overseas Bank

Established jointly by the IOB, Indian Bank and NABARD.