Promoting Financial Inclusion - United Nations Development ...

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BOX C.2 BC Arrangement partite agreement with State Bank of India and technology provider ALW. The arrangement among the three parties is depicted in Box C.2. • Operations: Drishtee operates as a business correspondent through its kiosks, which are run by village level entrepreneurs, who work as BC agents. The BC agents are responsible for acquiring new business, taking care of daily bank related operations, whereas Drishtee takes care of administrative functions such as business flows, release of agent’s commission. Additionally, Drishtee has also appointed its local teams in rural areas and each team is responsible for over viewing the functions of 5 to 10 BCs. The BC agents work as a local cashier to banks and are responsible for deposit making, withdrawal from bank accounts of individuals. Drishtee maintains its accounts with partner banks so that transactions get reflected in bank’s accounts on a real time basis. In this regard it takes refundable security deposit of `10,000 from each BC agent and sets a maximum limit of same amount. • Process of selection of agents: Currently Drishtee has 500 BC agents spread across the country. The selection of agents is done by Drishtee wherein it undertakes due diligence and checks the social standing, residential status of applicants and gives franchise only if it is satisfied with background check. Once the agents are selected, they are required to pay a refundable security deposit of `10,000 and franchise fee of `375,000. Subsequently BC agents also receive a BC code, which is generated by SBI. • Training of BC agents: The training to BC agents is provided by both SBI and Drishtee, wherein SBI informs BC agents about bank’s various products, application procedure, documents required and Drishtee provides one day organizational training by instructing BC agents on areas such as running kiosks, troubleshooting. Furthermore, Drishtee also organizes customized refresher trainings as per the requirement. • Functions of BC agents: The BC agents are responsible for acquisition of new bank accounts. Presently Drishtee’s BC agents offer services for opening of SBI’s savings accounts and NFAs. 52 PROMOTING FINANCIAL INCLUSION
• Commission structure: The BC agents do not receive any minimum remuneration and their pay structure is completely commission based. BCs receive `10 per NFA and `50 per bank’s savings accounts. Furthermore, they are also entitled to receive 1% of loan amount and FD facilitated by them through bank. However, it should be noted that currently BCs do not work upon loan applications and 3% of Drishtee’s BCs are also engaged in Drishtee’s microfinance. As per rough estimates, the activities of BCs are not lucrative since they earn on an average `700 to `1,200 per month. Problems Faced by Drishtee in Implementation The study tried to assess some main problems in this model in order to judge the viability and sustainability of the model. Some of the issues are specified below: (i) Problems with existing technology: The study team was informed that Drishtee is planning to change its technology partners due to problems with the existing technology, such as: • The mobile phone set has GPRS activated in it but it does not operate in certain villages due to network problems. • The card is provided directly by ALW to BC agents and to final customer. As a result, there are many variables in the service provider chain and probability of delays increases. (ii) Attrition rate: Drishtee faces the problem of high attrition rate since majority of BCs work on a part time basis and are demotivated by low income earned as BC agent. (iii) Changes in strategy: Drishtee has been using card based technology provided by ALW for the past three years of its operations. However, recently it has decided to change technology provider and select kiosk banking model development by Tata Consultancy Services (TCS). Under this model biometric devices instead of smart card devices are used and integrated with core banking tools. Currently SBI is striving to undertake phase wise migration of clients by tagging card based clients with kiosk based clients. Resultantly Drishtee has temporarily suspended its operations and is not engaged in customer acquisition. (iv) Problems faced by BCs in their daily operations: Drishtee reviews work of BCs at timely intervals, hence they were asked to specify some of the main problems faced by BCs in their operations. Some of the issues are • The BCs find it difficult to sell savings products since people are more interested in obtaining credit and procuring remittance services • BCs have to face resistance from local bank’s branch managers, who are sometimes not forthcoming and willing to use services of BC agents. Progress So Far As per the estimates, approximately 50,000 SBI savings accounts and 10,000 NFAs have been opened by Drishtee’s BC agents in the last three years. However, just 20% to 30% of these accounts are currently active due to various reasons such as propensity to save and differences in client behaviour. A discussion on viability and long term growth proposition of BC model indicated that the model can be undertaken only if banks provide a host of services and a proper follow up on use of such services is undertaken. Furthermore, BCs find it expensive to deploy an outside technology provider due to high costs of machines and PROMOTING FINANCIAL INCLUSION 53
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Disclaimer: FICCI The information a
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Please contact FICCI at: E-mail: fi
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4.13 Conclusions - inclusion constr
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to this study is greatly acknowledg
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FITF FLCC FMCG FSM GCC GoI HDI ICAI
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x EXECUTIVE SUMMARY
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metropolitan centres so this does n
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• Historical problems such as the
Page 18 and 19:
FIGURE Yields in the Banking System
Page 21 and 22: 1 Background Inclusive economic gro
Page 23 and 24: financial services as it has implic
Page 25 and 26: • Providing financial services ac
Page 27 and 28: The analysis of region-wise credit
Page 29 and 30: …WHILE PROGRESS UNDER OTHER GOVER
Page 31 and 32: The contribution of SBLP to financi
Page 33 and 34: provide remittance services due to
Page 35 and 36: terms of number of borrowers, the S
Page 37 and 38: 4 The Policy Conundrum - Is It Prud
Page 39 and 40: BCs. These BCs have been able to op
Page 41 and 42: 4.3 MICRO-INSURANCE REGULATIONS 14
Page 43 and 44: crore as grant support for promotio
Page 45 and 46: IMPROVING THE QUALITY OF MANAGEMENT
Page 47 and 48: norms. However, the banks still nee
Page 49 and 50: at the prime lending rates of banks
Page 51 and 52: exchange, loan products and card pr
Page 53 and 54: prefer to transact with banks only
Page 55 and 56: use of smart cards, mobile technolo
Page 57 and 58: • Limited number of FLCCs: One of
Page 59 and 60: savings, and this has ultimately af
Page 61 and 62: 6 The Way Forward The Government of
Page 63 and 64: price for those provided services o
Page 65 and 66: Case Studies of Financial Inclusion
Page 67 and 68: each located at least 1-2 km apart
Page 69 and 70: Officer (CEO) with support from the
Page 71: course fee to successful candidates
Page 75 and 76: on a single card. In the field, the
Page 77 and 78: Box C.7 Field Visit Observations fr
Page 79 and 80: operations management and portfolio
Page 81 and 82: convince new account openers to obt
Page 83 and 84: Annexes ANNEX 1: PRINCIPLES OF CLIE
Page 85 and 86: • Customers are informed of their
Page 87 and 88: Distance criterion Payment of commi
Page 89 and 90: Financial Inclusion Fund Promotion
Page 91 and 92: Package Key features Reforms in the
Page 93 and 94: Activities Amendments of rules and
Page 95 and 96: Activities Computerisation Status G
Page 97: RBI, 2009, “Financial deepening b
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