1. MEMORANDUM FOR EXECUTIVE COMMITTEE OF THE CENTRAL BOARD
FINANCIAL INCLUSION PLAN 2011-2013
Financial Inclusion is the delivery of financial services at an affordable cost to the vast sections of disadvantaged and low income groups.
1. RBI INSTRUCTIONS
To further the cause of financial inclusion and increasing outreach, RBI vide their Circular DBOD No.BL.BC.58/22.01.0021/2005-06 dated 25th January 2006, permitted All Scheduled Commercial Banks including RRBs to engage intermediaries such as Business Correspondents (BC) / Business Facilitators
(BF) to provide f inancial and banking services to the unbanked and underprivileged populat ion. RBI also in the said circular listed the Individuals / entities who are eligible to be engaged as BCs/BFs. Subsequently, the basket of the eligible entit ies was expanded based on the suggestion received and recommendations of a Working Group constituted by RBI.
RBI, vide their Circular No.RPCD.CO.233.HLC.BC.No.43/02.19.10/2009-10 dated 27/11/2009, has directed that the Lead Banks may constitute a subcommittee of District Consultat ive Committees (DCCs) to draw a roadmap by March 2010 to provide banking services through a banking out let in every
village having a population of over 2,000 by March 2011. Such banking services may be either through brick and mortar branches or through any of the various forms of ICT-based models, including BCs.
RBI have also advised banks to come up with specif ic Financial Inclusion Plans (FIP) by March 2010, with a view to rolling them out over the next three years. The FIP needs to be approved by the Banks Board. RBI have provided broad contours for the proposed FIP and left it to each Bank to frame their
plans, in the line with their business model and comparative advantage. Accordingly, we had framed the FIP for the next three years, which was approved by ECCB, vide its agenda No.CB/EC1/317 held on 8th March, 2010. On submission of the FIP as above to RBI, it has been suggested to add specific timelines and stage-wise plan of implementat ion of the FIP 2011-13 and furnish a copy of the revised plan duly approved by the Board to RBI. At the time of approval of the FIP, the allotment of specific villages with a populat ion of more than 2,000 to be covered was under process at SLBC / DCC level. The same has now been finalized and included in this plan which is provided in Annexure-B. Accordingly, a revised memorandum is being submitted for approval.
2. OBJECTIVES OF THE FIP
To make basic banking products / services available to the unbanked and underprivileged populat ion in RUSU and Urban / Metro areas.
To continue to provide all existing FI products and services and any other products / services as and when developed depending on the demand and usage.
To make available services like remittances, standing instructions for repayment of loans, etc.
To enable receipt of EBT payments of various State and Central Governments, through the F.I. accounts.
To make available other products like micro insurance and micro investments.
To align the F.I. accounts with UID project.
To make available the products / services as near the customers’ residence as possible.
To continue to use a judicious mix of Branch channel (Exist ing and New) and Alternate Channels for F.I.
To extensively use the alternate channel, CSPs of BC/BF and Marketing and Recovery Teams to bring banking to the doorsteps of the FI customers.
To leverage technology for operational conveniences, accounting and risk mit igat ion.
To provide for adequate risk mitigat ion measure through monitoring and supervision of the F.I. activity.
To cover additional 1.00 lac villages in the next 3 years up to 2013. Identify the villages with populat ion of over 2,000 and plan to provide Banking services in every village allotted to the Bank by the Sub Committee of District Consultat ive Committees (DCC) by March 2011, through a banking out let (either through Branches or through Business Correspondent outlets).
All branches (Existing / New) to be on CBS connectivity. The Exist ing Branches are already on CBS. All new Branches will also be opened on CBS platform.
To init iate necessary measures for spreading Financial Literacy among the excluded populat ion.
3. PRESENT STATUS OF F.I. IN THE BANK (As on 31st March 2010)
No Frill accounts are being opened with zero balance at branches and through CSPs of BCs.
68.38 lac No Frill accounts have been opened up to March 2010, 29.54 lac through branches and 38.84 lac through the CSPs of BCs by way of Smart Cards / other technology based platform.
More than One lac unbanked villages have been covered, through the Alternate and Branch Channel by 31st January, 2010.
The following technology platforms are leveraged for opening and serving F.I. accounts through the CSPs of BCs engaged.
o Smart card based Savings / Overdraft accounts operated through contact and contact less cards using POS device.
o SBI kiosk banking.
o Cell phone based messaging system.
The technology based F.I. accounts opened through the BCs are operat ing in 21 States covering 135 districts.
SBI branches in RUSU areas are also catering to F.I. accounts.
More than 26,354 CSPs of BCs/BFs have been set up.
316 Rural Central Processing Centres have been launched to enhance the processing capacity for processing loan accounts.
About 4,000 OMRs are serving the F.I. customers.
17.12 lac SHGs have been credit linked against target of 16.23 lacs by March, 2010.
Rs.11,576 cr. have been disbursed to the SHGs cumulatively. In the current year, the amount disbursed is Rs.3525 crs.
11.17 lac members of SHGs have been covered for Life Insurance under Grameen Shakti (Micro Insurance Scheme).
189.65 lac households in 264 districts and 80,581 villages have been covered under 100% Financial Inclusion project of SLBC.
145.6 lac accounts have been opened in RUSU Branches and 96% of the Branches have exceeded the target of opening 250 accounts per Branch per annum as recommended by the Rangarajan Committee.
Operating guidelines for engagement of BCs / CSPs issued.
4. FINANCIAL INCLUSION STRATEGY AND PLAN 2011-2013
A. INCREASING OUTREACH
(i) Through CSPs of BC Branches:
CSPs of BC to be increased from 26,354 to 50,000 by 2013 to be contributed equally by BFs and BCs.
RUSU Branches to increase from 8,390 to 10,000.
All existing branches are on CBS and all new branches to continue to be opened on CBS.
A hub and spoke model with branches catering exclusively to CSPs to be piloted and rolled out in 2010-11.
Coverage of unbanked villages: The number of villages to be covered in the next three years are proposed to be 1 lac, year-wise and channel-wise break-up is furnished in the Annexure. The names of the villages covered will be put on the Bank’s website.
There are totally 99,617 villages in the country as per census 2001 with populat ion of over 2,000 in 449 districts, out of which 64,000 villages are yet to be covered. SBI has been allotted 11,943 unbanked villages for covering the same by way of opening branches or establishing Customer Service Points (CSP). A detailed list (State-wise and Circle-wise alongwith timelines) is enclosed on Annexure B. 11,108 villages with populat ion more than 2,000 will be covered by Customer Service Points of Bus iness Correspondents engaged by the Bank and 835 villages will be covered by branches.
Establishment of the CSPs and coverage of villages is being monitored both by the Circle Offices and Rural Business Group at Corporate Centre, Mumbai. The position will be reviewed on quarterly basis.
(ii) Procedure for sanctioning loans :
Loan proposals sourced by the BC-CSPs will be sanctioned by the Bank officials only - either at the Link branch or at Rural Central Processing Centres (RCPC) where the relative Link branch is attached to a RCPC. We have already set up about 316 RCPCs and have plans to cover all the districts.
(iii) Coverage of RRBs under CBS platform:
Out of the 17 Regional Rural Banks sponsored by the Bank, f ive RRBs are already under CBS. The CBS connectivity has been extended to 1,365 branches out of the total 2,607 branches of all RRBs. The RRBs cover 124 districts and have opened 18.76 lac FI accounts. The entire network of RRBs are proposed to be covered under CBS by September 2010.
B. TECHNOLOGY EMPLOYED
All products offered through Business Correspondent (BC) channel will be technology enabled.
Considering that the technologies are still evolving, it is the policy of the Bank to pilot all available technologies, subject to Proof of Concept.
At present, we are employing three types of technologies:
_ Card and Point of Sale (PoS) device with M/s A Litt le World Pvt. Ltd. and M/s Fino as technology providers. Customer identif ication is through biometrics. This technology offers the benefit of ‘off line’
transactions.
_ Cell Phone messaging system based accounts with M/s EKO as the technology vendor. Security is provided by PIN. Transactions are put through ‘on line’. There is no capital investment for the agent of BC
except for the mobile phone.
_ Internet Kiosk bank based accounts works with a technology which was developed by the Bank. Security is through biometrics and the transactions are ‘on line’. Common Service Centres will be leveraged as BCs and operate on the SBI Internet kiosk technology to enroll FI customers.
Across all these models, the accounts are to be hosted in Bank’s CBS and the settlement between the Bank and the BC is done within 24 hours of transaction being put through in the field. Data transmission between the BC-Customer Service Point and the Bank’s CBS is seamless without any manual intervention.
_ In all these technologies, Savings Bank and Remittance products are offered. In Card and PoS based accounts, Recurring Deposit and Savingscum- Overdraft products are also offered. More products are being developed for this channel.
_ Micro ATM, i.e., front end hand held device to be introduced by UIDAI. The PoS machines used by our BCs conform to these standards.
Priority to be given to kiosk banking as it is cost effective and online.
Strive to reduce cost and look out for new and better technology.
Operational convenience, security and cost and online connection to be factors to decide on technology.
Process of vendor selection, infrastructure arrangement, cost structure and fees, etc., Technology vendor selection. First instance through tender. Second round has been on a pilot basis to extend outreach in view of vendor capacity limitat ion. As of now, our approach has been to have 3 types of technology in the front end, to be interfaced with our uniform CBS backend. This policy is proposed to be pursued till the proposed plan period of March 2013. Infrastructure will be as per the technology needs. We shall pursue our existing approach of cost optimizat ion as an important factor of our technology / infrastructure choice. Technology fees to vendors have been mapped against the tender discovered prices so far and has been
further optimized through periodic discussions / negotiations, as also cheaper front end options introduced (like chip less cards) to follow through the plan period.
C. PRODUCTS
The following products are presently available for F.I. customers:
Through Branch Channel
_ No Frill Savings .Bank Account
_ General Credit Cards.
_ Kissan Credit Cards.
_ Other products within the overall ceiling for balance in the accounts as
stipulated by RBI.
Through CSP of BC
_ SBI Tiny Smart Card Accounts, features as applicable to No Frill Account.
_ SBI Tiny RD Card Account – with special features of flexi payments.
_ SBI Tiny O/D account with facility of O/D with maximum limit of Rs
25,000/-.
_ Remittances.
Electronic Benefit Transfer
_ All the savings bank accounts opened through the BCs are enabled to receive credits from the Governments under Electronic Benefit Transfer (EBT).
_ We have enrolled about 26 lakh benef iciar ies across 5 States for receiving Government benefits.
_ Revenue models for these projects are being discussed by us with the State Governments and Ministry of Rural Development, Govt. of India and once a cost effective revenue model is finalized (by charging either the remitt ing Governments or the benefit receiving customers), we propose to participate in the EBT projects of all State Governments.
_ All the existing products will be continued to be made available and suitable other product(s) also developed depending on the demand and usage.
D. REVIEW MONITORING AND EVALUATION
Presently, the following system is in vogue for monitoring and evaluat ion of the Financial Inclusion initiatives and their progress-
The performance vis-à-vis targets set for the various FI activit ies is reviewed at various levels beginning from the RBOs to Circles and Corporate Centre through structured monthly reports.
Reporting as required by RBI is submitted at periodic intervals.
Periodic reviews are put up to the top management at Corporate Centre and observations / action plans conveyed to Circles for implementat ion.
The Monthly CENMAC presentat ion also includes the performance on FI activit ies.
The performance of the Business Correspondents / Business Facilitators is also reviewed by the ECCB once a year.
The progress is also reviewed in the per iodic meet ings / seminar with the Circle Rural Business Heads.
Special posts have been created in the Rural Business Group for monitoring and managing the FI Init iat ives and Outreach Channels like Chief Manager (Rural) in the Regions.
The monitoring and evaluation mechanism will be f ine tuned to meet the requirements under the current FI plan.
Control of Business Correspondents:
Control of Business Correspondents, at present, is with the Bank (Rural Bus iness Group). A dedicated cadre of Channel Managers / Channel Management Facilitators reporting to Chief Manager (Rural) at Regions monitors and mentors the BC-CSPs. Over all command of the outreach channel is vested with Asst. General Manager / Dy. General Manager (Rural Bus iness) at Local Head Offices.
_ Performance of individual CSPs is being monitored through Channel Management Software (CMS) which is also a tool for payment of commission to the BCs.
_ At present, Bank is engaging the BCs, both individuals and organizat ions, directly. Depending on the geographic spread of the BC, they are classified as national or regional BCs. BCs with presence across more than one Circle are national BCs and these are being engaged by Rural Bus iness Group at Corporate Centre. BCs with presence only in one Circle are engaged by Rural Business Units at Local Head Offices.
Detailed instructions on the criteria and selection process are put in place.
_ Considering that the number of BCs and their CSPs is expected to go up substantially in the coming years, we are examining the possibility of outsourcing the activity of BC management.
E. STRATEGY FOR URBAN CENTRES
Our Bank has a strategy to implement FI activit ies in the urban areas also with the help of technical support. A beginning has been made in Delhi and Surat; this will now be extended sizably.
Remittance is a major service targeted for the migrant labour. Relaxed KYC as permitted for FI accounts opened through CSPs of BCs by RBI is followed. The UID project is expected to further ease KYC conditions.
Remittances corridors are being mapped to ensure that the migrant labour is benefited from the service at affordable cost. A remittance facility from Customer Service Point (CSP) of Bus iness Correspondent (BC) to another CSP of the same platform has been implemented in 6 districts of Delhi and 5 districts of Bihar. Similar ly, a facility of remittance from BC to CBS branch will be piloted during the f irst quarter ending June, 2010. The facility will be extended in mult iple centres progressively.
‘No Frills’ accounts are also offered through our Urban Branches.
F. EVALUATION OF FIELD STAFF ON FI PERFORMANCE
It is proposed to give suitable targets to the Branch Managers, Chief Manager (Rural), and AGM of the Regions on FI activities and evaluate their performance in their Annual Appraisal reports.
G. INTEGRATION OF FIP WITH BUSINESS PLAN OF THE BANK
The various init iat ives for Financial Inclusion and the Targets to be achieved in the next three years will be dovetailed into the Bank’s Annual Budgetary Plans and suitable targets given to each Circle. The FIP will also be a part of the Annual Policy guidelines.
H. FINANCIAL LITERACY
The broad objective of the Financial Literacy and Credit Counseling Centres (FLCCs) is to provide free financ ial literacy / education, credit counseling and creating awareness among the public regarding their r ights and duties in respect of banking services. The RBI has advised all the banks to set up FLCCs in their lead districts in a phased manner to cover all segments of the society. The modalit ies to set up FLCCs in our lead districts, as per the guidelines issued by the RBI, are being worked out. We propose to set up 100 FLCCs in our lead districts in the next 3 years. We have advised the District Coordinators and Lead District Managers to take up the task of Financial Literacy through the Village Panchayats and other Govt. Officials in the Rural Development Depts.
I. BUSINESS LEVELS:
_ Based on the sourcing capacity being created and enhanced processing capacity (branches and RCPCs) being built up, we expect the business levels of Rural Bus iness Group will be as under by March 2013.
_ Aggregate Deposits of this form Rs.5,20,000 crores
Retail personal segment Rs.2,40,800 crores
Small & Medium Enterprises Rs.1,05,000 crores
Agr iculture Rs. 30,000 crores
_ Aggregate Advances of which Rs.2,81,000 crores
Retail loans to P segment Rs. 98,000 crores
(including Rs.4,500 crores Educational
Loans and Rs.25,000 crores Housing
Loans)
Loans to Small & Medium Enterprises Rs. 61,000 crores
Agr iculture Rs.1,22,000 crores
The revised Financial Plan for 2011-2013 is recommended for approval. The revised plan will be advised to RBI after approval.
DEPUTY MANAGING DIRECTOR
Rural Business Group, & GROUP EXECUTIVE
Corporate Centre, Mumbai (RURAL BUSINESS)
10th June 2010
Annexure A
Quantitat ive aspects to be covered in the FIP and the year-wise plan:
(Rs. in crores) (No. of units in lacs)
Sr.No. Target (Number) 2011 2012 2013
1. No. of new No Frill accountsthrough branches 20 25 30
and through CSPs of BCs [ Targets for 2010-11
enclosed: Annexure A(1)(a) Branch Channel
Annexure A(1)(b) Technology Channel
Annexure A(1)(c) Urban & Metro Branches ]
2. No. of households to be provided with
KCC/GCC/OD in SB A/cs ( Plan to cover all 8 9 10
households in each selected village )
3. No. of villages to be provided with banking
Services- (Actual)
Villages with population more than 2000 11943 - -
Villages with populat ion less than 2000 38057 25000 25000
Total [ Annexure 3(A) ] 50000 25000 25000
4. No. of households to be covered 60 70 70
250 accounts per RUSU branch
5. No. of BCs/CSPs to be engaged
(Actual) 8000 8000 8000
6. No. of new Branches
(Actual) 550 550 600
7. No. of SHGs to be credit linked
[ Annexure 7 ] 350 400 450
8. New Business to be generated
through the plan, viz., Deposits, 750 750 900
Advances, (Rs. In Crores) 750 1250 2000
9. Micro Insurance – Grameen Shakti through
SBI Life To increase from 5% of SHG members covered to 10%.
10. Remittances through CSPs Remittance corridors in 15 locations with linkage in remote areas to be developed.
11. Govt. Benefit Payments Depending upon acceptable commercials, EBT be attempted to be serviced for all Central / State Govts.
12. Enabling Accounts for receiving EBT
All accounts opened through CSPs to be enabled to receive EBT.
13. Leveraging UID UID will be leveraged when introduced, suitably.
14. New Products
To continue to develop suitable products for F.I. depending on demand and experience.
The No Frill accounts opened and operated through CSPs could be through Smart Card, kiosk banking, cell phone based messaging system or through any other approved technology.
All the FI accounts opened at the Branches or through CSPs of BCs will be opened as SB OD accounts. Need based limits upto Rs.25000/- can be sanctioned for these accounts.
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