Banking and e government

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This presentation discusses interfaces and interoperability issues betwween bank's IT systems and e-government systems. It also describes new inter-operability features mandated by financial inclusion and Aadhaar based payment systems

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Banking and e government

  1. 1. Bankingande-governmentByMohan Datar17th May 2013BSE InstituteMumbaiByMohan Datar17th May 2013
  2. 2. Agenda• What is Banking• What is e-government• Level 1 Interfaces: Citizens and Businesses.• Level 2 Interfaces: Regulators• Level 3 Interfaces: Financial Inclusion• Financial Inclusion - Process• Q & A• What is Banking• What is e-government• Level 1 Interfaces: Citizens and Businesses.• Level 2 Interfaces: Regulators• Level 3 Interfaces: Financial Inclusion• Financial Inclusion - Process• Q & A
  3. 3. What Is Banking????3
  4. 4. What Is eGovernment?• eGovernment refers to the use by government agencies ofInformation Technologies that have the ability to transformrelations with citizens, businesses, and other arms ofGovernment. ( World Bank)• These technologies can serve a variety of different ends:– Better Service delivery to Citizens– Empowerment of Citizens through access to Information– More efficient Government management (NISG)EXAMPLES?• eGovernment refers to the use by government agencies ofInformation Technologies that have the ability to transformrelations with citizens, businesses, and other arms ofGovernment. ( World Bank)• These technologies can serve a variety of different ends:– Better Service delivery to Citizens– Empowerment of Citizens through access to Information– More efficient Government management (NISG)EXAMPLES?4
  5. 5. Level 1 Interfaces: Payment PurposeCitizens and Businesses• Citizens– Payments of Bills and Taxes– Payments for Services– PPF– Pension Schemes• Businesses– Payments of Bills and Taxes– Payments for Services– License Fees– Tender Fees and Security Deposits– Receipts and TDS• Citizens– Payments of Bills and Taxes– Payments for Services– PPF– Pension Schemes• Businesses– Payments of Bills and Taxes– Payments for Services– License Fees– Tender Fees and Security Deposits– Receipts and TDS 5
  6. 6. Level 1 Interfaces: Payment ModesCitizens and Businesses• Citizens & BusinessesBank’s Drop BoxesAt Bank BranchesECSFranking Machines and e-StampsATMsCash and Cheque Deposit KiosksPayment GatewaysNet BankingNEFT• BusinessesRTGS• Citizens & BusinessesBank’s Drop BoxesAt Bank BranchesECSFranking Machines and e-StampsATMsCash and Cheque Deposit KiosksPayment GatewaysNet BankingNEFT• BusinessesRTGS 6
  7. 7. Level 1 Interfaces: Payment ModesCitizens and BusinessesSr No. Payment Mode System Interfaces1 Bank’s Drop Boxes ?2 At Bank Branches3 ECS4 Franking Machines and e-Stamps74 Franking Machines and e-Stamps5 ATMs6 Cash and Cheque Deposit Kiosks7 Payment Gateways8 Net Banking9 NEFT10 RTGS
  8. 8. Level 2 Interfaces:Regulators• RBI• I Tax• Customs• Excise• Service Tax• Sales Tax• IGR• ULBs• EOW etc• RBI• I Tax• Customs• Excise• Service Tax• Sales Tax• IGR• ULBs• EOW etc8
  9. 9. Level 2 Interfaces:Regulatory IDs• PAN• TAN• DIN• Sales Tax Registration no• Service Tax Reg no.• VAT Reg no.• Property no.• Company / Document Registration NoPlethora of Regulators Leading toMuItiple IDs for each citizen / Business• PAN• TAN• DIN• Sales Tax Registration no• Service Tax Reg no.• VAT Reg no.• Property no.• Company / Document Registration NoPlethora of Regulators Leading toMuItiple IDs for each citizen / Business9
  10. 10. e-government Service Delivery• Physical Infrastructure Vision: National Service DeliveryGateway• Legal Infrastructure: Electronic Service Delivery Act•16 May 2013 10• Physical Infrastructure Vision: National Service DeliveryGateway• Legal Infrastructure: Electronic Service Delivery Act
  11. 11. Level 2 Interfaces:Integration & Interoperability• Citizen / Business• KYC = Ravana’s Soul• Two Emerging Identities:– PAN– Aadhaar• Citizen / Business• KYC = Ravana’s Soul• Two Emerging Identities:– PAN– Aadhaar11
  12. 12. Level 3 Interfaces:Financial Inclusion• What is the Origin of the Term ‘Financial Inclusion’?• Key Objectives:– Extending formal banking system among less privileged inurban & rural India.– Weaning them away from unorganized money markets andmoneylenders.– Equipping them with the confidence to make informed financialdecisions.• What is the Origin of the Term ‘Financial Inclusion’?• Key Objectives:– Extending formal banking system among less privileged inurban & rural India.– Weaning them away from unorganized money markets andmoneylenders.– Equipping them with the confidence to make informed financialdecisions.12
  13. 13. Level 3 Interfaces:Financial Inclusion• Financial Inclusion: Some Facts• Access to Banking– RBI – 40%– Census 2011 – 58.7%• No. of Standard Bank Accounts – 5.4 Cr• No of Credit cards – 1.9 Cr.• BPL Population – 29.8% (~30Cr)• Financial Inclusion: Some Facts• Access to Banking– RBI – 40%– Census 2011 – 58.7%• No. of Standard Bank Accounts – 5.4 Cr• No of Credit cards – 1.9 Cr.• BPL Population – 29.8% (~30Cr)13
  14. 14. Level 3 Interfaces:Financial Inclusion• What is Financial Inclusion?• RBI Definition:– Financial Inclusion is the processof ensuring access to appropriate financial products andservices(which are) needed by all sections of the society in general andvulnerable groups such as weaker sections and low incomegroups in particularat an affordable cost (&) in a fair and transparent mannerby mainstream institutional players• What is Financial Inclusion?• RBI Definition:– Financial Inclusion is the processof ensuring access to appropriate financial products andservices(which are) needed by all sections of the society in general andvulnerable groups such as weaker sections and low incomegroups in particularat an affordable cost (&) in a fair and transparent mannerby mainstream institutional players14
  15. 15. Level 3 Interfaces:Financial Inclusion• Implementation Process– New Financial Product – ‘No Frills Account’– New Payment Process – Formation of NPCI– New KYC Process – Aadhaar– New Funds Delivery system – Electronic benefits Transfers– New Approach for Banking System Expansion– New approach to Build Financial Literacy – Formation ofFinancial Stability Development council (FSDC)• Implementation Process– New Financial Product – ‘No Frills Account’– New Payment Process – Formation of NPCI– New KYC Process – Aadhaar– New Funds Delivery system – Electronic benefits Transfers– New Approach for Banking System Expansion– New approach to Build Financial Literacy – Formation ofFinancial Stability Development council (FSDC)15
  16. 16. Financial Inclusion Process:1. No Frills AccountEligibility criteria andoperating instructionsThis account is offered to those individuals who aredeprived of basic banking services, belong to lowerincome group and towards promoting FinancialInclusion initiative.The total balance in the account should not exceedRs. 50,000/- at any given point of time.The sum total of credits in the account shall notexceed Rs. 1 lakh in a year.This account is offered to those individuals who aredeprived of basic banking services, belong to lowerincome group and towards promoting FinancialInclusion initiative.The total balance in the account should not exceedRs. 50,000/- at any given point of time.The sum total of credits in the account shall notexceed Rs. 1 lakh in a year.Service Delivery At all Bank Branches.Initial deposit amount Rs. 100/-Average Monthly Balance(AMB)Rs. 100/-ATM-cum-debit card Issuance charges waived however available subjectto annual charges16
  17. 17. Financial Inclusion Process:1. No Frills Account Thru BCService Delivery At designated Customer Service Points (CSPs)through Business Correspondent using MicroATMs.Physical Statement Mini statement available through POT(Micro-ATM). Optional half yearly statement providedon request by BC.Cash deposit charges NilAccount opening charges NilAccount opening charges NilSmart card e-passbook Rs. 100/-Average Monthly Balance (AMB) NilCash withdrawal charges Rs. 3/- per transaction17
  18. 18. Financial Inclusion Process:1. No Frills Account 31/03/13• No. of Standard Bank Accounts – 5.4 Cr• No. of No Frills Accounts - 17.14 Cr• No of Credit cards – 1.9 Cr.• No. of Kisan credit cards - 3.17 Cr• No. of BCs - 1,52,328• No. of Standard Bank Accounts – 5.4 Cr• No. of No Frills Accounts - 17.14 Cr• No of Credit cards – 1.9 Cr.• No. of Kisan credit cards - 3.17 Cr• No. of BCs - 1,52,32818
  19. 19. Financial Inclusion Process:2. New Payment Process: AEPS• The four Aadhaar enabled basic types of banking transactions:– Balance Enquiry– Cash Withdrawal– Cash Deposit– Aadhaar to Aadhaar Funds Transfer• The only inputs required for a customer to do a transaction underthis scenario are:-– IIN (Identifying the Bank to which the customer is associated)– Aadhaar Number– Fingerprint captured during their enrolment• The four Aadhaar enabled basic types of banking transactions:– Balance Enquiry– Cash Withdrawal– Cash Deposit– Aadhaar to Aadhaar Funds Transfer• The only inputs required for a customer to do a transaction underthis scenario are:-– IIN (Identifying the Bank to which the customer is associated)– Aadhaar Number– Fingerprint captured during their enrolment19
  20. 20. Financial Inclusion Process:2. New Payment Process: AEPS20
  21. 21. Financial Inclusion Process:3. New KYC Process AADHAR• The purpose of the UIDAI is to issue a uniqueidentification number (UID) to all Indian residentsthat is– Robust enough to eliminate duplicate and fakeidentities.– Can be verified and authenticated in an easy, costeffective way• The purpose of the UIDAI is to issue a uniqueidentification number (UID) to all Indian residentsthat is– Robust enough to eliminate duplicate and fakeidentities.– Can be verified and authenticated in an easy, costeffective way
  22. 22. Financial Inclusion Process:3. New KYC Process AADHAR• Three Basic components of Aadhaar– Demographic Data.– Biometric Data– De-Duplication• Three Basic components of Aadhaar– Demographic Data.– Biometric Data– De-Duplication
  23. 23. Financial Inclusion Process:3. New KYC Process AADHAR• 3 Generations of Identity authentication• 1G– In Person / Eyewitness• 2G– Variety of ID Documents• 3G– Aadhaar• 3 Generations of Identity authentication• 1G– In Person / Eyewitness• 2G– Variety of ID Documents• 3G– Aadhaar
  24. 24. Financial Inclusion Process:3. New KYC Process AADHAR• 3G ID Features– Virtual– 24 X 7 availability– Global Access– Systemic Interoperability– Single Version of Truth• 3G ID Features– Virtual– 24 X 7 availability– Global Access– Systemic Interoperability– Single Version of Truth
  25. 25. Financial Inclusion Process:3. New KYC Process AADHAR1. Aadhar is proof of identity, not of citizenship2. To establish identity, authenticate online3. Aadhaar is valid throughout the country1. Aadhar is proof of identity, not of citizenship2. To establish identity, authenticate online3. Aadhaar is valid throughout the country
  26. 26. Financial Inclusion Process:4. Electronics Benefits Transfer• GoI launched the Scheme in 51 districts on 1st Jan,2013• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.• Est. Volume in next 2 Years: Rs. 5L Cr.• NFS Usage Data• GoI launched the Scheme in 51 districts on 1st Jan,2013• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.• Est. Volume in next 2 Years: Rs. 5L Cr.• NFS Usage DataMonth/YearNo. OfparticipantsNo. Of ATMNo. ofbalanceenquiryNo. of CashwithdrawalPin ChangeMiniStatementTotalVolumeApr-13 143 111,493 37,257,214 138,220,349 216,506 4,250,210 179,944,279Apr-12 93 98,025 40,977,284 125,408,277 132,495 2,746,105 169,264,161
  27. 27. Financial Inclusion Process:5. New Approach for Banking Expansion• 40% lending MUST be to• Small Farmers• Students• Low Cost Home loans• All villages with population above 2000 populationconnected on Broadband• All Villages below 2000 population to be connected inthis 5yr Plan.• Increased Reliance on ICT• Percentage of ICT accounts has increased from 25% to 45%• 40% lending MUST be to• Small Farmers• Students• Low Cost Home loans• All villages with population above 2000 populationconnected on Broadband• All Villages below 2000 population to be connected inthis 5yr Plan.• Increased Reliance on ICT• Percentage of ICT accounts has increased from 25% to 45%
  28. 28. Financial Inclusion Process:6. New Approach for Financial Literacy• A technical group on Financial Inclusion and Financial Literacy underFSDC – Coordinating the efforts of all Financial Sector Regulators• National strategy on Financial Education prepared• Financial Literacy-To be included in School Curriculum at NationalLevel.• 658 Financial Literacy Centers (FLCs) functioning as at the end ofDecember 2012• 1.5 million people educated during the period April to December 2012• A technical group on Financial Inclusion and Financial Literacy underFSDC – Coordinating the efforts of all Financial Sector Regulators• National strategy on Financial Education prepared• Financial Literacy-To be included in School Curriculum at NationalLevel.• 658 Financial Literacy Centers (FLCs) functioning as at the end ofDecember 2012• 1.5 million people educated during the period April to December 2012
  29. 29. Q and A???
  30. 30. THANK YOU

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