RBI coming forward for UCBs Recommendations of Working Group on IT Support for UCBs Published for comments and suggestions

Working group consisted of RBI authorities NAFCUB representative State Registrars of two State Representative from cooperative bank

RBI authorities

NAFCUB representative

State Registrars of two State

Representative from cooperative bank

Objectives of the working group Review current level of IT infrastructure of UCBs Structure a model / benchmark level Suggest roadmap to achieve IT upgradation Identify areas in which RBI can provide IT Support Define nature, scope & delivery mechanism for IT Support from RBI

Review current level of IT infrastructure of UCBs

Structure a model / benchmark level

Suggest roadmap to achieve IT upgradation

Identify areas in which RBI can provide IT Support

Define nature, scope & delivery mechanism for IT Support from RBI

Current Scenario Financial Strength : 77 / 1813 banks have > 50% deposits 77 % banks (approx 1400) have 19% deposits 4 MOU states ( MH/ Guj/ AP/ Karnatak) have 72% UCBs

Current Scenario In terms of branches : 1714 29 25 135 11 – 25 Low fin.strength / loss making 656 2 – 10 No connectivity / CBS required 894 Unit banks

25

Current Scenario In terms of Deposits : 500 – 1000 crores : 19 banks > 1000 crores : 15 banks 95 % banks have between 0 – 5 crores deposits

Current Scenario In terms of I.T. implementation : 16 UCBs have implemented Core Banking System 50 UCBs have no computer at all Remaining all have various level of TBA modules installed (through vendor or in-house IT)

Current Scenario Problems with vendors : Vendors disappear Key persons left vendor Lack of regulatory compliance modules

Problems with vendors :

Vendors disappear

Key persons left vendor

Lack of regulatory compliance modules

Current Scenario Minimum IT infrastructure required : Computerized front-end Automatic backend accounting Management Informative System (MIS) reports Regulatory reports

Minimum IT infrastructure required :

Computerized front-end

Automatic backend accounting

Management Informative System (MIS) reports

Regulatory reports

Current Scenario Vendor 1: CBS Shared Data Center + D.R. site WAN connectivity Retail banking : ATMs / POS/ Kiosk/ Card banking

Vendor 1:

CBS

Shared Data Center + D.R. site

WAN connectivity

Retail banking : ATMs / POS/ Kiosk/ Card banking

Current Scenario Vendor 1: At Branch and HO: Only PCs / printers required No servers required Off-line transactions facility

Vendor 1:

At Branch and HO:

Only PCs / printers required

No servers required

Off-line transactions facility

Current Scenario Vendor 1: Cost (pre-negotiated list price) 30 lacks for signup 1.5 lacs per branch setup cost 30,000 p.m. recurring charges

Vendor 1:

Cost (pre-negotiated list price)

30 lacks for signup

1.5 lacs per branch setup cost

30,000 p.m. recurring charges

Current Scenario Vendor 2: Shared hardware Common software Data centre + D.R. site Routine periodic operations Reports generation and distribution

Vendor 2:

Shared hardware

Common software

Data centre + D.R. site

Routine periodic operations

Reports generation and distribution

Current Scenario Vendor 2: Maintenance / Support Guaranteed uptime Delivery channels : ATMs/ SMS/ Mobile/ Payment gateways Connect through secure VPN over internet

Vendor 2:

Maintenance / Support

Guaranteed uptime

Delivery channels : ATMs/ SMS/ Mobile/ Payment gateways

Connect through secure VPN over internet

Current Scenario Vendor 2: Cost: 1.75 lacs per branch one time setup fee 28,000 p.m. per branch recurring Outright sale: 3,50,000 per branch large banks / 3,00,000 unit banks

Vendor 2:

Cost:

1.75 lacs per branch one time setup fee

28,000 p.m. per branch recurring

Outright sale:

3,50,000 per branch large banks / 3,00,000 unit banks

Current Scenario Vendor 3: Cooperative Bank CBS + RTGS + NEFT on STP mode Front office Back office MIS reports Regulatory reports

Vendor 3: Cooperative Bank

CBS + RTGS + NEFT on STP mode

Front office

Back office

MIS reports

Regulatory reports

Current Scenario Vendor 3: Cooperative Bank Cost: 10 lacs H.O. 3 lacs per branch

Vendor 3: Cooperative Bank

Cost:

10 lacs H.O.

3 lacs per branch

Current Scenario Vendor 3: Cooperative Bank Implementation : Software installation at HO + branches : No data centre required Centralized data centre – connected by HO+branches Vendor will host all applications

Vendor 3: Cooperative Bank

Implementation :

Software installation at HO + branches : No data centre required

Centralized data centre – connected by HO+branches

Vendor will host all applications

Support infrastructure No grant-in-aid : Own what you get Interest free loans built-in subsidy element Structured repayment for groups of banks Loss : Moratorium until bank turned around Profit : attach conditions on declaring dividend

No grant-in-aid : Own what you get

Interest free loans

built-in subsidy element

Structured repayment for groups of banks

Loss : Moratorium until bank turned around

Profit : attach conditions on declaring dividend

Support infrastructure Various training by RBI Appropriate hardware for overall success

Various training by RBI

Appropriate hardware for overall success

Funding procedures Directly to banks : ruled out Directly to vendors : ruled out Through IDRBT Ensure proper SLA between vendors & banks Select ASP model Reimburse to big banks for CBS & h/w (100+ crores, 3 years profit making, 9+% CRAR, strong IT team)

Directly to banks : ruled out

Directly to vendors : ruled out

Through IDRBT

Ensure proper SLA between vendors & banks

Select ASP model

Reimburse to big banks for CBS & h/w (100+ crores, 3 years profit making, 9+% CRAR, strong IT team)

Funding procedures Loan details: Interest free, repayable in 7 years, one year moratorium For software as well as hardware Weak / sick banks can be given 2 years moratorium ASP model : IDRBT to decide SRS, select vendors, prepare implementation plans, SLA prepare and ensure

Loan details:

Interest free, repayable in 7 years, one year moratorium

For software as well as hardware

Weak / sick banks can be given 2 years moratorium

ASP model : IDRBT to decide SRS, select vendors, prepare implementation plans, SLA prepare and ensure

Control procedures Outright purchase – RBI may not – NABARD – SCCB / DCCB IDRBT to develop area of expertise to cater UCBs’ IT upgradation. National and State federations may also take initiatives for IT support to UCBs Implementation in 4 MOU states i.e. MH/Guj/AP/Kar Customization through IDRBT – charged basis

Outright purchase – RBI may not – NABARD – SCCB / DCCB

IDRBT to develop area of expertise to cater UCBs’ IT upgradation. National and State federations may also take initiatives for IT support to UCBs

Implementation in 4 MOU states i.e. MH/Guj/AP/Kar

Customization through IDRBT – charged basis

Control procedures Those already having may get funding for upgradation and expansion projects Bonus for regular/ early repayment : last installment can be waived

Those already having may get funding for upgradation and expansion projects

Bonus for regular/ early repayment : last installment can be waived

Finances involved 8 – 10 % AMC 1.2 to 3.6 lacs Recurring ( borne by banks) 90 crores Hardware/ D.C. 400 crores 480 crores Software Outright purchase for over 100 banks Unit & small banks

Actions at GUCBF Work Group for decide on IT Support for UCBs for Gujarat established Additional support from RBI to be ensured for Gujarat Make model suitable for Gujarat Ensure participation by all banks

Actions at Your end Decide on Current scenario and level of IT infrastructure you wish to achieve for your bank Decide on Course-of-actions for your bank Send your comments, suggestions and requirements to Ms. Alpana Killawala, CGM, RBI [email_address] Mr. Jyotindra Mehta,Chairman,GUCBF [email_address]

Decide on Current scenario and level of IT infrastructure you wish to achieve for your bank

Decide on Course-of-actions for your bank

Send your comments, suggestions and requirements to

Ms. Alpana Killawala, CGM, RBI [email_address]

Mr. Jyotindra Mehta,Chairman,GUCBF [email_address]

Thank you ! Jyotindra Mehta Chairman, GUCBF