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Branchless banking project report

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Branchless BAnking

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Branchless banking project report

  1. 1. 1 | P a g e A Project Report On Penetration and Extent of Use of Branchless Banking in India: A Case Study of Axis Bank 2016 Under The Supervision Of: Submitted By: Mr. Manoj KR Gupta Ansar Hussain College Mentor: (PGDM 15-17) Dr. Sanjay Rastogi IBA, Greater Noida
  2. 2. 2 | P a g e DECLARATION I hereby declare that the Project report titled “Branchless Banking’s Development as a means of extending financial services in the new era of Banking” is my original work and has not been published or submitted for any degree, diploma or other similar titles elsewhere. This has been undertaken for the purpose of partial fulfillment of POST GRADUTE DIPLOMA IN MANAGEMENT at Indus Business Academy, Greater Noida. Ansar Hussain PGDM 15-17 ansarhussain15@ibagreaternoida.org
  3. 3. 3 | P a g e ACKNOWLEDGEMENT I wish to express my gratitude to AXIS BANK for giving me an opportunity to be a part of their esteemed organization and enhance my knowledge by granting permission to do summer training project under their guidance. I am deeply indebted to my guide, Mr. MANOJ KR GUPTA, AVP, Branch Manager, AXIS Bank, for his valuable and enlightened guidance. He provided me with the opportunity to learn in the bank and spared his valuable time to help me. My special thanks to Mr. SHAGUN AGARWAL, Operation HEAD, Mr. SURESH PANDEY, BSM, AXIS Bank, for providing great support and help whenever was required. A special thanks to my faculty guide, Dr. SANJAY RASTOGI for being the chief facilitator of this project and helped me enhance my knowledge in the field of banking sector. This project has been possible due to the support of several wonderful individuals. I would like to thank many unknown individuals, with whom I interacted. All of them with their due cooperation and motivation made the completion of this project successful. I would like to thank them all. Last but not the least I am highly obliged to my friends and colleagues for their help and support. The learning during the project was immense and valuable. Regards, ANSAR HUSSAIN
  4. 4. 4 | P a g e CONTENTS 1. Acknowledgement 2. Abstract 3. Introduction / Company Overview 4. Company Profile 5. Literature Review 6. Introduction of Branchless Banking 7. Introduction 8. Need of Branchless Banking 9. Branchless Banking in India 10. Indicators of Financial Inclusion 11. Role of Technology 12. Role of Government of India 13. Role of RBI 14. Bank Initiated Enabler for Branchless Banking 15. Challenges Faced by Business Correspondents 16. Benefits of Branchless Banking in India 17. Benefits of Branchless Banking in Other Countries and their adoption in India 18. Objective and Scope of the Study 19. Research Methodology 20. Method of Research 21. Types of Research 22. Types of Data 23. Data Collection Tools 24. Sampling frame, unit, size, method. 25. Data Analysis : Results and Analysis 26. Data Classification 27. Data analysis and Interpretation of Results of Branchless Banking 28. Data Analysis and Results of Case Study on Axis Bank customer Preference 29. Interpretations of Results 30. Research Findings and Conclusion 31. Limitations
  5. 5. 5 | P a g e 32. Suggestions and Recommendations 33. Appendix 34. Bibliography List Of References
  6. 6. 6 | P a g e Abstract I decided to choose Axis Bank for summer internship, where I selected a project by the name of "Branchless Banking’s Development as a means of extending financial services in the era of Banking". In this project, I learnt about different type of Branchless Banking Services offered by Axis Bank and then I come to know about the importance of Branchless Banking in future and how much is important to banking sector I collected data from websites of respective selected banks. Even I took help from other banking and finance related websites. I also got data from respective branch. I also prepared questionnaire for primary research, through which I came to know about customers' perspective regarding Branchless Banking Services offered by banks. Then I did analysis on that basis and tried to make conclusions out of that.
  7. 7. 7 | P a g e Introduction of the Industry
  8. 8. 8 | P a g e BANKING IN INDIA Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. HISTORY: The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: · PHASE I - Early phase from 1786 to 1969 of Indian Banks · PHASE II - Nationalization of Indian Banks and up to 1991 · PHASE III - Indian Financial & Banking Sector Reforms after 1991.
  9. 9. 9 | P a g e PHASE I: The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established  Bank of Bengal (1809),  Bank of Bombay(1840) and  Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No.23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those day’s public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to the traders. PHASE II: Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership.
  10. 10. 10 | P a g e The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: · 1949: Enactment of Banking Regulation Act. · 1955: Nationalization of State Bank of India. · 1959: Nationalization of SBI subsidiaries. · 1961: Insurance cover extended to deposits. · 1969: Nationalization of 14 major banks. · 1971: Creation of credit guarantee corporation. · 1975: Creation of regional rural banks. · 1980: Nationalization of seven banks with deposits over 200 crores. After the nationalization of banks, the branches of the public sector bank India raised to approximately 800% in deposits and advances took a huge jump by 11,000%.Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. PHASE III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the Foreign Reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.
  11. 11. 11 | P a g e 1.2 NATIONALIZED BANKS IN INDIA Banking System in India is dominated by nationalized banks. The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective behind nationalization was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. Before 1969, State of India (SBI) was only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores 1.3 PRIVATE BANKS All the banks in India were earlier private banks. They were founded in the pre-independence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up to private banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘In principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive.
  12. 12. 12 | P a g e Introduction of the Organization
  13. 13. 13 | P a g e COMPANY DESCRIPTION AXIS BANK Axis Bank India, the first bank to begin operations as new private banks in 1994 after the Government of India allowed new private banks to be established. Axis Bank was jointly promoted by the Administrator of the specified undertaking of the  Unit Trust of India (UTI-I)  Life Insurance Corporation of India (LIC)  General Insurance Corporation Ltd. Also with associates viz. National Insurance Company Ltd., the New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. EVOLUTION: UTI was established in 1964 by an Act of Parliament; neither did the Government of India own it nor contributes any capital. The RBI was asked to contribute one-half of its initial capital of Rs 5 crore, and given the mandate of running the UTI in the interest of the unit- holders. The State Bank of India and the Life Insurance Corporation contributed 15 per cent of the capital each, and the rest was contributed by scheduled commercial banks which were not nationalized then. This kind of structure for a unit trust is not found anywhere else in the world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn profits. In the course of nearly four decades of its existence, it (the UTI) has succeeded phenomenally in achieving its objective and has the largest share anywhere in the world of the domestic mutual fund industry. '' The emergence of a "foreign expert" during the setting up of the UTI makes an interesting story. The announcement by the then Finance Minister that the Government of India was contemplating the establishment of a unit trust caught the eye of Mr. George Woods, the then President of the World Bank. Mr. Woods took a great deal of interest in the Indian financial system, as he was one of the principal architects of the ICICI, in which his bank, First Boston Corporation Bank, had a sizeable shareholding. Mr. Woods offered, through Mr. B.K. Nehru, who was India's Executive Director on the World Bank, the
  14. 14. 14 | P a g e services of an expert. The Centre jumped at the offer, and asked the RBI to hold up the finalization of the unit trust Proposals till the expert visited India. The only point Mr. Sullivan made was that the provision to limit the ownership of units to individuals might result in unnecessarily restricting the market for units. While making this point, he had in mind the practice in the US, where small pension funds are an important class of customers for the unit trusts. The Centre accepted the foreign expert's suggestion, and the necessary amendments were made in the draft Bill. Thus, began corporate investment in the UTI, which received a boost from the tax concession given by the government in the 1990-91 Budget. According to this concession, the dividends received by a company from investments in other companies, including the UTI, were completely exempt from corporate income tax, and provided the dividends declared by the investing company were higher than the dividends received. The result was a phenomenal increase in corporate investment which accounted for 57 per cent of the total capital under US-64 scheme. Because of high liquidity the corporate sector used the UTI to park its liquid funds. This added to the volatility of the UTI funds. The corporate lobby which perhaps subtly opposed the establishment of the UTI in the public sector made use of it for its own benefits later. The Government-RBI power game started with the finalization of the UTI charter itself. The RBI draft of the UTI charter stipulated that the Chairman will be nominated by it, and one more nominee would be on the Board of Trustees. While finalizing the draft Bill, the Centre changed this stipulation. The Chairman was to be nominated by the Government, albeit in Consultation with RBI. Although the appointment was to be made in consultation with the Reserve Bank, the Government could appoint a person of its choice as Chairman even if the Bank did not approve of him. Later on in 2002 the UTI was renamed to Axis Bank.
  15. 15. 15 | P a g e BUSINESS DESCRIPTION The Bank's principal activities are to provide commercial banking services which include merchant banking, direct finance, infrastructure finance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services. CORPORATE PROFILE Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of financial services to customer segments covering Large and Mid-Corporates, SME, Agriculture and Retail Businesses. The Bank has a large footprint of 2589 domestic branches (including extension counters) and 12355 ATMs spread across 1,139 centers in the country as on 31st March 2015. The Bank also has 7 overseas branches / offices in Singapore, Hong Kong, Shanghai, Colombo, Dubai, DIFC - Dubai and Abu Dhabi. Axis Bank is one of the first new generation private sector banks to have begun operations in 1994. The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India),Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently transferred to SUUTI, an entity established in 2003. With a balance sheet size of Rs. 461,932.39 crores as on 31st March 2015, Axis Bank is ranked 9th amongst all Indian scheduled banks. Axis Bank has achieved consistent growth and stable asset quality with a 5 year CAGR (2010-11 to 2014-15) of 21% in Total Assets, 18% in Total Deposits, 22% in Total Advances and 24% in Net Profit.
  16. 16. 16 | P a g e The Corporate Office of Axis Bank is located at Axis House Mumbai. Axis House has received the ‘Platinum’ rating awarded by the US Green Building Council for its environment friendly facilities and reduction of carbon emission. SUBSIDIARIES The Bank has set up nine wholly-owned subsidiaries: Axis Capital Ltd. Axis Private Equity Ltd. Axis Trustee Services Ltd. Axis Asset Management Company Ltd. Axis Mutual Fund Trustee Ltd. Axis U.K. Ltd. Axis Securities Ltd. Axis Finance Ltd. Axis Securities Europe Ltd. PROMOTERS: UTI Bank Ltd. has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up IN 1993 with a capital of Rs. 115 crore, with  UTI contributing Rs. 100 crore,  LIC - Rs. 7.5 crore  GIC and its four subsidiaries contributing Rs. 1.5 crore each. Axis Bank is today one of the most competitive and profitable banking franchise in India. Which can be clearly seen by an analysis of its comprehensive portfolio of banking services
  17. 17. 17 | P a g e including Corporate Credit, Retail Banking, and Business Banking, Capital Markets, Treasury and International Banking. CAPITAL STRUCTURE The Bank has authorized share capital of Rs. 850 Crores comprising 4,250,000,000 equity shares of Rs.2/- each. As on 31st March, 2015 the Bank has issued, subscribed and paid-up equity capital of Rs. 474.10 crores, constituting 2,370,522,199 shares of Rs. 2/- each. The Bank’s shares are listed on the National Stock Exchange and the Bombay Stock Exchange. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The bonds issued under the MTN programme are listed on the Singapore Stock Exchange DISTRIBUTION NETWORK The Bank has a network of 2402 domestic branches (including extension counters) and 12,922 ATMs across the country, as on 31st March 2014.The overseas operations of the Bank are spread over the seven international office with branches at Singapore, Hong Kong, DIFC (Dubai, International Financial Centre), Colombo, and Shanghai and representative Offices at Dubai and Abu Dhabi During the year, the Bank Overseas Subsidiary namely Axis Bank UK Ltd. commenced banking operations. BUSINESS OVERVIEW An overview of various business segments RETAIL BANKING  The Bank pursues an effective customer segmentation strategy, the success of which is reflected in the fact that Savings Bank deposits grew at a Compounded Annual
  18. 18. 18 | P a g e Growth Rate (CAGR) of 26.13% over the last five years. During the year, Savings Bank deposits grew 23.44% to Rs. 63,778 crores from Rs. 51,668 crores last year. On a daily average basis, Savings Bank deposits grew 20.26% to Rs. 52,243 crores. The Bank has also maintained its approach in increasing the proportion of Retail Term Deposits. On the 31st March 2013, retail term deposits grew 24.37% year-on-year to Rs. 59,531 crores, constituting 42.37% of total term deposits, compared to 37.20% last year. Likewise, the Bank continued to focus on increasing its share of retail loans in total advances. The retail loans of the Bank grew 43.62% to Rs. 53,960 crores as on 31st March 2013 from Rs. 37,570 crores last year. Retail loans constituted 27.40% of the Bank’s total advances as on 31st March 2013, compared to 22.13% last year of which secured loans accounted for 87%.  During the year, the Bank added 325 branches spread across 279 centers. The Bank added 1,321 ATMs during the year to reach a network size of 11,245 as on 31st March 2013 compared to 9,924 ATMs last year. The Bank has deployed 550 Automated Deposit Machines (for cash deposits into customer accounts) and has extended this facility 24X7 in certain branches which have integrated self-service lobbies. Besides the ATM network, internet banking, mobile banking and phone banking have developed as important alternate channels of the Bank. BUSINESS BANKING  As on 31st March 2013, balances in current accounts increased by 21.55% and stood at Rs. 48,322 crores compared to Rs. 39,754 crores last year. On a daily average basis, current accounts balances grew by 4.73% to Rs. 28,698 crores compared to Rs. 27,403 crores last year.  The Bank is one of the top CMS providers in the country. The Bank acts as an agency bank for transacting government business offering services to various Central Government Ministries / Departments and other State Governments and Union Territories. The number of CMS clients has grown to 15,818 from 11,548 last year.
  19. 19. 19 | P a g e CORPORATE CREDIT  The corporate credit portfolio of the Bank comprising advances to large and mid- corporates including infrastructure) grew 7.89% to Rs. 98,239 crores from Rs. 91,053 crores last year. This includes advances at overseas branches amounting to Rs. 29,972 crores (equivalent to USD 5.52 billion) comprising mainly the portfolio of Indian corporates and their subsidiaries as also trade finance. The advances at overseas branches accounted for 15.22% of total advance TREASURY  The Bank has an integrated Treasury, covering both domestic and global markets, which manages the Bank’s funds across geographies. The Bank’s treasury business has grown substantially over the years, gaining market share and continuing to be among the top five banks in terms of forex revenues. The Treasury plays an important role in the sovereign debt markets and participates in the primary auctions held by RBI. It also actively participates in the secondary government securities and corporate debt market. The foreign exchange and money markets desk is an active participant in the inter-bank/ FI space. The Bank has been exploring various cross-border markets to augment resources and support customer cross-border trade. The Bank has emerged as one of the leading providers of foreign exchange and trade finance services. It provides a gamut of products for exports and imports as well as retail services. Its cutting edge technology provides comprehensive and timely customer services. International Banking  The international operations of the Bank have generally catered to Indian corporates who have expanded their business overseas. The overseas network of the Bank currently spans the major financial hubs in Asia. The Bank now has a foreign network
  20. 20. 20 | P a g e of four branches at Singapore, Hong Kong, DIFC-Dubai and Colombo (Sri Lanka), and three representative offices at Shanghai, Dubai and Abu Dhabi, besides strategic alliances with banks and exchange houses in the Gulf Co-operation Council (GCC) countries. While branches at Singapore, Hong Kong, DIFC-Dubai and Colombo enable the Bank to partner with Indian corporates doing business globally and primarily offer corporate banking, trade finance, treasury and risk management solutions, the Bank also offers retail liability products from its branches at Hong Kong and Colombo. SMALL AND MEDIUM ENTERPRISES  The Small and Medium Enterprises (SME) segment is a thrust area of the Bank. The business approach towards this segment, which is expected to contribute significantly to economic growth in future, is to build relationships and nurture the entrepreneurial talent available. The relationship based approach enables the Bank to deliver value through the entire life cycle of SMEs. The Bank has segmented its SME business in three groups: Small Enterprises, Medium Enterprises and Supply Chain Finance. The Bank extends working capital, project finance as well as trade finance facilities to SMEs. The Bank has launched ‘Business Gaurav SME Awards’ in association with Dun & Bradstreet to recognize and award achievers in the SME space. AGRICULTURE  As of 31st March 2013, the agriculture business is operated through 759 branches attached to 93 agricultural clusters, which are controlled by 20 ABCs. To achieve the objectives of increasing the business reach, consistent growth of portfolio and maintaining quality of assets, business, credit, operations and collections functions in this business are handled independently.As on 31st March 2013, the Bank’s outstanding loans in the agricultural sector was Rs. 14,845 crores, constituting 7.54% of the Bank’s total advances
  21. 21. 21 | P a g e FINANCIAL INCLUSION  The Bank regards financial inclusion not merely as a corporate social responsibility initiative but as an integral component of its rural strategy. The financial inclusion initiatives of the Bank are aimed at enabling customers in rural markets to use formal banking channels for their banking needs such as savings, payments, credit and insurance. Apart from savings, payments are the major requirement of such customers due to migration of workforce. The Bank offers no-frills accounts, tailor-made fixed deposits and recurring deposit products to meet the savings requirements of customers. As on 31st March 2013, the Bank had opened 61.61 lac no-frills accounts covering 42,338 villages.  The Bank has been in the forefront of several innovations in this space. It has tied-up with leading telecom companies to provide savings and remittance facilities using the mobile phone and their distribution outlets in key domestic payment corridors. The Bank is also a leading player in the remittance market, enabling migrant workers in urban areas remit money to their families in the hinterland. The Bank endeavors to meet the entire set of financial needs of its customers, including micro-lending, ‘Chhota-deposits’ and micro-insurance (under life and general insurance categories).  The Bank also actively participates in electronic/direct benefit transfer for disbursal of benefits under various government schemes using smart cards and biometric authentication technology. The Bank has made significant investments in technology, and is integrated with the Aadhar platform through NPCI to enable transfer of Aadhar based social welfare benefits. The Bank has launched several programs to deliver micro-loans to rural customers through its business correspondents in Tamil Nadu, Bihar and Madhya Pradesh. It has also tied up with leading corporates to deliver credit to their end consumers through their rural supply chain partners.
  22. 22. 22 | P a g e Board of Directors Name Designation Sanjeev Mishra Non-Executive Chairman V Srinivasan Deputy Managing Director Prasad R Menon Director Som Mittal Director Usha Sangwan Director Rakesh Makhija Addnl. Independent Director B Babu Rao Addnl. Non-Executive Director Rajesh Dahiya Executive Director Shikha Sharma Managing Director & CEO V R Kaundinya Director Samir K Barua Director Rohit Bhagat Director S Vishvanathan Director Ketaki Bhagwati Addnl. Independent Director Rajiv Anand Additional Director
  23. 23. 23 | P a g e Mission  Customer service and product innovation tuned to diverse needs of individual and corporate clientele.  Continuous technology up gradating while maintaining human values.  Progressive globalization and achieving international standards.  Efficiency and effectiveness built on ethical practices.  Customer Satisfaction through providing quality service effectively and efficiently. VISION AND VALUES Vision 2015 To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology Core Values  Customer Centricity  Ethics  Transparency  Teamwork  Ownership
  24. 24. 24 | P a g e UNIT: AXIS BANK LIMITED Jeevan Prakash Building Sector 17-B Chandigarh- 160017 Tel: 0172- 5062917 Registered Office ‘Trishul’, 3rd Floor, Opp. Samartheshwar Temple, Law Garden, Ellis Bridge, Ahmedabad – 380 006. Tel No. : 079 – 2640 9322 Fax No. : 079 – 2640 9321 Web site: www.axisbank.com The Corporate Office Axis Bank Limited, Corporate Office, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai - 400 025 Tel: (022) 2425 2525
  25. 25. 25 | P a g e AXIS BANK OFFERS ITS SERVICES MAJORLY IN FOUR PARTS: A. Personal B. Corporate C. NRI D. Priority banking 1) Retail A) Accounts I) Saving Account (1) Easy Access Saving Account (2) Prime Plus Saving Account (3) Prime Saving Account (4) Women’s Saving Account (5) Senior Privilege Account (6) Future Star Saving Account (7) Pension Saving Account (8) Trust/NGO Saving Account (9) Insurance Saving Account (10) Youth Saving Account (11) Basic Saving Account (12) Small Basic Saving Account I) Salary Account (1) Easy Access Salary Account (2) Prime Salary Account (3) Priority Salary Account (4) Wealth Salary Account (5) Defense Salary Account (6) Employee Salary Account II) Current Account (1) Normal Current Account (2) Local Current Account (3) Business Advantage Current Account
  26. 26. 26 | P a g e (4) Business Select Current Account (5) Business Classic Current Account (6) Sweeps Current Account (7) Safe Deposit Current Account (8) Pension Reimbursement Current Account (9) New Pension System B) Deposits I) Fixed Deposit II) Recurring Deposit III) Tax Saver Deposit IV) Fixed Deposit Plus V) En Cash 24 Flexi Deposit C) Cards I) Credit Cards (1) Insta Easy Credit Card (2) Miles And More Credit Card (3) My Business Credit Card (4) My Choice Credit Card (5) My Wings Credit Card (6) My Zone Credit Card (7) Neo Credit Card (8) Platinum Credit Card (9) Pride Platinum Credit Card (10) Pride Signature Credit Card (11) Privilege With Unlimited Travel Benefits Credit Card (12) Signature With Lifestyle Benefits II) Debit Cards (1) Burgundy World Debit Card (2) Priority Debit Card (3) Titanium Debit Card (4) Secure + Debit Card (5) Display Debit Card (6) Youth Debit Card (7) Ladies First Debit Card
  27. 27. 27 | P a g e (8) Power Salute Debit Card (9) NRI Debit Card (10) Titanium Debit Card (11) Titanium Prime Plus (12) Visa Classic Debit Card (13) Smart Privilege Debit Card III) Pre-Paid Cards (1) Rewards Pre-Paid Card (2) Axis Bank Suvidha Pre-Paid Card (3) Smart Pay Pre-Paid Card (4) Meal Pre-Paid Card (5) Gift Pre-Paid Card IV) Commercial Credit Cards (1) CCC With Corporate Liability (2) CCC With Individual Liability (3) CCC With Joint And Several Liability (4) Central Travel CCC (5) Purchase CCC (6) Purchase Control CCC (7) My Business CCC V) Commercial Debit Cards (1) Master Card Business CDC (2) Business Titanium Rewards CDC (3) Business Titanium CDC D) Loans I) Home Loans (1) Axis Bank Home Loan (2) Asha Home Loan (3) Empower Home Loan (4) Happy Ending Home Loan (5) Super Saver Home Loan II) Personal Loan III) Car Loans (1) New Car Loan
  28. 28. 28 | P a g e (2) Pre-Owned Car Loan (3) Loan Against Car IV) Loan Against Property V) Gold Loan VI) Loan Against Securities VII) Loan Against Shares VIII) Commercial Vehicle & Construction Loan IX) Educational Loan E) Forex (1) Multi-Currency (2) Travel Currency (3) Diners (4) India Travel (5) International Fund Transfer (6) Foreign Currency Cash (7) Foreign Currency Demand Draft (8) Foreign Currency Travel Cheques F) Investments (1) Gold Mohur (2) Silver Mohur (3) Axis Direct (4) Mutual Fund (5) Demat Account (6) 8% Savings Bonds (7) IPO Smart (8) Alternate Investments + Products (9) Public Provident Fund (10) Atal Pension Yojna G) Insurance (1) Life Insurance (2) Health Insurance (3) Home Insurance (4) Travel Insurance (5) Motor Insurance
  29. 29. 29 | P a g e (6) Business Guard (7) Pradhan Mantri Suraksha Bima Yojna (8) Max Life Pradhan Mantri Jeevan Jyoti Bima Yojna (9) Bima Uphar Yojna 2) NRI A) Accounts (1) Inaam NRI Personal (2) NRE Savings (3) NRE Prime Savings (4) NRO Savings (5) Resident Foreign Currency (6) NRE Salary B) Deposits (1) Resident Foreign Currency (2) NRE FD (3) FCNR (4) NRI-Pro Fc (5) NRO Rupee (6) NRE Rupee (7) NRO Rd (8) NRI Pro Rupee (9) FD+ C) Loans (1) NRI Home Loans (2) Top Up Loans (3) Home Loan For Self-Employed NRI D) Insurance (1) General Insurance E) Investments (1) NRI Mutual Fund (2) Portfolio Investments Scheme (3) Gold Mohur (4) 4 In 1 NRI Investment F) Send Money To India
  30. 30. 30 | P a g e (1) Middle East (2) Australia (3) Africa (4) UK (5) Singapore 3) Krishi A) Accounts (1) Krishi Saving Account (2) Krishi Current Account B) Loans (1) Kisan Credit Card (2) Gold Loan (3) Loan For Horticulture (4) Loan For Rural Project (5) Tractor Loans (6) Contract Farming (7) Warehouse Receipt Loans (8) Microfinance C) Rural Banking D) Financial Inclusion 4) Burgundy Banking A) Burgundy For Resident B) Burgundy For Non-Resident 5) Priority Banking A) Priority For Resident B) Priority For Non-Resident
  31. 31. 31 | P a g e LITERATURE REVIEW: Overview of Branchless Banking: Branchless banking is a type of banking that takes place where the banking customer does not need to visit a branch or central location of the bank physically. Financial institution business may be completed through technological services, such as online Banking transactions, over the Mobile phone, or through an ATM (Automated Teller Machine) Now a day’s Branchless banking is very common activity, and many people are able to complete all their banking online without ever having to visit the bank. There are many benefits to branchless banking to the customers. There is no need for the human to take time out of the day to physically visit the bank in order to withdraw or deposit money these activities customer can do through branchless banking easily Examples of branchless banking technologies are the Technology, Internet, automated teller machines (ATMs), Point of sale POS devices, and mobile phones etc. Each of these technologies serves to deliver a set of branchless banking services to the customers International Background of the Branchless Banking: The concept of branchless banking first introduced by United Kingdom after that a Midland bank has started this concept in with more futures. At that time Midland Bank was one of the Big Four banking groups in the United Kingdom for most of the 20th century. It is now part of HSBC. HSBC is a British multinational banking and financial services company and the headquartered in London United Kingdom. It is the world's second largest bank providing financial services to the customers. It was founded in London in 1991 by the Hong Kong and Shanghai Banking Corporation to act as a new group holding company National Background of the Branchless Banking: India has been declared as a ground innovation in branchless banking and has been successful in developing a variety of business models involving a wide range of players many banks has played a role in activities of branchless banking, including mobile network operators (MNOs), technology companies and even courier businesses etc. According to history Branchless banking concept was first introduced in India in April 2006 under the regulation of Reserve Bank of India has provided clear guidance to the financial institutions. Customer Satisfaction with Branchless Banking:
  32. 32. 32 | P a g e In this world all knows that customers place great importance on the value and Convenience offered by financial institutions (Lewis and Soureli, 2006) and that customer satisfaction (which is affecting on the service quality perceptions) Many Research create confusion and gaps in understanding the nature of online service quality process, and how it operates within the financial institution it depends upon customer lack of specific knowledge as to how the quality of Branchless Banking web sites impacts on customers mentality it all depends upon customer satisfaction with their bank (Carmel and Scott, 2009). Automated transaction of services has the potential to make customers enthusiastic about their financial institution. And to tell other potential customers about its advantages. After that, automated service users would be more likely to comment positively about their bank to other potential customers, recommending the bank encouraging and motivating others to do business with it (Joseph and Stone, 2003) Vol. 1 | No. 2 | August 2012 Reliability Reliability involves consistency of performance and dependability of silk bank branchless banking activities. It means that the silk bank performs the service right the first time to their customers. It also means that the silk bank honors its promises with in India. Indian Gov. involves accuracy in billing in all departments, keeping records correctly and performing the service at proper time. Customers should be specifically influenced by the reliability of advance technology because they might be associated with risks such as the technology malfunctioning. Fees and Charges: Fees and charges of every online transaction impacts on Service quality in branchless banking financial institution are important when human internet interaction is the main service delivery and communication strategy with their potential customers. After introducing branchless banking Silk bank offering high quality services to satisfy potential consumers but it needs, that at lower costs, because it is competitive advantage of financial institutions Online banking has successfully reduced operating administrative costs and other costs In this world every person want to save money when a bank provides a lower cost services as compared to other financial institution in India result customers prefer a lower cost bank easily it shows that Cost savings have helped online based banks offering lower or no service fees it’s an advantage for the financial institution for diverting customers expectation to the
  33. 33. 33 | P a g e online banks, it means it is hypothesized that fees and charges have positive impact on customer satisfaction Response Response means Customers are particularly interested in the speed with which a service is offered or delivered to their potential customers (TheWall Street Journal, 1990). Most researcheshave indicated that few customers overrate the processing time of a services especially in India According to employees of many bank on certain occasion customers has a strong liking to carry out the service by them. This activity is particularly justified by the willingness of the customers to up the speed of delivery it is mandatory for the bank to upgrade system and manage delivery time and follow advance mood of technology. Because slow service delivery has a negative effect onfew customers if customers are expecting a fastservice delivery it is clear that customers using the service more positively. That time was an important factor for each individual in using a new service or advance technology in banks. In this fast moving world timesavings were essential for each individual who use online banking and online shopping.
  34. 34. 34 | P a g e LITERATURE REVIEW Almost 4 billion people are unbanked—more than two-thirds of the population in the world’s low-and middle-income countries. They are the huge unserved majority today. In recent years, there has been growing effort and interest in measuring financial inclusion, but as yet we have no globally consistent datasets that can give us a clear sense of how this proportion has changed over the past decade. However, evidence from countries like Brazil, South Africa, India, and Kenya strongly suggests that there has been an upward trend (Fin Mark Trust 2003 and 2008; FSD Kenya 2009a; Kumar 2005; World Bank 2008a). Technology has played a role in this expansion, though we should not overstate its role to date. Information technology has primarily helped to enable expansion through more conventional banking channels, such as branch and ATM. For example, in growing from 0 to 8 million deposit customers in five years, Mexico’s Banco Azteca used a robust electronic banking system to connect a large network of mini-branches in stores of its parent Elektra, a large seller of consumer durables, and other retail chains (Rhyme 2009). The task of financial inclusion in a country like ours with large population and geographical spread is, indeed, challenging. The data released from the recent census of India indicates that only 58.7% of households in India avail of banking services with the figure being 54.4% for rural areas and 67.8% for urban areas. The opening of bank accounts is only the first stage and the focus now is not just on improving access but also on better use of the financial infrastructure. Overview on Branchless Banking Branchless banking systems are becoming prevalent in the developing regions of the world as a mechanism to extend financial services to the economically deprived populations. Instead of setting up formal bank branches, these systems use a network of human agents to facilitate banking transactions, thereby reducing the cost of banking for people with small cash holdings. Today, over 50 million people in the developing world rely on branchless banking services to meet their financial needs and together they transact more than $100 million on a daily basis Criteria for constitute branchless banking
  35. 35. 35 | P a g e  Non-bank retail outlets are used as customer touch-points, at least for cashing in or out of the accounts.  Technology, such as payment cards or mobile phones, is used to identify customers and authorize transactions electronically and, in some cases, to allow customers to initiate transactions on their own.  Transactions can be processed against an electronic store of value (although cash- based services for non-customers may also be offered in addition)  Accounts are issued by institutions recognized and explicitly or implicitly authorized by the banking regulator, although they may not be formally licensed and regulated This represents a fairly expansive definition of branchless banking, since it may involve three types of “outsourcing” of activities typically conducted by banks to non- bank players: the customer interface, where customers at the very least cash in and cash out from their electronic accounts; the operation of the accounts; and the issuance of the accounts and the investment of the float. Drivers of branchless banking  The retail network, composed of the collection of retail outlets where transactions are originated  The payment network, which aggregates the transactions from the collection of retail outlets and routes them to the appropriate issuer  The account platform, which manages the service logic by authorizing individual transactions and maintaining the value of accounts Each of these elements has very different economics, and each presents key tradeoffs that providers need to face. An understanding of the economic drivers helps establish the roles of the value chain and the types of partnerships that are most likely to achieve the necessary scale, and ensures that the service can be delivered at an end-to-end transaction cost that poor customers can afford. Advantages 1. Economies of Large Scale Operations 2. Spreading of Risk
  36. 36. 36 | P a g e 3. Economy in Cash Reserves 4. Diversification on Deposits and Assets 5. Cheap Remittance Facilities 6. Uniform Interest Rates 7. Proper Use of Capital 8. Better Facilities to Customers 9. Banking Facilities in Backward Areas 10. Effective Control
  37. 37. 37 | P a g e Overview of Branchless Banking
  38. 38. 38 | P a g e 1. Introduction Financial inclusion is based on the principal of equity and inclusive growth and will be the catalyst to empower the poor to contribute to the social and economic growth of India. As per 2011 census, about 58.7 percent households had reported availing of banking facilities. Out of the 24.69 crore households, 14.48 crore reported availing banking services. Nearly 10 crore households were not availing the services; which is a significant percentile of the population. The introduction of Branchless banking will usher in banking for the unbanked in India and will provide a window in financial inclusion for a large segment of the population which are poor and unbanked. Branchless Banking needs to see as the key enabler of financial inclusion of the poor in India. Need of Branchless Banking These needs fulfilled by Branchless Banking where The two pillars of financial inclusion are the Bank linked Special Help Groups (SHG) and the Business Correspondent (BC) Model.
  39. 39. 39 | P a g e Branchless Banking in India: Reaching out to a large unbanked population can be achieved by a judicious use of technology and people on the ground to extend financial services to the unbanked by opening up channels beyond the currently operational branch network. The government has set a target of providing financial inclusion for any village with a population of more than 2000 people, there are about 6,00,000 villages which need to be supported with banking and other financial services.
  40. 40. 40 | P a g e Indicators of Financial Inclusion These indicators showing how Indian Banking sector developing in the future of banking and making reach to unbanked people across the country This branchless banking has to be done in conjunction with other plans and direction provided by the Indian government to opening more brick and mortar branches in states, districts, talukas and villages, identified by the government of India.
  41. 41. 41 | P a g e Development by financial inclusion in the country where showing progress of financial inclusion in banks in Table 2.3 Branchless banking is the vehicle to take banking to customer's doorstep rather than the traditional approach of the customer seeking the banks. Table 2.3gives the growth of financial inclusion in India in the year 2013. It can be gleaned from the table that Business Correspondents (BC) have been the key enablers of financial inclusion ; there were 221,341 BC's servicing 1,20,355 villages in India as on March 2013.
  42. 42. 42 | P a g e Role of Technology Despite the efforts like nationalization of State Bank of India in 1955, commercial banks in 1969 and 1980; setting up of RRBs; encouraging urban and rural cooperative banks; and instituting priority-sector lending scheme put in by the GOI and RBI, financial disparity still remains one of the major issues plaguing the Indian rural population. These efforts have failed to build the social capital and consequently failed to achieve desired level of financial inclusion. Technology has started playing a very important role in financial inclusion. Indian banks are using all the avenues available to increase their reach and penetration. One of the recent technologies that has made the banking system much easier is the Automated Teller Machines (ATMs). The statistics that provides the distribution of ATMs in rural and urban areas. Branchless Banking through ATM and expansion of ATM’s in Rural-Urban areas a. Automatic Teller Machines (ATMs) Automatic Cash dispensing machines are already in place in cities and towns. The machine identifies the bank user through his card and password. The user can withdraw cash through these machines, check his account balances and use it for some other small transactions.
  43. 43. 43 | P a g e Generally, these ATMs are owned by the banks or bank outsources it to third party to run an ATM on their behalf. b. Deposit taking Machines These are the machines which take cash deposits from customers and update the status of their deposit in real time. These machines are currently present only in the bank branch premises of few banks in cities. c. Hand held devices These are devices which are used to identify user accounts usually through a card and biometric identifier. The main purpose of the device is to update the transactions happening at BC location in the bank servers. These devices update the deposit and withdrawal information in the servers. The Handheld devices either operate through uses of mobile data networks or through the Local Area Network (LAN) connection. d. Computerized transactions in Kiosk Computers at kiosk can directly connect to banks website and use the website for banking transactions like deposits, withdrawals, etc. e. White Label ATMs White Label ATMs variants of normal ATMs wherein it is operated by a private entity and different banks can provide the service through this ATM. f. Internet Banking/ Mobile Banking Bank account holders can use their accounts using internet banking and mobile banking to transfer money to different accounts and pay their bills. Though the technologies are available but effective implementation of the technology to increase the reach of banking services is yet to happen. The low cost solutions like computerized kiosk and handheld devices have increased the penetration in last few years but
  44. 44. 44 | P a g e they are still prone to network connectivity and maintenance issues. Moreover the low number of transactions due to limited product suit, lack of interest by people and technology hiccups has made the business unsustainable for many BCs which is affecting the scaling of the current models. Payment Banks Financial inclusion entails not just the availability of financial products – credit, deposit, insurance, etc. but also the ability to transfer money around in an affordable manner. While banks have found this transfer unviable the mobile technology platforms came to the fore offering services like mobile wallet, mobile money, etc. However, despite the penetration of the mobile channel, this platform has been vastly underutilized for monetary transactions. One reason is the requirement of the bank as a partner for the cash out transaction. Thus, the person performing the cash out needs to have a bank account. Other important issue with the system is that of risk transfer and market inefficiency. An escrow account is used for the money in these mobile wallets that earns no interest for the mobile company. Moreover this also exposes the mobile wallet to risk if the bank defaults. Thus, apart from these operational issues, affordable remittances could lead to overall development of those who are financially excluded. Currently this is being deterred by high transaction costs accorded by the banks. Therefore, with the objective of providing low cost (through high volume) remittance services to the migrant laborers and other entities, RBI (2014a) has come up with the concept of Payment Banks. Non-Banking Financial Companies (NBFCs), mobile companies, corporate BCs, public sector entities, current Payment Protection Insurance (PPI) providers etc. can register and set up payment banks. Restricted to a maximum of Rs. 100,000 per customer, the payment banks will be allowed to accept current and saving deposits. While the primary purpose of these accounts is to effect low cost remittance services, the holder will be eligible for interest income on these accounts. While the payment banks cannot lend unlike banks they can however act as Business Correspondent for banks and lend on their behalf. Thus, the primary source of income for payment banks would be the interest they earn by depositing the customer money in Government Securities as directed by RBI. They would also have access to interbank call money market to sort out any liquidity issues. Payment Banks are essentially exposed to operational and limited market risks (investments are held till maturity) and no credit risks (no lending allowed), while a minimum CAR of 15 percent and a net worth of Rs. 100 crore is required to be maintained.
  45. 45. 45 | P a g e Given that the payment banks are not allowed to directly lend, the profits would essentially be derived from transaction fees (which will be small due to competition) and the Net Interest Margin. While theoretically, this looks an interesting opportunity, how the firms face the ground level challenges will be important. Firms will need to find answers to challenging issues of thin profit margins, interoperability, technical limitations and regulations. Mobile Phone The penetration of financial services in India is very low and the problem is predominant in rural areas. Only 50 percent of Indians today hold a savings account and one in seven individuals have access to banking credit.3 Without access to formal banking services, the only means of savings and transferring value is through physical assets like cash, jewelry or livestock, and this happens often with small time money-lenders at a higher cost. This not only increases risk exposure, but also perpetually marginalizes this segment of the population from the formal economy, as it is difficult and costlier for banks, insurance companies and government agencies to transact with them. Role of Government of India The Government of India (GOI) initiated the Financial Inclusion program with the launch of the “Swabhimaan” campaign in the Union Budget of 2010-2011. Under “Swabhimaan” - the Financial Inclusion Campaign launched in February 2011, Banks had provided banking facilities by March, 2012 to over 74,000 habitations having population in excess of 2000 using various models and technologies including branchless banking through Business Correspondents Agents (BCAs). Further, in terms of Finance Minister's Budget Speech 2012- 13, the “Swabhimaan” campaign has been extended to habitations with population of more than 1000 in North Eastern and hilly States and to habitations which have crossed population of 1600 as per census 2001. About 40,000 such habitations have been identified to be covered under the extended “Swabhimaan” campaign. The GOI advised Indian banks to open branches in areas which had 5,000 or more population in under-banked districts and 10,000 or more population in other districts under this campaign. In two year 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 were opened by end of March, 2012. The objective of Financial Inclusion (FI) is to extend financial services to the large unbanked population of the country to unlock its growth potential and to achieve inclusive growth by
  46. 46. 46 | P a g e making financing available to the poor and offer banks a business opportunity for receiving deposits and also lending money. The GOI efforts have resulted in rural incomes growing rapidly in a short time due to efforts to provide rural development and employment programs. CRISIL has reported in August 2012 that 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 in the same period. In the year 2001 only about 35% of the total number of households availed banking service, in rural areas it was less than one in three households and in urban areas one in two household who available banking service services. With the GOI initiatives in 2011 , 3 out of 5 households in India avail banking services, in rural areas it is one in two households and in urban areas more than two out of three households who avail of banking services. The growth during the period of 2001-2011, in the number of households 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 % per annum and in urban areas by 7.2 %per annum n. Table 2 shows the progress made in financial inclusion as on March 31st 2013. Role of Reserve Bank of India Reserve Bank of India (RBI) the regulator has clearly identified the need for Financial Inclusion as s the engine for growth of the Indian economy. The Business Correspondent (BC) has been the key outsourced resource in achieving the goals set by the GOI for Financial Inclusion in India. The RBI has encouraged the use of Information Technology with smart cards with biometric identification, personal computer operated kiosks and mobile technology to enable Business Correspondents to deliver Banking Services. RBI has simplified the Know Your Customer (KYC) norms, allowed the opening of No-Frills Accounts, issue of General purpose Credit Cards (GCC) and have mandated that the goal is to have all households in villages with more than 2000 inhabitants should have bank accounts and banking services.
  47. 47. 47 | P a g e RBI has also mandated that financial literacy and credit counseling to be provided to the new customers of the bank, so that they understand the on how to benefit by the financial inclusion initiatives offered to them. Business Correspondents will offer the following Products to the customers ; Savings Bank, Recurring Deposit, Remittances, Saving Banks cum Over Draft (SBcum- OD), Tiny Card to Banks have been asked to put in place risk mitigation in the use of Business Correspondents by obtaining security deposit, due diligence process in selection, a committee approach for selection of BC partners and to conduct periodical checks on the BC partners and also to ensure the fidelity insurance is provided by the Business Correspondents. RBI has mandated that the banks must ensure that the cash management is the responsibility of the BCs including arranging transit insurance cover and must ensure that they always have cash available and the customers are given uninterrupted service; and adequate balance is maintained in the settlement account of the BC. BC's can also be extended overdraft limits to ensure BCs' get enough physical cash for deployment to their customers at the customer service points (CSP). Bank Initiated Enabler for Branchless Banking Banks are providing loans to BC's for acquiring equipment, machines, furniture to set up Customer Service Points (CSP) enabled with Point of Sale (POS) Machines, finger print scanner, computers, mobile phones as term loans. Banks also provide training in banking operation required by Business Correspondents (BC) and Customer Service Points (CSP) operators before they begin operations. They are also taught on how to handle and operate the information technology equipment by the technology vendors of the banks. Challenges Faced by Business Correspondents There are a number of challenges faced by the Business correspondents, most of which are Social in nature. The first is the resistance to financial inclusion due to illiteracy and lower economic status, this is being partly overcome by sustained financial literacy training. Regulatory compliance to KYC (Know your customer) has been relaxed and ceilings have been put in place to comply with the Anti-Money Laundering (AML) compliance. The Bank's ability to accept the liability of the BC's is another challenge along with the restricted
  48. 48. 48 | P a g e eligibility criteria permitted by RBI to be a Business Correspondent and the restrictions on the BC engaging a sub agent. Benefits of Branchless Banking in India. Branchless Banking in India enables the financial inclusion of Indian rural and semi-rural and poor urban areas and the benefits are: i) Economical Support to the Poor: An opportunity for the lowest strata of society to save money to overcome financial difficulties which they encounter often and makes them vulnerable. Thus it provides them a platform to borrow money, receive money and also save their money securely and confidently in a regulated and reliable banking environment. ii) Credit Support: Credit was traditionally sourced from informal channels which made the poor dependent and vulnerable. With financial inclusion there is an opportunity for the poor to avail of credit at reasonable terms to fund their aspirations and foster entrepreneurship. iii) Direct Payment to the Beneficiary Banking allows a safe and reliable payment channel for Public subsidies and welfare programmes offered by the GOI for the poor. With financial inclusion the money is delivered directly to the beneficiary from government subsidies and welfare programmes. Thus leakage in the system is reduced and the money reaches the poor people who are its recipients without pilferage. Government of India has already started direct cash transfers to the beneficiaries of various government schemes and this has been well received by the recipients. Branchless Banking in Other Countries and their Adaptation in India: The experiences in the countries of Brazil, Kenya, Mexico and South Africa are relevant for India given the challenges being faced by these countries are quite similar to India's challenges in Financial Inclusion. i) Brazil Banking is provide through agents called Banking Correspondents (BC); by easing the restrictions on BC and allowing them to provide a range of services. In 1997, 40 million out of 62 million Brazilians did not have access to financial services. In a decade 1, 50,000 BCs'
  49. 49. 49 | P a g e cover more the 60% of the customer services points and in the period 2000 to 2008 the number of bank accounts increased from 63.7 million to 125.7 million. Indian financial inclusion model has borrowed the BC concept which has worked in Brazil and has been successful in India too. ii) Kenya Kenya has been the front runner in harnessing mobile banking in the world with its M-PESA implementation. Thus they have done away the need to have a bank account and have empowered the mobile company to act as a banker for keeping and transacting money. The mobile phone company acts as the repository of customers' money and allows them to transact using their mobile phones; but the money stored in the mobile phone does not earn any interest and is not cash. The M-PESA was launched in 2007 by Safari.com & Vodafone and the transactions had a cap of $500 and included more than 17,000 agents. The client base has reached 10 million customers about 40% of the population. In a recent development there is a deposit facility in a savings account in partnership with a Bank named as M-KESHO which can be operated from the customer’s mobile phone. The Reserve Bank of India has allowed use of 'semi closed wallet' by mobile companies, customers can now can send and spend money through the mobile network, but can't withdraw cash. Airtel, Vodafone and Idea are offering such services in collaboration with Indian Banks and RBI approval. iii) Mexico Mexico has used the microfinance route for financial inclusion by providing micro credit and similar financial products funded by private capital and substantial investment in technology and resources. The microfinance for profit behemoth has 1.5 million clients and is the largest microfinance institution (MFI) in Latin America and is named as Comparators. The interest rates are usurious at more than 100 percent per annum, and there are host of compliance issues with Comparators. But it is a success story of innovation, efficiency and tight cost controls and is efficient at training and managing a very de-centralized base of loan officers. Comparators has demonstrated how a MFI can succeed by being extremely profitable for its shareholders. In India Micro finance companies tried this model before the Malegam Committee appointed by the RBI recommended that MFI's charge no more than 24% on loans and that their margins be limited to 10%. The report has disallowed more than two microfinance companies to lend to one borrower and to enforce this it had recommended the setting up of a a microfinance credit information
  50. 50. 50 | P a g e bureau which is in operational today. It also stipulated a ceiling of Rs. 25,000 to a single borrower and loans only to families with income less than Rs. 50,000. It also classified NBFC's with microfinance operations as NBFC-MFI and recommended that loans to these entities will be treated a priority sector lending. iv) South Africa South Africa has taken the no-frills banking approach with negligible minimum deposit and a given number of free transactions. The Central Bank of South Africa mandated five banks to launch the no-frills banking with no monthly fees and five free transactions in a month and it was named as "Mzansi" in 2004. South Africa is one of the most expensive banking markets and the Government devised the Mzansi scheme to provide affordable financial inclusion. As per a 2009 report the adoption of Mzansi has been limited to 6 million in a population of 32 million, only 3.3 million accounts were active, with an usage rate of only 58 percent used for transfer of money and payment of bills and remittance of salary. The downside is that once the five transaction were exhausted the additional transactions were charged at regular banking rates which were exorbitant for the poor. India has adopted this no-frill financial inclusion route with limited success, with 25 million people signed up only 2.77 million are active uses, which is a usage of just 11 percent. The government is planning to launch direct transfers of subsidies to these accounts and there is a renewed interest in this no-frills model in India which seems to be a workable model for disbursement of money from various government schemes created for the poor in India.
  51. 51. 51 | P a g e OBJECTIVE AND SCOPE OF THE STUDY Objectives The objectives of the research were: 1. To study the methods of delivery for branchless banking in India. 2. To study the benefit of branchless banking in India. 3. To study the Experience of branchless Banking in India. 4. To study branchless banking implemented in other countries and its adaptation in India. Scope of the Study The introduction of mobile banking as well as agent banking can bring a lot of social value for low‐income individuals in India through the removal of many potential barriers to access. Removing barriers that are preventing low‐income individuals from using formal services will make financial services more accessible which could potentially help lift the welfare of these individuals. In a previous section, the barriers that were found to be most worrying were the proximity barriers, high cost barriers, information barriers and barriers associated with documentation requirements. As will be discussed, mobile banking and agent banking can facilitate the delivery of financial services and effectively reduce all barriers to access emphasized in study. Research methodology  A questionnaire was prepared covering questions related to branchless banking and e banking services.  The question was presented in one to one interview with each of the respondents.  The questions were presented with Axis bank’s customers.  Proper spread sheet has been prepared on the basis of results came out from questionnaire responses  Analysis has been done on the basis of data from spreadsheet and data collected by questionnaire.
  52. 52. 52 | P a g e  Conclusions had been arrived at using the response of the concerned persons and not on questionnaire alone. Research Design The research done by me is an exploratory research. Data Collection Method The methods used for collected primary data are 1. Questionnaire (Likert Scale) 2. Interviews Sources of secondary data 1. Internet 2. Axis Bank’s documents Sampling The data collected at a random basis from respondents. All the respondents are customers of Axis Bank Ltd. Sample size The sample size of respondents is 50. Contact Method The respondents are met by face to face at branch location of Axis Bank. RESEARCH METHODOLOGY Research Methodology may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying the research problem along with the logic behind them. Research Meaning Research in common parlance refer to a search for knowledge. In fact research is art of scientific investigation.
  53. 53. 53 | P a g e Objectives of Research: a) To gain familiarity with a phenomenon or to achieve new insists into it b) To portray accurately the characteristics of a particular individuals situation or a group. c) To determine the frequency with which something occurs or with which it is associated with something else. d) To test a hypothesis of a causal relationship between variables. Research can be defined as, “A scientific and systematic search for pertinent information on a specific topic”. Research Methods: A research method refer to the behavior and instruments used in selecting and constructing research techniques. Research methods may be understood that which method or technique that are used for conduction of research. Regarding this research/project observational method has been following the observation. Sampling Method: Sampling method indicates how the sample units are selected. There are various types of sample designs which can be covered under the two board groups random or probability or non- random sample. SOURCE OF DATA: Data is collected in two types: 1) Primary data 2) Secondary data
  54. 54. 54 | P a g e Primary data: The primary data are those data, which are collected afresh and for the first time. And happen to be original in character. Questionnaire – A set of questionnaire is prepared for the cause of collecting different information related to the pre-determined objectives. The questionnaire prepared is in two forms & targeted towards the doctors and chemists differently. The format of questionnaire is structured and non-disguised. Direct Personal Interview – Under this method of collecting data there is face-to-face context with the person from whom the information is obtained. The data collected are from the respective selected doctors and chemists visited regularly. The pattern used is Structured and Indirect Interview. Secondary data: Secondary data means data that are already available i.e., they refer the data, which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has to look into various sources from where he can obtain them, IN this case he is certainly not confronted with the problems that are usually associated with the collection of original data. Secondary data may either be published data or unpublished data. Usually published data are available in:  Books, magazines and newspapers.  Data provided by the company.  Internet. Data Analysis Data Classification
  55. 55. 55 | P a g e Data classification is the process of sorting and categorizing data into various types, forms or any other distinct class. Here I classify data on the basis of Age, Gender, and Use of service, Customer preferences, and Customer satisfaction. Data Analysis and Results of Branchless Banking No of Commercial Banks in India As here the banking after Independence in India till 2000 was on more focusing on opening new banks and providing services to serve the country and made financial literate to unbanked population, but from 2010 to 2013 and till now Indian Banking Sector is fore focusing providing all quality services and which cater all needs of unbanked population and using Technology and taking step towards the paperless banking as Branchless Banking. 89 154 272 298 169 169 173 157 1 9 6 9 1 9 8 0 1 9 9 1 2 0 0 0 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 NO. OF COMMERCIAL BANKS
  56. 56. 56 | P a g e Total ATM in India For enhancements in Branchless Banking, Banks came with the ATM now in India mostly transactions done by ATM and the no of ATM are increasing day by day to strengthen Branchless Banking Total No of Branches Now come branches what we required, where we required here day by day banks increasing branches to serve the unbanked population of the country, 2010 2011 2012 2013 2014 2015 2,249,497 2,407,870 2,561,465 2,728,425 2,891,190 3,046,685 1 2 3 4 5 6 TOTAL ATM IN COUNTRY Year ATM 85457 91145 99242 101567 2010 2011 2012 2013 TotalNo. of Branches
  57. 57. 57 | P a g e Business Correspondents Lack of access to basic financial services is still a major challenge in a country such as India where more than 65% of the population is classified as “Under Banked or Unbanked”. RBI allowing banks to provide service at people’s doorstep through the use of third party services. This model is referred to as “Business Correspondents/Banking correspondents” in short BC’s. The no. of BCs is increasing day by day to strengthen Branchless Banking Model. Internet Banking and Mobile Banking Mobile banking and Internet Banking seeking towards the paperless banking and developing the branchless banking model and provide a support as a pillar where user get access and can do any transfer like RTGS, NEFT and also can make payments. The penetration of Internet Banking and Mobile Banking is increasing day by day to making paperless banking in country 34174 80802 141136 221341 2010 2011 2012 2013 BCs 0.00% 5.00% 10.00% - 1,000,000,000 2,000,000,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 Internet Banking/Mobile Banking User Population Pentration
  58. 58. 58 | P a g e Credit Card and Debit Card Subscriber Branchless Banking basically providing banking through without basic physical place of branch here no need to go branch and make payments and transfer Banks providing Credit Card and Debit Card to the accountholder by them he can make payments and transfer the money. Now days in India 65% people having the plastics money as Debit and Credit Card. No. of Credit Card and Debit Card are both increasing day by day to provide banking facility without any need to go at physical place of bank they can do whole banking. 17672337 18865537 18710332 20362859 22748760 263796762 314436803 372506779 500080855 643191224 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 SUBSCRIBER OF CREDIT CARD/DEBIT CARD Credit Card Debit Card
  59. 59. 59 | P a g e Data Analysis and Results of Case Study on Axis Bank Customer Preference Data analysis and results are on the basis of Questionnaire Results Here 74% respondents are using Branchless Banking and 26% are not using which means 37 respondents are using and 13 are not using Branchless Banking. In question no. 2 analyzes about the reason behind not using Branchless Banking there are four concern as Security, Service, Availability, and Inconvenience. 74% 26% CustomerWho are using or not using Branchless Banking Using Not Using 23% 23% 23% 31% Reason behind not using Branchless Banking Security Service Availabilty Inconvenience
  60. 60. 60 | P a g e Here 66% out of total respondents are saying about the easiness of Branchless Banking and 34% are saying not easy to use. Chart presenting the reason with perspective percentage why Branchless Banking is not easy to use. 66% 34% Is Branchless Banking easy to use.? Yes No 29% 23% 24% 24% Reason behind Branchless Banking is not easy to use Service Assistance Complication in banking Literacy Use of Technology
  61. 61. 61 | P a g e Here customer seeks to use Branchless Banking as per the chart 38% respondents choose service because they want save time in banking. In this question I came to know about how often they use branchless banking so here mostly respondents’ usage daily to services offered by bank. 30% 38% 32% Why customer choose Branchless Banking Convenience To save time 24x7 access 35% 25% 24% 16% How often do you use Branchless Banking · Daily · Once a week · 2-4 times a week · Less than once a week
  62. 62. 62 | P a g e Here in chart I came to know about which service like most and least offered by bank In this question studied about the how much use to services offered by bank 9 10 4 3 5 6 9 7 9 0 1 65 15 13 5 11 16 12 3 4 16 15 52 2 7 13 5 4 UTILITY BILL PAYMENTS MAKE AN ACCOUNT ENQUIRY MONEY TRANSFER STOPPAYMENTS E-ALERTS BANKSTATEMETS Which service you like most of branchless banking Most Like 1 Like 2 Average 3 Dislike 4 Most Dislike 5 5 7 5 2 7 4 12 17 3 2 4 47 6 11 3 4 14 10 3 13 5 4 63 3 5 25 18 9 PAY BILLS ACCOUNT ENQUIRY TRANSFER OF FUNDS BETWEEN ACCOUNTS INTERNATIONAL FUNDS TRNSFER REQUEST PROCESS PAYROLL ORDER CHEQUEBOOK which feature do you use regularly Most Using 1 Normal Using 2 Average Using 3 Least Using 4 Not Using 5
  63. 63. 63 | P a g e Here 54% are satisfied which means more than half who are using branchless banking they satisfied with the branchless banking. Here 28% respondents are completely trust upon security of branchless banking and 26% are doing somewhat trust upon security of branchless banking 16% 54% 8% 22%0% Do you visit branch less often since you started using branchless banking? · Very satisfied · Satisfied · Neutral · Unsatisfied · Very unsatisfied 28% 26% 22% 24% Do you trust the security of branchless banking services? · Completely · Somewhat · Dubious · Not at all
  64. 64. 64 | P a g e Here 34% respondents of project are lying in 24-29 age group which is most in all age ranges. 86% respondents are male means 43 respondents, and 14% are female means 7.3 24% 34% 20% 16% 4% 2% Age Range · 18-23 · 24-29 · 30-35 · 36-41 · 42-47 · 47-above 86% 14% Gender Male Female
  65. 65. 65 | P a g e Interpretation of Results  Project has total 50 respondents where 37 are using branchless banking and 13 are not using in respective 74% and 26%.  If customer not using branchless banking, reason behind not is mostly inconvenience  Branchless Banking is easy to use according to the given information by respondents as 66% respondents are using Branchless Banking has opinion about the easy banking.  If not using branchless banking Here I came to know about the 29% respondents are saying Bank not providing proper service assistance they face difficulties in banking and 24% are respective facing problem as use of technology and literacy.  38% respondents are using to save time in banking and 32% are using for to 24X7 access.  Mostly respondents are using daily branchless banking.  Respondents are mostly like to make account enquiry and mostly dislike to stop payments.  Here customer has good experience about the account enquiry, order Chequebook and transfer amount between the accounts and not good experience or opinion about the international fund transfer.  More than half respondents are satisfied with the services as branchless banking provided by bank and not used to go physical place of bank.  More than one fourth are trust completely upon the security of branchless banking and 26% are in case of somewhat they some doubt.  Mostly respondents are young generation and they are seeking more development in this era of banking.  Here 43 respondents are male and 7 was female.
  66. 66. 66 | P a g e Research Findings and Conclusion Here after deep study of project I came to know Branchless Banking is the future of banking sector where one can access without physical presence of bank and making easier to banking services. As the Digital Campaign by Government of India, all banks going into digital mode where all banks taking initiative but Axis Bank is one of the best e-services provider and best websites which facilitating to customer to make easy banking so bank seeking toward vision 2020. Banks should start a proper service assistance to branchless banking and should take needed step for betterment of future of branchless banking which will be helpful in making competencies in digital banking sector. Banks needs to take required step to make awareness of mobile app and importance of the app to the customer ,through the app customer can do all function which he did earlier at bank now he can do on his phone so bank needs to take step for mobile app awareness Limitations Some of the limitations of the project are listed as below:  Due to the financial and time constraints a cluster analysis of the population so as to get better results was not feasible.  It was difficult to break the ice with the common people initially. It was a daunting task to convince them to fill in the personal details of the questionnaire where they have to mention the monthly income, occupation etc.  To convince the people for a proper interviewing process is also difficult.  Figures keep on changing from time to time.
  67. 67. 67 | P a g e  Compilation of data on competitor analysis was difficult due to non-availability of correct information. Suggestions and Recommendations The government and Reserve Bank of India have been making concerted efforts since mid1950’s and with renewed vigor since 2005 but success has been rather slow, due to lack of a strong network, and financial instruments not suited to rural residents. Moreover, lack of awareness and financial literacy among rural population are primarily responsible for low penetration of financial services. More incentives for the BCs, utilizing existing network for banking such as post offices, creating awareness for the use of banking technologies as well as mobile phones etc. will help in creating a big difference in the economy. The proposed solutions that target the above issues and suggest a way forward for sustainable inclusive growth are presented below: • Preference should be given for a physical branch. The existing network of more than 1, 55,000 post offices and more than 5,00,000 fair price shops, an outlet of public distribution system with some semblance of government approval, can be explored, especially in rural areas. • There is a need to have granular schemes, preferably different schemes for rural and urban areas. Further, distinct schemes can be made on the basis of nature of employment of different people. For example, daily wage laborers can be allowed to make tiny deposits on daily basis - a special RD scheme for daily wage laborers can be introduced. • Methods of financial literacy need to be changed from distributing printed literature to audio and visual media such as radio and TV programs, especially in local languages. • Financial literacy needs to be given importance in schools, and student small saving programs, where bankers visit schools and collect small deposits, need to be revived. • A BC need to be rebranded as a banker against the existing image of a travelling salesman which would enhance the acceptability of BCs among general public. This could be achieved by a contractual arrangement, thereby giving a semi-official status of a bank employee to a BC. This would reduce the attrition rates of BCs and increase their loyalty towards the profession. • The rebranding exercise of BCs would also heighten participation of women as BCs. The status of a bank employee would help them to counter regressive objections of women being salespeople.
  68. 68. 68 | P a g e • The possibility of appointing house-wives as well as people with limited handicap as BCs could also be considered as that might reduce the attrition rate. • As opposed to retired personnel, school teachers could be tapped as BCs. • Allowing BCs to offer additional financial products like insurance and mutual funds would increase their scope. • Banks could also look at skill development by conducting regular, structured training sessions for BCs. • As each village is different from other the demographic factors like income and propensity to save and take loans will differ from village to village. So, there is scope for having differential limits for BCs based on location and customer profiles. Demographic and historical transaction data can be used to evaluate the risk to define different limits of transaction with each BC instead of keeping it uniform across BCs. • Encouraging banking habits amongst the unbanked masses by installing audio-video enabled ATMs to announce simple instructions in the local language to assist the customer in the unbanked areas, could be considered. • In case such ATMs are installed in the premises of post offices, then trained guards could facilitate withdrawals, deposits and also account opening forms. • The issue of security can be addressed by installing inbuilt CCTV cameras in the ATM machine as well as the post office.  As seen above, customers of Axis Bank are quite satisfied with the functioning and operations, so in this case, I would suggest that bank should try to maintain this kind of operations and keep on satisfy its customers.  Bank need some development in the new era of branchless banking which can make more compatible to the user and will make competency in the market.  Basically bank should focus upon the customer satisfaction and services provided by bank where was making directly impact upon customer mind and using preferences.  The study has been focused only on the performance and service quality aspect of e banking.  The impact of e-banking on profitability has been ignored which can give a good platform for future research.
  69. 69. 69 | P a g e  The services are divided into four categories, i.e., internet banking, mobile banking, phone banking and ATM services. About internet banking services, the most common services offered by the bank are balance enquiry and statement and transaction history.  A wide divergence was found in different bank categories in offering e- banking services. Private sector banks are leading in ‘stop payment request’, ‘re-issue and upgrade of ATM/ debit card’, ‘Demat holdings’, ‘loans details’, ‘interest rate updates’, ‘bill payment’, ‘online shopping’, ‘ticket booking’, ‘mobile top up’ and ‘share trading’. This shows how much potential and platform to perform as a leader in banking that all will make more advanced services of internet banking are offered by bank.  To study the relationship between electronic banking and customer satisfaction and to ascertain which aspects of e-banking have significant impact on satisfaction, factor analysis was conducted. The aim was to determine nine dimensions of service quality and their relative contribution in influencing the overall customer satisfaction.  The study reveals that there is a change in personal development and relations after adoption of e-banking. Employees perceive that environment after introduction of e banking has improved a lot.  Banks needs to take required step to make awareness of mobile app and importance of the app to the customer ,through the app customer can do all function which he did earlier at bank now he can do on his phone so bank needs to take step for mobile app awareness.
  70. 70. 70 | P a g e Appendix Branchless banking is Virtual banking, branchless banking is the delivery of financial services outside conventional bank branches using information and communication technologies. However, with the advent of Internet banking, the industry is characterized by dramatically aggressive competition. The shift from traditional branch banking to Internet banking has meant that new strategies to attract new customers and retain existing ones have become critical called as Branchless Banking. Branchless Banking allows customers to access banking services 24 hours a day, 7 days a week. 1. Do you use any branchless banking service?  Yes  No 2. If No, what is the reason behind not using branchless banking?  Security  Service  Availability  Convenience 3. Is branchless banking easy to use?  Yes  No 4. If No, why do you think branchless banking is not easy to use?  Service Assistance  Complication in banking  Literacy  Use of Technology 5. What is the reason for choosing branchless banking?  Convenience  To save time  24x7 access 6. How often do you use branchless banking?  Daily  Once a week  2-4 times a week
  71. 71. 71 | P a g e  Less than once a week 7. Which service you like most of branchless banking?(Rate on 1-5 scale)  Utility bill payments 1 2 3 4 5  Make an account enquiry 1 2 3 4 5  Money transfer 1 2 3 4 5  Stop payments 1 2 3 4 5  E –alerts 1 2 3 4 5  Bank statement 1 2 3 4 5 8. Which feature do you use regularly? (Rate on 1-5 scale)  Pay bills 1 2 3 4 5  Account enquiry 1 2 3 4 5  Transfer of funds between accounts 1 2 3 4 5  International fund transfer request 1 2 3 4 5  Process payroll 1 2 3 4 5  Order check books 1 2 3 4 5 9. Do you visit branch less often since you started using branchless banking?  Very satisfied  Satisfied  Neutral  Unsatisfied  Very unsatisfied 10. Do you trust the security of branchless banking services?  Completely  Somewhat  Dubious  Not at all 11. Age Range  18-23  24-29  30-35  36-41  42-47
  72. 72. 72 | P a g e  47-above 12. Gender  Male  Female 13. Name------------- 14. Contact No.-------------- 15. Address--------------
  73. 73. 73 | P a g e Bibliography www.axisbank.com www.cgap.org www.rbi.org www.en.wikipedia.org Financial Inclusion in India research paper by Aligarh Muslim University International journal of Innovative Research in Management ISSN 2319–6912 (March 2013, issue 2 volume 3) Banking Survey. (2011). Annual survey Results, Harare, Zimbabwe. Press Information Bureau Government of India Ministry of Finance 05-February-2008 http://pib.nic.in/newsite/erelease.aspx?relid=3541 Deloitte banking the unbanked. http://www.deloitte.com/assets/Dcom- Malaysia/Local%20Assets/Documents/Bankingtheunbank News, Magazines, Newspaper www.npci.com www.indiastats.in Agarwal, Parul (2014), “Financial Inclusion in India: a Review and Initiatives and Achievements”, IOSR Journal of Business and Management, Volume 16, Issue 6, June. Chakrabarty K.C. (2011), Keynote address on Financial Inclusion, Mumbai, September. Chakrabarty, K.C. (2012), “Financial Inclusion: Issues in Measurement and Analysis”, Keynote address, BIS-BNM Workshop on Financial Inclusion Indicators, Kuala Lumpur, November. CRISIL (2013), “Inclusix Financial Inclusion Index”, June. Euromonitor International (2010), “Emerging Focus: Emerging market economies drive global growth in mobile connectivity”, November. Gupta, Sanjeev Kumar (2011), “Financial Inclusion – IT as an enabler”, RBI Occasional Paper, Volume 32, No. 2. Government of India (2008), “Committee on Financial Inclusion” (Chairman: Dr. C. Rangarajan). India Post (2012), “Book of Information”. India Post (2013), “Annual Report”.
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