Strategy Paper on
Direct Benefit Transfer: How to make it happen
Summary of Recommendations
1. Dedicated officers for FI at all rural branches to promote FI as an
important line of business.
2. DBT-Led Financial Inclusion to be based on Aadhaar Platform. It
should be led by DBT. DBT should include obligation to make available
payment of cash at habitation level. Business volumes can be built
with active campaign for DBT.
3. Customer Service Provider: CSP to be a resident of the village and
every village to have a CSP. CSP to act as Business Correspondent and
Business Facilitator. BC-BF should be tagged to the branch not to
4. ICT to provide end-to-end solution with online transactions and
visibility to the FI Officer/Branch Manager.
5. Inter-operable FI Solutions to work across bank, place and agent.
6. Multiple platform access: Rupay Card, Biometric-enabled Rural ATM in
every Village, Establishments, Mobile money, etc.
7. Aadhaar as proof of identity and proof of address for the residents,
facilitates instantaneous opening of bank account and delivery of
8. CIDR as sole custodian of biometric data of residents.
9. CIDR to provide biometric authentication services as a public utility on
not for profit basis.
NPCI-APB-AEPS as backbone for hassle free FI Platform.
Trigger the Gold Rush. Penetration pricing to cut across barriers
Service as Right. Ensure mobile connectivity in all villages; roll
out FI services in all connected villages. Let telecom providers connect
remaining villages as per market share or let BSNL do it.
Keep it simple and stupid. Reengineer processes and Redesign
Financial Inclusion Products and services.
Start NOW & right away delivering services. Wait for nothing or
no one. Fast track the FI Campaign.
Bring SBI Group, Nationalized banks and RRBs fully on board.
Solar modules for charging micro ATMs.
Trigger the Gold Rush: Adopt a Strategic Approach:
Neutralize First-mover disadvantages & promote First-mover
The first bank to seed the account and make payment on AEPS
retains the seeding for a period of one year as the default banker. It
will retain customer, if continues to serve better as per annual
Identify Stakeholders & reward value chain activities attractively.
Identify risks like wrong seeding and false acceptance and create
a fund to neutralize them.
Provide a Law for Aadhaar, DBT and FI covering UIDAI, CIDR,
protection against abuse of data, profiling, breach of privacy,
protection of actions done in good faith, recovery of amounts
credited/paid wrongly, etc.
Post Office as Bank on CBS.
No service tax on financial inclusion services for ten years.
authentication: One Time Password, Authorized Messenger, Joint
Customer Protection: Provide for Mini-statement, SMS alerts,
transaction print out, pass book entries, voice over in vernacular.
Trigger the Gold Rush: Provide an Attractive Reward System: to all
Stakeholders; settle the dues at day end. Sponsored Bank,
Beneficiary Bank, Paying Bank, Technology Service Provider,
Business Correspondent, Customer Service Provider, APBS, AEPS,
Risk Fund. Total Cost of DBT for User Agency: 2.55%.
Special FI accounts which can be credited with their share of
remuneration instantly or on day-end settlement basis.
Cash Management for Financial Inclusion: Supply of cash in interoperable scenario: BC-CSP can be allowed to draw cash from any
bank branch or ATM to make DBT Payments upto Rs. One lakh per
Create Demand Pull: Availability of service will make the resident
demand for more! They will volunteer for enrollment, opening up of
villages for services, cutting across feudal barriers & vested
interests and inhibitions against change.
AP experience shows universal acceptance & customer satisfaction.
Work in Mission Mode: Enrolments for AADHAAR on campaign mode
on saturation basis.
Expedite generation, issue & delivery of UIDs.
Permanent Enrolment Centers for residual enrolments and for
updating existing records.
Now there is a Mission Director for DBT at the Centre; every State
may have a State Mission Director to lead the roll out locally.
If it is so BIG, give it What It Takes (WIT):
Build on Strengths: Public Sector Banks to recruit, train & deploy
35000 new rural bank officers on Service Area Approach with
private banks to offer competition and choice to customer.
B. Broadbase the system and make it universal, inter-operable and
ubiquitous: The services can be made accessible to residents through
multiple agents across banks, multiple establishments, multiple
channels like biometric ATMs, through Rupay Cards, mobile banking,
C. Jobs for a million functionaries: CSPs in 6 lakh villages
supported by FI officers, ultra small branches
Reasons for Slow Progress of FI-DBT:
Absence of Business Case for any Stakeholder; Bank-TSP-BC-CSP.
FI-EBT taken up to satisfy Govt & RBI; Corporate Social Responsibility.
Private databases for biometrics: inability to saturate enrollments.
Unreliable mechanism for service delivery.
Poor connectivity for GPRS in villages.
Shortage of Electric Power to charge POTD.
Absence of adequate number of reliable Corporate BCs and Technology
8. Failure of common RFP to appoint Business Correspondents.
Reasons for slow progress on AADHAAR Platform:
1. Enrollments are not completed; large number of poor people still left
2. Delays in issue of UID, in communicating UIDs issued.
3. Delay in seeding databases of User departments.
4. Delay in seeding Bank accounts and in mapping them on NPCI-APB.
5. CSPs yet to be positioned in many villages.
6. Procurement and positioning of micro ATMs to be done.
7. Inter-operability among banks, still not achieved.
8. SBI Group and some Nationalized banks are still not on board.
9. Remuneration of stakeholders is not yet defined. Banks gain nothing
by doing FI-DBT. No clarity on remuneration of TSP-BC-CSP.
Professions of faith in FI-DBT do not result in service availability.
Statistics on FI speak of BCs positioned and accounts opened,
but are silent about services rendered and volumes achieved.
Absence of dedicated officers for FI.
CSPs are poorly paid and have no motivation.
Technology is in place; Policy and Strategy are found wanting.