Showing posts with label desi rupay card. Show all posts
Showing posts with label desi rupay card. Show all posts

Saturday, February 18, 2017

Rs 27,000 crore saved under Direct Benefit Transfer scheme since November 9

Union Minister, RuPay, Haryana, Haryana Education Minister, DBT

Since digital transactions took off rapidly from November 9, 2016, Rs 27,000 crore has so far been saved under the Direct Benefit Transfer scheme, this was informed at an event held at Panchkula today.
Also, about 35 per cent people have taken to debit card, RuPay card and e-wallet services for making payments in Haryana.
This was disclosed in the presence of the Union Minister of State for Social Justice and Empowerment, Krishan Pal Gujjar, and the Haryana Education Minister, Ram Bilas Sharma, at the inaugural function of the ‘Digi Dhan Mela’ and ‘Basant Utsav’, at Panchkula, near here, today, a Haryana government statement said here.
Speaking on the occasion, Gujjar said that 100 Digi Dhan Melas were being organised in the country to encourage people to adopt cashless transaction system for making payments.
So far, 56 such melas have been held. This is the third such mela in Haryana after Gurugram and Sonipat.
Gujjar urged the people to make digital transactions to realise the dream of Prime Minister Narendra Modi, and also encourage others to adopt this system.
The main aim of Digi Dhan Mela is to give people message of ‘Mera Mobile-Mera Bank-Mera Batua’, he added.
Speaking on the occasion, Ram Bilas Sharma thanked Arjuna awardee Sanjay Phogat, international shooter, Gauri Sheoran, and Kings XI Punjab (IPL) player, Manan Vohra, and others for attending the mela and expressed hope that such events would inspire people to adopt digital payment methods.
Vice-Chairman, National Payments Corporation of India, Pushpendra Singh, and Deputy Director, NITI Aayog, Sukhdeep Kaur, gave detailed information about various digital schemes.

Sunday, November 29, 2015

Govt extends RuPay card usage condition to 90 days regarding insurance claim

Under Pradhan Mantri Jan Dhan Yojana (PMJDY), RuPay Debit Card, with an in-built accident insurance cover of Rs 1 lakh, is provided to account holders. About 16.54 crore RuPay cards have been issued so far under PMJDY.

Rupay

Government has extended RuPay card usage condition to 90 days for a claim under an in-built accident insurance cover in case of RuPay Classic cardholders with effect from November 25, 2015. Under Pradhan Mantri Jan Dhan Yojana (PMJDY), RuPay Debit Card, with an in-built accident insurance cover of Rs 1 lakh, is provided to account holders. About 16.54 crore RuPay cards have been issued so far under PMJDY.
One of the stipulation of meeting the claim under accidental death and/or permanent disablement was that the cardholder has to carry out at least one successful financial or non-financial transactions at a merchant establishment or at ATM or micro ATM or e-commerce transaction, up to 45 days prior to the date of incident, resulting into accidental death /permanent disability.
“This condition was posing problem to RuPay cardholders. Requests were received to increase this condition of 45 days,” Finance Ministry said in a statement.
The issue was taken up by government with National Payment Corporation of India (NPCI), which operates the scheme of RuPay debit cards.
“NPCI has extended 45 days usage condition to 90 days for RuPay Classic cardholders with effect from November, 2015. Accordingly, accident arising on or after 00:00:01 November 25, 2015 will be considered for extended period,” it said.
However, claim intimations on RuPay Classic cards where accident has occurred before November 24, 2015 will not be eligible for claim benefit under 90 days usage condition.
As on November 20, out of 697 claims lodged for accidental insurance under RuPay debit card in PMJDY accounts, 644 claims have been disposed off.

Friday, August 7, 2015

NPCI ties up with JCBI to issue RuPay card in India




Japan’s JCB International and National Payments Council of India (NPCI) have entered into a strategic partnership for JCB Acceptance and Card Issuing in India.

NPCI provides RuPay, a domestic card payment network countering Visa and MasterCard.
The agreement, which will initially enable the JCBI cardholders to transit in all ATMs and credit card swipe machines in India, will eventually enable the Indian issuers to come out with cards that can be accepted globally without going through the visa or MasterCard network.

In the first stage of the agreement between the JCBI and NPCI, over 10 lakh card-accepting terminals and 2,00,000 ATMs across India will be made available to the JCBI cardholders.

Around 165 million RuPay domestic cards have been issued by 426 banks in India.

“The visitors from Japan are many and the economic relationship is emerging and growing. Since we have built the massive infrastructure with the cooperation of the banks, the network must be of privilege. We would like to support the member banks so that their infrastructure will be utilized to the maximum,” said A.P. Hota, Managing Director and CEO, NPCI.

India is a growing economy and JCB considers it to become one of the world’s leading consumer markets.

The debit and credit cardholders in the country are also growing steadily.

“We believe our extensive card acceptance network and customer oriented services across the world will be a strong feature of RuPay/JCB international cards. We would love to by-implant important product in promoting RuPay cards throughout the world and contribute to the NPCI member banks by providing unique and expensive values of JCB Brand,” said Kimihisa Imada, Deputy President, JCB International Co.

Japan is also finding new partners in the manufacturing sector.

Yamaha showcased the newly developed linear conveyor module for manufacturing line at a recently held Manufacturing World Japan expo.

Comparing to conventional conveyor, the linear conveyor can freely manipulate a slider on which the products are moved. It achieves more advanced convey.

“This is already used in factories across Asia, including in Thailand and China. It is suitable for large-scale production like manufacturing mobile phones,” said Nagashima Ryuzo, Sales Office Manager, Yamaha Motor Co. Ltd.

Suga Systems Inc. showcased a 3D printer called “LOGSITE”, a suitable product for business or educational purpose. The printer is equipped with special heater for quicker production.

“I have been involved in making 3D printers from the beginning of this industry. With that knowledge, we especially want to put focus on educational industry like introducing this machine to schools and raise the level of Japanese manufacturing industry,” said Tokuzo Suga, a representative of Suga Systems Inc.

The Japanese companies are fast expanding their base by joining hands with local companies throughout Asia. It not only helps the Japanese firms to grow, but also helps them in introducing advanced technology to their partner firms in the Asian subcontinent.

Sunday, December 7, 2014

Finance Ministry asks banks for early issuance of RuPay card under Pradhan Mantri Jan Dhan Yojana

The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).


The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana.

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banksby December 15.

As per status presented in the meeting, banks have opened 8.39 crore accounts under PMJDY and have issued 5.32 crore RuPay cards leaving a gap of 3.07 crore.

It was discussed that Aadhaar numbers have been seeded in 30 per cent of account opened under PMJDY, it said.

Banks were asked to aware the customers for Aadhaar seeding and to use various channels including SMS, internet Banking and ATMs for seeding of Aadhaar numbers, it added.

The meeting chaired by Anurag Jain, Joint Secretary (FI), Department of Financial Services, Ministry of Finance banks were asked to make efforts in area of financial literacy in coordination with various agencies and existing Financial Literacy Centers to spread awareness on PMJDY and use of RuPay cards etc.

Executive directors of the banks who participated in the meeting were also asked to arrange for sensitising of their staff members and training for Bank Mitras among others.

During the review, special focus was given on completion of household survey work and coverage of all uncovered households. It was informed that 97 per cent survey work has been completed.

It is found that out of 20.28 crore households, 17.28 crore households have been covered including persons already having bank accounts.
 It was decided that strategy should be framed in such a manner so as to cover remaining uncovered 3 crore households by December 26.

Thereafter the same should be duly publicised through local media that all uncovered households as per survey have been covered and public feedback should be obtained for information about uncovered households, if any, it said.

"For this purpose, information may be given by a person who doesn't have bank account himself or anybody having this knowledge by contacting toll free numbers," it said.

"This process should be carried-out in close supervision and coordination of local district administration. Complete saturation of uncovered Households should be achieved by January 26, 2015," it added.

The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banks ..

Read more at:
http://economictimes.indiatimes.com/articleshow/45387629.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banks ..

Banking on rural deposits


The Jan Dhan Scheme has by far been the quickest and most expansive financial inclusion drive launched in the country. It was launched with a set target for the existing banks. The results are quite amazing and actually provide some guidance to the new players entering the market as ‘payments’ or ‘small’ banks.

So far, 81.2 million accounts have been opened of which 60% are in rural areas. Banks, primarily public sector banks (PSBs), have issued 51.1 million RuPay cards for these accounts. Deposits in these accounts were R6,355 crore as of November 26. Interestingly, there were 60.7 million zero-balance accounts, which implies an average of R3,100 in the non-zero accounts. This scheme has been aggressively implemented and the focus was more on opening accounts with minimum KYC norms to expedite the process. The idea is laudable as it is a quick way of accomplishing a task. But the high zero-balance accounts, as well as low balances on an average, actually signal that these households typically do not have the money to keep as deposits or are sceptical of the same. Alternatively, they may not really be interested in such deposits, notwithstanding the add-ons of a debit card as well as possible future credit and insurance going forward.

Therefore, RBI’s decision to start issuing licences to payments banks that will take savings bank deposits and invest only in government securities for a 1-year duration or less and, to a certain extent, in other bank deposits, will pose a challenge to the licensees as they will have to create a superstructure to keep their business going. All options are open and telecom companies and other card-based companies can tie their businesses with bank accounts and probably be more successful than banks as there is already an existing business relationship with the customer. The question is will these households actually keep the deposits with these banks or not?

Post offices qualify for such a licence and are well poised to leverage this market. They would only have to scale up and not really have to start afresh like the supermarkets or telecom companies. Their deployment of funds too would change—passing it on to the Centre and states; they will have to deploy all in short-term paper. Their operations too have to be altered unless a new Post Office savings bank is opened in the same premises, as there are other products being offered which can no longer be done—postage, fixed and recurring deposits, and small savings (including the Kisan Vikas Patra). Regulation does not permit the same and, hence, a new bank may be created for this purpose. However, for an completely new entrant, the establishment costs would be considerable.

The model, for any entrepreneur, makes a lot of sense as the bank will get deposits at 4% or free (current accounts) and can earn a good 7-8% return. Operational costs will be low at 1-2%, and hence a return of 1-2% can be maintained without any encumbrance of NPAs or capital as these variables will become irrelevant given the business model. However, if fresh infrastructure is to be created then there would be high overheads.

The small bank concept is, of course, more challenging as 75% of the funds have to go to priority sector lending, to the farm sector and the SMEs, with a cap of R25 lakh for 50% of the loans. This will be on top of the CRR and SLR requirements. Intuitively, it can be seen that the cost of servicing these small-sized loans would be high for these banks which will also have to open up brick-and-mortar branches, unlike the payments banks.

Additionally, both these segments are vulnerable. When the monsoon fails, the farm loans go bad and the cycle of monsoon failures has been moving with shorter amplitudes. Further, the economic cycle too has become more unpredictable and, often, a sustained industrial slowdown results in higher NPAs being generated as they get affected almost immediately when the economy slows down. This being the case, the pressure on quality would be high. This will also pressurise their capital and hence will be onerous, unlike it is for commercial banks where the portfolio is well spread across all sectors, smoothening the risks .

MFIs and NBFCs can apply here and it will be interesting to see if they are attractive to these players. This will hold for MFIs who would get access to deposits in a formal manner and can lend to these segments where there is a modicum of familiarity. NBFCs, too, may be inclined to consider this option given that the regulatory structure has become a little more intense for them in their normal line of business.

The crux of these banks working well would depend on their ability to garner deposits in the rural areas in particular. The Jan Dhan Yojana warns that it may be difficult to get the deposits, though opening accounts would be easy. It will require a lot of awareness. Counter-intuitively, if the Jan Dhan programme that offers the promise of credit and insurance has not caught on, would a plain vanilla deposit be convincing to the household. This is where the payments bank should work and linking one’s own product to the deposit could be a good way of making a start.

Sunday, November 16, 2014

FinMin review meeting with chiefs of PSU banks, FIs on Nov 20

FinMin review meeting with chiefs of PSU banks, FIs on Nov 20
The Finance Ministry has called a meeting of chiefs of public sector banks on November 20 to review their financial performance and Jan Dhan Yojana, among other things.

Chief executives of financial institutions like Nabard and NHB are also attending the meeting.
"Finance Minister Arun Jaitley may attend the meeting. If the Minister is unable to, Department of Financial Services Secretary Hasmukh Adhia will head the review meeting," a source said.

The main agenda of the meeting is discussing financial performance at the end of the second quarter, sources said.

The progress of Pradhan Mantri Jan Dhan Yojana (PMJDY) is another important issue that will be discussed in the meeting.

The issue of asset quality and recovery of bad loans would also be discussed. Credit to farm sector, MSME, housing and education loans may also come up talks, sources said.

Besides, there would be deliberation on lending to stalled projects.

The Prime Minister on August 28 launched the the PMJDY scheme to boost financial inclusion. About 7 crore bank accounts have been opened under Jan Dhan scheme so far.

As on November 10, 7.24 crore accounts have been opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) of which 4.29 crore in rural and 2.95 crore are in urban areas. RuPay Cards have been issued in case of 3.97 crore accounts.

The Yojana envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility.

The main features of the PMJDY scheme include Rs 5,000 overdraft facility for Aadhar-linked accounts, RuPay Debit Card with inbuilt Rs 1 lakh accident insurance cover.

Besides, account holders under the scheme will get life insurance cover of Rs 30,000. This was additional benefit announced by the Prime Minister during the launch of the scheme.

Under the scheme, the account holders will get an overdraft facility of Rs 5,000.

Sunday, October 19, 2014

Every BPL household to have RuPay card in 6 months

Speaking on the sidelines of the launch of RuPay card at GSC Bank on Tuesday, S K Gupta, chief project officer, RuPay, National Payments Corporation of India (NPCI) said that in six months, every household in the country below poverty line (BPL) will have a bank account and a RuPay card. More than 40 million RuPay cards have been issued in the country till now. "There are 2,000 licenced banks in the country. Earlier, only 50-55 banks could issue debit cards but now around 310 banks are issuing RuPay cards," said Gupta.

RuPay card which was launched 2.5 years back is fully Indian card payment network set up by NPCI. Along with a RuPay card, customer also gets an accidental insurance of Rs 1 lakh, the scheme will be valid till March 2015.

Under Pradhan Mantri Jan Dhan Yojana (PMJDY), three districts in Gujarat have achieved target of opening one bank account in each household. Porbandar, Mehsana and Gandhinagar have reported that at least one bank account of all households has been opened thereby making these areas fully saturated in PMJDY. There are 1.22 crore households in Gujarat, of which more than 95 lakh households have one or more bank accounts as of now. As on October 7, 2014, 5.52 crore accounts have been opened and a deposit of Rs 4268 crore have been mobilized under PMJDY so far.

Thursday, October 9, 2014

Jan Dhan target to be met, on paper

 20140924_122336

Enquiry about a Jan-Dhan account form at a Bank of Baroda branch in the National Capital Region (NCR) was greeted with: but don't you have an account in any bank? After 10 minutes, the form did eventually come, with a stare that had 'why burden us with another account that is going to remain idle' written all over it.

Just a few kilometres away, one of the branches of IDBI Bank had run out of forms. An executive explained that since there was a huge pile of forms yet to be processed, it had been decided to go slow in opening new accounts. A nearby United Bank of India branch is yet to issue RuPay cards to some customers who opened their accounts nearly a month ago. One such customer said: "Bank officials were clearly in no mood to open our accounts in the first place. We were asked to come some other time. When we persisted, they went through the motions. But we are yet to receive anything."

FAST TRACK INCLUSION
  • 47,630,652 - Number of new accounts opened
  • 13,303,975 - Number of RuPay cards issued
  • Rs 3,226.97 crore - Balance in accounts
  • 36,574,947 - Number of zero balance accounts
Status as on September 23 Source: Ministry of finance

As the Jan-Dhan scheme completes a month since its official launch, reports coming in from various parts of the country suggest the stated target of 75 million new accounts will be achieved much before January 26 next year. But the scheme's implementation is patchy. Agents are charging commissions for filling forms in Bihar. Reports indicate in Madhya Pradesh and Uttar Pradesh, stationery shops are selling forms as bank branches have run out. "These reports are not baseless. Some of these things are happening. But an overburdened banking system cannot be expected to do everything," said an executive with a leading public sector bank (PSBs).

In terms of numbers, the scheme has exceeded expectations. By September 23, all banks put together had opened 47 million new accounts. RuPay cards have been issued to 13 million people. Of all accounts opened in less than a month, 36 million are zero-balance ones.

Bankers this reporter spoke to complain they are flooded with inane queries. What are the benefits of this loan scheme? When will the insurance money come into the account? How much loan can be taken against this account? Can insurance money multiply with multiple accounts and can the RuPay card serve as another proof of identity? "With such a deluge of questions every day, two executives of a bank branch, on an average, are entrusted with the task of dealing with them," said another bank executive. It was bound to have some impact on core banking operations, he added.

The less-than-enthusiastic response of bankers stems from the fact that most branches have been asked to hold 12-hour camps every Saturday. At times, staff are made to come in on Sundays to ensure satisfactory completion of targets. "Even if we take the help of business correspondents, verification of documents and processing of forms have to be done by bank staff. There is a limit to how many forms can be processed in a day," said another executive with a PSB.

Bankers also say multiple accounts might prove a spoiler. "I will say 50-60 per cent of all the accounts that have been opened under the Jan-Dhan scheme are by those who already have accounts in other banks," said the executive of the leading bank. Other bankers concurred. In fact, this reporter came to know about a person who opened a new account under the scheme in the branch where she already had an account. "What is wrong in this? If there is a new scheme, why should we be denied its benefits just because we are already part of the banking network?" her husband, a resident of Ghaziabad, asked.

The one-page account opening form has a column seeking self-declaration that a person does not have any account in any bank. But bankers say the self-declaration is meaningless as there is no mechanism to stop multiple accounts. "If a person has multiple documents as proof of identity, he can open multiple accounts and our system cannot detect it. There is no inter-bank arrangement to stop duplication," said the branch manager of another PSB.

Bankers say accounts opened without valid address proof are put in the high-risk category and these are unlikely to get the overdraft facility. Such account holders will be asked to furnish proof of residence within a year, as is the case with all accounts in the high-risk category. The Bank of Baroda form mentions that eligibility for an overdraft facility of up to Rs 2,000 is "satisfactory operation" of an account for at least six months. "There is a great deal of misconception about the overdraft facility. Those who have opened accounts under this scheme are under the impression that they automatically become eligible for the overdraft facility, which is not the case," said the executive of the leading PSB.

On accident insurance of Rs 1 lakh for each account holder, bankers say it comes automatically with the RuPay card. What it means is that existing account holders who opened their accounts prior to the launch of the scheme may get RuPay cards issued against their old accounts and become eligible for accident insurance. However, bankers are awaiting further instructions on who is going to pay the premium for the life insurance cover of Rs 30,000 that has been promised with each Jan-Dhan account.

Monday, September 22, 2014

Financial Inclusion in India: Moving Beyond Bank Accounts

On August 15, India’s Independence Day, Prime Minister Narendra Modi announced a national mission of financial inclusion. Called the Pradhan Mantri’s Jan-Dhan Yojana — the Prime Minister’s People’s Wealth Program — it envisions bank accounts for all Indians. In its first phase, ending August 14, 2015, the target is 75 million accounts. “I wish to connect the poorest citizens of the country with the facility of bank accounts,” said Modi. “There are millions of families who have mobile phones, but no bank accounts. We have to change this. The change will commence from this point.”

Earlier prime ministers had made similar grandiose announcements, with few results. Indira Gandhi started a campaign against poverty, but it never gained traction. Manmohan Singh started a campaign against unemployment, but that failed to take hold as well. The Modi government is still in its honeymoon period; people are willing to accept Jan-Dhan as a plan but not a reachable destination.
On August 28, Modi formally launched the program. Banks across the country had been working overtime to make the necessary arrangements. On the first day, more than 15 million accounts were added. “It is the end of financial untouchability,” Modi noted. “It is the beginning of freedom from poverty.”

It’s not just the accounts that enticed people to the camps set up by the public sector banks. Every account holder will get a RuPay debit card, launched by the Reserve Bank of India (RBI)-promoted National Payments Corporation of India (NPCI); accident insurance cover of Rs.100,000 (approximately $1,650); life insurance coverage of Rs. 30,000 for those opening accounts before January 26 (celebrated as Republic Day in India), and an overdraft facility of Rs. 5,000.
“Never before in economic history have 15 million bank accounts been opened in a single day,” said Modi. “Never before have insurance companies issued 15 million accident policies in a single day. Never before has the government of India organized a program of such scale — over 77,000 locations — with the participation of so many chief ministers, union ministers, and government and bank officials.”

ICICI, India’s largest private sector bank, opened only 100,000 accounts that day. “ICICI Bank has been working on a comprehensive financial inclusion plan over the past four years,” MD and CEO Chanda Kochhar told Knowledge@Wharton. “Through our network, we cover approximately 15,600 villages and have brought more than 18.5 million unbanked people into the banking fold. We aim to open 2.5 million accounts under the yojana, taking the total number of accounts under our financial inclusion program to more than 20 million.” As of September 8, major private sector banks taken together opened just 580,000 accounts.

Reasons for Concern
It remains to be seen whether the program will lead to big changes. “This is a small step and the take-up is encouraging,” says Wharton finance professor Krishna Ramaswamy. “It might lead to small and improved savings in an accountable and hopefully trustworthy way.”
The skepticism comes in part due to questions about the veracity of the numbers themselves. RBI governor Raghuram Rajan has publicly warned the banks not to run after records. “We have to make sure the Jan-Dhan Yojana does not go off track,” he said at a conference on September 15. “The target is universality, not just speed and numbers.”

According to H.K. Pradhan, professor of finance and economics at XLRI Jamshedpur, there are concerns of duplicate accounts from people who may have opened them “without really understanding what they were doing.” He adds that the issue will be sorted out when biometric identification is introduced. But there could be operational complications: Anybody in India can open multiple accounts, so how can there be a different rule for the currently unbanked?

The second — and more important — issue is that India’s problem of financial inclusion is gargantuan. According to World Bank data, only 35% of Indians have an account with a formal financial institution. This is 42% in the case of men and 27% for women. Only 8% have debit cards and 2% credit cards. According to the government’s 2011 Census, 58.7% households utilize formal banking services.

Rating agency Crisil, a Standard & Poor’s company, has a financial inclusion index called the Inclusix. The all-India Inclusix score is 40.1 (which mean that about 40% of the country has access to formal banking services). There are wide variations — from 62.2% in the southern region to 28.6% in the eastern region.

The high-powered Nachiket Mor committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, set up by the RBI, found that 60% of the rural and urban population did not have a functional bank account. “India’s financial inclusion indicators, particularly in banking, put it below the median of countries, and bank accounts are a first step to inclusion,” says Rajesh Chakrabarti, executive director of the Bharti Institute of Public Policy at the Indian School of Business.

According to a report by global consulting firm Frost & Sullivan, India’s continued growth can only be assured “if steps are taken to ensure that social and economic development is inclusive.” Financial inclusion has moved into public consciousness only over the past decade or so. “Financial inclusion can no longer be treated as a fringe subject,” notes Jayanta Nath Mukhopadhyaya, director of the J.D. Birla Institute (department of management). “It has to be recognized as an important part of the mainstream thinking on economic development.”

The immediate challenge for banks, Pradhan says, will be acquiring the technology needed to facilitate more financial inclusion. “Moreover banks need to convert the old and dormant accounts into the new financial inclusion accounts in order to get the accident coverage and overdraft facility for the account holders.” This means that some of the work done on financial inclusion so far will have to be duplicated.

“There is much more to financial inclusion” than simply opening accounts, says M.S. Sriram, visiting faculty at the Centre for Public Policy at the Indian Institute of Management in Bangalore. “The state needs to put its resources to ensure that the infrastructure backbone is available — which means that there is ubiquitous presence of interoperable point of sale devices that allow people to transact without a hefty fee…. Once this architecture is available, the poor will start transacting.”
Chakrabarti adds that the government “seems to be fighting the symptoms rather than the disease. The point is for the formal banking system to be present when needed and be superior in convenience and efficiency. However, the approach taken seems to be to lure people into banking through incentives and to hope that the habit sets in. The trouble is that once the sweetener goes away, day-to-day banking provides little benefit in convenience to many users at the bottom of the pyramid.”

Long Road Ahead
The consensus of opinion is that Jan-Dhan is a worthwhile effort, but it’s too early to say whether it will succeed. “As compared to its predecessor — the Swabhiman scheme — this program has a high possibility of success due to two major strategic improvements,” states Rana Kapoor, MD & CEO of YES Bank and president of apex chamber Assocham. “First, it mandates provision of ATM-cum-debit cards to each account holder instead of the Smartcard [for thumbprint authentication] as earlier, where the customer was solely dependent upon agents or business correspondents. ATM debit cards give 24-7 access to savings, which is critical for the below-the-poverty-line population. The quantum of savings is limited and probability of emergency requirements is high.”

http://knowledge.wharton.upenn.edu/article/financial-inclusion-india-aims-move-beyond-bank-accounts/

Wednesday, September 10, 2014

Improving capacity is key to financial empowerment

A lot has already been said about the Jan Dhan Yojana; by the eloquent prime minister himself and then by advertisers, commentators and other worthies.In the crowd of messages, one called for urgent action. It said, 'Free accidental death insurance of up to Rs 10 lakh on your debit card has expired. Shop NOW to activate cover for the month.' I have no intention of dying to find out how much free insurance I am worth.

However, with the Jan Dhan Yojana fresh on my mind, I pulled out the plastic at the gas station, only to put it back because the two factor authentication required that I step out in the rain to punch my PIN at the handheld device, now irrefutably attached to the cashier's table!

I guess I am now without cover and I wish the new millions getting free insurance with their new debit cards better luck than that.

A lot has already been said about the Jan Dhan Yojana; by the eloquent prime minister himself and then by advertisers, commentators and other worthies. It is phenomenal as far as communication and intent goes. It warms the heart to know that the bullet trains will not bypass the small hapless woman, but that there is a plan to empower her in plastic and reward points.

It is difficult to argue with the potential of financial inclusion to significantly change lives and create long term, sustainable value. And yet, it will be a while before we know if the Yojana triggered or delayed financial inclusion.

Banks successfully opened 1.5 crore accounts on the launch day. However, achievement of numeric targets will not indicate success here as the entire value of the banking relationship is from ongoing use of the accounts. One hopes that low hanging fruits such as benefits transfers will be implemented efficiently by the government and banks will be able to manage BCs who in turn will be able to fulfill customer expectations.

But given the different agencies involved, it will be interesting to see who takes long term responsibility for actions, inactions and decisions made for and on behalf of banks, including potential credit and cost decision made for and on behalf of banks, including potential credit and cost decisions.

On their part, the central bank has been working at a furious pace to change the bank licensing framework to accommodate needs of an economy marked by small value, high frequency transactions.

The idea is that if supply side constraints are removed, old and new banks will compete and collaborate and test new, innovative, technology-driven distribution frameworks that will meet the demand side at a frameworks that will meet the demand side at a fair price, correcting a historical skew.
http://economictimes.indiatimes.com/opinion/comments-analysis/improving-capacity-is-key-to-financial-empowerment/articleshow/42138671.cms
In the crowd of messages, one called for urgent action. It said, 'Free accidental death insurance of up to Rs 10 lakh on your debit card has expired. Shop NOW to activate cover for the month.' I have no intention of dying to find out how much free insurance I am worth.

However, with the Jan Dhan Yojana fresh on my mind, I pulled out the plastic at the gas station, only to put it back because the two factor authentication required that I step out in the rain to punch my PIN at the handh ..

Wednesday, September 3, 2014

Jan Dhan Yojana: Clarity awaited on insurance

So far, more than 25 million bank accounts have been opened under the Jan Dhan Yojana and all these individuals will be eligible for life covers of Rs 30,000 by LIC

 It might take time to offer life and accident insurance covers under the Pradhan Mantri Jan Dhan Yojana to those opening bank accounts under the scheme, as various issues in this regard are yet to be resolved.

Under the scheme, which seeks to open 75 million accounts by January 26, 2015, an accident insurance cover of Rs 1 lakh is provided with every RuPay debit card offered by the National Payments Corporation of India (NPCI).

NPCI officials said HDFC Ergo General Insurance would provide the accident cover under the scheme. This will cover accidental deaths, provided the debit card is swiped within 45 days of its issuance and is in an active state.

HDFC Ergo did not respond to a mail seeking details of the cover.

There is also a proposal for an additional accident cover of Rs 1 lakh for opening bank accounts within a stipulated period. While general insurance executives said state-owned general insurers would provide this, no official announcement or communication has been sent by the finance ministry to the companies concerned.

“Though this proposal was discussed in meetings with the finance ministry, it hasn’t issued any letter on when it would be launched and whether it would be completely free for customers,” said a senior insurance executive.

Sources said the general insurers selected for these covers were yet to receive any official communication from the ministry saying they had been selected for this and would have to make payments during receipt of claims.

While debit cards and insurance covers (at least a Rs 1-lakh accident cover) will be provided to all accountholders under this scheme, insurance officials say this might not be done immediately. An official said as the volumes were huge, they would be provided the complete kit within the next few weeks.

Further, the life insurance cover of Rs 30,000 is still being worked out, in terms of the premium collection, amount and the mode of payment.

Life Insurance Corporation of India (LIC), which will offer the cover to all individuals who open bank accounts under the financial inclusion scheme by January 26, 2015, has held a series of meetings with finance ministry officials on the collection of premia and administration of the scheme. A decision on the premium amount and the mechanism to pay claims is still awaited; a clarification is expected in the next three days.

So far, more than 25 million bank accounts have been opened under the Jan Dhan Yojana and all these individuals will be eligible for life covers of Rs 30,000 by LIC.

There have been talks of a minimal payment for this scheme by individuals. Also, the claim settlements could be through the Aam Aadmi Bima Yojana (AAMY), a social security scheme administered by LIC.

A life insurance cover wasn’t part of the Jan Dhan Yojana announced in Prime Minister Narendra Modi’s Independence Day address; it was announced on August 28, when the scheme was officially launched.

The scheme is expected to boost insurance penetration in India. Insurance penetration (premia, as percentage of gross domestic product, fell to 3.9 per cent in 2013-14, compared with four per cent in 2012-13, according to a Swiss Re sigma study). On the life insurance front, insurance penetration in India was 3.1 per cent; for non-life insurance, it was 0.8 per cent.

Monday, September 1, 2014

Aadhaar not mandatory to open bank account under Pradhan Mantri Jan Dhan scheme

Beneficiaries display their RuPay cards during the launch of the Pradhan Mantri Jan Dhan Yojana in Chennai on Thursday.

Account openers will get a RuPay Debit card with an in-built accident insurance cover of Rs.1 lakh and a pass-book immediately.

Opening a savings bank account just got easier and faster. With the launch of Pradhan Mantri Jan Dhan Yojana, customers can walk into a public or private sector bank with their Aadhaar card and open a zero-balance SB account instantly. But Aadhaar is not mandatory. A National Payment Corporation of India platform is being built to enable customers to access their accounts on mobile devices. 

Account openers will get a RuPay Debit card with an in-built accident insurance cover of Rs.1 lakh and a pass-book immediately. An additional Rs. 30,000 life insurance cover will be offered for those opening the accounts before January 26, 2015. Also, an overdraft facility of up to Rs. 5,000 will also be permitted for Aadhaar-enabled accounts after satisfactory transaction in the account for six months. 

However, Aadhaar is not mandatory for opening the account under this scheme.A technical platform has been built by National Payment Corporation of India to connect all banks and telephone network operators in the country. The platform is being built to enable customers to access their accounts on any mobile handset.

Friday, August 8, 2014

Will PM Narendra Modi's financial inclusion plan use Aadhaar for authentication?

In less than two weeks, PM Narendra Modi is expected to announce a new Financial Inclusion drive.
However, even as the anointed day - the 15th of August - draws near, key aspects of this drive are still unclear.

 

The programme, called Sampoorn Vittiyea Samaveshan (SVS), seeks to add 20 crore new bank accounts. These will be linked to Aadhaar. They will probably provide an overdraft facility. And they will be used for cash transfers.

Go deeper into the details, however, and you encounter a set of unresolved questions. Prime among them, the role of Aadhaar.

While researching this story, ET reviewed two drafts produced by the Department of Financial Services - one in June, and the second in July. The draft dated 8 July, 2014, says: "This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of Direct Benefit Transfers (DBT) from Government/Local Bodies."

According to a source close to the UIDAI, who spoke to ET on the condition of anonymity, this phrasing suggests that while Aadhaar numbers might be seeded into bank accounts, it might not be used for authentication.

In other words, once the cash flows into the Aadhaar-linked bank account, last-mile authentication when the money is being withdrawn will be done using the authentication systems of either the relevant bank or the last-mile service provider - like a Banking Correspondent (BC) company.
Not using Aadhaar for last mile authentication has significant fallouts for the UIDAI. Which, among other things, has the Aadhaar-enabled Payment System as one of its key components, and sees authentication services as one of its principal functions and revenue streams.

Till now, the UIDAI has argued that Aadhaar-based authentication is needed to show that the DBT (Direct Benefit Transfer) has indeed reached the targeted beneficiary.

However, from the field, this claim has been marred by persistent reports that online biometric authentication is not working for manual labourers and the old. Agrees Sanjay Kuberkar, The founder of Adrenaline Financial Inclusion Advisors, "The biometrics do not always work."

Another reason the UIDAI wants Aadhaar-enabled authentication is because that will further inter-operatability. A person can use her biometrics to access her account through any BC, any bank.
Says the source close to the UIDAI, "If banks or last-mile providers use their own proprietary (biometric) authentication technologies, then there will be no inter-operatability." In other words, a person with an account in United Bank may not be able to use a BC working with State Bank of India to access his account.

This is where the debate gets complex. Aadhaar has defined standards for Micro ATMs and Biometric Capture. Banks and BCs adhering to those standards, with BCs who have plugged into the bank's core banking servers, can send authentication queries all the way to the UIDAI's central ID repository. In this design, a beneficiary can access her account through any service provider if they are Aadhaar-compliant.

But, banks too have been creating their own biometric databases. And the question is whether authentication requests where one bank sends one biometric authentication query to another bank can be as interoperable as the Aadhaar ones.

Under former DFS Secretary DK Mittal, the department ran such pilots in Haryana. These too were online biometric authentications but the biometrics were stored with the banks. But those, says the UIDAI source, failed.

However, another way to ensure interoperatability is to use PIN numbers instead of biometrics. It is here that a proposal in the SVS documents is interesting. It proposes that all account holders be provided with a RuPay card. Says Kuberkar, "The card works at any ATM, and does not require biometric authentication."

Counters the UIDAI source, "Biometrics are safer than PIN numbers.

In contrast, PIN numbers can be used also by those who have trouble with biometrics.
There is another reason why some banks want to retain authentication with them. Aadhaar was planning to start charging for authentication. A decision which has now been deferred to December.
Says Kuberkar: "Cost of Aadhaar authentication is an issue, even if the cost is kept at just 25 paise per authentication. There is at least one client bank of mine who is considering to use their own biometric authentication method instead of Aadhaar because of the cost implications."

What does this seeding/authentication debate mean for reducing leakages? According to MS Sriram, visiting faculty at IIM Bangalore's Centre for Public Policy, it is a good idea to use the Aadhaar number only for seeding. "Linking bank accounts with the Aadhaar number will help the government eliminate ghosts and duplicates from beneficiary lists."

Such a move, he says, also addresses the concerns around biometrics not working and privacy. "Using Aadhaar only for seeding also takes care of some privacy-related questions. A trail of a person's movements will not be available any longer at the central server."

About ten days ago, the Department of Financial Services (DFS) was expected to present an updated iteration of SVS to the Prime Minister. This was shortly after he reposed his faith in the UIDAI project. It is yet unclear what transpired in that meeting. The documents in the public domain pre-date that meeting. Emails to DFS officials seeking an appointment went unanswered.

However, based on conversations with UIDAI officials and Banking Correspondent (BC) companies, it seems there is little clarity on this question on how Aadhaar will be used.

Not sharing client data, says NPCI

MUMBAI: National Payments Corporation of India - Reserve Bank of India's brainchild which manages the backbone of the country's payments systems - has been asked to pay a token fine of Rs 10,000 to the Maharashtra treasury for passing on highly sensitive personal data to processing companies without a non-disclosure agreement. NPCI has contested the order by the state government's principal secretary (information technology) denying both charges - of compromising individual personal data and of not having non-disclosure agreements.

The adjudicating officer's order was in an intellectual property rights tussle between two companies that processed card transactions for banks. CredenTek Software, an IT company, had complained against In Solutions Global (ISG), which specialized in processing card transactions for banks. NPCI came into the picture as it emerged that it was one of ISG's major clients.

"We had filed a case against In-Solutions Global for source code violation and as part of our evidence we had submitted CDs containing sensitive personal data of bank customers which was handed to our clients by ISG," said Prashant Mali, Cyber Law & Cyber Security Expert from Mumbai who represented CredenTek for this case.


Hearing both sides, the adjudicating officer - Rajesh Aggarwal, principal secretary (information technology) - said in his order that no case is made out of data theft or source code stealing under the IT Act and it is a dispute regarding contracted services not being rendered rather than a copyright issue. While he dismissed the source code, he said that during the course of hearings, "a more sinister crime of negligence under the IT Act came to light" and expressed shock that real data of bank customer transactions was passed on as sample data for testing software rather than simulated data.

When contacted, NPCI said it does not share any confidential information with any party and has strong privacy policy based on international standard and its and has been awarded certificate for this. NPCI said its electronic clearing and settlement system was "safe and highly secure". and was compliant with Payment Card Industry Data Security Standards. NPCI said it has entered into a non-disclosure agreement with In-solutions Group, which has been filed with the application before the IT secretary of the Maharashtra government - the plea has not been disposed of so far.

"The order passed by the IT secretary against NPCI was without jurisdiction and ultra vires and beyond the powers. There was no proceeding initiated by the IT secretary, government of Maharashtra, against NPCI under any law. Even no notice was issued by IT Secretary before issuing order for payment of penalty. NPCI has already challenged his order as soon as it came to knowledge of NPCI by filing an application for review application," it said in a statement.

NPCI, which manages the ATM switch, Rupay and other payment networks such as IMPS that allow electronic funds transfers between banks, has been upset at the strong remarks made by the adjudicating officer without being heard. In the order, the adjudicating offer had said what was "more worrisome" was that NPCI is also running the Aadhaar Payment Bridge System, which includes Aadhaar number (UID) of the customers. Now, UID number is perhaps the most sensitive data of an Indian citizen, which needs to be protected even more than the Social Security Number (SSN) of USA, as it has linkage to biometrics (fingerprints and Iris). Obviously, UID number cannot be published on any website by any government department, and should be used for any Analytics or any other purpose, only with proper precautions as per Rules 6 and 7 of Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011."

Friday, August 1, 2014

The NDA’s ambitious financial inclusion plan

Mumbai/New Delhi: Bank accounts for every Indian and banking services within 5km of every town and village, and all by March 2016—that’s the ambitious financial inclusion plan Prime Minister Narendra Modi will likely detail in his Independence Day speech.

The NDA’s ambitious financial inclusion plan

Named Sampoorn Vittiyea Samaveshan (SVS), the scheme has been sketched out in a paper prepared by the department of financial services. Mint has reviewed a copy. In his budget speech, finance minister Arun Jaitley announced the National Democratic Alliance (NDA) government’s intention to launch a financial inclusion mission on 15 August that would provide banking services to all households in the country, and especially focus on women, small and marginal farmers and labourers. According to Census 2011, 59% of the 246.7 million households in India have access to banking services; 54% of the 167.8 million rural households in India have access to banking services, and 67% of the 78.9 million urban ones do. Jaitley will meet chiefs of state-run banks on Thursday to discuss the preparedness of banks to roll out the government’s financial inclusion plan, bankers and a government official said.

“The meeting is mainly to review how banks are gearing up for the rollout of the financial inclusion mission,” said the government official, who did not wish to be identified. The financial inclusion plan will look to provide universal access to banking facilities with a basic bank account with an overdraft facility of Rs.5,000 and a Rupay-enabled debit and ATM card with inbuilt accident insurance cover of Rs.1 lakh. “This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of all government benefits,” the paper said. Rupay is an Indian government initiative and the country’s own equivalent of Visa and Mastercard. Account holders will also receive financial literacy training sessions and, on completion of these training sessions, a Rs.5,000 overdraft limit.

 According to Reserve Bank of India estimates, 182 million zero balance accounts had been opened in India up to March 2013, but only 3.95 million of these availed overdraft facilities adding up to Rs.155 crore. The approach paper, dated 16 July, outlines six pillars upon which the entire programme will be based. The financially excluded should be provided universal access to banking facilities, the paper said. They should have basic bank accounts and should be provided microcredit, microinsurance and unorganized sector pension facilities, it added. The borrowers under this scheme will undergo financial literacy training, while the entire loan portfolio should be insured against a credit guarantee fund, with an initial corpus of Rs.1,000 crore, which will provide for defaults on such accounts, it said.

To achieve these objectives, the government is open to public-private partnerships while it will also tap into the existing national infrastructure of post offices and the future payments banks network, according to the approach paper. Various microcredit organizations will be allowed to compete with each other while the crucial role will be played by the business correspondents (BCs), or agents of banks who reach out to the last mile, offering simple credit and deposit products to customers. According to S.S. Mundra, chairman and managing director of Bank of Baroda, not all objectives have to be met by 2016 and the entire financial inclusion drive will be done in a phased manner, which should give banks ample time to prepare. “We already have 6,000 business correspondents, and they are doing a very good job. If need be we will hire more such BCs,” Mundra said, adding that banks’ own resources won’t be stretched much because the bank staff will largely play a supervisory role.

“This is not a big task because most of the job has already been done by banks. Accounts are being opened every day and by 2016, we will be covering every household of every village we have been assigned without any problem,” said M. Narendra, chairman of Indian Overseas Bank, which has about 3,500 BCs who are paid Rs.3,500 per month. In order to incentivize BCs, the paper proposes that remuneration for them be set at Rs.5,000. According to Rishi Gupta, chief operating officer and executive director of FINO PayTech, a banking correspondent service provider, the payment of Rs.5,000 is less than what it should be but still a welcome raise. “Government is acknowledging that providing last mile delivery involves a lot of expense and expertise.

 If you don’t incentivize the people who are involved in the last mile delivery, soon they will lose interest and any such financial inclusion plan will not fructify,” Gupta said. Technology will also need to play an important part in the government’s financial inclusion plan. For providing fully enabled bank accounts to the unbanked population, banks will have to ensure that every transaction is part of the core banking solution. Till now, most of these transactions were offline and not connected to the bank’s core banking network.

That could well address the issue of inactive accounts, said a bank official. “Unlike earlier, the bank accounts will be fully operational from anywhere, be it a bank branch, an ATM or a business correspondent outlet,” added this person who did not wish to be identified. “Transfer of money directly to beneficiary accounts under the direct benefit transfer scheme will also make sure that the accounts are active,” the bank official added.

The direct benefits transfer scheme envisages transferring directly to beneficiaries the money they are entitled to under government schemes. Funds will be transferred after a customer’s biometric authentication, either through Aadhaar-enabled payments system or the bank’s own servers. Aadhaar is a unique ID issued by the Unique Identification Authority of India that has thus far issued 650 million cards. To make it lucrative for bankers to open bank accounts and transfer funds from the government to beneficiary accounts, the government is considering paying banks 2% of the transaction amount for every transfer.

The government’s plan could also be a big business opportunity for technology providers. The department of financial services, in an advertisement, has asked interested technology providers to present their innovative ideas to improve the existing last mile connectivity. “The combination of bio-metric, smart cards and low-cost ATMs have not been successful in scaling up. Putting the responsibility on leading banks to adopt a region for financial inclusion hasn’t worked either.

The needle has not moved,” said Rama Vedashree, vice-president at software lobby body Nasscom. “The ministry of finance may be looking for new technology solutions to ensure the outreach of financial inclusion programme as the current technologies being used have not been able to do that.” “This may be an effort to find and understand the scope of new low cost technologies that can fast-track the process of financial inclusion,” she added. Once the mission is launched, its progress will be reviewed quarterly by the finance minister, rural development minister and the minister for communication and information technology. In addition, financial services secretary G. S. Sandhu will review the progress with bankers every month.

Monday, July 28, 2014

Nabard launches RuPay Kisan cards

National Bank for Agriculture and Rural Development (Nabard) today rolled out RuPay Kisan Card and RuPay Debit Card here today.


National Bank for Agriculture and Rural Development (Nabard) today rolled out RuPay Kisan Card and RuPay Debit Card here today.



"This is the first time that RuPay Card, which is in the nature of ATM cum Debit Card, is being issued by any cooperative bank in the state of Haryana," said Nabard Chief General Manager (Haryana) D V Deshpande.

He said the issue of RuPay cards by cooperative banks will enable them to improve their customer service and bring it on par with any other bank to farmers and other customers.

Meanwhile, Haryana Chief Minister Bhupinder Singh Hooda asked Nabard to increase the refinance given to cooperative banks from 50 per cent to 75 per cent.

Speaking on the occasion of its 33rd Foundation Day here today, Hooda said reducing groundwater level and shrinkage of fertile land posed big challenges which could be met by promoting piped and drip irrigation, constructing green houses, promoting dairy and techniques of vertical farming.
Hooda asked Nabard to work at the micro level for the expansion of these techniques and said it should provide finance for setting up water bodies in the state.

He said while Kisan Clubs have been set up in all sub-divisions of the state, there is a need to set up Kisan Clubs in all villages.

"Nabard should extend a helping hand in doing so. These clubs would act as a bridge between NGOs, self-help groups, farmer groups," he added.

Wednesday, July 23, 2014

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15




Prime Minister Narendra Modi is set to give a big boost to the ongoing financial inclusion drive by unveiling a comprehensive programme at the Red Fort in his address to the nation on the Independence Day.

The proposed comprehensive financial inclusion programme envisaging insurance and pension cover, apart from a default cover for lenders, is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to a note sent to the Indian Banks Association (IBA) by Financial Services Secretary G S Sandhu.

According to the note, Mr Modi’s new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government.

First, the earlier efforts at financial inclusion had villages as the unit for coverage while the current plan focuses on coverage of households.

Secondly, only rural areas have been the focus so far while both rural and urban areas have been included now, says the ministry note.

Thirdly, the current plan is proposed to be implemented as a ‘mission mode’ project. It envisages a comprehensive coverage of all excluded households by a six-pillar approach in two phases, according to the note.

The first phase of the programme, which begins from August 15 this year and ends on August 14, 2015, will provide basic banking accounts with overdraft facility of Rs. 5,000 and RuPay debit card with inbuilt accident insurance cover of Rs. 1 lakh and creation of credit guarantee fund for coverage of defaults in overdraft accounts, according to the ministry.

The second phase, which will begin on August 13, 2015 and conclude by August 14, 2018, will cover micro-insurance and unorganised sector pension schemes like Swavlamban.

When contacted, IBA said already state-owned banks, insurers and regulators are working overtime to ensure a smooth kick-start.

“We are currently busy chalking out the modalities of implementation of the project, which will be implemented in the entire country after it is declared by the Prime Minister on August 15,” IBA chairman K R Kamath, who is also the chairman of Punjab National Bank, told PTI.

It is a good scheme as it envisages going beyond the geographical boundaries and promises of connecting each and every household, he said, adding that more than being commercially viable, it is important to link every household with the banking system.

“Through this programme, we are looking at providing two savings bank account facility-one each for the husband and the wife-to all those households which not served by the banking system so far,” MR Kamath said.

“Of course, these basic banking accounts will come with some in-built overdraft facility and RuPay debit cards with an inbuilt accident cover of Rs. 1 lakh. We are awaiting the final announcement of the scheme by the Prime Minister.”

Inclusive pension is also one of the pillars of the proposed comprehensive financial inclusion programme.

“Pension under ‘the mission mode’ will lay emphasis on this facility for the lower income segment and the unorganized workers,” said R V Verma, acting chairman of the Pension Fund Regulatory and Development Authority (PFRDA).

“We will seek to achieve and expand the scope of the National Pension Scheme (NPS) to serve the disadvantaged sections of the population through active involvement and participation of all categories of intermediary institutions like banks, NBFCs, MFIs, NGOs, corporates and annuity service providers,” Mr Verma added.

Though micro-insurance will come in the second phase of the programme, insurers have already started working on it.

“While the already existing 4,000 micro offices of the four PSU general insurers would be strengthened, over 2 lakh existing business correspondents will be asked to sell micro insurance products to ensure the last mile connectivity,” New India Assurance chairman and managing director G Srinivasan said.

“Though micro-insurance will come in the second phase only, we have already started working on it,” he added.

The premium for the low-cost insurance products, which is to be paid by the beneficiaries or from subsidy under the Rashtriya Swasthya Bima Yojana scheme, will range between Rs. 100 and Rs. 300 per annum, New India Assurance general manager K Sanath Kumar said.

Nabard will provide the initial Rs. 1,000 crore to create a credit guarantee fund to cover possible defaults on overdraft accounts under the scheme, a Nabard official said.

Several rounds of meetings have already been held by the Department of Financial Services with all the stakeholders of the programme, including state-owned banks, insurance companies and pension regulator PFRDA.

The banking sector would be expanding itself to hire an additional 50,000 business correspondents (BCs), launch over 7,000 branches and more than 20,000 new ATMs in the first phase, Sandhu told the IBA, adding that around 50,000 BCs are likely to be appointed in rural areas for the programme alone.
 

Tuesday, July 22, 2014

Popularising RuPay Card - State Bank of India Initiative



The State Bank of India, the largest public sector bank started issuing RuPay cards  three months back and has realised the benefits of it.

In India, 90 per cent of credit card transactions are domestic; however, the cost of transactions is high due to monopoly of foreign gateways like Visa and Master cards.

If this process of transactions is made India-centric, cost can come down drastically. In the last 3-4 decades, the usage of credit and debit cards -- what we call the plastic money -- has increased manifold.

Their usage has actually multiplied in the past one decade due to emergence of e-commerce. We can not only make purchases of our needs from a big store by swapping our credit or debit card, we can even purchase air, train, bus ticket; or any commodity from e-commerce websites using this plastic money.

Though banking is no new business in India and credit and debit cards have been issued since long ago; however, these credit and debit cards had essentially been issued in partnership with international gateways like Visa and Master card. It is notable that Visa and Master cards make huge bucks from this business.

According to world Line India, a leading agency providing services in the field of electronic transactions, there are nearly 20 million credit cards in the country; and HDFC Bank, State Bank of India, ICICI Bank and Axis Bank are the main banks issuing most of the credit cards. Apart from this, there were 389 million debit cards in the country in March 2014.

During the last one year (2013-14) 58 million new debit cards were issued. It is notable that after the ATM machines were started being used, all banks have been issuing debit cum ATM cards to their customers, which can be used not only for withdrawing money, but also for making transactions at stores and e-commerce websites.

Foreign gateways like Master and Visa cards charge fee in lieu of their services and huge sum of foreign exchange gets transferred abroad by these companies. Due to monopoly of Master and Visa cards, a hefty fee is charged by them.

Their business in India has been increasing leaps and bounds in the last 10 years. According to RBI, credit cards transactions were Rs 1.56 lakh crore and debit cards transactions Rs 20.22 lakh crore during the year 2013-14.

Foreseeing the importance of an Indian Card, Reserve Bank of India, desired to start an Indian card and National Payment Corporation of India (NPCI), realised this desire and an Indian card in the name of RuPay was started on March 26, 2012.

Today in­­­creasingly the transactions of a majority of Indian banks and financial institutions are being facilitated by RuPay and it is giving a  tough competition to Visa and Master card. NPCI has also tied up with Discover Financial to give RuPay an international acceptance.

International acceptance 


RuPay global card is now accepted at ‘Discover Global Payment Network’ internationally. RuPay was dedicated to the nation on May 8, 2014 by the President of India, Pranab Mukherjee.

RuPay card is accepted on all ATM machines under national financial switch of NPCI. According to the NPCI data there are 1,45,270 ATMs and 8,75,00 points of sale which come under RuPay platform. In addition to this RuPay is accepted on nearly 10,000 e-commerce websites.

Banks recognised by NPCI for this purpose can issue RuPay credit and debit cards which are accepted in ATMs, Points of Sale (PoS) and e-commerce websites. As of now about 240 banks have been issuing RuPay cards. Along with this 200 cooperative and rural banks are also issuing RuPay cards, giving a boost to financial inclusion.

Kotak Mahindra Bank has started a new initiative on financial inclusion; whereby farmers of 75 cooperative societies can get payment for their milk directly to their bank account.

This model is destined to be implemented in Gujarat, where 3 lakh farmers of 1,200 societies will benefit.

It is notable for domestic sector that RuPay fee is merely one third of Master and Visa cards. Though RuPay is cost effective private banks are still not cooperating in adopting RuPay.

Around 150 lakh RuPay cards in circulation now have so far been mostly issued by public sector banks. Argument of private banks is that since they have long period tie-ups with Master and Visa Cards, they cannot adopt RuPay till these agreements expire.

Though private Indian and foreign banks know that in the long run RuPay would prove to be beneficial, they are not ready to adopt new card looking at their short term interests.

The State Bank of India, the largest public sector bank has started issuing RuPay card only three months back and has realised the benefits of the same. According to SBI officials, though it has long term agreement with Master and Visa cards, still it would be good for the bank to pay money to them and switch over completely to RuPay.

Experts believe that if only SBI adopts RuPay fully, the scheme would be a success. Although for international operations, fee of RuPay is yet to be decided, the NPCI says that it would be better to keep it low to maintain it attractiveness in international business also.

In the first week of July 2014, the secretary, department of financial services of the Union ministry of finance has written to CEOs of all the public sector banks urging them to issue RuPay cards to all new customers and the existing customers who have not been issued debit cards so far.

Banks have also been asked to install RuPay card terminals in commercial establishments. So far there is a system of issuing only one type of debit card; however if one desires to get Master and Visa card, he/she can be issued the same along with RuPay card.

Those who are used to Master or Visa card need to be lured gradually towards using RuPay as it will prove to be a win-win situation for all, as it would not only reduce cost of transactions significantly, but also increase the card penetration in the country, especially rural areas.

Wednesday, May 14, 2014

With RuPay, India builds its own card payment network

President Pranab Mukherjee presenting an award to CEO, ICICI Bank Ltd. Chanda Kochhar during the launch of "RuPay" card in New Delhi on Thursday.

India takes on global players like MasterCard and Visa; Conceived by National Payments Corporation of India, RuPay card is accepted at all ATMs (1.6 lakh plus), 95% of PoS terminals (9.45 lakh plus) and most of the eComm merchants (about 10,000) in the country

New Delhi : President Pranab Mukherjee on Thursday dedicated to the nation indigenous card payment network called RuPay taking on the global players like Visa and MasterCard. It will work on ATMs and merchant outlets and help in reducing cash transactions.

The new payment network developed by the National Payments Corporation of India (NPCI), a not-for-profit company envisioned by the Reserve Bank of India (RBI) and created by the banking industry, covers all the automated teller machines (ATMs) and most of the retail and e-commerce platforms.

The RuPay platform is being used by certain banks like ICICI, State Bank of India, Punjab National Bank, among others, for clearing and settlement. RuPay, which works on three channels — ATMs, Point of Sales (POS) and online sales, is the seventh such payment gateway in the world.  A variant of pre-paid RuPay card would shortly be launched by IRCTC, which will help in booking railway tickets.

“RuPay” is the coinage of two terms Rupee and Payment.  “Dedication of RuPay to the nation is symbolic of the maturity of the payment system development in India,” Mukherjee said after formally launching the card at a function at Rashtrapati Bhavan.  He pointed out that with the launch of new system, India has now ranked among the “few countries in the world to have such a network built domestically to meet the card-based payment system needs of the country.”

The RuPay card is accepted at all ATMs (1.6 lakh plus), 95 per cent of PoS terminals (9.45 lakh plus) and most of the eCom merchants (about 10,000) in the country.

RuPay Scheme provides flexibility to card issuing banks to issue special purpose cards like Kisan Cards, Milk Procurement Cards, Grain Procurement Cards and Financial Inclusion Cards.

A variant of the card called “Kisan Card is now being issued by all the Public Sector banks in addition to the mainstream debit card which has been issued by 43 banks”.   More than 150 cooperative banks and the Regional Rural Banks (RRBs) in the country have also issued RuPay ATM cards. The total number of cards issued as on date is 17 Million and is growing at a rate of about three million per month.

NPCI Chairman Balachandran M said the NPCI board plans to take RuPay card overseas and is already in talks with Discover Financial Services in the US and JDC in Japan for partnership.
Speaking on the occasion, Financial Services Secretary G S Sandhu said RuPay would be available at a cost which is much less than those of international cards.

For clearing and settlement of each transactions, banks will have to pay 40 per cent lower fees in RuPay platform compared to other international platforms. Public sector banks have already installed 25,331 RuPay cards enabled ATMS and 9,000 more ATMs would be installed in the current fiscal, Sandhu said.

Sunday, February 9, 2014

RuPay Cards to reach 25 m

The National Payment Corporation (NPCI) plans to almost double the number of RuPay Cards, the homegrown rival to Visa and MasterCard, to 25 million over the next two months.

“We have so far issued 14 million RuPay cards, and this will touch 25 million by the end of March,” NPCI Managing Director and Chief Executive Abhay P Hota said.  NPCI is the nodal agency under the Reserve Bank that manages the national payment switch and has developed the RuPay Cards.

RuPay Card, Reserve Bank and domestic lenders-promoted NPCI’s answer to Visa and the MasterCards which control the domestic plastic money market, was launched in April 2012.

It has seen as many as 210 banks, including all public sector banks and some of the leading private sector ones, issuing these domestic debit cards, Hota said. He agreed, however, that most RuPay customers are urban cooperative banks and regional rural banks.

He also said Citi and HSBC will join RuPay system by July. “Today our cards are accepted on all ATMs (1.45 lakh), 8.4 lakh merchant terminals and 70 per cent of the e-commerce merchants,” he said.

About the quick acceptance, he said, for all the stakeholders it makes immense business sense as NPCI charges just 90 paise as the fee per transaction — 60 paise from the merchant and 30 paise from the issuing bank — with the same kind of security; the same on a Visa or MasterCard is as high as Rs 4.

“Our switching fee is only 60 paise for acquiring banks and 30 paise for issuing banks per transaction,” Hota said. On profitability, Hota said, “We will break even by the end of the seventh year (2018-19).”

Hota ruled out entering credit cards business as of now but was confident of traction in the international debit cards. Till now, Bank of Baroda, Central Bank of India and Saraswat Bank have issued RuPay international debit cards, being offered with the California-based Discover Financial Services.