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Innovative use of ICT by PSUs for Customers Benefits

ProjectFinancial Inclusion@PNB

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As per Rangarajan Committee Report Financial Inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups, at an affordable cost, in a fair and transparent manner by mainstream institutional players.

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Important Milestones on Road to Financial Inclusion in India1904 1969 1975 1990s 2005 2006 Sept. 2010 2011 Setting up of Rural Cooperatives Nationalization of 14 major Commercial Banks Setting up of Regional Rural Banks Self Help Group RBI advised banks to open no frill accounts RBI allowed BC/BF to act as agents of banks RBI allowed for - profit companies (excluding NBFC) to act as Business Correspondent National Payment Corporation of India (NPCI) launched Interbank Mobile Payment System (IMPS)3

OUR BELIEF

Banking to the unbanked is a profitable businessMISSION

Banking for the UnbankedVISION

To be a leading Global Bank with PAN Indiafootprints and become a household brand in the Indo-Gangetic plains, providing entire range of financial products and services under one roof 4

Financial Inclusion Models Adopted by the Bank

Financial InclusionBranch based Model (Brick and Mortar) Branchless Model (ICT Model)

Brick & Mortar ModelOpening PNB MITRA-No frill accounts (Zero balance accounts) with relaxed KYC norms - Launched PNB Mitra ATM card; withdrawal limit : upto Rs. 5,000 per day. ICT (Information & Communication Technology) Model Base Branch acts as a focal point for Business Correspondents (BCs) BCs are engaged by the Bank/technology providers BC Agents (BCAs) contact the customers for enrollment and issue biometric smart cards. BCAs use laptops and POS in Off Line mode. Relaxed KYC norms 5 -

Project FI through RRBs Following Srinivasan Committee recommendation, to leverage technology for business and inclusive growth, the project CBS@RRB implemented in all the 6 RRBs sponsored by PNB in April,2010. Six RRBs sponsored by PNB:Haryana Gramin Bank ,Rajasthan Gramin Bank, Punjab Gramin Bank Himachal Gramin Bank, Sarva UP Gramin Bank, Madhya Bihar Gramin Bank.

No. of Service Outlets Avg. no. of Txn. In Lacs (Post CBS) per day Customer Base (In Lacs)

1488 3.07 87.94

Project adjudged as the best IT implementation for year 2010 by PC QUEST Magazine. Project was awarded SKOTCH AWARD for the year 2010.6

FI Products Offered by PNB Products offered Savings with inbuilt OD facility upto Rs.2500/ OD facility of Rs. 500/- is offered upfront

Banking transactions Financial Inclusion Cash withdrawal Cash deposit Mini statement Balance inquiry

in

Proposed new products Micro Credit Remittances/ Fund Transfer Term Deposit & Recurring Deposit Micro Insurance Micro Mutual Fund

Besides Mini Statement facility, Passbook facility is also offered to FI customer.7

Customer Enrollment ProcessWeb Camera for Photograph Biometric scanner for Fingerprints

Pad for Signature capturingBattery Power back-up for undisrupted enrolment

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FI Vendor

ENROLLMENT PROCESSBack Office n Back Office 3

Data conversion

Validation of DataExternal Firewall

FINCBS Server at DC

Vendor Intermediary server

External Firewall

FI Intermediary server

Back Office 1

Back Office 2

Card personalization centre

Card distribution centre

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Transaction ProcessTransaction at the village carried out by BCA with Hand Held Terminal (HHT) Machine is used to capture Transactions HHT application supports all products Secured transaction With BCA card & Customer card Transactions are Recorded in customer & BCA card Banks security key embedded in SAMsmart chip component of HHT 10

Uniqueness of project FI @PNB PNB has adopted branchless banking model supported with smart card based technology. It has independent CBS setup for FI server at data centre with DRS setup. The management and control of whole setup is done by PNB team. Data validation, upload and other activities are performed by exclusive FI back Offices. The complete system is secured with symmetric key based Key Management System( owned and managed by Bank) as per IDRBT open standards for FI. Financial transaction happens at HHT only after authentication of BC agents smartcard and customers smartcard followed by finger print authentication. On completion of any transaction, the HHT prompts transaction amount and the resultant balance of the customer in local language

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Uniqueness of project FI @PNB

Contd.

An instant receipt generated from the HHT is given to the customer Data transmission is done in encrypted form. Interoperability is achieved through use of centralized KMS facilitating the FI customers to avail banking facilities anywhere within the district/state. Necessary Information security system and policies including Firewall system has been put in place for FI project. FI disaster recovery site has been put in place to meet the challenge of any failure at Data centre.

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BCP in FI (Business Continuity Plan):Customer Finger print fails to match

BCA can manually perform the transaction ( override)Within the customer wise, day wise limit fixed by Bank It is controlled through the HHT application New smart card will be issued if the failures are continuous

HHT is lost before the transaction upload Copy of the transactions are stored in BCA card

Retrieved from the BCA card and uploaded

HHT is lost and BCA card is also lost Second copy of the receipt with the BCA sent to FI back office

Transaction created in FINCBS

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BCP in FI (Business Continuity Plan) cont.BCA fails to turn up Alternate BCA sent to village Customer card read and the transaction retrieved Uploaded to FINCBS after validation Customer card lost New card is issued with the data already available with the Bank

Weekly reconciliation between Banks account and BC account.Cash management BC maintains main account with bank - Provides cash to each BCA within the limit - Cash held with the BCA is insured for loss and fidelity -BCA to remit the net amount and the data to Bank atleast once in 48 hours -HHT application will not permit further transaction without sync with TSP server14

Particulars No Frill accounts opened (lacs) Amount in Rs.(lacs) Out of above -ICT based accounts ( lacs) -Under Brick & Mortar model (Branch based) (lacs) Credit Based FI Accounts Amount (in lacs)

As on March2011

73.33 100342

40.89 32.4418328 5380.92

No. FI Back OfficesNo. of FI SOLs FI Technology Providers Total no. of correspondent (NGOs, sec 25 co. FTC & other bodies) Business Correspondent Agents Business Facilitators Farmers Training Centers

08991 10 21 2965 1633 915

Major Financial Inclusion ProjectsProjectsProjects in Rural Area

Number28

StatesBihar, Rajasthan, HP, Uttarakhand, UP, Punjab, Jharkhand, MP, Orissa, West Bengal Punjab, Delhi, J&K, Chandigarh, Bihar AP, Haryana, UP, Chattisgarh 14 STATES (Indo Gangetic Plain) + Andhra Pradesh Rajasthan UP, Chhatisgarh, North East, Bihar , Karnataka 17 States (14 in Indo Gangetic Plain + AP, Karnataka and North East)16

Projects in Urban Area NREGA/Social Security Total ( ICT projects) Project BHAMASHAH Credit Driven Projects ( Non ICT ) GRAND TOTAL

06 05 39 01 06 46

Reach under Financial InclusionParticulars Number of villages with Population > 2000 through Bank Branches (Brick & Mortar Model) Number of villages with population > 2000 through BC Model (ICT model) Number of villages with population < 2000 through BC Model (ICT model) As on March 2011 2013 2186 3219

No. of NO Frill a/cs opened in 2010-11 in villages with population over 2000.

10.09 lac

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PNBs Jana Mitra Rickshaw Project

Making Rickshaw Pullers Rickshaw Owners Launched in Varanasi on Feb 2, 2008 in association with Centre for Rural Development Extended to Agra, Allahabad, Kanpur, Meerut, Lucknow, Patna Targets to cover 10000 rickshaw pullers 9503 Rickshaws are financed under Rickshaw Projects with outstanding credit of Rs. 9.88 Crore (as on June 2011)

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Financing Farmers in Bulandsahar in Collaboration with Mother DairyICT Based Financial Inclusion with Credit Driven Project

Farmers supply milk to Mother Dairy and get fair priceNo dependency on local milk vendors Mother Dairy pays back through the accounts (smart card based) on weekly basis BC agent makes payment to the farmers through smart card Farmers get loan for milch cattle at affordable interest rate More than 30000 farmers have been covered under this project

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Credit Driven FI Projects in PNB

(Data as on June 2011)

Financing to Farmers in North East through KCC through BC model.5439 accounts are opened (tie up with KAKSSUS NGO) with outstanding credit of Rs. 26.99 crore Financing to Self Help Groups in Rajanandgaon through BC model. Financing to vegetable growers in Tineri & Punpun (Patna) 741 accounts are opened with outstanding credit of Rs. 2.42 Crore More than 56000 GCCs issued with outstanding credit of Rs. 1.16 crore More than 16.53 lac KCCs issued with outstanding credit of Rs. 134.46 crore 2322 accounts are opened under Weavers Project, Varanasi with outstanding credit of Rs. 11.61 Crore 190 accounts are financed to Common Service Centres with outstanding credit of Rs. 1.95 Crore 20

Capacity BuildingOfficials of the bank have been trained under the Train the Trainer programme of (Indian Institute of Banking & Fin