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Chandrakant Patil Minister for Cooperation, Textile Marketing & PWD, Government of Maharashtra
Aniruddh Mukherjee Secretary, Department of Finance, Government of Madhya Pradesh
Chandrakant Dalvi Commissioner, Department of Cooperation, Government of Maharashtra
Dr A S Ramasastri Director, Institute for Development & Research in Banking Technology
Pramod Karnad Managing Director, Maharashtra State Cooperative Bank Ltd
C A Rajkumar Adukia Chairman of the Committee for Cooperatives & NPO sector of ICAI
Flashback
Gujarat Cooperatives Summit 2015
Maharashtra Cooperatives Comes of Age
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Contents 42 GSC BANK LTD Driven on the Path of Progress
18 CA RAJKUMAR ADUKIA Chairman of the Committee for Cooperatives and NPO sector of ICAI
4/ BFSI | bfsi.eletsonline.com | JULY - SEPTEMBER 2015
digitallearning
EDITORIAL
Cooperation Wins
A
s India became Independent in 1947, its economy was in a bad shape and the ‘Great British Robbery’ of decades had left the peasants and farming community virtually in tatters. Adding to their woes were the traditional moneylenders, who would take away even the last piece of cloth off the poor borrower’s person.
It was then that the country woke up to the cooperative movement, and societies were formed by groups and communities to help themselves. While in most parts of the country this movement withered out even before full bloom, some states took it to its logical conclusion and further continued with it. Maharashtra is one of the few states where cooperatives found their way into various sectors, like agriculture, banking, housing, dairying and textiles, etc. As many as 54 different types of cooperatives, including sugar cooperatives, spinning mills, housing societies, labour federations, etc., are successfully running today, and the number of such institutions is around 2.30 lakh. According to the latest data, nearly 6.5 crore people of the State, constituting about 50 per cent of the total population, are in one way or the other connected to the cooperative movement and being benefitted from them. In the agriculture sector, during 2013-14, Rs 34,888 crore crop loan was given to the farmers in Maharashtra, out of which Rs 13,556 crore were distributed through the cooperative sector and Rs 19,642 crore through the commercial banks. But the number of farmers covered by the cooperative sector was more than that of the commercial banks. Even in terms of investment credit, there are 1.36 crore farmer families and 76 lakh farmers, who get the benefit of crop loans at present. With 4,839 branches and 1,576 ATMs, cooperative banks have made their presence felt in every nook and corner of the State. What is more, in keeping with the demand of times, the cooperative banks are also adopting IT tools to increase scale, efficiency and customer satisfaction to remain the highly competitive ecosystem. Given the extraordinary achievements of the State in the cooperative sector, Elets Technomedia, in association with the Department of Cooperation, Marketing & Textile, Government of Maharashtra, is organising ‘Maharashtra Cooperative Summit’, in the financial capital of India—Mumbai—on 9th September 2015. The occasion will see key decision-makers, senior government officials from Maharashtra and beyond, and stakeholders like office-bearers of different cooperative bodies, technology players in the domain and experts coming together on a platform to deliver insights on the current cooperative scenario and the road ahead.Around 50 leading banking IT providers will be face to face with cooperative bankers to discuss the possibility of collaboration. Besides, an estimated 200 cooperative bankers will share their regulatory and other business challenges and come out with recommendations. So, be there to be part of it all.
RAVI GUPTA Ravi.Gupta@elets.in
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JULY - SEPTEMBER 2015 VOLUME 01 n ISSUE 03
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Cooperatives
CHANDRAKANT DALVI
COOPERATION BEARING FRUIT IN MAHARASHTRA The cooperative sector in Maharashtra has made a tremendous development in the last four decades. Increased use of technology will give further boost to the sector, believes Chandrakant Dalvi, Commissioner Cooperation, Government of Maharashtra. Excerpts from an interaction with Rachita Jha and Sneha Mejari of Elets News Network (ENN) What is the extent of reach of cooperatives in Maharashtra? Maharashtra is one of the leading states in terms of cooperative movement. It has played a significant role in the social and economic development of the State, particularly in the rural areas. Initially, this movement was confined mainly to the fields of agricultural credit. Later, it rapidly spread to other fields like agro-processing, agro-marketing, rural industries, consumer stores, social services, etc. Today, there are 54 types of cooperatives including
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sugar cooperatives, spinning mills, housing societies, labour federations, etc., and total institutions are around 2.30 lakh in number. Nearly 6.5 crore people of the State, approx 50 per cent of the total population, are in some or other way connected to the cooperative movement and being benefitted from the cooperatives.
What are the three levels to give crop loans to the farmers and the policies around it? Finance is one of the important segments in the coopera-
Cooperatives
CHANDRAKANT DALVI tives through which the cooperative department works. It includes the Maharashtra State Cooperative Bank, District Central Cooperative Banks (DCCBs), and at the grassroot level, there are Primary Agriculture Credit Societies (PACS), which are 21,000 in number in the State. In large villages, there may be multiple PACS, but if there are two-three small villages in neighbourhood, one PACS is good enough to help out the rural folk. The crop loans for the Rabi and Kharif are given to the farmers and citizens through District Central Cooperative Banks. NABARD gives fund to the Maharashtra State Cooperative Banks and further it is routed through PACS to distribute among the farmers. Though NABARD is the major source of funding for distributing crop loans in Maharashtra, there are commercial banks and the State-Level Bankers Committee (SLBC) too for the same. The Government has drafted a policy for them as to how much finance can be given to the farmers every year and the commercial and cooperative banks need to ensure its provisions. As per the policy, whatever finance is given to the farmers in the form of crop loans, 50 per cent is routed through the cooperative banks while remaining 50 per cent goes through the commercial banks. In 2013-14, `34,888 crore crop loan was given to the farmers in Maharashtra, out of which `13,556 crore was distributed through the cooperative sector and `19,642 crore was distributed through the commercial banks. But the number of farmers covered by the cooperative sector were more than that of the commercial banks. Through the cooperative sector, 35.99 lakh farmers were benefitted with the crop loan and 16.25 lakh farmers through the commercial banks. We, as cooperatives, follow the practice of small loan-small farmer where usually the commercial banks could not reach. Since the cooperative movement is working through PACS, it benefits more to the farmers and that too at the doorstep.
What about investment credit? Investment credit is another major aspect of the cooperatives, which is given to the farmers for digging of the wells and other needs. In Maharashtra, about `5,000 crore was distributed as an investment credit last year, though out of this the major share was given by the commercial banks as compared to the cooperative banks. In Maharashtra, there are 1.36 crore farmer families and 76 lakh farmers are given the benefit of crop loans at present. So, there is much scope for the cooperatives in terms of reaching out to the people. The incumbent Government and the cooperative department will work together with these banks to benefit the farmers for the crop loans. We will set physical targets for both cooperative and commercial banks to cover maximum farmers in the State and to curb the practice of borrowing money from private moneylenders.
In 2013-14, `34,888cr crop loan was given to the farmers, out of which `13,556 crore was distributed through the cooperative sector and `19,642 crore through the commercial banks Apart from this, there are 483 urban cooperative banks and 15,000 cooperative credit societies in Maharashtra. Approximately 65 per cent of the urban banks in India are located in Maharashtra. The urban cooperative banks mostly provide non-agricultural finance in the urban areas and the towns across the State.
What are the advantages of having sugar cooperatives? Do SMEs help sugar societies in technology adoption to help them get best prices in the market? Sugar industries from the beginning are in the cooperative sector only. Private industries were not very keen to establish sugar factories in rural areas and provide services to the people. But over the past 10 years, the private sugar industry has entered the sugar sector. As of today, there are 168 cooperative sugar factories and 72 private sugar factories in the State. We have the crushing capacity of 5.11 lakh metric tonnes a day and the annual turnover of the sugar factories is around `35,000 crore. There are nine lakh harvesters and around 1.5 lakh people working in sugar factories. People who were earlier in the sugar cooperatives, they have now established their private sugar industries. At present, the private sugar factories are a bit modern as
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Cooperatives
CHANDRAKANT DALVI compared to the cooperative ones. Recently, the Government announced a package of `2,000 crore to support the pricing of the sugarcane to the farmers to ensure Fair and Remunerative Price (FRP). So, the rate of the sugar crop in the market has gone down a little. This year, it is difficult for the cooperative sugar industries to give FRP to the farmers and the government wants that the farmers should not suffer.
Is there any provision for affordable housing? In Maharashtra, there are more than one lakh cooperative housing societies. When the buildings or complexes are ready, the upkeep of those flats, buildings and campuses is done by the cooperative housing societies. In other words, there is a practice of self management after builder moves out. The cooperative societies take over the housing campuses and run them to avoid additional burden on the municipal administration. Another important role performed by the Cooperative Department in the context of cooperative housing societies is the execution of the Maharashtra Ownership of Flats (MOFA) Act 1963. We have decided to support the housing societies to facilitate them to get all the papers required to file an application to the Daily Diary Report (DDR). Once application is filed in the DDR, we ensure that the applications are fixed within six months so that the societies can go for the land acquisition and their names on the land records. We have also provided facilities to make online application for the daily convenience through a portal called e-Sarkaar. The portal enables people to apply application online for the convenience and can also track the status of their application. This portal has won an award from the Government of India earlier this year. Another important aspect of the cooperative movement is capacity building. A lot of training programmes have been organised for skill development of the office bearers, members of the societies and farmers. More than 15 lakh people are trained every year. As per the provisions of Cooperative Societies Act 2013, every member of the cooperative has to attend a training programme once in five years.
What are your dream projects that you are working on? Our first plan is to implement ‘Zero Pendency and Daily Disposal’ project that can provide quick and responsive administration in any department. Under this programme, we will computerise all units in the Cooperative Department. And later
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all these offices will be connected to the State Data Centre in Mantralaya in Mumbai, so that eGovernance can be implemented in the Department and quick services can be provided to the members of the cooperatives and the citizens at large. Secondly, we want to make e-Sarkaar portal more userfriendly, through which people can access the detailed information of each and every cooperative institution in Maharashtra. We have 2,30,000 cooperative institutions and each of them have uploaded their information on e-Sarkaar portal. Further, every society has to file six returns annually with the Cooperative Department at taluka level. Through this portal, all the annual returns will be uploaded by the societies. It will be available to the public to bring transparency in the system. People can also register their complaints against any of the societies on the portal and it will be automatically escalated to the respective officials. The third technological intervention which we have planned is e-Audit. In the Cooperative Department, we have two wings — one is administration, and the other is audit. We audit each cooperative institute every year, i.e. all 2,30,000 cooperative institutions are audited every year and these audit reports are scrutinised, too. We have decided to meet the present requirement of the audit department, which can be simpler and reflect the real picture of financial and accounts departments. We have District Special Auditors (DSA) in each district and auditors at taluka level. All audit report will be digitised, i.e. audit will be done manually but the report will be scrutinised through an online application.
What role can the cooperative banks play in context of PMJDY? Pradhan Mantri Jan-Dhan Yojana (PMJDY) aims to facilitate the last mile and unbanked rural population, and similar financial inclusion work is being done by the cooperative credit societies. We open bank accounts of those people who don’t have accounts in any commercial banks. The cooperative sector has reached out to the people, whom commercial banks never reach. Earlier, the cooperative banks were not allowed to open the zero-balance PMJDY accounts. But as we persuaded with the Government of India, we were granted permission to open these accounts. In Maharashtra, the cooperative banks have opened 2.86 lakh Jan-Dhan accounts. The Reserve Bank of India (RBI) is not directly involved in the cooperatives but it helps us in a big way through NABARD.
Cooperatives
PRAMOD KARNAD
The Lifeline
fo r FARMERS One of the plus points of the cooperative credit system in Maharashtra is its rural network, which primarily caters to the needs of farmers in the remote areas of the State where commercial banks do not have any reach, says Pramod Karnad, Managing Director, Maharashtra State Cooperative Bank Ltd, in an interview with Sneha Mejari of Elets News Network (ENN)
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What have been the factors leading to the growth of perhaps strongest cooperative sector in Maharashtra? The cooperative movement started in the late 18th century and it came to India from the Great Britain. The first cooperative society was registered in 1904, along with the first cooperative act that also came the same year. Even though the first cooperative institute was registered in Gujarat, the movement also gained momentum in the State of Maharashtra. Further, housing societies were registered in Maharashtra at a fast pace. In Gaondevi, the first housing society was formed by Rao Bahadur S S Talmaki and even after 120 years, it still stands tall. The cooperative act was enacted and implemented in 1906. The credit cooperative societies followed the housing societies. The Maharashtra State Cooperative Bank also has its roots in the credit society. In 1911, we were registered as a bank, which makes us more than 100 years old today. The cooperative movement took momentum in the State in various sectors like housing society, credit society and consumers movement, and subsequently it spread out to sugar and other sectors. Maharashtra as a state had a conducive atmosphere for the growth of the movement.
Cooperatives
PRAMOD KARNAD
What role did the Maharashtra State Cooperative Bank play as an apex body in guiding the cooperative banking sector? There is a three-tier cooperative credit structure in Maharashtra. There are primary agricultural credit societies (PACS) at the ground level, District Central Cooperative (DCC) Banks at the middle level and the Maharashtra State Cooperative Bank as the apex body. Apart from this, we have urban cooperative banks, too. In this structure, PACS are at the grass-root level and play as the foundation of the structure. Out of 95,000 PACS in India, we have more than 21,000 PACS in Maharashtra alone, which is the major chuck. We have 31 DCC banks in Maharashtra, one in each district. Apart from this, we also have the function of leading other non-credit societies, like housing, spinning etc. Our primary concern is to monitor the credit cooperative structure. Out of 21,000 PACS, 5,000 PACS are not viable according to a recent survey. It is our responsibility to turn these unviable PACS into successful ones.
How have the Vaidhyanathan Committee recommendations helped the cooperative bodies in the State? Following its recommendations, funds were allocated by the Central Government to the credit structure. We are using this fund for technological upgradation of the societies by bringing common accounting system in all the PACS, thus making their work easier. We also get funds from the Government of Maharashtra to strengthen the PACS, as they are the integral part or the foundation of the structure. Every village has a PACS and their members are none other than farmers. So, these societies are for the farmers and by the farmers in most cases. These farmers require the crop loan, equipment loan, agro implements, electric motor pump, pipelines, flattening of their land, funds to dig a bore well, etc. If we want to provide farmers with funds for a better agricultural produce, it becomes very import that these PACS are in a condition to borrow and repay from the District Central Cooperative Banks, as they are the sole funding agency for the needs of farmers. Over the years, in Maharashtra, we have developed a fantastic network with the
21,000 PACS and also 30,000 branches of the DCC Banks. This is the rural network and is absolutely in the remote areas of the State where the commercialised banks cannot reach. This is one of the achievements of the cooperative credit system in the State.
What are the challenges being faced in driving the credit structure? We have a State Level Bankers Committee (SLBC), which
The cooperative movement gained momentum in the State in various sectors like housing society, credit society and consumers movement, and subsequently, it spread out to sugar and other sectors allocates the share of cooperative banks for crop financing. These crop loans are not only short-term loans but there also medium- and long-term loans for farmers. This share is realised at the beginning of the financial year. Until 201112, the cooperative sector would receive the largest part of this share for short-term seasonal agricultural operations, like crop loans for 11 or 12 months. A total of 70 per cent share was given to DCC banks and the Maharashtra State Cooperative Bank, while 30 per cent went to the State Bank of India and other banks. Gradually, some problems emerged in the DCC banks, and therefore, the target could not be achieved. And, this is how their share was diverted to state banks, like SBI or even private banks. Now, the share of 70 per cent has come down to 45 percent for the cooperative banks and the remaining 55 per cent goes to the state-owned banks and the regional rural banks (RRBs). The quantum has shrunk because among 31 district banks, a few banks are not viable. As the Managing Director of the Maharashtra State Cooperative Bank, I am worried as my share is coming down and it is my responsibility to make the DCC banks viable and increase my share. ď Ž JULY - SEPTEMBER 2015 | bfsi.eletsonline.com | BFSI
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Expert View
C A RAJKUMAR ADUKIA
eGOVERNANCE IN COOP SOCIETIES
A PRIORITY CA Rajkumar Adukia, Chairman of the Committee for Cooperatives and NPO Sector and Committee on Information Technology of ICAI, in an interview with Kartik Sharma, says that eGovernance in cooperative societies’ management must be a priority
What does The Institute of Chartered Accountants of India (ICAI) do and how wide is its reach? The ICAI is a statutory body established under the Chartered Accountants Act, 1949 for the regulation of the profession of Chartered Accountants in India. In the last 66 years, ICAI has achieved recognition as a premier accounting body, not only in the country but also globally, for its contribution in the fields of education, professional development, maintenance of high accounting, auditing and ethical standards. Now, ICAI is the second largest accounting body in the whole world. ICAI is a partner in nation building. It has five regions with 148 branches regulating more than 2,50,000 members across India.
How does ICAI contribute to nation building? ICAI, as a part of its role in aiding proactive process towards better governance, is called upon to interact with various regulatory/statutory authorities on issues of interest touching upon the profession and otherwise. In this process, the Institute, at regular intervals, provides technical advice and necessary inputs on the matters of economic relevance to various ministries and bodies like CAG, RBI, SEBI, CBDT, etc. Following the initiatives undertaken by ICAI, several departments of the Central and state governments including the Department of Posts, municipal corporations, etc., have approached the Institute for utilising the services of Chartered Accountants to advice on matters pertaining to economy, expenditure and development of control mechanism over public funds and alike.
What is the vision of ICAI for 2030? ICAI envisions becoming the world’s leading accounting body by playing a predominant role in setting world class standards in identified service areas and developing thought leadership and research that addresses concerns of countries, developed, developing and under‐developed.
Can you highlight the role of Committee for the Cooperatives and NPO Sectors of ICAI? The Committee for Cooperatives and NPO Sectors is a
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Expert View
C A RAJKUMAR ADUKIA non‐standing committee of ICAI. The Committee has been constituted to identify issues and opportunities in the cooperatives and NPO sectors and equip members and other stakeholders to find a new niche for themselves as well as maintaining and developing the core competencies in the cooperatives and NPO sectors.
What has been your focus since you became the Chairman of the Committee? We have designed six-day certificate courses for cooperatives and non-profit organisations separately and completed 14 certificate courses. These courses are enriching with knowledge of formation, management, accounting, taxation and audit aspects of cooperative societies and NPO sector. It also covers the duties and privileges of cooperative societies and NPOs, drafting, stamp duty and registration, etc. Webinar/ Webcast and hosting of seminars, workshops and publications aim to enhance members’ knowledge, expertise, skill sets and consequently assist in their career growth. e-newsletter, updating the website and forming taskforce for different types of societies and for different states, etc., and making representation to the Central and state governments to resolve the issues faced by the sector are the focus areas.
What all issues need immediate attention of the Government of Maharashtra to strengthen the cooperative movement in the State? There has to be a transition into an online system of functioning of the department by adopting technology and incorporating the use of IT in the functioning of the Cooperative Department. There can be a proper and robust IT and communication network in place within the Department that can supplement even better functioning, i.e. website, officers’ login, officers’ email-IDs, etc. At the same time, filing of returns, forms and statements by cooperative societies can also be made online. The current provisions (section 73CB) relating to the election tries to ensure autonomous and democratic functioning of the cooperatives, but at the same time, are impracticable and would cause hardship to the cooperative societies. The election officer shall step in only when there is a dispute or the conduct is not fair in respect of the elections process. l A comprehensive manual should be published in a single book on the 1st of April of every year compiling all the pronouncements for easy reference of the cooperatives and others. ICAI would extend as a noble support the required assistance in compiling and bringing out this manual. l In similarity with the corporate governance requirements for the corporate, principles of ’cooperative governance’ can be introduced to be applicable on the cooperative societies. l One of the core principles of cooperation is the concern
for community. While focusing on members’ needs, the cooperatives have to work for the sustainable development of communities through policies and programs accepted by the members. l Considering the functioning of the Cooperative Courts and the Co-operative Appellate Court, it is necessary that they should be renamed as Cooperative Tribunals & Cooperative Appellate Tribunal to better describe these authorities, in line with the structure & functioning of these authorities. Chartered Accountants being knowledgeable with respect to the cooperative law and other laws can act as complete business advisors for cooperatives and also act as representatives in case of the disputes under this Act. l With the increase in number of cooperative societies of various classes, there is also a simultaneous increase in the number of disputes. Arbitration, that serves as an alternative form of dispute resolution can facilitate faster resolution and settlement of disputes. Arbitration mechanism can also be introduced under this Act for easier and faster dispute resolution and settlement.
We have designed six-day certificate courses for cooperatives and nonprofit organisations separately and completed 14 certificate courses Steps on the similar lines are also taken in other states like the state of Kerala. Audit of cooperative societies: Cooperative societies are required to arrange for getting their accounts audited under section 81 of the MCSA. The total number of Maharashtra cooperative societies is more than 2,18,000, while that of practising chartered accountants is around 30,000. Keeping in view the ratio of the number of cooperative societies to the number of chartered accountants practicing, there is a need to modify the provisions so as to enable all practicing members of the ICAI to be eligible for being appointed as the auditors for cooperative societies without requiring them to get themselves empanelled. Exit Scheme for defunct co-operative societies: Out of the more than 2,25,000 co-operative societies, a few may not be operating and may have become defunct. Such cooperative societies can be given an opportunity to make an application to the Registrar and get their registration cancelled). (Mr Adukia is B.COM, FCA, ACS, ACMA, LLB, MBA, DIPR, IFRS (UK), DLL&LP. He is a legal consultant, writer and speaker. He is also a frequent speaker at various seminars and conferences, and has trained various senior level officers.)
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Special Article
NEW-AGE BANKING
Technology Transforming Banking for Good The power of technology is transforming the Banking Sector at a fast pace in India. In the next few years, the country is set to witness more and more penetration of digital banking, completely changing the way people have done transactions over the ages, write Arpit Gupta and Subhajit Bhattacharya of Elets News Network (ENN)
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Special Article
NEW-AGE BANKING
P
rime Minister Narendra Modi, while launching one of the most ambitious projects of the Central Government, ‘Digital India’, said, “I dream of a Digital India where mobile and eBanking ensures financial inclusion.” It means the banks are going to be mostly virtual and paperless, and in the next few years, a scenario might emerge when most of the citizens would not need to visit banks for their banking needs. Even at present, a majority of transactions are being done from desktops and ATMs, rather than bank branches. Digital India aims to ensure a transparent and clean system of governance, wherein the citizens of the country would enjoy their rights and avail the citizen benefits in an easier and accountable manner. Through this coveted project, the Government is aiming to reach out to maximum citizens of the country and have their greater say in the affairs of the Government by bridging the ageold gap through the Information and Communication Technology tools. Experts believe that apart from some core sectors such as IT, health and education, the emerging banking domain of India will also witness a mammoth change, all on account of the Digital India campaign.
Banking on technology The Indian banking sector is now sitting on the cusp of a big digital revolution and passing through a crucial era of transformation. The Pradhan Mantri Jan-Dhan Yojna (PMJDY) has brought a massive non-banking population under the umbrella of banking, which has further strengthened the demand and need for absolute digitisation of the Indian banking system. Finance Minister Arun Jaitley, at the launch of the Digital India programme, said, “Our financial inclusion programme is the largest in the world. In less than five months, we have opened 160 million Jan-Dhan accounts...the direct benefit transfer (DBT) scheme has been extended to 130 million people in a few months.” Today, most of the nationalised banks and private banks provide facilities of digital banking to their customers. In spite of that, a massive rural population of India is deprived of the benefits of digital banking. On one hand, the urban population of the country is empowered with eBanking, opening accounts online and transferring funds just at a click of the mouse, on the other, the villages of India are still an easy prey to unscrupulous money lenders, illegal financial nexus and ponzi schemes. Recently, the Indian banking family expanded by 11 new members. The Reserve Bank of India (RBI) granted in-principle licences to these new members — nine for starting payment banks and two universal banks, which is definitely a great morale booster for the sector. These completely digitally-empowered banking bodies will reach
out to maximum population of India and will provide them their best possible services. A crucial study of the PwC on digitisation of banking, points out that the need of digitisation will reach its crest by the year 2020 and all the organisations will be forced to adapt to digitisation. “The size of the economy is increasing every day and that must be complimented by proper banking infrastructure. Digitisation can only turn this into reality which will soar the level of financial inclusion,” says Shinjini Kumar, Leader, Banking Capital Markets, PwC India.
Digital-banking age There are a plethora of benefits of digitisation of banking, which a developing country like India can reap. Digi-
Increased usage of Net Banking and technology in the modes of payments would reduce the frequency of unaccounted money that has been used as black money by traders, businessmen as well as politicians tisation in banking will increase the scope of financial inclusion and it will also help the banks offer extremely tailor-made services to the customers. Jaitley believes that increased usage of Net Banking and technology in mode of payments would reduce the frequency of unaccounted money that has been used as black money by traders, businessmen as well as politicians. This will surely keep a track of all the transactions making the system more transparent. With maximum reach, the banks will also be able to bring in more people under the banking ecosystem. Further, with the eBanking system in place, the entire financial system will get a massive boost. “With proper digitisation, the entire banking process will gain momentum, which
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Special Article
NEW-AGE BANKING to expand its digital presence. Leading private banks such as HDFC, ICICI and Axis Bank have also launched several payment solutions. The State Bank of India has recently launched new mobile wallet ‘SBI Buddy’. Similarly, HDFC has launched PayZapp, and ICICI Bank released ‘Pockets’ in the past few months. In the future, Yes Bank and Axis bank are also expected to jump onto the bandwagon with their own mobile wallets.
Urban-rural digital divide
Experts suggest that the Indian Android mobile market will grow manifold in the coming few years… This mobile boost will empower a massive nonbanking population and will bring them under the banking canopy will definitely have a direct and conclusive effect on the economy of India,” emphasises Abhirup Sarkar, eminent economist. Further, the country’s largest lender, the State Bank of India, has committed to spending nearly `30 billion a year
The inclusion of computer-related banking will help the banks reach a large number of customers and will facilitate the lowest strata of the pyramid. A recent study reveals that most of the customers do not get satisfactory services from banks and this makes them turn towards other financial organisations, which might be non-reliable and risk-prone. The Indian banks combat a massive challenge in reaching to the rural population, and digitisation will help them navigate through this challenge. “To turn digitisation of banking into a reality, the urbanrural digital divide must be levelled through proper digital literacy,” asserts Shinjini Kumar, Leader, Banking Capital Markets, PwC India. The digital database covers about 70 per cent of India’s population and eventually 800 million Indians will get
‘Digitise the payments’ Bhavin Mody, Director, e-Billing Solutions Private Limited It took over a decade for customers to switch their preference from cash to card to online wallets. As per the predictions made by the Internet and Mobile Association of India (IAMAI), the Indian digital payments industry was expected to reach `1.2 lakh crore by December 2014. Despite this, the penetration level of digital payments in India is very low. Within the e-tailing segment, cash on delivery contributes to about 50 per cent of the payments. There is a need to digitise these payments. Tapping this segment alone can double the digital payment volume in that segment. One of the solutions to achieve this is Mobile Point of Sale (mPOS), which can help in collection of card-based payments at the time of delivery.
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Further digitisation of payments will happen with solutions like NFC-based tap and pay, which has the potential of revolutionising the payments horizon. Digital payment instruments like e-wallet and m-wallet are already believed to be
the next vehicle of digital payments growth story in India. In view of this scenario, EBS, a leading payment aggregator in India, has on-boarded more than 11,000 businesses to accept online payments. It offers the complete gamut of payment options to its clients – right from credit and debit cards, net banking up to cash cards, e-wallets, m-wallets and IMPS. In order to further boost digital payments, it offers an integrated mPOS solution which will enable its e-Commerce clients to gradually replace the cash on delivery option. Various initiatives undertaken by EBS like EMI payment and Debit cards with PIN payment option are encouraging more and more customers to pay online.
Special Article
NEW-AGE BANKING
Bridging the gap V Swaminathan, Senior Executive Vice President- India, Kotak Mahindra Bank With the advent of newer technologies in banking, multiple modes of collection have emerged, with payment gateway being the biggest one. The Kotak Mahindra Bank works very closely with top municipal corporations in Madhya Pradesh, where payment gateway is set up. We also have mobilebanking app and cash-deposit machines. In keeping with the changing times, we have come up with a technology for the Provident Fund Trust banking and the model has been adopted in a few states. We work closely with the eGovernance projects at the national level, i.e. the Prime Minister’s Relief Fund, Mahatma Gandhi Swachhta Mission, remittance services, etc. In
addition, the solutions that we offer to the government, include payment collection, communication and technology, etc. For electronic pay-
ments, we have Kotak Remit. Kotak Mahindra Bank has been contributing to the eGovernance initiatives of the Central Government and state governments in its own way. It is the fourth largest bank having reasonably vast presence across the country and abroad. We have a global footprint in the US, the UK, Dubai and Mauritius. Talking specifically of the financial inclusion, we help the Beej Nigam in Gujarat to ensure delivery of bulk subsidy. We also help in tax collection in the States of Goa and Maharashtra. Further, we help in Central Sales Tax (CST) collection in Delhi, Bihar, Punjab, Andhra Pradesh and Telangana. We work at talukas and panchayat level through rural centres too.
increase to 1.4 billion by 2020, driven by the rise in affordable devices and services. Experts suggest that the Indian Android mobile market will grow manifold in the coming few years. By 2019, the market will achieve a galloping growth and will have more than 650 million users. This mobile boost will empower a massive non-banking population and will bring them under the banking canopy. It will also fuel the growth of Indian economy and will iron out the creased areas of Indian financial infrastructure.
Security concerns
government subsidies as direct bank transfers. A smart digitisation will minimise the need for establishing a branch in the remotest corners of India. Standard banking, including deposition of money and withdrawal of funds, will also be possible through mobile or an electronic kiosk or smart payment device. According to the Telecom Regulatory Authority of India (TRAI), the country had nearly 970 million mobile phone subscribers in May 2015. This number is expected to
To provide services to the customers, the banks are relying not only on smart banking, but also on safe banking. Cyber experts think that excessive reliance on digitisation might affect the customer’s safety. It is with regard to the presence of digital revolution in banking that more and more banking customers are falling prey to a gamut of white collar crimes. An expert on white collar crime from an elite police force says, “Digitisation in banking should be properly cushioned with a robust vigilance system, which will monitor all the account-related activities of the customers and will further prohibit any acts of money laundering or account-hacking activities by unknown hackers who are prowling in the darkness of the cyber world.”
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DR A S RAMASASTRI In fact, in the days ahead, the real push is expected from initiatives like Digital India. The ‘Gyan Sangham’ meeting that Prime Minister Narendra Modi had with public sector banks, has given focus to digitising of customer-facing processes and improving operational efficiencies. More importantly, the expectations from new payment banks have added energy in public, private and cooperative banks to deliver more through digital channels. In the next three to five years, we are likely to see an increased adoption of Mobile Banking, Cloud Computing and introduction of more products on ATM kiosks. Technology adoption in banking sector should be for improving efficiency and providing convenient services to customers at affordable costs. At the same time, without proper awareness and skill sets, banks and their systems are prone to become vulnerable and exposed as there have been increasing trends of cyber attacks and fraud, which have put the banks on high alert. Thus, banks also need to undertake thorough security assessment of their IT infrastructure and delivery channels.
How according to you is the cooperative banking sector in India accepting the technological advancement?
TECH-AIDED BANKS
for AFFORDABLE
BANKING
Technology adoption in banking sector improves efficiency and provides convenient services to customers at affordable costs, insists Dr A S Ramasastri, Director, Institute for Development and Research in Banking Technology (IDRBT), in conversation with Sneha Mejari of Elets News Network (ENN) In the last one year, there has been a huge shift technologically in the banking sector as a whole. How do you perceive it? Initiation for technology adoption started in a big way when commercial banks went for CBS (Core Banking System), making routine transaction processing and balancing of bank’s book convenient. During the recent past, digital wallets and mobile payments have also become popular in India.
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India has a large cooperative sector in the form of Urban Cooperative Banks (UCBs), State Cooperative Banks (SCBs), District Central Cooperative Banks (DCCBs) and Primary Agricultural Credit Societies (PACS). Cooperative banks have been doing a phenomenal service in accomplishing financial inclusion. Nevertheless, due to their internal functioning structure, technology adoption by this section has been relatively slow. But now even that is changing. Realising the need to stay competitive, cooperative banks are coming forward to implement ATMs, NEFT/ RTGS and mobile banking. Medium and small-sized cooperative banks today realise that setting up their own data centers and building IT teams is difficult to manage in the long term. So, they are looking at cloud computing services, which enable reduced capital expenditures (CAPEX) investment and ensure uninterrupted services driven by Service Level Agreement (SLA) stipulations. Cooperative banks have a fair opportunity to forge partnership with the cloud computing service providers. The Reserve Bank of India, as a regulator, has been guiding UCBs in their technology upgradation plans. Similarly, NABARD has been working for SCBs, DCCBs and also PACS.
How has IDRBT been engaged in the cooperative banking sector? IDRBT was established by the RBI to provide guidance and assistance to banks for technology adoption. It has always been supportive of IT needs of cooperative banks. It has
BFSI
DR A S RAMASASTRI been providing banking technology-related training programmes at reasonable costs for the cooperative sector, consultancy services for building technology roadmaps and evaluation. Indian Banking Community Cloud (IBCC) is the first community cloud for the banking sector in the world. Currently, it offers core banking, e-mail and non-banking applications required for a bank, SFMS, DR as a service, and IT Infrastructure and other technology services for cooperative banks. To promote technology in cooperative banks, IDRBT is working closely with RBI, NABARD and state federations of cooperative banks.
What are the upcoming or recent projects been planned by IDRBT in the cooperative banking sector? IDRBT participated in seminars on technology for the cooperative banks of Gujarat, Andhra Pradesh and Telangana UCB federations. These have created awareness among the bank officials in the areas in which they can implement technology in their respective banks. In the last nine months, IDRBT has been engaged in conducting a
tomers trust banks for their hard-earned money, so it is the banks’ duty to protect the interests of the smallest customer. IDRBT places emphasis on the highest standards of security. As stated earlier, there has been an increasing trend in the attacks on banks in the form of ATM skimming, DDOS, etc. In the digitally-connected world, attack on small banks could escalate and create losses for other banks as well. It is highly recommended that cooperative
IDRBT was established by the RBI to provide guidance and assistance to banks for technology adoption. It has always been supportive of IT needs of cooperative banks banks planning technology adoption, either internally or with the help of service providers, should give paramount importance to security. In case any cooperative bank has to rely on external service provider, it should do so only with reputed and trusted service providers.
What is the vision of IDRBT for the banks and technologies for them? Our vision statement is “To be the premier and preferred Research and Development Institution on Financial Sector Technology and its Management, Working at the Intersection of Banking and Technology for the Indian banking”. We plan to work more closely with cooperative sector and understand their challenges and enable them to be digitally connected with their customers. series of technology training programmes exclusively for RRBs and cooperative banks and these would continue. We are leveraging proven solutions working in banks, so that cooperative banks get these at affordable prices. These solutions also have the features of best practices. The endeavour is to develop solutions as modules and bundle these, depending on the size and need of a bank. The Institute is in the process of setting up cloud-based solution for the PACS of a district in the southern part of India and is also planning to extend the solution to other PACS as well.
Along with technology, security is a major concern. What are your views on that? It is true that security is a major concern these days. Cus-
What will be your message for the cooperative banks participating in the ‘Maharashtra Cooperative Summit 2015’? Technology adoption can make cooperative banks more competitive. Right planning and implementation of technology will help these banks to be future-ready. The greatest advantage these banks have is the grass-root level contact through which they will be in a better position for financial inclusion. It would be advantageous for them to choose effective features of best solutions rather than trying to implement all high-end functionalities. They all can come together to find innovative solutions to address the highly diversified clientele within the cooperative sector.
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BIOMATIQUES
The iris technology is not about what you remember or what you carry, but about who you are, and it’s almost a foolproof identification technology: the False Acceptance Rate (FAR) in fingerprints is 1:10000, while for the iris, it is 1:1.5 million, says Tamaal Roy, CEO, Biomatiques Identification Solutions, in conversation with Rachita Jha of Elets News Network (ENN)
FINGERPRINTS
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What is the scope and adoption of biometrics technology within the government and the BFSI sector so far? The government sector has been pushing biometrics a lot, but its growth in the BFSI sector is slow. Generally, they feel that implementation of new technologies like biometrics will make them lose their customers, and even if a bank loses five per cent of its customers due to it, it is a huge loss. So, the government must take the call to make it compulsory for all banks. The challenge with the BFSI sector is to make everyone adopt this technology. The shift from traditional to modern methods of identification is taking place quite slowly. There are some banks, which have now started adopting fingerprint technology, while some others have come up with high-tech locker system. In certain areas like pension and rationing system, technology can be adopted to avoid any form of malpractices and delays in allocation of funds and services.
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BIOMATIQUES were also into other methods of biometrics like fingerprint, voice and facial recognition technology. So, if they were to give iris technology at the cost of fingerprint technology, it will render their fingerprint scanners useless. That was another reason why the iris technology has not been so popular. The advantage that we have is that we are only into iris technology, hence weren’t really interested or worried about other forms of biometrics. The Unique Identification Authority of India (UIDAI) was only interested in fingerprint and iris, out of which we chose iris because it is latest, accurate and far superior as compared to other forms of biometrics.
What is Biomatiques’ growth strategy going forward? Aadhaar was one of the reasons why we came into the market, as we know that in India, we have a huge scope. However, as a technological company, we don’t want to stop at Aadhaar. We would definitely want to explore the global arena, as we don’t want to creep into any complacency. Apart from Aadhaar, we want to tap other options as well, like ATMs and mobile phones. In today’s age, computer has
UIDAI was only interested in fingerprint and iris, out of which we chose iris because it is latest, accurate and far superior as compared to other forms of biometrics Iris technology is fairly new in terms of customer exposure. What are the areas where you foresee its application? The best part about iris technology is that it is not about what you remember or what you carry, but it’s about who you are. When the Indian Government went for Aadhaar exercise, they went for two forms of recognition methods; one was the fingerprint that was somewhat common and the other was iris. Every citizen’s iris and fingerprint was captured during the process of Aadhaar enrollment. However, in comparison to iris, fingers and palms are the most exposed parts of the body. The FAR – False Acceptance Rate – in fingerprint is 1:10000, while for the iris, the FAR is 1:1.5 million. Even if the cornea of the eye is replaced, the iris remains unaffected. So, we get 264 vertices with the help of iris, which are used in calculating the algorithmic patterns, whereas with fingerprints, we get only 38 vertices. Considering the business scope, the size of the market is very huge. Most of the companies have positioned iris technology at a very high market rate, reason being they
come to the size of a mobile, thanks to the Android revolution. So, instead of using a password for your mobile, you can use your iris. We are showcasing this technology to many mobile manufacturing companies across India and abroad. Not just that, we also have in mind the automobile industry, the IoT sector and the smart city projects. So, if one wants to access his/her home or vehicle, he/she would not need a key because their iris would be the key.
Do you see any application of iris technology in healthcare? Talking about healthcare, one of the things we are looking at is a fitness tracker. The wrist band like wearable device constantly monitors one's pulse and temperature, and this information is stored in a secured database. Now, if one wants to protect this data further, one can use his/her iris to secure this data. Just as access control can be used for people, it can be used for data, too. Besides, the best part about iris scanners is that one can scan the eyes even from a distance of two meters. JULY - SEPTEMBER 2015 | bfsi.eletsonline.com | BFSI
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SWIFT INDIA
SMART INFO EXCHANGE
for SWIFT BANKING SWIFT India enables the entire financial community to exchange automated, standardised financial information securely and reliably, thereby reducing costs and risks, and improving compliance and services to its customers, says Saqib Sheikh, Chief Operating Officer, SWIFT India Domestic Services Pvt Ltd, in an interaction with Sneha Mejari of Elets News Network (ENN) What is the purpose of SWIFT India and how relevant is it to India’s financial markets? While the banking sector has seen phenomenal growth in credit and transaction volumes over the last few years, many indicators continue to show significant potential and rapidly growing demand for banking services. Currently, more than half the population remains unbanked, and of those who do avail bank services, only a quarter actively use digital banking channels. It is because many of them still prefer transacting on paper at brick and mortar branches. However, this scenario is changing as the use of digital banking channels is growing at 20–25 per cent annually, in keeping with 34 per cent annual increase in the Internet access. With initiatives like Pradhan Mantri Jan-Dhan Yojana (PMJDY), the number of bank accounts has jumped to 27 per cent in a single year. As the citizenry is educated and targeted by such initiatives, this will put stress not only on existing business lines, but also on businesses with technologies relying on to offer services to their customers in an efficient, user-friendly and predictable manner. While the country’s GDP has at times been anaemic, as low as 3.9 per cent in 2008, India’s overseas financial transactions have consistently grown by over nine per cent year on year, as seen on the SWIFT network. Regardless of progress in the national reforms agenda, this shows a confident trajectory for growth in the banking sector from both domestic and cross-border business in the coming years. All this growth will be coupled by an increasingly volatile and competitive marketplace. Digital wallets, bill aggregators and other tech firms are entering into traditional bank businesses. The 11 new payment banks will add to an existing crowded bank space that struggles to
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find differentiation and competitive advantage. Customers too show little brand loyalty and up to 50 per cent of digital banking users are eager to try services from the new banks.
With India’s growth and inclusive agenda, increasing competition from new entrants and pressing
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SWIFT INDIA demand from fickle and mobile customers, financial institutions will have to be prepared and agile. This is where SWIFT SCRL, the global banking cooperative, and its joint venture in India, SWIFT India, will have a major impact. SWIFT SCRL provides financial messaging services to over 10,800 financial institutions in over 212 countries. This is the network over which the financial world conducts its business operations with speed, certainty and confidence. SWIFT India uses this proven SWIFT SCRL technology to provide a domestic financial platform for India’s financial markets.
Who are SWIFT India’s customers and what difference can it bring to them? SWIFT India provides a messaging service. The concept is simple - financial institutions can send structured financial transactions in a highly secure and reliable manner to one another. The beauty is in its scale and reusability. The service can be used across markets, financial instruments and counterparties. Whether you are a bank who needs to send payments for clearing and settlement to RBI or NPCI payments systems, or a corporate customer who wishes to open a letter of credit, or a broker dealer wants to confirm his/her securities trade, the same messaging platform can be used. With guaranteed delivery, ability to send individual transactions or bulk files of 250 megabytes or more, and almost no down time, this creates a powerful foundational platform on which the industry can grow and innovate. No longer do banks, NBFCs, corporates, payments systems, stock exchanges, clearing houses and other financial institutions have to invest in disparate channels for trading, confirming, settling or advising their counterpart and customers.
What services does SWIFT India provide? In February 2015, SWIFT India’s messaging platform has gone live and today we provide messaging services to banks and corporates in payments, trade finance and treasury markets. To use the service, financial institutions require a SWIFT infrastructure, comprising minimal software and hardware, to be deployed and integrated at their premises. This enables them to connect to the network and communicate with customers and counterparties. Banks and corporates are in the process of integrating with the SWIFT India platform and by the end of 2016, they will be able to clear and settle high and low value payments, exchange letters of credit and bank guarantees and trade in foreign exchange and money markets, all over a single channel fully integrated with their back office systems, eliminating paper and manual processing.
Is there an exciting project you are working on now that will have significant impact? SWIFT India’s heritage is that of a cooperative. Our
This platform will enable financial institutions l To connect and communicate with payment and securities market infrastructures, counterparties and corporate customers in a highly secure and reliable manner l Build capacity and resiliency in critical financial systems, reducing operational and systemic risks generated from significant projected transaction volumes l Develop a rich end-to-end channel for their customers to transact with speed, transparency and certainty.
customers are our owners and our focus is reducing costs and risks, and enabling innovative new products and services. In practice, this means banks and corporates define the way in which we conduct business and deliver services. SWIFT India has established working groups focussed on payments and cash management, trade finance and treasury, which the community defines the financial standards with which the market will communicate over the SWIFT India platform. Financial standards define the language with which the industry communicates. It is important that the language and its lexicon is well understood, otherwise the sender of a financial instruction will not achieve the desired result. In a financial system this can create sizeable financial risk. To address this, SWIFT India in consultation with its working groups has issued “2015 Version 1 Usage Guidelines”. These guidelines are derived from global financial standards and adapted for India’s markets. Accessible to customers of SWIFT India, these guidelines establish the language with which the industry can uniformly communicate with one another. These 2015 Version 1 guidelines will be adapted as business needs evolve.
What are your future plans for the company? As Indian financial institutions connect to the platform, we will see a major shift in traffic from inefficient and insecure bilateral connections to a common foundational communication platform. The SWIFT India platform is scalable and functionally extensible, and we will open the channel to many more markets, instrument types and counterparties. Our next area of focus will be the securities market place, where exchanges, clearing houses, dealers and investors have similar challenges in dealing with disparate channels. In all circumstances, we will proceed under the guidance and direction of our customers and community.
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Corporate PAYNEAR
PAPERLESS PAYMENTS
with PAYNEAR Keeping in mind the Prime Minister's vision of Digital India, Paynear has come up with various solutions to make payment process trouble-free. Easy to use and adopt, these solutions play a major role in addressing the pain areas while making payments. Dr Priti Shah, Chief Executive Officer, Paynear Solutions Pvt Ltd, talks about the successful journey of the organisation with Sneha Mejari of Elets News Network (ENN)
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What are the various ways in which Paynear is contributing to the financial sector? Paynear has been working towards achieving the goal of cashless economy by driving forward our Prime Minister’s vision of Digital India, empowering all the merchants, be they from any vertical, to accept and manage card payments. Our flagship product ‘Paynear mPay’ mobile POS Solution facilitates payment acceptance anytime, anywhere by transforming smartphone / tablet / PC into a cardpayment acceptance device. Merchants can effortlessly
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PAYNEAR
reconcile card and cash payments via Paynear mPay. In addition, we facilitate capturing customer data for customer retention and reward programmes. We also educate merchants on the benefits of card acceptance and availing loan to grow their businesses, and connect them to partner banks for availing loans.
What advantages do you offer to the customers as compared to other market players? Paynear offers solutions to merchants beyond card payments, which help them optimise their inventory and billing, also increasing customer engagement and retention. Unlike other players in the field, we bring over a decade of payment experience that helps us offer solutions addressing merchants’ pain points. We are the first firm to launch mPOS App in eight regional languages, making it geography-friendly in terms of ease of use and adoption. Moreover, one of the most important aspects of this facility is that merchants need not open a new bank account for the purpose, as funds are automatically settled within one day in the bank account they provide. We also offer an internationally-acclaimed card reader (with over one million deployments worldwide) that comes with definite technical advantages over others. We provide white label solutions like mobile POS to customers, along with the name and branding of the bank.
How active is your company in the cooperative banking sector?
Paynear offers solutions to merchants beyond card payments, which help them optimise their inventory and billing, also increasing customer engagement and retention
We are already in touch with non-acquirers and cooperative banks to offer card-acceptance solution to their customers at zero cost to banks. This helps them in offering state-of-the-art acquisition solutions to their customers with a simple referral. Additionally, it helps them garner more business and loyalties otherwise lost to other acquiring banks. Those banks that partner with Paynear can offer this solution without any investment, infrastructure, cost or risk to themselves, nor do these require any approval from the Reserve Bank of India (RBI) or National Payments Corporation of India (NPCI). We also have a solution for banks to launch ‘m-Lobby’ concept at their branches by offering utility bill payments, recharge and DTH at practically nil cost to retain customers with added convenience.
connecting rural India with the mainstream economy. Cooperative and scheduled banks can play an active role with financial inclusion to bridge this gap. Banks moving away from resistance to adopt new technology and innovation will sustain. The government can also extend support in terms of creating awareness, training programmes and investment to connect them with the mainstream economy. This is because rural India needs to benefit from the digital innovation as well. We will also extend our cooperation to the government to engage for such programmes. Banks should take enough recourse to bridge this gap through technology and the aim should be not just to satisfy, but to engage with customers and enrich their experience.
How do you view the technological shift in the banking industry?
What new projects Paynear is planning?
Banks can flourish by focusing on technological innovations. One good example is mobile banking, which is quickly becoming popular as more and more financial apps are being launched, promising to make life easier. Moreover, Internet banking is making immense contribution to the digital transformation process. Nevertheless, there is still a vast rural-urban divide to be bridged for
After our flagship product mPay, we already had a soft launch for ‘SPOT’ (a one-stop solution for mobile, data card, DTH recharges, bill payments, bookings and much more) to equip merchants in offering these services to their customers, thereby opening an additional revenue channel. We will soon launch ‘ePay’ to include payments vide cardnot-present customers. This would create a clear differentiator to offer an omni-channel solution to the industry.
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BFSI BANDHAN BANK CEO, MD & Founder of Bandhan Bank Chandra Shekhar Ghosh and Union Finance Minister Arun Jaitley exchange pleasantries at the launch ceremony of the Bank in Kolkata recently
The Making
of a
Bank
An NGO grows into a micro-finance company to finally taking shape of a universal bank. That has been the story of ‘Bandhan Bank’ – the first commercial bank of East India since Independence. Subhajit Bhattacharya of Elets News Network (ENN) reports
E
astern zone got its first commercial bank since Independence when Union Finance Minister Arun Jaitley inaugurated 'Bandhan Bank' at the Science City Auditorium in Kolkata recently. “West Bengal was once known for producing several intellectuals, but few entrepreneurs. The launch of Band-
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han Bank will not just boost the growth of Bangla entrepreneurs, but also signifies the return of entrepreneurs to Bengal,” Jaitley said addressing the gathering. Post Independence, Bandhan is the first bank in the zone, which got clearances from the Reserve Bank of India and the Government of India to start its nation-wide
BFSI BANDHAN BANK commercial operations. It came into being with its state-ofthe-art financial activities targeting the weaker sections of the society, and soon evolved into a massive micro-finance company with its branches across the country. Incidentally, Bandhan is the only micro-finance company of India that has successfully transformed itself into a universal bank. It started its journey in the year 2001 as an NGO working towards the cause of poverty elimination and all-round development of women. Later, in the year 2006, it transformed itself into a non-banking financial organisation. “Bandhan started its trail with twin objectives of poverty eradication and women empowerment. With a record repayment of 99 per cent, the institution has successfully fulfilled its objectives,” said West Bengal Finance Minister Dr Amit Mitra, speaking on the occasion. Bandhan will concentrate entirely on the eastern part of India. It plans to open 200 branches in West Bengal, followed by 67 in Bihar, 60 in Assam, 21 in Maharashtra, 20 each in Tripura and Uttar Pradesh and 15 in Jharkhand. The bank will have two separate headquarters in Kolkata, one for micro-finance and the other for general banking. CEO, MD and Founder of the Bank, Chandra Shekhar Ghosh, vowed to change the banking system of India with this new innovative banking.
Bandhan forays into the banking sector with more than 1.43 crore accounts, `10,500 crore loan book and over 19,000 employees. It will start operating in the country with more than 501 branches and 2,000 service centers and ATMs spread across 24 states “We always believed in the ‘customer first’ business philosophy and we are a universal bank having equal respect for our customers, whether he or she is big or small. Bandhan family is dedicated to provide the fundamental banking rights to all the citizens of India,” he said. Bandhan is foraying into the Indian banking domain with more than 1.43 crore accounts and `10,500 crore loan book, along with more than 19,000 employees. It will start operating in the country with more than 501 branches and 2,000 service centers and ATMs spread across 24 states. Further, the Bank wants to consolidate its presence in the market with concrete planning. It has plans to take the count of its ATMs to 250 and the number of branches to 632 by the end of the fiscal year 2016. “The Bank will stick
to its motto of serving rural India. More than 70 per cent of Bandhan Bank branches will target the customers of the rural India and rest 35 per cent will cater to the urban customers of India,” an exuberant Ghosh stated. Experts feel that since a massive population of India lives away from the mainstream financial infrastructure of the country, it is not only affecting the rural economy of India, but also adversely telling on the GDP of the country. After the launch of the Prime Minister Narendra Modi’s pet project Jan-Dhan Yojana, more than 17 million bank accounts were opened, which has bolstered the entire banking system of India and brought millions of uncovered customers under the banking umbrella. Financial pundits predict that the banking asset of India will grow manifolds to reach USD 28.5 trillion by 2024-25, and that banks like Bandhan will definitely play a pivotal role in this growth. At present, there are plethora of banks, which include several foreign, cooperative and nationalised banks competing to grab the potential customers of the Indian market. Amongst many, the State Bank of India holds the largest chunk of customers in its closet. The Bandhan Bank got some preferences from the RBI on sympathetic grounds and got its nod by depositing a capital of `2,570 crore against the standard capital amount of `500 crore. Interest rates for the savings bank account have been kept above four per cent for the balance of one lakh rupees and for balance above `1 lakh, it is five per cent. “To fuel the growth of East India, the Centre will implement all possible strategies by forgetting all political differences,” assured Jaitley. The Union Finance Minister opined that the growth of states like Uttar Pradesh, West Bengal, Odisha and other north-eastern states will contribute hugely to the growth of the GDP of the nation. RBI Deputy Governor H R Khan, who was also present on the dais, said, “Bandhan is born at a very critical time of the Indian economy. It is entering the market with another 11 payment banks and one universal bank...that makes the Indian Banking sector somewhat crowded at the moment.” The Bank got the initial approval from the RBI in 2014 and final nod from the Central Bank in the month of July 2015. A number of entities invested in this newly-formed bank, including IFC, SIDBI, Caladium Investment Pvt Ltd, etc.
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Smart Change
A LITTLE WORLD-SBI
SWIPE AND PAY for
SERVICES THRU
SMART CARD Smart Cards help reduce the challenges faced in making payment at different levels like ticket window or the grocery. With the use of smart cards, the banking system can really reach a different plane, opines Anurag Gupta, Founder & CEO, A Little World Private Limited-SBI
Journey of ‘A Little World’ l 2006: Set up India’s first Business Correspondent outlets to provide last mile basic banking services in the remotest villages in India. One of the world’s first commercial scale implementations on NFC mobiles, which were integrated with biometrics and receipt printing. At present, A Little World operates over 10,000 rural microbanking outlets covering all states of India. l 2007: Pioneered payment of government benefits using mobiles and biometric authentication, starting with the first ever biometric payments for pensions and NREGA in Warangal in Andhra Pradesh from April 2007. We have enrolled over 18 million beneficiaries for biometric bases accounts in villages. l 2009: Started the first ever instant remittance facilities for migrants outside of Bank branches. Started in Surat in 2009. We currently have mobile-based remittance outlets in 120 cities in India, handling about 0.5 billion USD in cash annually. l 2012: First fully online payment system (cash-in/out, funds transfer) integrated with Aadhaar biometrics database.
Smart cards can be accessed Daily payments at grocers, pharmacies, cafes, etc. Daily use in Public Transport (BRTS, City Buses) Municipal Corporations for a ‘Smart City’ Card Gated Enclaves: Apartments, Schools / Colleges, Factories, Campuses l SBI e-Pay for load by popular payment instruments l l l l
Achievements so far:
T
he relevance of A Little World (ALW) has increased ever since the announcement of Pradhan Mantri Jan-Dhan Yojana (PMJDY), an ambitious financial inclusion programme of the Central Government. ALW works extensively with the State Bank of India (SBI) across all states in India. Along with SBI, A Little World has written some of the first chapters of India’s financial inclusion story. SBI owns 20 per cent equity in the company, and also represents the management of A Little World. Along with the State Bank of India, A Little World Private Limited has launched Smart Card, which works for payments i.e. for automatic fare collection, identification and access control. SBI brings trust and credibility for all stakeholders. ‘Smart Change’ is a quick transaction platform
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l Gone live with SBI and six other major partners l India’s biggest dairy and grocery retail chains (Amul, Mother Dairy) l India’s biggest public transport operator (UPSRTC) l Municipal Corporations (Surat and Bhopal – early stage of implementation) l First campus implementations are under way l Several Smart City Card implementations are in pipeline and takes just a quarter second to complete a transaction. Working on the 'tap and go' mode, it requires no pin, signature or authentication. A key attribute to this product is that instead of merchants being charged, the converse business model of this platform is to charge a nominal fee to the customers who use this platform for multiple purposes. The charge is Rs 10 per month as a flat fee and if they want SMS alerts on daily basis, they pay an additional Rs 5 for a month. SBI acts as an issuer and settlement bank and municipal corporation acts as facilitator for various citizen services like daily payments, automatic actions, etc. (As told to Manish Arora)
Technology TRIDIB JANA
WiseBank Enterprise for Intelligent Banking Tridib Jana, Managing Director, Issac Technologies Pvt Ltd, throws light on how cooperative banks use cloud technology to beat the competition
I
ntroduction of cloud technology in the finance industry has helped revive the cooperative banking industry by allowing them to upgrade and modernise their service portfolio without incurring large IT expenses. Cooperative banks can now offer services like online banking, multi-channel banking and doorstep banking through cloud platform.
Cloud Tech in Coop Banking Banks are rapidly adopting cloud-delivered platforms, applications and business processes, as it offers a series of advantages over traditional monolithic environment. In the cooperative banking sector, it has helped address the biggest challenges faced by these banks in serving customers – manpower, money and technology. Cloud adoption has allowed them the following benefits: l Optimising manpower and eliminating overhead redundancy by automating and streamlining operational process l Reducing expenses by offering modern technological solutions through cloud platform l Create a technologically empowered environment that would allow cooperative banks to widen their customer base by creating innovative product range and integrating more channels, like doorstep banking
Centralised solution to PACS The KCC RuPay card from NABARD is a smart card-cumdebit card that can be used in ATMs/handheld swipe machines issued to financially empower Indian farmers. NABARD aimed it to be disbursed to the target audience by DCCBs to its customers as well as members of PACS. This arrangement called for a holistic approach to create an integrated environment between DCCBS and PACS where the DCCB CBS is to be integrated with PACS-centralised solution without affecting the daily operation process of the PACS. The integration is to support real-time data exchange and update function between the DCCB and PACS-centralised solutions.
An innovative core banking solution Issac Technologies has been one of the early adopters of cloud computing in banking. We are known for bringing innovations and international standard technological solutions since our inception in 2006. The company offers an array of banking software applications with a robust, scalable and agile core banking solution at the centre of its product offering. WiseBank Enterprise – the core banking solutions by Issac Technologies, is built using modern, standard technologies catering to the business needs of clients. This is a highly parameterised and modular solution that is offered both as comprehensive core banking solution for cooperative banks and as an adjunct solution for PACS. It is a convergent solution capable to cater to different financial segments effectively. Its features are: l Built using web-based technology l Intuitive and interactive designing l Scalable, adaptive and responsive design l Platform- and technology-independent l Developed using industry and accounting best practices l In-built analysis and reporting l Process automation l Easy integration and multi-channel support l Multi-language, multi-currency support l Cloud-ready, multi-tenant support As an adjunct centralised solution, it offers required features for PACS automation: l CAS or Common Accounting System-compliant as prescribed by NABARD l Offers integration between DCCB and Apex Banks l CBS and PACS centralised solution for KCC RuPay Cards programme l MIS reports and analysis as per PACS accounting standards l Business process standardisation and automation l Centralised solution with multi-tenant capability l Multi-channel integration l WiseBank Enterprise allows 360-degree insight on operation, customer behaviour and business challenges to allow banks and financial institutions to sprint ahead of competition, innovate and market new products effectively. JULY - SEPTEMBER 2015 | bfsi.eletsonline.com | BFSI
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Corporate
LG ELECTRONICS
TECH IN BANKING
WIN-WIN for ALL
As technology makes way into the banking sector, LG offers its display screens to banks making communications with customers easier and provide them services with ease. Hemendu Sinha, Business Head - B2B, LG Electronics India Pvt Ltd, talks about the crucial role it plays in the BFSI sector in an interaction with Akanki Sharma of Elets News Network (ENN) and services offerings to attract more and more customers. We have some specific products and solutions for the Banking and Finance sector, especially designed keeping in mind their requirements. Of the various categories of products, display devices play a crucial role, as the customer-oriented information also need to be visually communicated to the customers. To this end, we have products based on leading display technology called In-plane Switching (IPS). LG is one of the pioneers in implementing the IPS technology. It is also a leader in display panels globally and a lot of investment goes into bringing out the most suitable products for the BFSI sector, business-to-business applications and viewers in general. In addition to the banks displaying the desired information, they also have to appear transparent. This helps them generate confidence in their brand name among the masses. Our IPS-based display devices are the best in the world and a number of leading banks are using it for their unique features. For instance, ‘wide-view angle’ screens are quite popular for displaying objects and information at public places, as irrespective of the angle a person watches it from, the view remains the same. On the contrary, in an LCD/ LED screen, the whole picture changes as the viewer changes angle. Further, IPS takes care of the blackening effect that could be an obstacle in clear viewing even with bright lights around.
How do you think the company has an edge over its rivals?
How does LG connect itself with the Indian BFSI sector? The requirement of any financial organisation is to engage customers and provide them good services. These organisations look for a differentiated identity in terms of visibility
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As the technology keeps evolving, we also keep on reinventing ourselves. Talking about the BFSI sector, operation and maintenance remain an important part of the solutions we deploy. Once a solution is deployed, maintaining its quality for a long time is a challenge. Furthermore, displays are no more dumb devices, since information can easily be fed to these through PCs, laptops or smart phones. LG has provided an operating system to these display devices. Most of our products have an inbuilt operating
Corporate
LG ELECTRONICS system, called WebOs, a multi-task operating system for smart devices. This intelligent OS comprises a processor, memory device, storage facility, etc. This is an advantage none of our competitors have as of now. For a banker, they can just buy the screen and get the entire solution with it. In addition to it, if a bank wants to convey the message to a vast horizon simultaneously, it can be done in a centralised manner. We have screens which can work over networks and are solutions unto themselves. Another edge we enjoy is that our products can be customised as per the requirements of individual banks. We have interactive screen solutions, which can come to life just with a touch. The bank can convey message to the customer and vice-versa via the screen only. Also, LG is one of the world's largest display manufacturers and it has created the narrowest bezel screens which is less than 2mm thick.
What is LG’s revenue model for the BFSI vertical? We work in distribution and system integration model. Banks might get solutions from different vendors, but in case they want a single screen solution, only we can provide that. We don’t get revenue directly from banks; rather it mostly comes through system integrators. Of course, we try telling banks why they must opt for the LG’s solutions, but the solution is finally rolled out by the system integrator in most cases.
What are the challenges you face in marketing these solutions? Decisions are relatively quicker in the banking sector as compared to other verticals. Like most businesses, banks also work on the Return on Investment (ROI) model. So, they need to be convinced that whatever they are investing into today, will fetch them good returns sooner than later. In today’s competitive market, it is a huge challenge. Further, there is no uniformity in terms of what banks want these days. Although there are guidelines from the Government of India and RBI with regard to standards to be followed, beyond that banks use their discretion as per their specific requirements. So, meeting the varying requirements becomes difficult at times.
Which are the geographies that you have successfully penetrated into with your BFSItargeted solutions? LG is present in almost all the major banks across the country, but since most of the banks are headquartered in Mumbai, we have our largest presence in the West, followed by the South. Unfortunately, there are not many banking headquarters in the East and the North. However, we are present in all Public Sector Banks (PSBs) as well as private banks.
LG’s electronic display products are developed on IPS-based technology, which is the best in the world and most of the leading banks prefer it Do you have any plans to offer solutions to the proposed smart cities, too? The interesting fact about smart cities is that one can always keep on adding elements to these. For instance, security is one of the important aspects, for which we have a surveillance solution. There would be requirement of screens everywhere, because that is how the information can be disseminated best. We have components, which are integral to any solution for a smart city. But incidentally, we don’t have any core solution. We have gadgets that need to be monitored and controlled, and it is done through software. Also, for monitoring a safe city, large display boards are required and LG is a leader in the field. When it comes to watching something, it’s display boards that come to one’s mind, and when it comes to display boards, LG remains the leader.
How do you rate your revenue growth in the BFSI vertical? Our internal survey on BFSI with reference to the display devices market says that we dominate the market with more than 35 per cent share. JULY - SEPTEMBER 2015 | bfsi.eletsonline.com | BFSI
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Corporate OXIGEN
Oxigen Services India Pvt Ltd leverages technology to take banking and financial services to the people living in rural India. It helps deliver financial products like subsidy transfers, bill payments, recharge services, etc., in an efficient, simple and cost-effective manner, says Pramod Saxena, Chairman & Managing Director of the company, in an interview with Arpit Gupta of Elets News Network (ENN)
‘OXIGEN’ TO BREATHE
LIFE INTO BFSI SECTOR What is Oxigen Super Point of Sale (PoS) machine and what is the technology used in it? Oxigen has two sets of services — one is for the consumers, who may choose to interact with us directly, and the other for the retailers who decide to use Oxigen services as a business tool. In line with the government’s vision of financial inclusion and its efforts to digitise India by creating a cashless society, Oxigen Services has introduced Oxigen Super PoS. It is first-of-its-kind device that brings three segments on one platform of retail, i.e. financial inclusion, card payments segment and recharge/bill pay operators, packaged with stateof-the-art features customised for Indian conditions. PoS is the only device selected by the Indian Banks’ Association (IBA) through a global bid recently.
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Prime Minister Narendra Modi has also proposed to give merchants and customers tax benefits using electronic payment systems, i.e. mobile wallets/ debit cards / credit cards, to bring transparency in financial transactions and convert maximum transactions from cash to electronic.
How will Oxigen Super PoS help in promoting financial inclusion? We are committed to promoting financial inclusion by providing payment solutions for recharges, money transfers and payments; business solutions for traditional retail, modern retail chains, online banking and government portals as well as the endconsumers. We also keep continuously upgrading our processes and skill sets. Oxigen Super PoS is quite helpful in bill payments, recharge services
Corporate
OXIGEN
and money transfers. It enables people to make bill payments of postpaid mobile, landline, electricity and other utility services and avail recharge services for all mobile operators’ prepaid services, data card and DTH services. Currently, the industry stands at `7 lakh crore for bill payments and `2 lakh crore for recharges. As far as financial inclusion is concerned, Cash in–Cash out transactions through Oxigen Super PoS will provide a safe and costeffective way of money transfer for those having bank accounts but not easy access to bank branches/ATMs, and ensure an efficient subsidy transfer mechanism to the target population. Currently, the industry stands at `2 lakh crore for domestic money transfers, `3 lakh crore for electronic benefit transactions and `5 lakh crore for international remittances. This will provide a huge boost in increasing the reach of Indian financial systems.
How does this device ensure security of transactions? Oxigen Super PoS device is fully safe and secure for all types of transactions. Linux software has been used for easy development of applications. We have designed it in a way that there is no security threat. All information is encrypted and needs secure login ID and password. Currently, it is the only micro-ATM device selected by the Indian Banks’ Association as per the UIDAI/NPCI specifications. The device is equipped with Biometric Reader for Aadhaar transactions and eKYC, and GPRS with a SIM Card slot and two Smart Card slots. It has in-built NFC – Tap & Pay facility and debit card and credit card acceptance (Rupay / VISA / Master Card both magnetic swipe & Smart Card facility). It is also certified by global payments standards for cards, i.e. EMV L1/L2 & PCI 3.0. Oxigen Super PoS can be used by following industries and establishments: l Banking industry (Department of Financial Services) l Telecom industry l Utility bill payment industry l All industries using Aadhaar services such as Provident Fund and Pensions, etc. l Mobile Wallet and Mobile Payments l Government CSC’s and Hubs l Ministry of Consumer Affairs, Food and Public Distribution l Large format retail chains l Traditional retailer (grocery stores, chemists, telecommunication shops, mom & pop stores, tea stalls, small merchant establishments) l Banking kiosks / Business Correspondents l Money transfer agents
We are serving 150 million customers annually and nearly 600 million transactions happen every year, and there has been not a single complaint so far related to security of transactions.
What is the network availability of Oxigen, and its plan for the coming years? We have largest retail footprint of small retail outlets crossing 2,00,000 in numbers, and more than 50 millionplus transactions occur per month. We are dealing with 4.8 million Jan-Dhan Yojana accounts with a gross transaction value of `10,000 crore. We are getting overwhelming response to Oxigen Super PoS device, which has battery backup of up to eight hours even after continuous operation and several days of standby. It supports wide power supply fluctuation in extreme Indian conditions—90 volts to 290 Volts AC input—and has extended antenna for working in poor coverage conditions. Our target is to provide easy access to last-mile banking, remittances and other financial products, bringing services within the common man’s reach, with a special focus on rural India.
Which financial institutions or banks have sought Oxigen’s help to reach out to the unbanked? Having been tied with 100 plus banks on IMPS by NPCI, Oxigen’s money transfer services reflect a greater promise of contribution to the mobile payments sector. We have also joined hands with India's biggest banks, like State Bank of India, ICICI Bank and Ratnakar Bank, to deliver a host of banking services across the country. By partnering with the State Bank of India to deliver mainstream financial services to the excluded, unbanked population using kiosk banking technology, together with its Business Correspondent model, Oxigen is the fastest growing company in the industry, in India. We have deployed a robust and advanced platform by engaging many retailers and enabling them with not only SBI’s kiosk banking but also Oxigen’s proprietary single-point recharge technology to successfully achieve a sustainable monthly transaction volume. JULY - SEPTEMBER 2015 | bfsi.eletsonline.com | BFSI
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Smart City Bhopal SPECIAL REPORT
Smart Banking With the dream of smart cities likely to come true soon, expectations of citizens are also on a high as they look forward to more intelligent facilities everywhere. Banking being an important domain, various banks are coming up with numerous initiatives to make banking easy, precise and faster. Just to know more about the way bankers intend to make their operations 'smart', Elets Technomedia Pvt Ltd organised the Smart Cities Conclave in the City of Lakes recently, wherein smart banking was in focus and experts from the sector shared their insights. We bring you the high points of the deliberations.
Making Aadhaar a payment bridge
Aniruddh Mukherjee, Secretary, Department of Finance, Government of Madhya Pradesh With a large number of Jan-Dhan accounts being open, the government is trying hard to facilitate citizens. However, there are still a few challenges that need to be overcome. Keeping the financial inclusion in mind, the government is trying to facilitate citizens through various initiatives like Pradhan Mantri Jan-Dhan Yojana (PMJDY). The Programme is supposed to be the flagship scheme through which all kinds of bank accounts are to be opened and after that supposedly the right beneficiary will get the benefit from it. Further, the Aadhaar integration with PMJDY is important because the Aadhaar biometric cheque or the Aaadhaar authentication has the software that ensures the right person gets the funds. Authentication via Aadhaar seeding has been a major issue in all kinds of places, even in Delhi. However, enrollment here is over 100 per cent. Besides, there are several states in southern part that have recorded a good number in Aadhaar enrollment. More than 90 per cent people have been covered under Aadhaar there, but again seeding becomes a huge issue there as well. Initially, Aadhaar was used for two big schemes, including LPG distribution and Public Distribution System (PDS). At present, Delhi is trying to do Aadhaarbased PDS on pilot basis. In a similar manner, the Government in Himachal Pradesh tried to link Mahatama Gandhi National Rural Employment Guarantee Scheme (MNREGS) via Aadhaar payment bridge. Ultimately,
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the Government wants to make Jan Dhan accounts operational. The entire payment does not go to the bank accounts, rather it goes through the Aadhaar payment bridge to the bank account, which is linked to the Aadhaar number. Now, the banks have to see when the Aadhaar linking takes place because with that the effectiveness can be managed. In LPG, a lot of fraudulent accounts have been knocked out and the same is happening in PDS now. Some of the states are trying to implement cash-based PDS system in which ration shops will actually not be distributing the subsidised ration, but it will be all cashbased and the person would be able to buy from any shop. Nonetheless, a big challenge for the Government is to operationalise the Jan Dhan accounts in which all the beneficiaries scheme should go like MNREGS, scholarship schemes, PDS and LPG, etc. With the evolution of technology, all the schemes should go via the Aadhaar payment bridge and it may deviate away from Real-Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT).
Transforming banks
Anurag Gupta, Senior Manager – Financial Inclusion and Services, AISECT Financial Inclusion is one of the nine important pillars of Smart Cities. The services are delivered through Business Correspondent model, business facilitator model, NPS, PAN card and KCC, etc., while financial literacy, insurance services, remittance kiosks and mobile banking are its important components. AISECT partnered with the State Bank of India and had started working for Financial Inclusion in
Smart City Bhopal SPECIAL REPORT 2009. At present, it has 3000 banking kiosks operational in rural, semi-urban and urban areas. We are national business correspondents of SBI and Bank of India (BOI). We are also working with Regional Rural Banks (RRBs) like Madhyanchal Gramin Bank and Punjab Gramin Bank. Apart from it, we work with 90 other nationalised banks and operate kiosks. We have our kiosks present in 12 states that facilitate citizens with many services like opening of no frill account, savings account, recurring deposit account, fixed deposit account and remittances, making Immediate Payment Service (IMPS) transactions, Aadhaar-enabled payment system, insurance and social security schemes, overdraft facility, small value loan, gold loan, etc. We have opened more than 64 lakh bank accounts through our kiosks and made 3000 crore transactions. Thus, it’s a financially viable model which is also recognised at national level. Banking kiosks have performed well in PMJDY too. It’s a real-time banking which operates on complete online system. It is basically a small extension counter of a bank, where customers are authenticated by their biometrics. It doesn’t require Smart Card of PoS terminals. Banks provide the technology and we work as BCs, while our outlets are customer service centres. Some essential equipment required in a centre includes computer, printer, web camera, biometric finger print scanner, and connectivity. Business growth can be seen as we had opened a total of 60,000 bank accounts till 2010. However, the figure shot up to more than 29 lakh till 2014-15. We have opened six lakh bank accounts in the current financial year. The transaction value during last year through these kiosks was Rs 1,376 crore. These kiosks have covered the un-banked and far-flung areas where banking was not possible and also decongested the rush at urban branches. These kiosks remain operational 365 days and function from 8 am to 8 pm and the cash transaction can take place anytime during this period. AISECT is a Bhopal-based company that deals with training and skill development, professional education, project implementation, eGovernance and other services. We have more than 20,000 centres across India and nearly 6,000 centres are being run at panchayat level. We have our branches in 27 states and three Union Territories, where more than one lakh students get trained on different trades by us.
Making remittance easier
Sanjay Aeron, Senior Manager- Sales, My Mobile Payments Limited My Mobile Payments Limited is into mobile money platform since 2010. We have currently 2.5 lakh merchants across the country and last year, we have transacted revenue of about 1,500 crore. At the moment, we are present in 400 cities and have a consumer base of about
125 million pan-India. The various activities we have been performing include mobile and DTH recharge, bill payments, etc. We have introduced a product called Mobile Money Order, wherein we are transferring small amounts to various locations by an individual by MTS programme by the government. This programme runs two folds, one is operated through the retail channel and the other through corporate. We are trying to cater the migrated force which has travelled from various areas and they are working in different locations across the country. We would like to help them by remitting money to their family members and near and dear ones to their native place. We are doing this activity at a very small processing fees. We have designed a product wherein somebody transferring money upto Rs 5,000 has to pay a nominal fee of Rs 16 per transaction for processing the case. The activity can be performed in various ways. The first is that the person who would like to transact with us can visit our retail point and complete the activity. Along with the Internet facility, this programme can also run on ordinary mobile handsets, and one doesn’t need to have a smart phone specifically to operate this service. An illiterate person who doesn’t know anything about technology or computer can also avail our services, as we provide SMS index too. Therefore, these are the services trying to help the bottom-most person of our society. One can log on to our website www.mobile-on-money.net and get a code as the page is opened. After that, one needs to log in through his/her mobile number. When the mobile number is captured, the page is opened in which the user requires to fill the details of beneficiary to whom he wants to transfer the money i.e. name, banking details and the amount, etc. Thereafter, an ipin provided to complete the transaction and within 60 seconds of filling the details, the money gets remitted. Further to this, we have recently entered into B2C market. One can download our product MOMWallet from Google Play Store. Once registered, the user will get multiple options on the basis of his/her needs. It enables users to shop and transfer funds and much more. There are various other areas we would like to approach, like education, tourism, transport and health because all these sectors can create their own wallet for paperless transaction. This is a smart move in present context.
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Bank Profile GSC BANK LTD
Driven on the Path of Progress The Gujarat State Cooperative Bank Ltd, Ahmedabad, is the apex bank in the structure of rural cooperative banking in the State, District Central Cooperative Banks (DCCBs) at the district level and Primary Agricultural Credit Societies (PACS) at the village level. A sneak peek into how the Bank has managed to survive amid the wave of reforms and neck-and-neck competition
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he Gujarat State Cooperative Bank Ltd, Ahmedabad, is the scheduled apex bank for the three-tier cooperative credit structure in the State of Gujarat. The Bank was established on May 1, 1960 and has successfully completed 56 years of its existence. It plays a leading role in the agricultural and rural development through its cooperative structure, providing agricultural credit to the farmers for the farm-related activities as well as its allied activities in short- and medium-term period. There are 18 district central cooperative banks (DCCBs) in Gujarat working with nearly 1200 branches and are affiliated to the GSC Bank Ltd. Further, there are nearly 8,100 primary agricultural credit societies (PACS) affiliated to the DCCBs. The flow of the agricultural credit is from the apex level through the DCCBs and PACS to the borrowers – the farmers.
Board of Directors The Bank has a 28-member elected Board of Directors. The Board consists of representatives from affiliated DCCBs, Urban Cooperative Banks (UCBs), Land Development Bank, Marketing Federation, Industrial Cooperative Societies, Professional Directors and representatives from the State Government and NABARD. The Bank has made great progress in cementing its financial base. It has achieved enormous growth in the last five years. The deposits have touched an all-time high of `6,900cr, which speaks of the trust and confidence of the depositors. The `5,029cr advances of the Bank, as on 31-03-2014, has increased to `5,921.99cr as on 31-03-2015 – of which nearly 74 per cent was provided as refinance for agricultural and allied activities under the short- and
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medium-term period to the affiliated DCCBs for on-lending to the farmers. The major portion of the investment of `4,921.92cr of the Bank is invested in Government securities and Fixed Deposits with the nationalised banks. The Bank maintained its Capital to Risk-weighted Assets Ratio (CRAR) above the criteria fixed by RBI, which speaks of the financial strength and soundness of the bank. The bank has been earning net profits and has been paying regular dividend to its shareholders.
Agricultural Loans The Bank provides refinance to its affiliated DCCBs obtained either from the refinancing agency NABARD or from its own funds. The farmers are provided short-term agricultural crop loan facilities through Kisan Credit Card (KCC) by the DCCBs/PACS. These crop loans are generally for a period of 12 months. There are more than 28 lakh farmers of Gujarat availing agricultural crop loans at an interest rate of seven per cent. Besides, agricultural term loans are provided to the farmers for digging wells, deepening of wells, bore wells, irrigation facilities, drip irrigation, tractor purchasing, horticulture, floriculture, dairy development for buying cows/buffaloes, construction of godown for storage facilities, marketing yard, cold storage, green house, poultry farm, etc. The GSC Bank Ltd also grants loans and advances for the non-agricultural activities. It granted loans and advances for working capital requirements as well as for term loans to FCI, Gujarat Narmada Valley Fertilizers Ltd, sugar industries, marketing yards etc.
Branch & Retail Banking RBI has adopted a policy of extending banking services
Bank Profile GSC BANK LTD to every nook and corner of the country and is now permitting establishment of new private sector banks as well as existing banks to open new branches. This will create greater competition and better services for the customers. The Board of Directors of the Bank with its foresight and vision has always been inclined to think that to face aggressive competition from other banks, the GSC Bank Ltd has to change its strategy and enter into retail banking by opening branches. So, it has opened nine ultra-modern branches in the first phase in Ahmedabad. All the branches are working on Core Banking Solution (CBS) platform offering wide range of services like RTGS, NEFT, CTS, RuPay ATM cum Debit Card, Internet Banking, IMPS payment services, SMS alerts, CSGL, safe deposit lockers and ATM services. It will also introduce Mobile Banking soon. Besides this, the Bank also offers various retails loans to the individuals like vehicle loans, housing loans, education loans, consumer loans, mortgage loans, loans against NSC/KVP/LIC, working capital for business etc. on very liberal terms and at a competitive rate of interest.
Information Technology In order to face the challenges posed due to the adoption of technology-led services by the commercial banks, it became imperative on the part of GSC Bank Ltd and its affiliated 18 DCCBs to transform its working and migrate to CBS platform, and offer newage services.
Awards
The Bank has been conferred with special awards from National Federation of State Cooperative Banks Ltd., Mumbai, from 2007-08 till 2012-13 for the best overall performance, corporate governance, resources development and profitability. It has also received award from the National Cooperative Union, New Delhi, for the Best Performing Cooperative organisation. The bank initiated a leading role to facilitate the implementation of CBS platform for the Bank as well as for its affiliated district banks. IT has invested heavily in building up the basic infrastructure like computers, servers and other related machinery for the CBS platform. The Bank has also established a computer lab with a view to train and upgrade employees’ IT awareness and skill.
Support to DCCBs The GSC Bank Ltd being the central financing agency acts as a lender of last resort for the DCCBs of Gujarat. The development roles played by the Bank are: l It has obtained a sum of `4,500cr as refinance from NABARD and provided the same to the DCCBs during 2014-15 in order to meet their lending programme needs;
l It has a l s o sanctioned an amount of `990cr from its own funds to the DCCBs during the year 2014-15; l It has played an important role in obtaining the banking licences for all the DCCBs of Gujarat as per the instructions of RBI; l Panchmahal District Cooperative Bank Ltd, Godhra, resumed its normal banking business after RBI withdrew its restrictions imposed under Section 35(A) following vigorous follow-up by the GSC Bank Ltd; l The Bank had executed an MoU with Tata Consultancy Services and NABARD for the CBS programme, which has been successfully implemented, bringing all the DCCBs to the CBS platform; l In order to enable the DCCBs to recover their overdues and stagnated dues and reduce their non-performing assets (NPA), the Bank had introduced ‘One Time Settlement’ scheme. The OTS scheme has immensely helped the DCCBs in improving their financial position; l The Bank had played a vital role in implementing the Rural Godown Scheme with the active support of the Government of Gujarat and NABARD for construction of 1,022 rural godowns by PACS in Gujarat in order to enable the farmers for storage of their agriculture produce and helping them from distress selling; l It has been helping the DCCBs in the implementation of the various schemes of the Government of India/ Gujarat/NABARD for boosting agricultural activities like dairy, poultry, horticulture, floriculture, green house, farm mechanisation, irrigation facilities, etc; l Savings accounts opened under the Pradhan Mantri Jan-Dhan Yojana (PMJDY) by all DCCBs working on CBS programme; l The Bank regularly conducts training programmes for the employees of the DCCBs with a view to increase the knowledge and efficiency. Similarly, Khedut Shibirs are held in association with the DCCBs for the benefit of the farming community, where they are given useful information.
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GCS 2015 EVENT REPORT
Cooperative Sector Gets a Boost The Indian cooperative sector is the largest in the world and it plays a very important role in employment generation, poverty alleviation and ensuring food security. Gujarat is well known as the home to cooperative societies. It is the first State in India which has over 50 cooperative dairies, and the second State, which has the largest number of cooperative banks after Maharashtra. Further, this State has shown immense growth in development of farmers through agricultural cooperatives. Banking, agricultural and dairy cooperatives also changed their style of functioning according to the technological changes. Elets Technomedia Pvt Ltd, along with the Gujarat Urban Cooperative Bank Federation (GUCBF), organised the ‘Gujarat Cooperatives Summit’ at Mahatma Mandir, Gandhinagar on 22nd June 2015. The focus here was primarily on the Cooperative Banking Sector in Gujarat. Chairmen and Managing Directors of around 150 cooperative banks participated in this conference and had long discussion on several aspects of the sector. The key objective behind focusing on the Cooperative Banking Sector was to understand how the banks have emerged out of the major infamous Madhavpura Mercantile Scam of 2001, which shook the entire cooperative banking industry and questions were asked about its very existence. The participants tried to understand the challenges faced today and talked about the initiatives that should be undertaken by the cooperative banks, along with the Government of Gujarat, to regain the lost confidence of its customers.
Session: Special Address Improving Health Mona Khandhar, Secretary, Cooperation, Government of Gujarat Our State has over 77,000 cooperative societies and around 1 crore 24 lakh members are associated with these societies. Our primary focus will be to put back in place their financial health, apart from devising ways to improve their services that they provide to their members, which is equally important. We would like to explore all the available e-platforms. In this context, we are focusing on three major aspects: (a) Increasing the scope of cooperatives (b) providing better infrastructure facilities – both physical as well as technology infrastructure and (c) their capacity building. Cooperatives in Gujarat have gone through many ups and downs in the past few years. Thankfully, much ground has already been regained and now, they are back on track in terms of providing better services to citizens, especially in the rural areas.
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GCS 2015 EVENT REPORT
Inaugural Session Revolutionising of Indian Cooperative Sector Cooperatives for all
Ghanshyam Amin, President, Gujarat State Cooperative Union and Chairman, Cooperative Bank of India The platform of Gujarat Cooperative Summit has brought all the major technology players like Infosys, Tata and others face to face with the cooperative sector stakeholders. The main objective of the Cooperatives is to provide services to the major underprivileged section of the society without any discrimination on the grounds of caste, creed and religion. The Cooperatives are being given the responsibility of upgradation of societal status of the underprivileged, with special focus on the rural areas. It has been accepted globally by over 118 countries in the world that if one wants to reach the rural population at large and provide them services, then cooperative bodies are the best available instrument. That being the reason, some 98 countries have joined hands and formed ICA (International Cooperatives Alliance). The best example of success of the Cooperatives is uplift of rural economy through formation of Primary Agriculture Cooperative Societies involving farmers at each level. Availability of reasonably-priced fertilisers, seeds, loans and advances required for farming, and right prices for the products has been ensured successfully by these village-based societies. The Cooperatives are actually doing the work of improving the economic situation of the rural population at large. However, there is an urgent need of adopting professional approach in the management of the Cooperatives, especially in banks, to fight against the competition from major commercial banks. The cooperative banks will have to adapt to the professional management style adopted by professional nationalised banks.
Collective leadership
R N Joshi, Chief Executive Officer, Gujarat Urban Cooperative Banks Federation (GUCBF) Collective cooperative leadership and transparency in management is the need of the hour in the cooperative banking today. The spirit of cooperation has played a major role in the success of Cooperatives in Gujarat. Currently, challenges are immense for the cooperative sector, especially on account of a globalised economy. We have survived many challenges in the recent past, especially the recent 2009 US Economic slowdown, wherein a support system was created by all major cooperatives in the world, and the big Madhavpura Scam in 2001, following
which the Gujarat Government, along with the Reserve Bank of India, took proactive steps to revive the entire sector. This has been possible primarily because of the discipline and a spirit of cooperation we are carrying together. Today, we are a team of 226 cooperative banks having more than 1 crore depositors. This shows that the people at large have faith in Urban Banking and Urban Credit. In the last 10 years, we have tried to move on to the ladder of technology through the use of Core Banking Solution (CBS), and we are pushing forward by implementing Mobile Banking, eGovernance and various others new-age techniques. We have been able to bring in a significant change in our way of working and managing the day-to-day operations. In the coming days, we would be facing challenges from three quarters called institution challenges: (a) Payment Banks (b) Small Banks and (c) Postal Banking. Payment banks, where currently the deposit and other services can be provided only up to `1 lakh, can take a major chunk of business away from the cooperative banks. Small banks, like Bandhan Bank, have entered the market recently and will pose challenges, especially in the North and East parts of the country. Small banks can give advances up to ` 25 lakh and will work more as a funding bank. They will work in unbanked areas and will provide the facilities as a mini bank; also will provide a big challenge for our survival. Then, postal banks have a vast reach and will give competition, especially in talukas and urban areas in the country, which we need to think about. Apart from this we are already facing a major competition and threat to our business from other financial market players like Credit Card & Debit Card operators, NBFCs and the likes.
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GCS 2015 EVENT REPORT Integrated cooperatives Dr S O Junare, Director, National Institute of Co-operative Management, Gandhinagar, Gujarat Gujarat accounts for 20 per cent of the total Credit Cooperative Societies and banks’ contribution put together. All the Sugar Cooperative Factories in Gujarat are working well and have not been closed or merged with the private sector, to date. The Bardoli Sugar Cooperative Factory is the largest sugar factory in Asia. Cooperative societies are present at 8,300 locations, mostly in villages of Gujarat, out of which 90 per cent societies are doing well. Success of the cooperatives depends on leadership and one can find ‘dedicated leadership’ in the cooperative sector of Gujarat. Also, we have democratic leadership, unlike in other states where there is not even an elected management. In most of the states in India, the cooperatives are run by the government. One would be astonished to know that out of `6.75 lakh-crore of the agricultural credit given out, about 30 per cent is being given through cooperative banks and credit cooperative societies. Today, in India, around 75-80 per cent farmers are small farmers and the 66 per cent of total loans or advances to these farmers is provided by the small credit cooperative societies. The private or nationalised banks majorly cater to HNIs (High Networth Individuals), while the
cooperative banks and credit cooperative societies take care of the credit need of small and marginal farmers. The cooperatives are working in risky areas since the beginning of the cooperative movement in 1946 in India, as that is what they stand for. The cooperatives in Gujarat are successful in Agriculture, Dairy and Banking sectors. But we need to further consolidate the foundation, as we still remain weak in cotton processing, oil seeds and fisheries. Another important model is the Integrated Cooperative Model, wherein the members get all the benefits and facilities. There are a lot of good things happening in the cooperative sector, but there’s not much publicity about these.
Growing beyond Madhavpura N V Patel, Chairman, Vadodara Urban Development Authority (VUDA) When Gujarat faced the massive Madhupara scam in 2001, it was only the leadership and focussed direction of the cooperative banks that made the sector survive. It has been made mandatory by RBI that all banks have CBS in place, failing which the licences of these banks will be withdrawn. The problem in implementation of CBS is more with smaller banks. The larger banks should take over or merge these banks with them for the benefit of their customers. There is a strong need of shifting all existing account holders to the cooperative banks for the Pradhan Mantri Jan Dhan Yojana (PMJDY) to yield real benefit. We need to wake up now to face the stiff competition from private multinational banks. The leaders in the cooperative banking sector need to analyse the strengths of these multinational banks as well as understand the needs of the clients. Adoption of good marketing strategy by the cooperatives banks is also necessary to be successful in the coming years. In the future, new bank branches could be ‘building-less’. Everything would be required to be done using latest technology through smart phones and laptops to online internet banking. The need of the hour is Smart Banking and to achieve it, we need to work on capacity building and training of our existing manpower. GUCBF has also started a new initiative by the name Center for Banking Research Development and Excellence.
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Big brothers to aid small ones Dollar Kotecha, Vice Chairman, Gujarat Urban Cooperative Bank Federation It’s a must to harness technology to win against the future challenges. There are various reasons behind the success of the cooperative movement, but one of the main reasons is integrity of the people of Gujarat and also the sense of entrepreneurship, which flows in the blood of Gujaratis. As a federation, we are dreaming to develop a cooperative umbrella, in which it will be easy for smaller banks to operate. All the banks must be connected with technology, so that small banks don’t have much of burden. The umbrella works from down to up and from up to down, so the idea is that the bigger banks will help the smaller banks. Banking is necessary, not the banks.
GCS 2015 EVENT REPORT
Session 2 Challenges & Strategy to Compete with Private and National level Banks Skill, Scale and Speed
R N Joshi, Chief Executive Officer, Gujarat Urban Cooperative Banks Federation The major discussion is held about what are the different challenges that Urban Cooperative Banks (UCBs) are facing today and how can one come out of it. More than one crore depositors are at present engaged with UCBs in Gujarat through their 98 units. Employability skills today are a major challenge in the cooperative banks in the State. In small banks, skill development and livelihood security are major issues. The UCBs need to contribute to the vision of Skill, Scale and Speed (3S), which is the vision document of the Prime Minister’s Skill Development Programme. The Federation, on the other hand, is ready to help the banks to create a Livelihood mission so as to generate more employment in the sector. In India today, we have 41.60 crore people in informal sector, and total demand of credit in the banking sector in India is around ` 20 lakh crore, out which NBFCs provide `1.5 lakh
crore and cooperative banking sector around `7 lakh crore. We need to tap this market properly, and considering the mode, technology is the only available solution. Tapping of savings is the first step of Financial Inclusion. In Gujarat, this savings is 30.19
Skilling for capacity enhancement N V Patel, Chairman, Vadodara Urban Development Authority (VUDA) The basic challenge faced by many banks today is development of their human resources, especially those who are with banks for many years. The appraisal criteria of the manpower will have to be defined properly. Also, marketing of the services needs to be improved. There are going to be two types of clients in the future – the ones who are going to come in the banks to do transaction and the others, who are not going to come to the bank. For other set of clients, technology adoption is the only solution. We are also going to face a major challenge from the post office sector, too, as all the post
per cent of GDP, i.e. around `1.90 lakh crore. Another area that needs to be tapped is nonearning members of the State. At least 3.6 crore people in Gujarat are non-earning members. One can also bring in Women Entrepreneurs. Women can be encouraged to participate in five sectors, viz, technology-related businesses, engineering and architecture, finance and publication, child care and healthcare, and event management and Entertainment. Cooperative banks can cover the marginalised section of society, who need houses through housing loans. Hence, financial inclusion can emerge only when cooperative banks are able to mobilise savings. Implementation of efficient and cost-effective banking solutions is also a major challenge to many banks. By March 2016, all cooperative banks will be in CBS Net.
offices are expected to turn into banks, with a strong rural reach and network. The Government of Gujarat has done an amendment in recent Cooperative Act and made it mandatory to have two women Directors in board and also one SC/ ST Director. RBI has suggested having two technocrats as Directors in the board. My suggestion would be to have at least one IT person in the board. This will help in facing the future challenges related to IT in a better way. Another suggestion to face the competition is to have and use the unemployed manpower on part time basis.
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GCS 2015 EVENT REPORT HR – the Spinal cord
Go the tech-way
Narendra Singh Dabhi, Managing Director, Adarsh Cooperative Bank Limited
Ajit Saijwani, Technology Advisor, Gujarat Urban Cooperatives Bank Federation (GUCBF)
Cooperation is in the DNA of a human being. Though we have many challenges in front of us, one should appreciate that we have more strengths to face them. To face the challenges and be successful, we need to bring changes in our working. And, the first change should be adoption of technology. We have served till date that area of society where banks have not reached, but technology has. Technology only can help us grow. Human resource is the spinal cord of any organisation. So, training the existing manpower in the bank is required. There is also a strong need to empower people through delegation of powers to the employees on the basis of their knowledge, skills and working attitude. The Regulator should also provide more autonomy to the cooperative banks for fulfilling the norms related to payment banking criteria, especially to the banks with net worth of more than `100 crore.
Adoption of technology is a must and helps in the growth of bank not only financially but also geographically. Mobile Banking is the future. It is the time to choose the right technology and more importantly right partner. Also, for business expansion one can have a tie-up with nationalised banks and can also go for more Micro ATMs. District banks are being provided the subsidy of ` 25,000 by Nabard for setting up Micro ATMS.
Survival is the challenge V S DAS, Former Executive Director, Reserve Bank of India The biggest challenge today for any cooperative bank is how to survive. Financial inclusion and technology are the two major aspects to the development of any cooperative bank. The cooperative banks will have to manage them innovatively as well as creatively. The State Government and the cooperative banks will have to work together to get every section of the society under financial inclusion. The State Government will have to enhance the skills of the employable youth, so that they can increase their income levels, can save and can then deposit in banks. Moreover, the customer will go to those banks where he can get services which he wants. He is now not loyal to any one, instead he will prefer to have all services under one roof. Today, the scale of the organisation matters instead of size. Governance is the major problem with respect to regulatory point of view. There should not be any political interference in the running of the bank. Moreover, there is
a high risk of non-regulatory compliance with the sector. The track record is not good. The cooperative spirit is on a decline, because many of the banks are not member-driven. UCBs work in a very controlled environment. They are not allowed to raise the capital from the open market, the advances is limited only to the area of operations, there is not subsidy provided on the loans given to SSI units, there is no much freedom provided on home loans, forex business or any guarantee that is to be issued. There are many challenges for getting permission for putting up of onsite as well as off-site ATMs. Then, there is dual control today on UCBs — from Registrar as well as RBI. There is a need for having a single regulatory power and it is suggested to vest RBI for such powers. There is a need to have a deep thought for strengthening the audit function in cooperative banks.
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Gandhinagar focal point for RICOH
Subhankar Dutta, National Business Head, Ricoh India
RICOH is committed to provide the best products and solutions to the cooperative banks in Gujarat. It is present for 25 years in the Indian market and has assembling facility established in Gandhinagar itself. The Gandhinagar facility is going to be a focal point for RICOH as it is the National Logistics Centre for the company. It is listed in NASSCOM and is in the top 40 players out of 6,500 players registered. 40 per cent people take loans from cooperative banks because of easy and flexible payment terms, while 35 per cent people take loans because of easy documentation. We have many clients in cooperative banks, like Shamrao Vithal Cooperative Bank Ltd, Andhra Pradesh Cooperative Bank and Saraswat Bank, and are now looking forward to the Gujarat Cooperative Banking Market.
GCS 2015 EVENT REPORT
Session 3 Technology in Banking and Financial Services – Core Banking Services and Payment Systems Smart Payment System Pushpinder Singh, Head- Financial Inclusion and New Business, National Payment Corporation of India (NPCI)
Branchless banking K P Saha, Managing Director, Senrysa Technologies Limited
Core Banking Solution (CBS) is the foundation where the entire building of technology is to happen. The next big thing coming up is payment systems. Today, more than two lakh ATMs are in the network of NPCI. RuPay debit card is developed and introduced in less than 18 months and the credit card will be in place from March 2016 onwards. The automatic cheque clearing system is at present provided by NPCI in almost every corner
of India. IMPS (Immediate Payment Service) is available 24x7 across India. NUUP (National Unified USSD Platform) is already introduced for non-smart phone users on dialing *99# and is available in regional languages. Innovative Micro ATM Machine is provided with authentication facility through Aadhaar Card. One must also note that as the use of Technology is increasing, the exposure to security threat is also increasing.
We provide branchless banking platform. Senrysa has specialised solutions and expertise in many areas of banking and financial services, including retail banking, wholesale banking, commercial banking, lending, auto finance, cash management, treasury solutions, corporate finance, mortgage and collections.
Coop banks eye rural areas Bhavit Godiwala, Delivery Manager – India, North Asia and South East Asia, Finacle Infosys Ltd Cooperative banks today play a major role in economic development, especially in rural areas in India. They are going to be very important distributors of the banking vision. Four major forces that are changing the entire scenario for the cooperative banking sector are competitive landscape, customer preferences, regulatory network and technology. There is a strong need of innovation in services, process, thinking and value-based partnership to survive in the highly competitive market. Infosys Finacle has not only been implemented in larger nationalised banks but also in some 45
out of 82 RRBs (Regional Rural Banks), 104 DCBs (District Cooperative Banks), approxi-
mately 3,500 branches and over 20,000 users of NABARD. It is also under implementation in 150,000 branches of postal banks, which is the largest global implementation. An independent study suggests that the banks using Infosys Finacle have around 50 per cent return on assets, 31 per cent higher return on capital, 8 per cent improvement in cost to expenses ratio, 37 per cent reduction in efforts, 35 per cent reduction in transaction cost and 21 per cent reduction in time to search the customers.
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GCS 2015 EVENT REPORT COMSUR tools for full security Gautam Goradia, Chief Executive Officer, COMSUR
Money on Mobile Gaurav Zutshi, CEO, My Mobile Payments Ltd ‘Money On Mobile’ is the RBI approved prepaid card issuer. Cooperative banks can provide the card to their customers who can do online shopping, book railway tickets, transfer money and can do various other such things that an ordinary debit card can, with absolute low technology cost. It is a unique out-of-the-box solution.
Installation of CCTV cameras is just the first step of provisioning of Security Eye today. The installation of the CCTV is not only enough, we also need to check it on daily basis, as per the Government of India's norms. The technology that COMSUR proposes takes the backup of entire system and records as a power point presentation. One can check the 24-hour footage of CCTV system in just one hour using software adopted by COMSUR.
BBSL for skilled manpower Gnana Shekhran, Chief Executive Officer, Best of Breed Software Solutions Limited (BBSL)
One must clearly define the scope for faster implementation of a Core Banking Solution (CBS). There is a need to make the scope specific by saying 'no' to vague requirements and the users will have to adapt the new system with a change in mindset. BBSL recruits people, skills them and makes them IT-ready. We leverage our in-depth domain and functional expertise, leading technology practices and a consultative approach to enable our consultants and employees to deliver business solutions for all our clients.
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Customer retention Rahil Patel, CISO, Kalupur Commercial Cooperative Bank Ltd It’s very important today to provide all possible technology solutions to keep the customer with us. However, it’s not necessary to adopt all the available technologies for a cooperative bank; one should pick just the ones that are needed for providing better services to its clients. Advancements in technology have transformed cooperative banking, enabling the sector to provide many channels for customer service, customer attainment and retention.
GCS 2015 EVENT REPORT
Session 4
Special Presentation
On-demand elastic model Abir Banerjee, Assistant Vice President, Sify Technologies Pvt Ltd We at Sify have a technology solution that can cater to the needs of group of cooperative banks through shared services. ‘Virtual machines’ is a reality today. It helps in bringing down the cost of providing services significantly. Thus, we propose ‘on-demand elastic model’ to our customers.
Session 5 Physical, Cyber Security and Risk Management in Banking Schneider Electric reduce costs
Beware of security threats Jayesh Chhatpar, Head IT, Rajkot Nagrik Sahakari Bank Limited Technology facilitates smart banking. But at the same time, the expenditure incurred by small banks to do this is too much. Transparency is important in any administration, and with the advancement of technology, that is happening fast. Everything is going online, leaving little scope for foul play. Today, it is very important to place a firewall at all the branch locations for better security of the critical information in the banks. It’s not only important to have security devices like surveillance and network only to be implemented, at the same time its very important to have a reliable service provider. Also, it is very important to make the management as well as the users aware about all possible security threats as well as precautionary measures to be taken.
Trust and Confidence for security Jyotish Werulkar, Country Manager – Enterprise, Quick Heal Technologies Pvt. Ltd. Rahul Bisen, Channel Head- Rack and Cooling, Schneider Electric Data Center in rack is the solution today offered to the cooperative banks. With our comprehensive data center infrastructure solutions, a targeted portfolio of software and life cycle services, Schneider Electric will help you increase your top line, reduce costs, ensure availability and limit your impact on global climate change.
Trust and Confidence of customer are the two fundamental sources to the security for cooperative banks today. Cyber Crime today has resulted in to `24,000 crore direct loss and `21,600 crore is the indirect loss to an exchequer of any bank in last one year. We have more than 300 cooperative banks affiliated with us across India and we have more than 50 banks in Gujarat that are there as an IT security partner. We have end-to-end security IT product offerings, along with customised support to the cooperative banks to offer.
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GCS 2015 EVENT REPORT Threat protection for seamless banking Vijender Katiyar, Regional Sales Head (West), Trend Micro Endpoint security is at a critical juncture. Increasingly, employees at organisations of all sizes are using a wider variety than ever of desktop and mobile devices, including smartphones, tablets and laptops, as they work from broadly dispersed locations, including home offices. Often, organisations are permitting and even encouraging employees to use their own devices under BYOD (bring your own device) policies. With these devices, employees are accessing not only corporate data and applications, but also social media, banking and shopping sites. Answering the need for a broad range of threat protection that can be managed from a single console, Trend Micro Smart Security Suites bring together a full complement of security capabilities, including endpoint, email and web security. From one console, you gain complete visibility across all components of the solution, and can see a time-based view of policy compliance and security incidents for a given user across all of that person’s devices.
Euronet provides comprehensive electronic solutions Subhrata Sahay, Sr. General Manager Sales, Euronet Services India Pvt Ltd. We are a global provider of electronic payment and transaction processing solutions for financial institutions, retailers, service providers and individual consumers. Our three primary business segments — Electronic Fund Transfer (EFT), epay and Money Transfer — are supported by 4,600 employees in 39 countries. Currently, Euronet worldwide partners with approximately 270 banks and card organizations, including multinational clients, to provide comprehensive electronic solutions ,including ATM network participation, outsourced ATM and POS management solutions, cross-border transaction processing services, credit and debit card issuing and acquiring services and a suite of integrated software solutions for electronic payment, merchant acquiring and card issuing and transaction delivery systems.
Safety and security
Advanced modules for Cooperative Banks
Pratik Patel, Vice President, Biomatiques Identification Solutions Pvt. Ltd.
I P S Sethi, Cooperative Core Banking Division, National Informatics Centre, Government of India
Biomatiques has its headquarters in Surat in Gujarat, where our major Research and Development takes place for the indigenous Iris Recognition solutions for India and global. We commit ourselves to deliver the best yet compact Iris Scanner hardware and quickest Iris Recognition SDK along with custom casing design solutions to meet various requirements for our range of products. We work together with our clients to increase their business profitability and operational efficiency to provide identity assurance contributing towards the safety and security of human kind.
The main objective behind development of the Cooperative Core Banking Solution (CCBS) by NIC is to serve the poorest of the poor in our country by furthering basic banking facility in the rural areas of the country. CCBS aims to provide a common interface for all the category of banks enabling better integration of information flow from SCBs, DCCBs and PACSs. NABARD, RBI, state cooperative departments could be benefitted through this system. CCBS is steaditly moving towards achieving success through multiple implementation at various cooperative banks. The solution has basic banking functionalities. However, to strengthen the product, a number of advanced modules like ATM integration, RTGS, NEFT, ECS, HRMS, treasury, social sector payments are being developed.
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GCS 2015 EVENT REPORT
Key Takeaways u Gujarat has more than 70,000 cooperatives comprising of banks, housing, dairies, credit, sugar and Primary Agriculture Cooperative Societies (PACS). u The financial health as well as the services the cooperatives provide to its members are very important. u Core banking is getting majorly implemented by district-level cooperative banks. u Cooperative Organisations should be left behind and will have to take the technological help so as to fight against the growing competition. u As per recent report of Reserve Bank of India, the rural advances in the cooperative banking sector is decreasing over a period of time and is approx 20 per cent of the total advances given especially by cooperative banks. However, these banks are of the view that the level playing field is not being provided to them as it is given to Nationalised and Private Banks. The facility of providing loans to the priority sector is given to nationalised banks as compared to cooperative banks. u Nationalised banks give the priority lending especially to major and established farmers, while cooperative banks have to take care of marginal and small farmers. u Also, the Indian Government provides more support and help to nationalised banks, by infusing financial help in case of instability in them. The same is not the case with cooperativ banks. u When the NPAs (Non – Performing Assets) of the cooperative banks rise, the responsibilities and ownership are in the hands of the management, while in nationalised banks, that's not the case. The Government gets involved on regular basis and supports them in lowering of NPAs, by providing inclusion of financial support. u The cooperative banks today in Gujarat are having deposit of more than `33,000 Crores and advances of more than `25,000 Crores. u Today, over 140,000 litres of milk is collected daily through the milk cooperatives in Gujarat, and they are being paid weekly. Further, the price paid to them is higher than the market price, still AMUL (Anand
Milk Union Limited) gave `500 crore back to these milk cooperatives as a price difference last year. This price difference was earned by marketing of additional byproducts like butter, cheese, chocolates, curd and others. Recently, the Gujarat Government has given a special package of providing a 300 square yards plot of land and also the financial assistance of `500,000 to women involved in milk collection. IFFCO today is making approx `1,200 crore year on year. Bardoli Sugar Factory near Surat is producing huge quantity of sugar per day. In India, there are more than six lakh cooperative societies today, with over 26 crore members. The payment by credit card today is `192,263 crore per day; by debit card, it is
challenges. u Recently, TDS has been introduced in cooperative banking sector. u Most of the people take loans from cooperative banks because of easy payment terms and easy documentation process. u The urban cooperative banks needs to contribute to the vision of SKILL, SCALE and SPEED (3S), which is the vision document of Prime Minister's Skill Development Programme. u The federation on the other part is ready to help the banks to create a Livelihood Mission so as to generate more employment in the sector. u Tapping of savings is the first step of financial inclusion. In Gujarat, this savings is 30.19 per cent of GDP i.e. around `1.90 lakh crore.
`23,49,365 crore; by ATM, it is `22,27,962 crore, POS use `1,21,039 crore and mobile banking is `1,03,00,530 crore. All these use the technology in some or the other way and is abig challenge to us. In Gujarat, where we have some 226 cooperative banks, 98 are grid banks and some 10 banks are unit banks with profit of less than `10 lakh per annum. How do we survive is the point to be thought about in such a scenario. u Until and unless the banks do not work along with technology as a part of the Livelihood Mission, and do not take part in the Skill Development Mission, are unable to attract people through schemes like JanDhan Yojana, these are going to face major
u Another area that needs to be tapped is non-earning members of the State. At least there are some 3.6 crore people in Gujarat, who are non-earning members. One can also bring in women entrepreneurs. Cooperative banks can cover the marginalised section of society that needs houses through housing loans. Hence, financial inclusion can emerge only when cooperative banks are able to mobilise savings. u Implementation of efficient and costeffective banking solutions is also a major challenge for many banks. The banks also need to look into establishment of business correspondents, who will help in generating more money for the banks.
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GCS 2015 EVENT REPORT u To fight against the competition, cooperative banks can adopt mobile banking and door step banking. u The basic challenge faced by many banks today is the development of their human resources, especially those who are with banks since many years. The appraisal criteria of these manpower will have to be defined properly. u There is a need for capacity enhancement. Also, marketing of the services needs to be improved. There are going to be two type of clients now onwards – one who are going to come in the banks to do transaction and others who are not going to come to the bank.
or having just a data transfer, instead it is having a proper MIS (Management Information System) too. u Cooperation is in the DNA of a human being. Though we have many challenges in front of us, one should appreciate that we have more strengths to face them. u To face the challenges and be successful, we need to bring the change in our working. And the first change should be adoption of Technology. u Human Resource is the spinal cord of any organisation. Training to the existing manpower in the bank is required. There is also a strong need of empowering people through delegation of powers to the employ-
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u u There is going to be a major challenge from the post office sector, as all the post offices are expected to turn into banks, with a strong rural reach and network. For customers who want to go into the banks and do the transactions, the postal banks are going to pose a big challenge. u It is better to have one IT Person in the board of directors. This will help in facing the future challenges related to IT in a better way. u One of the suggestions to face the competition is to have and use the unemployed manpower on part-time basis on contract and make them move in the market for promoting the services by providing them with latest instruments. u One needs to understand that the major use of having a CBS is not anywhere banking
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ees on the basis of their knowledge, skills and working attitude. The Regulator should also provide more autonomy to the cooperative banks for fulfilling the norms related to payment banking criteria, especially to the banks with net worth of over `100 crore. It is the time to choose the right technology and more importantly right partner. For business expansion one can have a tie up with nationalised banks and can also go for more Micro ATMs. District banks are being provided the subsidy of `25000 by NABARD for establishing of Micro ATMS. The State Government and the cooperative banks will have to work together to get every section of the society under financial inclusion. The customer will go to those banks where
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he can get services which he wants and desires. He is now not loyal to anyone, instead he will prefer to have all services under one roof. Today, the scale of the organisation matters instead of size. Governance is the major problem with respect to regulatory point of view. There should not be any political interference in the running of the bank. There is a high risk of non-regulatory compliance with the sector and the track record is not good. UCBs work in a very controlled environment and are not allowed to raise the capital from the open market. The advances are limited only to the area of operations, there is notsubsidy provided on the loans given to SSI units. There is no much freedom provided on home loans, forex business or any guarantee that is to be issued. There are many challenges for getting permission for putting up of onsite as well as off site ATMs. There is a dual control today on UCBs; from Registrar as well as of RBI. There is a need for having a single regulatory power and it is suggested to have with RBI. There is a need to have a deep dive thought for strengthening of the audit function in cooperative banks. Also, there is a strong need of market research. Also, as a regulator, RBI will have to introduce and devise a policy for standardisation of IT implementation. Cooperative banks today are playing a major role in the economic development ,especially in rural areas in India. They are going to be very important distributors of the banking vision. Four major forces that are changing the entire scenario for cooperative banking sectors are – competitive landscape, customer preferences, regulatory network and technology. Advancement in technology has transformed cooperative banking enabling the sector to provide many channels for customer service, customer attainment and retention. Trust and confidence of customer are the two fundamental sources to the security for cooperative banks today. Cyber Crime today has resulted in to `24,000 crore direct loss and `21,600 crore is the indirect loss to an exchequer of any bank in last one year.
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