i nc lu s i ve f i nanc e i nd i a re port 2014
24
ATM card as intended by the account upgradation
and the changed nomenclature though it is expected
that this too will change quickly in the near future.
•
Farm and non-farm sector credit cards continue to
expand at a steady pace.With the additionof 6.2million
small farm sector credits during 2013–14, there were
40 million farm accounts [Kisan Credit Cards (KCC)]
as on 31 March 2014. Besides, with the addition of
3.8 million small non-farm sector credits during
2013–14, there were 7.4 million non-farm accounts
[General Credit Cards (GCC)] as on 31 March 2014.
Nearly 328 million transactions were carried out in
BC-ICT accounts during 2013–14 as compared to 250
million transactions during the previous year. While the
figure appears to be impressive this represents a small
number of transactions per account—
less than 3 trans-
actions per account per year
. The number of ICT-based
BC transactions though encouraging is still very low
as compared to the increase in the number of banking
outlets. Greater emphasis is being placed on volume of
transactions carried out through the newly opened bank
accounts. The monitoring format for progress in FIP has
been modified to include detailed coverage of transac-
tions in savings, credit and [Electronic Benefit Transfer
(EBT)] accounts through BCs. The focus of monitoring
is now more on usage of these accounts through issue of
more credit products through the channel.
Appendices 2.1 and 2.2 give the outreach of leading
public sector and private sector banks in their financial
inclusion efforts as available from data in respect of the
parameters discussed above and others. A broad range
of products and initiatives taken by individual banks
as part of financial inclusion is also provided therein.
Various banks have piloted or implemented innovations
such as ultra small branches, kiosk-banking, mobile
banking, hub and spoke models and micro-ATMs and
biometric devices. A diverse set of products including
smart cards and small deposit schemes have been launched
and the services of business correspondents engaged. To
support the acceptance and spread of banking services,
various measures have been taken to improve financial
literacy. With the help of a large number of technology
service providers banks have introduced technological
innovations in their operations at strengthening the last
mile in the availability of financial services. However,
it has not led to scaling up of services to the unbanked
population on a large scale. At the same time due to the
scattered initiatives and technology implementation,
major issues emerged in the inter-operability of systems
towards seamless banking operations. These challenges
are now being addressed. Some of the measures that
have been taken include: (i) Setting up of Ultra Small
Branches (USBs); (ii) Unstructured Supplementary Ser-
vice Data (USSD) Based Mobile Banking; (iii) Aadhaar
Enabled Payment Systems (AEPS); (iv) Expansion of the
ATM network; and (v) Implementation of Direct Benefit
Transfer (DBT) schemes through banks.
3
A discussion
on the use of technology in financial inclusion through
the BC model is carried out in Chapter 3.
2.1.2 Guidelines for Strengthening of BC Model
With the objective of ensuring greater financial inclusion
and increasing the outreach of the banking sector, the
Reserve Bank permitted banks to utilize the services of
intermediaries in providing financial and banking services
through the use of BCs. As reported by the banks under
their financial inclusion plans (FIPs) nearly 2,48,000 BC
agents had been deployed by banks as on 31 March 2014
which are providing services through more than 3,33,000
BC outlets. Nearly 117 million BSBDAs opened through
BCs remained outstanding as on 31 March 2014. Though
the number of BC-ICT transactions increased consider-
ably, it was observed that the increase in the volume of
transactions was not commensurate with the increase in
the number of BCs engaged and the accounts opened
through them. A review of the BC model highlighted
that the cash management system followed by the banks
for BC operations was one of the major impediments in
the scaling up of the BC model.
In order to facilitate the scaling up of the BC model,
the RBI recently issued the guidelines asking bank
boards to:
•
review the operations of BCs at least once every six
months with a view to ensuring that the requirement
of pre-funding of corporate BCs and BC agents should
progressively taper down; and
•
review the remunerations of BCs and lay down a
system of monitoring by the top management of the
bank. It also directed that the cash handled by BCs
