i nc lu s i ve f i nanc e i nd i a re port 2014
28
mittee assessed the technical part of the BC function and
fixed a minimum amount for the tender, rather than an
open-ended proposal from TSPs. Further, when a vendor
left, it took four-five months to appoint a new one and
the work would be affected in the interim period. The
meagre payment to CSPs by corporate BCs was seen as
the reason for attrition of BCs at the last mile. This led
to the direct handling of BCs by some banks through the
USB model.
Finally, despite many innovations,
technology issues
have continued to persist. Besides the introduction of
technology had not resulted in a reduction in the cost of
providing financial services
6
. Beneficiaries/ stakeholders,
including banks, often complain of constraints in digital/
physical connectivity. This coupled with delays in the
issuance of smart cards and reliability issues in hardware
infrastructure such as hand held devices, etc., have had an
effect on the smooth roll out of financial services.
2.3 INNOVATIONS IN FINANCIAL
INNOVATION
2.3.1 NABARD Funding for Financial Inclusion
The apex agencies such have NABARD have supported
the integration of regional rural banks and cooperative
banks into the core banking system (CBS) and have also
supported initiatives to ground BCs in these agencies
apart from initiatives focusing on Information and Com-
munication Technology (ICT) and universal financial
literacy.
NABARD continued to manage two dedicated funds
i.e., (i) Financial Inclusion Fund (FIF) for meeting the
cost of developmental and promotional interventions
and (ii) Financial Inclusion Technology Fund (FITF)
for meeting the cost of technology adoption for financial
inclusion. With effect from 01 April 2012, the relative
margin (interest differentials) available to NABARD in
excess of 0.5 per cent in respect of deposits placed by
banks under RIDF and STCRC is being credited to FIF/
FITF. The position of contributions/accruals to the FIF
was Rs. 17,618.7 million and FITF was Rs. 2,030.4
million as on 31 March 2014.
As on 31 March 2014, the cumulative sanctions under
FIF and FITF were Rs. 5,028 million and Rs. 4,084.5
million, respectively, against which, disbursements were
Rs. 1,353.5 million and Rs. 2,215.5 million, respectively.
The Micro Finance Development and Equity Fund
(MFDEF) was closed on 31March 2013 and the activities
being financed by it are now being covered under FIF.
There is a proposal to further merge the FIF and the FITF.
The major initiatives under FIF have been:
(i) support to cooperative banks and RRBs for setting
up financial literacy centres
(ii) assistance to RRBs for demonstrating banking
technology
(iii) support for migration of data of PACS to CBS of
cooperative banks
(iv) financial education and literacy programmes in
schools
7
and through common service centres
The major initiatives under FITF have been:
(i) ICT solutions for RRBs adopting BC/ BF model
(ii) Support for CBS of weak RRBs
(iii) Assistance for CCBs and RRBs for RuPay KCC and
RuPay Debit Card and for purchase of additional
PoS devices (Box 2.2)
(iv) Support to RRBs and cooperative banks for ATM
inter-change charges
2.3.2 Government Initiatives
Several government initiatives have been launched in
support of financial inclusion that have served to provide
effective and cost-efficient means of promoting the access
to and use of financial services by poor and unbanked
families. In this effort, government departments are in-
volved as enablers in the use of communications and in-
formation technology to facilitate direct benefit transfers
and a range of financial and non-financial services. Two
of the most promising innovations are described below.
(a) Common Service Centres and
Financial Inclusion
National e-Governance Plan (NeGP) is being imple-
mented with the objective of creating transparent and
accountable governance. To achieve this mission, the
Department of Electronics and Information Technology
(DeitY), Government of India is rolling out Common
