A Little WorldA Little World

Doing a World of GoodDoing a World of Good

Team MuthootTeam Muthoot

PresentsPresents

DefinitionsDefinitions

Financial inclusion Financial inclusion means extending basic banking means extending basic banking services at affordable prices to the low income and services at affordable prices to the low income and disadvantaged groups.disadvantaged groups.

Purpose: Purpose: to connect the excluded with the formal banking to connect the excluded with the formal banking system in order to help them obtain an understanding of the system in order to help them obtain an understanding of the financial services available and equipping them with the financial services available and equipping them with the confidence to make informed financial decisions.confidence to make informed financial decisions.

Basic services Basic services include deposits / withdrawals, credit, include deposits / withdrawals, credit, remittance, investment, insurance etc.remittance, investment, insurance etc.

No frills account: No frills account: An account with An account with ‘zero’ or minimum ‘zero’ or minimum balance balance with maximum balance of Rs. 50,000/-at any given with maximum balance of Rs. 50,000/-at any given point in time and total credit in a year not exceeding Rs. point in time and total credit in a year not exceeding Rs. 1,00,000/-. 1,00,000/-.

Banks can restrict the nature of services offered, number Banks can restrict the nature of services offered, number of transactions permitted etc. of transactions permitted etc.

A few misconceptionsA few misconceptions Financial Inclusion (FI) is the latest ‘fad’.

FI is only social service; not a good business proposition.

FI simply means opening as many bank accounts as possible.

Everyone handles money. Therefore, everyone is financially literate.

FrameworkFramework

Facts & FiguresFacts & Figures

51.40% Farmer households financially excluded.

73% Farmer households having no access to formal sources of credit.

64% Share of Central, Eastern and North Eastern regions in the total financially excluded farmer households in the country.

Financial Inclusion Financial Inclusion TargetsTargets

By 2012:Cover at least 50% (55.77 million) of the excluded.

By 2015:‘Include’the remaining.

250 new households per branch per annumto be covered by all semi-urban and rural branches of banks and RRBs.

The Essential The Essential ComponentsComponents

Business Correspondents are organizations or individuals Business Correspondents are organizations or individuals that organize and offer one or more points of transaction that organize and offer one or more points of transaction outside of bank branches. The BCs organize and manage a outside of bank branches. The BCs organize and manage a network of such transaction points in partnership with a network of such transaction points in partnership with a bank.bank.

Technology Vendors provide hardware and processing Technology Vendors provide hardware and processing capacity and connectivity which can link clients to BCs and capacity and connectivity which can link clients to BCs and BCs to the bank.BCs to the bank.

Customer Service Points are individuals, shops or other Customer Service Points are individuals, shops or other outlet points responsible for the direct contact with the outlet points responsible for the direct contact with the clients. CSPs open bank accounts, conduct KYC, cash out clients. CSPs open bank accounts, conduct KYC, cash out withdrawals, receive payments and in some cases, extend withdrawals, receive payments and in some cases, extend credit.credit.

A Little World Pvt LtdA Little World Pvt Ltd Developer of ZERO, India’s first domestic payment system with Developer of ZERO, India’s first domestic payment system with

specific focus on reaching out to masses with lowest available specific focus on reaching out to masses with lowest available communication infrastructure.communication infrastructure.

Zero Microfinance and Savings Support Foundation -appointed Zero Microfinance and Savings Support Foundation -appointed as a Business Correspondent by 15 Banks – SBI, PNB, DENA, as a Business Correspondent by 15 Banks – SBI, PNB, DENA, UBI etc.UBI etc.

Manages field force, account creation, appointment of Manages field force, account creation, appointment of Customer Service Points (CSPs), management of cash etc.Customer Service Points (CSPs), management of cash etc.

Collaborates with strongly placed local organizations, district Collaborates with strongly placed local organizations, district and state administration to ensure smooth deployment and and state administration to ensure smooth deployment and operations. operations.

ZMF creates the last mile operations network in villages and ZMF creates the last mile operations network in villages and front-ends the delivery of full-featured transactional services on front-ends the delivery of full-featured transactional services on behalf of Banks. behalf of Banks. 

What does ALW offers?What does ALW offers? Leverage RBI’s BC model to set up a technology driven ‘Bank-Leverage RBI’s BC model to set up a technology driven ‘Bank-

in-a-Box’ in every village, at no capital cost to the partner Bankin-a-Box’ in every village, at no capital cost to the partner Bank Use new generation low-cost NFC mobile phones as POS Use new generation low-cost NFC mobile phones as POS

terminals for secure offline transactions using biometric terminals for secure offline transactions using biometric authentication, Provide robust account management systems authentication, Provide robust account management systems to Banksto Banks

Use Use GPRS GPRS data coverage of mobile operators for batch data coverage of mobile operators for batch synchronization with bank’s back-end systemssynchronization with bank’s back-end systems

Use cashless transfers, post-transaction settlements, and Use cashless transfers, post-transaction settlements, and negotiated overdrafts to reduce handling of cash to the negotiated overdrafts to reduce handling of cash to the minimum needed cyclesminimum needed cycles

What does ALW offer?What does ALW offer? Open no-frills free bank accounts with photo and Open no-frills free bank accounts with photo and

biometric ID for every villager, minimal cost to the bankbiometric ID for every villager, minimal cost to the bank A complete set of financial services in village (under A complete set of financial services in village (under

brand ZERO):brand ZERO): Deposits, withdrawals, transfersDeposits, withdrawals, transfers Disbursal of Pensions, NREG wages, other Disbursal of Pensions, NREG wages, other

Government benefitsGovernment benefits Loans (via Bank / MFIs / directly as a BC)Loans (via Bank / MFIs / directly as a BC) 3rd party deposits, collections (MFI loan repayments, 3rd party deposits, collections (MFI loan repayments,

utilities, mobile recharge, deposits for FMCG, Pharma, utilities, mobile recharge, deposits for FMCG, Pharma, Fuel, Fertilizers)Fuel, Fertilizers)

Other banking products as a Business Facilitator to Other banking products as a Business Facilitator to the partner bank.the partner bank. Insurance products, MFI transactionsInsurance products, MFI transactions

Ground ReportGround Report Mobile Phones as core Bank branchMobile Phones as core Bank branch

Mobile phone is your aid for opening accounts on the spot Mobile phone is your aid for opening accounts on the spot by local CSPby local CSP

Biometric Identification is providedBiometric Identification is provided

Smart Cards not needed for biometric authentication in Smart Cards not needed for biometric authentication in local service arealocal service area

Voice prompts during enrollment and transactionsVoice prompts during enrollment and transactions

Printout at the end of each transactionPrintout at the end of each transaction

Little World - AchievementsLittle World - Achievements

Little. World. Pvt Ltd (ALW) raised Rs 28.5 crore in second Little. World. Pvt Ltd (ALW) raised Rs 28.5 crore in second round of financing in 2008round of financing in 2008

SBI bought 20% stake in ALW for Rs.80 Cr, which valued at SBI bought 20% stake in ALW for Rs.80 Cr, which valued at Rs.400 Crore in total.Rs.400 Crore in total.

ZERO MASS FOUNDATION crosses ZERO MASS FOUNDATION crosses 3 million mark3 million mark

A Little World among Top 10 A Little World among Top 10 Innovative Companies of IndiaInnovative Companies of India

Collaborated with all major banks Collaborated with all major banks in Indiain India

Competitors in the fray..Competitors in the fray..BCBC Products Products

OfferedOfferedPartnePartner r BanksBanks

Customer Customer Service Service PointsPoints

Technology Technology PartnerPartner

Clients Clients ReachedReached

Eko Aspire Eko Aspire FoundationFoundation

Savings, Savings, RemittancesRemittances

SBISBI Eko Financial Eko Financial Services Ltd. mobile Services Ltd. mobile phone based SMS, phone based SMS, MIFOS for backendMIFOS for backend

BasixBasix Savings, Savings, Remittances, Remittances, Micro-credit, Micro-credit, Micro-Micro-insuranceinsurance

Axis Axis BankBank

A Little WorldA Little World 80008000

DrishteeDrishtee Savings, Savings, LoansLoans

SBI, SBI, HDFCHDFC

450450 For SBI – ALW For SBI – ALW For HDFC – For HDFC – Magnetic strip card Magnetic strip card and POSand POS

Swadhaar Swadhaar FinaccessFinaccess

SavingsSavings ICICI, ICICI, CitiCiti

99 FINOFINO 60096009

The SWOT AnalysisThe SWOT Analysis

ALW’s expansion strategy ALW’s expansion strategy Presence in 21 states and intends to cover whole Presence in 21 states and intends to cover whole

of India and also expand internationallyof India and also expand internationally UUse existing affiliation with Zero ZMF to create se existing affiliation with Zero ZMF to create

pre-eminent last mile delivery infrastructure in pre-eminent last mile delivery infrastructure in villagesvillages

ALW to use rural infrastructure created by ZMF ALW to use rural infrastructure created by ZMF for distribution of multiple products and for distribution of multiple products and services catering rural demand for e.g. micro services catering rural demand for e.g. micro insurance, mobile recharges , green goods etc. insurance, mobile recharges , green goods etc.

25000 new accounts open everyday by ALW25000 new accounts open everyday by ALW Continue growth strategy of deepening its Continue growth strategy of deepening its

penetration in current areas of operation, and penetration in current areas of operation, and broadening its national outreachbroadening its national outreach

After the initial pilot phase in early 2007, ALW After the initial pilot phase in early 2007, ALW increased its presence to 21 states covering a total increased its presence to 21 states covering a total of 119 districts. Current customer base stands at of 119 districts. Current customer base stands at 3.75 Mn, with over 25,000 accounts being added 3.75 Mn, with over 25,000 accounts being added every day. ALW has created 6,530 points of every day. ALW has created 6,530 points of presence till Feb 2009presence till Feb 2009

Future Growth Goals

Growth in Revenues and Enrolments

FY2013 GoalsCustomer Base: 100 Mn CSP : 151,500

SBI Tiny is SBI’s initiative SBI Tiny is SBI’s initiative for Financial Inclusionfor Financial Inclusion

ZERO TECHNOLOGY PLATFORM for SBI-Tiny

1. ID Profile: An extensive ID profile is created on the card. Some

information fields are compulsory and others are optional. Optional fields can also be captured in the future and written post-issuance on the card with control of the back-end system.

Pre-created information slots on each card: First Name; Middle Name; Last Name; Gender; Date of

Birth; Occupation; Marital Status; Blood Group; Caste; Full Address (Home/Business/Permanent/Correspondence); Yr. of Marriage; Yr.of passing (SSC); Mother's Name; Father's Name; Spouse's Name; No. of children; Handicapped (Y/N); Fingerprint (Left); Fingerprint (Right); Phone (Res); Mobile; Passport No.; PAN No.; Other SBI A/C No.; Driver Lic. No.; Vehicle Type; SHG No.; NREGS No.; National ID;Voter ID; Employee ID; Pension ID; Insurance Policy No.; Email ID; Income Group; Loyalty;Nominee Name and Relationship with card holder.

Following is printed on card: Photograph; Sex, Date-of-Birth;

Issuance Date; Name; Card Number; Address; SBI-Tiny;

ZERO; Disclaimer (usually at Back); Helpline Number; URL

Enrollments carried out in villages, and card printing carried out centrally.

Multiple Applications Using the common ID profile of the cardholder, the ZERO

framework allows the following categories of applications to be activated on the customer card: • Micro-Savings (SBI-Tiny no-frills pre-paid account) • Micro-Credit (including Kisan Credit Cards, GCC) • Micro-Insurance • Cash Withdrawals • Cashless Payments to Merchants • SHG saving-cum-credit accounts and attendance systems • Salary disbursements for schemes like Employment Guarantee

Scheme • Passbook • EMIs • Government Benefits • Utility Payments • Coupons, Vouchers and Tickets • Loyalty Points • Automatic Fare Collection Systems (eg.: GO-Mumbai transit e-

purse and passes)