exploring the nature, scope and feasibility of existing technological infrastructure of india's...
TRANSCRIPT
Exploring the Nature, Scope and Feasibility of Existing Technological Infrastructure of India's National e-Governance Plan's Customer Service Scheme Towards Converting In-cash
Transactions into Cashless Transactions
“KIOSK BANKING”
Parul Agarwal
Amulya K Champatiray
IFMR Research, Chennai, India
Agenda
• Background
• Model under study
• Motivation
• Research questions
• Methodology and sample
• Preliminary observations
• Steps Ahead & Further Research Questions
Introduction
IMTFI's Fifth Annual Conference for Funded Researchers, University ofCalifornia, Irvine
Five researchers from IFMR, Amulya Champatiray, Deepti Kc, Lakshmi Kumar, Mudita Tiwari and Parul Agarwal attended the conference organized by Institute for Money, Technology and Financial Inclusion (IMTFI) at University of California-Irvine on Dec 4-6, 2013. This conference brought together the institute's fifth-year award recipients who presented their preliminary findings. Deepti Kc and Mudita Tiwari presented their findings on social, cultural, and commercial factors that influence the decision of using cash versus electronic transactions amongst the privately led enterprises in Dharavi, and discussed the scope for the mobile or electronic payment systems. Lakshi Kumar presented her findings on the privacy risks that the current mobile money framework in India accounts for. Amulya Champatiray and Parul Agarwal presented the findings of their study that focused on exploring the nature, scope and feasibility of existing technological infrastructure of India’s National e-Governance Plan’s Customer Service Centre scheme towards converting in-cash transactions into cashless transactions.
Background • India is the 7th largest country by area and 2nd most populous country with a
diverse socio-economic culture. It is an emerging economy – 10th largest
economies by GDP and 3rd by PPP.
30% of population lives below poverty line
69% of population lives in rural India with poor infrastructure, services and employment opportunities
More than 60% of population is unbanked with only 7 branches per 100,000 adults in rural India
Background
• Recently, the Government of India has increased efforts and investment into financial
inclusion.
- Revisions in SHG-BLP (SHG 2), RBI’s financial inclusion drive, BC and BF,
New banking licence, Women’s bank, NREGA, NRLM, NHBY etc.
- The National e-Governance Plan (NeGP) to enable a greater accessibility
of all government, social and private sector services to the citizens at an
affordable cost.
Model under study
Model works on PPP Framework
Motivation
Sector based factors
• Emphasis on “branchless banking” –
critical inputs are essential to make
relevant corrective and replication
measures for a greater impact.
• Prior study conducted by CMF-IFMR
found that the KIOSK model in rural
areas is not financially viable if it just
offers financial services.
Model based factors
• Massive web-enabled infrastructure:
over 100,000 internet enabled kiosks
across 600,000 villages.
• Trust because of authentic system of
government service delivery.
• Innovative approach: motivating
enough to see if the model is
promising enough to be scaled-up
towards creating an impact on the
financial behaviour of poor.
Research Questions
• To study the kiosk banking model, set up under NeGP, its financial
viability and sustainability and to identify the motivation and aspirations
of VLEs.
• To understand the beneficiaries’ perspective regarding the significance of
this kind of banking model, their acceptability of electronic/ web-based
financial transactions and their further expectations.
• To explore the potential of the well-equipped and established physical
infrastructure of CSCs in converting villages’ major in-cash transactions
(especially in case of agriculture) into cashless transactions.
Sample and Methodology
• Partnering with AISECT, the following sample in Sagar district, Madhya
Pradesh was drawn for the study:
– 30 VLEs/CSCs were selected of which 10 were randomly selected for further
exploration.
– 5 SBI Bank Managers were also interviewed
1 CSC/ VLE
30 Beneficiaries 6 Farmers
Agri Input Retailers
Preliminary Observations
• Characteristics of CSCs and VLEs
• Characteristics of Clients
• Factors that motivate VLEs
• Branding and Marketing
• Services and Footfall
• Clients’ Experience with CSC
• Insights form Bankers
• SWOT Analysis
• Scope of extending the model
Characteristics of CSCs and VLEs
Average Age 35 years old
Education 10th standard and above
Existing business 60% (avg. income INR 10,000 PM)
Investment (capital)Own savings 71% and 29% got support from family
Average monthly income from CSC INR 15,500
Average number of villages covered 13
Average Client outreach (overall) 10,000
Average Client outreach for financial services 8,000
Characteristics of Clients
Age group School going kids to old age people
Male and female proportion of client 36% female and rest are male clients
Financial Decision maker 62% of respondents
Education >80% have acquired some level of education
Occupation36% Non-agri labour, 19% petty business, 12% each students and domestic services, 7% salaried and 2% old & retired
Average savings bank account per hh 2
Savings balance per household INR 2300 (median)
Most preferred source of savings 34% household save in formal institutions
Source of information about CSC Villagers / friends
Factors that motivate VLEs
• About 90% of VLEs believe that their social status has improved
due to their association with CSC • Further, 87% believe that it has strengthened their social
networks. • Learning from other VLEs helps them address the operational
issues and make them feel informed and connected.
Employment
Add value to existing business
Increase in monthly income
15%
43%
57%
Motivation
Branding and Marketing
• 87% of VLEs do their own marketing by using – sign boards, pamphlets, wall
posters, announcements, word of mouth, demo in schools
• On an average, about INR 6,800 was spent by each VLE towards marketing
• 60% VLEs believe that people are aware about their services
• 57% of VLEs plan to adopt a new marketing strategy in future in efforts to
increase their number of clients.
Services and Footfall: Financial
Particulars Average Monthly Transaction #Opening Basic savings account 450Opening RD/FD account 76Savings deposit in basic savings account 139Cash deposit in FD/RD account 30
Withdrawing cash from basic savings account1156
Transferring money from savings to FD/RD account
13
Loan Repayment: transfer of money from savings account
14
Life Insurance 8Remittance Services 107 (37% in other bank account)Bill Payments 47
Receiving government payments (pension, etc.) 275
Producing statements 300
Services and Footfall: Non-financial
Services Average Transaction #
Government to Citizen (G2C) Services Utility /Telephone Bills 840
Employment exchange 373
Business to Citizen (B2C) Services Digital Photos 837
Desktop printing 847
Forms downloads 427
Photocopy 614
Citizen to Citizen (C2C) Services (research data, data entry services) 23
Commerce/Online Service (rail ticket, astrology, matrimonial, shopping, etc.) 30
Telemedicine Primary Healthcare 10
Services and Footfall: Revenue Generating Products
Top 5 Financial Services – Usage & Revenue
Top 5 Non- Financial Services – Usage & Revenue
Withdrawing cash from a savings account Photocopy
Savings deposit in a savings account Digital photographs
Opening a savings account Printing
Cash deposit in FD/RD account Downloading forms
Opening FD/RD account Bill Payments
Services and Footfall: Usefulness of Services
Source used by clients prior to CSC
Source Savings Withdrawal Remittance
Didn’t do any transaction
41.2% 45.2% 50%
Used a formal bank 35.3% 32.3% 50%
Other 23.5% 22.6% -
Clients’ experience with CSC
Easy Moderate Difficult
66.7%
31.0%
2.4%
Clients’ level of convenience in us-
ing Kiosk
• Most attractive feature to clients: withdrawing money
• Cost incurred to open a bank account includes Rs. 5 on transportation and Rs. 13 on documentation etc.
• It takes around a week to get an account opened
• 91% of clients are satisfied with the services provided by CSC
• Location of the CSC is a clear advantage
Clients’ experience with CSC: in comparison
Advantages of CSC (over other service providers)
AdvantagesFinancial Services
Non - Financial Services
Location/proximity to village 88.10% 59.52%
Prices of services 64.29% 52.38%
Range of services 33.33% 34.15%
Quality of service 61.90% 42.86%
Insights from Bankers
Objective: Target small clients who otherwise cannot access banking services, increase SB accounts, loan recovery, sourcing new clients
Challenges: • Trust building among prospect clients • Technology – knowledge and comfort• Client KYC• Larger Government payments• Political interpretations• Monopoly and discrimination at VLE level
Future Plans:• Transfer of 100% SB account to Kiosk (decongestion to give more assistance
to high-end clients)• Provide more services like General insurance and loan services• Target small client 45,000 - 60,000 in next 2-3 years
SWOT Analysis
Strengths
• Bank’s Policy
• Multi-service
Approach
• Training
• Location
Weaknesses
• Technical glitches
• Electricity
• Space & management
Opportunities
• Scale-up
• Replication
• Innovation
Threats
• Competition
• Perceptions
• Political environment
Scope of extending the model: Current Status
Major source of livelihoods Agriculture
Average percentage of households that depend on agriculture
75% to 95%
Average total cultivation land in the village 1500 acres to 2200 Acres
Percentage of irrigated land 75% and above
Average land holding per farmer household 3 acres to 8 acres
Common retailers for purchase of inputs 5-10 KM radius
Most popular selling points 5-10 KM radius
Average Cash or credit transactions for input purchase
INR 10,090, 909/ village / year
Average in- Cash transactions for selling output
INR 12,272, 727/ village / year
Annual Business to each Retailer INR 400,000 to 600,000
Scope of extending the model: Proposition
• A model that provides either the first or a combination of the following:
- Scope to place (or receive) the order over phone and then transfer (or receive) money electronically through CSC
- To get (or post) information on quality of produce and price offered (or demanded) through CSC
• Reactions:
- Farmers are willing to pay for such a service as this will reduce costs and time for them
- Retailers are willing to pay for the service as this will get them more customers and will lead to a healthy competition
- Bankers believe that this model has potential but needs to be well thought through before implementation
Steps ahead and further research questions
Over the next phase of data collection (in next two weeks), researchers
intend to study the following in addition to the basic research questions:
• Does a child’s scholarship account motivate parents to get themselves
into the formal banking system?
• Does owning a savings account at an early age inculcate the habit of
saving and principle of money management among kids and youth?
• How can the model be extended and evolved to provide customized
services to people engaged in various livelihood based transactions?
Thank you
For further questions and discussion please write to the researchers at: