Financial InclusionAndhra Bank’s Experience

Challenges!

• Enrollment of large numbers • Wide geographic spread• High maintenance costs for accounts• Small ticket size of transaction• Illiteracy and use of vernacular• Product & service pricing• Trust and acceptance• Lack of electricity • Poor telecommunications

Financial Inclusion through SmartcardBank’s role in AP

• Schemes covered so far• Social Security Pensions (SSPs)• Wages under NREG Scheme• SHG Linkage (Pilot)

• Geographic scope– Indentified mandals in

• Warangal, Karimnagar, Medak, Mahaboobnagar, Chittoor, East Godavari

– One- district-one-bank• Srikakulam and Guntur

Our Technology Partners

• A Little World Pvt Ltd– Pilot project in Geesukonda Mandal – Warangal district

• Access Development Services (BC) & Atyati Technologies– Districts of East Godavari, Srikakulam, Karimnagar,

Mahaboobnagar, Medak, Chittoor, Guntur

• Fino Ltd. – SHG Linkage – Pilot - in East Godavari

Pilot Project – AP Govt - 2007

• Andhra Bank was allotted 25 villages in Geesukonda Mandal (Warangal district).

• Government has extended financial assistance – of Rs. 90/- per card – Rs.10,000 per hand held device – Service charges of 2% of the volume of cash

disbursed.

ALW –Solution• One-Time Costs– Cost of Smart Cards Per Card – Enrollment Fees Per Card – Cost of Photo Personalization Per Card – Cost of Terminals- Per Terminal – Cost of Cashboxes One time

• Operating Costs– Technology Operation fee Per Card – Transaction Fee Amt Disbursed – Cash Management Charges Amt Disbursed – Monthly fee per CSP Per Month – Mobile (connectivity) expenses

Salient aspects of our RFP

• Proven Technology• Scalable and interoperable system• Contact or Contactless smartcards• Fingerprint image acquisition as per RBI norms• End-to-end Solution (technology and banking

services)

• The entire solution outsourced – to a single Systems Integrator – result in better efficiencies and effectiveness.

• Bank need not procure any hardware or software • Bank need not procure any other resources

– Pay for the Vendor’s resources on usage basis.

• Integration of Banking and financial services – Provided by the same vendor – Payment for services based on gross value of customer transactions.

• Avoidance of risks from – obsolescence of Technology and – change of Methodology if any, will be handled by the Vendor.

The merits of the approach

Smart Card

Smart Card

Reader

POS Terminal

Printer

Biometric scanner

Financial Switch

Backend Banking Server

ISO 7816-4 /

ISO 14443-4

ISO 19794

ISO 8583

GSM/GPRS/PSTN/ LEASED LINE/ INTERNET

FRONTEND SYSTEMS CONNECTIVITY BACKEND SYSTEMS

Architecture suggested by Govt. of AP

Technical Specifications - RFP

• Smartcard– ISO 14443 / ISO 7816– EMV Compliant– 32 K EEPROM memory– Standard dimension PVC / Polycarbonate Card– DES/3DES (key length 1024/2048)– Hold User Certificates, Smartcard OS, Applications,

etc

Technical Specification - RFP

• Handheld devices– Integrated system or 2/3 components– ISO 14443 / ISO 7816 and ISO 18092 for read and write

operations– Built-in PKI support– EMV Compliant– Multilingual support– Online & Offline capability– Secured storage and communication– Long hours of battery support

Technical Specifications - RFP• Fingerprint Scanner

– Image acquisition at setting level 31 of ISO/IEC 19794-4– Contact area 1 x 1 sq.inch– Min. capture-size 13mm wide x 17 mm high– Pixel density 500 ppi with + 5 ppi– Pixel depth 8 bits– 200 grey levels (dynamic range of scanned image)– Sense live-scan plain finger impression– Strong anti-spoofing features– Protection from ambient light, residual images– Standard for Data-Interchange - ANSI-378– Encrypt fingerprint minutiae with 3 DES– Scanner surface to be resistant to dust, humidity, shocks, electronic discharge,

ambient light, extreme temperatures, etc

Responses to RFP

Outsourcing Terms

Payment to Vendor• Enrollment,• Card Personalization• Delivery of the Card to Customer• Card Management services

fixed price per-card basis

• Technology & Management•Facility Management

Commission as a percentage of gross amounts received / paid to Beneficiaries

• Banking and financial services

• Financial Literacy • Capacity building of BC

Part of deliverables by vendor at no extra cost.

Progress in coverage

• Beneficiaries covered so far in AP– Warangal District (pilot) 14,000– East Godavari District (enrolled) 150,000– Srikakulam District 20,000