Welcome Chief Secretary to Govt.

Presentation on

SMART CARD PILOT

Department of Rural DevelopmentDate18.08.2007

Outline Of The Presentation

Concept Stake holders Roles & Responsibilities Process Pilot districts Highlights of the pilot Present status Strengths Costing Scope of Business Roadmap Challenges

Concept.

Disbursement of Social Security Pensions and NREGS

wages through Smart Card technology.

Chip based smart card as identity card for disbursement.

Biometric (finger print based) proof of identity

arrangement.

Disbursement through a GP level Business correspondent

to beneficiaries.

Payment within 4 days of release of amount to bank /

financial institution. Continue

Concept.

It is a branch less banking model – major step

towards financial inclusion.

Enabling the establishment of a last mile

banking business correspondent network at

each village.

Provides mainstream banking and financial

services to the poorest of the poor.

Continued..

Stakeholders

IDRBT

RBI

Banking Institutions

Rural Development

NREGS Wage Seekers &

Pensions

Roles and responsibilities

Role of Rural Development

Provide information about approved beneficiaries.

Put in place appropriate systems and procedures

for transfer of payments.

In Warangal district, bear the cost of the smart

card and hand-held / point of sale devises.

2% service charges of the value of the benefits

disbursed in Warangal and Karimnagar districts.

Roles and responsibilities

Role of Banks / FINO MoU with Government. Open SB a/c accounts and issue Smart Card to

beneficiaries. Appoint, train and enter into contract with CSPs. Credit pensions / wages to the account of the

beneficiaries. Provide all required MIS from time to time.

Roles and responsibilities

Role of DRDAs / DWMAs

Supporting enrollment of beneficiaries.

Identification and orientation of VOs as Customer

Service Providers (CSP).

Provide copies of Wage / Pension payment orders.

Monitoring and periodical review.

Key-process

1. Enrollment Department gives list of beneficiaries – SSP &

NREGS

Concerned bank / Financial institution conducts an

enrolment camp in the village.

GPs, VOs assist the organisation in identification of

beneficiaries.

6/ 10 finger prints, photo and other details of the

beneficiary captured.

An account will be opened.

Contd..

Key-process

2. Preparation and issue Smart Card.

Data collected during enrollment is encrypted on

the card including biometric. (Encrypted Java

smart card with 32 KB memory).

Card is delivered to the beneficiary in the village

within three weeks.

Contd..

Key-process

3. Business Correspondent & Customer Service Provider (CSP) Bank / FI appoints a business correspondent. To deliver service at GP level. BC correspondent appoints CSP at the village level. Training to BC/CSP. Require hardware like Finger print reader, printer,

mobile phone etc., is positioned in the village.

Key-process

4. Payment

Government issue instructions to the Banks / FI

authorising payment.

List of beneficiaries and authorise amount will be given.

Individual account of beneficiary is credited.

Cash is physically transported and delivered in the

village to BC / CSP.

Key-process

5. Disbursement BC /CSP sits at pre-designated at government premises

usually GP building etc., Beneficiary approaches with card. Card is inserted in the card reader and identity of

beneficiary is established. Based on the a/c balance of the beneficiary as displayed

on the screen, cash is paid. A receipt is generated in duplicate. A manual acquittance also maintained. In case of exigencies, manual payment is made.

Key-process

6. Data uploading CSP / BC uploads data of disbursements daily. MIS report an progress of disbursement is

submitted to Government.

Pilot districts - Warangal

(6) Mandals in Warangal district with banks. Dharmasagar S.B.I Geesukonda Andhra Bank Station Ghanpur A.P.G.V.B Raghunathpally U.T.I Hanumakonda Union Bank of India Raiparthy S.B.H.

Started in 5 villages on April 30th with pension payment. Pension payment under taken in all 6 mandals in the month of

July 2007. An agency named Little World is providing technical support

and an agency named Zero Mass is providing logistic support to the banks

Pilot districts - Karimnagar.

(2) mandals in Karimnagar district with a private agency M/s Financial Information Network and Operations Ltd., (FINO) Thimmapur Sirsilla

Started in 5 GPs on 1st July with pension payment. Wages under NREGS paid in the entire

Thimmapuram mandal on 13th Aug. 2007. After the pilot, the bank model will be adopted.

Highlights of the pilot

Warangal

Karimnagar

Total

Total no. of villages covered

150 22 172

Beneficiaries covered 31,098 8,285 39,383

Payments made

Present status – warangal.

Mandal Bank   Total Enrollcards issued

Disb, throu

gh card

card issued disb.

Manually

through

manual disb.

Total

disb.

Amount disb.

Paying since

Dharmasagar SBIPensions 4002 3850 3624 3064 450 173 3687 737400 May

NREGS 5788 4196 0 0 0 0 0 0  

Raghunathapally UTIPensions 2452 2311 2181 1907 241 90 2238 447600 May

NREGS 10446 2823 0 0 0 0 0 0  

Station GhanapurAPGVB

Pensions 3829 3512 3292 3159 118 192 3469 693800 June

NREGS 12121 2338 0 0 0 0 0 0  

Gheeskonda ABPensions 2698 2504 2419 2324 26 225 2575 515000 June

NREGS 5662 0 0 0 0 0 0 0  

Hanumakonda UBIPensions 2621 2458 2314 2028 277 185 2490 498000 May

NREGS 3030 2756 0 0 0 0 0 0  

Raiparthy SBHPensions 3027 2842 2682 2655 26 205 2886 577200 June

NREGS 6173 0 0 0 0 0 0 0  

Total   Pensions 18629 17477 16512 15137 1138 1070 17345 3469000  

    NREGS 43220 12113 0 0 0   0 0  

Present status – Karimnagar

by M/s FINO, Ltd., in 2 mandals

Mandal   TotalEnrolled

cards issue

d

Disb. through card

card issued disb.

manually

through

manually

Total

disb.

Amount disb.

Paying since

Thimmapur Pensions 1739 1500   242 1 54 297 59400July in 5 GPs

  NREGS 10163 1587   182 0 376 558 230000 Aug 13th

Sirsilla Pensions 2363 2031              

  NREGS 13919 1478              

Strengths

Un disbursed pensions

112

1284

April (Before Smart Card)

July (After Smart Card)

Undisbursed amount

Rs. 22400

Rs. 256800

April (Before Smart Card)

July (After Smart Card)

Saving of Rs.1.89 lakhs after commencement of disbursement through Smart Card

Expected savings of Rs.158.00 lakhs per month if up scaled for entire state

Un disbursed pensions – breakup

• Never turned up for enrollment - 474 (most likely bogus cases)• Enrolled but (did not turn up) - 810 may or may not come back.

• Total 1284

Costing - pilot

One time investment (In lakhs)

District Beneficiaries (no)

Card Cost @ Rs.90/- & Rs.60/-

Terminals @ Rs.10000/-

Total

Warangal 31,098 27.98 15.40 43.38

Karimnagar 8,285 4.97 - 4.97

TOTAL 39,383 32.95 15.40 48.35

Recurring (In lakhs)

District Beneficiaries (no)

2% Service charge

Warangal 31,098 18.88

Karimnagar 8,285 5.31

TOTAL 39,383 24.19

Costing - Up scaling in two districts

One time investment

DistrictBeneficiari

es (no)

Card Cost @ Rs.90/-

Terminals @

Rs.10000/-

Total (in lakhs)

Warangal 6,40,000 576.00 101.00 677.00

Karimnagar

5,11,821 460.64 119.00 579.64

TOTAL 66,51,821 1036.64 220.00 1256.64Recurring cost (In lakhs)

District Beneficiaries (no)

2% Service charge

Warangal 6,40,000 436.00

Karimnagar 5,11,821 351.93

TOTAL 66,51,821 787.93

Costing – up scaling to entire state (annual)

One time investment

(In lakhs)

Beneficiaries (no)Card Cost @ Rs.90/-

Terminals @

Rs.10000/-Total

94.832,791 8467.44 218.90 8686.34

Recurring cost (In lakhs)

Beneficiaries (no)2% Service

charge

94.832,791 6114.23

Scope of Business

Pensions likely to touch 50 lakhs. Amount to be disbursed Rs.12,000.00 crores

NREGS wages seekers 60 lakhs.

Amount to be disbursed Rs.24,000.00 crores Total SHGs in the state 6.99 lakhs. Number of members of SHGs 87.37 lakhs. SHGs transactions Rs.10,000.00 crores. Crop loans Rs.17,300.00 crores. Housing loans Rs.4,115.00 crores. Total business in Rural areas Rs.67,000.00

crores

Roadmap

Pilot in 8 mandals in two districts By September 15th 2007

Entire Warangal & Karimnagar districts

By December, 2007

Entire State

- expand to 4 districtsBy December, 2007

- expand to 4 districts By June,2008

- expand to 4 districtsBy December, 2008

- expand to 4 districts By June,2009

- expand to 4 districtsBy December, 2009

- expand to 2 districts By March, 2010

Challenges

Up scaling to the entire state. Budget.

Autonomous certification agency – technology

etc., Availability of vendors.

Cost sharing model. Sharing between RBI and Government. Cost sharing by banks.

Contd..

Challenges

MIS – sending of authenticated reports. Nodal agency to compile and provide authentic

MIS. Database MIS.

Operational issues. De duplication. Enrolment process. Money evacuation.

Contd..