This presentation discusses interfaces and interoperability issues betwween bank's IT systems and e-government systems. It also describes new inter-operability features mandated by financial inclusion and Aadhaar based payment systems

1. Banking
and
e-government
By
Mohan Datar
17th May 2013
BSE Institute
Mumbai
By
Mohan Datar
17th May 2013

2. Agenda
• What is Banking
• What is e-government
• Level 1 Interfaces: Citizens and Businesses.
• Level 2 Interfaces: Regulators
• Level 3 Interfaces: Financial Inclusion
• Financial Inclusion - Process
• Q & A
• What is Banking
• What is e-government
• Level 1 Interfaces: Citizens and Businesses.
• Level 2 Interfaces: Regulators
• Level 3 Interfaces: Financial Inclusion
• Financial Inclusion - Process
• Q & A

3. What Is Banking?
???
3

4. What Is eGovernment?
• eGovernment refers to the use by government agencies of
Information Technologies that have the ability to transform
relations with citizens, businesses, and other arms of
Government. ( World Bank)
• These technologies can serve a variety of different ends:
– Better Service delivery to Citizens
– Empowerment of Citizens through access to Information
– More efficient Government management (NISG)
EXAMPLES?
• eGovernment refers to the use by government agencies of
Information Technologies that have the ability to transform
relations with citizens, businesses, and other arms of
Government. ( World Bank)
• These technologies can serve a variety of different ends:
– Better Service delivery to Citizens
– Empowerment of Citizens through access to Information
– More efficient Government management (NISG)
EXAMPLES?
4

5. Level 1 Interfaces: Payment Purpose
Citizens and Businesses
• Citizens
– Payments of Bills and Taxes
– Payments for Services
– PPF
– Pension Schemes
• Businesses
– Payments of Bills and Taxes
– Payments for Services
– License Fees
– Tender Fees and Security Deposits
– Receipts and TDS
• Citizens
– Payments of Bills and Taxes
– Payments for Services
– PPF
– Pension Schemes
• Businesses
– Payments of Bills and Taxes
– Payments for Services
– License Fees
– Tender Fees and Security Deposits
– Receipts and TDS 5

6. Level 1 Interfaces: Payment Modes
Citizens and Businesses
• Citizens & Businesses
Bank’s Drop Boxes
At Bank Branches
ECS
Franking Machines and e-Stamps
ATMs
Cash and Cheque Deposit Kiosks
Payment Gateways
Net Banking
NEFT
• Businesses
RTGS
• Citizens & Businesses
Bank’s Drop Boxes
At Bank Branches
ECS
Franking Machines and e-Stamps
ATMs
Cash and Cheque Deposit Kiosks
Payment Gateways
Net Banking
NEFT
• Businesses
RTGS 6

7. Level 1 Interfaces: Payment Modes
Citizens and Businesses
Sr No. Payment Mode System Interfaces
1 Bank’s Drop Boxes ?
2 At Bank Branches
3 ECS
4 Franking Machines and e-Stamps
7
4 Franking Machines and e-Stamps
5 ATMs
6 Cash and Cheque Deposit Kiosks
7 Payment Gateways
8 Net Banking
9 NEFT
10 RTGS

8. Level 2 Interfaces:
Regulators
• RBI
• I Tax
• Customs
• Excise
• Service Tax
• Sales Tax
• IGR
• ULBs
• EOW etc
• RBI
• I Tax
• Customs
• Excise
• Service Tax
• Sales Tax
• IGR
• ULBs
• EOW etc
8

9. Level 2 Interfaces:
Regulatory IDs
• PAN
• TAN
• DIN
• Sales Tax Registration no
• Service Tax Reg no.
• VAT Reg no.
• Property no.
• Company / Document Registration No
Plethora of Regulators Leading to
MuItiple IDs for each citizen / Business
• PAN
• TAN
• DIN
• Sales Tax Registration no
• Service Tax Reg no.
• VAT Reg no.
• Property no.
• Company / Document Registration No
Plethora of Regulators Leading to
MuItiple IDs for each citizen / Business
9

10. e-government Service Delivery
• Physical Infrastructure Vision: National Service Delivery
Gateway
• Legal Infrastructure: Electronic Service Delivery Act
•16 May 2013 10
• Physical Infrastructure Vision: National Service Delivery
Gateway
• Legal Infrastructure: Electronic Service Delivery Act

11. Level 2 Interfaces:
Integration & Interoperability
• Citizen / Business
• KYC = Ravana’s Soul
• Two Emerging Identities:
– PAN
– Aadhaar
• Citizen / Business
• KYC = Ravana’s Soul
• Two Emerging Identities:
– PAN
– Aadhaar
11

12. Level 3 Interfaces:
Financial Inclusion
• What is the Origin of the Term ‘Financial Inclusion’?
• Key Objectives:
– Extending formal banking system among less privileged in
urban & rural India.
– Weaning them away from unorganized money markets and
moneylenders.
– Equipping them with the confidence to make informed financial
decisions.
• What is the Origin of the Term ‘Financial Inclusion’?
• Key Objectives:
– Extending formal banking system among less privileged in
urban & rural India.
– Weaning them away from unorganized money markets and
moneylenders.
– Equipping them with the confidence to make informed financial
decisions.
12

13. Level 3 Interfaces:
Financial Inclusion
• Financial Inclusion: Some Facts
• Access to Banking
– RBI – 40%
– Census 2011 – 58.7%
• No. of Standard Bank Accounts – 5.4 Cr
• No of Credit cards – 1.9 Cr.
• BPL Population – 29.8% (~30Cr)
• Financial Inclusion: Some Facts
• Access to Banking
– RBI – 40%
– Census 2011 – 58.7%
• No. of Standard Bank Accounts – 5.4 Cr
• No of Credit cards – 1.9 Cr.
• BPL Population – 29.8% (~30Cr)
13

14. Level 3 Interfaces:
Financial Inclusion
• What is Financial Inclusion?
• RBI Definition:
– Financial Inclusion is the process
of ensuring access to appropriate financial products and
services
(which are) needed by all sections of the society in general and
vulnerable groups such as weaker sections and low income
groups in particular
at an affordable cost (&) in a fair and transparent manner
by mainstream institutional players
• What is Financial Inclusion?
• RBI Definition:
– Financial Inclusion is the process
of ensuring access to appropriate financial products and
services
(which are) needed by all sections of the society in general and
vulnerable groups such as weaker sections and low income
groups in particular
at an affordable cost (&) in a fair and transparent manner
by mainstream institutional players
14

15. Level 3 Interfaces:
Financial Inclusion
• Implementation Process
– New Financial Product – ‘No Frills Account’
– New Payment Process – Formation of NPCI
– New KYC Process – Aadhaar
– New Funds Delivery system – Electronic benefits Transfers
– New Approach for Banking System Expansion
– New approach to Build Financial Literacy – Formation of
Financial Stability Development council (FSDC)
• Implementation Process
– New Financial Product – ‘No Frills Account’
– New Payment Process – Formation of NPCI
– New KYC Process – Aadhaar
– New Funds Delivery system – Electronic benefits Transfers
– New Approach for Banking System Expansion
– New approach to Build Financial Literacy – Formation of
Financial Stability Development council (FSDC)
15

16. Financial Inclusion Process:
1. No Frills Account
Eligibility criteria and
operating instructions
This account is offered to those individuals who are
deprived of basic banking services, belong to lower
income group and towards promoting Financial
Inclusion initiative.
The total balance in the account should not exceed
Rs. 50,000/- at any given point of time.
The sum total of credits in the account shall not
exceed Rs. 1 lakh in a year.
This account is offered to those individuals who are
deprived of basic banking services, belong to lower
income group and towards promoting Financial
Inclusion initiative.
The total balance in the account should not exceed
Rs. 50,000/- at any given point of time.
The sum total of credits in the account shall not
exceed Rs. 1 lakh in a year.
Service Delivery At all Bank Branches.
Initial deposit amount Rs. 100/-
Average Monthly Balance
(AMB)
Rs. 100/-
ATM-cum-debit card Issuance charges waived however available subject
to annual charges
16

17. Financial Inclusion Process:
1. No Frills Account Thru BC
Service Delivery At designated Customer Service Points (CSPs)
through Business Correspondent using Micro
ATMs.
Physical Statement Mini statement available through POT(Micro-
ATM). Optional half yearly statement provided
on request by BC.
Cash deposit charges Nil
Account opening charges NilAccount opening charges Nil
Smart card e-passbook Rs. 100/-
Average Monthly Balance (AMB) Nil
Cash withdrawal charges Rs. 3/- per transaction
17

18. Financial Inclusion Process:
1. No Frills Account 31/03/13
• No. of Standard Bank Accounts – 5.4 Cr
• No. of No Frills Accounts - 17.14 Cr
• No of Credit cards – 1.9 Cr.
• No. of Kisan credit cards - 3.17 Cr
• No. of BCs - 1,52,328
• No. of Standard Bank Accounts – 5.4 Cr
• No. of No Frills Accounts - 17.14 Cr
• No of Credit cards – 1.9 Cr.
• No. of Kisan credit cards - 3.17 Cr
• No. of BCs - 1,52,328
18

19. Financial Inclusion Process:
2. New Payment Process: AEPS
• The four Aadhaar enabled basic types of banking transactions:
– Balance Enquiry
– Cash Withdrawal
– Cash Deposit
– Aadhaar to Aadhaar Funds Transfer
• The only inputs required for a customer to do a transaction under
this scenario are:-
– IIN (Identifying the Bank to which the customer is associated)
– Aadhaar Number
– Fingerprint captured during their enrolment
• The four Aadhaar enabled basic types of banking transactions:
– Balance Enquiry
– Cash Withdrawal
– Cash Deposit
– Aadhaar to Aadhaar Funds Transfer
• The only inputs required for a customer to do a transaction under
this scenario are:-
– IIN (Identifying the Bank to which the customer is associated)
– Aadhaar Number
– Fingerprint captured during their enrolment
19

20. Financial Inclusion Process:
2. New Payment Process: AEPS
20

21. Financial Inclusion Process:
3. New KYC Process AADHAR
• The purpose of the UIDAI is to issue a unique
identification number (UID) to all Indian residents
that is
– Robust enough to eliminate duplicate and fake
identities.
– Can be verified and authenticated in an easy, cost
effective way
• The purpose of the UIDAI is to issue a unique
identification number (UID) to all Indian residents
that is
– Robust enough to eliminate duplicate and fake
identities.
– Can be verified and authenticated in an easy, cost
effective way

22. Financial Inclusion Process:
3. New KYC Process AADHAR
• Three Basic components of Aadhaar
– Demographic Data.
– Biometric Data
– De-Duplication
• Three Basic components of Aadhaar
– Demographic Data.
– Biometric Data
– De-Duplication

23. Financial Inclusion Process:
3. New KYC Process AADHAR
• 3 Generations of Identity authentication
• 1G
– In Person / Eyewitness
• 2G
– Variety of ID Documents
• 3G
– Aadhaar
• 3 Generations of Identity authentication
• 1G
– In Person / Eyewitness
• 2G
– Variety of ID Documents
• 3G
– Aadhaar

24. Financial Inclusion Process:
3. New KYC Process AADHAR
• 3G ID Features
– Virtual
– 24 X 7 availability
– Global Access
– Systemic Interoperability
– Single Version of Truth
• 3G ID Features
– Virtual
– 24 X 7 availability
– Global Access
– Systemic Interoperability
– Single Version of Truth

25. Financial Inclusion Process:
3. New KYC Process AADHAR
1. Aadhar is proof of identity, not of citizenship
2. To establish identity, authenticate online
3. Aadhaar is valid throughout the country
1. Aadhar is proof of identity, not of citizenship
2. To establish identity, authenticate online
3. Aadhaar is valid throughout the country

26. Financial Inclusion Process:
4. Electronics Benefits Transfer
• GoI launched the Scheme in 51 districts on 1st Jan,2013
• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.
• Est. Volume in next 2 Years: Rs. 5L Cr.
• NFS Usage Data
• GoI launched the Scheme in 51 districts on 1st Jan,2013
• Est volume of Funds Transfer thru MGNREGA – Rs.3L Cr.
• Est. Volume in next 2 Years: Rs. 5L Cr.
• NFS Usage Data
Month/Y
ear
No. Of
participants
No. Of ATM
No. of
balance
enquiry
No. of Cash
withdrawal
Pin Change
Mini
Statement
Total
Volume
Apr-13 143 111,493 37,257,214 138,220,349 216,506 4,250,210 179,944,279
Apr-12 93 98,025 40,977,284 125,408,277 132,495 2,746,105 169,264,161

27. Financial Inclusion Process:
5. New Approach for Banking Expansion
• 40% lending MUST be to
• Small Farmers
• Students
• Low Cost Home loans
• All villages with population above 2000 population
connected on Broadband
• All Villages below 2000 population to be connected in
this 5yr Plan.
• Increased Reliance on ICT
• Percentage of ICT accounts has increased from 25% to 45%
• 40% lending MUST be to
• Small Farmers
• Students
• Low Cost Home loans
• All villages with population above 2000 population
connected on Broadband
• All Villages below 2000 population to be connected in
this 5yr Plan.
• Increased Reliance on ICT
• Percentage of ICT accounts has increased from 25% to 45%

28. Financial Inclusion Process:
6. New Approach for Financial Literacy
• A technical group on Financial Inclusion and Financial Literacy under
FSDC – Coordinating the efforts of all Financial Sector Regulators
• National strategy on Financial Education prepared
• Financial Literacy-To be included in School Curriculum at National
Level.
• 658 Financial Literacy Centers (FLCs) functioning as at the end of
December 2012
• 1.5 million people educated during the period April to December 2012
• A technical group on Financial Inclusion and Financial Literacy under
FSDC – Coordinating the efforts of all Financial Sector Regulators
• National strategy on Financial Education prepared
• Financial Literacy-To be included in School Curriculum at National
Level.
• 658 Financial Literacy Centers (FLCs) functioning as at the end of
December 2012
• 1.5 million people educated during the period April to December 2012

29. Q and A
???

30. THANK YOU