ANNUAL CREDIT PLAN UNION TERRITORY OF PUDUCHERRY

Transcription

1 ANNUAL CREDIT PLAN UNION TERRITORY OF PUDUCHERRY CONTENTS CHAPTER NO. SUBJECT PAGE NO. 1 PROFILE OF UNION TERRITORY OF PUDUCHERRY 1 2 FINANCIAL INCLUSION 5 3 GOVERNMENT SPONSORED PROGRAMMES 24 4 SERVICE AREA VILLAGES/WARDS 35 5 SCALE OF FINANCE AND UNIT COST DETAILS 49 6 REVIEW OF ANNUAL CREDIT PLANS TO ANNUAL CREDIT PLAN REPORTS 61 Convenor a State Level Banker s Committee Zonal Office, 10, Kamaraj Salai Puducherry

2 PROFILE OF UNION TERRITORY OF PUDUCHERRY 1

3 Profile of Union Territory of Puducherry The Union Territory of Puducherry covering a total area of 479 Sq. Kms comprising of four erstwhile French establishments in India viz. Puducherry, Karaikal, Mahe and Yanam. Puducherry the head quarters of Union Territory which is 162 Kms south of Chennai along with east coast is in Puducherry region covering 290 sq. kms is interspersed with enclaves of Villupuram and Cuddalore districts of Tamil Nadu. The area of Karaikal region is 161 sq. kms which is about 150 kms south of Puducherry and is surrounded by Nagapattinam district of Tamil Nadu. Yanam region is spread over an area of 20 sq. kms and is 840 kms north-east of Puducherry near Kakinada surrounded by East Godavari District of Andhra Pradesh and Mahe region with a total area of 9 sq. kms is in the west coast near Tellicherry in Kerala, 653 kms away from Puducherry. Puducherry town is connected by railways, and by roadways. Puducherry is referred by names such as Quintessence of French Culture, India s Little France and The French Riviera of the East. Still it has the French flavor in it as one can see by the grand colonial mansions, beautiful boulevards, and placid promenades, spellings on sign boards and buildings, names of roads and public places. The district presents more or less a flat land. There are no hills or forests. The main soil types are red ferrallitie black clay and coastal alluvial. Karaikal district is situated in more or less a flat land. There are no hills or forest in this district. This district consists of almost entirely coastal alluvial soil which is highly suitable for cultivation of paddy and pulses. Pulses, cotton, chilies, coconuts, ground nuts, vegetables and sun flower are the other popular items grown in the district. Karaikal is a good fishing centre with the following ten marine fishing villages spread along the coast. Mahe is a little area which is bounded on the south-west by the Arabian sea, on the north by river Moolakadavu and on the other sides by a stretch of calcareous hills of medium height which are linked to the ghats by a series of wooden hillocks. The district consists of three entities viz. Mahe town proper, the small enclave of Kallayi and of Naluthura. Mahe is situated on the Malabar Coast. This district is entirely rain fed and is covered by typical red laterate soil. There is no forest area in this district. The coast line here lies between the richest fishing belt between Ponnani and Mangalore on the west coast. Mahe is at the centre of a prawn grouped which stretch from Quilon to Mangalore. Yanam lies on the spot where the Coringa river and Godavari river separate. It is more or less a flat land. Population - The Union Territory of Puducherry has a population of 9,74,345 according to the 2001 census. The provisional census as per 2011 census is 12,44,464. 2

4 Soil - Various types of soil found in the Union Territory are red loamy, coastal alluvium, delta alluvium, red laterite, deep black and red sandy. Climate - The mean maximum temperature is 38.2ºC and mean minimum temperature is 24ºC. Rainfall - North-East monsoon is the major source of rainfall in the Union Territory. Rivers - Gingee and Pennaiyar are the major rivers in the Puducherry region. Gingee river traverses diagonally from North-West to Southeast, while Pennaiyar river forms the southern border of Puducherry region. A branch of Pennaiyar River called Malattar flows through the Puducherry region. Cauvery River along with its seven tributaries flows through Karaikal region. Godavari is the only major river in the Yanam region, the rivers Mahe and Moolakadavu serve Mahe region. Mineral resources - The mineral deposits in the Union Territory of Puducherry include limestone, clay, lignite, phosphatic rocks, brick clays, canker, seashells, garnet sands, laterite and beach sands etc. There are no mineral resources in the Yanam region, which is of economic value. Rail linkage - Puducherry is connected with Chennai by Broad Gauge railway line via Villupuram. Karaikal has now being connected to rail network through Nagore. Mahe is on the Broad Gauge line between Kozhikodu and Thalaserry. Yanam has no railway facility and the nearest railway station is Kakinada, which is located at about 26 Kms from Yanam. Roadways - Puducherry has well developed roads. All the rural roads are all weather roads. Revenue and administration - The Union Territory consists of 236 census villages/wards, 129 revenue villages 6 taluks (4 in Puducherry, 2 in Karaikal) and 2 sub-taluks (Mahe & Yanam). For the purpose of Development administration, the Territory is divided into six blocks namely (i) Ariyankuppam block (Karikalampakkam) (ii) Oulgaret block (Reddiarpalayam) (iii) Vilianur block (iv) Karaikal block (v) Mahe block and (vi) Yanam block consisting of 47 circles of village level units. Puducherry Panchayats Act of 1973 & Municipalities Act of 1973 came into force in There are five municipalities, namely Puducherry, Oulgaret, Karaikal, Mahe and Yanam. There are 10 Commune Panchayats, namely, (i) Vilianur (ii) Mannadipet (iii) Ariyankuppam (iv) Bahour (v) Nettapakkam (vi) Tirunallar (vii) Neravy (viii) Nedungadu (ix) Kottucherry and (x) T.R. Pattinam. 3

5 PERFORMANCE INDICATORS OF THE CREDIT DELIVERY SYSTEM AND OTHER KEY BANKING STATISTICS FOR UT OF PUDUCHERRY AS OF DECEMBER 2011 Rs. in Lakhs Particulars Co-operatives PSCB PCCLDB RRB Commercial Banks (includes SIDBI & PIPDIC) No. of Banks No. of Branches Of which Rural Semi-Urban Urban * * 1 Avg. Population/Branch Avg. No. of Villages/Branch Total deposits as on (Rs. In lakhs) Avg. Deposits/Branch Total Loan Outstanding as on Avg. Advance/Branch Agri Outstanding % of Agri. Advance to Total advances CD ratio Total DEMAND, COLLECTION AND BALANCE (Priority Sector Advances) Year Demand Collection Balance % of recovery June June June June June June June June June June June June June June

6 FINANCIAL INCLUSION 5

7 FINANCIAL INCLUSION FINANCIAL INCLUSION-A TOOL FOR POVERTY ERADICATION Financial exclusion is both a symptom and cause of poverty. For accelerated growth of the economy, people should be provided with basic banking services through financial inclusion. With the objective of ensuring greater Financial Inclusion with outreach of banking sector and providing Banking services to the doorstep in a cost effective manner RBI has directed all the banks to implement Financial Inclusion Plan. In most of the developing countries, a large segment of society, particularly low-income people, have very little access to both formal and semi-formal financial services. For sustainable equitable growth, Financial Inclusion is relevant and important. The reform process initiated in the nineties has widely transformed the economic landscape of India. However, the benefits of economic growth have not equitably reached all segments of our Society. Access to sustainable and secure financial services contributes directly to higher incomes while reducing the vulnerability of the poor. Bringing more people, and therefore more money, into the formal financial system can lead to overall economic growth and increased stability in developing country s economy. Financial exclusion is increasingly being recognized as a factor that aggravates poverty, where the poor are largely unbanked. The predominance of gender and age related issues, low literacy levels, unshakable faith in local money lenders and local informal institutions, poor communication facilities, lack of social security, psychological and cultural barriers, lack of legal identity, unorganized employment etc in rural India and high transaction cost for the lending institutions, were responsible for the exclusion. Despite the phenomenal growth of banking network, post nationalization of banks, still 48% of households in India do not have access to banking services. A large number of the poor still depend on informal sources of savings and avail the loan from money lenders. If the financial sector is to contribute more fully to inclusive economic growth, it must reach out to the people at lowest strata of the society. 6

8 Measures by RBI and GOI towards Financial Inclusion Historically, the Reserve Bank of India (RBI) and the Government of India (GOI) have been making efforts to increase banking penetration in the country. Some of these measures include the nationalization of commercial banks in 1969 and 1980; initiating the Lead Bank Scheme in 1970; establishing Regional Rural Banks (RRBs) in 1975; introducing Self-Help Group (SHG)- Bank Linkage Programme in 1992 and formulating the Kisan Credit Card scheme in In November 2005, banks were advised to make available a basic banking no-frills account with nil or very low minimum stipulated balances as well as charges to expand the outreach of such accounts to vast sections of the population. In order to ensure that persons belonging to low income group, both in urban and rural areas do not encounter difficulties in opening bank accounts owing to procedural hassles, the know your customer (KYC) procedure for opening accounts has been simplified. More recently, in January 2006, banks were permitted to utilize the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and other civil society organizations as intermediaries in providing financial and banking services through of business facilitator and business correspondent models. To extend hassle-free credit to bank customers in rural areas, the guidelines on General Credit Card (GCC) schemes were simplified to enable customers access credit on simplified terms and conditions, without insistence on security, purpose or end-use of credit. With a view of providing hassle free credit to customers, banks were allowed to issue General Credit Cards (GCC) akin to Kisan Credit Cards (KCC). Moreover, the Government of India has also expressed its explicit concern on the issue of overall inclusion in the development process through its various initiatives such as the Rural Employment Guarantee Scheme, the Bharat Nirman programme, the Sarva Shiksha Abhiyan, and the like. A Committee on Financial Inclusion, with Dr. C. Rangarajan as Chairman, was constituted by the Government of India in June 2006, to recommend a strategy to achieve higher financial inclusion in the country. COVERAGE OF ALL FARMERS UNDER KCC Financial Inclusion should reach the grass root of the society i.e farming community. All the farmers are to be covered under formal banking credit and Kisan Credit Card is the best tool for the same which provides loans to farmers to raise crops with minimum difficulty. All the eligible farmers in Union Territory of Puducherry were covered under KCC scheme for which common 7

9 format was designed and printed for usage of all bankers. The forms are also made available through Farmer credit centres. Strategy and Guidelines on Financial Inclusion 1. Financial inclusion is an important priority of the Government. A number of policy measures have been taken towards achieving the objective of financial inclusion. Under the Financial Inclusion Plan under implementation, in the first instance, habitations with population of 2000 and above, as per 2001 census, are being taken up for provision of banking services by March Only about 5% of the nearly 6 lakh villages in the country have bank branches. There are 296 under banked districts in the under banked states in the country. With the Financial Inclusion Plan under implementation, around 73,000 villages, having population of 2000 and above, would be provided facilities for banking services by March The Banking Correspondents and the new bank branches being opened in these villages would also provide services in the adjoining areas. 3. The Task Force set up by the Government for the direct transfer of subsidies on LPG, Fertilizers & Kerosene has already presented its interim report. Pilot for direct transfer of subsidies on kerosene and LPG are being taken up this year. Besides, there are at least 35 other schemes where the benefits are to be transferred to the beneficiaries and adoption of electronic benefit transfer would greatly enhance the efficiency of such transfers, besides reducing the scope of malpractices. Disbursement of MNREGA wages to the beneficiaries is required to be made in a fixed time period. Extension of banking and other financial services to the rural areas will also facilitate and, in fact, accelerate the economic development of such areas. 4. In view of the above, an urgent need of a strategy and approach for the extension of financial services to the entire country, and thereby extend the benefits of electronic benefit transfer, exists. These guidelines would be applicable for the time bound coverage of the entire country with banking services under financial inclusion. 5.1 Banking Responsibility: (i) Service area approach would be adopted for the coverage of the entire country for financial inclusion. So far the SLBCs have allocated specific villages among the banks. As Gram Panchyats are at the centre of the various developmental and welfare schemes and would play an important role in the electronic benefit transfer, service area of the banks needs to be defined in terms of the Gram Panchayats. (ii) Each DCC shall prepare a plan in a format as given at Annexure -I. Changes in existing allocation, wherever required, could be finalised at the level of the SLBCs at their next 8

10 (iii) meetings to be held before 31 st October Banks to whom the areas under Gram Panchayats are allocated would be responsible for all the financial inclusion activities in such areas. However residents would be free to approach any bank within or outside the service area for any banking service. Area to be served by the existing and to be opened branches should also be specified in term of the Gram Panchayats and the other areas may be covered through the BC model, as stated above. 5.2 Coverage Plan : (i) Under the present scheme of financial inclusion, all villages having a population of 2000 or more, as per 2001 census, (72721 villages) have been identified and allocated among banks by the SLBCs to be covered under the Financial Inclusion by March, In addition, considering the population distribution, in Arunachal Pradesh, Himachal Pradesh, Meghalaya, Mizoram, Uttarakhand, Chhattisgarh, Andaman & Nicobar, Daman & Diu, Pudducherry, Lakshadweep, all villages of 1000 and above must be covered by September (ii) Banks must, with their service areas, assign the existing BCs the area of the entire Gram Panchayat or, if required, also the adjoining Gram Panchayat in accordance with para 5.4 below. Banks must also assign the BCs, to be appointed as per sub para (i) above, the area of entire Gram Panchayat in which village having population of 1000 or 2000, as the case may be, falls. (iii) (a) At present the District and State Level Plans are being prepared for the banks, NABARD etc. Similarly, the Public Sector Insurance Companies are also preparing their field level plans. (b) In order to develop a comprehensive frame work for delivery of financial services and, hence, promote Financial Inclusion, it is necessary that comprehensive Financial Services Plan for the entire District and State is also prepared. (c) It has therefore been decided that: The District Lead Bank Officer, Officer In charge of NABARD and Nodal Officers of Public Sector Insurance Companies, both life and non life, would prepare a comprehensive District Financial Services Plan covering banking, rural development, insurance, etc. These officers would also meet once every month to review the progress and resolve inter agency issues. At the State Level, SLBC Convener, NABARD in-charge for the State and State In-charge of Public Sector Insurance Companies, both life and non life, would prepare similar State Financial Services Plan. At the State level also, these officers would meet once every month to review the progress and resolve interagency issues. (d) The objective of the exercise is to ensure Financial Inclusion by ensuring bank account for every household, Kisan Credit Card to every farmer s family, General Credit 9

11 Card to other households and extensive coverage under micro-insurance and micropension scheme besides looking at the critical gap in infrastructure in terms of rural warehousing etc. (e) The District Lead Officer and the State SLBC Convener would be responsible for the aforementioned committees at the District and the State Level respectively. 5.3 Branches: (i) In the under banked districts as listed by the RBI, the Banks shall within their service area, open a regular brick and mortar branch in larger habitations with population of 5000 and above by September Such branches could initially have lesser staff, say 2 persons, with ATM facilities. The staff strength could be increased as the business grows. Under the extant Policy of RBI on branch authorisation, prior approval of the RBI is NOT required to open branches in tier 3 to tier 6 areas. In fact, opening bank branches in the under banked districts of the under banked states would entitle the banks to seek branches in tier 1 towns under their Annual Branch Authorisation Plan. Such a branch would be assigned a service area by the DCC/SLBC covering one or more Gram Panchayats. (ii) In other districts, the banks must try to open as many brick and mortar branches, in their service areas, in habitations having population of 10,000 and above by September (iii) While planning for branch expansion, it may be seen that in the unbanked areas the branches are available within a radial distance of 5 km. 5.4 Business Correspondents (BC): (i) In habitations without a bank branch, the Business Correspondent would be the main instrument of delivery of financial services. It is necessary to ensure that the business model of BCs is commercially sound and that they become financially viable in a reasonable time, say 2 years. This would require that each BC handles a reasonable number of household accounts, keeping the geographical coverage in consideration. (ii) Based on the feedback from the various Institutions, it is felt that the BC/Agent should be dealing with households, or cater to a population of about In the hilly, tribal and desert areas or where distance is large, the banks could have lesser number of accounts keeping the geographical and other conditions under consideration. DLCC will take a decision in such cases and get it ratified from SLBC. However, it must be ensured that the each BC Agent is assigned a sub-service area within the service area of the branch. Gram Panchayat shall be retained as a unit and BCA could be assigned more than one Gram Panchayats. (iii) Requirement of BC/BCA may be worked out in such a manner that the BCA is available within a radial distance of 2 km. 6 While appointing BCAs, Banks will keep following features in mind: (i) It is better to appoint an existing entrepreneur as BCA so that it is an additional income to him/her. This will improve the viability of BCA. While approving location of BCA, the place 10

12 should be such that easily accessible and be preferable by the place of weekly local Haats. (ii) Nearly 1 lakh Common Service Centres (CSCs) have been established by the Department of Information Technology. The CSC network will also expand. In order to ensure convergence and to assist viability of BC, it would be necessary that in the villages to be covered, wherever a CSC exists, the CSC is made a BCA. Banks can engage additional BCAs, if required in such cases. (iii) The selection of BCA must be done by the BC with the consent of the concerned Branch Manager in whose service area the BC is located. Preference should be given to such persons who are already doing some activity in the village. (iv) The device to be given to BCA should be interoperable through the gateway of NPCIL so that the customer can access to any bank by using the device. The device must have biometric facility plus card or password plus card. The BCA must have on-line connectivity. (v) The BCA must be responsible to receive and pay money, to transfer money from one to another. Each BCA must necessarily be appointed as Business Facilitator (BF) for all activities permitted by the RBI. BCAs must also be used as deposit mobilisation and recovery agents as permitted by RBI. (vi) The BCA will also be acting as an extension staff for micro insurance, animal insurance, crop insurance and micro pension. The banks will ensure coordination with the agencies, viz., LIC and other agencies dealing with these products. (vii) An officer of the concerned branch of the bank must be visiting the BCA once in a week on a fixed time and day and will use this visit to collect application for opening account, loans of all types, recovery follow-up and any other banking issues. This will install greater confidence among the customers and facilitate increased banking transactions through BCAs. (viii) The BCA must be responsible for routing all transactions of all villages in the assigned villages so that effective marketing and follow up, can take place. (ix) BCA could be remunerated using different models or a combination based on transactions, number of accounts opened, value of transactions, etc., with safeguards against recycling of funds, the guiding principle being the BCA has motivation to facilitate transactions of the customers and to provide good quality services. (x) For cash management, a proper arrangement needs to be worked out keeping in view the guidelines of RBI by the banks and with the BCA. (xi) Transfer of the funds by the account holders of the bank represented by the BC to the account holders of other banks should be possible. (xii) It is necessary for banks to ensure that there is a continuous improvement in the quality of services through the BCAs. Banks must have regular training programmes of the BCAs along with BCs. This must lead to reduction in footfall of the villages from the villages attached to the BCA in the service area of the branch of the bank. 11

13 7. Electronic Benefit Transfer: (i) Presently 32 schemes are in operation, (Annex-II), funded by the Government of India, under which benefits are to be given directly to the beneficiaries. Transfer of such subsidies into the accounts of the beneficiary under Electronic Benefit Transfer would enhance the efficiency of delivery of such services. Benefits in the areas covered under Financial Inclusion must be transferred electronically into the accounts of the beneficiaries. The Convenor Banks of SLBC must take up this matter in the next SLBC and the roadmap for Electronic Benefit Transfer in respect of each scheme must be finalized. (ii) RBI issued the operational guidelines on implementation of Electronic Benefit Transfer and its convergence with the Financial Inclusion Plan on Under this, one district - many bank- one leader bank model is to be adopted. While all Departments of the Government of India ( GoI) and State Governments may, for administrative convenience, deal with only one leader bank, such leader bank will obtain the funds from the GoI/State Government and, in turn, arrange to transfer funds through inter-bank transfer to other banks for credit to the accounts of ultimate beneficiaries. Under the service area approach, while the banks would be responsible for the Electronic Benefit Transfer to the residents in their service area, the residents would be free to choose the bank through whom they would like such transfer of benefits. (iii) In some states, parallel structures for Electronic Benefit Transfer for some schemes have been created which are inconsistent with the aforesaid guidelines issued by the RBI. Such system should be discontinued henceforth or converted into one district- many banks-one leader bank model as per para-(ii) above. (iv) It has also been observed that KCC beneficiaries as well as others who are already having bank accounts are asked to open separate account for availing Electronic Benefit Transfer. Any beneficiary having any bank account must not be required to open new accounts and the benefits should be credited to the existing account. ICT based Financial Inclusion The recent developments in banking technology and expansion of telecommunication network in the hinterlands of the country have provided the perfect launch pad for extending banking outposts to remote locations without having to open bank branches in the area. This could be achieved by leveraging technology to open up channels beyond branch network and create the required banking footprints to reach the unbanked so as to extend banking services similar to those dispensed from branches. In short, technology has to enable the branch to go where the customer is present, instead of the other way around. Under the Information Communication Technology (ICT) based Financial Inclusion Model, banking services are provided at the doorstep of the customers through a voice guided Point of Sale (POS) machine (Micro ATM) and smart cards by engaging the Field Business 12

14 Correspondent (FBC). Customers are allowed to deposit and withdraw cash up to certain amount in the village itself. All the transactions are carried out through biometric authentication, which is more secured. Customers can also deposit the loan installments, monthly RD installments etc through point of sales machine and transfer funds from their account to various other accounts of same branch or different branch throughout the country. Customers are provided with the printed slip for each transaction. MGNREGA and pension payments are made through POS. Provisions for Balance enquiry and obtaining mini statements for the last 10 transactions are also possible through POS. Besides ICT model, banking services are also provided through Banking Service Centres (BSCs) - an internet based Kiosk model to extend financial services for inclusive banking and sustainable livelihood of the people. Banking services are also provided through mobile van. The van visits one day to each village in a week and provide all banking services to the customers of the villages. Financial Inclusion solution is the need of the day to bring an inclusive growth for the entire country. This will not only provide banking solution but also will bring a revolution in the Banking history of India by providing financial education thus bringing changes in the social and economic life of rural India freeing them from the clutches of money lenders. It is becoming increasingly apparent that addressing financial exclusion will require a holistic approach on the part of the banks in creating awareness about financial products, education, and advice on money management, debt counseling, savings and affordable credit. The success of all the financial inclusion efforts taken by the banks shall largely depend on how the banking facilities offered at the villages are accepted and utilized by the villagers. Banks need to redesign their business strategies to incorporate specific plans to promote financial inclusion of low income group treating it as a business opportunity. 100% Financial Inclusion in UT of Puducherry A bird's eye view Preamble Reserve Bank of India in its Annual Policy Statement for the year , while recognizing the concerns in regard to the banking practices that tend to exclude rather than attract vast sections of populations, urged banks to review their existing practices to align them with the objectives of financial inclusion. In the Mid Term Review of the Policy ( ) the RBI, with a view to achieving greater financial inclusion, exhorted the banks to make available a basic banking `No 13

15 frills' account either with `nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population and in a transparent manner. Further to this direction, Dr. Y.V.Reddy, Governor, Reserve Bank of India, in his visit to UT of Puducherry mooted the idea of reaching the un-reached and called Bankers in Pondicherry on to take up a NATIONAL PILOT PROJECT ON FINANCIAL INCLUSION (NPPFI) in the UT of Puducherry for a period of one year commencing from He also called upon the State Level Banker - Indian Bank to put in place the project guidelines for operation and allocation of specific villages/wards to each Bank branch. Indian Bank s Initiative: Pursuant to the discussion with the then Governor, RBI had with the Bankers in the Union Territory of Puducherry on , a National Pilot Project on Financial Inclusion (NPPFI) was conceived and launched on by Indian Bank, the SLBC convener involving all the banks. Indian Bank has taken lead in implementing the Financial Inclusion in the Country and is the first Bank to implement the Financial Inclusion Project on a pilot basis in UT of Pondicherry where it has lead responsibility. Detailed guidelines, procedures, formats etc. were finalized and made available to all bank branches. All the Villages and urban wards were allocated to various Bank branches operating in the Union Territory. As a pre-project initiative and to set the ball rolling, Indian Bank implemented the concept in Mangalam village of Union Territory of Pondicherry on The bank covered entire 744 households in the village and 1661 fresh SB accounts were opened, after taking care of the requirement of KYC norms. Besides opening 'no frills' /zero balance SB accounts, small overdrafts and General Credit Cards were issued to 1661 persons involving a credit outlay of Rs lakhs. Financial Inclusion Package The financial inclusion schemes provides No frills SB account with Overdraft (OD) facility up to a maximum of Rs. 5000/- per individual for general consumption purpose without insisting on any purpose and issue of General Credit Card (GCC) for individuals with a maximum of Rs. 25,000/- for income generating activities. With a view to providing social security to the Below Poverty Line (BPL) families, Indian Bank has launched a Mediclaim Scheme in association with United India Insurance Company Limited 14

16 (UIIC), Universal Health Care Policy for no frills account holders. Besides, for providing life cover to SHG members, a Group Insurance scheme in the name of Jana Shree Bima Yojana (JBY) has been launched in association with LIC of India. In addition to life coverage the policy provides scholarship facility to the wards of SHG members. a) Issue of Savings Bank Account - No frills Savings Bank accounts have been opened for all the eligible individuals in the rural/semi-urban households at their doorsteps using simplified KYC / documentation procedures. b) Issue of Overdraft (OD) - All eligible No frill account holders preferably lower end segment of the people have been provided Overdraft facility with a maximum of Rs.5000/- per individual without insistence on any security, purpose or end use of the credit. c) Issue of General Credit Card (GCC) / Kisan Credit Card (KCC) - All eligible account holders have been issued General Credit Card based on the assessment of the income and cash flow of the household up to a maximum limit of Rs. 25,000/- without insistence on any security and the purpose or end use of the credit. d) Defaulters Cleansing Mechanism - RBI has advised Banks to provide a simplified mechanism for one time settlement of loan where the principle amount is equal to/less than Rs.25,000/- and which have become doubtful and loss assets as of September 30, e) Strengthening SHG lending - In order to further strengthen and to take forward the micro enterprise, based on the track record of SHGs, a general line of credit with simplified accounting is provided to the SHGs instead of frequent modification of limit based on the savings mobilized. This arrangement will reduce the transaction cost and provide feasibility in the credit delivery to the beneficiaries. f) Insurance Products - These account holders are offered various insurance products inclusive of Life insurance and medical insurance to provide social security. Indian Bank has introduced Insurance Products to provide Life, Accident and Health cover to the neglected segment of the people under Janashree Bima Yojana, the insurance scheme for SHG members and Universal Health Care, a Mediclaim insurance scheme for Below Poverty Line (BPL) families under Financial Inclusion project. Modus Operandi followed in implementation of the project: Basic data such as population pattern and household details were collected using census 2001 and electoral list. 15

17 Teams were formed, involving Bank officials / SHGs members/ students / village volunteers etc for conducting household s survey Prior to commencement of household survey, sufficient publicity was given using Tom Tom" and issuing handbills to the public about the teams' visit. Using Household survey format, basic details such as name, age, Voter ID No. / Ration card No., occupation, income level and mainly willingness of the adult members to open Bank accounts and particulars of their association with financial institution etc were collected. No frills accounts opening formalities were completed on the spot for all eligible and willing households/individuals. Photographs were also taken on the spot Ration card / Electoral ID cards details were verified for fulfilling the simplified KYC norms. Based on household survey format every household's financial requirements were analyzed and the limits for Overdraft/ General Credit Cards finalized. Willing participants were covered with low cost life and Medical insurance Regular SLBC and Bankers Core Committee meeting were convened to review the implementation of the project regularly in order to make all the participating Banks aware of the importance of the project. All the Banks in Puducherry with 14 implementing branches have opened 'No frills' SB accounts covering households. Thus Union Territory of Puducherry became the first State/ Union Territory in the entire country where all the families were provided with a Bank account and needy households were given credit facilities. The pilot project was completed within a period of one year as conceptualized. ICT ENABLED FINANCIAL INCLUSION PLAN (FIP) Pursuant to the announcement of Union Finance Minister in his budget speech regarding providing of banking services to the rural hinterland in a time bound manner and based on the recommendations of the High level committee to review the Lead Bank Scheme, RBI advised the Banks to provide basic banking facility to all villages in the country with population of more than 2000 by drawing out bank specific Financial Inclusion plans. Lead Banks have been advised to allocate such villages to various banks so as to provide the banking services in a time bound manner. Accordingly SLBC, Puducherry has convened the meeting of the bankers to finalize the list of the unbanked villages with population above 2000 on and the same was allocated to the 16

18 member banks for providing Banking services on service area basis. In the process 42 villages with population more than 2000 were identified for providing banking services. Banking services have been provided to all the villages with population above 2000 in a record time i.e by well before the stipulated time line of Govt. of India thus creating another history in banking industry. The details of the villages along with the name of the Banks and the mode of providing banking services are hosted in the SLBC website. RBI outreach programme The Reserve Bank s outreach programme aiming to evolve a sustainable banking model at the village level is being implemented by various banks through financial inclusion initiatives. The concept is to provide banking services to all the unbanked rural populace. Indian Bank in UT of Puducherry participated in all three outreach programme conducted by RBI at Managalam village, Chettipet village and Manamedu village where banking services are provided to all the villages through ICT based smart card technology. In order to promote Financial Literacy, A Financial Literacy and Credit Counseling Centre (FLCC) was established in Puducherry. To train the rural youth in various professional and self-employed activities, an Indian Bank Selfemployment Training Centre (INDSETI) was also established in Puducherry. Coverage of villages with population 2000 and below: In accordance with the guidelines of Govt. of India banks have to provide banking services to all the unbanked villages with population 2000 and below, SLBC Puducherry identified and allocated 25 villages to various banks. All these villages have been provided with banking services by well before the stipulated time. Thus Union Territory of Puducherry has become the first State in the entire country to complete 100% Financial Inclusion by providing banking services at doorstep of all unbanked villages with population above 2000 as well as below The details of the list of the villages provided with banking services are also hosted in the website of UT of Puducherry. 17

19 As directed by Govt. of India, SLBC has taken steps to provide Kisan Credit Card to all the eligible farmers in the State. Presently UT of Puducherry is well served by network of 126 branches of commercial banks, 25 branches of Puduvai Bharatiyar Grama Bank, 27 PSCBs and one PCCLD Bank. Thus 179 branches of banks/financial institutions are functioning as on Thus Union Territory of Puducherry is now declared as 100% Financially Included by providing banking services at doorstep of all unbanked villages with population above 2000 as well as below TOTAL FINANCIAL INCLUSION Financial exclusion is both a symptom and cause of poverty. For accelerated growth of the economy, people should be provided with basic banking services through financial inclusion. It is estimated that over two billion people are excluded from access to financial services globally. In most of the developing countries, a large segment of society, particularly low-income people, have very little access to both formal and semi-formal financial services. For sustainable equitable growth, Financial Inclusion is relevant and important. Most of the developed countries are taking efforts to bring the underprivileged segment of the society into banking fold to improve their financials and living standards. Out of 6 lakhs habitations in the India, only about 30,000 have a commercial Bank branch, with 40% having bank accounts, only 26.2% of the rural population are covered thro bank accounts. Financial exclusion is noticeable predominantly in large sections of rural areas and slums in Urban areas, and it is more than 75% in Northern Easter States. Financial exclusion is mainly due to lack of accessibility, affordability and non availability of appropriate Banking product or services to the under privileged. Phase I In late 60 s to 80 s, the focus was on channeling of credit to the neglected sectors. Nationalization of major commercial banks, Strengthening of Co-operative sector, Introduction of Lead Bank Scheme, Service area approach, Creation of Regional Rural Banks, IRDP, 20 Point Programs, etc. Phase II Early 90 s to March 2005, introduction of Self Help Group (SHG), Kisan Credit Card. 18

20 Phase III In April 2005, Financial Inclusion was explicitly made as a major policy objective and thrust was on providing safe facility of saving deposits thro No Frill accounts. General Credit Card (GCC) and Overdraft (OD) were introduced in Utilizing the services of Business Facilitators and Business Correspondents, Establishment of Rural Self Employment Training Institutes (RSETI) and Financial Literacy and Credit Counseling (FLCC) centers. Setting up of Unique Identification Authority of India (UIDAI) for providing UID number for all citizens. Financial Inclusion aims at delivery of banking and financial services to vast sections of disadvantaged and low income groups in a fair, transparent and equitable manner at an affordable cost thro Opening of No Frill Savings Bank Account OD facility in SB a/c for consumption needs Provision of GCC cards for taking up economic activities Kisan Credit Cards for eligible farmers and Insurance Products, etc., Inclusive Growth by Financial Inclusion As State Level Bankers Committee (SLBC) Convenor Bank for Union Territory of Puducherry, Indian Bank has pioneered in Financial Inclusion by formulating first of its kind FI model and launched the National Pilot Project on Financial Inclusion on , by selecting Mangalam Village where entire households were covered by No Frill accounts. Thus our Mangalam village in UT of Puducherry has become first village in the entire nation to have 100% financially included with credit/overdraft facilities and General Credit Cards. Dharavi (Mumbai) was brought under Urban Financial Inclusion, for migrant workers who had no access to any formal financial service by Indian Bank. Technological Initiatives for Financial Inclusion: As a door step banking by providing on line banking facilities, Banking Service Centers are established. Bio-metric ATMs are also provided to facilitate to have 24x7 services for the cash transactions. To facilitate Financial Literacy and skill up-gradation to the villagers, Banks have formed Rural Self Employment Training Institutes (RSETI) and Financial Literacy and Credit Counseling (FLCC) centers. 19

21 High Level Committee to review the Lead Bank Scheme chaired by Smt Usha Thorat, then Deputy Governor of RBI, recommended for broadening of the scope to provide banking facilities thro any of the various forms of Information Communication Technology (ICT) based model including services thro Field Business Correspondents (FBCs) / Banking Service Centres (BSCs)/Branches and Mobile Branches. Information Communication and Technology based Smart Card enabled BC model In this model, banking services are provided at the doorstep of the customers through a Point of Sale (POS) machine (mini ATM) and smart cards by engaging the FBC. Customers are allowed to deposit and withdraw cash up to certain amount in the village itself. Besides, they can also deposit the loan installments, monthly RD installments etc. All the transactions by the Field BCs will be through Online only. A voice guided Point of Sale machine/micro ATM is provided to the FBC which is activated by FBC s Smart card and make the FBC to do the transactions thro POS. FBCs are identifying the customers for opening account and capturing all the 10 finger prints with photograph of the applicants along with account opening form with relaxed KYC. Accounts are opened on authorization and the service provider will prepare smartcards and delivered to the customers on activation. FBC can accept cash receipt and make cash payment with certain limits. FBC can effect transfer from one account of the customer to another account. Customers will be provided with the printed copy for each transaction. MGNREGA and pension payments are made thro POS. All FBCs are provided with uniform dress code and identity card. Swabhimaan Sign boards are displayed at the villages. Salient Products: No Frill Savings Bank Account: To cater low income population with no initial/minimum balance with relaxed KYC norms. 20

22 Relaxed KYC norms: The balance in the account should not exceed Rs.50000/- at any point of time and the total credit summations in all the accounts taken together not to exceed Rs100000/- in a year. ITC enabled Smartcard BC model: Each customer will be issued a smart card which is enabled with a microchip to store the transaction data. Transaction will be done with biometric authentication thro POS machine. Balance enquiry can be made and obtain mini statements for the last few transactions. Publicity and Awareness: Public awareness meeting has been organized in the villages and the BC model, its working and advantages have been explained thro screening of short film, street plays, folk songs, distribution of pamphlets, banners and posters. Marketing/Business mobilization: Marketing of FI products like OD, GCC, KCC etc thro promotional campaigns. Grievance Redressal: all the complaints/grievance of the FI customers are redressed immediately. The performance of Total Financial Inclusion at UT of Puducherry UT of Puducherry is well served by network of 126 branches of commercial banks, 25 branches of Puduvai Bharathiar Grama Bank, PSCB (27) and PCCLD Bank (1). Thus 179 branches of banks/financial institutions are functioning as on The UT of Puducherry is now declared as covered with 100 per cent banking facilities to all its eligible and willing households. Of the 236 villages/wards and households allotted, households existed and were surveyed. Due to mobilization efforts, as many as accounts have been opened under the project and credit facilities were extended to the tune of Rs lakhs under OD/GCC scheme to beneficiaries and Rs lakhs to 3073 beneficiaries under other facilities. 42 villages with above 2000 population and 25 villages below 2000 population have been covered under FBC/BSC/mobile banking. With a view to make SHG movement sustainable, Micro Entrepreneurs Development Programme (MEDP) was organized covering various trades like community gardens, solid waste management by NABARD. Micro insurance is being taken at the instance of NGOs from various service providers like LIC, SBI Life Insurance, HDFC Life Insurance etc., It is has been recognized that opening of accounts is just the preliminary measure of the process of Financial Inclusion. It is necessary that other steps like issue of GCC cards, making available 21

23 the entire range of financial services and products to the customers, micro insurance, etc., are completed by the banks. Financial Literacy and Credit Counselling Centre (FLCC) Financial Inclusion was introduced to bring a sizable majority of the population particularly vulnerable groups who remain excluded from the opportunities and services provided by financial sector. In order to make people understand about the various financial products and services, budgeting and money management, taking appropriate decisions in managing personal finances, and understanding their rights and responsibilities Financial Literacy and Credit Counselling Centre has been established in Puducherry with the following specific objectives: To educate the people in rural and urban areas with regard to various financial products and services available from the formal financial sector To make the people aware of the advantages of being connected with the formal financial sector To provide face-to-face financial counseling services, including education on responsible borrowing and offering debt counselling to individuals who are indebted to formal and/or informal financial sectors To formulate debt restructuring plans for borrowers in distress and recommend the same to formal financial institutions, including cooperatives, for consideration To take up any such activity that promotes financial literacy, awareness of the banking products, financial planning and amelioration of debt-related distress of an individual To create awareness among the public about various financial management To take up any other activity that facilitates the above The Financial Literacy and Credit Counselling Centre (FLCC) is functioning in the following address: No.10,Kamaraj Salai, Calve Bungalow Road Near Ind Bank Merchant Banking Puducherry Phone no E Mail Id: flccpondy@yahoo.com Indian Bank Self Employment Training Institute (IND SETI) Rural Development is a complex subject which warrants coordinated efforts by the Government, Corporates, Financial Institutions, NGOs, grass root level leaders etc., Training the youths and farmers in the rural area will enhance the livelihood opportunity for them in their locality and it will also curtail the drift of the rural population to the urban areas searching for jobs, thereby bolting 22

24 the severe shortage of manpower for farm and farm related operations, in addition to enhancing agricultural production and productivity. To mitigate the unemployment problem among the youth in rural areas, Rural Development and Self Employment Training Institute (RUDSETI) was jointly formed by few Banks and NGO way back in RUDSETI's core offering includes its free, unique and intensive short-term residential self-employment training programmes with free food and accommodation. A practical orientation and rigorous training with escort service are some of the distinct features of RUDSETI. To ensure the quality training is imparted to the aspiring candidates and the object of placing them on jobs/individual ventures tie-up arrangements with reputed NGOs, Krishi Vigyan Kendras, Agricultural University Research Stations, Corporates, placement organizations/man power agencies, etc. will be made according to the necessities. Such tie-up arrangements would play a pivotal role in strengthening and commitment to provide for placement assurance on completion of training, besides sponsoring viable projects in case of candidates with self employment aspirations. The cutting edge of the training is the post training follow up to sustain motivation level and to overcome teething problems of first generation entrepreneurs. The Institute will put in place a system of periodical follow up of the trained candidates once in a quarter and assist them to sort out problems in pursuing their avocation. The hand holding services will continue till the trained candidates achieve sustainable income level. IND SETI will endeavour and make periodical arrangements/organize Bazaars to provide marketing support to the trained entrepreneurs of the Institute based on requirements and other factors. This facilitates the participants to get an insight about market trends and customer behaviour. Indian Bank Self Employment Training Institute (INDSETI) is functioning in the following address. No 159,I Floor, Thiruvalluvar Salai, Pillai Thottam, Puducherry Phone no E Mail Id: indsetipuducherry@gmail.com 23