An Overview of Smart Card Projects in India

Transcription

1 Chapter 4 An Overview of Smart Card Projects in India 4.1 Introduction In India smart cards are poised for a rapid growth. A number of projects are deployed where the smart card technology is playing a pivotal role. The major focus areas of smart cards, the important smart card based projects will be discussed in this chapter. The three major focus sectors of smart cards are as follows: Mobile Telecommunication E-Governance E-Purse, Loyalty Cards and Fleet Management 4.2 Mobile Telecommunication India is the second largest telecommunication market just behind China having an impressive base of around 958 million subscribers, while the overall teledensity has increased to 76 % as of 30 September 2014 (TRAI, 2014). The segment is witnessing moderate growth at present. The mobile phone is the largest user of smart cards (SIM cards) in India they have close to 55% of the total smart card market share (Cyber Media Research, 2012). By 2020, mobile could contribute almost ` 21.6 lakh crore to India s GDP, creating 4.1 million additional jobs, and generating significant contribution through infrastructure investment of around ` 48,300 crore and with public funding of ` 1.8 lakh crore (Boston Consulting Group, 2013). Page 117

2 The total number of telephone subscribers in India stood at million at the end of September, 2014 as against million in April 2000 (TRAI, 2014). From 2001 to 2011, the total number of telephone subscribers has grown at a Compound Annual Growth Rate (CAGR) of 35% per annum but the growth rate has decelerated substantially. The comparative rates in the 1980 s and 1990 s were 9% and 22%, respectively. (TRAI, 2012). Figure 4.1 : Indian Mobile Subscriber Growth Source: Prabhudesai, 2014 The urban subscription increased from million at the end of August, 2014 to million at the end of September, 2014 and the rural subscription increased from million to million during the same period. The mobile sector in India is divided into 22 circles and they are broken down into 4 groups: metro circles and subsequently to A, B and C circles based on economic and revenue parameters. Each circle has a license and a maximum of 12 players are allowed. The telecommunications sector in India is regulated by three policy making and regulatory bodies namely: Department of Telecommunications (DoT) Telecom Regulatory Authority of India (TRAI) Page 118

3 Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) The teledensity 13 statistic released by TRAI is pegged at 74.55% as on September, 2014 but the spread is not uniform as shown in the graph below. Figure 4.2 : Pan India Teledensity as on September 2014 Source: TRAI, 2014 There is a large difference between the urban and the rural tele-densities. Urban teledensity is at % while rural teledensity is only 44.96%. The shares of urban and rural subscribers were at 59.48% and 40.52% respectively in September 2014 (TRAI, 2014, p. 2). 13 Teledensity is expressed as the number of telephone lines for every 100 people in a population. Page 119

4 Figure 4.3: Urban and Rural Teledensity Divide in India Source: DoT, 2014 Despite moderate teledensity India has second highest per person minutes usage per month which is an excellent growth opportunity. The gap between the urban and rural teledensity is very large and the demand for new connections in the cities are stalling, while the rural market is largely untapped. So the new growth vehicle will be the rural connection and 3G networks. The profitability of the rural segment is around 7% to 10% lower than that of the urban segments. Average Revenue Per User (ARPU) of Indian telecom sector was around ` 112 as on September Call rates in India are among the cheapest in the world with Average Revenue Per Minute (ARPM) of ` Over the last few years, call rates have declined sharply and has stabilised. Page 120

5 Figure 4.4: APRU and APRM for CDMA and GSM Source: TRAI, 2014 The market composition of the major players across the circles shows that the private players control more than 90% of the market while the size of the public sector operators comprising of MTNL and BSNL have shrunk steadily to the present 9.69%. Based on the September 2014 statistics released by TRAI, Bharati is the leading service provider having 22.74% followed by Vodafone (18.69%), Reliance (11.84%), Idea (15.43%), while PSU operator BSNL and MTNL controls 9.32% and 0.37% respectively. Rest of the market share are being held by smaller operator as shown in the graph below. Figure 4.5: Market Share for the Telecom providers in India Source: TRAI, 2014 Page 121

6 4.2.1 Current and Future Scenario In February 2012, the Supreme Court of India cancelled 122 2G licenses which was awarded from the year 2008 onwards. The licences cancelled include 21 of Videocon, 22 of Unitech Wireless Ltd. (Uninor), 9 of Idea, 21 of Loop, 6 of S-Tel, 21 of Sistema, 3 of Tata, 13 of Swan and 2 of Allianz. Some of the operators who faced cancellation like Loop Telecom Private Limited, Etisalat DB Telecom Pvt. Ltd. and S Tel Ltd. have folded their operations. Two affected operators Unitech Wireless Limited and Videocon Telecommunications Ltd. are continuing their operations after winning back in some of their circles after regaining some of the cancelled licenses in November, 2012 re-auction (India Ratings, 2013). As a result of this verdict the industry is witnessing consolidation and rise in call charges. The overall sector has witnessed a negative growth since the last two quarters of 2012, as per the TRAI figure the overall subscriber has shrunk by 25 million connections in December 2012 as compared to November This decline is largely due to large scale disconnections of inactive SIMs by the service providers across circles and also to a lesser extent of withdrawal of service by some of the service providers affected by the SC license cancellation. Out of the total million wireless subscribers, million were active on the date of peak Visitor Location Register (VLR) 14 for the month of December The proportion of VLR subscribers who are the live subscribers is approximately 81.14% of the total wireless subscriber base reported by the service providers. The new Telecom Policy-2012 envisages rural teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the year 2020 (DoT, 2012). 14 Visitor Location Register is a database that contains information about count of all the SIM cards being serviced on an operator s network. Page 122

7 In spite of a gloomy projection, India is emerging as the world s fastest growing mobile market with over 6 million new subscriber additions every month coupled with one of the lowest tariff rates (Chowdhury, 2012) Growth Drivers for Future The Telecom Policy 2012 has mandated 100% mobile rural penetration by 2020 which is an indicator of the fact that the future growth arenas of telecom will be the rural outback of India. Increased demand for consumers access to data services owing to launch of newer telecom technologies like M2M and LTE will drive growth for the sector in the coming years. Data traffic will overtake voice traffic by 2018 (GSMA, 2013). Also, as 3G and 4G LTE penetration expands, it will create a demand pull for digital content for smart devices like tablets, smartphones, smart TVs. As we move towards a fully connected world increased rural penetration better devices, rollout of m-banking, m-governance, e-education, e-health, machine to machine applications will herald a data service explosion which will transform the socio-economic future of India. 4.3 E-Governance The smart card enabled e-governance projects undertaken by any of the state or central government or its related departments and organisations are the major vehicles of growth for smart cards. Smart cards are increasingly being used in these projects as a delivery and identification tool because of its inherent security, portability and easy integration with biometrics. According to Planning Commission (2007) the Government of India administers a number of subsidy/welfare programmes targeting the vulnerable Page 123

8 sections of society. The degree of success in implementing these programmes is dependent on the level of efficiency of the delivery process. Adopting appropriate tools to achieve this objective should become part of the programme implementation strategy. However, as technological innovation invents new methods, adoption of tools becomes a dynamic criterion. Multi-Application Smart Cards (MASCs) is one of the technological breakthroughs of recent times. MASCs facilitate simplification of procedures and enhancing the efficiency in administering various schemes. The application of this technology cuts across usage; from government to citizens, government to other agencies and between agencies to citizens. The National e- Governance Policy fully recognises the significance of this technological revolution and the need for tapping its potential for various applications in the government to citizens interface. Smart cards are becoming increasingly popular for application in government projects starting from driving license to RSBY health cards. They are becoming irreplaceable facilitators for making the government-citizen interactions more simple and transparent. The issues relating to vendor lock in and interoperability have been addressed to a large extent by adoption of SCOSTA standards. The increased usage of smart card as a delivery vehicle can be seen both in the organised and the unorganised sectors. In the organised sector health cover like Employees State Insurance (ESI), Provident Fund (PF) for the work force are being serviced and delivered by using smart cards. The organised sectors have some social security cover like ESI, PF fund etc., however the unorganised sector does not have any form of social security. With a view of correcting this gross inequality the Government of India (GOI) has launched a number of social re-engineering schemes to correct these situations. We will analyse a few such projects and study the impact of smart card usage on these projects. Page 124

9 4.3.1 Rashtriya Swasthya Bima Yojna (RSBY) RSBY is one of the largest health insurance schemes in the world today with coverage for hospitalization being provided to around 60 million below poverty line (BPL) populations. Most of the covered population are poor and live in rural hinterlands of India. More important than its scale, however, is the innovative approach for providing services to the poor which combines technology that can reliably identify beneficiaries and verify transactions with a public-private partnership where incentives for all stakeholders are appropriately aligned (Palacios, 2010). It is a health insurance scheme which was initiated by the Ministry of Labour and Employment (MoLE) in The primary aim of the project was to provide health care cover to the under privileged BPL population. RSBY is one of the largest health insurance schemes undertaken globally. The aim of GOI is to bring the entire BPL population under the scheme of RSBY population. The major beneficiaries of the scheme are the marginalised rural population of India. The RSBY is a unique project which is paperless and uses biometric enabled smart cards which minimizes the inconvenience to the policyholder and also speeds up the service delivery process Objective and Purpose of the RSBY A unique feature of the Indian economy is the lack of any universal social and healthcare security as is present in any developed nation like the USA, Canada etc. as a result medical expenses are largely financed through individual out-of-pocket Page 125

10 payments 15. National health accounts data show that the central government, the states and local government together account for only 20% of total health expenditures in India: 78% take the form of un-pooled, out of pocket payments one of the highest percentage in the world and a main reason for people falling into poverty. External aid to the health sector via government or NGOs accounted for a mere 2% of total health expenditure (Jain, 2010). The affected population which include both the urban and rural population are often forced to borrow and resort to extreme measure like sell of their assets and valuables a fall out of poor healthcare security. The problem is even more multiplied in case of the underprivileged and BPL section of the population 16 as is evident from Table 4.1 shown below: Table 4.1 Out of Pocket Expenses and Indebtedness in India Items Average OOP Payments made per hospitalization in Govt. facilities Average OOP Payments made per hospitalization in private facilities All India Percentage of people indebted due to OP Care Percentage of people indebted due to IP Care Source: Swarup, 2010 Poorest Social security such as ESI, PF exists only in the organized sector which only accounts for the 6% of the 433 million people, thus 94% of the workforce exists in unorganised sector (Swarup, 2008) and contributes to around 50% to the national GDP still they do not have any social security cover (NCEUS, 2008). Realising the 15 According to the world health organization (WHO), India has one of the highest rates of out of pocket health spending in the world at 78% of total health spending and 94% of private health spending. 16 The National Sample Survey Organization (NSSO) 2004 had reported that 65% of India s poor get into debt and 1% fall below the poverty line because of sickness. Page 126

11 growing social security needs of informal sector workers, the Indian Government is working towards an agenda of social protection, including employment security, old age pensions, life, disability and health insurance (Jain, 2010). It is estimated that around 4% of BPL population requires hospitalisation every year and the cost per admission (at prices) was estimated at ` 2,100 (Rajeev, 2004). To mitigate the suffering of the poor population GOI launched RSBY in the year The project was initiated after studying the failures and shortcomings of the past health insurance schemes and the limitation of the target population. RSBY aims to cover all BPL families in India, estimated at 300 million, by RSBY is one of the largest health insurance schemes in the world today with coverage for hospitalization being provided to around 60 million people. Most of the covered population are poor and live in rural India. More important than its scale, however, is the innovative approach to providing services to the poor which combines technology that can reliably identify beneficiaries and verify transactions with a public-private partnership where incentives for all stakeholders are appropriately aligned (Palacios, 2010). The objectives of RSBY are therefore to: a. Provide adequate cashless financial backup to meet the upfront hospitalization cost which the BPL population was unable to pay. b. Improve access to quality health care for the target audience. c. Empowering the beneficiaries with the authority to choose from a national network of service providers. d. Provide a paperless system which even the illiterate can use easily. e. Provide adequate portability to take into account the migratory nature of the target population. Page 127

12 The Salient Features of RSBY Coverage and Benefits: RSBY provides annual hospitalisation coverage up to ` 30,000 for a family of five members. The policy is based on a family floater system. Coverage extends to five members of the family which includes the head of household, spouse and up to three dependents. In case of a newborn the infant is automatically inducted into the family. There are fixed package rates for a large number of surgical procedures. Transportation charges are also covered up to a maximum of ` 1,000 with a limit of ` 100/- per hospitalization. Pre and post hospitalization up to one day prior to hospitalization and up to five days from the date of discharge from the hospital. All pre-existing diseases are covered from day one. No age limit on the enrollment of beneficiaries Funding of RSBY The funding of the project is based on a state center sharing basis wherein: 75% (90% in Jammu & Kashmir and the North-Eastern States) of the funding is borne by the central government. 25% (10% in Jammu & Kashmir and the North-Eastern States) of the funding is borne by the respective state government. Beneficiary to pay ` 30 per annum as registration fee. Administrative cost to be borne by state government. Cost of smart card to be borne by the central government at ` 60 per beneficiary. Page 128

13 The insurance premium is determined at the state-level based on an open tender process. Average premium per beneficiary for active districts is around ` 560. Table 4.2 : Key Parameters of RSBY Parameter Description Remarks Benefits Covered Eligibility Criteria Cost of hospitalization for 725+ procedures at empaneled hospitals up to ` 30,000 per annum per household plus ` 100 transport cost per visit up to ` Must be on the official state BPL list; limited to five members of the household including household head, spouse and three dependents Premium And ` 30 registration fee per household per annum Fees paid by household; Per household premium payment determined through competitive bidding process; Policy Period One year starting the month after first enrollment in a particular district Financing 75%/25% Government of India/State Government Source: Palacios, Administration of RSBY Pre-existing conditions are covered; minimal exclusions; day surgeries covered; All enrolled members must be present to be enrolled; infants are covered through mother Average premium for active districts is around ` 560 Enrollment can take place over four months The ratio is 90%/10% in Northeast states and Jammu & Kashmir Each state must establish an independent body, the State Nodal Agency, to implement the scheme in that state through insurance companies. The Government of India provides the overall regulatory framework and technical support Service Delivery System Model of RSBY The delivery of the health care takes place through a network of empanelled hospitals which have successfully met the empanelment criteria. There are more than 4,500 empanelled hospitals among which 70% are private hospitals. The empanelment is done at the state level by the state selected insurance company based on prescriber empanelment guidelines. Once a hospital is empanelled a nationally Page 129

14 unique hospital ID number is generated so that transactions can be tracked at each hospital it is automatically covered by all the insurers. An empanelled hospital has to install necessary hardware and software to be able to process beneficiaries smart card transactions. They have a dedicated RSBY desk with trained staff. Each empanelled hospital is connected with the district server of the insurance company for real-time data transfer The Stakeholders of RSBY The conceptual framework of RSBY was developed by the central government with active support from agencies like World Bank and Technische Zusammenarbeit (GTZ) GmbH. The RSBY is a unique project which has a thriving public private partnership (PPP) model. There are many stakeholders involved in the entire scheme. The major ones being: Central Government State Government State Nodal Agency Insurance Company Hospitals NGOs Smart Card Agencies Once a state signs a memorandum of understanding with the central government to implement RSBY, a nodal department is assigned by the state government. The nodal agency selects the insurance company based on open tendering. The financial bid of the tender is essentially the annual premium per enrolled household that the insurer is willing to accept for the prescribed level of coverage and other conditions. The insurer is compensated on the basis of the number Page 130

15 of verified smart cards issued, i.e., households covered. Each contract is specified on the basis of an individual district in a state and the insurer agrees to set up an office in each district where it operates. While more than one insurer can operate in a particular state, only one insurer can operate in a single district at any given point in time (Palacios, 2010). The selected insurer must covers the benefit package as prescribed by The Ministry of Labour and Employment (MoLE) through a cashless facility that in turn requires the use of smart cards which must be issued to all beneficiary. It mandates a sub contract to be arranged with a qualified Third Party Administrator/Smart Card Provider. The insurer also engages local NGO s with sufficient reach to provide grass root contact and aware of the RSBY RSBY Process Flow RSBY is a Public-Private Partnership initiative that involves a set of complex but well defined processes. The process flow for RSBY is detailed below (Swarup & Jain, 2010): a) Implementing state government set-up an independent State Nodal Agency for RSBY. b) State Nodal Agency collects and prepares BPL data in the specified RSBY format. c) Insurance company is selected through an open bidding process. d) Annually, an electronic list of eligible BPL households is provided to insurers by the state. An enrollment schedule for each village is prepared by them and the process has to be completed within four months. e) It is the Insurance Company s obligation to hire intermediaries to reach out to the beneficiaries before the enrollment. Page 131

16 f) Insurer has to set up a 24-hour call center to provide help line services where information and guidance about the scheme and its usage can be obtained free of cost. g) Insurance company is also obligated to start a district kiosk at the district headquarters, where any post-issuance modification in the smart card can be done. h) Mobile enrollment stations are established at local centers (e.g., public schools) at each village at least once a year. These stations are equipped by the insurer with the hardware to collect biometric information (fingerprints) and photographs of the members of the household covered and a printer to print smart cards. i) State government set up District Key Management Authority (DKMA) and appoints Field Key Officer (FKO) for smart card encryption and provides them with DKMA & FKO cards. j) FKO from the district needs to be present at the camp and must insert his or her own government-issued smart card and provide his or her fingerprint to verify the legitimacy of the enrollment. This way each enrollee can be tracked to a particular official. In addition to the FKO, an insurance company/smart card agency representative is present at the enrollment camp. k) At the end of the enrollment camp, a list of enrolled households is sent to the state nodal agency by the insurer. The list of enrolled households is maintained centrally. l) Before commencement of the enrollment process, insurance company empanels both public and private hospitals. Each empaneled hospital is provided with a smart card which also contains a national unique ID. m) A beneficiary, after receiving the smart card and after the commencement of the insurance policy, can visit any empaneled hospitals across the country to get the treatment. Page 132

17 n) A patient comes to a provider to receive care and goes straight to the RSBY help desk at the designated hospital where the patient s identity is verified via fingerprints. o) Assistant at RSBY help desk checks whether procedure is in the list of prespecified packages. Procedures are priced, paid to the provider on a case based payment system. p) If procedure is on list, appropriate prescribed package is selected, patient is scheduled for procedure and the amount to be paid out is blocked. q) If not on list, help desk checks with insurer to price and get approval to conduct procedure, patient is schedule for procedure and the predetermined amount to be paid is blocked. r) In patient treatment is provided to the beneficiary. s) Upon release of beneficiary from hospital, smart card is swiped again with fingerprint verification. Beneficiary is paid by the hospital ` 100/ as transportation expense at time of discharge. The pre specified cost of procedure is deducted from the amount available on the card. t) After rendering service to patient, hospital sends an electronic report of claim to the insurer. u) The insurer/tpa reviews the records and information and makes payment to the hospital (electronically) within a specified time period (mutually agreed between insurer and hospital). v) Insurance company submits the claim for premium on monthly basis for the enrolments done in that particular month from the nodal agency. w) The nodal agency settles the claim of the insurance company. Page 133

18 Issuance of FKO Card Download of FKO Data at DKM server An Overview of Smart Card Projects in India Technology Framework of RSBY RSBY employs innovative approach to provide services to the poor which combines technology that can reliably identify beneficiaries and verify transactions with a public-private partnership where incentives for all stakeholders are appropriately aligned (Palacios, 2010, p. 1). The RSBY deploys a technology platform centered on smart card, which is used for both identification and as a vehicle for service delivery. Figure 4.6 : Rashtriya Swasthya Bima Yojana Process flow Government of India Upload on website after verification State Nodal Agency Selection through tendering Submission of data and bill Insurance Company BPL Data Payment to Insurer Health Care Providers District Kiosk Call Centre FKO Awareness Health Camps BPL Beneficiaries DKM Utilisation of Services Source: Vishy, 2012 Page 134

19 Smart Card Technology in RSBY Smart card is central vehicle to RSBY, which provides cashless transaction as well as interoperability in network hospitals throughout the country. Biometric technology along with elaborate key management system is used to validate the beneficiary and minimise fraud and leakages in the system. The entire technology backbone to the system is provided by the NIC. SCOSTA compliant smart cards are used in the project which have become the de facto standard for most of the large smart card based project in India. The smart cards are normally issued by the smart card service provider on behalf of the insurance company to the beneficiary. The ownership of the card throughout remains with the central government. The smart card issued in RSBY is for an entire family having maximum of five members. It is not issued in the absence of head of the family as his photograph has to appear on the face of the card. In case one of the applying members other than the head of the family is absent his or her record can be added at the district kiosk, which is maintained by the insurance companies. Figure 4.7 : RSBY Registration Process Flow Source: RSBY, 2015 Page 135

20 Card Splitting Provision A unique feature of the RSBY policy is the option of card splitting keeping in view with the migratory nature of the target population. The RSBY cards can be split at the time of first issue or subsequently at the district kiosk. Split value can be decided by the head of the family, provided the total amount on both the cards is equal to the total amount available on the primary card before the split. The insurance company will authorise issue of these cards. A new card can be issued in case of loss of smart card. However, the beneficiary will have to bear the cost of the duplicate card. As the details of the family would be available in the database, the card could be issued at the district kiosk. The hospitals are mandated to possess necessary hardware of predetermined specifications to read and operate the data on the smart card. Transaction software, based on the specifications, is to be prepared by the service provider for use in the hospitals. A back-end database management is put in place for transmission from hospitals to a designated server and for electronic settlement of claims to make the scheme not only cashless but also paperless. An elaborate MIS is developed for close supervision and monitoring at various levels Biometric Technology Framework Fingerprints of all beneficiaries are collected during enrolment at the village level. Two fingerprints of each of the family member being enrolled captured. The primary fingerprints to be captured would be right and left thumb. One thumb impression of each of the household beneficiaries is stored in the smart card. Page 136

21 Key Management System (KMS) The KMS of smart cards is a unique feature of the entire system which helps in reducing fraud and leakages in the system and also injects accountability into the system. It has been developed by NIC, the implementation process is quite complex and it involves the generation of master keys cards. The KMS will consist of three levels of operation for generation and Management of Keys and related Cards: Central Key Generation Authority(CKGA) District Key Manager Field Key Officer o Issuer(A district-level, state government officer) o Kiosk o Hospital The master key cards generated at the FKO levels are used for field operations: Issuer >Issuance Card (MIC) District Kiosk > Kiosk Card (MKC) Hospital > Hospital Card (MHC) Page 137

22 Figure 4.8: RSBY Key Management Hierarchy A Central Key Generation Authority (CKGA) has been set up for creating root keys and to manage the entire key management system at the central level. The district keys are generated by CKGA. Thereafter, the keys for field key officers (FKOs) are generated at the district level. The district keys will be transferred by the CKGA to the district key managers. The DKMA is responsible for distribution of Master Key cards among various FKOs within the district. It also maintains the database of all the Master Key cards issued to various FKOs Issuance of RSBY Cards RSBY smart cards are generated with the help of Master Issuance Cards (MIC). At the camp organised for RSBY Enrolment, The issuer FKO who is a district-level, state government officer identifies every beneficiary in the presence of the insurance company s representative based on the hard copy of the beneficiary list he then insert his or her own, centrally-issued, smart card to verify the legitimacy of the enrolment. In such a way, each enrollee can be traced to the particular state government official that was present. After enrolment, the list of households issued Page 138

23 smart cards is downloaded from the FKO s card and centralized at the district level and eventually state level (Palacios, 2010, p. 5). The concerned issuing FKO is responsible for safe keeping and safe usage of these cards, while they are in use. They are also their responsibility to ensure that all the defined security parameters are strictly being followed at the field by various trusted authorities which are using authority cards for various functionalities. This elaborate key management system essentially minimizes the chances of fraud and bogus enrolment since the beneficiary cards can only be generated after the MIC cards are put into the system by the FKO. Thus each beneficiary is tagged with the FKO who is in turn tagged with the DKM just in case of bogus cards or any disputes related to the card issuance and also bogus claims at the hospital end Online Paperless System RSBY has been able to operationalise a paperless scheme with the help of technology. Claims are submitted online by hospitals and so insurers can make online payments to hospitals. The aim of the scheme is to use technology not only for controlling fraud and monitoring utilization, but also to find innovative solutions to insurance related problems. The enrolment software has been designed to ensure that male heads of households must insure their spouses. In addition, since the scheme aims to provide quality treatment to all beneficiaries, technology has been implemented to ensure that every beneficiary receives needed treatment. If the patient is not in a condition to validate his/her identity at the hospital then any family member who is on the RSBY smart card can validate the identity of the patient by providing his/ her fingerprint. A robust backend data management system is being developed for RSBY which will ensure smooth flow of data from across India to both the state and central government in real time. Apart from the central server three levels of state level of Page 139

24 servers need to be in operation. They are the following (Ministry of Labour and Employment, 2010, p. 15) : State Server by State Nodal Agency: State server located at the state capital which is used to store enrolment and hospitalization data from all over the state. It also stores the fingerprints and photographs data of the RSBY beneficiary. DKM Server by District Authorities: District authorities needs to set up a DKM server at the district, which will be used to issue FKO and other cards and to download the data from the FKO cards. The same server which is being used for BPL population by the DKM shall be used for other targeted beneficiaries also. Insurance Company Server: Insurer set up a server where data related to enrolment and hospitalisation is stored, also ensuring that the data is available to the district kiosk as and when required. Table 4.3 : State wise Status for Enrolment of Beneficiaries. State Selected Number of Districts Enrolment Complete Enrolment in Progress In Districts with Enrolment Total BPL Families BPL Families Enrolled Till Date Assam ,76,874 14,21,104 Bihar ,90,986 8,18,531 Chandigarh ,223 7,865 Chhattisgarh ,82,032 21,41,822 Gujarat ,16,150 18,76,307 Haryana ,29,850 4,37,850 Himachal Pradesh ,36,575 4,81,699 Jharkhand ,68,109 17,14,552 Page 140

25 State Selected Number of Districts Enrolment Complete Enrolment in Progress In Districts with Enrolment Total BPL Families BPL Families Enrolled Till Date Karnataka ,88,340 64,30,255 Kerala ,17,954 20,18,764 Madhya Pradesh ,91,258 6,08,748 Manipur 6 6-1,20,237 70,383 Meghalaya ,18,469 65,840 Mizoram 8 8-2,12,572 1,52,983 Nagaland ,68,055 1,28,184 Orissa ,38,381 43,07,538 Pondicherry ,724 6,467 Punjab ,54,255 2,32,352 Rajasthan ,68,380 26,92,626 Tripura 7 7-7,75,930 5,05,327 Uttar Pradesh ,43,930 38,39,765 Uttarakhand ,21,119 2,85,435 West Bengal ,27,061 60,63,390 Total ,85, ,07,787 Source :RSBY, 2015 Page 141

26 Figure 4.9 : RSBY State wise BPL Families Vs Enrolment Source: RSBY, RSBY at Present The RSBY project is operational in 26 states at present as per the data from the website of RSBY. The Current status of the project is provided in Table 4.3: Around 37 million smart cards issued. 56 million persons enrolled under RSBY. 26 states have started RSBY. 23 states have commenced enrolment. 23 states have started service delivery. Page 142

27 4.3.2 Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) Objectives and Social Mandate NREGA 17 was instituted by the Ministry of Rural Development in the year It was introduced in a phased manner across India. In Phase I it was implemented in 200 of the most backward districts of India. It was introduced in an additional 130 districts in Phase II ( ). In the Phase III (2008) all the remaining districts of India were covered (Ministry of Rural Development, 2013, p. 3). The vision of NREGA is to enhance the livelihood security of the rural poor by guaranteeing employment for at least 100 days in a year and building assets for the poor. The National Rural Employment Guarantee (Amendment) Act, 2009 renamed NREGA as MGNREGA. NREGA is the first ever law internationally that guarantees wage employment at an unprecedented scale. The primary objective of the Act is augmenting wage employment. Its auxiliary objective is strengthening natural resource management through works that address causes of chronic poverty like drought, deforestation and soil erosion and so encourage sustainable development. The process outcomes include strengthening grass root processes of democracy and infusing transparency and accountability in governance (Ministry of Rural Development, 2013, p. 3). The act directs state government to implement NREGA schemes. Under the NREGA the central government meets the cost towards the payment of wage, 3/4 of material cost and some percentage of administrative cost. State government meet the cost of unemployment allowance, 1/4 of material cost and administrative cost of 17 The term NREGA and MGNREGA will be used interchangeably in this study. Page 143

28 State Council. Since the state government pay the unemployment allowance, they are heavily incentivised to offer employment to workers. (Wikipedia, 2010). No discrimination between men and women is allowed under the act and all are paid equally. All adults can apply for employment Project Leakages in NREGA Though NREGA was introduced as a ground breaking social engineering project, there has been widespread criticism about the leakages and corruption in the project. The average number of work provided last year was only 37 days (Bhattacharya, 2013). There have been reported cases of pilferage of the funds by making payments to non-existent labour force for fictitious works. As evident from the various reports, there has been widespread leakages in NREGA across the length and breadth of the country amounting to thousands of crores. The modes of such leakage are as follows (Rai, 2012) : Inflated and fictitious job card entries are made for which the beneficiary are not aware of. Well off non-labour household are provided with the job card and false entries are made in the job cards. The beneficiary returns the money credited to their account for some commission. Partial or non-payment of dues accrued wages to the genuine workers. The introduction of ICT technologies like smart card coupled with GPS enabled readers and tight integration with payment channels will help in plugging the leakages, as was evident from the pilot studies (NREGA, 2009; Muralidharan, et al., 2014). Page 144

29 Technological Innovations in NREGA In view of the enormity of NREGA programme it is necessary to make best use of latest Information and Communication Technologies (ICT). This helps in ensuring effective implementation and proper management of the programme. It also lends transparency and credibility to the system Use of Smart Cards and Biometrics NREGA has developed and pioneered an online web based MIS software call NREGASoft. It is a comprehensive MIS which has most of the relevant data pertaining to NREGA including workers entitlements, work data, fund flow etc. All the information is hosted in the public domain in the NREGA website. Though the system is quite robust and transparent the data collection at the ground level is done manually and there is a lag in the entry of the data. More over the beneficiary of the NREGA are illiterate who does not have the means to access the data posted on the website. Since the final beneficiary will be the wage seeker it will not be just a smart card or/and handheld devices but a e-governance model that will be people friendly and will empower the wage seeker to assert his/her right. The smart card and hand held devices will explore an innovative way of achieving financial inclusion not just in terms of access but in usage as well. It presents the prospect of coupling financial inclusion with NREGA (NREGA, 2009, p. 1). Smart cards based handheld devices are used as IT tool to ensure rights and entitlements. Smart cards have the potential to capture details of the Workers, Work and Wages (WWW) including the muster rolls and the job cards. Many states have started use of smart cards and handheld devices for the wage disbursement like: Tamil Nadu, Karnataka, Andhra Pradesh, Bihar, Orissa, UP, Kerala, Meghalaya etc. Page 145

30 For example, the state government of Bihar has launched E-Shakti smart card under the scheme. Smart cards operate like a job card in tandem with the GPS enabled handheld readers so that all transactions of NREGA programmes are captured which includes registration, Job card and demand for work site. Smart cards helps in capturing the Workers, Work and Wages (WWW) data in real time thus introducing transparency and accountability in the system and plugging the leakages. It also acts as an interface for the uneducated subscribers of the system who are able to use the system effectively. Figure 4.10: NREGA Pilot Smart Card Flow Source: NREGA, 2009 The advantages of implementing a smart card based ecosystem for NREGA is already established. It makes the data transfer real time and reduces the leakages in the systems and benefits the beneficiary. Smart card reduces the human intervention Page 146

31 to a large extent thus minimising errors in the system. Smart cards are the vehicle of choice for the delivery of the NREGA to the largely illiterate population. Inherently secure microprocessor based smart cards are able to perform the transaction in both online and offline mode. This will help tremendously in data collection and payment in the remote locations where there is no telecom connectivity. The smart card also addresses the challenges due to the migratory nature of the rural population (Muralidharan, et al., 2012) Implementation of Low Cost Biometric ATM for NREGA Workers IIT Mumbai s Rural Technology and Business Incubator (RTBI) under the aegis of The Ministry of Rural Development (MoRD) and the United Nations Development Program (UNDP) have undertaken pilot projects involving low-cost ATMs. These ATMs use smart card and biometric for security verification. The entire payment is disbursed directly through ATM to the end user through the security of the bank s network which will, by default, minimise leakages Status of the Project Madhuri Sharma observed that there are technology options under active consideration whose intervention could possibly make NREGA implementation better for Job seekers, common man and society at large. These areas include use of smart card and biometric devices for Authentication of job seekers/wage earners, e-muster roll by using mobile devices to capture daily attendance of worker, e-payment by using smart card, biometric devices, ATM etc. Rural Informatics has come to stay and prosper further to facilitate Rural Development in India (Babu, 2014). The scheme commenced on February 2, 2006 in 200 districts, was expanded to cover another 130 districts in and eventually covered all 593 districts in India by April 1, The outlay was ` 110 billion in and rose steeply to ` 391 billion (140% increase in amount with respect to previous budget) in (Wikipedia, 2010). A total of 179, 43,189 families in the country have been provided employment under NREGA. According to the state-wise data Page 147

32 presented by the government of Andhra Pradesh tops the list of states, followed by Rajasthan, West Bengal, Uttar Pradesh and Chhattisgarh (KAUR, 2010). In the present budget the GOI has mentioned the provision of extending RSBY cover to the NREGA workers. From the year 2006 to 2012 over ` 1, 10,700 crores (66% of the total expenditure of around ` 1, 66,000 crores) under NREGA has been spent on worker wages. In financial year alone, ` 24,600 crores of the total expenditure under NREGA was spent on worker wages (Mann & Pande, 2012). The smart card and ATM pilot has demonstrated significant reduction of cash delivery time, prevention of leakages and pilferages and promotion of transparency in the system. It has also allowed the under-privileged worker to have bank account and it encourages saving as they do not need to take out their entire wage. The uses of smart card in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) project has demonstrated a drop in fund leakage by 12 %. In a study involving the rollout of Smart cards over 158 sub- districts and 19 million people across Andhra Pradesh for making payments for two large welfare programs: MNREGA and Social Security Pensions (SSP). The new system delivered with less leakage under MNREGA payments process without adversely affecting program access. It was found that leakage of funds allocated dropped by as much as 12.2 %. The worker also workers spent almost 21 minute less in collecting each payment made electronically compared with manual transfer. Around 84% of the MGNREGA job cardholders and 91% of the beneficiaries of Social Security Pension preferred payments through smart cards. The study demonstrated that the smart card based eco system was also significantly cost-effective. It showed that when smart cards were used to deliver cash benefits in like in MGNREGA, the government saved about US $4.44 million when time saved is converted into money and US $4.25 million in cost of implementation. Thus the reduction in leakage cover the cost of implementation many times over (Muralidharan, et al., 2012; Muralidharan, et al., 2014; Mukherjee, 2014). Page 148

33 4.3.3 Resident Identity Card Project In 1986, a pilot scheme for resident identity card was implemented for issue of identity cards to residents in selected border areas of Rajasthan. A Group of Ministers (GoM) was constituted after the Kargil war with a view to overhaul the national security system. The GoM recommended that registration of citizens and noncitizens living in India should be made compulsory, this in turn will facilitate the creation of a national citizens register. The GoM also recommended that all citizens should be given a Multipurpose National Identity Card (MNIC) and non-citizens should be issued identity cards of a different colour and design. The recommendation of the GoM was accepted by GOI in The Multipurpose National Identity Card (MNIC) project was the first initiative under taken by the Government of India in establishment of a smart card based national identity scheme, managing citizens identity and facilitating e-governance (NIELIT, 2011). In May 2007, Government of India launched MNIC pilot project, with the aim of strengthening of the national security while facilitating efficiency in e-governance. The MNIC project pilot was initiated to distribute two million smart cards to Indian residents in 13 districts spread across 12 states. The system gathered personal data of Indian citizens including gender, age, marital status, permanent address, etc. The identity card being given to each individual citizen was a 16KB SCOSTA compliant smart card. MNIC employed asymmetric key cryptography and symmetric key cryptography in the smart card as a security measure against the risk of tampering and cloning. The National Informatics Centre was instrumental in developing the processes for database management and smart card technology. Page 149

34 The MNIC project was lying in hibernation since the pilot study. Government issued a notification approving the setting up of a Unique Identification Authority of India (UIDAI) 18 under the umbrella of the Planning Commission. The MNIC project is now integrated with the UIDAI project which was rechristened as AADHAAR in the year The aim UIDAI was to issue a unique identification number (UID) to the residents of India (Das, et al., 2011). The Government of India (GOI) has approved the proposal for introducing the National Identification Authority of India Bill, 2010 in Parliament. It proposes to constitute a statutory authority to be called the National Identification Authority of India and lay down the powers and functions of the authority including the framework for issuing UID numbers and related matters (Das, et al., 2011). The Union Cabinet on the 19th of March 2010 approved the creation of National Population Register (NPR). The project spanned to cover an estimated population of 1.2 billion with a projected total cost outlay of ` crores (Press Information Bureau, 2010). Based on the NPR data every adult resident in the country will be issued a smart card based identity card. The National Population Register (NPR) is a Register of usual residents of the country. It is being prepared at the local (Village/sub-Town), sub-district, District, State and National level under provisions of the Citizenship Act 1955 and the Citizenship (Registration of Citizens and issue of National Identity Cards) Rules, It is mandatory for every usual resident of India to register in the NPR. The objective of the NPR is to create a comprehensive identity database of every usual resident in the country (Census Commissioner, 2013). 18 Unique Identification Authority of India website Page 150

35 The Government has approved ` crore for creation of NPR in the entire country. The exercise is slated to be completed by The Expenditure Finance Committee has recommended the smart card based Resident Identity Cards (RICs) for all the residents of India. The union cabinet considered the proposal on the 31st of January 2013 and subsequently constituted a Group of Ministers (GoM) constituted to examine all aspects of the scheme and to resolve differences. The GoM is headed by the defence minister and includes 11 other ministers and four special invitees (Express News Service, 2013). The Resident Identity Card will carry the card bearer s AADHAAR number. The RIC as per the inputs of the Technical Committee will be used by various departments and ministries for providing various services. The Resident Identity Card is printed on a 64 Kb capacity smart card. The demographic and a few biometric attributes of the resident will be embedded in this chip. The embedded data will facilitate off-line authentication of resident at remote locations where internet connectivity is not available. This will help in plugging leakages in the service delivery of other social inclusion projects managed by the GOI (Census Commissioner, 2013). Figure 4.11: Resident Identity Card Process Flow Source: Census Commissioner, 2013 Page 151

36 Status of the Project Under National Population Register (NPR) Resident Identity Cards (RICs) are issued in 3331 coastal villages in 13 maritime States/ Union Territories of India with a view to strengthen coastal security. The estimated cost for the outlay is ` crores. The Government, subsequently, in June 2011, approved the scheme of creation of NPR in the entire country at an estimated cost of ` crores. As per the ministry of home affairs till mid of August, 2013 more than 64 lakh RICs in the coastal areas have been personalised and dispatched. The state wise breakup is as follows: Table 4.4: Total RIC Distribution till August 2013 Name of States/ UTs Resident Identity Cards Dispatched Tamil Nadu 5,95,868 Puducherry 49,098 Maharashtra 3,54,619 Karnataka 3,99,744 Gujarat 7,80,871 Goa 84,894 Daman & Diu 67,522 Andhra Pradesh 5,63,103 Orissa 4,96,265 Andaman & Nicobar Islands 1,67,386 West Bengal 8,96,988 Kerala 19,45,400 Lakshadweep 39,781 Total RICs Personalised and Dispatched 64,41,539 Page 152

37 4.3.4 Smart Card Based Driving Licence and Registration Certificate Introduction Gujarat was the first state in India to implement a smart card-based Driving Licenses (DL) in the year In January 2002, the Government of Madhya Pradesh formally launched smart card based Driving Licenses, along with Vehicle Registration Cards (RCs). The Government of India (GOI) has issued guidelines in 2010 for the introduction of smart card based Driving Licenses (DL) and Registration Certificate (RC) across all states of India (MRTH, 2010). The smart card based DL and RC contains an embedded chip that stores the cardholder s fingerprint, digital signature and personal information in case of DL and scanned documents of the registration file for RC, in memory with WORM (Write Once Read Many) capability of the smart card. The DL/RC is hard-masked SCOSTA compliant 64 KB microprocessor based contact smart card. The entire IT backbone of the project is being provided by the NIC. In fact to address the interoperability in the nationwide implementation of DL and RC the SCOSTA was conceptualised and developed for the transport application. Subsequently it has moved to other segments. NIC has developed two software namely VAHAN and SARATHI for the RC and DL database respectively and it is standardised across India Status of the Project Before the large scale computerisation the major problems that plagued the RTO were issue of fake/multiple DL/RC. Previously it was easy for a person to have multiple DL registered under fake addresses and names. Often stolen vehicles were sold to unsuspecting citizens on forged RC documents which were mostly paper documents. It was impossible for the RTOs to check the duplicate and fake cards. Page 153

38 With the introduction of smart card based driving license and registration certificate across the various RTOs in India it became nearly impossible to duplicate and fake the DL/RC. Figure 4.12: A Typical State Level Vahan Sarathi Eco-System Source: OneWorld, 2010 The ministry of road transport and highways has launched an ambitious national register for both driving licence and vehicle registration details. The register is operational at both national and state level. Of the 993 Regional Transport Offices (RTOs) across all the 35 states and Union territories 987 have been replicated under the national register. It means data of registration of vehicles and driving license holders from these RTOs will be available on one integrated national platform. As of date 11 crore Registration Certificates and 3 crores Driving Licenses that have been digitalized and information is available online (Press Information Bureau, 2013). Detection of fake driving licences and tracking stolen vehicles has become very convenient. Often it was observed that commercial driving license holder used to have multiple DL across states, so when they were caught for any serious offence Page 154

39 they will simply switch to the license of the other state. With the national register they will not be able to have multiple licenses as the same will be checked with the existing profiles in the national register including biometrics. The information captured at the regional level (RTO level) will cascade to state consolidation registry (SCR) to be replicated to the state register. This will act as a repository at the state level providing information to key stakeholder like the police, transport departments, other G2C services etc. The state register data will cascade to the national register which ensures transparency and de-duplication of records. The national level data will also be shared with the key stakeholders like inter state check post, DoRTH, RTO/DTO/MLO/SDM, police department etc. (Dash, 2010). Under this national register scheme two portals VAHAN and SARATHI were launched to provide IT based solutions for Vehicle Registration and Licensing. VAHAN portal was introduced to automate vehicle registration and related processes. Whereas, SARTHI deals with issuance of driving license and related processes. The two portals VAHAN and SARATHI ensure availability of all the DL/RC holders data in one integrated national platform. The smart card based DL/RC is a boom to both the document holder and the law enforcement officials. Gradually most of the state RTO s will integrate all the documents like Insurance details, pollution road challan and fines into the smart card. Thus the user will be freed from carrying multiple documents with him. The police department can check the smart card of the vehicle and the driver in real time by connecting with the national database and ascertain if any violation or deviations are reported against (Harsimran Singh, 2007). Page 155

40 4.3.5 Biometric Electronic Passports Project Background Government of India has introduced smart card based electronic passports (epassports), also known as biometric passports. The Indian electronic passport is a contactless smart card. Electronic passports contain a contactless radio frequency based integrated circuit embedded in the cover that contains vital information about the passport holder like name, gender, date of birth and photograph. It also holds biometric information of physical attributes such as fingerprints, iris and facial patterns. The Indian electronic passports are based on SCOSTA-CL. The SCOSTA- CL standard is compliant to ICAO specified standard for reading passports across the world. It will make India one among the 53 countries that have switched over to an e- passport system. Figure 4.13: Security Features of Electronics Passport. Source: Fadhilah, 2012 The Indian Electronic Passport OS Standard is established by IIT Kanpur in collaboration with NIC and members from the Smart Card Forum of India (SCAFI). The OS personalization software is developed by NIC New Delhi in consultation with IIT Kanpur. The ISP Nasik is the agency that manufactures the blank electronic Page 156

41 passports with electronic chip inlays. The personalized fully functional electronic passports have been tested for interoperability and have been found to perform quite well and sometimes better than the passports available elsewhere in the world (Moona, 2009). Figure 4.14: Components of an Electronics Passport. Source: Fadhilah, 2012 Indian e-passports have a 64KB chip integrated with a photograph of the passport holder and subsequently included the holder's fingerprints. The biometric passport also has been tested with passport readers abroad. The Indian e-passport has a unique security feature that cannot be read unless it comes into contact with a reader so that a code is generated this negates sniffing attacks. The code then unlocks the chip for the information to be read on the chip. The average read time of e- passport is 4 seconds whereas the US one takes 10 seconds to read Status of the Project The first pilot for e-passport was initiated in Around 300 diplomatic and official passports were issued by the Ministry of External Affairs (MEA) under the pilot project. Gemalto was chosen to provide its Sealys etravel solution to India Page 157

42 Security Press for the pilot. The Sealys etravel solution includes contactless RFID based integrated circuit embedded with secure operating system which archives and protects the holder s digital identifiers. The results of the pilot study in relation to security and other related features were positive. The Ministry of External Affairs has floated a global tender for supplying the integrated circuit that will be used in the e-passports (Abraham, 2013). But the project hit a roadblock as the vendor was under investigation for providing a similar solution rollout in Pakistan which could pose as a potential national security risk. The MEA had plans to start issuing e-passports to ordinary citizens in the second phase. But it recently said that the project had to be deferred as it had to seek fresh security clearance from the MHA in respect of a technically qualified bidder (Bhaumik, 2012). Efforts are underway to link the AADHAAR to the passport issuing process. This will streamline and simplify the data collection process during the issuance of passport. Biometric information is already captured for the unique ID cards. It means people who use their UID card for KYC (Know Your Customer) can skip the queue for biometrics at the passport centre, The AADHAAR card is already valid address and identity proof for passports (TNN, 2013). As part of National e-governance Plan the Ministry of External Affairs (MEA), Government of India has entrusted Tata Consultancy Services (TCS) for the Passport Seva Project (PSP), the largest mission-critical e-governance project valued at over. `1,000 crore under PPP (Public Private Partnership) model. The entire passport distribution and delivery system was re-engineered under the guidance of National Institute for Smart Government (NISG) who was entrusted by MEA to study and make the recommendations for the process re-engineering. Under the scheme 77 model Passport Seva Kendras (PSKs) were established across the country, creating a centralized IT backbone linking all PSKs, regional passport offices also Police and Postal Department. Page 158

43 4.3.6 Smart Card Implementation in Banking for Social Inclusion About 70% of the Indian population lives in villages having divergent demographic patterns, living standards, education levels and income levels. Majority of population live away from modern amenities. As per National Sample Survey Office (NSSO) data majority of farmer households (51.4%) in the country do not have access to credit from institutional or non-institutional sources. It is estimated that only 27% of the cultivators have access to institutional credit from which one third borrow from informal sources. Farm households without any credit access from formal sources as a ratio of total farm households are high at 95.91%, 81.26% and 77.59% respectively for the North Eastern, Eastern and Central Regions of India (Rangarajan, 2008). The Banking Sector despite having 99,000 branches does not lend well to rural population. The average population per branch office is about 16,000. Only 36,000 inhabited areas have a bank branch out of the 600,000 inhabited areas in India. The penetration of debit card and credit card is also very low at 13% and 2% of the population which is largely concentrated among the urban population (Khan, 2012). It is clear from the data that there is a tremendous scope for both the government and the bank to explore the bottom layer of the pyramid. In order to mitigate the suffering of the poor and largely illiterate masses biometric smart card were issued to the remote villages to help them to bank using just their finger as their password. A number of banks have launched such projects including Syndicate Bank, Union Bank, Vijaya Bank etc. More banks are in the process of launching similar schemes. The bank accounts holder who are NREGA beneficiary are also linked with the job cards wherein their salary is directly credited to their bank account thus minimising fraud and pilferage. Page 159

44 As per the Rangarajan Committee Report, 2008, financial inclusion is, the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost (Rangarajan, 2008, p. 1). The recent technological development in the banking sector has transformed the banking services from the traditional manpower intensive infrastructure to a more ICT enabled one which are supplemented by credit/debit cards (ATM), internet banking etc. But the benefits of such technology are still restricted to the creamy layer of the society. Access to finance by the poor and vulnerable groups is a prerequisite for poverty reduction and social cohesion. This has to become an integral part of our efforts to promote inclusive growth. In fact, providing access to finance is a form of empowerment of the vulnerable groups. Financial inclusion denotes delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups. The various financial services include credit, savings, insurance and payments and remittance facilities. The objective of financial inclusion is to extend the scope of activities of the organized financial system to include within its ambit people with low incomes (Rangarajan, 2008). Due to the low value transactions that take place from the targeted population, running a full-fledged rural outfit is not a viable option for the banks. Business Correspondents 19 (BCs) model is ideally the alternate viable business model in order to have a greater coverage of these people in rural and other area. Under the set-up, the bank is permitted by RBI to outsource selected banking services through Business Correspondents (BCs) and their authorized agents. 19 BC is a legal entity that acts as a teller for the bank and carries out a full range of transactions on behalf of the bank. Banks pay commissions to the BCs in lieu of the services rendered by them. In beginning only NGOs, micro-finance institutions, registered non-banking financial companies, and post offices were allowed to function as BCs. Now the guidelines have been expanded to include individuals, local grocery shops, and for-profit companies. The primary objective of establishing BC was to reach to the remotest of the village population (Kishore, 2012). Page 160

45 Figure 4.15 : Facilities under Financial Inclusion Military Canteen Stores Department (CSD) Automation Using Smart Card CSD smart cards are issued by the Ministry of Defence to the families of Army and ex-army personnel. The canteen smart card is used to buy the regular grocery, liquor and various other items from designated army canteens at a subsidised rate. Ministry of Defence has introduced the smart card based canteen service to authorised users. Under this scheme the user having smart cards only will be able to buy the items worth entitled amount from CSD. Defence establishments have introduced the smart cards which are used for multiple applications like time attendance, access control, canteen, employee benefits etc. (Elets News Network, 2007). There are more than 4000 retail shops canteens across the country which Page 161

46 caters to the needs of close to five million people. The system is comprised of a mix of both offline and online technologies helped streamline POS operations. The system consists of inventory management, retail/billing of products and also creation of automated online indents. Canteen smart card came in existence in 2004 before that there was no smart card; items were sold based on identity cards. There was a large scale pilferage wherein lot of items were offloaded in the local market. To curb the rampant black marketing of the CSD products GOI issued Canteen smart card. With a view to automate the Unit Run Canteens (URCs), facilitating better inventory Management and arresting the misuse of the canteen facilities, the Canteen Inventory Management Services (CIMS) interfaced with smart card was developed in April It was observed that as against lakh beneficiaries, lakh smart cards had been issued. The CSD issues of smart cards to servicemen, ex-servicemen and their dependents as per the guidelines. Canteen Inventory Management System (CIMS) interfaced with smart cards is a unique project undertaking automation for Military CSD canteens throughout India (Director General of Audit Defence Services, 2010). 4.4 E-Purse, Loyalty Cards and Fleet Management The retail industry in India is witnessing an exponential growth which is fuelling the adoption of loyalty programs to retain customers. Still the adoption of loyalty programmes in India is at very preliminary stage. According to industry estimates currently, in India, there are about 20 million people, who are enrolled in top 10 organised loyalty programmes, the number is very small compared to a population of 1.2 billion. Going by the industry predictions, almost 50% of consumer brands in India are taking their loyalty programmes seriously and are likely to flush in investments to rev up their IT infrastructure to support these programmes Page 162

47 (Jhingan, 2012). The loyalty card programs are moving towards innovative technologies like smart card, RFID and NFC. An interesting case study is that of a farmer s mall run by an NGO in Amreli district of Gujarat offering contactless smart card based loyalty program. The program was aimed at offering products at reduced price; under this program the farmers can purchase products at up to 30% lower than the market price. The Loyalty program ensures that the farmers get points after every purchase. Whenever a farmer purchases any item, he accumulates points (which can be redeemed that time or later) for himself and to the farmers in his genealogy hence encouraging 'purchase to earn'. The contactless smart card based application maintains the purchase record of the cardholder and the points he/she earns and accumulates. The solution has been highly successful and has more than 7000 customers it has helped the mall to close sale of more than ` 1.1 crore within three months (Parmar, 2009) Stored Value Petro Cards The fuel card or fleet cards as they are popularly called are a recent phenomenon in India and dates back to the early nineties. They were in vogue since the 1960 s and 70 s in the developed countries like USA and UK Initially there the fuel cards were magnetic strip cards but over the time the card shifted to smart card based system due to inherent security and reliability of smart cards (Wikipedia, 2013). The large petroleum companies in India namely the Indian oil Corporation, Hindustan Petroleum Ltd, Bharat Petroleum Ltd are successfully running smart card based fleet management and stored value fuel cards. The major smart cards based programs are mentioned below: Page 163

48 Table 4.5 : Prevalent Petro Card Brand in India Organisation Indian Oil Corporation Ltd. Indian Oil Corporation Ltd. Bharat Petroleum Corporation Ltd. Bharat Petroleum Corporation Ltd. Hindustan Petroleum Corporation Ltd. Loyalty Card Programs XTRAPOWER Fleet Card XTRAPOWER Easy Fuel Card PetroBonus Card SmartFleet Loyalty Card DriveTrack Plus Card Fleet Management Cards The fleet management cards have a number of advantages which encourages the fleet owners to adopt such programs. The fleet cards are especially helpful for the vehicle fleet owner who can monitor the fuel usage of their vehicles and minimise false billing. Some of the major benefits are noted below: Cashless Transaction: The fleet owners can provide the drivers with the precharged smart cards instead of providing them with hard cash which can be subject to theft, loss and pilferage. Centralised Cash Management: The fleet owners can better manage their funds through a centralised system wherein they can fill desired amount of card values to the designed cardholders instead of filling up individually. The fleet owner can stop the usage of any fleet card. Loyalty Points: For every transaction the fleet owner accumulates bonus points which he can redeem in due course of time. MIS Report: the fleet owner can get timely report of individual vehicle and consolidated vehicle report. It gives total value loads and spends individually, loyalty points earned and redeemed and total cash balance across the fleet. Vehicle Tracking: The owner can track the vehicle based on the logs generated from the fuelling stops. Page 164

49 The fleet management programs in India are in a nascent stage though the offerings are improving over the time. Still there are certain value additions which are not integrated in the programs when compared with the offerings by global players which include roadside assistance and toll payments. A comparative analysis is presented below: Figure 4.16: Fleet Management Offerings Source: Srinivas, Retail Fuel Cards These cards can be used by the cardholder to make purchases of fuel and lubricants at designated retail outlets of the issuing companies. These cards have to be refilled with the minimum stipulated amount and fuel can be bought using such cards from the designated fuel stations. Based on the volume of purchase the customers are issues with redeemable reward points. Page 165