Financial Inclusion Policy Bank has Board approved FI Policy and salient features of the Policy are as below: Purpose of the Financial Inclusion Policy: Financial Inclusion Policy is required (a) To give a clear perspective of various facets of Financial Inclusion to all the staff members of the Bank in Branches and Administrative Offices for smooth implementation of FI programme. (b) To have greater transparency and to place in public domain details such as names of the Technology Service Providers selected for providing end-to-end solution on implementation of FI, Policy of the Bank on engaging BCs / CSPs. Names of the FI villages allotted, Names of BCs / CSPs engaged, etc, for enhancing the public confidence. (c) To put in place a mechanism for Grievance redressal. Objectives of the policy: To take effective steps for smooth roll out of Financial Inclusion Plan. To put in place a suitable monitoring mechanism for ensuring effective implementation of FIP. Develop systems and procedures for implementation of FI. Identify potential problem areas and take steps to overcome the same to ensure achievement of SOI targets under FI. Develop a suitable management information system to periodically review the performance in implementation of FIP. Make available basic banking products / services to all the households in FI village s areas. Enable receipt of EBT payments of various State and Central Governments, through the F.I. accounts. Make available other products like micro insurance. Align the F.I. accounts with UID project. Leverage technology for operational convenience, accounting and risk mitigation through monitoring and supervision of the F.I. activity. Initiate measures for spreading Financial Literacy in FI villages. To cover all the allotted FI villages under Financial Inclusion. PMJDY ( Pradhan Mantri Jan Dhan Yojana was introduced by GOI and the programme was launched by the Hon ble Prime Minister on 28.08.2014 and was decided to implement on a mission mode with the following objectives as enunciated in the PMJDY guidelines released by GOI on 22.08.2014 1
Mission Mode Objectives (6 Pillars): PMJDY to be executed in the Mission Mode envisages provision of affordable financial services to all citizens within a reasonable distance. It comprises of the following six pillars:- 1. Universal access to banking facilities: Mapping of each district into Sub Service Areas (SSA) catering to 1000-1500 households in a manner that every habitation has access to banking services within a reasonable distance say 5 km by 14 August, 2015. Coverage of parts of J&K, Himachal Pradesh, Uttarakhand, North East and the Left Wing Extremism affected districts which have telecom connectivity and infrastructure constraints would spill over to the Phase II of the program (15 August, 2015 to 15 August, 2018) 2. Providing Basic Banking: Accounts with overdraft facility and RuPay Debit card to all households: The effort would be to first cover all uncovered households with banking facilities by August, 2015, (subsequently advanced to 26th Jan 2015) by opening basic bank accounts. Account holder would be provided a RuPay Debit Card. Facility of an overdraft to every basic banking account holder would be considered after satisfactory operation / credit history of six months. 3. Financial Literacy Programme: Financial literacy would be an integral part of the Mission in order to let the beneficiaries make best use of the financial services being made available to them. 4. Creation of Credit Guarantee Fund: Creation of a Credit Guarantee Fund would be to cover the defaults in overdraft accounts. This initiative is to be taken by GOI. 5. Micro-Insurance: To provide micro- insurance to all willing and eligible persons by 14 August, 2018, and then on an ongoing basis. 6. Unorganized sector Pension schemes like Swavalamban: By 14 August, 2018 and then on an ongoing basis. Under the mission, the first three pillars would be given thrust in the first year. Financial Inclusion Policy Statement: To take effective steps for implementing Meaningful and Holistic Financial Inclusion as per the directions of Government of India, RBI and the Board of Directors of the Bank. 2
Guiding Principles for implementation of Financial Inclusion: 1. Strong orientation with a belief that Poor are bankable and No man is too small to bank with and with a focus on assisting underprivileged persons belonging to weaker sections, women and minorities. 2. To take care of financially excluded sections of the Society by providing formal access to banking services in the allotted FI villages. 3. Transparency in the matter of engaging Business Correspondents / Customer Service Providers, Technology Service Providers, 4. Promote staff participation in the implementation of Financial Inclusion. 5. Encourage individual initiative and foster development of the FI villages and also associate with reputed NGOs, wherever feasible. 6. Promote financial literacy, develop new products that are found necessary for promoting Financial Inclusion. Road map of SyndicateBank: Financial Inclusion Plan of the Bank covers the following: a) To implement Financial Inclusion as per the directions of GOI / RBI. b) To achieve targets given by the Government under Statement of Intent (SOI) executed by the Bank with Govt. of India. c) To implement PMJDY as per the directions of DFS, GOI. Organizational structure: An exclusive FI Department headed by a General Manager assisted by Officers, Executives having IT and rural banking background established. Patron General Managers and Regional Managers will review the implementation of FIP during their Branch visits. Nodal Executives and Nodal Officers have been designated at Regional Offices to monitor the implementation of FI through the branches in the region. Roles and responsibilities: a) Corporate Office: Financial Inclusion Dept : Formulate a clear cut policy on FI, Define the roles of various functional units, Develop suitable systems and procedures, Formulate strategies for achievement of targets under FIP. Act as Nodal Point of contact between Bank and Regulators in the matter of FI. 3
b) Regional Office : Closely monitor implementation of FI Policy of the Bank through the branches in the region. Identify and evolve suitable operational guidelines / procedures and communicate to the branches for effective implementation of FI Policy. Create awareness and educate the employees about the corporate concerns and steps to be taken for achieving the goal of FI. Monitor the working of BC / CSP and BC Supervisors and identify the areas of slippage and take prompt remedial action. Give a feedback to the Corporate Office on the shortcomings / disturbing features noticed in the working of BCs / CSPs observed in the branches and take necessary corrective action. Redress grievances of customers particularly on the transactions carried out through the BCs c) Branch: Implement the policies on Financial Inclusion as per the guidelines given Identify the growth opportunities and take the initiative in meeting the requirement of banking service in the allotted FI village under the guidance of RO. Monitor the working of BCs / CSPs and the transactions carried out by BCs / CSPs to ensure that they conform to the laid down guidelines. Give a feedback to the RO/CO on the shortcomings / disturbing features noticed in the working of BCs / CSPs for necessary corrective action. Take expeditious steps for redressal of grievances of customers particularly on the transactions carried out through the BCs. Take appropriate remedial actions to address the shortcomings noticed in the working of BCs. Training BC/Branch Managers and Nodal Officers: To ensure effectiveness of delivery system, Bank will impart training to Master Trainers as per training module given by Indian Institute of Banking & Finance (IIBF). Creating awareness about the importance attached to FI and the roles to be played by the implementing personnel will be the focus of training programmes to be organized for Nodal Officers at Regional Offices, Base Branch Managers and Business Correspondents. 4
Monitoring Mechanism: Nodal Officers and Nodal Executives at the Regional offices are designated to assist the Regional Head in monitoring implementation of FI through the branches. The Regional Head and other Executives from Regional Office during their visit to branches (having FI villages) shall review the progress in implementation of FIP and provide the required guidance. The Patron General Manager during his visits to the regions may also visit the FI Villages to review the progress. RBI has stipulated that 1% of the FI Villages shall be visited by CMD / ED and 5% of the FI Villages shall be visited by GM, FID, and Corporate Office, to oversee the implementation of FIP. Dash board facility provided to branches and Regional Offices for daily monitoring. Regional Offices shall conduct at least bi-monthly meeting of bank Mitr to review their performance, Measures for ensuring Data Security: Security standards recommended by IDRBT are strictly adhered. Smart Card based transactions require two factor authentication and it is achieved through the use of physical card with the photograph of the customer on the card and the finger print. Fingerprint captured and stored in smart card during enrollment process is matched with the fingerprint impression captured on the HHM during authentication process. In case of mobile technology, the mobile number and the voice are two factors taken for authentication, apart from the photograph available on the card & passbook. The message from the Hand Held Device or from the Mobile Device is transmitted through the process of encryption / decryption from the sending and the receiving ends to ensure data security. Data from Micro ATM to FI server and to CBS travel in an encrypted form. Data in Smart Card is also stored in encrypted form. TSPs are bound by non-disclosure and data ownership clause of SLA, which ensures data ownership and security for the Bank. FI servers are placed in Bank s production and DR site. Risk mitigation: Banking transactions carried out through Business Correspondents entails operational and reputational risks and the following measures have been adopted to exercise control and to effectively supervise operations being carried out by them. 5
a) Two Factor Authentication Customers have to present the card and affix their fingerprint to successfully complete a transaction. b) Per Day Transaction Limit Customers are facilitated to withdraw or deposit a maximum of Rs.5000/- per day through the Business Correspondents. However, this limit can be reviewed periodically and GM (FI) is authorized to fix a limit after getting concurrence from RMD. c) Customers are provided with a receipt for every transaction that has been successfully carried out by them. Customers to be educated to preserve the receipt till the relevant transaction appear in the pass book printed by the branch. d) Voice guiding in local language. e) e-kyc for opening of accounts is also implemented at Bank Mitra locations as per RBI guidelines. f) Aadhaar enabled payment system (AEPS) is implemented in Bank for transactions done through Micro ATMs in which the authentication of bio-metrics of the customers will be done from UIDAI database server to ensure full-proof mechanism of authentication. Audit of FI Accounts: The following tools are being made use of for supervision and audit of the accounts: Off site monitoring of FI activities through DIT / a separate FI-IT Cell to be created for this purpose. Audit of BCs by regular concurrent / external auditors of the Bank along with the audit of the bank branch. Periodical IS Audit of the systems by outside agency Surprise inspection of B Cs/Books & Cash Risk based internal audit. (RBIA) Transparency & information placed in public domain: To ensure compliance with the directions of the Board / RBI / GOI, casting obligations on the Bank for disclosure in areas such as selection of Technology Service Provider, BC s engaged by the Bank, etc, are hosted on the Bank s website, http://www. syndicatebank.in Further, information such as names and addresses of BCs and the villages allotted to the Bank under FI are also hosted on the Bank s website for information of General Public to ensure transparency. Progress in FI is also hosted in the website. 6
Engaging the services of Technology Service Providers / BCs / BC Supervisors : Engaging the services of Technology Service Providers / BCs / BC Supervisors should be done in a simple and transparent manner following the guidelines in force in the Bank and also the guidelines given by Central Vigilance Commission, wherever applicable. Technology Service Providers (TSP): Technology Service Providers are engaged by the Bank to provide an end-to-end solution in implementation of Financial Inclusion Project. The TSP shall provide technology solutions for Smart cards / Handheld Terminal and / or Mobile based financial solution projects. Their solution must be highly secured, amenable to audit and follow widely accepted open standards to allow inter-operatability among different systems adopted by different Banks. The solution should also be compatible and synergize with Core Banking Solutions of the Bank. The proposed solution should support authentication of customers through finger print matching, secured communication, mobile registration, voice recognition, PIN authentication, transaction processing, customer enrollment system, uploading / downloading of transactions, customer enrollment data through on-line / off-line mode, generation of printed acknowledgement for completed transactions, audit trail including failed transactions and provide MIS. TSP shall arrange Customer Service Providers (CSP) at the identified locations of the Bank. Cash management, supervision and monitoring of CSPs should be undertaken by the TSP under a Service Level Agreement to be entered into by the Bank and the TSP. Business Correspondents: RBI have permitted Bank to engage Financial Intermediary for providing financial and banking services in the form of Business Correspondents who, among others, could be a section 25 company or for profit company. The Bank has an elaborate Board approved BC Policy which clearly mentions the entities that are eligible to be appointed as BCs, their roles and responsibilities, customer operations to be carried out, handling and maintenance of cash, remuneration to be paid, records and registers to be maintained, dispute redressal mechanism, etc. BC model has the potential to speed up the process of FI and bring vast majority of population in hither to inaccessible area within the banking fold. Activities to be undertaken by BCs would be within the normal course of bank's banking business, but conducted through BCs at places other than bank premises/atms. 7
The BC can be a corporate BC who may in turn appoint Customer Service Providers (CSPs) for providing basic banking facilities in the villages. The Bank can, on its own, engage BCs for the branches identified for the purpose adhering to the guidelines issued by RBI / Bank from time to time. Bank has implemented KIOSK Banking module by engaging Services as service provider. CSC- e Governance Technology available for adoption: As per the guidelines given by RBI, Bank may adopt suitable Technology for implementation of FI from among the available alternatives such as mobile technology, conventional cards, smart cards, common service centers, low cost ATMs, handheld devices etc. No uniform or unique model is ideally suited to the whole country. Therefore, Bank has to choose from a range of available models and adapt any of them depending upon the requirement. As per revised guidelines of GOI/RBI, RuPay Debit Card is to be issued to all account holders and hence Micro ATMS at Bank Mitra are enabled for usage of RuPay cards Features of Hand Held Machine (HHM)/Micro ATMs: Hand Held Machine is 10 x 5 x 3 in size (at present). HHM is to be 1.5.1 version as per GOI It consists of display system, Key Board, Finger Print reader and a printer. Smart Card is inserted in HHM, to allow the customer to operate the account. Key board is used for operating the machine. Finger Print reader is used for identification of the customer. Display system /monitor show the details of the account, amount debited / credited to the account. HHM is voice enabled. Whenever the amount is debited / credited to the account of the customer the HHM echoes the transaction details to the customer in local language. HHM updates the card with the latest transaction. Latest ten transactions are saved in the card. It will be as per IDRBT specifications. EBT for NREGA, SSP and other government payments: The basic idea of Financial Inclusion initiative is to extend low cost, door step banking services to unbanked and under banked rural population who reside in remote regions. Electronic Benefit Transfer (EBT) would help in transfer of NREGA payment and Social 8
Security Pensions and such other government payments using ICT devices. Each customer could be identified uniquely by fingerprints, bio-metric authentication which is more secured than through Personal Identification Number. FI Products: Providing financial products not necessarily promote inclusion. Such product should result in increased economic activity in the area. Interest should be generated amongst the unreached BPL households about No Frill Accounts in such a way that they should voluntarily approach the bank for the product. The Department of Financial Services (DFS), MOF, GOI has vide their letter no. DO No. 1/9/2014-FI dated 09.07.2014 on Action Plan for Comprehensive Financial Inclusion has directed the Banks for providing Basic Banking Accounts with overdraft and Rupay Debit Card to all uncovered households by opening two bank accounts one for the husband and other for the wife. And to provide overdraft of Rs.5000/- to the lady member only in case of bank accounts of both husband and wife. Rupay Debit Card to be provided should have inbuilt accident insurance cover of Rs.1.00 lakh. The overdraft facility will be covered under credit guarantee. Life Insurance cover of Rs. 30000/-is also made available to the account holders who opened accounts between 16.08.2014 to 31.01.2015 subject terms & conditions of the scheme. Apart from providing the entire range of products available in base branch, the following products are offered to FI customers now: FI SKCC for meeting the credit requirements for crop production without any upper limit. FI GCC - for meeting expenses for taking up economic activities Limit Rs 2000/- FI RD For mobilizing micro savings in multiples of Rs.10/- with a minimum of Rs 10/-. Micro Insurance To cover all FI customers having No Frill Accounts with insurance cover up to Rs.25000/- for normal death and Additional Accident Death Benefit of Rs. 25000/- for death due to accident. Bank may also develop suitable new products depending upon the need and requirement of the FI customers, from time to time. The product to be developed should be approved by GM:FI and GM:IT taking necessary clearance from the Competent Authority. 9
Financial literacy : Financial literacy is a pre-requisite for effective Financial Inclusion, which will ensure that financial services reach the unreached and under-reached section of the Society. In order to provide this, the Bank may establish FLCCs on its own or may associate with other Banks in establishing a Trust to promote financial literacy. Establish Financial Literacy and Credit Counseling Centres (FLCCs) in Banks Lead Districts for providing free financial literacy/education, credit counseling services and creating awareness among the public regarding their rights and duties in respect of banking services. The Department of Financial Services (DFS), MoF, GOI has vide their letter no. DO No. 1/9/2014-FI dated 09.07.2014 on Action Plan for Comprehensive Financial Inclusion has directed the Banks to extend the Financial Literacy Programme to block level from district level at present. The Bank may also set up Financial Inclusion Resource Centres (FIRC) in selected Lead Districts of the Bank to promote financial literacy. Educate people in rural and urban areas with regard to various financial products and services available from the Bank, such as, organizing group meetings, gramasabhas, participation in publicity campaign such as Swabhimaan, distribution /display of publicity materials on FI such as posters, pamphlets, organizing skits, magic shows, debates, essay writing competition, quiz for school children in FI villages, etc. Educate people in rural and urban areas with regard to various financial products and services available from the Bank, such as, organizing group meetings, gramasabhas, participation in publicity campaign such as Swabhimaan, distribution /display of publicity materials on FI such as posters, pamphlets, organizing skits, magic shows, debates, essay writing competition, quiz for school children in FI villages, etc. Develop promotional video/short films, participate in publicity/promotional programmes organized by IBA, RBI & GOI and share the expenses involved. Financial literacy activity of the Bank aims at providing basic financial knowledge to the villagers in simple and understandable ways. The Financial Literacy activities should center around the following themes. 10
a) Why the villager should have a No Frill Account in the Bank. In what way it will be beneficial to him? b) What are the benefits of keeping deposits with the Bank? c) How the Bank can help in providing all round development of the villagers? d) What is a debt trap and how Bank can help the villagers in coming out of the debt trap? e) How the interest is calculated by Bank and other Agencies? f) For what kind of activities the Bank can extend help? Grievances Redressal mechanism: As part of consumer protection measures, Reserve Bank of India has advised Banks to constitute Grievance Redressal Mechanism within the Bank for redressal of complaints about the services rendered by BC s. Beneficiaries of BC services are generally illiterates and are prone to misguidance. At times customers tend to perceive the BC as Bank staff and not as agents functioning on behalf of the Bank. At stake will be the reputation and standing of the Bank in the eyes of the public, if the BC is either not functioning as per the guidelines or has not been extending Banking services expected of him. Keeping this in view, Bank has established a three-tier grievance redressal mechanism as follows. a) First Level of Customer Redressal Officer is the Base Branch Manager. The Bank shall ensure display of Name and address of the Branch Manager in BC premises and Branch Manager shall dispose of the complaints received within 15 days. b) Second Level of Customer Redressal Executive is the Regional Manager of the Region under whose jurisdiction the village is situated. Name and address of Regional Manager shall be displayed on the notice board in Branch premises. Complaints received at RO shall be disposed of within 15 days. c) Third Level of Customer Redressal Executive is the General Manager (Financial Inclusion) at Corporate Office, Bangalore, whose name and address are displayed on the Bank s website. 11
If a complainant does not get satisfactory response from the Bank within 60 days from the date of lodging the complaint, he /she will have the option to approach the office of the Banking Ombudsman for redressal of their grievance. In view of this, Branch managers to closely monitor the activities of the BC s and promptly redress grievance of the customers, besides extending prompt and courteous service to avoid complaints. Regional Managers during their Branch visits will look into the quality and adequacy of customer services being extended by BC s appointed in FI villages and also verify the complaints /deficiencies observed and take immediate steps to redress the grievances. 12